Utf 8 -cases 1ab

Cases on ContractsCases on Contracts

Associate Professor Tadas KlimasAssociate Professor Tadas Klimas

Herbert v. DurandHerbert v. Durand

Fr Cc § 1134 ‑ Agreements legally made Fr Cc § 1134 ‑ Agreements legally made take the place of legislation for those who take the place of legislation for those who make them.make them.

They may be revoked only be mutual They may be revoked only be mutual consent or for causes which the law consent or for causes which the law authorizes. authorizes.

Herbert v. DurandHerbert v. DurandDurand, a journeyman tailor, got an order Durand, a journeyman tailor, got an order

from Herbert, a bespoke (custom) tailor, from Herbert, a bespoke (custom) tailor, to make two coats at a price of 6.50 Fr. to make two coats at a price of 6.50 Fr. per coat. When the work was done per coat. When the work was done Durand claimed that the price was too Durand claimed that the price was too low and brought an action in the office of low and brought an action in the office of the the Conseil des prud'hommesConseil des prud'hommes (Labour (Labour Court) on the grounds that he could not Court) on the grounds that he could not live on a wage so disproportionate to the live on a wage so disproportionate to the real value of his labour.real value of his labour.

Hawkins v. McGee Hawkins v. McGee

Fr Cc § 1149Fr Cc § 1149 Damages due to a creditor Damages due to a creditor are, as a rule, for the loss which he has are, as a rule, for the loss which he has suffered and the profit which he has been suffered and the profit which he has been deprived …deprived …

Hawkins v. McGee Hawkins v. McGee Principles of European Contract LawPrinciples of European Contract Law Article 9:502: General Measure of DamagesArticle 9:502: General Measure of Damages The general measure of damages is such sum The general measure of damages is such sum

as will put the aggrieved party as nearly as as will put the aggrieved party as nearly as possible into the position in which it would have possible into the position in which it would have been if the contract had been duly performed. been if the contract had been duly performed. Such damages cover the loss which the Such damages cover the loss which the aggrieved party has suffered and the gain of aggrieved party has suffered and the gain of which it has been deprived. which it has been deprived.

Δ = McGee, a doctor (surgeon); Π = Δ = McGee, a doctor (surgeon); Π = Hawkins, his patient. Π paid Δ to perform Hawkins, his patient. Π paid Δ to perform an operation on his hand in order to an operation on his hand in order to remove scar tissue. Π testified that Δ remove scar tissue. Π testified that Δ guaranteed the hand would turn out guaranteed the hand would turn out “100% perfect” or “100% good”. “100% perfect” or “100% good”. Additionally, it appears that the Δ had Additionally, it appears that the Δ had solicited the operation. solicited the operation.

The hand was not perfect after the The hand was not perfect after the surgery—indeed, it was even worse. Π surgery—indeed, it was even worse. Π sued for negligence (which claim was sued for negligence (which claim was rejected by the lower court) and also for rejected by the lower court) and also for breach of contract. The jury awarded breach of contract. The jury awarded damages to Π, but the trial judge reduced damages to Π, but the trial judge reduced the damages. The plaintiff appealed this the damages. The plaintiff appealed this reduction in damages.reduction in damages.

Issue: As a matter of law, is the standard Issue: As a matter of law, is the standard to be applied in judging whether a to be applied in judging whether a contract was formed in which Δ contract was formed in which Δ guaranteed a perfect hand an objective guaranteed a perfect hand an objective one, or a subjective one? That is, are one, or a subjective one? That is, are hidden mental reservations on Δ's part hidden mental reservations on Δ's part regarding a guarantee of a perfect hand regarding a guarantee of a perfect hand relevant? relevant?

Société des Eaux de Vittel v. Dehen Société des Eaux de Vittel v. Dehen


Facts: When a person in a self-Facts: When a person in a self-service store placed a bottle of soda service store placed a bottle of soda into her basket, proceeded to the into her basket, proceeded to the checkout counter, where when she checkout counter, where when she moved it, it exploded, injuring her moved it, it exploded, injuring her eye. The lower court found no eye. The lower court found no negligence. Therefore the only negligence. Therefore the only recovery possible is in contract.recovery possible is in contract.


Issue: Can a public offer be made Issue: Can a public offer be made by means of pricing items in a self-by means of pricing items in a self-service store?service store?

Barker v. Allied SupermarketBarker v. Allied SupermarketSupreme Court of OklahomaSupreme Court of Oklahoma

Barker v. Allied SupermarketBarker v. Allied Supermarket

Same factsSame facts


Shopper puts back?Shopper puts back?


Shopper puts back?Shopper puts back?

Shop has created a power of Shop has created a power of withdrawal in the shopperwithdrawal in the shopper


Ct remarks that a shopper has no Ct remarks that a shopper has no choice but to comply with the choice but to comply with the situation given. situation given.


Three ways to accept: Three ways to accept:

Place in basketPlace in basket

Take to counterTake to counter

Pay Pay

Fielders Industries v. Solwest Fielders Industries v. Solwest TradingTrading

Solomon Islands: High Court (1996)Solomon Islands: High Court (1996)

FieldersFielders

Facts: Π = Fielders Ind's. Facts: Π = Fielders Ind's.

Π and Δ had been dealing with Π and Δ had been dealing with one another prior to the events one another prior to the events leading to this lawsuit. Π = leading to this lawsuit. Π = manufactures flour, rice, biscuits, manufactures flour, rice, biscuits, etc. and sells wholesale. Δ = a etc. and sells wholesale. Δ = a wholesaler and retailer in Noro, wholesaler and retailer in Noro, Western province. Western province.

FieldersFielders

Π in Oct. '91 sent 4 container Π in Oct. '91 sent 4 container loads to Δ who received and sold loads to Δ who received and sold these goods. Π in Dec '91 sent 10 these goods. Π in Dec '91 sent 10 container loads to Δ who received container loads to Δ who received and sold these goods, altho some and sold these goods, altho some were condemned.were condemned.

FieldersFieldersIssue: Can one accept an offer by Issue: Can one accept an offer by exercising dominion over goods exercising dominion over goods sent by the offeror?sent by the offeror?

FieldersFieldersIssue: Can one accept an offer by Issue: Can one accept an offer by exercising dominion over goods exercising dominion over goods sent by the offeror?sent by the offeror?

YESYES

FieldersFieldersWhat should defendant have What should defendant have done?done?

Δ should not have exercised Δ should not have exercised dominion. He should have dominion. He should have informed the Π of this informed the Π of this immediately.immediately.

FieldersFieldersWhat should defendant have What should defendant have done?done?

Δ SHOULD HAVE CALLED HIS Δ SHOULD HAVE CALLED HIS LAWYER!! LAWYER!!

RULE: PAY YOUR LAWYERS!! RULE: PAY YOUR LAWYERS!!

GET THEM GET THEM

PAY THEM PAY THEM

LISTEN TO THEM!!! LISTEN TO THEM!!!

Cooke v. OxleyCooke v. OxleyKing's Bench [United Kingdom] (1790)King's Bench [United Kingdom] (1790)

Cooke v. OxleyCooke v. OxleyKing's Bench [United Kingdom] (1790)King's Bench [United Kingdom] (1790)

Oxley/Offeror made an offer good for a Oxley/Offeror made an offer good for a term, good until four o’clock.term, good until four o’clock.

Cooke/Offeree accepted and delivered Cooke/Offeree accepted and delivered notice of acceptance prior to four o’clock.notice of acceptance prior to four o’clock.

Offeror did not performOfferor did not perform

Cooke v. OxleyCooke v. Oxley

Another way of looking at it: Oxley Another way of looking at it: Oxley agreed to give and did give Cooke agreed to give and did give Cooke an an optionoption to buy which had to be to buy which had to be used by four o’clock or it would used by four o’clock or it would lapse.lapse.

Did Cooke give anything for this? Did Cooke give anything for this? (No.)(No.)


Issue: Can there be an offer for a Issue: Can there be an offer for a term?term?

Alternative: Must an offer be Alternative: Must an offer be accepted at once, or can there be a accepted at once, or can there be a two-stage situation?two-stage situation?


““Historically contract making was a person process Historically contract making was a person process between the two parties and perhaps their lawyers. As between the two parties and perhaps their lawyers. As commerce expanded contracts were still a matter of commerce expanded contracts were still a matter of personal negotiation, though the carrying out of that personal negotiation, though the carrying out of that task might be entrusted to an agent by one or both task might be entrusted to an agent by one or both sides. The advent of a postal service in the late 18th sides. The advent of a postal service in the late 18th century in Britain created an entirely new problem for century in Britain created an entirely new problem for the courts. The offer and acceptance were no longer the courts. The offer and acceptance were no longer virtually contemporaneous acts between the parties or virtually contemporaneous acts between the parties or their agents face to face. Could there be a contract their agents face to face. Could there be a contract when that occurred? when that occurred? Cooke v OxleyCooke v Oxley suggested not.” suggested not.”

Dr. Robert N. Moles, Contract L. Lecture, http://netk.net.au/Contract/03Acceptance.aspDr. Robert N. Moles, Contract L. Lecture, http://netk.net.au/Contract/03Acceptance.asp


COOKE V. OXLEY HAS BEEN COOKE V. OXLEY HAS BEEN OVERRULED IN THE USA AND OVERRULED IN THE USA AND DISTINGUISHED IN THE UK.DISTINGUISHED IN THE UK.

IT IS NOT GOOD LAW.IT IS NOT GOOD LAW.

Maltzkorn v. BraquetMaltzkorn v. BraquetFrance: Cour de cassation (1968)France: Cour de cassation (1968)

Maltzkorn v. BraquetMaltzkorn v. Braquet

Facts: In 1961, Braquet made a public Facts: In 1961, Braquet made a public offer by means of an advertisement; offer by means of an advertisement; specifically, to sell certain land for 25,000 specifically, to sell certain land for 25,000 Fr. Maltzkorn communicated his Fr. Maltzkorn communicated his acceptance to Braquet. Braquet however acceptance to Braquet. Braquet however repudiated the contract. Braquet repudiated the contract. Braquet admitted that the farm had not been sold admitted that the farm had not been sold at the time of the receipt of Maltzkorn's at the time of the receipt of Maltzkorn's acceptance.acceptance.


Issue: is a public offer to sell a thing Issue: is a public offer to sell a thing which can only be sold to one person an which can only be sold to one person an offer, or merely an invitation to treat?offer, or merely an invitation to treat?


Issue: is a public offer to sell a thing Issue: is a public offer to sell a thing which can only be sold to one person an which can only be sold to one person an offer, or merely an invitation to treat?offer, or merely an invitation to treat?

It is an offer.It is an offer. To hold otherwise would be to create a To hold otherwise would be to create a

rule of law.rule of law. Note under French law a sale to the first Note under French law a sale to the first

party would be an effective revocation to party would be an effective revocation to the rest of the world.the rest of the world.


Q: What is necessary under French law for an Q: What is necessary under French law for an offer (including a public offer) to be revoked?offer (including a public offer) to be revoked?

A: An objective manifestation of the internal, A: An objective manifestation of the internal, subjective, revocation suffices. It is not only subjective, revocation suffices. It is not only that a revocation is effective upon emission, that a revocation is effective upon emission, but a wider, more encompassing, rule: any but a wider, more encompassing, rule: any external manifestation works to prove the external manifestation works to prove the revocation (such as a sale of a unique item to a revocation (such as a sale of a unique item to a third party).third party).


Q: Why doesn’t the law allow Braquet to simply Q: Why doesn’t the law allow Braquet to simply change his mind? Or does it?change his mind? Or does it?

A change of mind which is completely A change of mind which is completely subjective with no objective manifestation subjective with no objective manifestation would not be in accord with the objective would not be in accord with the objective theory of contracts. theory of contracts.

Yet the law does in any event allow Braquet to Yet the law does in any event allow Braquet to change his mind; it merely requires an outward change his mind; it merely requires an outward manifestation. Secondly, a person is always manifestation. Secondly, a person is always (although it is not really a function of law but of (although it is not really a function of law but of the legal system) allowed to change his mind, the legal system) allowed to change his mind, subject to the other party's right to sue.subject to the other party's right to sue.


Q: How is a public offer revoked in your Q: How is a public offer revoked in your jurisdiction?jurisdiction?

There are three considerations. One, a public There are three considerations. One, a public offer can generally be revoked by a public offer can generally be revoked by a public revocation. Two, a public offer can be revoked revocation. Two, a public offer can be revoked by a private communication, effective as to the by a private communication, effective as to the persons who receive it. Three, there is a persons who receive it. Three, there is a presumption in the case of limited numbers that presumption in the case of limited numbers that the offer is good only so far as supplies last; the offer is good only so far as supplies last; this is problematic (see discussion in the this is problematic (see discussion in the casebook at p. 41)casebook at p. 41)

..


Q: Would the rule of law stated in the first Q: Would the rule of law stated in the first paragraph be correct in your jurisdiction?paragraph be correct in your jurisdiction?

A: Probably not. Under Quebec (§ A: Probably not. Under Quebec (§ 1391), Louisiana, and even Lithuanian 1391), Louisiana, and even Lithuanian law the revocation, if sent to a private law the revocation, if sent to a private party, would only go into effect upon party, would only go into effect upon receipt. Generally a public offer is receipt. Generally a public offer is revoked by a publicized revocation, revoked by a publicized revocation, which goes into effect upon publication.which goes into effect upon publication.

de Marans v. Deschampsde Marans v. DeschampsFrance: Orleans (1885)France: Orleans (1885)

Mrs. Deschamps: Offeror= ΔMrs. Deschamps: Offeror= Δ Mr. De Marans: Offeree = ΠMr. De Marans: Offeree = Π

12/412/4 12/512/5 12/612/6

Offer PostedOffer Posted Offer ReceivedOffer Received

RevocationRevocation

PostedPosted

Revocation Revocation ReceivedReceived

Acceptance Acceptance PostedPosted

Acceptance Acceptance ReceivedReceived

De Marans v DeschampsDe Marans v Deschamps

Issue: When is a revocation effective?Issue: When is a revocation effective?


Issue: When is a revocation effective?Issue: When is a revocation effective?

In this case, plaintiff/offeree seeks to In this case, plaintiff/offeree seeks to show there was a contract formed.show there was a contract formed.


Fr: revocation effective upon emission Fr: revocation effective upon emission (information principle) Manifestation(information principle) Manifestation

defendant wins: no contract formed. defendant wins: no contract formed.


LT: revocation effective upon receipt LT: revocation effective upon receipt (information principle), and acceptance (information principle), and acceptance effective upon despatch (emission effective upon despatch (emission principle) (Lt Cc § 6.169.1 )principle) (Lt Cc § 6.169.1 )

Plaintiff offeree wins. Plaintiff offeree wins.


Quebec: revocation effective upon Quebec: revocation effective upon receipt (information principle), and receipt (information principle), and acceptance effective upon delivery acceptance effective upon delivery (information principle)(information principle)

Plaintiff offeree loses: can prove only that Plaintiff offeree loses: can prove only that revocation was received at same time as revocation was received at same time as acceptance received. What can’t he acceptance received. What can’t he prove?prove?

Cave cooperative de Novi v. Cave cooperative de Novi v. RicomeRicome

France: Cour de cassation (1923)France: Cour de cassation (1923)

Cave cooperativeCave cooperative

Ricome (Π) is seeking to prove a contract Ricome (Π) is seeking to prove a contract was formed; Cave coop. de Novi (Δ) that was formed; Cave coop. de Novi (Δ) that it was not. it was not.

Cave emits Cave emits offer via offer via telegr on telegr on 9/59/5

Ricome Ricome emits emits acceptanacceptance on 9/7 ce on 9/7 at 11:30 at 11:30 am via am via telegrtelegr

Cave emits Cave emits revocation revocation on 9/7 after on 9/7 after 11:30 am11:30 am

Ricome's Ricome's AcceptancAcceptance reaches e reaches Δ=Cave Δ=Cave subsequensubsequent to the t to the manifestatimanifestation of the on of the revocation revocation

Cave cooperative de NoviCave cooperative de Novi Issue: Is an acceptance effective upon Issue: Is an acceptance effective upon

emission?emission?

Cave cooperative de NoviCave cooperative de Novi Issue: Is an acceptance effective upon Issue: Is an acceptance effective upon

emission?emission? Holding: Yes.Holding: Yes.

Cave cooperative de NoviCave cooperative de Novi What of the fact that Ricome-Π stated he What of the fact that Ricome-Π stated he

would arrive at 9:00 am in order to sign would arrive at 9:00 am in order to sign the contract? the contract?

Cave cooperative de NoviCave cooperative de Novi What of the fact that Ricome-Π stated he What of the fact that Ricome-Π stated he

would arrive at 9:00 am in order to sign would arrive at 9:00 am in order to sign the contract? the contract?

A: No. There are no facts to support the A: No. There are no facts to support the contention that the parties had agreed in contention that the parties had agreed in advance that no contract would be advance that no contract would be formed until a formal signing occurs. formed until a formal signing occurs.

Jahn v. CharryJahn v. CharryFrance: Bordeaux (1870)France: Bordeaux (1870)

Jahn v. CharryJahn v. Charry Facts: Jahn sent telegrams to Charry, Facts: Jahn sent telegrams to Charry,

offering her to perform in an opera he offering her to perform in an opera he was staging. He sent them to the wrong was staging. He sent them to the wrong address, and under the particular facts address, and under the particular facts he was responsible for this. Charry as a he was responsible for this. Charry as a result received the telegrams after a result received the telegrams after a delay. During the time of this delay Jahn delay. During the time of this delay Jahn sent another telegram revoking the offer. sent another telegram revoking the offer. Upon receipt of the first two telegrams, Upon receipt of the first two telegrams, Charry accepted via telegram and Charry accepted via telegram and incurred expensesincurred expenses. .

Jahn v. CharryJahn v. Charry

Jahn Jahn sends sends telegram telegram to wrong to wrong address address

Jahn sends Jahn sends telegram telegram revoking revoking offer; offer; immediately immediately received by received by agent of agent of Charry Charry

Charry Charry receives receives Jahn's Jahn's offer offer

Charry Charry telegrams telegrams acceptance; acceptance; incurs incurs expenses expenses


Q: Can in every case an offeror revoke Q: Can in every case an offeror revoke an offer with no attendant liability?an offer with no attendant liability?


Q: Can in every case an offeror revoke Q: Can in every case an offeror revoke an offer with no attendant liability?an offer with no attendant liability?

A: No. While the offeror can revoke the A: No. While the offeror can revoke the offer in terms of contractual liability, the offer in terms of contractual liability, the acts which the offeror has committed acts which the offeror has committed (making and then revoking an offer) may, (making and then revoking an offer) may, in the particular case, lead to in the particular case, lead to extracontractual responsibility. extracontractual responsibility.

Delai raisonableDelai raisonable

Lt Cc § 6.169.2.2, which would seem Lt Cc § 6.169.2.2, which would seem upon its face require that the offeree upon its face require that the offeree receive expectation damages (meaning receive expectation damages (meaning that the court would hold a contract had that the court would hold a contract had been formed). been formed).

Delai raisonableDelai raisonable Restatement 2d § 87(2) USA: An offer Restatement 2d § 87(2) USA: An offer

which the offeror should reasonably which the offeror should reasonably expect to induce action or forbearance expect to induce action or forbearance of of substantial character substantial character on the part of the on the part of the offeree before acceptance offeree before acceptance and which and which doesdoes induce such action or forbearance induce such action or forbearance is binding as an option contract is binding as an option contract to the to the extent necessary to avoid injusticeextent necessary to avoid injustice

Gardner Zemke Co. v. Gardner Zemke Co. v. Dunham Bush, Inc.Dunham Bush, Inc.

New Mexico: Supreme Court (1993) New Mexico: Supreme Court (1993)

Gardner ZemkeGardner Zemke The parties exchanged standard forms The parties exchanged standard forms

which differed which differed materiallymaterially in regard to a in regard to a warranty provision. Under the UCC, LT warranty provision. Under the UCC, LT cc, PECL, UNIDROIT no contract would cc, PECL, UNIDROIT no contract would have been formed at this stage. have been formed at this stage.

Gardner ZemkeGardner Zemke Nevertheless the parties formed a Nevertheless the parties formed a

contract by conduct: the goods contract by conduct: the goods (refridgerating units called chillers) were (refridgerating units called chillers) were accepted and paid for.accepted and paid for.

Gardner ZemkeGardner Zemke The question is under which terms:The question is under which terms: The seller’s? (Last Shot Rule)The seller’s? (Last Shot Rule) The buyer’s? (First Shot Rule)The buyer’s? (First Shot Rule) The default terms of the code/law?The default terms of the code/law?

Gardner ZemkeGardner Zemke Knock Out Rule:Knock Out Rule:

Conflicting terms (material and Conflicting terms (material and immaterial (= additional and/or different)immaterial (= additional and/or different)

ARE KNOCKED OUT.ARE KNOCKED OUT.


After knockout, what remains?After knockout, what remains?


After knockout, what remains?After knockout, what remains?

THE DEFAULT RULESTHE DEFAULT RULES Supplied by the Supplied by the

law/code/statutelaw/code/statute

Hill v GatewayHill v Gateway U.S. Ct of Appeals 7th Circuit 1997U.S. Ct of Appeals 7th Circuit 1997

Hill v GatewayHill v Gateway Facts: П consumer/Hill ordered computer via Facts: П consumer/Hill ordered computer via

telephone. Apparently paid by credit card. telephone. Apparently paid by credit card. Gateway sent computer and programs via mail. Gateway sent computer and programs via mail. Inside box were terms, including a term binding Inside box were terms, including a term binding the parties to arbitrate disputes. The terms the parties to arbitrate disputes. The terms stated that they were applicable if the stated that they were applicable if the purchaser did not return the computer and purchaser did not return the computer and software within thirty days. П did not return software within thirty days. П did not return them, but now sues for damages and wants the them, but now sues for damages and wants the dispute tried in court.dispute tried in court.

Hill v GatewayHill v Gateway Issue: Can a contract be formed in Issue: Can a contract be formed in

stages?stages? (Rolling contract).(Rolling contract).

Hill v GatewayHill v Gateway Issue: Can an offeror condition an Issue: Can an offeror condition an

acceptance upon silent agreement to acceptance upon silent agreement to terms if rejection of offer is contemplated terms if rejection of offer is contemplated by return of merchandise?by return of merchandise?

Hill v GatewayHill v Gateway LT Cc § 6.186 LT Cc § 6.186 1. 1. Negalioja netikėtos (siurprizinės) Negalioja netikėtos (siurprizinės)

sutarčių standartinės sąlygos, t. y. sutarčių standartinės sąlygos, t. y. tokios, kurių kita šalis negalėjo tokios, kurių kita šalis negalėjo protingai tikėtis būsiant sutartyje. protingai tikėtis būsiant sutartyje. Netikėtomis (siurprizinėmis) Netikėtomis (siurprizinėmis) nelaikomos sutarties sąlygos, su nelaikomos sutarties sąlygos, su kuriomis šalis aiškiai sutiko, kai jos kuriomis šalis aiškiai sutiko, kai jos tai šaliai buvo tinkamai atskleistos.tai šaliai buvo tinkamai atskleistos.

Wood v Lucy, Lady Duff-Wood v Lucy, Lady Duff-GordonGordon

NY State Court of Appeals, NY State Court of Appeals, 222 N.Y. 88 (1917)222 N.Y. 88 (1917)

(NYS Ct of Appeals is highest ct in state)(NYS Ct of Appeals is highest ct in state)

Wood v Lucy, Lady Duff-Wood v Lucy, Lady Duff-GordonGordon

Lucy gave an exclusive right to Wood to Lucy gave an exclusive right to Wood to market her clothing designs, for a term of market her clothing designs, for a term of one year, for one-half of the profit.one year, for one-half of the profit.

Wood v Lucy, Lady Duff-GordonWood v Lucy, Lady Duff-Gordon

Lucy then contracted with Sears, Lucy then contracted with Sears, Roebuch & Co. to sell her designs thru Roebuch & Co. to sell her designs thru their catalog-their catalog-

Which was a major marketing innovation Which was a major marketing innovation and a super-move and a super-move


Wood sued for breach.Wood sued for breach. Lucy argued that there was no contract-Lucy argued that there was no contract-


Because of lack of obligations on both Because of lack of obligations on both sidessides


The intermediate ct agreed: the contract The intermediate ct agreed: the contract did not expressly obligate Wood to enter did not expressly obligate Wood to enter into even one single contract.into even one single contract.


The highest ct in NYS held, however, that The highest ct in NYS held, however, that there is an implied promise of good faith there is an implied promise of good faith on the part of Wood.on the part of Wood.


Because of the requirement of good faith, Because of the requirement of good faith, Wood had an obligation to try, in good Wood had an obligation to try, in good faith, to maximize the amount of faith, to maximize the amount of contracts it/he entered into on behalf of contracts it/he entered into on behalf of Lucy.Lucy.


Therefore there was an obligation on Therefore there was an obligation on Wood’s part. Wood’s part.

In Civil-Law terms, the object of his In Civil-Law terms, the object of his obligation was definable by good faith.obligation was definable by good faith.


This is a nearly-revolutionary case. It This is a nearly-revolutionary case. It allowed open-ended agreements and by allowed open-ended agreements and by implication justified output and implication justified output and requirements contracts, as well as requirements contracts, as well as contracts defining price in terms of the contracts defining price in terms of the market or in good faith-which took the market or in good faith-which took the French another 70 years to reach.French another 70 years to reach.


Questions (taken from Val. D. Ricks, the Questions (taken from Val. D. Ricks, the Story of Contract Law):Story of Contract Law):

What is the issue here?What is the issue here?


Questions (taken from Val. D. Ricks, the Story of Contract Law):Questions (taken from Val. D. Ricks, the Story of Contract Law):

What is the issue here?What is the issue here? Answer: (TK): Can a requirement of good Answer: (TK): Can a requirement of good

faith be read into a an exclusive agency faith be read into a an exclusive agency contract which does not delineate with contract which does not delineate with specificity the performance required? specificity the performance required? (Yes.)(Yes.)



2. Who do you suppose drafted this 2. Who do you suppose drafted this agreement? Why was it drafted the way it agreement? Why was it drafted the way it was?was?



2. Who do you suppose drafted this 2. Who do you suppose drafted this agreement? Why was it drafted the way it agreement? Why was it drafted the way it was?was?

Probably Wood. It did not specify a Probably Wood. It did not specify a minimum level of performance. It was minimum level of performance. It was probably written in the way it was probably written in the way it was because of uncertainty.because of uncertainty.



4. If the contract is taken as is, without 4. If the contract is taken as is, without any implied terms, what is Lucy's remedy any implied terms, what is Lucy's remedy if Wood does nothing to promote her if Wood does nothing to promote her designs?designs?



4. If the contract is taken as is, without 4. If the contract is taken as is, without any implied terms, what is Lucy's remedy any implied terms, what is Lucy's remedy if Wood does nothing to promote her if Wood does nothing to promote her designs?designs?

No remedy.No remedy.

Pilarek v. School of Trade Pilarek v. School of Trade RepresentativesRepresentatives

France: Civ. 19 December 1973France: Civ. 19 December 1973

Pilarek v. School of Trade Pilarek v. School of Trade Representatives (France 1973)Representatives (France 1973) Π Pilarek worked (during the Π Pilarek worked (during the

exam sessions only?) for the Δ exam sessions only?) for the Δ school school for payfor pay in each of the in each of the four previous years. In 1970 she four previous years. In 1970 she worked againworked again. .

Pilarek v. School of Trade Pilarek v. School of Trade Representatives (France 1973)Representatives (France 1973) Δ school did not pay her. Δ school did not pay her. The contract (apparently oral) The contract (apparently oral)

between the school and her did between the school and her did not specify the rate of pay for not specify the rate of pay for her. her.

Pilarek v. School of Trade Pilarek v. School of Trade Representatives (France 1973)Representatives (France 1973)

Δ claims she worked Δ claims she worked gratuitously and also that gratuitously and also that because of the fact that there because of the fact that there was a was a personal relationshippersonal relationship between her and the director between her and the director of the school a gratuitous of the school a gratuitous labor contract should be labor contract should be presumed. presumed.


