WHITE v. BENKOWSKI (Non-commercial agreement w/consideration) FACTS: P wanted to buy a property next door to D.

Water supply for the house came from a well on the Ds property D agreed to provide P with water through an agreement drafted by Ds friend, a real estate agent P was to pay D $3.00/month and half maintenance over a period of 10 years, with option to renew D claimed P was using too much water and turned off P water supply on several occasions PROCEDURAL HISTORY: P filed a complaint against D for 1) compensatory damages. 2) Punitive damages. P claimed D caused an unhealthy and unsanitary condition and great mental anguish. D filed a motion to dismiss (demurrer) on the ground that punitive damages cannot be awarded for breach of contract. Motion was denied. Jury found for P. $10 for compensatory and $2,000 for punitive. D moved for a new trial. Court ruled that there can not be a finding of punitive damages when there can only be a finding of nominal damages from the evidence. Court granted motion to strike from the verdict the answer regarding punitive damages. Nominal damages reduced to $1.00. P appeals trial courts findings. P appeals. ISSUE: Did the trial court err in reducing the award of compensatory damages and are punitive damages available for breach of contract? HOLDING: Reversed in part and affirmed in part. REASONING: Re Compensatory damages: P does not have to ascertain damages with mathematical precision. Trier of fact sets damages at a reasonable amount. Jury set plaintiffs damages at $10. Court was in error in reducing this amount to $1. Finding of $10 takes it out of nominal status and is predicated on actual injury. Re Punitive damages: Punitive damages are not recoverable in an action for breach of contract even if the breach was willful. Although a breach may be a tort, no tort was pleaded or provided.

NIM PLASTICS CORP. v. STANDEX INTERNATIONAL CORP. (Commercial agreement w/consideration) FACTS:- Plaintiff NIM Plastics Corporation (NIM) is in the business of extruding polycarbonate resin into sheets and film which it then markets and sells to its customers. Mold-Tech, a division of the Defendant corporation, is in the business of applying textured and chemically etched finishes on rolls to be used by customers to produce or manufacture sheets of film. - In or about 1992, NIM had one of its existing rolls refinished with a textured matte finish - In or about May of 1997, NIM and Mold-Tech entered into an oral contract. Under the agreement, Mold-Tech agreed (a) to refinish NIMs existing Roll with a matte finish replicating the matte finish then on the Roll, (b) to chemically etch the matte finish onto the existing Roll, and (c) to complete the work on the Roll and return it to NIM in approximately three weeks. - Mold-Tech had the Roll sandblasted and resurfaced and then returned it to NIM on or about June 9, 1997. The surface applied to the Roll did not replicate the matte finish which was on the Roll when the Roll was received by Mold-Tech. - NIM rejected the resurfaced Roll as non-conforming and seasonably notified Mold-Tech of its rejection of the Roll. NIM

returned the Roll to Mold-Tech twice for the purpose of Mold-Tech repairing and appropriately equating the finish on the Roll. Mold-Tech and its agent, Keystone Rolls, Inc., however, were unable to repair the Roll so that it complied with MoldTechs agreement with NIM. (Id.) - NIM shipped the Roll to New Castle, a competitor of Mold-Tech, which resurfaced the Roll with a matte finish replicating the original matte finish on NIMs Roll. PROCEDURAL HISTORY: On November 3, 1997, NIM filed a two-count complaint against Standex. NIM sues Standex for breach of contract (Count I) and breach of implied warranty (Count II). ISSUE: Plaintiffs implied warranty claim is a creation of the UCC and both parties agree that the UCC applies only to transactions in goods. Did Mold-Tech provide NIM with a good within the meaning of the UCC? HOLDING: Defendant Standex Internationals motion to dismiss Plaintiff NIM Plastics Corporations breach of implied warranty claim (Count II of the Complaint) is granted with prejudice. The court finds that the parties contract for MoldTech to provide a new matte surface for NIMs Roll was a service contract, not a sale of goods as defined by the U.C.C REASONING: - UCC defines goods as all things which are moveable at the time of identification to the contract for sale. It is not intended to deal with things which are not fairly identifiable as moveables before the contract is performed. Additionally, the U.C.C. defines a sale as the passing of title from the seller to the buyer for a price. Where a sale of goods additionally requires the seller to perform services, Illinois law classifies the agreement as mixed and requires courts to apply a predominant purpose test to determine whether the U.C.C. governs the contract. The central query of the test is whether the purpose of the agreement is the rendition of service, with goods incidentally involved (e.g., contract with artist for painting) or is a transaction of sale, with labor incidentally involved (e.g., installation of a water heater in a bathroom). If the contracts primary purpose is the sale of goods, then the entire contract falls within the ambit of the U.C.C.

SULLIVAN v. OCONNOR (agreement w/consideration) FACTS: D performed cosmetic surgery on P to improve her appearance. P was a professional entertainer D was to perform two surgeries to improve the appearance of Ps nose, but instead had to perform three and her appearance was worsened Ps nose could not be improved by further surgery Payments by P for Ds fee and hospital expenses were $622.65 PROCEDURAL HISTORY: P filed suit against D for breach of contract claiming the surgery had worsened her appearance and caused her pain and suffering and also for malpractice charging D had been negligent. Jury found for P in the amount of $13,500 on the issue of breach. They found for D on the issue of negligence. D appealed the correctness of the judges instructions regarding damages contending that judge should not have instructed on anything other than out-of-pocket expenses. ISSUE: Did trial court err in instructing the jury that P could recover damages and pain and suffering from third operation?

HOLDING: Ds exceptions should be overruled. REASONING: Trial judge instructed the jury 1) out-of-pocket expenses 2) damages flowing naturally, proximately and foreseeably from Ds breach (any change in appearance for the worse, including effects of consciousness) 3) pain and suffering of the third operation. For breach of patient-physician agreements under consideration, recovery limited to restitution (fee paid) seems too meager. An expectancy recovery may be excessive, given that the cause of action may be somewhat suspect. Where the doctor has been absolved of negligence, an expectancy measure may be overly harsh. Further to put a value on the expectancy recovery might be a strain on the imagination of the fact finder. There is no general rule barring pain and suffering damages in a breach action. It is a question of the subject matter and background of the contract and when the contract calls for an operation psychological and physical injury may be expected to figure in the recovery. Plaintiff is entitled to recover for out of pocket expenses, for the worsening of her condition, and for pain and suffering and mental distress involved in the third operation. These items are compensable on an expectancy or reliance view. HARDESTY v. SMITH (Consideration as a bargained for exchange) FACTS: D bought the rights to an invention for an improvement on a lamp D paid for the rights by signing promissory notes which were assigned to P When P sought to collect on the notes, D alleged that the improvement he had bought was worthless. PROCEDURAL HISTORY: At trial the court overruled Ps demurrer and found for D. ISSUE: Did the court err in not sustaining the demurrer? HOLDING: Yes. The fact that the improvement on the lamp was of no utility is not sufficient to bar a suit on the promissory notes. Judgment is reversed and the cause is remanded. REASONING: Parties of sufficient mental capacity have a right to make their own bargains. The owner of thing has the right to fix the price at which he will part with it, and the buyers own judgment should be his best guide as to what he should give to obtain it. The parting of a right, which one possesses, to another, at his request, may constitute a good consideration. When a party gets all the consideration he honestly contracted for, he cannot say he got no consideration. DOUGHERTY v. SALT (agreement w/consideration gift) FACTS: P received a note from his aunt for $3,000 payable at her death or before. On the note was written value received At aunts death, executrix refused to pay, claiming it was a gift and unenforceable. PROCEDURAL HISTORY: The trial judge submitted to the jury whether there was any consideration for the promised payment and then set aside a verdict for P and dismissed the complaint. Appellate Division reversed the judgment of dismissal and reinstated the verdict on the ground that there was sufficient evidence of consideration. D appeals. ISSUE: Did the trial court err in setting aside the jurys verdict and dismissing the complaint.

HOLDING: No. The verdict of the jury was contrary to the law and the judge was right in setting it aside. REASONING: The note was the voluntary and unenforceable promise of an executory gift. By the P witnesses own testimony consideration has been disproved and there is no question for a jury. The aunt was not paying a debt she was conferring a bounty. The promise was neither offered nor accepted with any other person. Nothing is consideration that is not regarded as such by both parties. MAUGHS v. PORTER (gift w/consideration) FACTS: D put an ad in the paper stating that there would be an auction of 50 new Fords. One person would be the winner of a new Ford. After a drawing, P was adjudged the winner. She paid the auctioneer $3. D ordered the car but refused to pay for it when it arrived and has refused to pay P the value of the car ($461). PROCEDURAL HISTORY: P filed a motion for $461. D filed a demurrer which was sustained. D filed the demurrer on the grounds that 1) failure of P to show sufficient consideration. 2) The scheme alleged in the notice of motion is a lottery or raffle and therefore illegal and unenforceable. P has been allowed a writ of error. ISSUE: Can the offer of gift be enforced if sufficient consideration is shown? If there is sufficient consideration does the transaction constitute a lottery? HOLDING: Yes the offer of a gift can be enforced if sufficient consideration is shown. Court held that Ds promise was unenforceable as a lottery. REASONING: A gift is a contract without a consideration and to be valid must be executed. A valid gift therefore is a contract executed. P cannot recover unless D is bound by a promise which is supported by a consideration sufficient to support the action. The court concludes that there is sufficient consideration to support the gift. Ds object was to attract persons to the auction with the hope of deriving benefit from their appearance. Although persons may attend only to draw the free car, they might nonetheless be induced to bid on a car once they arrive. Ps attendance was sufficient consideration for the promise of the car, which could be enforced if otherwise legal. Court held the promise was unenforceable as a lottery. A contract with consideration is still unenforceable if it violates public policy.

HAMER v. SIDWAY (consideration waiver of a legal right) FACTS: P was promised by his uncle that if her were to abstain from drinking, gambling, swearing and using tobacco until the age of 21, he would give P $5,000 P did abstain as per his uncles instructions and on his 21st birthday contacted his uncle to let him know Ps uncle stated that the $5,000 was in a bank account for the plaintiff and would be give to P once the uncle felt certain that P would use it responsibly. At the time Ps uncle died, no portion of $5,000 has been paid

P presented the claim to D, his uncles executor, and claim was denied. PROCEDURAL HISTORY: At trial judgment was entered for the plaintiff, but that judgment was later reversed. Plaintiff appealed. ISSUE: Did the court err in reversing the judgment for P? HOLDING: Yes. There was sufficient consideration to enforce the contract. Order appealed from should be reversed and judgment of the special term affirmed. REASONING: A valuable consideration in the sense of the law may consist in some right, interest, profit or benefit for one party or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other party, A waiver of any legal right at the request of another party is sufficient consideration for a promise. It is of no consequence whether the performance was of benefit to the promisor. BAEHR v. PENN-O-TEX OIL CORP. (agreement w/consideration) FACTS: P leased filing stations to Kemp, doing business as Webb Oil Co. Kemp was buying Webb oil from D. Kemp became heavily indebted to D and could not meet payments due to D. D collected rents, received payments, paid debts at Kemps discretion, & installed its agents in the office to run the business. P received a letter from Kemp stating D had all Kemps assets tied up. P called Ds agent to ask about payment of the filling station rent and was told that Kemps affairs were mixed up but they would be straightened up and a check for rent would be mailed to P. P then mailed a letter to D asking what he had to do to get rent checks or will I have to give it to an attorney to sue. D sent a letter back stating it was attempting to assist Kemp but that they were in no way operating or taking possession and denied knowledge or responsibility for any rent due. P again called asking for rent and Ds agent said they were interested in making sure P got his rent. No rent was received and a lawsuit was started. PROCEDURAL HISTORY: At trial, court ruled that D neither took possession of the filling stations nor an assignment of Kemps leases. Court granted Ds motion for judgment notwithstanding the verdict. Plaintiff appeals. ISSUE: Was the court in error in granting Ds motion for judgment notwithstanding the verdict? HOLDING: No. Although Ds agent made a promise to P, it was not in such circumstances that a contract was created. P states that agreement of forbearance to sue may be sufficient consideration for a contract. However, there is no evidence to suggest that P deferred initiating legal action any longer than suited his own personal convenience. REASONING: The fact that a promise was given does not necessarily mean that a contract was made. Consideration requires that a contractual promise be the product of a bargain. Bargain means negotiation resulting in voluntary assumption of an obligation by one party upon condition of an act or forbearance of an act by the other. Consideration must be regarded by the parties as such. SPRINGSTEAD v. NEES (forbearance)

FACTS: P & D were children of deceased who died intestate, leaving them his sole heirs. When Nees died he was owner of realty called sackett street property and atlantic ave property which was held in trust for children Sophia and George. When it was discovered that the Atlantic ave property was held in trust for only George and Sophia, there was murmuring and dissent amongst the other children. Sophia then stated we will give you our share in the sackett street property if you dont bother us about the atlantic ave property. Sackett Street property was sold thereafter but D did not turn over their share of the proceeds to P. PROCEDURAL HISTORY: Action was brought by the other three children against Sophia and George upon Ds alleged promise to recover their proportionate share of the sale proceeds. D testified that no such promise was ever made. Court dismissed complaint. D appeals. ISSUE: Was there consideration in Ds promise to give up their share of the sackett street property? HOLDING: No. P had not color of right in the Atlantic ave. property. Promise made by D was not even in response to any suggestion of any possible claim. Court can find no reason based on the evidence why P could suppose that even a doubtful or colorable claim could be asserted. Judgment should be affirmed. REASONING: Forbearance to assert a legal claim is sufficient consideration. It is not essential that the claim should be valid but it is enough if it could be regarded as colorful, doubtful, or plausible. If it is not, and there is no reason for an honest belief that it has some foundation in law or in equity, then forbearance applied to it is not good consideration. DISSENTING: Circumstances surrounding the opening of the strong box after the decedents death including the finding of the deed and conversation between the children, seems to present at least color of a valid claim by P, by reason of their heirship to Atlantic ave. property. The strong box where the deed was found belonged to the decedent and it might be doubted whether there had been a delivery of the deed before the grantors death, which was necessary to pass the title. DYER v. NATL BY-PRODUCTS (forbearance) FACTS: P, an employee of D, lost his foot in a job-related accident. D placed P on leave of absence at full pay and when he returned to work he was given his previous position of forman. Several months later P was laid off indefinitely. PROCEDURAL HISTORY: P filed a lawsuit claiming discharge was breach of an oral contract. He alleged that he in good faith believed he had a valid claim against his employer for personal injury and that forbearance from litigating the claim was made in exchange for a promise from D that he would have lifetime employment. D denied making such a promise. D filed for summary judgment and court sustained the motion on the basis that 1) there was no reciprocal promise on the part of P to work for D for life and 2) there was no forbearance of any viable cause of action on the ground that workers compensation had provided Ps sole remedy. P appeals claiming consideration for the alleged contract of lifetime employment was forbearance from pursuing action against D. He states that the trial court erred because 1) the court did not consider the reasonableness and good faith of his belief in the validity of the claim he forbore from asserting and 2) the court considered the legal merits of the claim itself that P forbore from asserting.