The trial court appointed an expert who arrived The trial court appointed an expert who arrived at a figure of 750 Fr. at a figure of 750 Fr.

Δ argues also that the judgement does not Δ argues also that the judgement does not state how this was arrived at.state how this was arrived at.


Issue: Issue: Can a tariff and hours be found Can a tariff and hours be found

through testimony or implication? through testimony or implication? Does this satisfy the requirements of Does this satisfy the requirements of

a certain object?a certain object?


Issue: Issue: Can a tariff and hours be found Can a tariff and hours be found

through testimony or implication? through testimony or implication? Does this satisfy the requirements of Does this satisfy the requirements of

a certain object?a certain object?

YESYES


Restatement 2d § 33 CertaintyRestatement 2d § 33 Certainty (2) The terms of a contract are (2) The terms of a contract are

reasonably certain if they provide a basis reasonably certain if they provide a basis for determining the existence of a breach for determining the existence of a breach and for giving an appropriate remedy. and for giving an appropriate remedy.


LR CK 6.613.LR CK 6.613.2. Tais atvejais, kai 2. Tais atvejais, kai pirkimo–pardavimo sutartyje nei pirkimo–pardavimo sutartyje nei tiesiogiai, nei tiesiogiai, nei netiesiogiainetiesiogiai nenustatyta nenustatyta kaina ar nenurodyta tvarka jai kaina ar nenurodyta tvarka jai nustatyti ir šalys nėra susitarusios nustatyti ir šalys nėra susitarusios kitaip,kitaip,

Pilarek v. School of Trade Pilarek v. School of Trade Representatives (France 1973)Representatives (France 1973) LR CK LR CK 6,306.4. Pirkimo–6,306.4. Pirkimo–

pardavimo sutarties sąlyga dėl pardavimo sutarties sąlyga dėl sutarties dalyko laikoma sutarties dalyko laikoma suderinta, jeigu sutarties turinys suderinta, jeigu sutarties turinys leidžia nustatytileidžia nustatyti daikto (prekės) daikto (prekės) pavadinimą ir kiekį.pavadinimą ir kiekį.


LR CK 6.329.LR CK 6.329.2. 2. Jeigu iš pirkimo–pardavimo sutarties Jeigu iš pirkimo–pardavimo sutarties

turinio ir ją aiškinant turinio ir ją aiškinant neįmanoma nustatyti neįmanoma nustatyti perduotinų daiktų kiekio, laikoma, kad perduotinų daiktų kiekio, laikoma, kad sutartis nesudaryta.sutartis nesudaryta.

France: Madame D. v. Madame France: Madame D. v. Madame B.B.

France Civ., 1987 liepos 22France Civ., 1987 liepos 22


Ponia D isipareigojo moketi tam tikra Ponia D isipareigojo moketi tam tikra pinigu suma poniai B uz tarpininkavima pinigu suma poniai B uz tarpininkavima ivaikinant vaika. Ponia B iskele ieskini del ivaikinant vaika. Ponia B iskele ieskini del 5000 USD. Zemutines grandies teismas 5000 USD. Zemutines grandies teismas priteise 3000 USD.priteise 3000 USD.


Ponia D apeliavo sprendima: Sutartis Ponia D apeliavo sprendima: Sutartis negalioja todel, kad nera (teiseto) negalioja todel, kad nera (teiseto) objekto: yra neteiseta teikti ivaikinimo objekto: yra neteiseta teikti ivaikinimo paslaugas uz pelna.paslaugas uz pelna.


Taip. Sutarties dalis del pelno negalioja.Taip. Sutarties dalis del pelno negalioja.

Collinet v. BoudetCollinet v. Boudet

France: Com., 1980 m. sausio mėn. 14 France: Com., 1980 m. sausio mėn. 14 d..d..


Facts: Π Boudet, a beer distributor, Facts: Π Boudet, a beer distributor, entered into a long term supply contract entered into a long term supply contract with Δ Collinet, a bar owner. After four with Δ Collinet, a bar owner. After four years, in 1972, Π sues for nonpayment. years, in 1972, Π sues for nonpayment.


Δ affirmatively asserts lack of object for Δ affirmatively asserts lack of object for indefiniteness in that the contract indefiniteness in that the contract specified that the beer was to be supplied specified that the beer was to be supplied for the price which Boudet set in the city for the price which Boudet set in the city of Verdun, selling similar goods to clients of Verdun, selling similar goods to clients of similar size,” but the lower court found of similar size,” but the lower court found that because of competition, the Δ would that because of competition, the Δ would not be purchasing beer at a price higher not be purchasing beer at a price higher than the market pricethan the market price


Issue: Is the object definite when the Issue: Is the object definite when the price term is the "usual price" as it was in price term is the "usual price" as it was in this case?this case?

Holding: No.Holding: No. (French law has since (French law has since changed).changed).

LT, U.S., CISG, UNIDROIT: YES. A LT, U.S., CISG, UNIDROIT: YES. A reference to the market price is ok as it is reference to the market price is ok as it is to a seller’s catalog.to a seller’s catalog.

6.313 str6.313 str2. 2. ……KaiKai pirkimo–pardavimo pirkimo–pardavimo sutartyje nei tiesiogiai, nei netiesiogiai sutartyje nei tiesiogiai, nei netiesiogiai nenustatyta kaina ar nenurodyta nenustatyta kaina ar nenurodyta tvarka jai nustatyti ir šalys nėra tvarka jai nustatyti ir šalys nėra susitarusios kitaip, laikoma, kad šalys susitarusios kitaip, laikoma, kad šalys turėjo omenyje kainą, kuri sutarties turėjo omenyje kainą, kuri sutarties sudarymo metu buvo įprastai toje sudarymo metu buvo įprastai toje prekybos srityje mokama už tokius prekybos srityje mokama už tokius pat daiktus, parduodamus pat daiktus, parduodamus atitinkamomis aplinkybėmisatitinkamomis aplinkybėmis

Įmonė Clinique du Plateau prieš Įmonė Clinique du Plateau prieš sutuoktinius Monsus.sutuoktinius Monsus.

Prancūzija: Kasacinis teismas, 1984 Prancūzija: Kasacinis teismas, 1984

Įmonė CliniqueĮmonė Clinique

Klinika uKlinika už 300,000 Fr ž 300,000 Fr pardavpardavė savo ė savo pagrindinį kapitalą pirkėjams Monsams, pagrindinį kapitalą pirkėjams Monsams, kurie turėjo apmokėti 10 lygiomis kurie turėjo apmokėti 10 lygiomis įmokomis, kasmet birzelio menesi.įmokomis, kasmet birzelio menesi.


The price however was indexed to the The price however was indexed to the price of a day at the (birthing) clinic.price of a day at the (birthing) clinic.


In France an index can be used if it is In France an index can be used if it is connected with the activity of (at least) connected with the activity of (at least) one of the parties.one of the parties.


Aftterwards the Clinic no longer satisfied Aftterwards the Clinic no longer satisfied the criteria for a birthing clinic (gimdymo the criteria for a birthing clinic (gimdymo namų) and it therefore said that the namų) and it therefore said that the indexing clause is void.indexing clause is void.


Issue: Is the appropriateness of an index Issue: Is the appropriateness of an index to be judged at the time of formation?to be judged at the time of formation?

Įmonė CliniqueĮmonė Clinique Issue: Is the appropriateness of an index Issue: Is the appropriateness of an index

to be judged at the time of formation?to be judged at the time of formation? YES.YES.

Įmonė CliniqueĮmonė Clinique Note: This is Note: This is not not a case of the index a case of the index

no longer being available or no longer being available or disappearing.disappearing.

6. Kai kaina turi būti nustatyta 6. Kai kaina turi būti nustatyta remiantis kriterijais, kurių nėra ar remiantis kriterijais, kurių nėra ar kurie išnyko arba negali būti nustatyti, kurie išnyko arba negali būti nustatyti, kaina nustatoma remiantis kaina nustatoma remiantis artimiausios reikšmės kriterijais.[NOT]artimiausios reikšmės kriterijais.[NOT]

Lizingo bendrovių klientai Lizingo bendrovių klientai valiutų kurso pinklėsevaliutų kurso pinklėse

Verslo žinios 2002 11 26 d.Verslo žinios 2002 11 26 d. Linas Kmieliauskas, Gytis VincevičiusLinas Kmieliauskas, Gytis Vincevičius


Nacionalinė vartotojų teisių apsaugos Nacionalinė vartotojų teisių apsaugos taryba (NVTAT) šiemet gavo trijų taryba (NVTAT) šiemet gavo trijų vilniečių skundus dėl su “Snoro vilniečių skundus dėl su “Snoro lizingu” (SL) pernai pasirašytų lizingu” (SL) pernai pasirašytų standartinių išperkamosios nuomos standartinių išperkamosios nuomos sutarčių. sutarčių.


Tarybai buvo pareikšta, kad lizingo Tarybai buvo pareikšta, kad lizingo bendrovė nesilaiko išperkamosios bendrovė nesilaiko išperkamosios nuomos sutarties punkto dėl nuomos sutarties punkto dėl mokėjimų perkaičiavimo, pasikeitus mokėjimų perkaičiavimo, pasikeitus valiutų kursui.valiutų kursui.

Lizingo bendrovių klientaiLizingo bendrovių klientai

Pernai, dar iki susiejant litą su euru, Pernai, dar iki susiejant litą su euru, sudarytose sutartyse buvo įtvirtinta, sudarytose sutartyse buvo įtvirtinta, kad, pasikeitus lito ir USD kursui, kad, pasikeitus lito ir USD kursui, šalys susitaria perskaičiuoti šalys susitaria perskaičiuoti mokėjimus pagal nustatytą mokėjimo mokėjimus pagal nustatytą mokėjimo dieną galiojantį lito ir dolerio kursą dieną galiojantį lito ir dolerio kursą taip, kad mokėjimo atitikmuo doleriais taip, kad mokėjimo atitikmuo doleriais nepakistų. nepakistų.


USD kursui smukus – išloštų USD kursui smukus – išloštų vartotojas, pakilus – lizingo bendrovė.vartotojas, pakilus – lizingo bendrovė.


SL klientai tikina, kad įmonė SL klientai tikina, kad įmonė neatsižvelgė į nuo vasario pasikeitusį neatsižvelgė į nuo vasario pasikeitusį USD ir lito santykį bei neperskaičiavo USD ir lito santykį bei neperskaičiavo mokėjimųmokėjimų


What should an attorney advise his What should an attorney advise his client?client? (The customers were angry (The customers were angry because the leasing companies were because the leasing companies were delaying recalculating the amounts delaying recalculating the amounts payable.)payable.)


Well, if one is right, don’t pay.Well, if one is right, don’t pay.


But in this situation, probably the But in this situation, probably the banks are right. banks are right.

A ‘lizingas’ is like a loan, and it is not A ‘lizingas’ is like a loan, and it is not natural to assume that less should be natural to assume that less should be returned than was given. returned than was given.

Société Cofratel v. Société Société Cofratel v. Société BechtelBechtel

France, France, Cour de CassationCour de Cassation 1995 1995


France, France, Cour de CassationCour de Cassation 1995 1995 when a contract envisages the formation when a contract envisages the formation

of further contracts the fact that the price of further contracts the fact that the price contained in those further contracts is not contained in those further contracts is not fixed in the initial contract does not affect fixed in the initial contract does not affect the validity of the latterthe validity of the latter...... though any though any abuse in the fixing of the price may give abuse in the fixing of the price may give rise to rescission or damages rise to rescission or damages


Case stands for the principle that a Case stands for the principle that a framework contract can be valid even if it framework contract can be valid even if it does not state the price at which services does not state the price at which services will be rendered in subsequent contracts.will be rendered in subsequent contracts.

Exercises: ObjectExercises: Object Distributor distributes beer to retailers. Distributor distributes beer to retailers.

Distributor and Retailer enter into a Distributor and Retailer enter into a contract wherein Distributor engages to contract wherein Distributor engages to provide a specified amount of a certain provide a specified amount of a certain beer to Retailer each month, the price to beer to Retailer each month, the price to be that of the Distributor’s latest pricelist be that of the Distributor’s latest pricelist minus ten percentminus ten percent

Exercises: ObjectExercises: Object . At the time of the formation of the . At the time of the formation of the

contract, the price approximates that contract, the price approximates that prevailing in the market. Several months prevailing in the market. Several months go by. go by.

Exercises: ObjectExercises: Object Then the Distributor notifies Retailer of a Then the Distributor notifies Retailer of a

200 percent price increase, twice that of 200 percent price increase, twice that of the existing market price. Retailer notifies the existing market price. Retailer notifies Distributor that it will accept no deliveries Distributor that it will accept no deliveries at the new price. Retailer then enters into at the new price. Retailer then enters into contract with another distributor for a contract with another distributor for a similar product. Distributor sues Retailer similar product. Distributor sues Retailer for damages.for damages.

Exercises: ObjectExercises: Object Under the PECL (as well as the Under the PECL (as well as the

Lithuanian code), Retailer is not liable for Lithuanian code), Retailer is not liable for breach of contract. Distributor breached breach of contract. Distributor breached the contract by setting a grossly the contract by setting a grossly unreasonable price. This is a material unreasonable price. This is a material breach. Hence the Distributor cannot breach. Hence the Distributor cannot recover damages for refusal to purchase recover damages for refusal to purchase the product at the unreasonable price. the product at the unreasonable price.

Exercises: ObjectExercises: Object If the jurisdiction (such as Spain or If the jurisdiction (such as Spain or

France) has a rule that a contract in France) has a rule that a contract in which one party has the right to set a which one party has the right to set a price unilaterally does not satisfy the price unilaterally does not satisfy the requirement of certainty, then the requirement of certainty, then the contract is absolutely invalid.contract is absolutely invalid.

Exercises: ObjectExercises: Object 2. Buyer communicates to Seller that 2. Buyer communicates to Seller that

it wishes to purchase ten gallons of it wishes to purchase ten gallons of a certain type of paint. Seller tenders a certain type of paint. Seller tenders performance together with an performance together with an invoice at a reasonable price. Is invoice at a reasonable price. Is there a contract? At what price?there a contract? At what price?

Exercises: ObjectExercises: Object LR CK 6.313.2. Tais atvejais, kai LR CK 6.313.2. Tais atvejais, kai

pirkimo–pardavimo sutartyje nei pirkimo–pardavimo sutartyje nei tiesiogiai, nei netiesiogiai nenustatyta tiesiogiai, nei netiesiogiai nenustatyta kaina ...laikoma, kad šalys turėjo kaina ...laikoma, kad šalys turėjo omenyje ... protingumo kriterijus omenyje ... protingumo kriterijus atitinkanti kaina.atitinkanti kaina.

Exercises: ObjectExercises: Object 3. Buyer communicates to Seller that it 3. Buyer communicates to Seller that it

wishes to purchase ten gallons of a wishes to purchase ten gallons of a certain type of paint. certain type of paint.

Exercises: ObjectExercises: Object 3. Seller tenders performance together 3. Seller tenders performance together

with an invoice at a grossly unreasonablewith an invoice at a grossly unreasonable price. Is there a contract? At what price? price. Is there a contract? At what price?

Exercises: ObjectExercises: Object France:France: There would be no contract as there has There would be no contract as there has

been no meeting of the minds. This been no meeting of the minds. This means there has been a failure of the means there has been a failure of the object. object.

Exercises: ObjectExercises: Object PECL, LT, CISG, UCCPECL, LT, CISG, UCC The contract is for the market price or a The contract is for the market price or a

reasonable price.reasonable price. The seller has breached the contract.The seller has breached the contract.

Exercises: ObjectExercises: Object PECL, LT, CISG, UCCPECL, LT, CISG, UCC The contract is for the market price or a The contract is for the market price or a

reasonable price.reasonable price. The seller has breached the contract.The seller has breached the contract.

Exercises: ObjectExercises: Object [New] (Not in readings):[New] (Not in readings): A contract states the price shall be that of A contract states the price shall be that of

the seller’s latest catalog. Valid?the seller’s latest catalog. Valid?

Exercises: ObjectExercises: Object [New] (Not in readings):[New] (Not in readings): A contract states the price shall be that of A contract states the price shall be that of

the seller’s latest catalog. Valid?the seller’s latest catalog. Valid? Yes.Yes.

Exercises: ObjectExercises: Object [New] (Not in readings):[New] (Not in readings): A contract in Lithuania states the price A contract in Lithuania states the price

payable in Litai shall be indexed to the payable in Litai shall be indexed to the Mexican peso. Neither the contract nor Mexican peso. Neither the contract nor the parties have anything to do with the parties have anything to do with Mexico. Valid?Mexico. Valid?

Exercises: ObjectExercises: Object [New] (Not in readings):[New] (Not in readings): A sale contract in Lithuania states the A sale contract in Lithuania states the

price payable in Litai shall be indexed to price payable in Litai shall be indexed to the Mexican peso. Neither the contract the Mexican peso. Neither the contract nor the parties have anything to do with nor the parties have anything to do with Mexico. Valid?Mexico. Valid?

Yes, in Lithuania (no in France).Yes, in Lithuania (no in France).

Exercises: ObjectExercises: Object [New] (Not in readings):[New] (Not in readings): A person contracts to sell his eye to a A person contracts to sell his eye to a

buyer to be used to replace the buyer’s buyer to be used to replace the buyer’s damaged eye. The person repudiates. damaged eye. The person repudiates. The buyer sues for damages. The buyer sues for damages.

Exercises: ObjectExercises: Object [New] (Not in readings):[New] (Not in readings): The buyer sues for damages. The The buyer sues for damages. The

repudiating seller claims the contract is repudiating seller claims the contract is void? Is it?void? Is it?

Exercises: ObjectExercises: Object [New] (Not in readings):[New] (Not in readings): Yes. The thing in question is not Yes. The thing in question is not

something legitimately in commerce. something legitimately in commerce. Similar things: ancient artifacts, Similar things: ancient artifacts,

profesional’s clients, illegal drugs, profesional’s clients, illegal drugs, explosives, surrogate pregnancy.explosives, surrogate pregnancy.

Exercises: ObjectExercises: Object LR CK 6.306LR CK 6.306 1. Pirkimo–pardavimo sutarties dalyku1. Pirkimo–pardavimo sutarties dalyku**

gali būti gali būti neišimti iš apyvartosneišimti iš apyvartos daiktai ... .daiktai ... .

*(objektu)*(objektu)

Tadas Klimas

Class 7Class 7

Tadas Klimas

Croize v. Veaux Croize v. Veaux 19291929

Veaux, a medical doctor, obtained a Veaux, a medical doctor, obtained a licence to exploit a pharmaceutical licence to exploit a pharmaceutical product and medical treatment from product and medical treatment from Croize, who was not a medical Croize, who was not a medical doctor. doctor.

Croize v. VeauxCroize v. Veaux

Veaux undertook to advertise this drug or Veaux undertook to advertise this drug or treatment for no less than 6000 Fr. a treatment for no less than 6000 Fr. a month. Veaux had to earn 26,000 Fr. a month. Veaux had to earn 26,000 Fr. a month prior to seeing any profit. The goal month prior to seeing any profit. The goal was to have Veaux prescribe this cure, it was to have Veaux prescribe this cure, it apparently having no scientific value.apparently having no scientific value.


Issue: Must the cause or purpose of a Issue: Must the cause or purpose of a contract be prohibited by statute in order contract be prohibited by statute in order to render the contract invalid?to render the contract invalid?


Issue: Must the cause or purpose of a Issue: Must the cause or purpose of a contract be prohibited by statute in order contract be prohibited by statute in order to render the contract invalid?to render the contract invalid?

No.No.


Lithuania Lithuania Lt Cc § 181.1 provides that a ‘convention Lt Cc § 181.1 provides that a ‘convention

which is against public order or good which is against public order or good morals is null and invalid.’ morals is null and invalid.’

Villaceque v. Levray (France 1879)Villaceque v. Levray (France 1879)

Facts: Π Levray sued Δ Villaceque Facts: Π Levray sued Δ Villaceque for non-payment of 4,750 Fr. 80 c for for non-payment of 4,750 Fr. 80 c for three barrels of caramel colorant three barrels of caramel colorant which Levray had sold Villaceque. Δ which Levray had sold Villaceque. Δ raises as a defense the nullity of the raises as a defense the nullity of the contract. contract.


The colorant was to be used to color The colorant was to be used to color wine, and it contained arsenic, and wine, and it contained arsenic, and to use the colorant thus gives rise to to use the colorant thus gives rise to a harmful product.a harmful product.


Issue: Can the cause of a contract Issue: Can the cause of a contract be illicit when, although its object is be illicit when, although its object is licit, the contemplated use of the licit, the contemplated use of the object is against the public interest?object is against the public interest?


Issue: Can the cause of a contract Issue: Can the cause of a contract be illicit when, although its object is be illicit when, although its object is licit, the contemplated use of the licit, the contemplated use of the object is against the public interest?object is against the public interest?

YESYES


Lt Cc §1.81.3: Unilateral or bilateral Lt Cc §1.81.3: Unilateral or bilateral restitution is possible if its application restitution is possible if its application does not violate imperative legal norms or does not violate imperative legal norms or good morals, that is, when the purpose of good morals, that is, when the purpose of the contract, violative of public order or the contract, violative of public order or good morals, good morals, was not reachedwas not reached and the and the rules of public law do not provide for rules of public law do not provide for property sanctions against the parties of property sanctions against the parties of such an agreement.such an agreement.


Here the purpose was probably Here the purpose was probably reached, therefore no restitution.reached, therefore no restitution.

Conte v. Fould Conte v. Fould

France, Cour de Cassation 1899France, Cour de Cassation 1899

Conte v. Fould Conte v. Fould Facts: Π Conte is a bar-owner who Facts: Π Conte is a bar-owner who

dispensed drinks as agreed by an agent dispensed drinks as agreed by an agent of Δ Fould to potential voters for Δ Fould of Δ Fould to potential voters for Δ Fould who was running for parliament. Π is who was running for parliament. Π is suing Δ in order to obtain payment for the suing Δ in order to obtain payment for the drinks. drinks.

Conte v. Fould Conte v. Fould "[I]t appears from all the circumstances "[I]t appears from all the circumstances

and evidence in the case that the drinks and evidence in the case that the drinks in question were intended, in the minds in question were intended, in the minds of the parties, to obtain votes for Fould of the parties, to obtain votes for Fould from those who took part; that, therefore, from those who took part; that, therefore, the cause of the obligation which Conte the cause of the obligation which Conte wishes to enforce is illicit as contrary to wishes to enforce is illicit as contrary to statutes, public policy, good moralsstatutes, public policy, good morals

Conte v. Fould Conte v. Fould Issue: If the object of a contract is licit, Issue: If the object of a contract is licit,

can the cause be illicit? Was the cause can the cause be illicit? Was the cause of the contract licit, entertain guests, with of the contract licit, entertain guests, with only the only the motive motive being illicit?being illicit?

Conte v. Fould Conte v. Fould Issue: If the object of a contract is licit, Issue: If the object of a contract is licit,

can the cause be illicit? can the cause be illicit? YESYES

Conte v. Fould Conte v. Fould Q: Was the cause stated in the contract? Q: Was the cause stated in the contract?

That is, was it agreed to entertain the That is, was it agreed to entertain the people in order for them to vote for people in order for them to vote for Fould? Is an agreement necessary or Fould? Is an agreement necessary or mere knowledge? mere knowledge?

Conte v. Fould Conte v. Fould Q: Was the cause stated in the contract? Q: Was the cause stated in the contract?

That is, was it agreed to entertain the That is, was it agreed to entertain the people in order for them to vote for people in order for them to vote for Fould? Is an agreement necessary or Fould? Is an agreement necessary or mere knowledge? mere knowledge?

MERE KNOWLEDGEMERE KNOWLEDGE

Conte v. Fould Conte v. Fould Restitution?Restitution?

Conte v. Fould Conte v. Fould Restitution?Restitution? Under LT law, purpose was achieved, Under LT law, purpose was achieved,

therefore no restitution.therefore no restitution.

Demoiselle Monge v. Demoiselle Monge v. Veuve MinartVeuve Minart

France: Cour de cassation 1964 France: Cour de cassation 1964


Facts: Π Monge sues Δ Minart. Minart Facts: Π Monge sues Δ Minart. Minart invoked an affirmative defense of invoked an affirmative defense of absolute nullity. Π Monge appeals.absolute nullity. Π Monge appeals.


Monge worked in Minart's brothel as a Monge worked in Minart's brothel as a chamber-maid. Monge claims she did not chamber-maid. Monge claims she did not know of the fact that it was a brothel at know of the fact that it was a brothel at the time of the formation of contract. the time of the formation of contract. Monge is owed the balance of her salaryMonge is owed the balance of her salary—apparently she was paid only part of —apparently she was paid only part of what she was supposed to have been what she was supposed to have been paid.paid.


Issue: In order for a contract to be illicit, Issue: In order for a contract to be illicit, do both parties have to know of the do both parties have to know of the immoral purpose at the time of immoral purpose at the time of formation?formation?


Issue: In order for a contract to be illicit, Issue: In order for a contract to be illicit, do both parties have to know of the do both parties have to know of the immoral purpose at the time of immoral purpose at the time of formation?formation?

Holding: Yes.Holding: Yes.


3. Vienašalė ar dvišalė restitucija galima, 3. Vienašalė ar dvišalė restitucija galima, jeigu jos taikymas neprieštarauja jeigu jos taikymas neprieštarauja imperatyvioms įstatymų normoms ar imperatyvioms įstatymų normoms ar gerai moralei, t. y. gerai moralei, t. y. kai nebuvo pasiektaskai nebuvo pasiektas viešajai tvarkai ar geros moralės viešajai tvarkai ar geros moralės normoms prieštaraujančio sandorio normoms prieštaraujančio sandorio tikslastikslas……

Cohen-Scali v. RoubieuCohen-Scali v. Roubieu



Facts: Cohen-Scali = Π = Facts: Cohen-Scali = Π = landlord/lessor sued lessee Δ landlord/lessor sued lessee Δ Roubieu for nonpayment of rent, Roubieu for nonpayment of rent, and, apparently, for renouncing the and, apparently, for renouncing the lease ahead of the stated term. Δ lease ahead of the stated term. Δ raises as an affirmative defense the raises as an affirmative defense the nullity of the contract.nullity of the contract.


By the terms of the written lease Δ By the terms of the written lease Δ renounced the right to sue the Π for any renounced the right to sue the Π for any reason whatsoever.reason whatsoever.


Issue: Does sufficient cause exist in a Issue: Does sufficient cause exist in a bilateral contract in which one party has bilateral contract in which one party has no rights whatsoever?no rights whatsoever?


Issue: Does sufficient cause exist in a Issue: Does sufficient cause exist in a bilateral contract in which one party has bilateral contract in which one party has no rights whatsoever?no rights whatsoever?

Holding: No. As the court said, "such Holding: No. As the court said, "such a stipulation being in manifest a stipulation being in manifest contradiction with the essential rules contradiction with the essential rules of the contract of lease and even with of the contract of lease and even with the principle of contract altogether."the principle of contract altogether."


Best argument for Π: The Δ agreed not to Best argument for Π: The Δ agreed not to sue; the parties can limit liability. Δ has sue; the parties can limit liability. Δ has rights, he merely waived enforcing them.rights, he merely waived enforcing them.


Best argument for Δ: The Δ has no rights Best argument for Δ: The Δ has no rights under this purported agreement; it never under this purported agreement; it never really was formed, since there must be in really was formed, since there must be in a rental agreement an effective right to a rental agreement an effective right to enforce the agreement on the part of the enforce the agreement on the part of the tenant.tenant.

Class 8Class 8

Régie communale des Sources Régie communale des Sources Nessel v. SARL EurogadgetNessel v. SARL Eurogadget



Π Eurogadget sued Δ Régie communale Π Eurogadget sued Δ Régie communale des Sources Nessel for non-payment for des Sources Nessel for non-payment for (we surmise--promotional) bottle (we surmise--promotional) bottle openers. Π claimed that the total price is openers. Π claimed that the total price is 33,000 Fr (60,000 units at 550 per 33,000 Fr (60,000 units at 550 per thousand, or 550 x 60 = 33,000 Fr.). thousand, or 550 x 60 = 33,000 Fr.).


Δ claimed that the total price was Δ claimed that the total price was understood by it to be 55 per thousand, understood by it to be 55 per thousand, or 55 x 60 = 3300 Fr. Δ argued the or 55 x 60 = 3300 Fr. Δ argued the contract is invalid for mistake. The lower contract is invalid for mistake. The lower appellate court did not reply to the appellate court did not reply to the argument that as a matter of law one argument that as a matter of law one cannot make a mistake as to price.cannot make a mistake as to price.


Issue: Can price be a substantial quality Issue: Can price be a substantial quality regarding which a mistake resulting in regarding which a mistake resulting in invalidity can be made?invalidity can be made?


Issue: Can price be a substantial quality Issue: Can price be a substantial quality regarding which a mistake resulting in regarding which a mistake resulting in invalidity can be made?invalidity can be made?

YESYES


Note: The rule is, however, that a Note: The rule is, however, that a mistake as to mistake as to valuevalue will not be will not be recognized.recognized.

Berthon v. Vanden BorreBerthon v. Vanden Borre



Π Berthon = Lessor sues Lessee Δ Π Berthon = Lessor sues Lessee Δ Vanden-Borre regarding a repudiated Vanden-Borre regarding a repudiated rental agreement. Δ sought to rent a rental agreement. Δ sought to rent a villa on the Côte d'Azur for the month villa on the Côte d'Azur for the month of July for 6000 Fr excluding charges of July for 6000 Fr excluding charges (the 2007 equivalent of $1215 USD).(the 2007 equivalent of $1215 USD).


The "agency acting for Berthon had The "agency acting for Berthon had specified that it was a comfortably specified that it was a comfortably appointed villa, but its outside and inside appointed villa, but its outside and inside gave the unmistakable impression of a lack gave the unmistakable impression of a lack of maintenance; the bedding, the doors and of maintenance; the bedding, the doors and walls were in an obviously dirty state; the walls were in an obviously dirty state; the furniture was clearly insufficient and a large furniture was clearly insufficient and a large building site ... was in the immediate building site ... was in the immediate vicinity of the villa, such as to disturb the vicinity of the villa, such as to disturb the peace and isolation of the occupant." peace and isolation of the occupant."


The Court of Appeal found that the The Court of Appeal found that the high rent ‘albeit implicitly’ ‘gave rise high rent ‘albeit implicitly’ ‘gave rise to a presumption that it would be of a to a presumption that it would be of a related calibre.’related calibre.’


Issue: Can a mistake be made as to Issue: Can a mistake be made as to quality such as would invalidate a quality such as would invalidate a contract?contract?


Issue: Can a mistake be made as to Issue: Can a mistake be made as to quality such as would invalidate a quality such as would invalidate a contract?contract?

Holding: Holding: Yes. Yes.


Quality was a substantial quality of Quality was a substantial quality of the thing for the plaintiff.the thing for the plaintiff.

This was known to the lessor/plaintiff.This was known to the lessor/plaintiff.


Note that it is not necessary that the Note that it is not necessary that the other party know there is a mistake other party know there is a mistake being made; it must know that X is a being made; it must know that X is a substantial/essential quality.substantial/essential quality.

Choquel v. CamirelChoquel v. Camirel

France: Orleans (1931)France: Orleans (1931)


Δ Choquel put ad in paper. Π Camirel Δ Choquel put ad in paper. Π Camirel bought a chest for 7000 Fr (about 275 bought a chest for 7000 Fr (about 275 U.S. 1931 dollars). П had it examined by U.S. 1931 dollars). П had it examined by expert who found it was "only a poor expert who found it was "only a poor copy" and that the signature of the artist copy" and that the signature of the artist was a forgery. was a forgery.


Δ admitted knowing it was not an Δ admitted knowing it was not an antique; at first, however, he had antique; at first, however, he had maintained that he had thought it was an maintained that he had thought it was an antique. antique.


Π purchaser was a collector, but a Π purchaser was a collector, but a dilletante; the seller was an expert. Δ dilletante; the seller was an expert. Δ admitted the chest was worth perhaps admitted the chest was worth perhaps 700 Fr but contended he had the right to 700 Fr but contended he had the right to sell it at any price.sell it at any price.


Issue: Can evidence of the conduct of the Issue: Can evidence of the conduct of the other (non-mistaken) party be taken to other (non-mistaken) party be taken to show knowledge that the mistake was as show knowledge that the mistake was as to a substantial, determining, element?to a substantial, determining, element?


Issue: Can evidence of the conduct of the Issue: Can evidence of the conduct of the other (non-mistaken) party be taken to other (non-mistaken) party be taken to show knowledge that the mistake was as show knowledge that the mistake was as to a substantial, determining, element?to a substantial, determining, element?

YESYES


Assumption of risk?Assumption of risk? Inexcusable error?Inexcusable error?


Assumption of risk?Assumption of risk? Inexcusable error?Inexcusable error? No. Purchaser a diletantte/mNo. Purchaser a diletantte/mėgėjasėgėjas, ,

seller an expert.seller an expert.

Madam D v. Madam MMadam D v. Madam M



Π Madam D = a reseller, purchased Π Madam D = a reseller, purchased from Madam M 31 paintings for 55,000 from Madam M 31 paintings for 55,000 Fr. (about 11,200 in 1966 U.S. dollars). Fr. (about 11,200 in 1966 U.S. dollars). Δ did not pay for them. Δ did not pay for them.


Expert testimony established that Expert testimony established that some of them were forgeries. Π (the some of them were forgeries. Π (the buyer) initiated an action for mistake buyer) initiated an action for mistake (and fraud).(and fraud).


Issue: Can a mistake as to a non-Issue: Can a mistake as to a non-essential quality (aspect) be such as essential quality (aspect) be such as to vitiate consent?to vitiate consent?

Holding: No.Holding: No.


What is really going on here is that the What is really going on here is that the buyer bought paintings not on the buyer bought paintings not on the basis of their originality (which was basis of their originality (which was never stated by the seller)never stated by the seller)


But merely as industrial art, But merely as industrial art, decoration.decoration.


But merely as industrial art, But merely as industrial art, decoration.decoration.

Class 9Class 9

FraudFraud

Nugent v StanleyNugent v Stanley

336 So.2d 1058 (1976)336 So.2d 1058 (1976) Court of Appeal of Louisiana, Third Court of Appeal of Louisiana, Third

Circuit.Circuit.


Пs sue Δ for rescission of the sale of a Пs sue Δ for rescission of the sale of a business on the basis of fraud. business on the basis of fraud.


Plaintiffs testified that during these Plaintiffs testified that during these negotiations it was made entirely clear to negotiations it was made entirely clear to Stanley that they wished to purchase a Stanley that they wished to purchase a going established business with a good going established business with a good reputation, good will in the community, reputation, good will in the community, and an established line of credit with and an established line of credit with carpet mills and other suppliers. carpet mills and other suppliers.


П further testified that during these П further testified that during these negotiations they were assured by Δ that negotiations they were assured by Δ that upon consummation of the sales upon consummation of the sales transaction they would acquire in addition transaction they would acquire in addition to the physical propertyto the physical property


some $12,000.00 to $15,000.00 of firm some $12,000.00 to $15,000.00 of firm contracts for installation of carpet which contracts for installation of carpet which had been secured by him had been secured by him


Plaintiff also leased premises from Plaintiff also leased premises from ΔΔ with with an option to purchase after six months. an option to purchase after six months. ΔΔ reserved right upon non-payment of rent reserved right upon non-payment of rent to re-enter and take possession of the to re-enter and take possession of the premises.premises.


Plaintiff also leased premises from Plaintiff also leased premises from ΔΔ with with an option to purchase after six months. an option to purchase after six months. ΔΔ reserved right upon non-payment of rent reserved right upon non-payment of rent to re-enter and take possession of the to re-enter and take possession of the premises.premises.


Instead of the 12,000 USD in extant Instead of the 12,000 USD in extant contracts there were only two contracts, contracts there were only two contracts, neither for profit. neither for profit.


Also the business’s credit was very bad. Also the business’s credit was very bad. From some suppliers could not even get From some suppliers could not even get Cash on Delivery sales. Cash on Delivery sales.


ΠΠ departed the premises, claiming the departed the premises, claiming the contract was invalid for contract was invalid for fraud/misrepresentation. fraud/misrepresentation.


ΔΔ re-entered the premises and took over re-entered the premises and took over the business. the business.


The trial court held that a voluntary and The trial court held that a voluntary and mutual rescission had taken place when mutual rescission had taken place when the purchasers left the premises and the the purchasers left the premises and the seller took them back. seller took them back.


It also held that the court action initiated It also held that the court action initiated by plaintiff was in the nature of one for by plaintiff was in the nature of one for redhibition. redhibition.


Redhibition has to do with a defective Redhibition has to do with a defective product or thing. The price can be product or thing. The price can be lowered by the court. lowered by the court.


The appellate court said, however, that The appellate court said, however, that an action for a reduction of price due to an action for a reduction of price due to defect and a rescission are mutually defect and a rescission are mutually exclusive.exclusive.


Note Note ΔΔ admitted that admitted that ΔΔ assured assured ΠΠ that that ΔΔ had a well established business, with had a well established business, with good with and an established line of good with and an established line of credit, plus approximately $12,000.00 credit, plus approximately $12,000.00 worth of contracts for the installation of worth of contracts for the installation of carpetcarpet


but denied any inference that 'such but denied any inference that 'such casual statements and/or casual statements and/or representation(s) may have formed part representation(s) may have formed part of the contract of sale and assignment, of the contract of sale and assignment, the terms of which are best evidence the terms of which are best evidence of itselfof itself.' .'


Ct finds:Ct finds: Stanley incorrectly represented and in Stanley incorrectly represented and in

fact grossly exaggerated the value and fact grossly exaggerated the value and income of his going business. income of his going business.


It is settled that parol evidence is It is settled that parol evidence is admissable [sic] for the purpose of admissable [sic] for the purpose of establishing that an agreement is subject establishing that an agreement is subject to annulment because of lack of consent to annulment because of lack of consent due to misrepresentation and error. due to misrepresentation and error.


No mutual rescission: parties had rented No mutual rescission: parties had rented premises, and rental period had expired. premises, and rental period had expired. A separate contract. A separate contract.


ΠΠ are e are entitled to rescission of the sale of ntitled to rescission of the sale of December 4th are entitled to a return of December 4th are entitled to a return of the purchase price paid by them subject the purchase price paid by them subject to their return of the property to to their return of the property to ΔΔ together with whatever adjustments are together with whatever adjustments are necessary to compensate the necessary to compensate the ΔΔ for for ΠΠ’s’s use of the property during the period from use of the property during the period from December 4, 1972 to June 4, 1973. December 4, 1972 to June 4, 1973.

Dombrovskis v. Dombrovskis v. BaranauskasBaranauskas

Lietuvos AukLietuvos Aukščiausiasis teismasščiausiasis teismas 2005 m. spalio 26 d., Vilnius 2005 m. spalio 26 d., Vilnius


ΠΠ Baranauskas sued Baranauskas sued ΔΔ for non-return of for non-return of a 42,000 Lt loan, plus .5a 42,000 Lt loan, plus .5% daily interest = % daily interest = nearly 90,000 Lt, plus damages of nearly 90,000 Lt, plus damages of 12,000 Lt. 12,000 Lt.


Second paragraph of written loan Second paragraph of written loan agreement recites that the loan was agreement recites that the loan was made on 2001 10.made on 2001 10.


ΔΔ claims rescission for fraud or mistake. claims rescission for fraud or mistake.


ΔΔ claims it never received the loan. claims it never received the loan. That the agreement was blank and given That the agreement was blank and given

him in a car.him in a car.


That he understood the agreement to be That he understood the agreement to be one for the purchase of a shed/garage in one for the purchase of a shed/garage in relation to the creation of a new relation to the creation of a new corporation and business.corporation and business.


That he at the time was ill as a paranoid That he at the time was ill as a paranoid schizophrenic, that this was known to the schizophrenic, that this was known to the ΠΠ and that he was taken advantage of. and that he was taken advantage of.


Another man who participated in the Another man who participated in the negotiations testified that there never negotiations testified that there never was talk of a loan, only a purchase.was talk of a loan, only a purchase.


The date of the loan agreement and the The date of the loan agreement and the date of the purported turning over of the date of the purported turning over of the money do not coincide.money do not coincide.


The loan agreement calls for interest for The loan agreement calls for interest for late payment at the rate of 185% a year!late payment at the rate of 185% a year!


There was no security given for the There was no security given for the purported loan altho the two parties had purported loan altho the two parties had only known each other for a month.only known each other for a month.


The trial ct in essence rejected the The trial ct in essence rejected the consideration of any of the above claims consideration of any of the above claims and simply affirmed the agreement as and simply affirmed the agreement as written.written.


Issue: Is extrinsic testimony admissible to Issue: Is extrinsic testimony admissible to prove deceit when a party claims he was prove deceit when a party claims he was deceived as to the consequences of a deceived as to the consequences of a convention (when the party is clearly convention (when the party is clearly unable to fend for themselves)?unable to fend for themselves)?


Holding: Yes.Holding: Yes. The LT Supr. Ct. appears to say that the The LT Supr. Ct. appears to say that the

lower cts erred because they did not lower cts erred because they did not consider the facts offered by the consider the facts offered by the defendant in regard to the deceit or error.defendant in regard to the deceit or error.


LAT: ‘vertinant, ar buvo suklysta, reikia LAT: ‘vertinant, ar buvo suklysta, reikia atsižvelgti į sandorio šalies, teigiančios, atsižvelgti į sandorio šalies, teigiančios, kad ji suklydo … sveikatos būklę, kad ji suklydo … sveikatos būklę, sandorio sudarymo aplinkybes … .sandorio sudarymo aplinkybes … .

Duty to DiscloseDuty to Disclose ““Another exception is made in view of the Another exception is made in view of the

particular nature of a party or of a particular nature of a party or of a contract. Thus, the manifest frailty of a contract. Thus, the manifest frailty of a person of advanced age should put the person of advanced age should put the other party on notice that such a person other party on notice that such a person may not be able to exercise the diligence may not be able to exercise the diligence necessary to inform himself concerning necessary to inform himself concerning all the circumstances of the contract, all the circumstances of the contract,

Duty to DiscloseDuty to Disclose so, in such a case, the other party is so, in such a case, the other party is

under a duty to inform the elderly person under a duty to inform the elderly person on the nature and consequences of the on the nature and consequences of the instruments to be signed.”instruments to be signed.”

Saul LitvinoffSaul Litvinoff

Duty to DiscloseDuty to Disclose one who fails to give another information one who fails to give another information

that the other should have found by that the other should have found by himself commits no fraud since it can be himself commits no fraud since it can be said that any error made in such a said that any error made in such a situation results not so much from one situation results not so much from one party's reticence as from the other's lack party's reticence as from the other's lack of diligence in protecting his own interest. of diligence in protecting his own interest.


Duty to DiscloseDuty to Disclose It is different, however, when the It is different, however, when the

circumstances are such as to impose on circumstances are such as to impose on one party a duty to inform the other one party a duty to inform the other concerning certain facts, a duty that concerning certain facts, a duty that seems to appear whenever a party's seems to appear whenever a party's silence, or failure to inform or to disclose, silence, or failure to inform or to disclose, is a flagrant abuse of the other party's is a flagrant abuse of the other party's ignorance. ignorance.


First Acadiana Bank v. BollichFirst Acadiana Bank v. Bollich Louisiana: Court of Appeal, 3rd Circuit Louisiana: Court of Appeal, 3rd Circuit

(1988) (1988) La Cc § 1949-52; Fr Cc §§ 1109, 1110; La Cc § 1949-52; Fr Cc §§ 1109, 1110;

PECL § 4.103; Lt Cc § 190; PECL § 4.103; Lt Cc § 190; Restatement 2d § 161(c)Restatement 2d § 161(c)

First Acadiana Bank v. BollichFirst Acadiana Bank v. Bollich Facts: ∆ Bollich agreed to guarantee one Facts: ∆ Bollich agreed to guarantee one

loan to son for $ 20,000. No facts were loan to son for $ 20,000. No facts were presented that ∆ knew he was signing a presented that ∆ knew he was signing a continuing guarantee agreement—he did continuing guarantee agreement—he did not read it..not read it..

First Acadiana Bank v. BollichFirst Acadiana Bank v. Bollich Bank officer (Laverne) according to ∆‘s Bank officer (Laverne) according to ∆‘s

testimony knew he (∆) only was to sign testimony knew he (∆) only was to sign as guarantor for one loan. ∆‘s son repaid as guarantor for one loan. ∆‘s son repaid the $ 20,000 but owed more and the $ 20,000 but owed more and therefore the bank sued ∆ under the therefore the bank sued ∆ under the continuing guarantee agreement. continuing guarantee agreement.

First Acadiana Bank v. BollichFirst Acadiana Bank v. Bollich There was evidence that the bank‘s There was evidence that the bank‘s

actions were not credible: the agreement actions were not credible: the agreement was notarized long after the actual was notarized long after the actual signature was executed ...signature was executed ...

First Acadiana Bank v. BollichFirst Acadiana Bank v. Bollich Issue: Can a party avoid a contract by Issue: Can a party avoid a contract by

claiming mistake (claiming mistake (erreur obstacleerreur obstacle) in ) in contradiction of its written terms?contradiction of its written terms?

First Acadiana Bank v. BollichFirst Acadiana Bank v. Bollich Issue: Can a party avoid a contract by Issue: Can a party avoid a contract by

claiming mistake (claiming mistake (erreur obstacleerreur obstacle) in ) in contradiction of its written terms?contradiction of its written terms?

Holding: Holding: YESYES

““[I]if in the course of negotiations one [I]if in the course of negotiations one party states his impression of the party states his impression of the contractual object and asks from the contractual object and asks from the other, ‘Tell me if I am wrong,’other, ‘Tell me if I am wrong,’

the other's silence amounts to an the other's silence amounts to an assertion that the asking party is right, assertion that the asking party is right, and will constitute fraudulent reticence if and will constitute fraudulent reticence if the one who remains silent knows that the one who remains silent knows that the other's impression is false …”the other's impression is false …”


Lebret v. FleischerLebret v. Fleischer

France: Cour de cassation (1887)France: Cour de cassation (1887) Cass. req. 27 April 1887Cass. req. 27 April 1887.”.”

Lebret = Π; Fleischer = ∆. Lebret sued ∆ Lebret = Π; Fleischer = ∆. Lebret sued ∆ Fleischer for non-performance of a Fleischer for non-performance of a payment obligation. The parties had payment obligation. The parties had contracted that Lebret‘s ship would free contracted that Lebret‘s ship would free Fleischer‘s, which was stuck on sand. Fleischer‘s, which was stuck on sand. Fleischer was about to lose his ship and Fleischer was about to lose his ship and argued in vain for less rigorous terms. argued in vain for less rigorous terms.

He escaped total loss only by agreeing to He escaped total loss only by agreeing to pay 18,000 Fr (4.3 times more than the pay 18,000 Fr (4.3 times more than the lower court ordered ∆ to pay). lower court ordered ∆ to pay).

. .

Issue: Is consent vitiated for duress only Issue: Is consent vitiated for duress only when the threat emanates from the other when the threat emanates from the other party?party?

Holding: No. Holding: No. It is sufficient that the fear be It is sufficient that the fear be “caused by “caused by

a considerable and present evil to which a considerable and present evil to which the promisor’s person or wealth is the promisor’s person or wealth is exposed.”exposed.”

Vigneron v. GlaugetasVigneron v. Glaugetas

France: Cour de cassation (1919) France: Cour de cassation (1919) Casebook 168Casebook 168


Facts: Bed-ridden farmer Duvoisin Facts: Bed-ridden farmer Duvoisin (‘paralysed, weakened by illness, (‘paralysed, weakened by illness, bedridden, abandoned by members of bedridden, abandoned by members of his family’) yielded to the fear that his his family’) yielded to the fear that his share-cropping tenants would not share-cropping tenants would not continue to look after him and made a gift continue to look after him and made a gift or gifts or gifts inter vivosinter vivos to them. to them.


Lower court found duress and invalidated Lower court found duress and invalidated the contract of gift.the contract of gift.


Issue: Can it be duress simply when a Issue: Can it be duress simply when a party is at the mercy of the other?party is at the mercy of the other?

Holding: Yes.Holding: Yes.


Šlėvė v. RimkusŠlėvė v. Rimkus

LAT (Civ. byla Nr. 3K-3-16/2001 m.) LAT (Civ. byla Nr. 3K-3-16/2001 m.) (2001)(2001)


Ieškovas F.Šlėvė 1999 m. spalio 7 d. Ieškovas F.Šlėvė 1999 m. spalio 7 d. kreipėsi su ieškininiu pareiškimu į kreipėsi su ieškininiu pareiškimu į Radviliškio rajono apylinkės teismą, Radviliškio rajono apylinkės teismą, prašydamas pripažinti negaliojančiu 1999 prašydamas pripažinti negaliojančiu 1999 m. kovo 3 d. pirkimo-pardavimo sutartį, m. kovo 3 d. pirkimo-pardavimo sutartį, kuria jis pardavė atsakovui R.Rimkui kuria jis pardavė atsakovui R.Rimkui pastatus, esančius Kėdainių 103A, pastatus, esančius Kėdainių 103A, Šeduvoje. Šeduvoje.


Pastatai atsakovui parduoti už 71000 Lt, Pastatai atsakovui parduoti už 71000 Lt, nors jų inventorizacinė vertė yra apie nors jų inventorizacinė vertė yra apie 712826 Lt. Ieškovas teigia, kad pastatus 712826 Lt. Ieškovas teigia, kad pastatus jis buvo priverstas parduoti dėl jis buvo priverstas parduoti dėl susidėjusių sunkių aplinkybių, nes buvo susidėjusių sunkių aplinkybių, nes buvo skolingas bankui apie 80000 Lt. Be to, skolingas bankui apie 80000 Lt. Be to, pats atsakovas ruošiasi šiuos pastatus pats atsakovas ruošiasi šiuos pastatus parduoti.parduoti.


Radviliškio rajono apylinkės teismas Radviliškio rajono apylinkės teismas nustatė, kad ieškovas ginčo sandorį iš nustatė, kad ieškovas ginčo sandorį iš tiesų sudarė labai nenaudingomis sau tiesų sudarė labai nenaudingomis sau sąlygomis dėl sunkių susidėjusių sąlygomis dėl sunkių susidėjusių aplinkybių, todėl 2000 m. balandžio 5 d. aplinkybių, todėl 2000 m. balandžio 5 d. sprendimu ieškinį patenkino, sprendimu ieškinį patenkino, pripažindamas tarp šalių sudarytą sutartį pripažindamas tarp šalių sudarytą sutartį negaliojančia ir pritaikydamas visišką negaliojančia ir pritaikydamas visišką restituciją. restituciją.


Teismas taip pat pripažino negaliojančiu Teismas taip pat pripažino negaliojančiu Radviliškio rajono notarų biuro registro Radviliškio rajono notarų biuro registro įrašą Nr. 1350.įrašą Nr. 1350.


LAT: LAT: Tai, kad sandoris būtų pripažintas Tai, kad sandoris būtų pripažintas

negaliojančiu būtina nustatyti šiuos negaliojančiu būtina nustatyti šiuos požymius:požymius:

1) sandorio šalis (šiuo atveju pardavėjas) 1) sandorio šalis (šiuo atveju pardavėjas) neturi būtinų gyvenimui sąlygų (neturi neturi būtinų gyvenimui sąlygų (neturi būsto, pragyvenimo šaltinio, sunkiai būsto, pragyvenimo šaltinio, sunkiai serga jis ar šeimos nariai ir panašiai);serga jis ar šeimos nariai ir panašiai);


LAT: LAT: 2) kita sandorio šalis (pirkėjas) turi žinoti 2) kita sandorio šalis (pirkėjas) turi žinoti

šias sunkias aplinkybes;šias sunkias aplinkybes;


LAT: LAT: 3) kita sandorio šalis (pirkėjas) 3) kita sandorio šalis (pirkėjas)

pasinaudojo šiomis sunkiomis pasinaudojo šiomis sunkiomis aplinkybėmis;aplinkybėmis;

4) sandoris buvo sudarytas labai aiškiai 4) sandoris buvo sudarytas labai aiškiai nenaudingomis kitai šaliai (pardavėjui) nenaudingomis kitai šaliai (pardavėjui) sąlygomis (pvz., ypač maža kaina).sąlygomis (pvz., ypač maža kaina).

Šlėvė v. RimkusŠlėvė v. Rimkus LAT: LAT: Šioje teisės normoje įtvirtinta galimybė Šioje teisės normoje įtvirtinta galimybė

nuginčyti sandorį dėl to, kad jo sudarymą nuginčyti sandorį dėl to, kad jo sudarymą nulėmė sunkios susiklosčiusios nulėmė sunkios susiklosčiusios aplinkybės, verslo santykiuose gali būti aplinkybės, verslo santykiuose gali būti taikoma tik išimtinais atvejais, nes taikoma tik išimtinais atvejais, nes verslininkas prisiima su jo verslu susijusią verslininkas prisiima su jo verslu susijusią riziką ir privalo a priori suvokti, riziką ir privalo a priori suvokti,

Šlėvė v. RimkusŠlėvė v. Rimkus LAT: LAT: kad verslui nepasisekus jis patirs kad verslui nepasisekus jis patirs

neigiamų turtinių pasekmių, t.y. praras neigiamų turtinių pasekmių, t.y. praras investuotas lėšas, turės parduoti jam investuotas lėšas, turės parduoti jam priklausantį turtą ir panašiai.priklausantį turtą ir panašiai.

Standard Coffee Service Co. v Standard Coffee Service Co. v Raymond BabinRaymond Babin

Court of Appeal of Louisiana, Fifth CircuitCourt of Appeal of Louisiana, Fifth Circuit 472 So. 2d 124472 So. 2d 124; ; 1985 La. App. LEXIS 1985 La. App. LEXIS

89638963 (1985) (1985)


The employee, a sales representative, The employee, a sales representative, was asked to go to the employer's office, was asked to go to the employer's office, without knowing what the meeting was without knowing what the meeting was about. When he arrived, he was asked to about. When he arrived, he was asked to sign a new employment agreement that sign a new employment agreement that contained an arbitration clause and a contained an arbitration clause and a non-compete agreement. non-compete agreement.


The employee signed the contract under The employee signed the contract under alleged threats of termination. Two years alleged threats of termination. Two years later, the employee was terminated and later, the employee was terminated and the employee started a similar business the employee started a similar business on his own. The employer attempted to on his own. The employer attempted to institute arbitration proceedings regarding institute arbitration proceedings regarding the alleged breach of the agreement, and the alleged breach of the agreement, and the employee refused on the basis that the employee refused on the basis that the agreement was illegally obtained. the agreement was illegally obtained.


The employer filed a petition to compel The employer filed a petition to compel arbitration with the trial court, which arbitration with the trial court, which denied the rule to compel arbitration. The denied the rule to compel arbitration. The employer appealed, and the court employer appealed, and the court affirmed. affirmed.


The court held that the trial court properly The court held that the trial court properly found the employee was coerced into found the employee was coerced into signing the contract with threats of his signing the contract with threats of his termination, and therefore the contract termination, and therefore the contract was not valid. The court held that a was not valid. The court held that a reasonable person with the subjective reasonable person with the subjective characteristics of the employee would characteristics of the employee would have felt forced into signing the have felt forced into signing the employment contract.employment contract.

Richard v. BuerRichard v. Buer France: Cour de cassation (1970)France: Cour de cassation (1970)

Richard v. BuerRichard v. Buer Π-appellee is Buer, who hired horses to Π-appellee is Buer, who hired horses to

make a short trek to a lake for himself, make a short trek to a lake for himself, his son and a female friend. Buer’s his son and a female friend. Buer’s horse was frightened and spooked. horse was frightened and spooked.