ISSUE: Is good faith forbearance to litigate a claim, which proves to be invalid and unfounded, sufficient consideration to uphold a contract of settlement? HOLDING: Yes. Reversed and remanded. The invalidity of Ps claim against D does not foreclose him, as a matter of law, from asserting that his forbearance was consideration for the alleged contract of settlement. There remains a material fact as to whether Ps forbearance to assert his claim was in good faith, and thus summary judgment should not have been rendered against him. REASONING: Compromise of a doubtful right asserted in good faith is sufficient consideration for a promise. The fact that a claim is ill-founded is not in itself enough to prevent forbearance from being a sufficient consideration for a promise. Forbearance is sufficient if there is any reasonable ground for the claimants belief that it is just to try to enforce his claim. It does not mean he must believe that the suit can be won, it means that he must not be making the claim or threatening suit for purposes of vexation or to be a nuisance. DE LOS SANTOS v. GREAT WESTERN SUGAR COMPANY (illusory contract) FACTS: P & D executed a hauling contract stating that P would transport in Ps trucks such tonnage of beets as may be loaded by D and unload beets at designated factories. Term of the contract was 10/1/1980 to 2/15/1981. P was obligated to furnish insurance, suitable trucks and equipment, necessary labor, maintenance, fuel and licenses required. Compensation P was to receive was based solely on the amount of beets he transported, with the rate per ton varying with the length of the haul. P was aware that D had executed identical contracts with other independent truckers. In December 1980 P was informed by D that his services were no longer necessary. PROCEDURAL HISTORY: P sued D for breach of contract claiming that he was entitled to continue hauling until all the beets had been transported to the factory. P claimed D wrongfully terminated the contract, causing him loss of profits and forced sale of his trucks at a loss. D alleged that they were not obligated under the contract to allow P to haul any particular tonnage and that its determination that it would no longer require Ps services was a determination which was within Ds discretion under the terms of the contract. Court entered summary judgment for D. P appeals. ISSUE: Is a contract without mutuality enforceable? HOLDING: No. Judgment affirmed. It is clear that neither P nor D intended to promise to transport a specific quantity of beets or to transport beets during a specific period of time. The term of the contract merely established the period of time during which the promised contained in the contract would be in effect. Although P made a number of promises in the contract, D made no promises other than to promise to pay for the transportation of the beets loaded by D onto Ps trucks. Contract is void for want of mutuality. In the absence of a specification of quantity, D had no obligation to use Ps services. REASONING: A contract which depends on the wish will, or pleasure of one of the parties is unenforceable. Mutuality of obligation is an essential element of every enforceable agreement. Mutuality of contract consists in the obligation on each party to do, or permit something to be done, in consideration of the act or promise of the other. Mutuality is absent when only one of the contracting parties is bound to perform and the rights of the parties exist at the option of one only.

WOOD v. LUCY, LADY DUFF-GORDON

(illusory contract exclusivity) FACTS: D is a fashion designer with a good reputation. Her favor helps a sale. D employed P to help turn this Vogue into money. P was to have the exclusive right to place her endorsements on the designs of others. P was also to have the exclusive right to place her own designs on sale or license others to market them. In return, D was to have of all profits and revenues derived from and contracts P might make. Exclusive was right was to last at least one year and thereafter from year to year unless terminated by notice of 90 days. P says he kept the contract and D broke it by placing her endorsement without his knowledge and withheld the profits. PROCEDURAL HISTORY: D sued P for damages. D claimed that it lacks the elements of the contract because P is not bound to anything. ISSUE: Does a contract for exclusive dealing impose an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale? HOLDING: Yes. Judgment of the appellate division is reversed and order of the special term affirmed. Although P does not promise in so many words that he will use reasonable efforts to market Ds designs, court holds that the promise is fairly implied. Ps promise to pay D profits and render accounts monthly was a promise to use reasonable efforts to bring profits and revenues into existence. REASONING: The defendant gave an exclusive privilege she was to have no rights for at least a year to market her own designs except through P. Acceptance of the exclusive agency was an assumption of its duties. Further, the agreement states the P owns a business adapted to the placing of such endorsements as D has approved. The implication is that the business will be used for the purpose for which it was adapted. Ds sole compensation was 1/2 of all profits resulting from Ps efforts. Without Ps efforts, D could get nothing. Without an implied promise, transaction has no business efficacy. P goes on to promise that he will account monthly for all monies and will take out such patents, copyrights and trade-marks as may be necessary to protect rights and articles mentioned in the agreement.

WEINER v. MCGRAW HILL (Conditions of satisfaction) FACTS: D was working as a publisher for Prentice-Hall when he was invited to engage in discussions looking toward joining Ds staff. Ds rep assured P that it was the companys firm policy not to terminate employees without just cause and thus would bring about job security. On the application that P filled out and submitted it stated that his employment would be subject to the Ds employee handbook. In taking the position with D, P forfeited all accrued earnings with former employer as well as the pay raise that was proffered to induce him to stay with his previous employer. P routinely rejected offers of employment while working with D. After 8 years with D, P was suddenly discharged for lack of application

PROCEDURAL HISTORY: Plaintiff filed a claim seeking damages for wrongful termination. D filed a motion to dismiss stating that there existed no contract of employment under which Ds evaluation of Ps performance could be challenged in a court of law. D further contended that the oral promise of job security was in no way binding. The trial court upheld the complaint but the appellate division reversed and granted the motion to dismiss on the basis that Ps employment was at will. ISSUE: Did the plaintiff, though not engaged for a fixed term of employment, plead a good cause of action for breach of contract against his employer? HOLDING: Yes. The order of the appellate division should be reversed and the order of the special term reinstated. P stated a valid cause of action. Court finds sufficient evidence of a contract and a breach to sustain a cause of action. P was induced to leave his employer with the assurance the D would not discharge him without cause and this assurance was incorporated into the employment application. P rejected other offers of employment in reliance on that assurance. Further, P alleges that on several occasions when he recommended that certain subordinates be dismissed he was instructed to proceed as per the handbook because employees could be discharged only for just cause. These factors combine to present a question for trial and as such the appellate division should not have dismissed the complaint. REASONING: Mutuality is not always essential to a binding contract, but consideration is a fundamental requisite. Mutuality in the sense of requiring reciprocity is not necessary when a promisor receives other valid consideration. MATTEI v. HOPPER (conditions of satisfaction) FACTS: P, a real estate developer was planning to construct a shopping center adjacent to Ds land. P accepted an offer from D to buy Ps land. Written agreement was evidenced on a deposit receipt. The terms were that P was required to deposit $1,000 of purchase price and to consummate the title within 120 days. Deposit receipt provided that sale was subject to P obtaining satisfactory leases. P turned over $1,000 to the real estate agent. Prior to the 120 days, while in the process of securing leases. D notified P that D would not sell her land under the terms in the deposit receipt. D was informed that satisfactory leases had been obtained and that P had offered to pay balance of the purchase price. D failed to tender the deed as provided in the deposit receipt. PROCEDURAL HISTORY: P brought an action for damages after D allegedly breached a contract by failing to convey her real property in accordance with the terms of the deposit receipt the parties had executed. Court concluded the agreement was illusory and lacking mutuality. P appeals. ISSUE: Was the contract voided due to the clause stating leases satisfactory to the plaintiff must be obtained? HOLDING: No. Judgment reversed. The contract was neither illusory nor lacking in mutuality of obligation because the parties inserted a provision making Ps performance dependent on his satisfaction with the leases. REASONING: When parties attempt to make a contract where promises are exchanged as consideration, the promises must be mutual in obligation in order for the contract to bind either party, both must have assumed some legal obligations. Without this mutuality of obligation, the agreement lacks consideration.

Two satisfaction clauses effect: 1) In those contracts where the condition calls for satisfaction as to commercial value or quality, operative fitness, or mechanical utility, dissatisfaction cannot be claimed arbitrarily, unreasonably or capriciously and the standard of the reasonable person is used in determining whether satisfaction has been received. 2) satisfaction clauses dealing with fancy, taste or judgment. Where the question is one of judgment, promisors determination that he is not satisfied, when made in good faith has been held to be a defense to an action on the contract. A promisors duty to exercise his judgment in good faith is an adequate consideration to support the contract. KIRKSEY v. KIRKSEY (Justified reliance) FACTS: P was the wife of Ds brother but had been widowed for some time P resided on public land, was comfortable settled and would have attempted to secure the land she was living on. D wrote a letter to P asking her to come live on his land and leave her property. D wrote that P could come and raise her family on his land P moved to Ds land shortly after receiving the letter and was given a house and land After 2 years D forced D to move to an uncomfortable house in the woods and thereafter forced her to leave the property. PROCEDURAL HISTORY: At trial a verdict in the amount of $200 was awarded to the plaintiff. D appeals. ISSUE: Did Ds offer of land to P constitute an enforceable contract? HOLDING: No. his offer was a mere gratuity and judgment must be reversed. There is no bargained for exchange. REASONING: The court held that the promise was a mere gratuity and there is no action for the violation of the gratuity. DISSENTING: The loss and inconvenience P sustained in moving the Ds land is sufficient consideration to support the promise to furnish P with a house and land. Why is this case here: Have promise and reliance, but there is no bargained for exchange. What does the brother in law get? It differs from Hamer v Sidway where the parties both understand the contract. Nothing specifies the duration

RYERSS v. TTEE PREBYTERIAN CONGREGATION FACTS: D encouraged P to build a church and stated he would pay a $100 subscription to the TTEEs for building the church. PROCEDURAL HISTORY: P filed suit against D when he did not pay on his subscription after P had built the church. Court found for P. D appeals. ISSUE: Are Ds repeated promises, and Ps reliance on those promises, to build a church, sufficient consideration? HOLDING: Yes. The judgment is affirmed and the court was right in instructing the jury that if they believed the evidence of the contract, the defendant was liable. The contract was evidenced by his repeated declarations and admissions. Consideration was in the labor, trouble and expense to which he subjected P as well as in the benefit D expected.

REASON: There are no grounds of defense against a promise so well proved and which is so abundantly supported by a consideration both good and valuable. Could a reasonable person have relied upon the promise to their detriment? SEAVEY v. DRAKE (Justified reliance specific performance) FACTS: P was only child of Ds testate Testator prior to his death gave P a portion of the land which D accepted and took possession of. P had note against father for $200 which he gave up. Father then provided him with an additional strip of land. P has and is occupying the land and paying all taxes on it. He has spent $3,000 in improvements. PROCEDURAL HISTORY: P filed a claim in equity for specific performance of a parol agreement of land. D move to dismiss because there is no cause for equitable relief and because parol contract was without consideration and executory. Problems: unbargained for exchange, statute of frauds, no objective proof of fathers intent. ISSUE: Do Ps improvement on the land constitute valid consideration? HOLDING: Yes. Problem: 1) S of F; 2) Unbargained for exchange; 3) No objective proof of fathers intent. Plaintiffs request for specific performance of an oral contract to convey land is granted because the promise induced the plaintiff to take possession and make valuable improvements to the property. REASONING: Specific performance of a parol contract is decreed in favor of the vendee who has performed his part of the contract. No action shall be maintained upon a contract for sale of land unless the agreement upon which it is brought is in writing and signed by the party to be charged or someone authorized. In equity however, it is a fraud for the vendor to insist upon the absence of a written instrument when he has permitted the contract to be partly executed. The expenditure of money or labor in the improvement of the land induced by the donors promise to give the land to the party making the expenditure, constitutes, in equity, a consideration for the promise and the promise will be enforced. This appears to be a case of promissory estoppel, however promissory estoppel gives you the value of the change in position had the promise not been made. If P gets to keep the land this ends up looking like bargain w/consideration. SIEGEL v. SPEAR FACTS: P purchased from D furniture in the sum of $909.25 and provided D two mortgages which provided monthly payments for the purchase price. P wanted to give up his apartment for the summer at which time he had paid $295 P went to Ds business and arranged with Ds credit man that P would send his furniture by his own truck to Ds storehouse. At the time that the arrangements were made P claims that Ds credit man also promised to insure the furniture for Ps benefit. The following month Ps furniture was destroyed by fire and no insurance had been placed upon it.