Richard v. BuerRichard v. Buer The guide, Richard’s son, advised Buer The guide, Richard’s son, advised Buer

to kick off the stirrups and to jump off. to kick off the stirrups and to jump off. He did so and broke his leg. Buer sued He did so and broke his leg. Buer sued and won in the lower court, the court and won in the lower court, the court stating it was a contract of transport [and stating it was a contract of transport [and hence of result-hence of result-de resultatde resultat].].

Richard v. BuerRichard v. Buer Issue: Was the nature of the contract that Issue: Was the nature of the contract that

of transport?of transport?

Richard v. BuerRichard v. Buer Issue: Was the nature of the contract that Issue: Was the nature of the contract that

of transport?of transport? Answer: It was not. It was a sport, and Answer: It was not. It was a sport, and

thus the responsibility must be only of thus the responsibility must be only of best efforts. (No negligence was proven, best efforts. (No negligence was proven, apparently.) Therefore the court apparently.) Therefore the court reversed the judgement. reversed the judgement.

DEJEAN v. LOUISIANA DEJEAN v. LOUISIANA WESTERN R. CO.WESTERN R. CO.

167 La. 111 (1928)167 La. 111 (1928) Supreme Court of Louisiana.Supreme Court of Louisiana.


Facts: Π sued ∆ to recover value of 25 Facts: Π sued ∆ to recover value of 25 bales of cotton. ∆ claimed fire started not bales of cotton. ∆ claimed fire started not due to negligence on its part. Statute due to negligence on its part. Statute states: ‘Carriers ... liable ... unless prove states: ‘Carriers ... liable ... unless prove loss … occasioned by’ force majeure.loss … occasioned by’ force majeure.


Q: Is the obligation of the carrier one of Q: Is the obligation of the carrier one of best efforts, of guarantee, or of result?best efforts, of guarantee, or of result?


Q: Is the obligation of the carrier one of Q: Is the obligation of the carrier one of best efforts, of guarantee, or of result?best efforts, of guarantee, or of result?

A: Of result. Consult Lt Cc § 6.718.5: A: Of result. Consult Lt Cc § 6.718.5: party under such an obligation must party under such an obligation must prove force majeure (a mere proof of prove force majeure (a mere proof of diligence is not enough).diligence is not enough).


Q: If the obligation had been merely one Q: If the obligation had been merely one of diligence, who would have won and of diligence, who would have won and why?why?



The carrier.The carrier.



The carrier. The ∆ did not adduce any The carrier. The ∆ did not adduce any proof that the fire did indeed start via a proof that the fire did indeed start via a spark from a cotton gin which then spark from a cotton gin which then smouldered, undetected, for a long time, smouldered, undetected, for a long time, only to burst into flames during transport. only to burst into flames during transport. If it had, ∆ would have won.If it had, ∆ would have won.

Louis Dreyfus Corp. v. Louis Dreyfus Corp. v. Continental Grain Co.Continental Grain Co.

Louisiana: Court of Appeal, 4th Circuit Louisiana: Court of Appeal, 4th Circuit (1981) (1981)

Louis DreyfusLouis Dreyfus Facts: The contract called for Π to sell grain to Facts: The contract called for Π to sell grain to

∆ upriver at a set price and for ∆ to sell grain ∆ upriver at a set price and for ∆ to sell grain (not the same grain, but the same amount and (not the same grain, but the same amount and quality) downriver. The effect of the contract quality) downriver. The effect of the contract was such that a given amount of grain upriver was such that a given amount of grain upriver would be sold and the same amount would be would be sold and the same amount would be repurchased downriver, at a premium indicative repurchased downriver, at a premium indicative of the transport cost. The Mississippi river froze of the transport cost. The Mississippi river froze between St Louis and Cairo for 34 days; it was between St Louis and Cairo for 34 days; it was officially closed by the U.S. Coast Guard. officially closed by the U.S. Coast Guard.

Louis Dreyfus CorpLouis Dreyfus Corp Therefore the ∆ was actually unable to Therefore the ∆ was actually unable to

transport the grain—but there was grain transport the grain—but there was grain available for the ∆ to buy and to resell to available for the ∆ to buy and to resell to Π at the downriver location: except that in Π at the downriver location: except that in order to do this the ∆ would have order to do this the ∆ would have sustained a significant loss, because the sustained a significant loss, because the market price downriver was up. market price downriver was up.

Louis DreyfusLouis Dreyfus (Note that, ostensibly, the contract calls (Note that, ostensibly, the contract calls

for the ∆ to sell grain, not transport it.) for the ∆ to sell grain, not transport it.) Therefore ∆ invoked force majeure, Therefore ∆ invoked force majeure, arguing that the contract was a through-arguing that the contract was a through-put contract, essentially one of transport, put contract, essentially one of transport, and not of individual sale and purchase. and not of individual sale and purchase. The Π argued it was a contract of The Π argued it was a contract of purchase-sale. purchase-sale.

Louis Dreyfus Corp. Louis Dreyfus Corp. (Note that, ostensibly, the contract calls (Note that, ostensibly, the contract calls

for the ∆ to sell grain, not transport it.) for the ∆ to sell grain, not transport it.) Therefore ∆ invoked force majeure, Therefore ∆ invoked force majeure, arguing that the contract was a through-arguing that the contract was a through-put contract, essentially one of transport, put contract, essentially one of transport, and not of individual sale and purchase. and not of individual sale and purchase. The Π argued it was a contract of The Π argued it was a contract of purchase-sale. purchase-sale.

Demoiselle Monge v. Veuve Minart Demoiselle Monge v. Veuve Minart Monge worked in Minart's brothel as Monge worked in Minart's brothel as a chamber-maid. Monge claims she a chamber-maid. Monge claims she did not know of the fact that it was a did not know of the fact that it was a brothel at the time of the formation brothel at the time of the formation of contract. Monge is owed the of contract. Monge is owed the balance of her salary—apparently balance of her salary—apparently she was paid only part of what she she was paid only part of what she was supposed to have been paid.was supposed to have been paid.

Chapter 12Chapter 12

Right to Withhold PerformanceRight to Withhold Performance

Dubosc v. Soc des Eaux de Dubosc v. Soc des Eaux de Châtel-GuyonChâtel-Guyon


Cass. civ., 5 December 1934Cass. civ., 5 December 1934

DuboscDubosc

Facts: Π Dubosc sued ∆ for Facts: Π Dubosc sued ∆ for damages. Π had several times damages. Π had several times refused without good cause to refused without good cause to identify himself by showing his identify himself by showing his “bathing” membership card. “bathing” membership card.

DuboscDubosc

Facts: The ∆ had returned his Facts: The ∆ had returned his money, the return of which Π money, the return of which Π accepted, but ∆ had suspended accepted, but ∆ had suspended performance and had retained Π’s performance and had retained Π’s card. The trial court found that ∆ card. The trial court found that ∆ had the right to suspend had the right to suspend performance. Π appeals on the performance. Π appeals on the following ground:following ground:

DuboscDubosc

Does a party have the right to Does a party have the right to suspend performance if this is suspend performance if this is equivalent to a complete and total equivalent to a complete and total breach—when resolution breach—when resolution (termination) of the contract can (termination) of the contract can be ordered only by a court?be ordered only by a court?

DuboscDubosc

In this case the ∆ does not have In this case the ∆ does not have lesser means of putting pressure lesser means of putting pressure on the ∆. It is difficult to conceive on the ∆. It is difficult to conceive of how it could withhold a lesser of how it could withhold a lesser part of its performance.part of its performance.

DuboscDubosc

Another justification is that the Another justification is that the exceptioexceptio is founded on the idea of is founded on the idea of cause, and non-performance of one cause, and non-performance of one obligation justifies the non-obligation justifies the non-performance of the corresponding performance of the corresponding one, each obligation being the one, each obligation being the cause of the other. cause of the other.

DuboscDuboscThe third argument is one of The third argument is one of necessity: necessity: Official Comment to PECL § 9.201: Official Comment to PECL § 9.201: ‘In some cases the aggrieved party ‘In some cases the aggrieved party cannot practicably withhold part of cannot practicably withhold part of its performance - for instance, many its performance - for instance, many obligations to perform a service obligations to perform a service must realistically be performed in full must realistically be performed in full or suspended in full.’or suspended in full.’

DuboscDubosc

This link is to an account of a This link is to an account of a student being forcibly ejected from a student being forcibly ejected from a university library in California in university library in California in 2006 for not identifying himself and 2006 for not identifying himself and for refusing to leave: for refusing to leave: http://http://abclocalabclocal. go. com/ . go. com/ kabckabc/ story? section=/ story? section=local&idlocal&id= 4763689&ft== 4763689&ft=exLgexLg

SA Coronet France v. SARL Marseille SA Coronet France v. SARL Marseille MarineMarine

France: Cour de cassation (1973) France: Cour de cassation (1973)

Coronet-France signed an agreement Coronet-France signed an agreement granting Marseille Marine (MM) an granting Marseille Marine (MM) an exclusive right to sell its boats in a exclusive right to sell its boats in a specified area for three years in specified area for three years in exchange for a promise to sell at least exchange for a promise to sell at least nine boats a year and to pay a debt in nine boats a year and to pay a debt in instalments by way of bills of exchange. instalments by way of bills of exchange. MM did not sell any boats the first year MM did not sell any boats the first year and stopped paying the instalments. and stopped paying the instalments.

CF sent a letter to MM purporting to CF sent a letter to MM purporting to terminate the contract and to give the terminate the contract and to give the exclusive distributorship to another exclusive distributorship to another company. The contract apparently did company. The contract apparently did not allow for unilateral termination, even not allow for unilateral termination, even in the case of essential non-performance.in the case of essential non-performance.

Issue: If a distributor has stopped its Issue: If a distributor has stopped its performance because of the non-performance because of the non-performance of its exclusive agent, can it performance of its exclusive agent, can it grant another party an exclusive agency grant another party an exclusive agency in the same area?in the same area?

No. Under French law, that is.No. Under French law, that is. Yes under other systems.Yes under other systems. But that is qualified by the right to cure.But that is qualified by the right to cure.

Holding: No. This would be the same as Holding: No. This would be the same as a unilateral termination a unilateral termination (resolution/rescission), which the contract (resolution/rescission), which the contract did not allow for. The contract is still in did not allow for. The contract is still in force, and the creditor (the party making force, and the creditor (the party making use of the right to stop performance) use of the right to stop performance) must must remain ready to performremain ready to perform. .

Olsona Co. v. Spauda, Olsona Co. v. Spauda, Inc.Inc.

Lithuania: Supreme Court (1999) Lithuania: Supreme Court (1999)


Facts: On March 6, 1998 Olsona co. and Facts: On March 6, 1998 Olsona co. and Lithuanian National Radio and Television Lithuanian National Radio and Television entered into an agreement by which entered into an agreement by which LNRT undertook to publish an advertising LNRT undertook to publish an advertising supplement for Olsona. Olsona listed supplement for Olsona. Olsona listed eight telephone numbers to take orders eight telephone numbers to take orders for advertisements. for advertisements.


The numbers actually belonged to The numbers actually belonged to Spauda, Inc., but under a lease Spauda, Inc., but under a lease agreement between Spauda (∆) and agreement between Spauda (∆) and Olsona (Π), Olsona had the right to use Olsona (Π), Olsona had the right to use them. Olsona did not perform its them. Olsona did not perform its monetary obligation vis à vis the monetary obligation vis à vis the telephone lines, and therefore ∆ telephone lines, and therefore ∆ disconnected four of them. Π claims it disconnected four of them. Π claims it lost 90,000 Litas profit because of this.lost 90,000 Litas profit because of this.


Did the Δ have a right to suspend its Did the Δ have a right to suspend its performance? performance?


Did the Δ have a right to suspend its Did the Δ have a right to suspend its performance? performance?

The opinion relates that the trial court did The opinion relates that the trial court did find that the Δ had a right to disconnect find that the Δ had a right to disconnect the phones.the phones.


Perfect example of proportionality.Perfect example of proportionality.


Q: Assuming the damages had been Q: Assuming the damages had been proven, what is the best argument that proven, what is the best argument that the ∆ had a right to suspend its the ∆ had a right to suspend its performance?performance?


Q: Assuming the damages had been Q: Assuming the damages had been proven, what is the best argument that proven, what is the best argument that the ∆ had a right to suspend its the ∆ had a right to suspend its performance?performance?

A: In a bilateral contract, one party‘s A: In a bilateral contract, one party‘s obligation has as its obligation has as its objective objective cause the cause the performance of the other party. performance of the other party. Therefore non-performance excuses Therefore non-performance excuses non-performance. This right to suspend non-performance. This right to suspend was exercised proportionally. was exercised proportionally.

14 Specific Performance14 Specific Performance

Jalagier v. Société Jalagier v. Société Immobilière Le RabelaisImmobilière Le Rabelais


JalagierJalagier

This relatively recent and very short case This relatively recent and very short case illustrates the attitude of the Cour de illustrates the attitude of the Cour de cassation (the "supreme court") of cassation (the "supreme court") of France towards specific performance, or, France towards specific performance, or, as it is known in the Continental law, as it is known in the Continental law, performance in kind.performance in kind.

JalagierJalagier

As pointed out by Barry As pointed out by Barry Nicholas, the result is that the Nicholas, the result is that the creditor has a right to have what creditor has a right to have what was done destroyed; was done destroyed;

JalagierJalagier

there is no requirement that the creditor there is no requirement that the creditor prove damages, which indeed in this prove damages, which indeed in this instance he could not (having arguably instance he could not (having arguably received more than he had had a right to received more than he had had a right to receive).receive).

JalagierJalagier

Contractor built floors exceeding height Contractor built floors exceeding height limit limit

Was ordered to tear downWas ordered to tear down

JalagierJalagier

LT Louisiana PECL?LT Louisiana PECL? Nope.Nope.

JalagierJalagier

LT Louisiana PECL?LT Louisiana PECL? Nope.Nope. Unproportional.Unproportional. LR CK § 6.213.2.2. LR CK § 6.213.2.2.

JalagierJalagier

PECLPECL Applying § 9:102 (2)(b), the court would Applying § 9:102 (2)(b), the court would

deny the prayed-for relief because deny the prayed-for relief because "performance would cause the debtor "performance would cause the debtor unreasonable effort or expense."unreasonable effort or expense."

Chem de fer d’Orléans v. VidalChem de fer d’Orléans v. Vidal



Facts: Furniture being transported by rail Facts: Furniture being transported by rail was damaged. Lower court ordered their was damaged. Lower court ordered their repair by the railroad company.repair by the railroad company.


Issue: Can a court compel a party to do Issue: Can a court compel a party to do an act which it is not obliged to do under an act which it is not obliged to do under law or contract?law or contract?


The case stands for the proposition that if The case stands for the proposition that if specific performance is available that a specific performance is available that a party may be ordered to repair a faulty party may be ordered to repair a faulty performance. But the lower court in this performance. But the lower court in this case had ordered repair of damages, not case had ordered repair of damages, not of the performance. of the performance.

Weingarten v. Northgate MallWeingarten v. Northgate Mall

Supreme Court of LouisianaSupreme Court of Louisiana Louisiana: 404 So.2d 896 (1981)Louisiana: 404 So.2d 896 (1981)


Π=Tenant-Weingarten sued developer of Π=Tenant-Weingarten sued developer of shopping mall seeking permanent shopping mall seeking permanent injunction to tear down an addition to a injunction to tear down an addition to a mall. mall.


The lease provided that specific The lease provided that specific performance could be had without the performance could be had without the necessity of showing irreparable harm or necessity of showing irreparable harm or inadequacy of money damages. inadequacy of money damages.


The place where the addition was built had The place where the addition was built had been a parking lot and Π’s customers been a parking lot and Π’s customers now had fewer spaces; also some of the now had fewer spaces; also some of the lot had been restricted for future lot had been restricted for future expansion by Π. The trial court denied expansion by Π. The trial court denied the relief.the relief.


The Supreme Court held that:The Supreme Court held that:

courts are empowered to withhold specific courts are empowered to withhold specific performance in some exceptional cases performance in some exceptional cases even when specific performance is even when specific performance is possible, possible,


under circumstances of case, court would under circumstances of case, court would not specifically enforce lease by ordering not specifically enforce lease by ordering destruction of major part of $4,000,000 destruction of major part of $4,000,000 building which shopping center developer building which shopping center developer erected in an area reserved to its tenant erected in an area reserved to its tenant for customer parking.for customer parking.


we conclude that the legislative aim of the we conclude that the legislative aim of the redactors of the code was to institute the redactors of the code was to institute the right to specific performance as an right to specific performance as an obligee’s remedy for breach of contract obligee’s remedy for breach of contract except except when it is impossible,when it is impossible,


greatly disproportionate in cost to the greatly disproportionate in cost to the actual damage caused, actual damage caused,


no longer in the creditor’s interest, no longer in the creditor’s interest,

or of substantial negative effect upon the or of substantial negative effect upon the interests of third parties. interests of third parties.


Rule 1): Regarding certain types of Rule 1): Regarding certain types of obligations, such as the obligation to obligations, such as the obligation to deliver a thing, the court must grant deliver a thing, the court must grant specific performance, unless the specific specific performance, unless the specific performance is impracticable. performance is impracticable.


Rule 2): In regard to other obligations, Rule 2): In regard to other obligations, there seems no longer to be a right to there seems no longer to be a right to specific performance, but it is at the specific performance, but it is at the discretion of the court.discretion of the court.

Suchan v. RutherfordSuchan v. Rutherford

Supreme Court of IdahoSupreme Court of Idaho 410 P.2d 434 (1996)410 P.2d 434 (1996)


ΔΔ vendor counterclaims for specific vendor counterclaims for specific performance of what is essentially a performance of what is essentially a contract for the sale of a farm in which contract for the sale of a farm in which the purchase price is payable over the purchase price is payable over eighteen years.eighteen years.


Is specific performance available to the Is specific performance available to the vendor in a real estate contract when vendor in a real estate contract when the price is payable over 18 years?the price is payable over 18 years?



Under PECL answer would be no.Under PECL answer would be no.


PECL § 9:102: Non-monetary ObligationsPECL § 9:102: Non-monetary Obligations 1) The aggrieved party is entitled to 1) The aggrieved party is entitled to

specific performance of an obligation specific performance of an obligation other than one to pay moneyother than one to pay money, including , including the remedying of a defective the remedying of a defective performance. performance.



Usually in the USA cts have granted sp Usually in the USA cts have granted sp perf to the vendor as well as the perf to the vendor as well as the purchaser.purchaser.



LT: Much less clear. LT: Much less clear.


Lt Cc § 6.213. Demand for Execution of Lt Cc § 6.213. Demand for Execution of the Agreementthe Agreement

If a party does not perform a monetary If a party does not perform a monetary [payment] obligation, the other party [payment] obligation, the other party has the right to obtain specific has the right to obtain specific performance.performance.


LT: LT:

Not really disproportunate. Price is Not really disproportunate. Price is more or less market price.more or less market price.


LT: LT:

The best argument under Lithuanian law The best argument under Lithuanian law on the obligor's part would be that the on the obligor's part would be that the ordering of specific performance ordering of specific performance would greatly complicate the obligor's would greatly complicate the obligor's situation (Lt Cc § 6.213.3).situation (Lt Cc § 6.213.3).


LT: LT:

There is no codal provision in LT (there is There is no codal provision in LT (there is in Louisiana) regarding practicality of in Louisiana) regarding practicality of supervision by the court. supervision by the court.

Northern Indiana Pub. Ser. Co. v Northern Indiana Pub. Ser. Co. v Carbon County Coal Co.Carbon County Coal Co.

United States Court of Appeals, United States Court of Appeals, Seventh CircuitSeventh Circuit

799 F.2d 265799 F.2d 265 Decided Aug. 13, 1986Decided Aug. 13, 1986

NIPSCONIPSCO

In 1978 NIPSCO and Carbon County In 1978 NIPSCO and Carbon County signed a contract whereby Carbon signed a contract whereby Carbon County agreed to sell and NIPSCO to County agreed to sell and NIPSCO to buy approximately 1.5 million tons of buy approximately 1.5 million tons of coal every year for 20 years, at a price coal every year for 20 years, at a price of $24 a ton subject to various of $24 a ton subject to various provisions for escalation which by provisions for escalation which by 1985 had driven the price up to $44 a 1985 had driven the price up to $44 a ton.ton.

NIPSCONIPSCO

The contract was a fixed price contract, The contract was a fixed price contract, did not provide for change in price to did not provide for change in price to favor seller, and stated exact amount favor seller, and stated exact amount of coal to be provided.of coal to be provided.

NIPSCONIPSCO

Nipsco used the coal to generate Nipsco used the coal to generate electricity.electricity.

NIPSCONIPSCO

NIPSCO, as things turned out it was NIPSCO, as things turned out it was indeed able to buy electricity at prices indeed able to buy electricity at prices below the costs of generating below the costs of generating electricity from coal bought under the electricity from coal bought under the contract with Carbon County;contract with Carbon County;

NIPSCONIPSCO

NIPSCO repudiated the contract.NIPSCO repudiated the contract.

NIPSCONIPSCO

Carbon County (supplier-seller) moves Carbon County (supplier-seller) moves for specific performance.for specific performance.

NIPSCONIPSCO

Carbon County (supplier-seller) moves Carbon County (supplier-seller) moves for specific performance.for specific performance.

NIPSCONIPSCO

Carbon County’s mine shut down, as Carbon County’s mine shut down, as NIPSCO was the only customer.NIPSCO was the only customer.

NIPSCONIPSCO

although a $$ judgement (121 million) will although a $$ judgement (121 million) will make the owners of Carbon County make the owners of Carbon County whole it will do nothing for the miners whole it will do nothing for the miners who have lost their jobs because the who have lost their jobs because the mine is closed and the satellite mine is closed and the satellite businesses that have closed for the same businesses that have closed for the same reason. Only specific performance will reason. Only specific performance will help them help them

NIPSCONIPSCO

specific performance is available only if specific performance is available only if damages are not an adequate remedy damages are not an adequate remedy

(Anglo-American rule!)(Anglo-American rule!)

NIPSCONIPSCO

As to minersAs to miners

““But since they are not parties to the But since they are not parties to the contract their losses are irrelevant. “contract their losses are irrelevant. “

NIPSCONIPSCO

Indeed, specific performance Indeed, specific performance would be would be improperimproper as well as unnecessary here, as well as unnecessary here, because it would force the continuation of because it would force the continuation of production that has become production that has become uneconomical. No one wants coal from uneconomical. No one wants coal from Carbon County's mine. Carbon County's mine.

NIPSCONIPSCO

With the collapse of oil prices, which has With the collapse of oil prices, which has depressed the price of substitute fuels as depressed the price of substitute fuels as well, this coal costs far more to get out of well, this coal costs far more to get out of the ground than it is worth in the market.the ground than it is worth in the market.

NIPSCONIPSCO

With continued production uneconomical, it With continued production uneconomical, it is unlikely that an order of specific is unlikely that an order of specific performance, if made, would ever performance, if made, would ever actually be implemented. actually be implemented.

NIPSCONIPSCO

Carbon County is seeking specific Carbon County is seeking specific performance in order to have bargaining performance in order to have bargaining leverage with NIPSCO, leverage with NIPSCO,

NIPSCONIPSCO

Under PECL Or LT?Under PECL Or LT?

NIPSCONIPSCO

Under PECL Or LT?Under PECL Or LT?

Disproportional. (Same result.)Disproportional. (Same result.)

NIPSCONIPSCO

Why does Posner claim that forcing CCCC Why does Posner claim that forcing CCCC to take coal from the ground would to take coal from the ground would impose “costs on society greater than the impose “costs on society greater than the benefits”?benefits”?

NIPSCONIPSCO

Why does Posner claim that forcing CCCC Why does Posner claim that forcing CCCC to take coal from the ground would to take coal from the ground would impose “costs on society greater than the impose “costs on society greater than the benefits”?benefits”?

Wasteful and uneconomic. Far cheaper to Wasteful and uneconomic. Far cheaper to buy substitute.buy substitute.

NIPSCONIPSCO

Why in such a contract should specific Why in such a contract should specific performance not be ordered?performance not be ordered?

NIPSCONIPSCO


1. Adequacy of money damages (USA)1. Adequacy of money damages (USA)

NIPSCONIPSCO


1.1. Adequacy of money damages (USA)Adequacy of money damages (USA)2.2. Disproportunate cost to recalcitrant Disproportunate cost to recalcitrant

buyer (who could buy much much buyer (who could buy much much cheaper on the market)cheaper on the market)

NIPSCONIPSCO


Impracticality of supervision (coal mine Impracticality of supervision (coal mine closed) closed)

(but not a criteria in LT and PECL, is in (but not a criteria in LT and PECL, is in Louisiana and elsewhere)Louisiana and elsewhere)

NIPSCONIPSCO

5. How does Posner know that the parties 5. How does Posner know that the parties will settle out and not perform the will settle out and not perform the injunction?injunction?

NIPSCONIPSCO

5. How does Posner know that the parties 5. How does Posner know that the parties will settle out and not perform the will settle out and not perform the injunction?injunction?

The costs are prohibitive but most The costs are prohibitive but most importantly they can settle so that importantly they can settle so that everyone wins.everyone wins.

NIPSCONIPSCOThen Carbon County would be making a profit of Then Carbon County would be making a profit of

only $20 on each ton it sold to NIPSCO ($40-only $20 on each ton it sold to NIPSCO ($40-$20), while NIPSCO would be losing $30 on $20), while NIPSCO would be losing $30 on each ton it bought from Carbon County ($40- each ton it bought from Carbon County ($40- $10). Hence by offering Carbon County more $10). Hence by offering Carbon County more than contract damages (i.e., more than than contract damages (i.e., more than Carbon County's lost profits), NIPSCO could Carbon County's lost profits), NIPSCO could induce Carbon County to discharge the induce Carbon County to discharge the contract and release NIPSCO to buy cheaper contract and release NIPSCO to buy cheaper coal. For example, at $25, both parties would coal. For example, at $25, both parties would be better off than under specific performance be better off than under specific performance

NIPSCONIPSCO

6. Why does Posner say that NIPSCO 6. Why does Posner say that NIPSCO must pay damages? Why is there must pay damages? Why is there normally a damages right?normally a damages right?

NIPSCONIPSCO

6. Why does Posner say that NIPSCO 6. Why does Posner say that NIPSCO must pay damages? Why is there must pay damages? Why is there normally a damages right?normally a damages right?

The risk of the change in market prices The risk of the change in market prices was assumed by NIPSCO.was assumed by NIPSCO.

There is normally a damages right as a There is normally a damages right as a basic principle of contract law. No basic principle of contract law. No defenses are here available.defenses are here available.

NIPSCONIPSCO

There is normally a damages right as a There is normally a damages right as a basic principle of contract law. No basic principle of contract law. No defenses are here available.defenses are here available.

Madison Square Garden Boxing Madison Square Garden Boxing Inc. v. Earnie ShaversInc. v. Earnie Shavers

UNITED STATES DISTRICT COURT UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FOR THE SOUTHERN DISTRICT OF NEW YORKNEW YORK

434 F. Supp. 449434 F. Supp. 449

1977 1977

Madison Square Garden Boxing Madison Square Garden Boxing Inc. v. Earnie ShaversInc. v. Earnie Shavers

Mad.Sq.Gdn v. Earnie ShaversMad.Sq.Gdn v. Earnie Shavers

Known as the "The Acorn" and "Black Known as the "The Acorn" and "Black Destroyer", Shavers compiled one of Destroyer", Shavers compiled one of the most amazing records in boxing the most amazing records in boxing history. history.


At one point he won almost thirty fights At one point he won almost thirty fights in a row by knockout. He scored over in a row by knockout. He scored over 20 victories in the first round alone, 20 victories in the first round alone, including that over including that over Ken NortonKen Norton. .


Shavers fought Shavers fought Muhammad AliMuhammad Ali at the at the Madison Square GardenMadison Square Garden on on September 29September 29, , 19771977 and, while almost and, while almost flooring Ali with a right in the second flooring Ali with a right in the second round, he lost a close decision. Ali later round, he lost a close decision. Ali later said Shavers was the hardest puncher said Shavers was the hardest puncher he ever faced.he ever faced.


ΠΠ Madison Sq Gdn seeks specific Madison Sq Gdn seeks specific enforcement to enjoin enforcement to enjoin ΔΔ Shavers, a Shavers, a heavyweight contender, from heavyweight contender, from participating in any boxing match until participating in any boxing match until he fulfills his contractual obligations to he fulfills his contractual obligations to plaintiff.plaintiff.


Shavers wants to fight for someone else Shavers wants to fight for someone else and has received and has received a 30,000 USD a 30,000 USD advance for it.advance for it.


This is a personal services contract.This is a personal services contract.


LT Cc 6.213 (vykdymas natLT Cc 6.213 (vykdymas natūroje galimas ūroje galimas nebent)nebent)

5) neįvykdyta prievolė yra išimtinai 5) neįvykdyta prievolė yra išimtinai asmeninio pobūdžio.asmeninio pobūdžio.


PECLPECL Article 9:102 Article 9:102 (2) Specific performance (2) Specific performance

cannot, however, be obtained where:cannot, however, be obtained where: (c) the performance consists in the (c) the performance consists in the

provision of services or work of a provision of services or work of a personal character or depends upon a personal character or depends upon a personal relationshippersonal relationship


ButButThis is of an obligation This is of an obligation not to do.not to do.


Louisiana Civil CodeLouisiana Civil Code Specific PerformanceSpecific Performance §1986. Right of the obligee §1986. Right of the obligee Upon an obligor's failure … not to do an Upon an obligor's failure … not to do an

act …the court shall grant specific act …the court shall grant specific performance.performance.


Ct foundCt found Shavers to be without question Earnie Shavers to be without question Earnie

Shavers' talents are "unusual, unique Shavers' talents are "unusual, unique [and] extraordinary" [and] extraordinary"


Ct foundCt foundAnd that the contract is not unconscionableAnd that the contract is not unconscionable


Ct foundCt found the Garden would be to a measurable the Garden would be to a measurable

extent, irreparably injured as a viable extent, irreparably injured as a viable promoter of major boxing matches were promoter of major boxing matches were Shavers with impunity able to simply Shavers with impunity able to simply disavow a prior agreement with the disavow a prior agreement with the Garden to take advantage of a later-Garden to take advantage of a later-made more attractive offer. made more attractive offer.


French French Law of ContractLaw of Contract Where ... the Where ... the Comedie FrancaisComedie Francais sought sought

to enforce against one of its actors his to enforce against one of its actors his contractual undertaking not to appear contractual undertaking not to appear with another company, an with another company, an astreinteastreinte was was imposed.imposed.


1. Why1. Why not not order an injunction?order an injunction?


1. Why1. Why not not order an injunction?order an injunction? Best arg: personal services. Best arg: personal services.


2. What kinds of damages will Top 2. What kinds of damages will Top Rank seek from Shavers? Will Top Rank seek from Shavers? Will Top Rank succeed? Why is a negative Rank succeed? Why is a negative injunction necessary?injunction necessary?


2. What kinds of damages will Top 2. What kinds of damages will Top Rank seek from Shavers? Rank seek from Shavers?

Expectation damages (lost profits)Expectation damages (lost profits) Will Top Rank succeed? Will Top Rank succeed? Probably.Probably.


Why is a negative injunction Why is a negative injunction necessary?necessary?

Damages … Damages … would Shavers have the would Shavers have the money?money?


Why is a negative injunction Why is a negative injunction necessary?necessary?

Also-damage to Madison Sq Garden’s Also-damage to Madison Sq Garden’s reputation and ability to arrange such reputation and ability to arrange such events.events.


3. What other jobs are enough like 3. What other jobs are enough like Shavers’ that an employer could get a Shavers’ that an employer could get a negative injunction to prevent harm negative injunction to prevent harm from a breach?from a breach?


LR CK § 6.213LR CK § 6.213 (galima nebent) (galima nebent) 3) turinti teisę gauti įvykdymą sutarties 3) turinti teisę gauti įvykdymą sutarties

šalis gali protingai gauti įvykdymą iš kito šalis gali protingai gauti įvykdymą iš kito šaltinio;šaltinio;

End Chapter on Sp PerfEnd Chapter on Sp Perf

Class 15Class 15

DamagesDamages

Hadley v. BaxendaleHadley v. Baxendale England: Court of Exchequer (1854)England: Court of Exchequer (1854)

Hadley v. BaxendaleHadley v. Baxendale Δ undertook to transport a Δ undertook to transport a

crankshaft to another town to be crankshaft to another town to be repaired, and then to return the repaired, and then to return the crankshaft.crankshaft. [1][1] Hunter, Hunter, Modern Law of ContractsModern Law of Contracts § § 14:1014:10 [[suprasupra n. 88]. n. 88].

Hadley v. BaxendaleHadley v. Baxendale There was evidence to indicate There was evidence to indicate

that the Π millers (Hadley) had that the Π millers (Hadley) had informed ∆ that the matter was informed ∆ that the matter was urgent, and that the ∆ stated “they urgent, and that the ∆ stated “they could quickly deliver the broken could quickly deliver the broken crankshaft to and from the town in crankshaft to and from the town in which the repair shop was located. which the repair shop was located.

Hadley v. BaxendaleHadley v. Baxendale

The defendants did not The defendants did not deliver as rapidly as they deliver as rapidly as they promised; consequently, promised; consequently, there was a substantial delay there was a substantial delay in getting the shaft repaired in getting the shaft repaired and back to the mill.and back to the mill.


The plaintiffs did not have a The plaintiffs did not have a spare shaft, and the mill was spare shaft, and the mill was shut down the entire time that shut down the entire time that the shaft was in transit and in the shaft was in transit and in the shop. the shop.

Hadley v. BaxendaleHadley v. Baxendale Because the defendants did not Because the defendants did not

live up to their promises of live up to their promises of speedy delivery, the plaintiffs speedy delivery, the plaintiffs sought to recover from them the sought to recover from them the profits they lost for the time that profits they lost for the time that the mill was closed.”the mill was closed.”


Π did not inform Δ that the Π did not inform Δ that the crankshaft was the only one crankshaft was the only one they had and that therefore they had and that therefore the mill was inoperable until it the mill was inoperable until it was repaired and returned.was repaired and returned.


Π did not inform Δ that the Π did not inform Δ that the crankshaft was the only one crankshaft was the only one they had and that therefore they had and that therefore the mill was inoperable until it the mill was inoperable until it was repaired and returned.was repaired and returned.


Is a party liable for damage it Is a party liable for damage it caused but did not foresee?caused but did not foresee?

Hadley v. BaxendaleHadley v. Baxendale General damagesGeneral damages. A party is . A party is

entitled to recover damages entitled to recover damages which flow naturally from a which flow naturally from a breach.breach.


Special damages.Special damages. A party is A party is entitled to recover damages entitled to recover damages which otherwise were in the which otherwise were in the contemplation of the parties at contemplation of the parties at the time of the formation of the the time of the formation of the contract.contract.

Hadley v. BaxendaleHadley v. BaxendaleBest arg. for Π: ∆’s non-performance (delay Best arg. for Π: ∆’s non-performance (delay

in performance) did indeed cause the in performance) did indeed cause the damages complained-of and therefore damages complained-of and therefore ∆ should be liable for them.∆ should be liable for them.


Best arg. for Π: ∆’s non-Best arg. for Π: ∆’s non-performance (delay in performance (delay in performance) did indeed cause performance) did indeed cause the damages complained-of and the damages complained-of and therefore ∆ should be liable for therefore ∆ should be liable for them.them.


Q: Must a party Q: Must a party expressly agreeexpressly agree to to special damages in order to be special damages in order to be liable for them? What if a party at liable for them? What if a party at formation formation merely has knowledgemerely has knowledge that the other party would suffer that the other party would suffer lost profits in the event of a lost profits in the event of a breach?breach?


Larroumet: Droit CivilLarroumet: Droit Civil““If an obligor knows at formation If an obligor knows at formation that if it fails to perform that the that if it fails to perform that the other party will be liable under a other party will be liable under a second contract with a third party second contract with a third party to that third party, to that third party,


Larroumet: Larroumet: Droit CivilDroit Civilthen the obligor, if it fails to then the obligor, if it fails to perform, will be liable for the perform, will be liable for the second party’s losses for second party’s losses for failure to perform under the failure to perform under the second contract.” second contract.”

Rockingham County v. Rockingham County v. Luten Bridge Co.Luten Bridge Co.

(The Bridge To Nowhere Case) (The Bridge To Nowhere Case) 35 F.2d 301.35 F.2d 301.United States Court of Appeals, Fourth United States Court of Appeals, Fourth Circuit, 1929. Circuit, 1929.

Rockingham County v. Rockingham County v. Luten Bridge Co.Luten Bridge Co.

ΠΠ Luten Bridge undertook to Luten Bridge undertook to construct a bridge for appellant-construct a bridge for appellant-defendant Rockingham County.defendant Rockingham County.

Rockingham Cty v. Luten Brdge Co.Rockingham Cty v. Luten Brdge Co.

ΠΠ Luten Bridge undertook to Luten Bridge undertook to construct a bridge for appellant-construct a bridge for appellant-defendant Rockingham County.defendant Rockingham County.


Rockingham County repudiated Rockingham County repudiated the contract.the contract.


At the time of the repudiation, At the time of the repudiation, ΠΠ had spent ~ 1900 USD.had spent ~ 1900 USD.

(The county cancelled the road (The county cancelled the road construction as well.)construction as well.)


ΠΠ Luten Bridge did not cease Luten Bridge did not cease work. It constructed the bridge work. It constructed the bridge (now leading to nowhere) and (now leading to nowhere) and sued for nearly 19,000 USD.sued for nearly 19,000 USD.


Ct: “Ct: “His remedy is to treat the contract as His remedy is to treat the contract as broken when he receives the notice, and broken when he receives the notice, and sue for the recovery of such damages, as sue for the recovery of such damages, as he may have sustained from the breach, he may have sustained from the breach, including any profit which he would have including any profit which he would have realized upon performance, as well as any realized upon performance, as well as any other losses which may have resulted to other losses which may have resulted to him “him “


No right to pile up damages.No right to pile up damages.


This is sometimes called the ‘duty’ This is sometimes called the ‘duty’ to mitigate.to mitigate.


Not really a duty since duties are Not really a duty since duties are owed to the other party.owed to the other party.

Binka v. BartusevičiusBinka v. BartusevičiusLietuvos Aukšč. TeismasLietuvos Aukšč. TeismasCivilinė byla Nr. 3K-3-344, 1999 m. Civilinė byla Nr. 3K-3-344, 1999 m.

Binka v. BartusevičiusBinka v. Bartusevičius

Ieškovas R.Bartusevičius kreipėsi į teismą Ieškovas R.Bartusevičius kreipėsi į teismą ir nurodė, kad, susitaręs su atsakovu ir nurodė, kad, susitaręs su atsakovu A.Binka, 1998 m. gegužės 18 d. perdavė A.Binka, 1998 m. gegužės 18 d. perdavė pastarajam suremontuoti pastarajam suremontuoti automobilį ,,AUDI-200", pagamintą 1988 m. automobilį ,,AUDI-200", pagamintą 1988 m.


Tačiau, kaip teigė ieškovas, A.Binka Tačiau, kaip teigė ieškovas, A.Binka automobilio nesuremontavo, pats juo automobilio nesuremontavo, pats juo naudojosi, o 1998 m. gegužės 23 d. paliko naudojosi, o 1998 m. gegužės 23 d. paliko stovėjimo aikštelėje prie savo namų, iš stovėjimo aikštelėje prie savo namų, iš kur automobilis buvo kur automobilis buvo pagrobtas.pagrobtas.


IIeškovas prašė priteisti iš atsakovo eškovas prašė priteisti iš atsakovo septyniolika tūkstancių (septyniolika tūkstancių (1700017000)) Lt Lt nuostoliams dėl automobilio praradimo nuostoliams dėl automobilio praradimo atlyginti. atlyginti. Žemesnės grandies teismas Žemesnės grandies teismas patenkino.patenkino.


Atlygintinų nuostolių dydis nustatytas Atlygintinų nuostolių dydis nustatytas

pagal specialistų pateiktą pagal specialistų pateiktą realią realią automobilio vertęautomobilio vertę jo vagystės metu jo vagystės metu


Atlygintinų nuostolių dydis nustatytas Atlygintinų nuostolių dydis nustatytas

pagal specialistų pateiktą pagal specialistų pateiktą realią realią automobilio vertęautomobilio vertę jo vagystės metu jo vagystės metu


Binka (Binka (ΔΔ kasatorius (‘apeliantas’)) kasatorius (‘apeliantas’)) teigia, kad todėl, kad mokėtini teigia, kad todėl, kad mokėtini nuostoliai ribotini automobilio nuostoliai ribotini automobilio įsigijimo faktinę kainą: įsigijimo faktinę kainą: 9295 Lt 9295 Lt (~ (~ 8000 Lt mažiau nei buvo priteista).8000 Lt mažiau nei buvo priteista).


Teismas: Teismas: ““turto pirkimo turto pirkimo kaina neparodo tikrosios kaina neparodo tikrosios turto vertės turto vertės ““


Teismas: Teismas: ““turto pirkimo turto pirkimo kaina neparodo tikrosios kaina neparodo tikrosios turto vertės turto vertės ““


damnum emergensdamnum emergens

arar

lucrum cessanslucrum cessans


damnum emergensdamnum emergens

But why not lost profits?But why not lost profits?

Chem. de fer du Midi v. Chem. de fer du Midi v. BosquetBosquet



France: Cour de cassation (1913)France: Cour de cassation (1913)Fr Cc § 1150; Fr Cc § 1150; PECL § 9:503; PECL § 9:503; Lt Cc § 6.258.4; Lt Cc § 6.258.4; Restatement 2d § 351Restatement 2d § 351


Facts: Facts:

Π Bosquet’s train was late. He Π Bosquet’s train was late. He missed an appointment to clinch a missed an appointment to clinch a deal. The lower court awarded him deal. The lower court awarded him 200 Fr. The railroad had offered 200 Fr. The railroad had offered 15 Fr.15 Fr.

Chem. de fer du Midi v. Chem. de fer du Midi v. BosquetBosquetIs the railroad liable for all Is the railroad liable for all of the Π’s damages, of the Π’s damages, irrespective of whether they irrespective of whether they were foreseeable?were foreseeable?

Chem. de fer du Midi v. Chem. de fer du Midi v. BosquetBosquetHolding: No. Under Fr. Cc Holding: No. Under Fr. Cc 1150, an obligee is liable for 1150, an obligee is liable for only foreseeable damages. only foreseeable damages. It could not have foreseen It could not have foreseen Π’s damages.Π’s damages.

Chem. de fer du Midi v. Chem. de fer du Midi v. BosquetBosquetDid Bosquet seek to Did Bosquet seek to recover general or special recover general or special damages, using Anglo-damages, using Anglo-American terminology? American terminology?

Chem. de fer du Midi v. Chem. de fer du Midi v. BosquetBosquetBest arg. for Bosquet: The Best arg. for Bosquet: The damages were in fact caused by damages were in fact caused by the railroad. Additionally, they the railroad. Additionally, they should know that from time to time should know that from time to time a passenger who is delayed by a passenger who is delayed by their late performance will sustain their late performance will sustain such damages as are being such damages as are being claimed.claimed.

Chem. de fer du Midi v. Chem. de fer du Midi v. BosquetBosquetBest arg. for railroad: It Best arg. for railroad: It neither knew nor should neither knew nor should have known that Bosquet if have known that Bosquet if late would sustain such late would sustain such damage. damage.

Chem. de Fer P.-L.-M. v. BartheChem. de Fer P.-L.-M. v. Barthe

France: Cour de cassation (1930) France: Cour de cassation (1930) Fr Cc § 1150; Fr Cc § 1150; PECL § 9:503; PECL § 9:503; Lt Cc § 6.258.4; Lt Cc § 6.258.4; Restatement 2d § 351Restatement 2d § 351


France: Cour de cassation (1930) France: Cour de cassation (1930) Fr Cc § 1150; Fr Cc § 1150; PECL § 9:503; PECL § 9:503; Lt Cc § 6.258.4; Lt Cc § 6.258.4; Restatement 2d § 351Restatement 2d § 351


Facts: 210 kilos of seedlings Facts: 210 kilos of seedlings were delayed. The railroad were delayed. The railroad had knowledge of the fact that had knowledge of the fact that they were live seedlings and they were live seedlings and therefore had to be delivered therefore had to be delivered without delay.without delay.


As a result, by the time of As a result, by the time of delivery the seedlings were dead. delivery the seedlings were dead. The lower court awarded damages The lower court awarded damages in order both to reimburse the Π in order both to reimburse the Π for the cost of the seedlings but for the cost of the seedlings but also for one year’s lost profits on a also for one year’s lost profits on a vineyard.vineyard.


Issue: Were the lost profits Issue: Were the lost profits foreseeable?foreseeable?


Yes. They were foreseeable Yes. They were foreseeable since the railroad had knowledge since the railroad had knowledge of the nature of what it was of the nature of what it was shipping, and late shipment of shipping, and late shipment of such an article would cause such such an article would cause such damages.damages.


Best arg. for ∆: The damages are Best arg. for ∆: The damages are not sufficiently proximate.not sufficiently proximate.(Answer: But they are (Answer: But they are foreseeable: no one ships 210 k of foreseeable: no one ships 210 k of live seedlings for nothing.)live seedlings for nothing.)


Best arg. for Π: The ∆ had Best arg. for Π: The ∆ had knowledge Π would suffer special knowledge Π would suffer special damages, therefore they were damages, therefore they were foreseeable and therefore ∆ is foreseeable and therefore ∆ is liable.liable.

Soileau & Coreil v Trans-Soileau & Coreil v Trans-Western PublishingWestern Publishing

Court of Appeal of Louisiana, Third CircuitCourt of Appeal of Louisiana, Third Circuit

542 So. 2d 198; 542 So. 2d 198; ((19891989))

SoileauSoileau

ΠΠs are attorneys. Contracted s are attorneys. Contracted with ‘yellow pages’ firm which with ‘yellow pages’ firm which publishes business advertising publishes business advertising in a publ. called “The Telephone in a publ. called “The Telephone Book.”Book.”

SoileauSoileau

But another law firm’s But another law firm’s telephone number was telephone number was published in place of the published in place of the ΠΠ’s’s!!

SoileauSoileau

ΠΠs sue for damages.s sue for damages.

SoileauSoileau

ΔΔ however claims damages are however claims damages are limited by the terms of their limited by the terms of their agreement to the price paid for agreement to the price paid for advertisement (which was 170 advertisement (which was 170 USD).USD).

SoileauSoileau

Court: Court: It is well established in our It is well established in our

jurisprudence that such jurisprudence that such limitation of limitation of liability clausesliability clauses as in the present as in the present

case case are validare valid and not against public and not against public policy.policy.

SoileauSoileau

Note:Note:

If bad faith (including gross If bad faith (including gross negligence) were proven, negligence) were proven, limitation would not be given limitation would not be given effect.effect.



Jacob & Youngs v. KentJacob & Youngs v. KentCourt of Appeals of New YorkCourt of Appeals of New York[1][1]230 N.Y. 239, *; 129 N.E. 889, **; (1921)230 N.Y. 239, *; 129 N.E. 889, **; (1921)[1][1] Highest court in the State of New York. Highest court in the State of New York.


Jacob & Youngs v. KentJacob & Youngs v. KentCourt of Appeals of New YorkCourt of Appeals of New York[1][1]230 N.Y. 239, *; 129 N.E. 889, **; (1921)230 N.Y. 239, *; 129 N.E. 889, **; (1921)[1][1] Highest court in the State of New York. Highest court in the State of New York.

Jacob & Youngs v. KentJacob & Youngs v. Kent

Restatement 2d § 243; Restatement 2d § 243; Quebec Cc §§ 1604, 1606; Quebec Cc §§ 1604, 1606; PECL § 8:103PECL § 8:103


Restatement 2d § 243; Restatement 2d § 243; Quebec Cc §§ 1604, 1606; Quebec Cc §§ 1604, 1606; PECL § 8:103PECL § 8:103


Restatement 2d § 243 (4 … a breach by Restatement 2d § 243 (4 … a breach by non-performance gives rise to a claim for non-performance gives rise to a claim for total breach only if it so substantially total breach only if it so substantially impairs the value of the contract to the impairs the value of the contract to the injured party at the time of the breach that injured party at the time of the breach that it is just in the circumstances to allow him it is just in the circumstances to allow him to recover damages based on all his to recover damages based on all his remaining rights to performance. remaining rights to performance.


Kent (∆) hired Π to build a 77,000 USD Kent (∆) hired Π to build a 77,000 USD country home; construction ceased in country home; construction ceased in 1914. This is the equivalent of $ 1914. This is the equivalent of $ 1,551,919.50 in 2005 U.S. dollars.1,551,919.50 in 2005 U.S. dollars.[1][1]

[[1]1] Lawrence H. Officer, Samuel H. Williamson, Lawrence H. Officer, Samuel H. Williamson, Purchasing Power of Money in the Purchasing Power of Money in the

United States from 1774 to 2005United States from 1774 to 2005, http://www.mswth.com/ppowerus/ (last updated Aug., , http://www.mswth.com/ppowerus/ (last updated Aug.,

2006).2006).


The contract contained the following The contract contained the following clause: ‘All wrought iron pipe must be well clause: ‘All wrought iron pipe must be well galvanized, lap welded pipe of the grade galvanized, lap welded pipe of the grade known as “standard pipe” of Reading known as “standard pipe” of Reading manufacture.’manufacture.’


After the house was constructed, it After the house was constructed, it was discovered that the builder had was discovered that the builder had inadvertently used other pipe of the inadvertently used other pipe of the same quality.same quality.


To replace it would have cost the builder a To replace it would have cost the builder a great deal, since it would have meant great deal, since it would have meant rebuilding substantial portions of the rebuilding substantial portions of the house. The owner, Kent, refused to make house. The owner, Kent, refused to make the final payment of 3,483.46 USD.the final payment of 3,483.46 USD.


Issue: Must performance be absolutely Issue: Must performance be absolutely perfect, or does substantial performance perfect, or does substantial performance suffice? suffice?


Issue: Issue: Secondarily, is the performance in this Secondarily, is the performance in this case substantial? (that is, is the breach case substantial? (that is, is the breach here material or mere default?)here material or mere default?)


Cardozo:Cardozo:From the conclusion that promises may From the conclusion that promises may not their uttermost minutiae without a not their uttermost minutiae without a sacrifice of justice, the progress is a short sacrifice of justice, the progress is a short one to the conclusion that they may not be one to the conclusion that they may not be so treated without a perversion of intention.so treated without a perversion of intention.


Cardozo then finds that in principle, if Cardozo then finds that in principle, if there is no material breach in this particular there is no material breach in this particular case, that the homeowner would be able to case, that the homeowner would be able to setoff the difference between the setoff the difference between the performance and the (objective) value of performance and the (objective) value of the contracted performance, which would the contracted performance, which would be nothing or nominal. be nothing or nominal.


Best arg. for ∆ (homeowner): The breach Best arg. for ∆ (homeowner): The breach was material; Reading pipe was contracted was material; Reading pipe was contracted for, but not tendered. for, but not tendered.


Best arg. for Π (builder): The breach was Best arg. for Π (builder): The breach was inadvertent and trivial; there is no inadvertent and trivial; there is no difference in value, and therefore the difference in value, and therefore the builder’s obligation was substantially builder’s obligation was substantially performed.performed.

Marek v. McHardyMarek v. McHardy

Louisiana: Supreme Court (1958)Louisiana: Supreme Court (1958)234 La. 841; 101 So. 2d 689234 La. 841; 101 So. 2d 689


Louisiana: Supreme Court (1958)Louisiana: Supreme Court (1958)234 La. 841; 101 So. 2d 689234 La. 841; 101 So. 2d 689La Cc § 2016; La Cc § 2016; CISG § 72; CISG § 72; PECL 9:304; PECL 9:304; Lt Cc §§ 6.219, 6.220; Lt Cc §§ 6.219, 6.220; FLOC 238FLOC 238


Facts: Facts: Π was employed by ∆s, a Π was employed by ∆s, a group of physicians. Contract group of physicians. Contract provided for salary & that after 36 provided for salary & that after 36 months of work Π would be months of work Π would be partner with 10 % of the partner with 10 % of the partnership. partnership.


Facts: Facts: At 34 months ∆ advised At 34 months ∆ advised Π that he would not become a Π that he would not become a partner but would have to partner but would have to purchase it. Π ceased working purchase it. Π ceased working and seeks damages. and seeks damages.


Issue: Issue: If a party repudiates an If a party repudiates an obligation in advance of the term obligation in advance of the term for its performance, must the other for its performance, must the other party continue to perform? (In party continue to perform? (In other words, does the doctrine of other words, does the doctrine of anticipatory repudiation exist in anticipatory repudiation exist in Louisiana?)Louisiana?)


La Cc § 2016. Dissolution without notice La Cc § 2016. Dissolution without notice to performto performWhen a delayed performance would no When a delayed performance would no longer be of value to the obligee or when it longer be of value to the obligee or when it is evident that the obligor will not perform, is evident that the obligor will not perform, the obligee may regard the contract as the obligee may regard the contract as dissolved without any notice to the obligor. dissolved without any notice to the obligor.


Best arg. for ∆: Best arg. for ∆: Allowing a party to terminate a contract Allowing a party to terminate a contract prior to its breach by the other party prior to its breach by the other party deprives that other party of the power to deprives that other party of the power to retract the repudiation. The contract in retract the repudiation. The contract in question has not really been breached.question has not really been breached.


Best arg. for ∆: Best arg. for ∆: A party must be allowed to withhold A party must be allowed to withhold performance, since the other has stated performance, since the other has stated that it will not perform; that it will not perform;


Best arg. for ∆: Best arg. for ∆: secondly, such a party must have the secondly, such a party must have the power to terminate the contract and to power to terminate the contract and to sue for damages in order to safeguard sue for damages in order to safeguard its rights, inasmuch as retraction is only its rights, inasmuch as retraction is only a possibilitya possibility


in France Π could not sue prior to the in France Π could not sue prior to the expiration of the two months remaining expiration of the two months remaining of the period in question.of the period in question.

Universal Resources v Universal Resources v Panhandle Eastern Pipe LinePanhandle Eastern Pipe Line

UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUITFOR THE FIFTH CIRCUIT813 F.2d 77 813 F.2d 77 March 31, 1987March 31, 1987

Universal ResourcesUniversal ResourcesDefendant buyer refused to pay for Defendant buyer refused to pay for deficiencies in gas purchases, but deficiencies in gas purchases, but

contended that contended that its analysisits analysis of plaintiff of plaintiff seller's ability to supply makeup gas was seller's ability to supply makeup gas was reasonable cause for insecurity, reasonable cause for insecurity,

Universal ResourcesUniversal Resourcesand that plaintiff's refusal to supply and that plaintiff's refusal to supply adequate assurances in accordance with adequate assurances in accordance with Tex. Bus. & Com. Code Ann. § 2.609Tex. Bus. & Com. Code Ann. § 2.609 excused defendant's performance. excused defendant's performance.

Universal ResourcesUniversal ResourcesIssue: Does there have to be objective fact Issue: Does there have to be objective fact adduced as a condition of the right to adduced as a condition of the right to require assurance?require assurance?

Universal ResourcesUniversal ResourcesAnswer: Answer:

Yes.Yes.

Universal ResourcesUniversal ResourcesThe court held that defendant buyer had The court held that defendant buyer had not produced any evidence capable of not produced any evidence capable of proving reasonable grounds for insecurity, proving reasonable grounds for insecurity, becausebecause

Universal ResourcesUniversal Resources

there was there was no objective manifestationno objective manifestation of plaintiff's inability to supply makeup gas, of plaintiff's inability to supply makeup gas, and defendant's subjective conclusion that and defendant's subjective conclusion that plaintiff could not supply the gas could not plaintiff could not supply the gas could not provide reasonable grounds for insecurity. provide reasonable grounds for insecurity.