PROCEDURAL HISTORY: P filed suit to recover loss sustained by failure of D to insure the furniture and received a judgment in his favor. D appeals claiming there was no consideration for the agreement and that Ds credit man had no authority to make any such contract. ISSUE: If a person makes a gratuitous promise, and then enters upon the performance of it, is he is held to a full execution of all he has undertaken? HOLDING : Yes. Judgment affirmed. If a contract was made, there was in the nature of the case sufficient consideration to sustain the promise. REASONING: A mere agreement to undertake a trust without compensation is not obligatory, but once undertaken and the trust is entered upon, bailee is bound by the terms of his agreement. The confidence placed in him, and his undertaking to execute the trust, raise a sufficient consideration. WHEELER v. WHITE FACTS: P wanted to construct a commercial building or shopping center and entered into an agreement with D where D was to obtain the necessary loan ($75,000) or provide the money himself within 6 months from the contract date. After the contract was made D urged P that the loan would be made and that he should proceed with demolishing the buildings currently on the site to make way for construction of the new building. D assured P that if the loan could not be obtained, he would provide the money himself. After P had razed the old buildings, D told him there would be no loan. P made reasonable efforts to try to obtain the loan, but was not successful. PROCEDURAL HISTORY: P appeals from appeals court affirming trial court judgment dismissing the case. P brought suit against D for breach of contract to secure a loan or furnish money and that if the contract itself was not sufficient, D was estopped from asserting insufficiency. D filed filed special exceptions asserting the contract lacked elements of enforceability and trial court sustained them. ISSUE : Did the trial court err is dismissing Ps claim of promissory estoppel HOLDING: Yes. While the trial court did not err in sustaining the special exceptions aimed at the sufficiency of the contract, the pleadings based on estoppel state a cause of action. Judgments of the trial court and court of appeals reversed and cause is remanded for trial. REASONING: Where a promise acts to his detriment in reasonable reliance upon an otherwise unenforceable promise, courts in other jurisdictions have held recognized that the disappointed party may have a substantial and compelling claim for relief. The function of the doctrine of promissory estoppel is that estops a promisor from denying the enforceability of the promise. Losses of expected profits are not allowed even if they are provable with certainty. The promise is to recover no more than reliance damages. Since the promisee is partially responsible for failure to bind the promisor in a legally sufficient contract all that is required to achieve justice is to put the promisee in the position he would have been in had he not acted in reliance on the promise. HOFFMAN v. RED OWL STORES

FACTS: P contacted D in regards to establishing a Red Owl grocery store. P told D that he had only $18,000 capital and was repeatedly assured that this would be sufficient. P thought it would be a good idea to buy a small grocery store to gain experience. On the advice of D, P bought a small grocery store and leased the building in which it was operated. After three months, D came in and found the store operating at a profit and D advised P to sell the store to his manager and they would find him a larger store elsewhere. D was reluctant because he would be losing the summer tourist business but was assured that he would be placed in a bigger store by fall. P again reminded the D that he had only $18K for starting the business and D assured him there would be no problems. P placed $1,000 down on a lot chosen for the store At Ds urging P sold their bakery to obtain $10K in capital . P was advised he would have to put in an additional $2000. He spoke to his father in law who said he would put in a total of $13K if he could become a partner and D assured them that it would be fine. Later P was told his father in law had to sign an agreement designating the $13K as a loan. D presented P with a projected financial statement requiring $34,000 and claimed the $18,000 was the total of unborrowed or unencumbered cash. P told D he could not go along with the deal and negotiations ended. PROCEDURAL HISTORY: P filed a complaint for recovery of damages for breach of Ds representations and agreements. The case was subjected to the jury on a special verdict. The jury returned a verdict assessing damages to the P. Judge ordered a new trial on the finding of damages on the sale of Wautoma and affirmed the jurys verdict on all other issues and damages. P moved for judgment on the verdict and D appealed on the grounds that there was never a contract in force. ISSUE: Should the court recognize causes of action grounded in promissory estoppel and do the facts of the case make out a cause of action for promissory estoppel? Are the jurys findings with respect to damages sustained by the evidence? HOLDING: Yes on all counts. A number of promises were made to P, who relied on them to his detriment. There is ample evidence to sustain the answers of the jury. Injustice would result if P were not granted some relief because of the failure of D to keep their promises which induced P to act to their detriment. REASONING: The doctrine of promissory estopped was invoked as a substitute for consideration rendering a gratuitous promise enforceable as a contract. Restatement 90 does not impose the requirement that the promise giving rise to the cause of action must be so comprehensive in scope as to meet the requirements of an offer that would become a contract if accepted by the promisee.

ELVIN ASSOCIATES v. FRANKLIN FACTS: P sought to hire D to perform the title role of Mahalia Jackson in a musical production and D expressed strong interest P & D worked together for several months but never executed a final agreement. P incurred substantial expenses making arrangements for the production based on Ds assurances that Ps final proposal as acceptable. D never showed for rehearsal claiming a newly developed fear of flying. PROCEDURAL HISTORY: P sued D for breach of contract and right to recover under promissory estoppel.

ISSUE: Did the parties to the proposed contract evince an interest not to be formally bound before execution of a written, integrated contract? HOLDING Every draft read this lettershall constitute our understanding until a more formal agreement is prepared thus D was not contractually bound and the case for Breach must be dismissed. Court finds however that D unequivocally and intentionally committed herself to be in the production. Her continued expression of enthusiasm to P provided a reasonable basis for beginning to make various arrangements and expenditures necessary to bring the production to fruition. Further, since D was not to sign a contract until arriving in NY, D could not reasonable have expected that P could have performed his obligations to her without committing himself and spending large sums of money prior to her affixing her signature on the contract. Ds fear of flying did not make make her promise conditional or ambiguous such that P should have been alerted to suspend his efforts. It would be unconscionable not to compensate P for losses incurred by his entirely justified reliance on D. REASONING:

LOCAL 1330 v. US STEEL CORP FACTS: D plants employ 3.500 employees of Youngstown, OH. P are two leading labor orgs in the area and have had a collective bargaining contract with D for many years. The plants in question have become obsolete due to age of the facilities and changes in technology The plants are a dominant factor in the life of the city itself Plaintiffs claim that D made proposals to the plaintiff to the effect that if the workers put forth their best efforts and rendered the plants profitable the plants would then not be closed. PROCEDURAL HISTORY: D filed suit asking federal courts to order D to keep the two plants in operation. D claims plants are unprofitable and cannot be made otherwise due to obsolescence and change in technology and also asserts an absolute right to make a business decision to discharge its former employees and leave Youngstown. P appeal from district courts holding that plants were unprofitable and denying all relief on the grounds that no contract or enforceable promise was entered into and that there is clear evidence to support Ds decision that plants are not profitable. ISSUE: Did the district judge erroneously reject the promissory estoppel contract? HOLDING: No. The district judge rejected the estoppel contract on three grounds: 1) none of the statements made by D constituted a definite promise to continue operations if the plants were to become profitable; 2) statements relied on by P were made by employees and public relations officers of D, not by company officers; 3) the plants never became profitable. REASONING: P relies on a standard of reasonable expectability of the promise detrimentally relied upon. The court cannot find that reliance on a promise to keep plants open on the basis of coverage of plant fixed costs was within the reasonable expectability. Court stated there was no definite promise to continue operation of the plants if they became profitable. WHY IS THIS CASE HERE: If its not a promise a reasonable person could rely on then you havent met the burden of promissory estoppel. BLOOMGARDEN v. COYER

(implied in fact & quasi contract) FACTS: P met D while arranging to lease office space. D revealed to P that he and his partner planned to develop a waterfront complex but lacked the financial resources. P offered to put D in touch with a majority stockholder in this company. P put D in touch with Carley and arranged a meeting. At the meeting there was no mention of P being compensated. P arranged another meeting and at the end of the meeting was asked by D what P hoped to get out of this. P replied that he hoped his own company would garner some work. Several months later P asked for compensation for the first time, on behalf of his company, and was denied. He then asserted a claim for himself and was again denied. P then wrote directly to D claiming a fee and was again denied. At that point P commenced suit. PROCEDURAL HISTORY: Ds claim proceeded on the theory that he is entitled to a finders fee by virtue of a contract that was factually implied by custom or recognized as a legal consequence of the transaction. D moved for partial summary judgment on the issue of liability and P moved for summary judgment on the entire case. The court denied Ps motion and granted Ps motion on the grounds that 1) P did not hold the required real estate license; 2) It appears that at the time of dispute P did not expect to be personally compensated. ISSUE: Do Ps transactions with D establish a quasi contract or an implied in fact contract? HOLDING: No. The court is unable to perceive any factual basis on which it could be asserted that, at the time he introduced the parties P looked forward to any finders fee for himself. His silence on the matter during both meetings as well as well as his own statement in the deposition it was always my intent that SDI should benefit not myself personally indicated that at most P hoped to gain some work for his company. It was not until P had done his service to the parties that they were put on notice that a fee was required. D bore their burden as to the nonexistence of any genuine factual issue, and P offered nothing substantial to bar their request for summary judgment. For P to recover on the basis of a contract implied in fact, he would have to show additionally that he looked forward to personal payment for his services, and that the circumstances under which he introduced Coyer and Guy to Carley were such as would reasonably have put them on notice that he had that in mind. There is no basis on which a jury could rationally have found that when he brought the parties together P entertained any thought of a finders fee for himself or that those with whom he dealt held the payment of such a fee in prospect. These circumstances defeated both his implied-in-fact and his quasi-contract claim. Judgment affirmed. REASONING: An implied-in-fact contract is a true contract, containing all necessary elements of a binding agreement; it differs from other contracts only in that it has not been committed to writing or stated orally in express terms, but rather is inferred from the conduct of the parties in the milieu in which they dealt. Such a contract will not be implied unless the recipient knows or has reasonable grounds to believe that the beneficial acts were performed in anticipation of remuneration therefore. A quasi-contract is not a contract at all, but a duty thrust under certain conditions upon one party to require another in order to avoid the formers unjust enrichment. The principles governing the two remedies differ, though in particular cases they may dictate the same result.

SPARKS v. GUSTAFSON

(unjust enrichment) FACTS: P was a close friend of the decedent. D represents decedents estate. Decedent purchased an estate which P managed without charge until decedents death. Thereafter he continued to manage the property without compensation with the knowledge and consent of D. Ds property operate at a loss and P often provided his own money to do repairs and pay expenses. D & P signed a purchase agreement to sell the building to P contingent on final details. These were never worked out and building was sold to a third party at which time P ceased to manage it. P filed suit against D claiming that D had breached the agreement to sell the building to P and that P was entitled to recover the funds and services expended on the building under a statutory or equitable lien theory. PROCEDURAL HISTORY: the court found that P had no enforceable lien but that it would be inequitable to allow D to retain the benefits that P has conferred upon the building at his own expense. D appeals courts decision ordering estate to pay $65K damages to P in compensation for management services of decedents property claiming that P failed to prove either element of unjust enrichment. D argues that P gave his services gratuitously without the consent of the estate. ISSUE: Is it unjust to allow the estate to retain the benefits of Ps property management without having to pay for them.? HOLDING: Yes. There is no question the P conferred a benefit upon D. The services that P provided are not the type that one would ordinarily expect as a mere gratuity. His services were the type for which one would ordinarily expect to be paid. Decision affirmed. REASONING: Unjust enrichment exists where the defendant has received a benefit from the plaintiff and it would be inequitable for defendant to retain the benefit without compensating plaintiff for its value.

GAY v. MOONEY FACTS: P was nephew of Ds intestate. P and nephew had an arrangement where P would provide housing for his uncle in exchange for the uncle providing land to his children. P brought suit to recover compensation for the room and board furnished to the decedent. PROCEDURAL HISTORY: Trial court determined that Judgment for P and D appeals. ISSUE: Can P recover under an action of quantum meruit? HOLDING: Yes. The bargain is unenforceable because it is related to land and there was not susceptible proof as could be maintained under the statute of frauds. Howeverm plaintiff can recover on the value of the services provided. Judgment affirmed. REASONING: When a bargain is unenforceable the legal remedy is by an action on the quantum meruit for the value of the services.

KEARNS v. ANDREE (implied contracts)

FACTS: P was the owner of a lot of land in the process of construction but nearly finished. P entered into an oral contract with D for D to purchase the house and lot for $8500. D was to assume a mortgage of $4500 and pay cash of $4000. D became dissatisfied with the bargain but agreed to stand by the deal if certain alterations were made. P complied with the requested changes and secured a mortgage. Thereafter D declined to complete the purchase. Alterations to the house made it less salable and P sold it for $8250 PROCEDURAL HISTORY: P filed suit for breach of contract to recover for expenses incurred to finish house to Ds specifications and thereafter to adapt it to the purchasers wishes and to recover the difference in price between the original sale price and the price P was able to obtain. Trial court decided Ps actions were enough to take it out of the statute of frauds but the contract was not specific enough to be enforceable. P was awarded the value of the trees cut and the cost of repainting and repapering to the desires of D. D appeals. ISSUE: Can P recover under the theory of implied contract where no benefit was conferred on D? HOLDING: Yes. P seeks to recover the expense and loss incurred in reliance upon performance by D of an agreement too indefinite in terms to enforce. Work and expenditures of P were of no benefit to D and his main contention is that the basis of the recovery is for benefit conferred. The measure of recovery in this case is the reasonable value of the services performed and not the amount of benefit which was actually accrued from them to him for whom they were conferred. Sums allowed to P for painting and repapering allow P to collect on an unenforceable contract, which may not be done. P is entitled to recover reasonable compensation but a deduction must be made for benefit accrued to P by the work done on the premises at Ds request. Court finds error, judgment is set aside and a new trial ordered. REASONING: Where a special promise to make compensation by will is unenforceable by reason of the statute of frauds and where services have been performed at the request of him for whom they were done and in the expectation that compensation would be made for them, to his knowledge and with his acquiescence, in the absence of any special contract, the law would in such a situation imply an agreement that reasonable compensation should be made. Scope of remedy = reasonable value of services performed not actual benefit conferred on promisor as a result of performance. ANDERCO v. BUILDEX FACTS: D, a small construction firm, entered into a contract with the Brazilian embassy to partially reconstruct a building known as the Brazilian Annex. Among other things, D was to stabilize the structure to prevent further sinking and to elevate the building to partially alleviate unevenness in the floor. For this, D contracted with P, a firm specializing in a form of foundation work known as grouting. D asked P to perform the task using their grouting technique in lieu of alternative methods available. P & D had several discussions and Ds president sent a telegram to Ps vice president stating the Ps proposal was accepted subject to verbally agreed changes and that a signed revision would follow. D prepared, signed and mailed to P a revised contract to the effect that P was committed to raising the building 1 to 2 inches, within 10 days for a maximum of $20,000. P never received the document nor inquired as to why it was not received. P was eventually able to stabilize the perimeter but not to raise the building. After 11 days B was billed $9900. D reiterated constantly that $20K was their maximum and P countered that D should ask the Brazilian Embassy for more money. After 25 days P concluded they could not raise the building 1 in. and terminated the work.