Zabriskie Chevrolet v SmithZabriskie Chevrolet v Smith

99 N.J. Super. 441 (1968) Superior 99 N.J. Super. 441 (1968) Superior Court of New JerseyCourt of New Jersey

Zabriskie ChevroletZabriskie Chevrolet

Plaintiff dealer sued defendant buyer to Plaintiff dealer sued defendant buyer to recover the purchase price of a vehicle recover the purchase price of a vehicle and the buyer counterclaimed for the and the buyer counterclaimed for the return of his deposit and incidental return of his deposit and incidental damages. damages.


The dealer sold an automobile to the The dealer sold an automobile to the buyer. Within a short distance after buyer. Within a short distance after leaving the showroom the vehicle leaving the showroom the vehicle became inoperable because of became inoperable because of mechanical failure. mechanical failure.


The buyer notified the dealer that he The buyer notified the dealer that he cancelled the sale and simultaneously cancelled the sale and simultaneously stopped payment on the check he had stopped payment on the check he had tendered in payment. tendered in payment.


The dealer sued on the check and the The dealer sued on the check and the purchase order for the balance of the purchase order for the balance of the purchase price plus incidental damages, purchase price plus incidental damages, and the buyer counterclaimed for the and the buyer counterclaimed for the return of his deposit and incidental return of his deposit and incidental damages. damages.


The court rendered judgment for the The court rendered judgment for the buyer on both the action and buyer on both the action and counterclaim, pursuant to counterclaim, pursuant to N.J. Stat. Ann. § 12A:2-711(1)N.J. Stat. Ann. § 12A:2-711(1). .


The sales contract contained in the The sales contract contained in the purchase order form did not effectively purchase order form did not effectively disclaim or exclude the implied disclaim or exclude the implied warranties of merchantability or fitness. warranties of merchantability or fitness.


Defendant sought to purchase a new car. Defendant sought to purchase a new car. He assumed [**202] what every new car He assumed [**202] what every new car buyer has a right [***16] to assume and, buyer has a right [***16] to assume and, indeed, has been led to assume by the indeed, has been led to assume by the high powered advertising techniques of high powered advertising techniques of the auto industry --the auto industry --


that his new car, with the exception of that his new car, with the exception of very minor adjustments, would be very minor adjustments, would be mechanically new and factory-furnished, mechanically new and factory-furnished, operate perfectly, and be free of operate perfectly, and be free of substantial defects. substantial defects.


The "cure" intended under the cited The "cure" intended under the cited section of the Code does not, in the section of the Code does not, in the court's opinion, contemplate the tender of court's opinion, contemplate the tender of a new vehicle with a substituted a new vehicle with a substituted transmission, transmission,


not from the factory and of unknown not from the factory and of unknown lineage from another vehicle in plaintiff's lineage from another vehicle in plaintiff's possession. possession.


It was not the intention of the Legislature It was not the intention of the Legislature that the right to "cure" is a limitless one to that the right to "cure" is a limitless one to be controlled only by the will of the seller.be controlled only by the will of the seller.


For a majority of people the purchase of For a majority of people the purchase of a new car is a major investment, a new car is a major investment, rationalized by the peace of mind that rationalized by the peace of mind that flows from its dependability and safety. flows from its dependability and safety.


Once their faith is shaken, the Once their faith is shaken, the vehicle loses not only its real vehicle loses not only its real value in their eyes, but becomes value in their eyes, but becomes an instrument whose integrity is an instrument whose integrity is substantially impaired and whose substantially impaired and whose operation is fraught with operation is fraught with apprehension. apprehension.


The attempted cure in the The attempted cure in the present case was ineffective. present case was ineffective.

Don's Marine, Inc. v. HaldemanDon's Marine, Inc. v. Haldeman

Court of Civil Appeals of Texas, Court of Civil Appeals of Texas, Thirteenth District, Corpus ChristiThirteenth District, Corpus Christi

557 S.W.2d 826 557 S.W.2d 826 October 27, 1977October 27, 1977


ΠΠ sold boat to sold boat to ΔΔ. . ΠΠ sues to collect payment. sues to collect payment. ΔΔ counterclaims for advance. counterclaims for advance. Ct finds for Ct finds for ΔΔ. .


ΠΠ seller seller contended that the trial court contended that the trial court erred in not holding that appellee had erred in not holding that appellee had accepted the boat in question thereby accepted the boat in question thereby consummating the contract of sale. consummating the contract of sale.


ΠΠ seller seller contended that the trial court contended that the trial court erred in not holding that appellee had erred in not holding that appellee had accepted the boat in question thereby accepted the boat in question thereby consummating the contract of sale. consummating the contract of sale.


Boat was defective. Boat was defective. ΔΔ kept (did not reject) boat for over 30 kept (did not reject) boat for over 30

days. days.


ΠΠ repeatedly told repeatedly told ΔΔ during this period during this period that the defects would be cured. that the defects would be cured.


Defects were not cured.Defects were not cured.


§ 2.608. Revocation of Acceptance § 2.608. Revocation of Acceptance May revoke acceptanceMay revoke acceptance If accepted on the reasonable If accepted on the reasonable

assumption that its non-conformity assumption that its non-conformity would be cured and it has not been would be cured and it has not been seasonably curedseasonably cured


UCC § 2.608. UCC § 2.608. CISG § 48 & 49CISG § 48 & 49


Ct found that there had been no Ct found that there had been no attempts at cure.attempts at cure.


Ct found that there had been no Ct found that there had been no attempts at cure.attempts at cure.


Wasserman’s Inc. v. Township Wasserman’s Inc. v. Township of Middletownof Middletown

New Jersey: Supreme Court (1994)New Jersey: Supreme Court (1994) 137 N.J. 238; 645 A.2d 100137 N.J. 238; 645 A.2d 100

Wasserman’s Inc.Wasserman’s Inc. ‘‘Pursuant to a public advertisement for Pursuant to a public advertisement for

bids, plaintiff Wasserman’s Inc. bids, plaintiff Wasserman’s Inc. (Wasserman’s) and defendant, Township (Wasserman’s) and defendant, Township of Middletown (the Township of of Middletown (the Township of Middletown), entered into a commercial Middletown), entered into a commercial lease for a tract of municipally owned lease for a tract of municipally owned property.property.

Wasserman’s Inc.Wasserman’s Inc. The agreement contained a clause The agreement contained a clause

providing that if the Township cancelled providing that if the Township cancelled the lease, it would pay the lessee, the lease, it would pay the lessee, Wasserman’s, a pro-rata reimbursement Wasserman’s, a pro-rata reimbursement for any improvement costs and damages for any improvement costs and damages of twenty-five percent of the lessee’s of twenty-five percent of the lessee’s average gross receipts for one year. average gross receipts for one year.

Wasserman’s Inc.Wasserman’s Inc. In 1989, the Township cancelled the In 1989, the Township cancelled the

lease and sold the property, but refused lease and sold the property, but refused to pay the agreed damagesto pay the agreed damages

Wasserman’s Inc.Wasserman’s Inc. On cross-motions for summary judgment, On cross-motions for summary judgment,

the Law Division held that the lease and the Law Division held that the lease and the cancellation clause were enforceable. the cancellation clause were enforceable.

Wasserman’s Inc.Wasserman’s Inc. It subsequently required the Township to It subsequently required the Township to

pay damages in the amount of pay damages in the amount of $346,058.44 plus interest. The Appellate $346,058.44 plus interest. The Appellate Division affirmed.’Division affirmed.’

Wasserman’s Inc.Wasserman’s Inc. Issue: Issue: Is a purported liquidated damages Is a purported liquidated damages

provision calling for the payment of a provision calling for the payment of a percentage of the gross receipts a percentage of the gross receipts a penalty clause and therefore invalid (void penalty clause and therefore invalid (void and unenforceable)?and unenforceable)?

Wasserman’s Inc.Wasserman’s Inc. Issue: Issue: Is a purported liquidated damages Is a purported liquidated damages

provision calling for the payment of a provision calling for the payment of a percentage of the gross receipts a percentage of the gross receipts a penalty clause and therefore invalid (void penalty clause and therefore invalid (void and unenforceable)?and unenforceable)?

Lake River Corp. v. Lake River Corp. v. Carborundum Co.Carborundum Co.

United States: Court of Appeals, 7th Circuit United States: Court of Appeals, 7th Circuit (1985)(1985)

769 F.2d 1284769 F.2d 1284 Posner, Circuit Judge. Posner, Circuit Judge. Restatement 2d § 356; PECL § 9.509; Restatement 2d § 356; PECL § 9.509;

Quebec Cc § 1622; Fr Cc § 1152; Quebec Cc § 1622; Fr Cc § 1152; Lt Cc § 6.258Lt Cc § 6.258

Lake RiverLake River

Δ Carborundum agreed to order a certain Δ Carborundum agreed to order a certain amount; if Δ did not do so, it would pay amount; if Δ did not do so, it would pay up to that amount in penalty..up to that amount in penalty..

Lake RiverLake River

About half the agreed amount was About half the agreed amount was ordered. Thus Δ purportedly owed П ordered. Thus Δ purportedly owed П Lake River 241,000 USD. Lake River 241,000 USD.

Lake River Corp.Lake River Corp.

П demanded payment and Δ refused on П demanded payment and Δ refused on the grounds that the clause constituted a the grounds that the clause constituted a penaltypenalty


The court found that the provision was The court found that the provision was indeed a penalty.indeed a penalty.


The seller would always be paying more The seller would always be paying more than the amount of damages.than the amount of damages.


The reason for these results is that most The reason for these results is that most of the costs to Lake River of performing of the costs to Lake River of performing the contract are saved if the contract is the contract are saved if the contract is broken, and this saving is not reflected in broken, and this saving is not reflected in the damage formula.the damage formula.


As a result, at whatever point in the life of As a result, at whatever point in the life of the contract a breach occurs, the the contract a breach occurs, the damage formula gives Lake River more damage formula gives Lake River more than its lost profits from the breach—than its lost profits from the breach—dramatically more if the breach occurs at dramatically more if the breach occurs at the beginning of the contract; tapering off the beginning of the contract; tapering off at the end, it is true.at the end, it is true.

Stankevicius v ChadakeviciusStankevicius v Chadakevicius

Lithuania: Supreme Court (2000)Lithuania: Supreme Court (2000) Civ. byla Nr. 3K-7-23/ 2000Civ. byla Nr. 3K-7-23/ 2000 Lt Cc §§ 6.98 – 6.100; Lt Cc §§ 6.98 – 6.100; Cc of the LTSR §§ 222 – 224 (1964);Cc of the LTSR §§ 222 – 224 (1964); La Cc §2623, 2624;La Cc §2623, 2624; PECL § 9:509PECL § 9:509


Lithuania: Supreme Court (2000)Lithuania: Supreme Court (2000) Civ. byla Nr. 3K-7-23/ 2000Civ. byla Nr. 3K-7-23/ 2000


The parties entered into an ‘earnest The parties entered into an ‘earnest money’ agreement regarding the sale money’ agreement regarding the sale of the right to harvest lumber upon of the right to harvest lumber upon land owned by the Δ. land owned by the Δ.


П paid 8000 Lt to Δ (in 2000 this was П paid 8000 Lt to Δ (in 2000 this was the equivalent of 2000 USD), and the the equivalent of 2000 USD), and the balance was to be paid at a later date. balance was to be paid at a later date. The agreement contemplated the The agreement contemplated the formation of a purchase-sale formation of a purchase-sale agreement. agreement.


Subsequently, Δ refused to form the Subsequently, Δ refused to form the principal contract. principal contract.


П sued for 16,000 Lt, which is double П sued for 16,000 Lt, which is double the amount of the funds paid-in by the the amount of the funds paid-in by the П, under the theory that this was П, under the theory that this was earnest money..earnest money..


The trial court treated the 8000 Lt as The trial court treated the 8000 Lt as an advance. The appellate court an advance. The appellate court reversed. Δ landowner appealedreversed. Δ landowner appealed


Issue: Can an advance payment be Issue: Can an advance payment be characterized as earnest money when characterized as earnest money when there principal (ultimate) contract has there principal (ultimate) contract has not yet been formed?not yet been formed?


LT ct said it can’t.LT ct said it can’t.


All Western countries say the All Western countries say the opposite.opposite.


Concept of setoff:Concept of setoff: Simply put, if the principal contract is Simply put, if the principal contract is

entered into for price X, the party entered into for price X, the party under the payment obligation simply under the payment obligation simply needs to setoff the amount paid-in.needs to setoff the amount paid-in.


Concept of setoff:Concept of setoff: Simply put, if the principal contract is Simply put, if the principal contract is

entered into for price X, the party entered into for price X, the party under the payment obligation simply under the payment obligation simply needs to setoff the amount paid-in.needs to setoff the amount paid-in.


Secondly, the earnest paid-in is Secondly, the earnest paid-in is merely an advance, but one required merely an advance, but one required by the first (prelim) agreement. In by the first (prelim) agreement. In regard to the second it will regard to the second it will automatically be setoff upon the automatically be setoff upon the obligation having arisen. (Same obligation having arisen. (Same w/every advance.)w/every advance.)


Under La Cc §§ 2623-24, it is clear that Under La Cc §§ 2623-24, it is clear that earnest money provisions can appear in earnest money provisions can appear in preliminary agreements. preliminary agreements.

Roščin v. PersovskisRoščin v. Persovskis

Lithuania: Supreme Court (2003) Lithuania: Supreme Court (2003) Casebook 402Casebook 402

Lt Cc § 6.73; Lt Cc § 6.73; La Cc §2623, 2624; La Cc §2623, 2624; PECL § 9:509; PECL § 9:509; UCC § 2-718 (2), (3) UCC § 2-718 (2), (3)

Roščin v. PersovskisRoščin v. Persovskis П RoП Roščin sues under a preliminary ščin sues under a preliminary

agreement under which he had agreed to agreement under which he had agreed to purchase an apartment for 100,000 Lt. purchase an apartment for 100,000 Lt.

Roščin v. PersovskisRoščin v. Persovskis The contract stated that if Δ defaulted, Δ The contract stated that if Δ defaulted, Δ

would pay a 20 would pay a 20 % penalty, and if the % penalty, and if the seller defaulted, he would pay a 20 % seller defaulted, he would pay a 20 % penalty.penalty.. .

Roščin v. PersovskisRoščin v. Persovskis Issue: Is a penalty provision in a Issue: Is a penalty provision in a

preliminary agreement in reality an preliminary agreement in reality an earnest money provision and therefore earnest money provision and therefore invalid? invalid?

Roščin v. PersovskisRoščin v. Persovskis Holding: No.Holding: No.

Roščin v. PersovskisRoščin v. Persovskis Holding: No.Holding: No.

Roščin v. PersovskisRoščin v. Persovskis The court finds that as a matter of law a The court finds that as a matter of law a

reduction cannot exceed that which reduction cannot exceed that which would have been recoverable as would have been recoverable as moratory damages in the form of interest. moratory damages in the form of interest.

Roščin v. PersovskisRoščin v. Persovskis It then awards the П 3000 Lt (instead of It then awards the П 3000 Lt (instead of

10,000 Lt), but it is not clear on what 10,000 Lt), but it is not clear on what evidence, if any, this is based upon.evidence, if any, this is based upon.

Laurents v. Louisiana Laurents v. Louisiana Mobile Homes, Inc.Mobile Homes, Inc.

Louisiana: Court of Appeal, 3rd Circuit Louisiana: Court of Appeal, 3rd Circuit (1997) Casebook 412(1997) Casebook 412

La Cc § 2624; Lt Cc § 6.309.2; Rf Cc § La Cc § 2624; Lt Cc § 6.309.2; Rf Cc § 380.3; Quebec Cc § 1786380.3; Quebec Cc § 1786


Πs (a married couple) ordered a mobile Πs (a married couple) ordered a mobile home from Δ. Π paid a deposit. home from Δ. Π paid a deposit.


Δ materially breached the contract by Δ materially breached the contract by delivering a mobile home which was not delivering a mobile home which was not according to specifications and by according to specifications and by refusing to fix it. refusing to fix it.


Π terminated the contract and sued to Π terminated the contract and sued to recover damages and the deposit (as if it recover damages and the deposit (as if it were a mere advance payment).were a mere advance payment).


Π terminated the contract and sued to Π terminated the contract and sued to recover damages and the deposit (as if it recover damages and the deposit (as if it were a mere advance payment).were a mere advance payment).


Issue: What is the character of the Issue: What is the character of the “deposit”: a mere advance, liquidated “deposit”: a mere advance, liquidated damages, a penalty, or was it earnest damages, a penalty, or was it earnest money?money?

Decision: Earnest money.Decision: Earnest money.


the things that the prepayment in the things that the prepayment in question could possibly be characterized question could possibly be characterized as. as.


They are They are 1) a mere advance payment 1) a mere advance payment 2) liquidated damages 2) liquidated damages 3) a penalty 3) a penalty 4) earnest money.4) earnest money.


In some jurisdictions an advance made In some jurisdictions an advance made for a purchase is presumed to be earnest for a purchase is presumed to be earnest money.money.


In some jurisdictions an advance made In some jurisdictions an advance made for a purchase is presumed to be earnest for a purchase is presumed to be earnest money.money.


Courts generally will recognize a ten Courts generally will recognize a ten percent sum of prepayment as a percent sum of prepayment as a reasonable estimate and will, reasonable estimate and will, accordingly, give effect to the provision. accordingly, give effect to the provision. Casebook 381. Casebook 381.


The PECL endorses twenty percent.The PECL endorses twenty percent.[1][1] [1][1] PECL § 9.509 cmt. a, illustration 2. PECL § 9.509 cmt. a, illustration 2.

Oral Agreements//FormOral Agreements//Form

Everett Lee Hundley v. Everett Lee Hundley v. United States of AmericaUnited States of America

Brazil: Superior Court of Justice (1995) Brazil: Superior Court of Justice (1995) Casebook 510Casebook 510

Brazil Code of Civil Procedure § 402; Brazil Code of Civil Procedure § 402; Fr Cc § 1341; Fr Cc § 1341; Quebec 2863; Quebec 2863; Lt Cc §§ 1.71, 1.93.6.1Lt Cc §§ 1.71, 1.93.6.1

Hundley v USAHundley v USA

Facts: П entered into an oral contract to Facts: П entered into an oral contract to build ten homes for Δ. The price was build ten homes for Δ. The price was over ten minimum wages; over ten minimum wages;


therefore the contract should have been therefore the contract should have been in simple written form (that is, it does not in simple written form (that is, it does not have to be solemnified nor registered). have to be solemnified nor registered).


The trial court disallowed oral testimony. The trial court disallowed oral testimony.


But there was some supporting written But there was some supporting written evidence.evidence.

. .


Issue: When the law requires a contract Issue: When the law requires a contract to be in simple written form, but it is an to be in simple written form, but it is an oral contract only, oral contract only,

is oral testimony barred for the is oral testimony barred for the purpose of proving the contract or its purpose of proving the contract or its parts?. parts?.


Holding: No. Testimonial evidence may Holding: No. Testimonial evidence may be accepted if initial written evidence is be accepted if initial written evidence is available.available.


It is not necessary that the entire It is not necessary that the entire agreement be proven by the initial written agreement be proven by the initial written evidence; evidence;


it is sufficient that there be initial written it is sufficient that there be initial written evidence of the fact of the oral evidence of the fact of the oral agreement. agreement.

Then oral testimony is admissible to Then oral testimony is admissible to prove the agreement’s terms.prove the agreement’s terms.


LithuaniaLithuania Under Lt Cc § 1.93.6.1, witness Under Lt Cc § 1.93.6.1, witness

testimony is admissible to prove a testimony is admissible to prove a contract if there is the beginning of contract if there is the beginning of written proof. The result should be written proof. The result should be exactly the same as in the Brazilian exactly the same as in the Brazilian court.court.


FranceFrance Art 1341: Art 1341: Commercial matter: Commercial matter: C can be proven BY ANY MEANSC can be proven BY ANY MEANS

Burkandt v. Company LaigebuBurkandt v. Company Laigebu

Lithuania: Supreme Court Civ. byla Nr. Lithuania: Supreme Court Civ. byla Nr. 3K-3-802 (1999) Casebook 5113K-3-802 (1999) Casebook 511

LTSR Cc § 58; LTSR Cc § 58; Quebec Cc § 2860; Quebec Cc § 2860; Fr Cc § 1348; Fr Cc § 1348; PECL § 2.101;PECL § 2.101; Restatement 2d § 137Restatement 2d § 137

Burkandt v. Company Burkandt v. Company LaigebuLaigebu

Cc of the Lithuanian Soviet Socialist Republic Cc of the Lithuanian Soviet Socialist Republic (1964, as amended)(1964, as amended)

§ 58 Invalidity of the Convention when it is not in § 58 Invalidity of the Convention when it is not in the Statutorily Required Formthe Statutorily Required Form

A convention is invalid when it is not in the form A convention is invalid when it is not in the form required by law only if this is imperatively set forth required by law only if this is imperatively set forth by the statute.by the statute.

A convention which is not in writing when required A convention which is not in writing when required by law acts to deny the parties the right, in the by law acts to deny the parties the right, in the event of a dispute, to rely upon oral testimony to event of a dispute, to rely upon oral testimony to confirm the convention, and in certain cases confirm the convention, and in certain cases provided by law renders the convention invalidprovided by law renders the convention invalid


In 1994 П, a physical person, loaned Δ In 1994 П, a physical person, loaned Δ 50,000 Lt. Δ paid interest until 50,000 Lt. Δ paid interest until October, 1995. October, 1995.


Subsequently it stopped making Subsequently it stopped making interest payments and refused to interest payments and refused to return the money. return the money.


П does not have the loan contract in П does not have the loan contract in the original (that is, it only has an the original (that is, it only has an unspecified variety of a copy, perhaps unspecified variety of a copy, perhaps a fax). a fax).


П placed these documents into П placed these documents into evidence: bookkeeping documents evidence: bookkeeping documents (the Δ company’s cash book, cash (the Δ company’s cash book, cash disbursement orders, tax returns for disbursement orders, tax returns for 1994 and 1995, a document filed with 1994 and 1995, a document filed with the government stating its the government stating its transactions with non-residents).transactions with non-residents).


The court of appeals dismissed the The court of appeals dismissed the claim as unprovenclaim as unproven


the statute requires a written agreement, the statute requires a written agreement, which does not exist. The other which does not exist. The other documentary proof is to be rejected documentary proof is to be rejected because it does not ‘unconditionally’ because it does not ‘unconditionally’ prove the fact that the contract existed prove the fact that the contract existed because the evidence is ‘arguable’ because the evidence is ‘arguable’


Issue: Can a contract be proven by Issue: Can a contract be proven by documentary evidence other than an documentary evidence other than an original of the contract?original of the contract?


Yes.Yes.


Lastly, the court fails to note that § 58 is Lastly, the court fails to note that § 58 is inapplicable, inasmuch as the agreement inapplicable, inasmuch as the agreement was not oral at all. It was a written was not oral at all. It was a written agreement! agreement!


The only problem is that the П did not The only problem is that the П did not have the original. have the original.


Therefore the real question should have Therefore the real question should have been, is a copy admissible as proof, or been, is a copy admissible as proof, or even, will a copy be considered the same even, will a copy be considered the same as the original? This is the position of the as the original? This is the position of the French French


United StatesUnited States § 137 Loss or Destruction of a § 137 Loss or Destruction of a

MemorandumMemorandum The loss or destruction of a The loss or destruction of a

memorandum does not deprive it of memorandum does not deprive it of effect under the Statute.effect under the Statute.


Quebec Cc § 2860. A juridical act set Quebec Cc § 2860. A juridical act set forth in a writing or the content of a forth in a writing or the content of a writing shall be proved by the production writing shall be proved by the production of the original or a copy which legally of the original or a copy which legally replaces it.replaces it.


Quebec Cc § 2860. Quebec Cc § 2860. -- However, where a party acting in good However, where a party acting in good

faith and with dispatch is unable to faith and with dispatch is unable to produce the original of a writing or a copy produce the original of a writing or a copy which legally replaces it, proof may be which legally replaces it, proof may be made by any other means. made by any other means.

UAB Iniciatyva v. SimukonisUAB Iniciatyva v. Simukonis

Lietuvos AukLietuvos Aukščiausiasis Teismasščiausiasis Teismas Civ. byla nr.3K-3-792/1999Civ. byla nr.3K-3-792/1999


UAB Iniciatyva pasirase 1996 birz 18 d. UAB Iniciatyva pasirase 1996 birz 18 d. suderinimo protokola su J Šimukoniu del suderinimo protokola su J Šimukoniu del jam priklausancio Versekos restorano jam priklausancio Versekos restorano pardavimo. Kaina: 100,000 lt. pardavimo. Kaina: 100,000 lt.


Kai UAB ,,Iniciatyva” sumokės visą Kai UAB ,,Iniciatyva” sumokės visą restorano kainą, bus apiforminta pirkimo - restorano kainą, bus apiforminta pirkimo - pardavimo sutartis.pardavimo sutartis.


98 000 Lt. pervede.98 000 Lt. pervede. 2000 Lt ieškovas nepervedė, kadangi šią 2000 Lt ieškovas nepervedė, kadangi šią

sumą numatė panaudoti pirkimo - sumą numatė panaudoti pirkimo - pardavimo sutarties įforminimui. pardavimo sutarties įforminimui.


Kontr argumentas: tai tik preliminarine Kontr argumentas: tai tik preliminarine sutartis.sutartis.


Senojo civilinio kodekso 58 str. 5d. yra Senojo civilinio kodekso 58 str. 5d. yra identiška dabartinio CK §1.93.4 punktui: identiška dabartinio CK §1.93.4 punktui: Jeigu viena iš šalių visiškai ar dalinai Jeigu viena iš šalių visiškai ar dalinai įvykdė sandorį, kuriam būtinas notaro įvykdė sandorį, kuriam būtinas notaro patviritnimas, patviritnimas,


o antroji šalis vengia sandorį notariškai o antroji šalis vengia sandorį notariškai įforminti, tai teismas įvykžiusios sandorį įforminti, tai teismas įvykžiusios sandorį šalies reikalavimu turi teisę pripažinti šalies reikalavimu turi teisę pripažinti sandorį galiojančiu. sandorį galiojančiu.


Šiuo atveju sandorio po to notariškai Šiuo atveju sandorio po to notariškai patvirtinti nebereikia.patvirtinti nebereikia.

Express L and IntentExpress L and Intent

Mitchell v. LathMitchell v. Lath

New York: Court of Appeals (1928) New York: Court of Appeals (1928) Casebook 520Casebook 520

Restatement 2d §§ 209-218; Ca Cc § Restatement 2d §§ 209-218; Ca Cc § 1625; 1625;

PECL § 2:105; Unidroit § 2.17; PECL § 2:105; Unidroit § 2.17; Quebec Cc §§ 2863-64; Quebec Cc §§ 2863-64; Fr Cc § 1341; Fr Cc § 1341; Lt Cc § 1.72Lt Cc § 1.72


П Mitchell purchased land from Δ Lath. П Mitchell purchased land from Δ Lath.


П seeks to introduce evidence that it was П seeks to introduce evidence that it was also agreed that Δ would remove an ice also agreed that Δ would remove an ice house which he maintained on house which he maintained on neighboring property which П had found neighboring property which П had found objectionable.objectionable.


The ice house was not mentioned in the The ice house was not mentioned in the written agreement.written agreement.


The ice house was not mentioned in the The ice house was not mentioned in the written agreement.written agreement.


Was the agreement fully integrated?Was the agreement fully integrated?


Yes. Therefore evidence regarding the Yes. Therefore evidence regarding the ice house is barred.ice house is barred.


Ct was of opinion that the provision Ct was of opinion that the provision regarding the ice house would have been regarding the ice house would have been something which naturally would have something which naturally would have been included in the agreement.been included in the agreement.


Dissent was of the opposite opinion. Dissent was of the opposite opinion.


The question of integration (merger) The question of integration (merger) seeks to answer these questions:seeks to answer these questions:


What should the effect of a written What should the effect of a written contract be? contract be?

Should it be presumed to be complete? Should it be presumed to be complete? Should it bar evidence of supplementary Should it bar evidence of supplementary

promises which were made orally or in promises which were made orally or in other communications?other communications?