PROCEDURAL HISTORY: P filed sued for breach of contract and in the alternative seeking quasi-contractual recovery to prevent Ds unjust enrichment. D counterclaims for damages caused by Ps breach of contract. P contended they are owed an additional $14K as per the per diem rate agreed on and that the contract price was never limited to $20K. D contended that P failed to follow through on their commitment and that the claim exceeds the contract amount. The Court ruled that no contract had ever been formed because there was never a meeting of the minds as to its essential terms. ISSUE: Does the agreement between P & D constitute a valid contract? HOLDING: No. The parties had significantly different understandings of the terms of the contract that they had agreed to. The testimony so lacks precision that it is impossible to determine the precise nature of the conversations. Each partys version of the contract is underscored by their conduct in the course of the actual performance. P seeks recovery on quasicontractual claim theory that D was unjustly enriched at Ps expense. It is conceded that P succeeded in stabilizing the perimeter of the building, but did not raise the building 1 in. D received no benefit as a result of strenuous efforts to raise the building. There is no way for the court to determine whether the $9900 already paid represents more or less than the value of Ps successful efforts to stabilize the foundation. The court can make no finding for either party and both claim and counterclaim are dismissed. REASONING: In order to form a contract it is necessary that the parties manifest their agreement or mutual assent to its essential terms. In this instance there was no mutuality of assent. There is also no evidence that either party ignored the only reasonable interpretation of the words used or that either knew or had reason to know the intention or understanding of the other. Was the contract express or implied? There was no contract, there was no meeting of the minds. There was no mutual assent. Would Anderco have been more successful arguing promissory estoppel?

POSNER v. SEDER (quantum meruit) FACTS: P was contracted to work for D for one year for the sum of $17/week. He was to work from 6:30 AM to 6:00 PM. P was to work overtime without pay not more than 2 hours a day and not more than 2 months in the year. D broke the contract by discharging P. PROCEDURAL HISTORY: P filed suit for the hours he worked outside of 6 AM & 6:30 PM claiming the $17 did not include pay for the overtime work. Trial court found for P and D alleged exceptions. ISSUE: Can P collect payment on overtime worked after employer breached contract. HOLDING: No. The innocent party may either sue on the contract for damages for the breach, or, if he so elects, he may regard the action of the defendants as indicating a purpose on their part to repudiate the contract, may accept the repudiation and recover upon a quantum meruit the value of his services as if the special contract had not existed. P has sued upon a quantum meruit for the value of only a part of the services, namely, for those rendered in the extra hours named in the contract. D claims the $17/wk was payment of all services and he has been paid in full and nothing is owing. Neither view is

correct. Weekly hours of labor were variable so there was a weekly variation in the value of services. The true construction of the contract is that it was a yearly contract payable in weekly installments without reference to the amount of work done. Since payments were made during existence of the contract, they cannot be considered as having no reference to other parts of the contract. Ds exceptions sustained. REASONING: Upon quantum meruit the question is, what are his whole services fairly worth and is there anything due to him. That may be an entirely different amount than the market value of the services during the extra hours. It is not necessary that the plaintiff before bringing his action should return what he has received. It is necessary only that the amount received should be credited upon his claim. What is the scope of the remedy: value of services already received

KELLEY v. HANCE FACTS: D contracted P to excavate and build a sidewalk in front of Ds house for $420. P agreed to start work within a week and complete it before the cold weather set in. P did not start work for three months, removed a strip of earth along the front of Ds property, left and has not returned. D notified P that he had cancelled the contract. PROCEDURAL HISTORY: Court found the reasonable value of the work done was $133 and an award of $25 nominal damages to D for value of the earth removed. Court found the D was justified in canceling the contract due to Ps failure to perform and that P was entitled to recover reasonable value of the benefits accruing to D from the work already done by P. ISSUE: If P willfully and negligently abandoned his job, can he collect for the value of the benefit to D for the work already done? HOLDING: No. There is no claim that P can collect upon the theory of a performance of a divisible portion of the contract, nor is he entitled to recover on the theory of substantial performance. No portion of the sidewalk was finished and P without justification abandoned his contract before completion. P cannot therefore recover the reasonable value of the work done unless there has been such an acceptance of it by the defendant as to raise an implied promise on his part to pay for it. No acceptance of the work by the defendant prior to the breach is found and no promise to pay for the benefit received can be implied from the mere fact that he has received a benefit which from the nature of the case he could not avoid receiving and was powerless to return. It follows that the court erred in its conclusion that the plaintiff was entitled to recover the reasonable value of the work done by him in the partial performance of his contract. There is error, the judgment is reversed and the City Court of Meriden is directed to enter its judgment in favor of the defendant for nominal damages upon his counterclaim. REASONING: Though a contractor has failed of performance for reasons which would not excuse a breach, and where there has not been even substantial performance, the breach being merely negligent, many of the more recent decisions have held that he could recover the value of his work less the damages caused by his default. Such recovery is allowed, not upon the original contract, for that has been breached, but in quasi-contract upon the theory that if such recovery were not allowed the other party would be unjustly enriched at the expense of the contractor. There can ordinarily be no recovery where the contractor has wilfully abandoned his contract without justification. D may nevertheless make himself liable by his voluntary acceptance of the benefits under circumstances sufficient to raise an implied promise to pay for them

notwithstanding the nonperformance of the contract. Where, however, work has been done upon ones land, the benefit cannot well be returned and an acceptance of the benefit cannot be implied from the mere retention of possession of the land. In such cases therefore the better rule would seem to be that, except where there has been an actual acceptance of the work prior to its abandonment by the plaintiff, mere inaction on the part of the defendant will not be treated as an acceptance of the work from which a promise to pay for it may be implied. Recovery can be had for partial performance which has been beneficial only when the benefit has been appropriated by the defendant under circumstances sufficient to raise an implied promise to pay for the reasonable value of what has been received. Why does the bid for quantum meruit ultimately fail? There is no unjust enrichment. Intermeddler: interpose themselves in a situation that doesnt require their activity (moral obligation) Substantial Performance: Contractor deviates slightly but in good faith. This was not the case with Kelley.

BRITTON v. TURNER FACTS: P & D entered into a contract where P was to work for D for one year for $120. P left without notice or cause. PROCEDURAL HISTORY: P brought suit against D for payment of work already done. Jury found no evidence of any damages to D and awarded P $95 Q.M. D excepted to the instructions given to the jury stating that P was entitled to recover as much as the labor performed was reasonably worth. ISSUE: Can P recover under the theory of quantum meruit for the value of the work already done? HOLDING: Yes. The general understanding of the community is that the hired laborer shall be entitled to compensation for the service actually performed, unless an express stipulation shows to the contrary. P is entitled to the verdict. D offers no evidence of damages. REASONING: The amount the employee should be charged where the laborer abandons the contract is only the reasonable worth or the reasonable advantage of the value received. Benefit is equal to the benefit/advantage received minus the damages incurred. In Kelley the contract was not divisible. Here it could be deemed to be divisible. WATTS v. WATTS FACTS: P & D were in a cohabitation relationship for 12 years. P was induced by D to quit her job and was assured he would provide for her. P & D lived as husband and wife, she took his surname, filed taxes as husband and wife and bought real property as husband and wife. After 12 years, P moved out and was barred from returning to her business or her property by D. PROCEDURAL HISTORY: P claims D breached a contract share equally the wealth and property accumulated. Issue is presented at the pleading stage before trial. Court dismissed Ps case for failure to state a claim. ISSUE: Do the facts of this case allow P to state a claim for breach of contract and unjust enrichment.

HOLDING: Yes. Joint ownership of property and joint filing of returns may indicate that parties intended to share the wealth equally. P has pleaded the facts necessary to state a claim for damages resulting from breach. P also argues that D has been unjustly enriched by keeping all the profits of the 12 year relationship to which they both contributed. The court finds there are sufficient facts to state a claim for unjust enrichment. REASONING: Recovery based on unjust enrichment is sometimes known as quasi-contract or implied in law. Money, property, or services, including housekeeping or childrearing, may constitute adequate consideration independent of the unmarried cohabiting parties sexual relationship to support an agreement to share or transfer property. An action for unjust enrichment, or quasi contract, is based upon proof of three elements: (1) a benefit conferred on the defendant by the plaintiff; (2) appreciation or knowledge by the defendant of the benefit; and (3) acceptance or retention of the benefit by the defendant under circumstances making it inequitable for the defendant to retain the benefit.

MILLS v. WYMAN (preexisting obligation) FACTS: Ds son, 25, suddenly became ill at sea and was cared for by P. After all expenses were incurred D sent a letter to P expressing his gratitude and promising to pay for the expenses. D later changed his mind and P filed suit for compensation of all expenses incurred in the board and nursing of Ds son. PROCEDURAL HISTORY: Court found a nonsuit and P filed exceptions. ISSUE: Is a moral obligation sufficient consideration to support an express promise? HOLDING: No. The promise of D was made without any legal consideration and there is no moral obligation to compel D to complete the promise. Judgment of lower court sustained. REASONING: A moral obligation is a sufficient consideration to support an express promise only where there is a preexisting obligation, as in the case of a bankrupt and his creditor. There must originally have been a quid pro quo. A legal obligation is always a sufficient consideration to support either an express or an implied promise. When a child has reached manhood, whatever debts he incurs are his own and create no obligation on the father, and a promise founded on such a debt has no legally binding force.

WEBB v. MCGOWiN (presumption of preexisting obligation) FACTS: P in the scope of his work was clearing 75 lb pine block by dropping them to the floor below. In the course of his work and in the midst of dropping a block, P noticed Ds intestate, McGowin, on the floor below. Had P dropped the block on McGowin it would have caused serious injury or death. In order to avoid dropping the block, P had to fall to floor with it and was badly crippled for life. In consideration of P preventing injury to him and in consideration of the injuries sustained, McGowin offered P $15 every two weeks for the remainder of Ps life. Payments were made until McGowins death at which time they ceased. P brings suit for unpaid installments.

PROCEDURAL HISTORY: Court dismissed Ps action for nonsuit and P appeals. Demurrer stated 1) no cause of action; 2) no consideration; 3) failure to show agreement at or before services were rendered; 4) void under statute if frauds. ISSUE: Can P collect where there was no preexisting moral obligation but where the beneficiary of Ps actions acknowledged a moral obligation? HOLDING: Yes. McGowins agreement to compensate P for saving his life is valid and enforceable. The life and preservation of body have material values measurable in dollars. McGowin received a material benefit constituting a valid consideration for his promise. The services rendered by P were not gratuitous. Reversed and remanded. REASONING: When the promisor, having received a material benefit from the promisee and being morally obligated to compensate him for services rendered and in consideration of the obligation, promises to pay, the subsequent promise is an affirmance of services rendered and carries with it the presumption that a previous request for the services were made.

HARRINGTON v. TAYLOR FACTS: Ds wife was assaulted by D and took refuge in Ps home. The following day D went to Ps home and commenced an attack on his wife who took knocked him down with an axe and was in process of decapitating him when P intervened and the blow intended for D fell on her hand badly mutilating it but sparing Ds life. D orally promised to pay P damages and after paying a small sum failed to pay anything more. PROCEDURAL HISTORY: D demurred to complaint as stating no cause of action demurrer was sustained. P appeals. ISSUE: Does Ds moral obligation and subsequent promise constitute consideration? HOLDING: No. There was no consideration for Ds promise to pay P. judgment sustaining demurrer is affirmed. REASONING: However much D should be impelled by common gratitude to alleviate Ps misfortune, a humanitarian act of this kind, voluntarily performed, is not such consideration as would entitle her to recover at law. WHY DOES THIS CASE DIFFER FROM WEBB?

EDSON v. POPPE (past services) FACTS: Ds tenant had a well built which cost $250. After examining the work, and in consideration of the greatly increased value of the property, D agreed to compensate P for the work. D has not paid P any money. PROCEDURAL HISTORY: D denied all allegations in the complaint and alleged the complaint did not state a cause of action in that the consideration alleged is a past consideration. Objection was overruled and D excepted. ISSUE: HOLDING: Under the circumstances, the subsequent promise to pay P the reasonable value for the well was binding and supported by sufficient consideration. Judgment affirmed. REASONING: Past services are not a sufficient consideration for a promise to pay therefor, made at a subsequent time, and after such services have been fully rendered and completed; however, a moral obligation, founded on previous benefits

received by the promisor at the hands of the promisee, will support a promise by him. An express promise for past services rendered without previous request is supported by a sufficient consideration if the services were beneficial, and were not intended to be gratuitous.An act done for the benefit of another without his request is deemed a voluntary act of courtesy, for which no action can be sustained, unless after knowing of the service the person benefited thereby promises to pay for it. However, if the consideration, even without request, moves directly from plaintiff to defendant, and inures directly to defendants benefit, the promise is binding though made upon a past consideration.

MAULDIN v. SHEFFER (obligation in tort) FACTS: P an architect contracted D a mechanical engineer to provide drawings for a project P was working on to add additions to five school buildings. The drawings provided were erroneous, incorrect and contrary to the laws of physics and were rejected by the school board. Subsequent revisions were also rejected. P ultimately had to hire another engineer to provide the drawings and incurred substantial expenses in doing so. P also incurred loss of a contract to perform architectural services on other school buildings as a result of Ds engineering errors, although he had been previously contracted to do so. PROCEDURAL HISTORY: P filed suit ex delicto stating that D had willfully and knowingly, and in disregard of moral and professional duties used drawings from a previous unrelated project. P seeks punitive damages in the amount of $500,000. P filed general and special demurrers and court overruled general demurrer. ISSUE: Can P file a tort action against D for breach of contract when the breach was of a duty specified by law? HOLDING: Yes. The law imposes on professionals an obligation to exercise a reasonable degree of care such as is ordinarily exercised under similar conditions and like circumstances by persons employed in the same or similar professions. Court finds that the petition does state a violation of a duty imposed by law. Judgment affirmed. REASONING: Where there is malfeasance, the failure to act at all, the action cannot be brought ex delicto. Only where there is misfeasance, negligent performance of the contract, can there be a right to elect between a tort action and a contract action. In order to maintain an action ex delicto because of a breach of duty growing out of a contractual relation the breach must be a breach of duty imposed by law not merely a breach of a imposed by the contract itself.