This court in effect decided that the This court in effect decided that the contract would be treated as if there were contract would be treated as if there were a merger clause in it.a merger clause in it.

Cers v SchmitzCers v Schmitz

Supreme Ct of MinnesotaSupreme Ct of Minnesota 20022002

Cers v SchmitzCers v Schmitz

Appellant Peter Cers hired respondent Appellant Peter Cers hired respondent Roger Schmitz, a videographer, to travel Roger Schmitz, a videographer, to travel to Latvia with him to obtain footage for a to Latvia with him to obtain footage for a documentary video. documentary video.

Cers v SchmitzCers v Schmitz Cers sues Schmitz. Cers sues Schmitz. Contract was in writing, but no Contract was in writing, but no

merger/integration clause. merger/integration clause. Cers alleged Schmitz breached oral Cers alleged Schmitz breached oral

agreements: agreements:

Cers v SchmitzCers v Schmitz Ca. that [Schmitz] would produce Ca. that [Schmitz] would produce

recordings that met broadcast quality recordings that met broadcast quality standards;standards;

b. that [Schmitz] would produce usable b. that [Schmitz] would produce usable broadcast results on the first take;broadcast results on the first take;

c. that [Schmitz] was responsible for c. that [Schmitz] was responsible for all technical aspects of the camera all technical aspects of the camera operationoperation

Cers v SchmitzCers v Schmitz ΔΔ argues evidence barred by parol argues evidence barred by parol

evidence ruleevidence rule

Cers v SchmitzCers v Schmitz ΔΔ argues evidence barred by parol argues evidence barred by parol

evidence ruleevidence rule

Cers v SchmitzCers v Schmitz Ct: No 4 Corners rule. Must look at facts. Ct: No 4 Corners rule. Must look at facts.

Cers v SchmitzCers v Schmitz Written contract dealt only with financial Written contract dealt only with financial

termsterms No merger clauseNo merger clause No contradictionNo contradiction Negotiations concerned oral Negotiations concerned oral

Cers v SchmitzCers v Schmitz Therefore contract ‘incomplete’ and Therefore contract ‘incomplete’ and

therefore oral terms admissible. therefore oral terms admissible.

BjornstadBjornstad v. Northern States Power Co., 263 N.W. 2 v. Northern States Power Co., 263 N.W. 28989 Service agreement between electric Service agreement between electric company and rural consumer which company and rural consumer which contained no provision for payment of contained no provision for payment of consumer investment in connecting line consumer investment in connecting line built by him and transferred to company built by him and transferred to company held incomplete entitling consumer to show held incomplete entitling consumer to show by oral evidence collateral agreement as to by oral evidence collateral agreement as to price to be paid by company for service line price to be paid by company for service line and time when such payment was to be and time when such payment was to be made. made.

HML Corp. v. General Foods Corp., 365 F.2d 77, HML Corp. v. General Foods Corp., 365 F.2d 77, 150 U.S.P.Q. (BNA) 763 (3d Cir. 1966)150 U.S.P.Q. (BNA) 763 (3d Cir. 1966)

Where parties entered into contract for supply Where parties entered into contract for supply containing explicit statement that it incorporated containing explicit statement that it incorporated entire agreement of parties and that no entire agreement of parties and that no representations or statements had been made by representations or statements had been made by defendant buyer to plaintiff seller in any way defendant buyer to plaintiff seller in any way changing provisions of agreement, agreement changing provisions of agreement, agreement was complete in itself and could not be altered by was complete in itself and could not be altered by attempted showing of representation that attempted showing of representation that defendant would exert additional effort to defendant would exert additional effort to promote product. promote product.

Crockett & Myers, Ltd. v. Napier, Fitzgerald & KirCrockett & Myers, Ltd. v. Napier, Fitzgerald & Kirby, LLP, 440 F. Supp. 2d 1184 (D. Nev. 2006)by, LLP, 440 F. Supp. 2d 1184 (D. Nev. 2006)..

Under Nevada law, parol evidence rule barred Under Nevada law, parol evidence rule barred claim for breach of alleged oral referral fee claim for breach of alleged oral referral fee agreement between attorneys and their agreement between attorneys and their respective business entities, although parties' respective business entities, although parties' written retainer agreement did not contain an written retainer agreement did not contain an integration clause, where written retainer integration clause, where written retainer agreement was valid, complete, and agreement was valid, complete, and unambiguous, written retainer agreement unambiguous, written retainer agreement covered same terms as alleged oral agreement, covered same terms as alleged oral agreement, and fraud in procuring written retainer agreement and fraud in procuring written retainer agreement was neither pled nor proven. was neither pled nor proven.

International Paper Co. v. Standard IndustriInternational Paper Co. v. Standard Industries, Inc., 389 F.2d 99 (10th Cir. 1968)es, Inc., 389 F.2d 99 (10th Cir. 1968)..Where contract for straightening of creek Where contract for straightening of creek was not fully integrated in that it was was not fully integrated in that it was uncertain as to what plans, specifications uncertain as to what plans, specifications and drawings were applicable to work to be and drawings were applicable to work to be performed under contract, parol evidence performed under contract, parol evidence would be competent to prove full would be competent to prove full contractual intent of parties in their contractual intent of parties in their reference to performance in complete reference to performance in complete accordance with the plans and/or drawings accordance with the plans and/or drawings and specifications of the engineer. and specifications of the engineer.



ModificationModification

Angel v. MurrayAngel v. Murray

Case # 105Case # 105 Rhode Island: Supreme Court (1974)Rhode Island: Supreme Court (1974) 113 R.I. 482, 322 A.2d 630113 R.I. 482, 322 A.2d 630 CISG § 29; CISG § 29; Lt Cc § 6.223Lt Cc § 6.223 Restatement 2d § 89; Restatement 2d § 89; UCC § 2-209; UCC § 2-209;

Angel v. MurrayAngel v. Murray Restatement 2d § 89 Modification of Restatement 2d § 89 Modification of

Executory ContractExecutory Contract A promise modifying a duty under a A promise modifying a duty under a

contract not fully performed on either side contract not fully performed on either side is bindingis binding

Angel v. MurrayAngel v. Murray Restatement 2d § 89 Modification of Restatement 2d § 89 Modification of

Executory ContractExecutory Contract

(a) if the modification is (a) if the modification is fair and fair and equitableequitable in view of in view of

circumstances not anticipatedcircumstances not anticipated by the parties when the contract was by the parties when the contract was made; made;

Angel v. MurrayAngel v. MurrayП is a taxpayer who brought a suit against П is a taxpayer who brought a suit against

Murray (an official of the city of Newport), Murray (an official of the city of Newport), the city, and against Maher (Δs). Maher the city, and against Maher (Δs). Maher had contracted with the city to provide had contracted with the city to provide refuse collection. The contract had a five refuse collection. The contract had a five year term, commencing on July 1, 1964. year term, commencing on July 1, 1964.

Angel v. MurrayAngel v. MurrayIn 1967 Maher requested the city pay an In 1967 Maher requested the city pay an

additional 10,000 USD because the additional 10,000 USD because the contract price had been predicated on a contract price had been predicated on a projected increase per year of 20-25 new projected increase per year of 20-25 new housing units, but in fact 400 new units housing units, but in fact 400 new units had been added. had been added.

Angel v. MurrayAngel v. MurrayThe city council agreed to pay him the The city council agreed to pay him the

10,000 USD for that year, and again, 10,000 USD for that year, and again, after another request, agreed to pay him after another request, agreed to pay him the same amount extra the next year. the same amount extra the next year.

Angel v. MurrayAngel v. MurrayП contended the additional payments were П contended the additional payments were

illegal. The trial court entered a illegal. The trial court entered a judgement for П ordering Δ Maher to pay judgement for П ordering Δ Maher to pay back the money; back the money;

Angel v. MurrayAngel v. Murrayapparently, the court found that Δ Maher apparently, the court found that Δ Maher

had a pre-existing duty to collect the all had a pre-existing duty to collect the all refuse within the city bounds. refuse within the city bounds.

Δ appeals.Δ appeals.

Angel v. MurrayAngel v. MurrayIssue: Issue: Is a modification of a contract not fully Is a modification of a contract not fully

executed by either party in view of executed by either party in view of circumstances not anticipatedcircumstances not anticipated by the by the parties when the contract was made parties when the contract was made enforceable?enforceable?

Angel v. MurrayAngel v. MurrayHolding: Yes. Holding: Yes.

Angel v. MurrayAngel v. Murray§ 89D(a) of the American Law Institute’s § 89D(a) of the American Law Institute’s

Restatement Second of the Law of Restatement Second of the Law of Contracts … provides: “A promise Contracts … provides: “A promise modifying a duty under a contract not modifying a duty under a contract not fully performed on either side is bindingfully performed on either side is binding

Angel v. MurrayAngel v. Murray(a) if the modification is fair and equitable in (a) if the modification is fair and equitable in

view of circumstances not anticipated by view of circumstances not anticipated by the parties when the contract was the parties when the contract was made… .”made… .”

Angel v. MurrayAngel v. Murray(Best arg. for П (Angel): (Best arg. for П (Angel): No consideration supports the modification, No consideration supports the modification,

because Δ Maher had a pre-existing duty because Δ Maher had a pre-existing duty to perform as promised. to perform as promised.

Angel v. MurrayAngel v. Murray Continental LawContinental Law A modification will be held to be A modification will be held to be

enforceable if in good faith. enforceable if in good faith. Viz.Viz., Lt Cc § 6.223, which states that a , Lt Cc § 6.223, which states that a

contract can be modified by (mere) contract can be modified by (mere) agreement. agreement.

Wisconsin Knife Works v. Wisconsin Knife Works v. National Metal CraftersNational Metal Crafters

United States: Court of Appeals, 7th United States: Court of Appeals, 7th Circuit (1986) Circuit (1986)

Casebook 561Casebook 561 UCC § 2-209; CISG § 29; PECL § 2:106; UCC § 2-209; CISG § 29; PECL § 2:106;

Lt Cc § 6.183; Rf Cc § 452.1Lt Cc § 6.183; Rf Cc § 452.1

Wisconsin Knife WorksWisconsin Knife Works Buyer Wisconsin Knife Works terminated Buyer Wisconsin Knife Works terminated

a contract for 281,000 spade bit blanks a contract for 281,000 spade bit blanks that National Metal Crafters were to that National Metal Crafters were to deliver. deliver.

The purchase orders contained a ‘no oral The purchase orders contained a ‘no oral modification’ clause. modification’ clause.

Wisconsin Knife WorksWisconsin Knife Works

National Metal Crafters missed the National Metal Crafters missed the deadlines for delivery, which were in deadlines for delivery, which were in October and November, 1981. October and November, 1981.

Buyer Wisconsin Knife Works did not Buyer Wisconsin Knife Works did not declare a breach, cancel the contract nor declare a breach, cancel the contract nor seek damages for late delivery. seek damages for late delivery.


It continued to accept production until Jan. It continued to accept production until Jan. 1983 when it notified the seller (National 1983 when it notified the seller (National Metal Crafters) that the contract was Metal Crafters) that the contract was terminated. terminated.

At that point only 144,000 of more than At that point only 144,000 of more than 281,000 spade bit blanks had been 281,000 spade bit blanks had been delivered. delivered.


Buyer sued for damages. Δ seller (National Buyer sued for damages. Δ seller (National Metal Crafters) argued that the dates in Metal Crafters) argued that the dates in the purchase orders were not firm dates. the purchase orders were not firm dates.


The parties are ‘merchants’ as defined by The parties are ‘merchants’ as defined by the UCC. the UCC.


• The contract contained a no-oral The contract contained a no-oral modification clause, modification clause,

• and there had been no written and there had been no written modification.modification.

Wisconsin Knife WorksWisconsin Knife Works Issue: Can a party to a contract Issue: Can a party to a contract

containing a ‘no oral modification clause’ containing a ‘no oral modification clause’ waive its right to rely on the clause? Must waive its right to rely on the clause? Must there be reliance for the attempted there be reliance for the attempted modification ‘to operate’ as a waiver?modification ‘to operate’ as a waiver?


Holding: Yes. There must however be Holding: Yes. There must however be reliance (which is not in the statute).reliance (which is not in the statute).


Holding: Yes. There must however be Holding: Yes. There must however be reliance (which is not in the statute).reliance (which is not in the statute).

Wisconsin Knife WorksWisconsin Knife Works CISG, PECL, LithuaniaCISG, PECL, Lithuania The CISG and Lithuania have the same The CISG and Lithuania have the same

result as the court finds in the instant result as the court finds in the instant case. case.

Wisconsin Knife WorksWisconsin Knife Works The CISG and Lithuanian law both The CISG and Lithuanian law both

require reliancerequire reliance

Wisconsin Knife WorksWisconsin Knife Works The PECL is nearly the same, but the The PECL is nearly the same, but the

PECL provides that the no-oral PECL provides that the no-oral modification clause merely raises a modification clause merely raises a presumption that oral modification is presumption that oral modification is ineffective; this is different from the CISG ineffective; this is different from the CISG and the Lithuanian code. The practical and the Lithuanian code. The practical result may be the same, inasmuch as the result may be the same, inasmuch as the real issue is whether the contract was real issue is whether the contract was integrated.integrated.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin Pennsylvania: Supreme Court (1971) Pennsylvania: Supreme Court (1971)

Casebook 573Casebook 573 Restatement 2d §§ 279, 281; Restatement 2d §§ 279, 281; UCC § 3-311; UCC § 3-311; Quebec Cc §1661; Quebec Cc §1661; Lt Cc § 6.141.2Lt Cc § 6.141.2

Brunswick Corp. v. LevinBrunswick Corp. v. Levin In Dec., 1961, Brunswick, a vendor of In Dec., 1961, Brunswick, a vendor of

laboratory equipment, entered into an laboratory equipment, entered into an instalment sales contract with Community instalment sales contract with Community Laboratories, Inc. for over 10,000 USD. Laboratories, Inc. for over 10,000 USD.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin In Mar., 1962, Community leased a store In Mar., 1962, Community leased a store

from Key Enterprises for a term of three from Key Enterprises for a term of three years with monthly rental payments. years with monthly rental payments. Levin was the president of Key Levin was the president of Key Enterprises and a minority shareholder of Enterprises and a minority shareholder of Community.Community.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin In Sep. 1962, the landlord (Key In Sep. 1962, the landlord (Key

Enterprises) seized (pursuant to a Enterprises) seized (pursuant to a warrant) goods of the lessee, including warrant) goods of the lessee, including the equipment that had been delivered the equipment that had been delivered from Brunswick. A subsidiary of Key from Brunswick. A subsidiary of Key Enterprises purchased the equipment at Enterprises purchased the equipment at auction for 1400 USD, which was paid to auction for 1400 USD, which was paid to Key Enterprises.Key Enterprises.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin Brunswick sued and a jury found that the Brunswick sued and a jury found that the

seizure and auction (the distraint) was seizure and auction (the distraint) was illegal because at the time Community illegal because at the time Community had not owed rent, because the jury had not owed rent, because the jury believed that the written lease had been believed that the written lease had been orally modified to put off payments until orally modified to put off payments until profitability was reached. Brunswick profitability was reached. Brunswick obtained a judgement against Key obtained a judgement against Key Enterprises for nearly 10,000 USD.Enterprises for nearly 10,000 USD.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin While the above judgement was on While the above judgement was on

appeal, Brunswick sent Community a bill appeal, Brunswick sent Community a bill for an instalment payment of 271.17 for an instalment payment of 271.17 USD. USD.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin Levin (!) ‘seized the opportunity’ by Levin (!) ‘seized the opportunity’ by

sending a check for that sum and writing sending a check for that sum and writing on it, ‘“In full settlement of all claims and on it, ‘“In full settlement of all claims and litigation against Community litigation against Community Laboratories, Inc., Key Enterprises, Inc., Laboratories, Inc., Key Enterprises, Inc., and Benjamin Levin.” A cover letter and Benjamin Levin.” A cover letter stated the same. The check was cashed.stated the same. The check was cashed.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin Key Enterprises then petitioned the court Key Enterprises then petitioned the court

to strike the judgement because of to strike the judgement because of alleged alleged accord and satisfactionaccord and satisfaction. The . The court denied the motion, from which Key court denied the motion, from which Key Enterprises took this appeal.Enterprises took this appeal.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin Issue: Does a payment made in the Issue: Does a payment made in the

absence of a real dispute (as to the absence of a real dispute (as to the amount of the debt) satisfy a debt?amount of the debt) satisfy a debt?

Holding: No.Holding: No.

Brunswick Corp. v. LevinBrunswick Corp. v. Levin Quebec Cc § 1661. Quebec Cc § 1661. Lt Cc § 6.141.2 Lt Cc § 6.141.2 Novation is not presumed; it is effected Novation is not presumed; it is effected

only where the intention to effect it is only where the intention to effect it is evident. evident.

Frank v MotwaniFrank v Motwani

Supreme Court of LouisianaSupreme Court of Louisiana 19871987

Frank v MotwaniFrank v MotwaniΠΠ sellers sued sellers sued ΔΔ buyers. buyers.

Agreement to purchase real estate had to Agreement to purchase real estate had to be, and was, in writing. be, and was, in writing.

Frank v MotwaniFrank v MotwaniAgreement contained ‘liquidated damages’ Agreement contained ‘liquidated damages’

clause in amount of 50k in event clause in amount of 50k in event purchaser does not close.purchaser does not close.

Frank v MotwaniFrank v MotwaniΔΔ claims parties agreed to rescind verbally claims parties agreed to rescind verbally

at closing.at closing.

Frank v MotwaniFrank v MotwaniΠΠ argues that if agreement must be in argues that if agreement must be in

simple written form, so must agreement simple written form, so must agreement to rescind be.to rescind be.

Frank v MotwaniFrank v MotwaniHolding:Holding:

No.No.

Frank v MotwaniFrank v MotwaniCt:Ct:

There is no reason why a party to a There is no reason why a party to a contract that has to be in writing should contract that has to be in writing should not be able to offer evidence that the not be able to offer evidence that the parties verbally agreed to cancel the parties verbally agreed to cancel the contract.contract.


Clearly, the burden of proof will be on the Clearly, the burden of proof will be on the party asserting that it was cancelled. party asserting that it was cancelled.


Although this may very well be a difficult Although this may very well be a difficult burden to meet in the face of a signed burden to meet in the face of a signed written contract, the party claiming written contract, the party claiming cancellation should be allowed to present cancellation should be allowed to present evidence to prove that the contract was evidence to prove that the contract was verbally cancelled.verbally cancelled.

Frank v MotwaniFrank v MotwaniLT Cc § 6.192.4. LT Cc § 6.192.4.

The modification must be in the same form The modification must be in the same form that the underlying contract is that the underlying contract is requiredrequired to have been in, unless otherwise to have been in, unless otherwise provided by law or agreement.provided by law or agreement.

InterpretationInterpretation

Steuart v. McChesneySteuart v. McChesney

Pennsylvania: Supreme Court Pennsylvania: Supreme Court 444 A.2d 659 (1982) 444 A.2d 659 (1982) Casebook 529Casebook 529 Restatement § 202.3 (a); Restatement § 202.3 (a); PECL §§ 5:101, 5:102; PECL §§ 5:101, 5:102; Lt Cc § 6.193;Lt Cc § 6.193; La Cc § 2046; La Cc § 2046; Rf Cc § 431 Rf Cc § 431


Restatement 2d § 202.3Restatement 2d § 202.3 Unless a different intention is manifested,Unless a different intention is manifested, (a) where language has a generally (a) where language has a generally

prevailing meaning, it is interpreted in prevailing meaning, it is interpreted in accordance with that meaning. accordance with that meaning.


The Steuarts (П) granted a right of first The Steuarts (П) granted a right of first refusal to the McChesneys (Δ) in regard refusal to the McChesneys (Δ) in regard to certain real estate. The agreement to certain real estate. The agreement provided that the price would be the provided that the price would be the ‘market value of the premises according ‘market value of the premises according to the assessment rolls as maintained by to the assessment rolls as maintained by the county.’the county.’


Nine years later, П was received two Nine years later, П was received two offers for the property, for 30,000 and for offers for the property, for 30,000 and for 35,000 USD. П notified Δ, and Δ 35,000 USD. П notified Δ, and Δ tendered 7820 USD, the assessed value tendered 7820 USD, the assessed value of the property. of the property.


The tender was refused, and П initiated The tender was refused, and П initiated the suit. Δ counterclaimed for specific the suit. Δ counterclaimed for specific performance. performance.


The trial court, “after hearing testimony, The trial court, “after hearing testimony, held that the formula of twice the held that the formula of twice the assessed value was intended to serve as assessed value was intended to serve as ‘a mutual protective minimum price for ‘a mutual protective minimum price for the premises rather than to be the the premises rather than to be the controlling price without regard to a controlling price without regard to a market third-party offer.’”market third-party offer.’”


Issue: When the words of an agreement Issue: When the words of an agreement are clear and unambiguous, is the intent are clear and unambiguous, is the intent is to be discovered only from the express is to be discovered only from the express language of the agreement?language of the agreement?


Issue: When the words of an agreement Issue: When the words of an agreement are clear and unambiguous, is the intent are clear and unambiguous, is the intent is to be discovered only from the express is to be discovered only from the express language of the agreement?language of the agreement?

Holding: Holding: Yes.Yes.


‘‘[T]he plain meaning approach enhances [T]he plain meaning approach enhances the extent to which contracts may be the extent to which contracts may be relied upon by contributing to the security relied upon by contributing to the security of belief that the final expression of of belief that the final expression of consensus ad idemconsensus ad idem will not later be will not later be construed to import a meaning other than construed to import a meaning other than that clearly expressed.’that clearly expressed.’


Comment: The right of first refusal in this Comment: The right of first refusal in this case is a curious one. Ordinarily, a right case is a curious one. Ordinarily, a right of first refusal would operate so as to of first refusal would operate so as to give the holder of the right the option to give the holder of the right the option to buy at the same price as that of the third buy at the same price as that of the third party who has made the offer to the party who has made the offer to the seller. seller.


RussiaRussia Russia follows the four corner rule. The Russia follows the four corner rule. The

same result would be reached as in the same result would be reached as in the present case.present case.


FranceFrance France will not allow a provision to be de-France will not allow a provision to be de-

natured by the judge, but evidence as to natured by the judge, but evidence as to an understanding not in accordance with an understanding not in accordance with the written contract as such is the written contract as such is admissible.admissible.

Industrial Roofing v. J.C. Industrial Roofing v. J.C. Dellinger Memorial TrustDellinger Memorial Trust

Louisiana: Louisiana: Court of Appeal, 2nd Circuit (1999) Court of Appeal, 2nd Circuit (1999)

Casebook 534Casebook 534 La Cc § 2046; Restatement 2d §§ 204, La Cc § 2046; Restatement 2d §§ 204,

206; PECL §§ 5:101, 5:102; 206; PECL §§ 5:101, 5:102; Lt Cc § 6.193; Rf Cc § 431Lt Cc § 6.193; Rf Cc § 431

Industrial RoofingIndustrial Roofing

Restatement 2dRestatement 2d § 204 Unless a different intention is § 204 Unless a different intention is

manifested,manifested, (a) where language has a generally (a) where language has a generally

prevailing meaning, it is interpreted in prevailing meaning, it is interpreted in accordance with that meaningaccordance with that meaning


§206. Interpretation Against The §206. Interpretation Against The DraftsmanDraftsman

In choosing among the reasonable In choosing among the reasonable meanings of a promise or agreement or a meanings of a promise or agreement or a term thereof, that meaning is generally term thereof, that meaning is generally preferred which operates against the preferred which operates against the party who supplies the words or from party who supplies the words or from whom a writing otherwise proceeds. whom a writing otherwise proceeds.


§206. Interpretation Against The §206. Interpretation Against The DraftsmanDraftsman

In choosing among the reasonable In choosing among the reasonable meanings of a promise or agreement or a meanings of a promise or agreement or a term thereof, that meaning is generally term thereof, that meaning is generally preferred which operates against the preferred which operates against the party who supplies the words or from party who supplies the words or from whom a writing otherwise proceeds. whom a writing otherwise proceeds.


П= Industrial sued for balance due on a П= Industrial sued for balance due on a construction contract. Δ counterclaimed..construction contract. Δ counterclaimed..


According to Δ, ‘hog valleys’ on the roof According to Δ, ‘hog valleys’ on the roof should have been replaced with copper. should have been replaced with copper. The contract stated that the then extant The contract stated that the then extant (old) hog valleys (no mention of copper) (old) hog valleys (no mention of copper) were to be removed. were to be removed.


This was in the base part of the This was in the base part of the agreement. The additonal part of the agreement. The additonal part of the agreement stated that copper valleys agreement stated that copper valleys were to be installed. were to be installed.


Copper valleys are not copper hog Copper valleys are not copper hog valleys: coper valleys go under the roof valleys: coper valleys go under the roof at its seams. Copper hog valleys are like at its seams. Copper hog valleys are like open gutters running along the roof’s open gutters running along the roof’s edge. edge.


Δ argued that it understood the term ‘hog Δ argued that it understood the term ‘hog valleys’ to include copper hog valleys. valleys’ to include copper hog valleys.


Issue: Is a contract ambiguous when it Issue: Is a contract ambiguous when it states that something is to be replaced states that something is to be replaced but does not specify with what?but does not specify with what?


Holding: Holding: Yes. Yes. Therefore the court can go beyond the Therefore the court can go beyond the

four corners to ascertain the intent of the four corners to ascertain the intent of the parties.parties.


2d Q: What term should be supplied? 2d Q: What term should be supplied?


The П in essence argued that in the The П in essence argued that in the absence of an express provision that the absence of an express provision that the standards of the trade should be applied. standards of the trade should be applied. But the court found that the agreement But the court found that the agreement must be interpreted as requiring copper must be interpreted as requiring copper hog valleys because contracts hog valleys because contracts are are interpreted against the party drafting interpreted against the party drafting themthem

Berwick and Smith Co. v. Berwick and Smith Co. v. Salem PressSalem Press

Berwick and Smith Co. v. Salem PressBerwick and Smith Co. v. Salem Press Massachusetts: Supreme Judicial Court Massachusetts: Supreme Judicial Court

(1954) Casebook 540(1954) Casebook 540 Restatement 2d § 202 (b); Unidroit Restatement 2d § 202 (b); Unidroit

Principles § 4.3(e); PECL § 5.102 (e)Principles § 4.3(e); PECL § 5.102 (e)

Berwick and SmithBerwick and Smith

П agreed to bind a two-volume work for Δ П agreed to bind a two-volume work for Δ Salem Press. ‘The price was quoted as Salem Press. ‘The price was quoted as “5,000 copies at .561 10,000 copies “5,000 copies at .561 10,000 copies at .538.” П bound the books and invoiced at .538.” П bound the books and invoiced at .561. at .561.


Δ contended it should have been billed at Δ contended it should have been billed at the lesser rate. П sought to prove that the lesser rate. П sought to prove that the meaning of the word ‘copy’ is the meaning of the word ‘copy’ is controlled by trade usage (as meaning controlled by trade usage (as meaning ‘set’). ‘set’).


Δ did not in fact understand this special Δ did not in fact understand this special meaning. When Δ refused to pay, П meaning. When Δ refused to pay, П brought an action for damages. brought an action for damages.


The jury trial resulted in a verdict for П, The jury trial resulted in a verdict for П, from which Δ appeals, alleging error in from which Δ appeals, alleging error in submitting the question of whether there submitting the question of whether there was a trade useage binding upon the was a trade useage binding upon the parties to the jury, inasmuch as Δ had no parties to the jury, inasmuch as Δ had no actual knowledge of it.actual knowledge of it.


Issue: In order for trade useage to be Issue: In order for trade useage to be binding upon the parties, must both of the binding upon the parties, must both of the parties have actual knowledge of it?parties have actual knowledge of it?


Issue: In order for trade useage to be Issue: In order for trade useage to be binding upon the parties, must both of the binding upon the parties, must both of the parties have actual knowledge of it?parties have actual knowledge of it?

Holding: Holding: No.No.


Q: Why is this not a mistake?Q: Why is this not a mistake? A: Because knowledge is imputed to Δ as A: Because knowledge is imputed to Δ as

a matter of law.a matter of law.