HARGRAVE v. OKI NURSERY (tort due to misrepresentation) FACTS: P a company in NY contracted with D a company in CA to provide vines for Ps winemaking business. D represented that the vines were free of disease and suitable for wine production. P claims he relied on Ds representations in purchasing the vines and they turned out to be diseased and incapable of bearing fruit of adequate quality for commercial wine production. PROCEDURAL HISTORY: P filed suit against D for making knowingly false representations, breach of contract, breach of express warranty, breach of implied warranty of merchantability, breach of warranty of fitness, and negligent

performance of a contract. Asserting diversity of citizenship, D moved to dismiss for lack of personal citizenship. Motion was granted. P appeals. P states false representations of constitute fraudulent and tortuous acts committed in CA and causing injury in NY and D should reasonably have expected its fraudulent representations to have consequences in NY. ISSUE: Can P file a claim for tortious conduct in NY against a company based in CA? HOLDING: Yes. Under NY law personal jurisdiction over D requires the commission of a tortuous act outside NY that D could have expected to cause and injury to P. Ps allegations state a claim for fraud and if D indeed made the fraudulent representations it is subject to a liability in tort whether the agreement is enforceable or not. Order reversed. REASONING: A plaintiff may recover in contract because the defendant has made an agreement, and the law thinks it desirable that he be held to that agreement. Tort liability is imposed on the basis of some social policy that disapproves the infliction of a specific kind of harm irrespective of any agreement. Specifically the law of fraud seeks to protect against injury those who rely to their detriment on the deliberately dishonest statements of another.

KEITH v. BUCHANAN (warranties) FACTS: P purchased a sailboat from D for $75K. P had attended sailing school and sailed on many yachts but had never owned a yacht. The sailboat in this action was featured in sales literature and described as a seaworthy vessel. P testified that he relied on representations in the sales literature in regard to the purchase. P & sales rep discussed Ps desire for a boat that was oceangoing and would cruise long distances. P asked his friend to inspect the boat. P and an associate, both with sailboat experience, inspected the boat and advised P that it would suit his needs. A deposit was paid, a contract entered into and optional boat accessories were ordered. After delivery of the boat a dispute arose with regard to its seaworthiness. HISTORY: P filed a lawsuit alleging breach of express warranty and breach of implied warranty. The trial court found that no express warranty was established because D had not undertaken in writing to preserve or maintain the utility of the boat. The court also found that no implied warranty of fitness was created because P did not rely on skill and judgment D to select a suitable vessel. Trial court granted Ds motion for summary judgment. ISSUE: Was an express of implied warranty created at the time of Ps purchase of the sailboat? HOLDING: Reversed in part and affirmed in part. The trial court erred when it held that there was no express warranty because the representations made in the sales brochure were express warranties. Trial courts holding that there was no implied warranty of fitness was affirmed because plaintiff buyer did not rely on defendant sellers skill or judgment to select a suitable boat. Express Warranty: 1.Affirmation of fact, promise or description: statements made by the seller in the course of negotiation are presumptively affirmations of fact. The statements made by a retailer in a brochure can create express warranties. The statements in the brochure are specific and unequivocal and nothing indicates that the vessel is experimental in nature. 2.2) Basis of the bargain test: No particular reliance need be shown to weave sellers affirmations into the fabric of the contract. The buyer doesnt need to show that he would not have entered into the agreement absent the warranty

or that it was a dominant factor in inducing the agreement. An inspection by the buyer of goods does not necessarily discharge the seller from an express warranty if the defect was not actually discovered and waived. Implied Warranty: The major question in determining the existence of an implied warranty is the reliance by the buyer on the skill and judgment of the seller. The buyer had experience with sailboats at the time of the purchase and precise specifications in regard to the type of boat he wanted. He also had friends look at the boat before deciding to purchase it. REASONING: Cal. Unif. Com. Code 2313, provides that express warranties are created by (1) any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain, and (2) any description of the goods which is made part of the basis of the bargain. Formal words such as warranty or guarantee are not required to make a warranty, but the sellers affirmation of the value of the goods or an expression of opinion or commendation of the goods does not create an express warranty. Implied warranty: An implied warranty of fitness for a particular purpose arises when a seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the sellers skill or judgment to select or furnish suitable goods, which are fit for such purpose.

WEBSTER v. BLUE SHIP TEA ROOM (breach of implied warranty) FACTS: P was born and brought up in New England. P entered Ds restaurant and ordered clam chowder. She was informed that there was no more clam chowder and ordered a bowl of fish chowder. She began eating the chowder and realized there was something lodged in her throat. This led to two surgical procedures, the second of which produced a fish bone. HISTORY: P filed an action to recover damages for personal injuries sustained by reason of breach of implied warranty. An auditor found for P. On retrial in the Superior Court, jury returned a verdict for P. D appeals asserting that as a native New Englander P should have been aware that the chowder was a hearty dish and not an insipid broth. ISSUE: Does the presence of a fish bone in the chowder constitute a breach of implied warranty? HOLDING: No. Judgment for D. We should be prepared to cope with the hazards of fish bones which are occasionally to be anticipated in chowder and which in light of tradition do not impair their fitness or merchantability. REASONING: There is a strong distinction between the body of law dealing with foreign substances in food and those relative to the unwholesomeness of the food itself.

SCHOOR v. HOLMDEL (statute of frauds) FACTS: P, an engineering firm, was engaged to do surveying, engineering and professional planning. Sugarman owner 18% of the stock and acted as an attorney for D. Some of the invoices they submitted were paid and some were not.

A conference was held in the office of Sugarman. In addition to Sugarman, the president of plaintiff company and his attorney were also present. Ps unpaid bills were a principal subject of discussion. P testified that at this meeting Sugarman promised to personally pay all outstanding bills and charges that might be incurred in the future if plaintiffs would continue with the work they were doing, which was necessary for D to secure financing. Sugarman drew a check on his trust account for $2,000 and gave it to P. The engineering work went forward and Sugarman mailed a check for $1,000 to P stating that the company had no money and that this was his money. Also enclosed with the check was a letter from Sugarman detailing further engineering work that had to be done. P did all the work requested but received no further compensation. HISTORY: The trial court awarded P $24K and entered judgment against D. The appellate court reversed the decision concluding that even if D made a promise to pay it was unenforceable under the Statute of Frauds. P appeals. ISSUE: Was Ds promise to pay P an original promise or a promise to pay for the debt of another and therefore unenforceable under the statute of frauds? HOLDING: A special promise to pay for the debt of another must be in writing. The promise was not in writing. Sugarman contends that the promise only obligated him to pay secondarily if D could not pay and so comes under the statute of frauds and is unenforceable. P claims that the promise was made largely for Sugarmans personal benefit and did not create a suretyship relationship, it was an original promise resting on consideration. Sugarman testified that had the company been successful he would have received a substantial sum for legal fees and his investment. Court finds that the interest of Sugarman was obvious and that consideration was mainly desired for his personal benefit. Judgment of the Appellate Division is reversed. REASONING: Where the consideration for a promise that all or part of a previously existing duty of a third person to the promisee shall be satisfied is desired by the promisor mainly for his own advantage, rather than in order to benefit the third person, the promise is not within the Statute of Frauds. JONESBORO v. CHERRY (statute of frauds land) FACTS: D offered to sell P a 2,400 acre plantation and equipment to P for $900,000. P closed the contract by accepting the offer. D thereafter refused to convey the property HISTORY: P filed a complaint for specific performance. D demurred on the ground that the alleged contract is barred by the statute of frauds. The demurrer was sustained. P appeals. ISSUE: Does a contract for land fall within the Statute of Frauds if it does not have all the essential provisions of the contract in writing? HOLDING: Yes. D contends that the statute of frauds is applicable because the property to be sold is not sufficiently described and the written memorandum does not show the terms and conditions of the sale and time for payment. The sale price is given but the terms, down payment, balance owed and how it was to be paid were left blank. P argues that it is assumed that agreement for the payment is the entire purchase price in cash. The court holds that all the essential provisions of the contract must be in writing in order to satisfy the Statute of Frauds. The contract does not show the terms and conditions of sale at the time of payment. Judgment affirmed.

REASONING: All essential terms of the contract must be in writing in order for the contract to not fall within the statute of frauds.

MCINTOSH v. MURPHY (statute of frauds oral agreement) FACTS: D was in southern California interviewing prospective management personnel for his Chevy dealerships in Hawaii. P was interviewed twice. The position of sales manager was discussed but no contract was entered into. About a month later P received a call from the GM informing him of possible employment within 30 days if he was still available. P indicated his continued interest. Later in April P sent a telegram to D to let him know he would be in Honolulu. The day before his arrival, P received a call from D notifying him that the position of assistant sales manager was available. P expressed surprise at the change in job title from sales manager to assistant sales manager but reconfirmed that he would be arriving the following day. The day after his arrival, P commenced work. P worked for D for approximately 2 months at which time he was discharged on the grounds that he was unable to close deals with prospective customers and could not train salesmen. HISTORY: P filed suit to recover damages from D for breach of an alleged one-year oral employment. D moved for directed verdict arguing that the oral employment agreement was in violation of the provision of the Statute of Frauds requiring any agreement that is not to be performed within one year to be in writing. The trial court ruled that P was not bound by the contract until he showed up for work and assuming that the contract was for a years employment, it was performable within a year to the day and therefore no writing was required for it to be enforceable. A verdict for P was returned in the amount of $12K. ISSUE: Can P maintain an action on an oral contract in light of the prohibition of the Statute of Frauds? HOLDING: Yes. But the contract is enforceable under the doctrine of promissory estoppel. There is no question that the actions of P moving 2200 miles from L.A. to Hawaii was foreseeable to D. Injustice can only be avoided by the enforcement of the contract and the granting of money damages. No other remedy is adequate. Judgment of the trial court is affirmed on the ground that Ps reliance was such that injustice could only be avoided by enforcement of the contract. REASONING: Section 139 of Restatement Second of Contracts: A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires. GROVES v. JOHN WUNDER CO. (remedies: expectancy damages) FACTS: P owned 24 acres of real estate. P had a plant on the premises for excavating and screening gravel. Nearby D owned and operated a similar plant. P & D entered into a 7 year contract where P would lease the land to D, who agreed to remove the sand and gravel and to leave the property at a uniform grade, substantially the same as the grade existing at the time of the contract. Under the

contract, D got Ps screening plant. D paid P $105K. D breached the contract deliberately. It removed only the richest and best gravel and failed to comply with the terms and conditions of the lease. When D surrendered the premises the ground was broken rugged and uneven. HISTORY: The court found that in order to complete the performance the reasonable cost would be $60K. The reasonable value of the property had D performed the contract would have been $12K. The gauge of damages was the difference between the market value of Ps land when the contract was made and what it would have been if D had performed. P received a judgment of $15,000 and appeals asserting that he is entitled to the reasonable cost of doing the work called for by the contract. ISSUE: Can P collect the reasonable cost of doing the work called for by the contract when the reasonable cost is more than the value of the land? HOLDING: Yes. Ds breach of contract was willful. The decision of the court rewards bad faith and deliberate breach. It has never before been suggested that the lack of value in the land furnished to the contractor provides any escape from the ordinary consequences of breach. Value of the land is no proper part of any measure of damages for willful breach of a building contract. It is suggested that because of the little or no value of the land P may be unconscionably enriched; however there can be no unconscionable enrichment when the result is but to give one party to a contract only what the other has promised. Defendants are liable to P for reasonable cost of doing what they have promised to do. There must be a new trial. Judgment reversed. REASONING: Restatement section 346: The cost of remedying the defect is the amount awarded as compensation for failure to render the promised performance. The owner is entitled to compensation for what he has paid and of which he has been deprived by the contractors breach. DISSENTING: Ps recovery is limited to loss actually suffered by reason of the breach. He is not entitled to be placed in a better position than he would have been in if the contract had not been broken. Damages recoverable for breach of a contract to construct is the difference between the market value of the property in the condition it was in when delivered to and received by P and what its market value would have been if D had fully complied with its terms.

ROCK ISLAND v. HELMERICH & PAYNE (remedies: cost of performance) FACTS: D leased two tracts of land from P. for coal mining purposes. The lease contained a reclamation clause that after any mining operation the surface would be restored to a condition as close as possible to the condition prior to the mining operation. D subleased to land to Sam Sexton who used strip mining techniques to remove coal. When the lease period ended, the land was not reclaimed. HISTORY: P sued D for breach of leases reclamation provision, seeking damages equal to the amount necessary to reclaim the land. D filed a third party complaint against Sexton, who agreed to pay an judgment won by P. The jury awarded P $375, 000. D appeals a jury verdict in favor P. D appeals trial courts denial of its motions for judgment notwithstanding the verdict and for a new trial or amendment of the judgment.

ISSUE: Did the trial court err in holding that the proper measure of damages was cost of performance? HOLDING: No. The trial court submitted the issue of the importance of the reclamation clause to the jury. The trial court must submit the issue to the jury when the parties have introduced extrinsic evidence of their intent. Otherwise, the trial court should treat interpretation of the contract as a matter of law. Since neither party introduced evidence of intent in including the reclamation clause, trial court should not have submitted interpretation of the contract to the jury. D argues that the trial court should have held that lease was focused on coal mining as its main purpose and that reclamation was merely an incidental purpose. D further argues that diminution in value of the land was $6797 and restoring the land would cost $375,000 so the court should have held that the cost of reclamation was disproportionate to the diminution in land value. Parties expressly included a reclamation clause and required D to bear the clause of reclamation. Cost of performance is the proper measure of damages and the jury used this measure in calculating damages. The courts error is harmless. Judgment affirmed. REASONING: Oklahoma enacted an Open Cut Land Reclamation Act that declared that after any mining operations are completed the land is to be reclaimed. The statute makes no exception for cases in which the expenditures for reclamation are disproportionate to the resulting increase in land value.

RADFORD v. FROBERVILLE (remedies: completion damages) FACTS: P was the owner of house which was broken up into flats and leased to tenants. Next to the house was another large lot where another house could be built. P sold the lot to D for 6500lbs and Ds promise to build a fence to divide Ds property from Ps. When D failed to build a wall P sued, claiming as damaged 3400lb cost of building a wall. Ds failure to build a wall did not diminish the market value of Ps property. HISTORY: The court granted the cost of completion damages. ISSUE: What is the measure of damages when the work to be performed is of no financial value to P? HOLDING: N/A REASONING: The damages ought to be measured by the cost of the work.