Pacific Gas v. Thomas Pacific Gas v. Thomas Drayage Co.Drayage Co.

California: Supreme Court 69 Cal. 2d 33 California: Supreme Court 69 Cal. 2d 33 (1968) Casebook 543(1968) Casebook 543

UCC § 1-205; Unidroit Principles § 4.1; UCC § 1-205; Unidroit Principles § 4.1; PECL § 5:101.1; La Cc § 2046; Ee L. on PECL § 5:101.1; La Cc § 2046; Ee L. on Obligations § 29; Rf Cc § 431; Lt Cc Obligations § 29; Rf Cc § 431; Lt Cc 6.103.1 6.103.1

Pacific GasPacific Gas

““Defendant appeals from a judgment for Defendant appeals from a judgment for plaintiff in an action for damages for plaintiff in an action for damages for injury to property under an indemnity injury to property under an indemnity clause of a contract. In 1960 defendant clause of a contract. In 1960 defendant entered into a contract with plaintiff to entered into a contract with plaintiff to furnish the labor and equipment furnish the labor and equipment necessary to remove and replace the necessary to remove and replace the upper metal cover of plaintiff’s steam upper metal cover of plaintiff’s steam turbine. turbine.


Defendant agreed to perform the work ‘at Defendant agreed to perform the work ‘at [its] own risk and expense’ and to [its] own risk and expense’ and to ‘indemnify’ plaintiff ‘against all loss, ‘indemnify’ plaintiff ‘against all loss, damage, expense and liability resulting damage, expense and liability resulting from… injury to property, arising out of or from… injury to property, arising out of or in any way connected with the in any way connected with the performance of this contract.’”performance of this contract.’”


During the course of the work the steam During the course of the work the steam turbine was damaged to the amount of turbine was damaged to the amount of approximately 25,000 USD. П sued to approximately 25,000 USD. П sued to recover this amount.recover this amount.


Δ contends, however, that the indemnity Δ contends, however, that the indemnity provision was to cover only loss to П provision was to cover only loss to П caused by having to pay claims of third caused by having to pay claims of third parties. parties.


The loss in question, having been The loss in question, having been sustained by П and not by a third party, sustained by П and not by a third party, would have been covered under the plain would have been covered under the plain meaning of the clause. meaning of the clause.


Δ sought to prove this special meaning by Δ sought to prove this special meaning by producing evidence of П’s admissions, of producing evidence of П’s admissions, of П’s conduct in relation to other contracts П’s conduct in relation to other contracts with Δ, and by ‘other proof.’with Δ, and by ‘other proof.’


Issue: Should extrinsic evidence be Issue: Should extrinsic evidence be admissible to prove the indemnity clause admissible to prove the indemnity clause was intended to reimburse plaintiff (PG & was intended to reimburse plaintiff (PG & E) only against loss through having to E) only against loss through having to pay claims of third parties or also against pay claims of third parties or also against loss caused by its own injury? loss caused by its own injury?


Holding: Yes. Holding: Yes. The plain meaning rule would require that The plain meaning rule would require that

the court first determine, on the basis of the court first determine, on the basis of its own linguistic education and its own linguistic education and experience, what the meaning of the experience, what the meaning of the contract is. But words do not have fixed contract is. But words do not have fixed meanings outside of circumstances and meanings outside of circumstances and purposes. purposes.

Pacific GasPacific Gas ‘‘The fact that the terms of an instrument appear clear to a judge does not The fact that the terms of an instrument appear clear to a judge does not

preclude the possibility that the parties chose the language of the preclude the possibility that the parties chose the language of the instrument to express different terms.’instrument to express different terms.’

Case 101 Steuart v. McChesneyCase 101 Steuart v. McChesney

Steuarts (П) granted a right of first refusal to Steuarts (П) granted a right of first refusal to the McChesneys (Δ) in regard to certain real the McChesneys (Δ) in regard to certain real estate. The agreement provided that the price estate. The agreement provided that the price would be the ‘market value of the premises would be the ‘market value of the premises according to the assessment rolls as according to the assessment rolls as maintained by the county.’maintained by the county.’

Demoiselle Monge v. Veuve Minart Demoiselle Monge v. Veuve Minart Monge worked in Minart's brothel as Monge worked in Minart's brothel as a chamber-maid. Monge claims she a chamber-maid. Monge claims she did not know of the fact that it was a did not know of the fact that it was a brothel at the time of the formation brothel at the time of the formation of contract. Monge is owed the of contract. Monge is owed the balance of her salary—apparently balance of her salary—apparently she was paid only part of what she she was paid only part of what she was supposed to have been paid.was supposed to have been paid.

PECL § 4:118: Exclusion or PECL § 4:118: Exclusion or restriction of remediesrestriction of remedies

(1) Remedies for fraud, threats and (1) Remedies for fraud, threats and excessive benefit or unfair excessive benefit or unfair advantage-taking, and the right to advantage-taking, and the right to avoid an unfair term which has not avoid an unfair term which has not been individually negotiated, cannot been individually negotiated, cannot be excluded or restricted. be excluded or restricted.

Wickham & Burton Coal Co. v. Farmers’ Lumber Wickham & Burton Coal Co. v. Farmers’ Lumber Co. Iowa Supreme CourtCo. Iowa Supreme CourtIn August of 1916, In August of 1916, Π Π seller agreed to sell to Δ-seller agreed to sell to Δ-buyer “as much coal as buyer would wish to buyer “as much coal as buyer would wish to purchase” at a fixed price. Apparently because purchase” at a fixed price. Apparently because of the world war, coal prices rose, with the result of the world war, coal prices rose, with the result being that the contract became less attractive to being that the contract became less attractive to the Π-seller. Δ made two purchases under the the Π-seller. Δ made two purchases under the contract, and then Π refused to sell any more contract, and then Π refused to sell any more coal for the price fixed in the contract. The Δ coal for the price fixed in the contract. The Δ purchased coal at the market price and purchased coal at the market price and counterclaimed for the difference. counterclaimed for the difference.

Feld v. Henry S. Levy & Sons, Inc. Feld v. Henry S. Levy & Sons, Inc.

Δ operates a bakery business. In 1968 Δ operates a bakery business. In 1968 the parties entered into a written contract the parties entered into a written contract under which Δ undertook to supply the Π under which Δ undertook to supply the Π with Δ's entire production (output) of with Δ's entire production (output) of bread crumbs (a product which takes bread crumbs (a product which takes some steps to manufacture, not some steps to manufacture, not consisting merely of crumbs that may consisting merely of crumbs that may flake off of other bread products). The flake off of other bread products). The contract could be terminated by six contract could be terminated by six months advance notice. months advance notice.

Feld v. Henry S. Levy & Sons, Inc. Feld v. Henry S. Levy & Sons, Inc. Δ did supply several tons of bread Δ did supply several tons of bread crumbs to Π, then it stopped doing crumbs to Π, then it stopped doing so because it was "uneconomical." so because it was "uneconomical." Δ stated that it would resume Δ stated that it would resume supplying Π if the price were raised supplying Π if the price were raised from 6 cents a pound to 7 cents. Δ from 6 cents a pound to 7 cents. Δ dismantled the oven used for the dismantled the oven used for the process and halted production of process and halted production of bread crumbs. bread crumbs.

Feld v. Henry S. Levy & Sons, Inc. Feld v. Henry S. Levy & Sons, Inc.

Δ contends it did not breach the Δ contends it did not breach the contract since the contract only contract since the contract only required it to sell its breadcrumbs to required it to sell its breadcrumbs to Π, but since it was not making them, Π, but since it was not making them, it was under not duty to deliver it was under not duty to deliver them. It is not proven on the record them. It is not proven on the record that the breaking off of manufacture that the breaking off of manufacture was done in good faith.was done in good faith.

Feld v. Henry S. Levy & Sons, Inc. Feld v. Henry S. Levy & Sons, Inc. Δ did supply several tons of bread crumbs to Π, Δ did supply several tons of bread crumbs to Π, then it stopped doing so because it was then it stopped doing so because it was "uneconomical." Δ stated that it would resume "uneconomical." Δ stated that it would resume supplying Π if the price were raised from 6 cents supplying Π if the price were raised from 6 cents a pound to 7 cents. Δ dismantled the oven used a pound to 7 cents. Δ dismantled the oven used for the process and halted production of bread for the process and halted production of bread crumbs. Δ contends it did not breach the crumbs. Δ contends it did not breach the contract since the contract only required it to sell contract since the contract only required it to sell its breadcrumbs to Π, but since it was not its breadcrumbs to Π, but since it was not making them, it was under not duty to deliver making them, it was under not duty to deliver them. It is not proven on the record that the them. It is not proven on the record that the breaking off of manufacture was done in good breaking off of manufacture was done in good faith. faith.

Case 16 Société Muroiterie Fraisse Case 16 Société Muroiterie Fraisse v. Miconv. MiconMicon/Δ invited Π/Societe Muroiterie Fraisse to Micon/Δ invited Π/Societe Muroiterie Fraisse to negotiate concerning a possible order and Π by negotiate concerning a possible order and Π by invitation visited the site of an apartment building invitation visited the site of an apartment building being constructed. Π had previously installed being constructed. Π had previously installed mirrors in a model apartment in that building. Π mirrors in a model apartment in that building. Π made an offer concerning installation of mirrors made an offer concerning installation of mirrors in the entire building. Other similar companies in the entire building. Other similar companies also made offers. Micon/Δ did not advise Π that also made offers. Micon/Δ did not advise Π that it had received offers for a lesser (therefore it had received offers for a lesser (therefore more attractive) price one of which it accepted. more attractive) price one of which it accepted.

Case 17 Gerteis v. Société Viller-Lourmat Case 17 Gerteis v. Société Viller-Lourmat Π began negotiations April 1966 with Δ. Δ is the Π began negotiations April 1966 with Δ. Δ is the sole distributor in France of machines used to sole distributor in France of machines used to manufacture cement pipes made in Nashua, manufacture cement pipes made in Nashua, Iowa by Hydrotile Co. Robert Gerteis traveled to Iowa by Hydrotile Co. Robert Gerteis traveled to the USA (presumably to Iowa) to observe the the USA (presumably to Iowa) to observe the operation these machines from May 13 to 23, operation these machines from May 13 to 23, 1966. Π requested further information regarding 1966. Π requested further information regarding the machines in writing, the Δ did not respond. the machines in writing, the Δ did not respond. The manufacturer sent an estimate to Π which Δ The manufacturer sent an estimate to Π which Δ did not forward to Π on June 4, 1966. On June did not forward to Π on June 4, 1966. On June 16 Δ sold a Hydrotile machine to a competitor of 16 Δ sold a Hydrotile machine to a competitor of Π, undertaking not to sell another machine in the Π, undertaking not to sell another machine in the east of France (presumably the area that Π does east of France (presumably the area that Π does business in) for 24 months. Π sued for damages. business in) for 24 months. Π sued for damages.

Case 17 Gerteis v. Société Viller-Lourmat Case 17 Gerteis v. Société Viller-Lourmat Π began negotiations April 1966 with Δ. Δ is the Π began negotiations April 1966 with Δ. Δ is the sole distributor in France of machines used to sole distributor in France of machines used to manufacture cement pipes made in Nashua, manufacture cement pipes made in Nashua, Iowa by Hydrotile Co. Robert Gerteis traveled to Iowa by Hydrotile Co. Robert Gerteis traveled to the USA (presumably to Iowa) to observe the the USA (presumably to Iowa) to observe the operation these machines from May 13 to 23, operation these machines from May 13 to 23, 1966. Π requested further information regarding 1966. Π requested further information regarding the machines in writing, the Δ did not respond. the machines in writing, the Δ did not respond. The manufacturer sent an estimate to Π which Δ The manufacturer sent an estimate to Π which Δ did not forward to Π on June 4, 1966. On June did not forward to Π on June 4, 1966. On June 16 Δ sold a Hydrotile machine to a competitor of 16 Δ sold a Hydrotile machine to a competitor of Π, undertaking not to sell another machine in the Π, undertaking not to sell another machine in the east of France (presumably the area that Π does east of France (presumably the area that Π does business in) for 24 months. Π sued for damages. business in) for 24 months. Π sued for damages.

Case 18 Ysiem Corp. v. Case 18 Ysiem Corp. v. Commercial Net Lease RealtyCommercial Net Lease Realty

Π wanted Δ to develop land Π Π wanted Δ to develop land Π owned so that OfficeMax, a owned so that OfficeMax, a large retail firm, would open a large retail firm, would open a store on the premises, leasing store on the premises, leasing the building from Δ who would the building from Δ who would lease the land from Π. lease the land from Π.

Case 18 Ysiem Corp. v. Commercial Case 18 Ysiem Corp. v. Commercial Net Lease RealtyNet Lease RealtyOn March 26, 1998, Commercial Net On March 26, 1998, Commercial Net and Ysiem signed a letter of intent and Ysiem signed a letter of intent specifying the lease term, annual specifying the lease term, annual ground rent, and other contemplated ground rent, and other contemplated provisions including a statement that provisions including a statement that the effective date of the ground lease the effective date of the ground lease would be the date that OfficeMax would be the date that OfficeMax opened its doors or six months after opened its doors or six months after the start of construction, whichever the start of construction, whichever came later.came later.

Case 18 Ysiem Corp. Case 18 Ysiem Corp. Π and Δ then negotiated in relation to the lease Π and Δ then negotiated in relation to the lease between them. Δ-ComNet sent Π-Ysiem a between them. Δ-ComNet sent Π-Ysiem a signed copy of a contract containing a signed copy of a contract containing a conventioal term: that the lease comes into effect conventioal term: that the lease comes into effect at a certain date, which was left blank, and which at a certain date, which was left blank, and which further stated that if OfficeMax did not sign a further stated that if OfficeMax did not sign a sublease, lessee (ComNet) could render the sublease, lessee (ComNet) could render the lease null. The lease also stated that it would be lease null. The lease also stated that it would be effective only upon being signed and delivered. effective only upon being signed and delivered. Π signed and returned this lease, but Δ merely Π signed and returned this lease, but Δ merely retained all four copies without executing them. retained all four copies without executing them. OfficeMax did not sign a sublease because the OfficeMax did not sign a sublease because the price was too high. Π would not lower the rent. Δ price was too high. Π would not lower the rent. Δ lessened its margin. lessened its margin.

Case 63 Scott v. Moragues Lumber Co.Case 63 Scott v. Moragues Lumber Co.

Defendant undertook to lease a ship Defendant undertook to lease a ship to plaintiff if defendant acquired it. to plaintiff if defendant acquired it. Defendant did acquire the ship but Defendant did acquire the ship but leased it to another party. Plaintiff leased it to another party. Plaintiff sues for damages.sues for damages.

Case 86 Laurents v. Louisiana Mobile HomesCase 86 Laurents v. Louisiana Mobile HomesΠs (a married couple) ordered a mobile home Πs (a married couple) ordered a mobile home from Δ. Π paid a deposit. Δ materially breached from Δ. Π paid a deposit. Δ materially breached the contract by delivering a mobile home which the contract by delivering a mobile home which was not according to specifications and by was not according to specifications and by refusing to fix it. Π terminated the contract and refusing to fix it. Π terminated the contract and sued to recover damages and the deposit (as if it sued to recover damages and the deposit (as if it were a mere advance payment). were a mere advance payment). A clause in the contract specified that if the A clause in the contract specified that if the purchaser (Π) terminated the contract, the seller purchaser (Π) terminated the contract, the seller (Δ) would keep the deposit as ‘consequential (Δ) would keep the deposit as ‘consequential damages.’ damages.’

Case 86 Laurents v. Louisiana Mobile HomesCase 86 Laurents v. Louisiana Mobile HomesA clause in the contract specified that if the A clause in the contract specified that if the purchaser (Π) terminated the contract, the seller purchaser (Π) terminated the contract, the seller (Δ) would keep the deposit as ‘consequential (Δ) would keep the deposit as ‘consequential damages.’ damages.’ At the time of the formation of the contract, Louisiana law At the time of the formation of the contract, Louisiana law operated to create a presumption that such an advance is operated to create a presumption that such an advance is indeed earnest money. indeed earnest money.

Case 82 Lake River Corp. v. Carborundum Co.Case 82 Lake River Corp. v. Carborundum Co.

Δ Carborundum agreed to order a certain Δ Carborundum agreed to order a certain amount; if Δ did not do so, it would pay up amount; if Δ did not do so, it would pay up to that amount in penalty. About half the to that amount in penalty. About half the agreed amount was ordered. Thus Δ agreed amount was ordered. Thus Δ purportedly owed П Lake River 241,000 purportedly owed П Lake River 241,000 USD. П demanded payment and Δ refused USD. П demanded payment and Δ refused on the grounds that the clause constituted on the grounds that the clause constituted a penalty.a penalty.

Case 84 Stankevičius v. ChadakavičiusCase 84 Stankevičius v. Chadakavičius

The parties entered into an The parties entered into an ‘earnest money’ agreement ‘earnest money’ agreement regarding the sale of the right to regarding the sale of the right to harvest lumber upon land owned harvest lumber upon land owned by the Δ. П paid 8000 Lt to Δ (in by the Δ. П paid 8000 Lt to Δ (in 2000 this was the equivalent of 2000 this was the equivalent of 2000 USD), and the balance was 2000 USD), and the balance was to be paid at a later date. to be paid at a later date.

Case 84 Stankevičius v. ChadakavičiusCase 84 Stankevičius v. Chadakavičius

The agreement contemplated the The agreement contemplated the formation of a purchase-sale formation of a purchase-sale agreement. Subsequently, Δ refused agreement. Subsequently, Δ refused to form the principal contract. П sued to form the principal contract. П sued for 16,000 Lt, which is double the for 16,000 Lt, which is double the amount of the funds paid-in by the П, amount of the funds paid-in by the П, under the theory that this was earnest under the theory that this was earnest money. The trial court treated the money. The trial court treated the 8000 Lt as an advance. The appellate 8000 Lt as an advance. The appellate court reversed. Δ landowner court reversed. Δ landowner appealed.appealed.

Case 100 Mitchell v. LathCase 100 Mitchell v. Lath

П Mitchell purchased land from Δ П Mitchell purchased land from Δ Lath. Lath. П seeks to introduce evidence that it П seeks to introduce evidence that it was also agreed that Δ would remove was also agreed that Δ would remove an ice house which he maintained on an ice house which he maintained on neighboring property which П had neighboring property which П had found objectionable.found objectionable.

Case 100 Mitchell v. LathCase 100 Mitchell v. Lath

Is the ‘agreement’ to get rid of the ice Is the ‘agreement’ to get rid of the ice house a collateral agreement?house a collateral agreement?

That is, is the contract completely That is, is the contract completely integrated?integrated?


Steuarts (П) granted a right of Steuarts (П) granted a right of first refusal to the McChesneys first refusal to the McChesneys (Δ) in regard to certain real (Δ) in regard to certain real estate. The agreement estate. The agreement provided that the price would provided that the price would be the ‘market value of the be the ‘market value of the premises according to the premises according to the assessment rolls as maintained assessment rolls as maintained by the county.’by the county.’


Nine years later, П was received Nine years later, П was received two offers for the property, for two offers for the property, for 30,000 and for 35,000 USD. П 30,000 and for 35,000 USD. П notified Δ, and Δ tendered 7820 notified Δ, and Δ tendered 7820 USD, the assessed value of the USD, the assessed value of the property. The tender was refused, property. The tender was refused, and П initiated the suit. Δ and П initiated the suit. Δ counterclaimed for specific counterclaimed for specific performance. performance.


The trial court, “after hearing The trial court, “after hearing testimony, held that the formula of testimony, held that the formula of twice the assessed value was twice the assessed value was intended to serve as ‘a mutual intended to serve as ‘a mutual protective minimum price for the protective minimum price for the premises rather than to be the premises rather than to be the controlling price without regard to controlling price without regard to a market third-party offer.’”a market third-party offer.’”

Case 102 Industrial Roofing v. J.C. Dellinger Memorial Case 102 Industrial Roofing v. J.C. Dellinger Memorial TrustTrust

П= Industrial sued for balance due on П= Industrial sued for balance due on a construction contract. Δ a construction contract. Δ counterclaimed. According to Δ, ‘hog counterclaimed. According to Δ, ‘hog valleys’ on the roof should have been valleys’ on the roof should have been replaced with copper. The contract replaced with copper. The contract stated that the then extant (old) hog stated that the then extant (old) hog valleys (no mention of copper) were to valleys (no mention of copper) were to be removed. This was in the base part be removed. This was in the base part of the agreement. of the agreement.

Case 102 Industrial Roofing v. J.C. Dellinger Memorial Case 102 Industrial Roofing v. J.C. Dellinger Memorial TrustTrust

The additional part of the agreement stated The additional part of the agreement stated that copper valleys were to be installed. that copper valleys were to be installed. Copper valleys are not copper hog valleys: Copper valleys are not copper hog valleys: copper valleys go under the roof at its copper valleys go under the roof at its seams. Copper hog valleys are like open seams. Copper hog valleys are like open gutters running along the roof’s edge. Δ gutters running along the roof’s edge. Δ argued that it understood the term ‘hog argued that it understood the term ‘hog valleys’ to include copper hog valleys. П valleys’ to include copper hog valleys. П drafted the contract. It was not specified drafted the contract. It was not specified with what the hog valleys were to be with what the hog valleys were to be replaced. The building was historic.replaced. The building was historic.

Case 103 Berwick and Smith Co. v. Salem PressCase 103 Berwick and Smith Co. v. Salem Press

Facts: П agreed to bind a two-Facts: П agreed to bind a two-volume work for Δ Salem Press. volume work for Δ Salem Press. ‘The price was quoted as “5,000 ‘The price was quoted as “5,000 copies at .561 10,000 copies copies at .561 10,000 copies at .538.” П bound the books and at .538.” П bound the books and invoiced at .561. Δ contended it invoiced at .561. Δ contended it should have been billed at the should have been billed at the lesser rate, because it (Δ) did not lesser rate, because it (Δ) did not understand the trade useage that understand the trade useage that each volume is considered a copy. each volume is considered a copy.

Case 104 Pacific Gas v. Thomas Drayage Co.Case 104 Pacific Gas v. Thomas Drayage Co.

““Defendant appeals from a judgment for plaintiff Defendant appeals from a judgment for plaintiff in an action for damages for injury to property in an action for damages for injury to property under an indemnity clause of a contract. In 1960 under an indemnity clause of a contract. In 1960 defendant entered into a contract with plaintiff to defendant entered into a contract with plaintiff to furnish the labor and equipment necessary to furnish the labor and equipment necessary to remove and replace the upper metal cover of remove and replace the upper metal cover of plaintiff’s steam turbine. Defendant agreed to plaintiff’s steam turbine. Defendant agreed to perform the work ‘at [its] own risk and expense’ perform the work ‘at [its] own risk and expense’ and to ‘indemnify’ plaintiff ‘against all loss, and to ‘indemnify’ plaintiff ‘against all loss, damage, expense and liability resulting from… damage, expense and liability resulting from… injury to property, arising out of or in any way injury to property, arising out of or in any way connected with the performance of this contract.’”connected with the performance of this contract.’”

Case 104 Pacific Gas v. Thomas Drayage Co.Case 104 Pacific Gas v. Thomas Drayage Co.

During the course of the work the steam turbine During the course of the work the steam turbine was damaged to the amount of approximately was damaged to the amount of approximately 25,000 USD. П sued to recover this amount. 25,000 USD. П sued to recover this amount. Δ contends, however, that the indemnity Δ contends, however, that the indemnity provision was to cover only loss to П caused by provision was to cover only loss to П caused by having to pay claims of third parties. The loss in having to pay claims of third parties. The loss in question, having been sustained by П and not by question, having been sustained by П and not by a third party, would have been covered under the a third party, would have been covered under the plain meaning of the clause. Δ sought to prove plain meaning of the clause. Δ sought to prove this special meaning by producing evidence of this special meaning by producing evidence of П’s admissions, of П’s conduct in relation to other П’s admissions, of П’s conduct in relation to other contracts with Δ, and by ‘other proof.’contracts with Δ, and by ‘other proof.’

Case 108 Procurator v. Sverida, Inc.Case 108 Procurator v. Sverida, Inc. Textile School of Alytus held property in Textile School of Alytus held property in quasi-trust from the government. With the quasi-trust from the government. With the knowledge and consent of some knowledge and consent of some government officials, the School government officials, the School gratuitously transferred the property, an gratuitously transferred the property, an apartment, to a third party. This transfer apartment, to a third party. This transfer was effected not in accordance with was effected not in accordance with privatization statutes. The third party, UAB privatization statutes. The third party, UAB Sverida, a closed corporation, transferred it Sverida, a closed corporation, transferred it to one Stankevicius, a citizen, from whom to one Stankevicius, a citizen, from whom the government (the Π) now seeks to the government (the Π) now seeks to vindicate it. Stankevicius purchased the vindicate it. Stankevicius purchased the property in good faith and for value.property in good faith and for value.

Case 109 Suburban Motors v. State FarmCase 109 Suburban Motors v. State FarmΔ State Farm appeals from a summary Δ State Farm appeals from a summary judgment declaring П, Suburban Motors, judgment declaring П, Suburban Motors, has valid title to an automobile. State Farm has valid title to an automobile. State Farm contends its title, obtained directly from the contends its title, obtained directly from the lawful owner whom it insured and from lawful owner whom it insured and from whom the vehicle was stolen, is superior to whom the vehicle was stolen, is superior to the claim of Suburban Motors, a bona fide the claim of Suburban Motors, a bona fide purchaser for value under a ‘chain of title’ purchaser for value under a ‘chain of title’ traceable to the thief. State Farm insured traceable to the thief. State Farm insured an automobile against theft. It was stolen; an automobile against theft. It was stolen; State Farm paid the owner the insurance, State Farm paid the owner the insurance, and the owner transferred title to the and the owner transferred title to the automobile to State Farm. automobile to State Farm.

Case 109 Suburban Motors v. State FarmCase 109 Suburban Motors v. State Farm

The automobile’s VIN numbers The automobile’s VIN numbers were changed and eventually it were changed and eventually it was registered with the was registered with the California Department of Motor California Department of Motor Vehicles. It was acquired by Vehicles. It was acquired by Suburban Motors and leased to Suburban Motors and leased to an innocent third party.an innocent third party.

The California Highway Patrol discovered it The California Highway Patrol discovered it was stolen, and the lessee voluntarily was stolen, and the lessee voluntarily turned it over to them, who turned it over turned it over to them, who turned it over (transferred possession to) State Farm. (transferred possession to) State Farm. Suburban Motors sued. On a motion for Suburban Motors sued. On a motion for summary judgement, the court found for summary judgement, the court found for Suburban Motors.Suburban Motors.

Case 110 Zhuravliova v. St. Petersburg Case 110 Zhuravliova v. St. Petersburg CustomsCustoms

П Zhuravliova sued Δ St. Petersburg П Zhuravliova sued Δ St. Petersburg Customs Office for return of her Customs Office for return of her automobile. П in 1996 purchased a automobile. П in 1996 purchased a 1994 Mitsubishi-Pajero automobile. It 1994 Mitsubishi-Pajero automobile. It was sold to her by one D.S. Piskunov was sold to her by one D.S. Piskunov and had been listed in the State and had been listed in the State Automobile Inspection’s register as Automobile Inspection’s register as provided by law. provided by law.


In February, 1998, the car was seized In February, 1998, the car was seized for the violation of customs rules: it for the violation of customs rules: it had been imported to Russia in 1994 had been imported to Russia in 1994 by one E.V. Buldakov but did not by one E.V. Buldakov but did not lawfully pass customs. lawfully pass customs.


П’s court action to invalidate the П’s court action to invalidate the decree pursuant to which the decree pursuant to which the automobile had been seized was automobile had been seized was unsuccessful. In July, 1998, П sued to unsuccessful. In July, 1998, П sued to declare her a bona fide purchaser and declare her a bona fide purchaser and to return the property to her. The trial to return the property to her. The trial court found for П, but the appellate court found for П, but the appellate court reversed the judgement. This court reversed the judgement. This appeal followed.appeal followed.

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