THORNE v. WHITE (nominal damages) FACTS: D (Thorne) contracted to put a new roof on Ps (White) residence and make certain repairs in connection therewith for $225. Within a few hours work was discontinued due to inclement weather. D never returned. P entered into a contract with another company. Cost was $582.26. P sued D for the difference alleging breach of contract. HISTORY: Court ruled for P Can P recover for the difference in the contract the he had with D and the contract he made subsequent to the breach?

HOLDING: No. damages awarded would be the correct sum if contract entered into with D and contract subsequently entered into was essentially the same contract. The trial court found that the first and second contracts were essentially the same. Court of Appeals disagrees. Contract entered into with D called for a 4-ply roof. Second contract called for a 5-ply roof. D was to put new roof over the old one. Second contact was to remove old roof entirely and build a new roof. There were several additional items in the second contract which were not bargained for in the first. P received more from the second contract than what he was to receive from D. Judgment reversed and a new trial ordered on the issue of damages. REASONING: A party damaged by breach may only recover for losses which are the natural consequence and proximate result of that breach. Injured party should not be placed in a better position than he would have been in had no breach occurred. Why was the lower court decision reversed with instructions to grant a new trial on damages? WARNER v. MCLAY (expectancy damages) FACTS: P holds that he is entitled to recover damages for expenditures and loss of profits occasioned by the breach of contract. HISTORY: Trial court instructed the jury that the contract was broken by D, so if P was ready and willing to perform his part of the contract and was prevented by D from doing so, P is entitled to any damage he may suffer from by reason of the failure of D to allow him to proceed. The jury was further instructed that since D submitted no evidence, they would be obliged to accept the evidence and submitted by P. Verdict and judgment for P. D appeals. ISSUE: Did the trial court err in its instruction to the jury regarding calculation of profits? HOLDING: Yes. The instructions given to the jury were not sufficient for the proper for the proper guidance of the jury on the question of profits. There was no attempt to define profits, nor any instruction given as to how these profits were to be estimated. Judgment reversed. REASONING: A building contractor who has been wrongfully prevented by the owner from completing his contract, is entitled to recover as damages not only his expenditures theretofore incurred in the partial completion of the structure, but also such profits as he would have realized had his undertaking been fully performed; and the measure of such profits would be the contract price, less the cost of the labor and material required to complete the building.

HANDICAPPED CHILDRENS ED BOARD v. LUKASZEWSKI (mitigation of damages) FACTS: P hired D to serve as a speech therapist for the spring term. The job was 45 miles away and D commuted. D was then offered a contract for the following school year for $10,760. Prior to the beginning of the school year, D was offered a job closer to home for $13,000. D accepted and notified Ps director that she was resigning. He told D to submit a letter for consideration to P. D submitted the letter and P refused to release her from the contract.

D went back to work. She had a meeting with the director and left the meeting very unsatisfied. She called her doctor to make an appointment for that afternoon. The doctor concluded that D had a hypertension problem. It was his opinion that even if D took hypotensive drugs, her condition would not improve unless the situation which caused the problem was removed. He further opined that it would be dangerous to drive long distances. D never returned to work. She submitted a resignation letter along with a copy of the doctors letter. P began looking for a replacement and the only qualified person had more teaching experience and the salary agreed upon was $1,026.64 more than P was to pay D. HISTORY: P filed charges against D for the amount of additional compensation it was required to pay as a result of Ds breach. The trial court ruled for P. D appealed and the court affirmed the trial courts ruling that D had breached the contract. However, they ruled that P had received a proportionately better qualified teacher so they had suffered no damages. ISSUE: Did D breach her contract and if so did P suffer recoverable damages as a result of the breach? HOLDING: Yes. The court upheld the trial courts findings that Ds condition resulted from the stress condition she had created in trying to repudiate her contract and that D had resigned for reasons other than health. The court affirmed that D had breached her contract. P expected to receive a teacher with the experience and salary of D. It neither expected nor wanted a more experienced teacher who had to be paid additional money. Ds breach forced P to hire a replacement and pay a higher salary. Therefore P lost the benefit of the bargain. Any additional value received by P was imposed upon it and cannot be characterized as a benefit. P suffered damages for the loss of its bargain in the amount of the additional compensation it was required to pay Ds replacement. P must attempt to obtain equivalent services at the lowest possible cost. P acted reasonably in hiring Ds replacement and properly mitigated the damages. P is entitled to have the benefit of its bargain restored. Decision of the court of appeals is affirmed in part and reversed in part. REASONING: A health danger will not excuse nonperformance of a contractual obligation when the danger is caused by the nonperforming party. Nor will a health danger which was foreseeable when the contract was entered into justify its breach. It would be unfair to allow a breaching party to escape liability because of a health danger which by his or her own fault has precluded liability. Damages for breach are measured by the expectations of the parties. COOPER v. CLUTE (seller repudiation) FACTS: D entered into a contract with P to deliver 1,430 bales of cotton at a price of 10 7/8 cents per pound. D failed to deliver the cotton. At the time of delivery the market value was 10 7/8 cents per pound. HISTORY: P claims court erred in not giving judgment to P for the difference between the contract price (10 7/8) and the price D got for the sale of cotton (11.03). ISSUE: Did the court err in not awarding P the difference between the contract price and the price D received for the sale of cotton after the breach?

HOLDING: No. The written contract shows that D did not sell to P any particular cotton. D could have performed the contract by purchasing similar cotton on the market and making delivery. Jury fixed MV of cotton at the place of delivery as 10 7/8, which is KP. P sustained no actual damage. REASONING: Measure of breach for an executory contract = Contract Price (KP) Market Value (MV) of the property at the time and place of the breach of the contract. If MV =KP only nominal damages can be recovered. There are cases where the evidence warrants the allowance of special damages.

NERI v. RETAIL MARINE CORP (buyer repudiation u.c.c.) FACTS: P contracted to buy a boat from D for $12, 587.40. They deposited $4,250. P rescinded the contract, stating that he was about to undergo surgery and hospitalization and would be unable to make any further payments. Boat had already been ordered and was delivered to D at about the time he received the letter rescinding the contract. D refused to refund Ps deposit and an action was commenced. HISTORY: P sued to recover deposit; D counterclaimed alleging breach of contract. D received summary judgment on the issue of liability. Special Term was directed to assess damages. Boat ordered in accordance with Ps contract was sold 4 months later for the contract price. P argues that Ds loss was recouped. D argues that but for Ps breach, they would have made two sales instead of one. Profit on the sale = $2579; incidental expenses = $674. D also sought to recover $1250 in attorneys fees. Trial court found damages owed to D in the amount of $500 under UCC Section 2-718 and directed Ps deposit in the amount of $3750 be returned. Judgment was affirmed by the court of appeals. ISSUE: Can D recover damages when KP = price received when boat was sold to a third party? HOLDING: Yes. P is entitled to damages in the amount of $4,250 $2,579 for lost profit $674 incidental damages. Order of the appellate division should be affirmed. REASONING: D is entitled to recover under UCC Section 2-708. When the dealer has an unlimited supply of standardpriced goods, the resale to replace the breaching buyer costs the dealer a sale, because if the buyer hadnt breached, the seller would have made two sales.

HADLEY v. BAXENDALE (consequential damages) FACTS: P is a miller with a business. The mill was stopped by a broken crank shaft. P sent a servant to D, a carrier, to have the shaft carried to the manufacturer so that they could make a new one for P. It was to be taken to the manufacturer the following day. P told D that the mill was stopped and that the shaft must be sent immediately. D was told that a special entry, if required, was to be made to hasten its delivery. The delivery was delayed by several days due to neglect and the mill remained closed and lost profits.

HISTORY: P sued D for lost profits. D objected that the damages were too remote and they were not liable. Judge left the case to the jury. The jury found a verdict of 25 lbs. in damages. ISSUE: Can P, a miller, collect for loss of profits where D, a carrier, failed to deliver a broken shaft to the manufacturer in a timely manner and Ps mill was stopped for several days as a result? HOLDING: No. The court finds that the only circumstances communicated by P to D was that the article to be carried was a broken shaft of a mill and that P were the millers of that mill. In the majority of millers sending broken shafts to third persons by a carrier, under ordinary circumstances such consequences would not in all probability have occurred. The loss of profits cannot reasonably be considered such a consequence of the breach as would have been fairly and reasonably contemplated by both parties when they made the contract. Such loss would neither have flowed naturally from the breach of this contract in the majority of cases, nor were the special circumstances communicated to or known by D. Judge should have instructed jury to not take loss of profits into consideration when calculating damages. New trial ordered. REASONING: Where two parties have made a contract which one of them has broken, damages should be such as may fairly and reasonably be considered arising naturally from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it. If the special circumstances under which the contract was made were communicated by P to D, and thus know to both parties, damages resulting from breach would be the amount of injury which would normally follow from a breach of contract under these special circumstances. If these circumstances were wholly unknown to the party breaking the contract, he at most could only be supposed to have had in his contemplation the amount of injury which would arise generally from such a breach of contract. Had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case. It would be unjust to deprive them of this advantage. Consequential damages: not every miller would have lost profits because of carriers delay. ARMSTRONG v. BANGOR MILL (lost expectancy damages) FACTS: P, a miller, sent a broken crankshaft to Ds machine shop for repairs. Ds workmen left the shaft out of alignment, necessitating the return from Ps mill back to D. Ps mill was shut down for 6 days with loss of earnings and expenses of maintenance. HISTORY: P filed suit for losses and expenses incidental to crankshaft repairs. Verdict for P. D filed a motion for a new trial. ISSUE: Were the damages awarded to P by the jury excessive? HOLDING: No. Upon the facts of this case, jury was justified in finding that Ds undertaking to work in a skilled and workmanlike manner was not fulfilled. Damages awarded were not excessive. P, an established business yielding regular profits, was impeded by Ds failure to fulfill the obligations impliedly imposed by its contract. Motion for a new trial is overruled. REASONING: In Ds contract to repair the crankshaft the law implies an undertaking on Ds part to perform the work in a reasonably skilled and workmanlike manner.

OTHER LOSS

CLARK v. MARSIGLIA (mitigation) FACTS: D delivered a number of paintings to P to clean and repair. They were delivered to D on two occasions. The first parcel was repaired at a cost of $75. The second parcel was repaired at a cost of $156. HISTORY: P sued D for work, labor, and materials in cleaning, repairing and improving paintings. For the first parcel D offered no defense. For the second parcel, D offered evidence that after P had commenced work on the paintings, he desired P not to go on. P finished cleaning the paintings and claimed recovery for the whole, insisting that D had no right to countermand the order which he had given. D requested the court to charge that he had the right to countermand his instructions for work and that P could not recover any damages for work done after the countermand. Court declined to charge as requested and instructed the jury that since P had started work on the paintings before the order was revoked, he had a right to finish and to recover the whole value for his labor and materials. Jury found for P. ISSUE: Did the trial court err in instructing the jury that P had a right to finish the contract and recover damages after D informed P that he was breaching the contract? HOLDING: Yes. P was allowed to recover as though there was no countermand of the order. D violated his contract by asking P to stop work on the paintings. Damages incurred by violating this contract include compensation for labor done and materials used and any other sum that may be assessed upon legal principles for breach of the contract. P had no right to continue to work once D had given an order for him to stop and to make the penalty for D greater than it otherwise would have been. Judgment reversed. REASONING: To hold that one who employs another to do a piece of work is bound to suffer it to be done at all events, would sometimes lead to great injustice. The just claims of the party employed are satisfied when he is fully compensated for his part performance and indemnified for his loss in respect to the part left unexecuted. To persist in accumulating a larger demand is not consistent with good faith towards the employer. D is entitled to contract price-cost of completion.

SCHIAVI MOBILE HOMES v. GIRONDA (retailers duty to mitigate)

FACTS: D signed a contract with P for the purchase of a mobile home for a total price of $23K with a $1,000 deposit. Subsequently D suffered marital, medical and financial troubles and breached the contract. P contacted Ds father and asked if D was still planning on purchasing the mobile home. Ds father replied that he did not know and asked whether he could buy the home so his son would not lose his deposit. P stated that he did not think this would be necessary. HISTORY The mobile home was sold to a third party for $1,028.69 less than the contract price with D and filed suit fir $4,800 for lost profits and interest expenses incurred as a result of the breach of Ds contract. Court found for P in the amount of $759.45. D appeals, claiming P failed to mitigate damages. ISSUE: Did P have a duty to mitigate damages by pursuing the offer of Ds father to purchase the home? HOLDING: Yes. The only witness at trial was Ds father who stated that he expressed his willingness to buy the home and to mortgage his house to raise the money. P presented no evidence on the issue of mitigation. Trial court ruled that P had not failed to properly mitigate damages because the fathers offer to buy the home was conditional and vague. The court misapplied the doctrine of mitigation. Trial court never focused on reasonableness of Ps failure to pursue the fathers offer. Court was solely concerned wit the legal sufficiency of the offer. Willingness to purchase the mobile home was contingent upon breach of his sons contractual obligation. As soon as duty to mitigate arose, P had unconditional willingness of fathers part to buy the home. Cannot agree with the trial courts conclusion that the offer was too vague to have constituted the foundation for a binding contract. The duty to mitigate is more than just a duty to accept legally enforceable offers. P had a duty to pursue the opportunity to minimize the effects of the breach but instead waited two months and then sold the home for $1,028K less than the father was willing to pay. There is no evidence that Ps failure to sell to Ds father rested on any legitimate ground. P did not take reasonable measures to mitigate its damages. Trial court erred in awarding damages based on the reduction in selling price. Ps failure to sell the home to Ds father bars recovery of any interest expense incurred after that point in time. Ds appeal granted. REASONING: When a contract is breached, the non-breaching party has an affirmative duty to take reasonable steps to mitigate damages. The non-breaching party needs only to take reasonable steps to minimize his losses. He is not expected to unreasonably expose himself to risk or expense.

PARKER v. 20TH CENTURY FOX (mitigation acceptable substitutes) FACTS: P was to play the female lead in Bloomer Girl The contract guaranteed compensation of $750K for 14 weeks work. Prior to the start of production, D decided not to produce the picture. D sent a letter to P stating they would not comply with the contract but she could opt to play the leading actress in Big country, Big Man. Compensation was identical, as were 31 of 34 numbered provisions of the original contract. Big Country was a dramatic, western type film set

in Australia. Bloomer Girl was a musical set in California. P was given one week to accept the contract. She did not and the offer lapsed. P then filed suit against D for recovery of the agreed guaranteed compensation. HISTORY: P set forth 2 causes of action: 1) money due under the contract; 2) damages resulting from Ds breach of contract. D pleaded as an affirmative defense to both causes of action Ps failure to mitigate damages, alleging that she unreasonably refused to accept its offer of the leading role in Big Country, Summary judgment was granted to P. D appeals. ISSUE: Did P unreasonably refuse to mitigate damages by refusing Ds offer of a role in Big Country? HOLDING: No. Trial court correctly ruled that Ps failure to accept Ds substitute offer could not be applied in mitigation of damages because the offer of a lead in Big Country was both of a different and inferior type. D failed to produce any facts showing the existence of a factual issue. Judgment affirmed. REASONING: The measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon for the period of the service, less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment. Employer must show that the other employment was comparable to that of which the employee has been deprived. Employees rejection of or failure to seek employment of a different or inferior kind may not be resorted to in order to mitigate damages. DISSENT: The question of whether the offer of work in Big Country was substantially similar to her former employment starring in Blooomer Girl is a question of fact and should not have been determined on a motion for summary judgment. In California alone it has been held that one must accept employment which is substantially similar employment in the same general line as the first employment, equivalent to the prior position, which is not of an inferior kind. The only alternative job offer an employee would be required to accept would be an offer of his former job by his former employer. Court uses the substantially similar test. The majority point out the differences in the two films and then assert that these constitute a difference in the kind of employment. The vehicles for the display of the stars talents are different, but it doesnt prove that Ps employment as a star in such vehicles is necessarily of a different kind and either inferior or superior. The question should not be whether differences in the two jobs exist, but whether the differences are substantial enough to constitute differences in the kind of employment, or whether they render the substitute employment to be of an inferior kind. This question requires factual determinations which are improper on a motion for summary judgment. The ultimate issue is whether the employee acted reasonably. DISSENT: The inquiry should not be whether differences between the two jobs exist but whether the differences are substantial enough to constitute differences in the kind of employment or whether the differences render the employment of an inferior kind. This inquiry involves factual determinations that are improper for summary judgment.

OLDS v. MAPES-REEVES CONSTRUCTION CO. (diminution of damages)

FACTS: D, a contractor, was to build a large building for a third party. P, subcontractors, were to furnish all the marble for $3,000. A controversy arose between D and third party and D asked P to discontinue work. D became liable to P for Damages = Sum it would cost to complete the work under the contract sum P were to receive. P brought suit against D and then made a contract directly with the third party to complete the work called for in their contract with D as well as other work. Profits on this contract were $335.23. HISTORY: Court held that D was entitled to diminution of damages or profit made by P. P appeals. ISSUE: Should damages be reduced by the amount of profit earned from the new contract with the third party? HOLDING: No. This is not a personal services contract, where the injured party would be required to dispose of his services in a reasonable way. Ps agreement was not to render personal services, but only to accomplish a specific result. They were free to take on as many other contracts as they chose. The question is whether the profits from the new contract were a direct result of Ds breach or whether they came from an independent, intervening cause. It is not to be assumed that P was not capable to carry on several contracts at one time. The making of profits on a new contract does not appear to be because of relief from the obligations of an old one. The contract with the landowner was a new undertaking in which P had no obligation to engage. If the contract had resulted in a loss to them, they could not have charged the loss to D. Since the contract resulted in a gain to P, there is no reason why D should receive this gain in diminution of the damages for which it was liable. There is no privity between D and P or between D and third party in reference to the new contract. Ruling at trial was erroneous and Ps damages should have been assessed w/out reference to their profits obtained under the new contract. Exceptions sustained. REASONING: One deprived of his contract is under no obligation to enter into new contracts with a view to make profits for the other party. EVERGREEN AMUSEMSENT CORP. v. MILSTEAD (loss of profits- new business) FACTS: D was the operator of a drive-in movie theatre. HISTORY: D was held liable to P for the balance of the clearing and grading of the site of the theatre, less the cost of completing a part of the work and damages for delay in compensation, based on rental value of the theatre property during the period of delay and out-of-pocket costs for that time. D counterclaimed for lost profits for the period of delay. Court held that the amount claimed was to uncertain and speculative. D appeals. ISSUE: Did the trial court err in disallowing evidence of Ds (a new business) lost profits? HOLDING: No. D claims that delay in construction cost $12,500 in profits. D offered a witness to testify that he had built a majority of the drive-in theatres in the area and was familiar with the drive-in theatre business. He also testified that a market survey in the area before the drive-in was built showed a need for a theatre in that area. He was also prepared to testify as to the reasonably anticipated profits by comparing the profits in the second year of business to those in which it could not operate the year before. Court holds that the trial court did not err in disallowing this evidence. The case was tried without reversible error. Judgment is affirmed.

REASONING: Loss of profit is a definite element of damages in an action for breach of contract or in an action for harming an established business. Loss of profits from a business which has not gone into operation may not be recovered because they are too uncertain and speculative.

LAKOTA GIRL SCOUTS v. HAVEY FUND RAISING (loss of profits- established business) FACTS: P contracted with D to campaign to raise funds in the amount of $345K. Due to inadequate consultation on the part of D, shifting personnel, and failure to provide assistance on collections, the campaign raised only $88K. P paid D 24K for the campaign and incurred an additional $10K in expenses. HISTORY: P filed suit against D for breach of contract for failure to provide the promised amount of assistance and supervision. Issue was submitted to the jury on the theory of lost profits: What P would have made if the contract had been performed, minus a deduction for savings made possible by the breach. The jury reached verdict of $35K against D. D appeals. ISSUE: Can D be held liable for loss of profits when the receipts from the drive exceeded the expenses? HOLDING: Yes. An expense approach to damages is recognized only when other measures of damages are inappropriate. The first consideration must be the propriety of an award based upon lost profits. Lost profits are recoverable where: 1) there is proof that some loss occurred; 2) that the loss flowed naturally and probably from the breach; 3) there is proof of a rational basis from which the amount can be inferred. It was foreseeable to D that a goal reasonably believed by P to be capable of achievement would be prejudiced by the failure of D to provide the services contemplated by the agreement and that such diminished return would result from the breach. No evidence was offered to cast doubt on Ps assertion that the campaign failed because of Ds breach. Expert testimony introduced at trial was sufficient for jury to determine how much less P netted than it would have with full performance of D. Judgment affirmed. REASONING: The jury need not make the computation of damages with mathematical exactness. It is enough if theres proof of a rational basis for computation. A reasonable source for computing damages rests with the testimony of expert witnesses. TEST for proving some loss occurred: proof that some loss occurred; loss flows directly from breached agreement and is foreseeable; proof of a rational basis for calculating profits. CHRUM v. CHARLES HEATING & COOLING (damages mental distress) FACTS: D installed a furnace for P. Several months later the furnace caused a fire which destroyed Ps home. There were no physical injuries. P was insured by state farm and paid out for their loss. HISTORY: State farm commenced an action against D, seeking subrogation. P filed a separate action seeking damages for economic loss, alleging negligence in installation of the furnace. P also filed suit for emotional distress and mental anguish resulting from the fire. D moved for partial summary judgment with respect to Ps emotional distress claim. The trial court denied the motion stating that the loss of a home was more personal than commercial and that D was aware that a furnace

was a potentially dangerous instrument and could foresee that any problems or difficulties could be disruptive to the purchasers life. D appeals the trial courts denial of the motion for partial summary judgment. ISSUE: Did the trial court err in denying Ds motion for partial summary judgment with respect to Ps emotional distress claim? HOLDING: Yes. The installation of a furnace, as well as other home improvements, arises by commercial contract and do not involve matters of mental concern and solicitude. Injury suffered by P was to property and not person. The claim is also inadequate to support an independent claim for mental distress in tort. Reversed and remanded. REASONING Kewin: Damages recoverable for breach of contract are generally limited to damages that arise naturally from the breach or are contemplated by the parties at the time of the contracting. Where an action is for a breach of a commercial contract, damages for mental distress are not recoverable. Stewart: Exception to Kewin. Where the contract breached is a personal agreement involving matters of mental concern and solicitude, damages for emotional suffering are recoverable. Damages for mental distress are allowed where the injury suffered is to the person. Where property loss is concerned the courts have generally disallowed recovery for mental distress in breach of contract actions. Other than Stewart, the only grounds upon which damages for mental distress are recoverable in a breach of contract case is where P alleges tortuous conduct, independent of any breach of the commercial contract. CHICAGO COLLISEUM v. DEMPSEY (alternative remedies) FACTS: D was the worlds Champion Heavyweight boxer. P entered into a contract with D to promote a boxing match between D and Harry Wills. D received a payment of $10 and was to receive $300,000 on 8/5/26 and another $500,000 10 days before the match, and 50% of any profits over 2M. As part of the contract D agreed to be insured by P for health and life and not to engage in any other boxing matches until after the date of the event. P contracted with Wills to pay him $50K 10 days prior to the match. This contract was entered into before the contract between D and P. P hired a promoter who was to be reimbursed for all expenses from the ticket sales as well as a certain amount for his services. P contacted D to let him know their insurance reps would be arriving to perform an examination for life and health insurance. D declined to be examined stating that he was too busy preparing for a match with Gene Tunney to be bothered. HISTORY: P brought suit against D to recover damages for breach of contract and asked that D be restrained and enjoined from participating in a match with Tunney. The court found that the contract was valid and entered a decree to enjoin D from participating in any boxing matches. The trial court dismissed the action for damages for breach. ISSUE: Did the trial court err in dismissing Ps claim for breach? HOLDING: Yes. As there was a valid written agreement, there should have been a finding of at least nominal damages for P. Damages: 1.Loss of profits that would have been derived by P if the contest in question was held. They cannot be sufficiently determined and are not recoverable.

2.Expenses incurred by P prior to the signing of the contract. Such expenses are not recoverable. P entered into contract with Wills prior to entering into contract with D. Any obligations assumed by P prior to the execution of the written contract with D are not chargeable to D. 3.Expenses incurred in enjoining and restraining D from participating in another match. These expenses are not recoverable. There is nothing in the contract with regard to attorneys fees. 4.Expenses incurred after the signing of the contract and before the breach. The issue should have been submitted to the jury on the question of these damages. Items recoverable are those incurred between the date of the signing of the agreement and the breach by D and such as were incurred as a necessary expense in furtherance of the performance. Judgment reversed and cause remanded for a new trial. REASONING: Compensation for damages for a breach of contract must be established by evidence from which a court or jury are able to ascertain the extent of such damages by the usual rules of evidence and to a reasonable degree of certainty. When the court is of the opinion that the performance in question is not susceptible of proof sufficient to satisfy the requirements and that the damages, if any, are purely speculative, then compensation for such damages is improper. Items recoverable in a breach of contract action are such items of expense as were incurred between the date of the signing of the agreement and the date of breach by the defendant and such as were incurred as a necessary expense in furtherance of the performance. Proof of such items should be made subject to the usual rules of evidence. AUTOTROL CORP v. CONTINENTAL WATER (reliance damages) FACTS: P & D entered into a contract whereby D owned the patent to a water purification system and P was to manufacture the control for the system and D was to manufacture the rest of the system. P was to sell the large systems and D the small systems. Product specs were not in place prior to the contract signing. The contract provided that is the parties were unable to agree on the specs, either party could terminate the contract by the stated deadline. The deadline passed and was extended. The extension passed and after a year, no product specs had been agreed on. D declared the contract terminated at that time and P alleged breach. HISTORY: P filed suit for breach of contract. The jury awarded P $1.5M. The jury was entitled to find that at the time the contract was breached, the need to agree on product specs was not urgent and agreement was not impossible. Further, D terminated the contract, not on the grounds of product specs, but on the division of the market for the product. D appeals. ISSUE: Can P recover for fixed costs that were incurred during the contract period? HOLDING: Yes. P incurred $245K in out-of pocket costs of performance. Jury also awarded over $700K in overhead expenses. The engineers salaries and benefits were pro-rated for the time spent working on the project and awarded as damages to P. D objected on the grounds that it is speculative that if this contract had not been made, it would have been replaced with one that would have covered the engineers salary and benefits. Ps variable costs are recoverable because the breach deprived them of the opportunity to recover them by making and selling the water-purification systems they had contracted for. P may recover for the engineers salary because, were it not for the contract with D, he would have had time to devote to another project which may have been profitable enough to cover his salary. Because of Ds breach, this expense became a loss. It is enough that a jury could conclude that P probably would have recouped its overhead expenses on other projects had the contract with D never been signed.

The implicit theory of the damages award is that is that P would have had zero profits on the joint venture, based on the rule that anticipated profits from a new venture are too speculative to support a recovery of damages. Were it not for that rule, P would be seeking expectation damages rather than reliance damages. REASONING Fixed Costs: Stay the same whether or not the business does anything. They are improper items of damages because the breach could not have caused the expense to be incurred. Variable Costs: Recoverable for damages (out-of-pocket expenses). It is a question of fact whether overhead items allocated to a broken contract would have been recovered in a substitute contract. If they are a growing firm, it is likely that they would be recovered. If they are a declining firm, one must consider that the firm may have decided to economize those expenses through layoffs and other adjustments. If they were able to slash costs but did not do so because they were necessary for the performance of the contract, those expenses caused by the breach are recoverable as damages. A reasonable probability must be established that overhead expenses would have been recovered by means of another contract had the contract in questions never been made. THIS CASE IS THE EXCEPTION TO THE GENERAL RULE THAT FIXED COSTS ARE NOT RECOVERABLE. H.J. MCGRATH CO v. WISNER (remedy clauses) FACTS: P (Wisner) entered into a written contract to grow tomatoes on 6 acres of land and to sell and deliver all tomatoes to D at a price of $28/ton. In case of breach, P agrees to pay D $300 as liquidated damages and not as penalty and D may deduct sum from money due to P. P testified that he sold some tomatoes to D, but also at the market for a higher price, in violation of the contract. D learned of this and deducted $300 from the money paid to P. HISTORY: Verdict for P in the amount of $300. D appeals. ISSUE: Can D enforce the liquidated damages clause of the contract against P? HOLDING: No. The specified damages are in no way proportionate to the possible extent of the prospective breach. Court also finds that prospective damages for failure to deliver tomatoes that have a ready market are not incapable or difficult to ascertain. The clause is a penalty clause and unenforceable. REASONING: An agreement, made in advance of breach, fixing the damages therefore, is not enforceable as a contract and does not affect the damages recoverable for the breach, unless (a) the amount fixed is a reasonable forecast of just compensation for the harm caused by the breach, and (b) the harm caused by the breach is one the is incapable or very difficult of accurate estimation. (Restatement 339) Where a contract promises the same reparation for the breach of a trivial or relatively unimportant stipulation as for the breach of the most important one, it is obvious that the parties have not adhered to the rule of just compensation. (Comment B Restatement 339)

TRUCK CENTER v. PURITAN FARMS (remedy clauses) FACTS: D furnished milk to consumers through home delivery. D leased a fleet of 25 trucks from P for a term of 7 years. P was to supply the trucks and take care of all necessary repairs. D was to pay a weekly rental fee. D was granted the right to purchase the trucks anytime after the initial 12 month leasing period by paying P the amount owing on the bank loan plus an additional $100/truck. Contract stated that if D were to breach the contract, P would be entitled to damages in the amount of of all rentals that would have become due had the agreement run its full course. After nearly three years, D sought to terminate the lease. D sent a letter to D stating that P had failed to make the necessary repairs on the trucks so D would be terminating the lease without penalty and without purchasing the trucks. P sent a letter to D stating they had fully performed their obligations and would file suit against D if they proceeded with the planned breach. D returned the trucks to P. At the time of termination, P owed $45K on outstanding bank loans. HISTORY: P commenced an action against D. D counterclaimed for return of security deposit. Trial court found that P had satisfactorily performed its obligations under the lease and D was not justified in terminating the agreement. They also held that the liquidated damages provision was reasonable and represented a fair estimate of actual damages. D appeals. ISSUE: Can be enforce the liquidated damages clause against D? HOLDING: Yes. The amount stipulated by the parties as damages bears a reasonable relation to the amount of probable actual harm and is not a penalty. The provision is enforceable. Judgment affirmed. REASONING: A contractual provision fixing damages in the event of breach will be sustained if the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation. BETTER FOOD MARKET v. AMERICAN DIST. TELEGRAPH (fixed damages for breach) FACTS: P and D entered into an agreement for D to install and maintain a burglar alarm system for Ps food market. D, on receipt of a holdup alarm, was to promptly transmit the alarm to the police department. Ps market was robbed. D received an alarm signal but fit inform the police or call its own guards for nine minutes. The burglar escaped with $35K from Ps market. HISTORY: P brought an action in tort and in contract. The court issued a directed verdict for D. P appeals. ISSUE: Did the trial court err in directing a verdict for D? HOLDING: Yes. The court held that there was sufficient evidence to find that the loss was the proximate result of Ds delay in responding to the alarm. With regard to the liquidated damages provision, the possibilities of the consequences of a failure of D to perform its obligation under the contract are innumerable. There is no way to ascertain what portion of any loss sustained could be attributed to Ds failure to perform. The parties reasonably agreed that in all cases of breach by D, the damages would be fixed at $50. Judgment reversed. Ps recovery is limited to $50.

In regards to the tort claim, although an action in tort may sometimes be brought for the negligent breach of a contractual duty, still the nature of the duty owed and the consequences of its breach must be determined by reference to the contract, which created that duty. REASONING: The amount of liquidated damages must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained. GOODMAN v. DICKER (remedy for PE) FACTS: P applied for a franchise to sell Emerson products with the knowledge and encouragement of D. D are distributors for Emerson Radio Corp. D induced P to incur expenses tin preparing to do business under the franchise, including employment of salesmen and solicitation of orders for radios. D represented that Ps application had been accepted and a franchise would be granted and P would receive an initial delivery of 30-40 radios. No radios were delivered and notice was finally given that the franchise would not be granted. HISTORY: P filed an action for breach of contract. The trial court held that no contract had been proven, but that P had relied to their detriment on Ds statements and conduct. Judgment was entered for $1500 for cash outlays of $1150 and loss of profits of $350. D appeals. ISSUE: Did the trial court err in finding for P under a theory of PE? HOLDING: D contends that no liability would have arisen under the dealer franchise because it would have been terminable at will and would have imposed no duty on the manufacturer to sell or P to buy, any fixed number of radios. Cancellation of the agreement by the manufacturer would have created no liability for expenses incurred by P in preparing to do business. Ds contentions miss the point of the case. The court is not concerned with the terms of the franchise. The issue is the promise by D that led P to incur expenses. D cannot advance a defense inconsistent with their assurance that the franchise would be granted. The trial court was correct in holding D liable for moneys which P expended in preparing to do business under the promised franchise. The trial court erred in adding in the item of $350 for lost profits. The true measure of damages is the loss sustained by expenditures made in reliance upon the assurance of a dealer franchise. Judgment affirmed. REASONING: Justice and fair dealing require that one who acts to his detriment on the faith of conduct of another party should be protected by estopping the party who has brought about the situation from alleging anything in opposition to the natural consequences of his own course of conduct. D&G STOUT v. BACARDI (remedy for PE) FACTS: P was a distributor for P in the liquor market. When two suppliers left, P faced a choice to sell out at the best possible price or continue to operate on a smaller scale. It began negotiating with another distributor on the terms of a sale. Knowing that negotiations were ongoing, D promised P that P would continue to act as their distributor. Based on this

representation, D turned down the negotiated selling price it was offered. One week later, D withdrew their account. P could not operate without D and went back to the negotiating table and settled or an offer $550K below the initial offer. HISTORY: P filed suit to recover the price difference between the first and second offer. The district court entered summary judgment for D on the grounds that Ds promise was not one on which P should reasonably have relied. The relationship between P & D was terminable at-will and Ds promises contained no language indicating that they would be good for a specific period. P appeals. ISSUE: Can P recover from D the price difference between the first and second offer on a theory of PE? HOLDING: Yes. The question is whether the loss incurred was attributable to lost expectations of future profit or resulted from an opportunity forgone in reliance on Ds promise. National was interested in purchasing all assets other than D, but Ds repudiation of its promise affected the selling price because without D, P could not afford to stay in business. D destroyed Ps negotiating leverage since P no longer had the option of operating independently. Ps only alternative was to liquidate. Their only choice was to sell at any price. P had a reliance interest in Ds promise. The devaluation represents a reliance injury rather than an injury to Ps expectation of future profits. Reversed and remanded. REASONING Certain damages are recoverable when an employer breaks a promise of employment, even if the employment was terminable at will. (moving expenses). Moving expenses represent out-of-pocket losses. The line drawn is between reliance damages and expectation damages. In future wages, employee has only an expectation of income, the recovery of which, promissory estoppel will not support in an at-will employment setting. In wages forgone in order to prepare for a move, as in the moving expenses themselves, the employee has given up a presently determinate sum for the purpose of relocating. Both are reliance costs, not expectancy damages. WALTERS v. MARATHON OIL (remedy for PE) FACTS: P contacted D, a petroleum seller and distributor, about possibly locating a combination food store and service station on a vacant gasoline service station site. P bought the service station and made improvements upon it based on promises and continuing negotiations with D. D sent a proposal and agreement to P, and before it was accepted by D, but after it was received by P, D placed a moratorium on the consideration of new applications and refused to sign the agreement. HISTORY: A trial court found for P on the theory of PE. D appeals the award for lost profits and Ps failure to take reasonable steps to mitigate their damages. ISSUE: Did the trial court err in awarding damages to P for lost profits? HOLDING: No. With regard to the issue of damages, P called numerous suppliers to try to obtain gasoline, but his requests were declined. The fact that alternate suppliers may have existed does not impose the duty to mitigate damages by searching for additional sources if P lacked the sophistication to conduct such a search. With regard to lost profits, the trial court found that Ps lost profits were .06/gallon x 370,000 gallons that they were entitled to receive under their allocation for the first year, for a total of $22, 200. D contends that Ps damages should have been the amount of their expenditures in reliance on Ds promise, measured by the difference between their expenditures and the present value of their property. Using this measure P would receive no award because the value of their real estate is slightly

more than the amount expended by P in reliance on the promise. The court holds that it is unreasonable to assume that P did not anticipate a return of profits on their time and funds. It is apparent the P suffered a loss of profits as result of their reliance on D and the amount of lost profits was ascertained with reasonable clarity. In addition, P took steps to mitigate damage. Judgment affirmed. REASONING: Courts are able to adjust the remedies so as to grant necessary relief. A district court sitting in equity may devise a remedy which extends or exceeds the terms of a prior agreement between the parties if it is necessary to make the injured party whole. GROUSE v. GROUP HEALTH PLAN (remedy for PE) FACTS: P was a recent pharmacy school graduate. He was working as a retail pharmacist for $7/hour and began seeking employment with better compensation and benefits. P filled out an application with D and went in for two interviews. Approximately 6 months later he was offered a job working with D. P stated that he would need two weeks to give his employer notice. P also received another job offer from another hospital, but declined it because of Ds offer. In the next few days, the hiring manager spoke to the GM in regards to his decision to hire P. He was informed that a written reference, background check and approval of the GM were necessary. D was unable to obtain a reference for P so someone else was hired. P called D and reported that he was available to begin work and was told that the position was no longer available. P experienced difficulty gaining full-time employment and suffered loss of wages as a result. HISTORY: P filed suit to recover damages. The judge found that he had not stated an actionable claim. P appeals. ISSUE: Did the trial court err in finding that P had not stated an actionable claim? HOLDING: Yes. On these facts no contract exists due to the bilateral power of termination. Neither party is committed to performance and the promises are illusory. The court finds that PE is applicable here. D knew that to accept its offer P would have to resign from his employment. P promptly resigned and gave notice to D that he had done so. It would be unjust not to hold D to their promise. P had a right to assume that he would be given a good faith opportunity to perform his duties to the satisfaction of D once he was on the job. He was not only denied the opportunity but resigned the position he already held in reliance of the firm offer tendered by D. Since prospective employment might have been terminated at any time, the measure of damages is not so much what he would have earned from D, but what he lost in quitting the job he held and declining at least one other offer of employment elsewhere. Reversed and remanded for a new trial on the issue of damages. REASONING: When a promise is enforced pursuant to Restatement 90, the remedy granted for breach may be limited as justice requires. Relief may be limited to damages measured by the promisees reliance.

SUSI CONTRACTING v. ZARA CONTRACTING (restitution A w/C)

FACTS: D entered into a subcontract w/P where P was to perform all the main work called for in a contract to extend the airport. P encountered unexpected soil conditions during the course of their work. This caused the progress of their work to slow, caused breakdown of their tools, and caused them to do work not generally called for by the contract. P requested more money from D. A dispute arose leading to mutual claims of breach. D took possession over completion of the contract and for three months took possession of the equipment left by P at the contract site. HISTORY: P filed suit alleging wrongful termination of the contract and recovery for reasonable cost and value of work performed and rental for their tools. D counterclaimed alleging they were forced to terminate the contract due to Ps refusal to perform. Trial court found for P: $39K for work done + $18K for the increased cost of excavation + $5K for rental tool value $43K for the amount advanced from D to P. D appeals. ISSUE: Did the trial court err in allowing damages above the contract price for Ds breach? HOLDING: No. D contends that P is not entitled to damages for the extra costs not covered in the contract because the contract explicitly stated that they would make no claim for damages for unknown conditions. However, this only applies if the parties are relying on the contract. It does not apply where the contract has been wrongfully terminated and the party sues in quantum meruit. P is not limited to the contract price in this situation. Since it is D who is in default and Ps performance is part of the very performance for which D bargained, it is to be valued not by the extent to which Ds total wealth was increased but by the amount for which such services could have been purchased from someone in Ps position at the time they were rendered. D received substantial benefits from P. It has received the performance necessary to ensure recovery of profits and avoid being in default. There is no error in this item of recovery. REASONING: The promisee upon breach has the option to forego any suit on the contract and claim only the reasonable value of his performance. The contract price does not limit recovery. However, the contract may be used as evidence of the value of performance. BAUSCH & LOMB v. BRESSLER (restitution no proof of lost expectancy) FACTS: P & D entered into a three year contract whereby P was to be the exclusive worldwide distributor of one of Ds products. In return for the exclusive distributorship, P paid D $500,000 and agreed to make minimum annual purchases of Ds supplies. The parties later amended the agreement to reduce the exclusivity of the distributorship and extend the contract for two additional years. D violated the contract by selling products in Ps territory and stated that they would no longer fill or accept orders from P. HISTORY: P filed suit for breach of contract. The district court entered judgment for P in the amount of $550,000. The court found two separate breached by D: 1) D breached by selling products in Ps exclusive territory; 2) D breached by wrongfully terminating the agreement. D appeals by challenging the finding that it materially breached the agreement by terminating the agreement. ISSUE: Did the trial court err in awarding P $550K for Ds breach of contract? HOLDING: Yes. P made claims for lost profits and sought to prove them by pointing to profits made by D through its sales before and after termination of the contract, but P offered no evidence tending to prove they would have made the same sales. The district court denied the claim as speculative. However, the court found that the $500,000 prepaid royalty should

be returned as P was denied their full right to exclusive distribution. This court finds that the district court erred if they awarded the $500K as expectation damages. It does not follow that P would have realized a return of 500K if it had been allowed to fully perform. District court alternatively suggested that the award might be appropriate on a reliance damages approach. P may recover his expenses of preparation and of part performance as well as other foreseeable expenses. However, the reliance measure of damages rests on the premise that the reliance interest is no greater than the partys expectation interest. Courts will not knowingly put a party in a better position than he would have been in had the contract been fully performed. A reliance recovery will be offset by any the amount of any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been fully performed. This court sees no justification for the $500K as reliance damages. P may be entitled to a damage award by way of restitution. P is entitled to recover as much of the $500K as they can prove unjustly enriched D. Restitution does not permit P to recover the entire $500K. P had several years of exclusive distribution rights before D breached, and these rights constitute a benefit to P which must be offset against the $500K paid. District court must ascribe a value to the distribution right that was enjoyed by P before the breach. The profits D obtained through its violative sales may provide some evidence of the diminished value of the distribution right. This portion of the district courts award is vacated and the court is directed to grant P a restitutionary award. REASONING: P must prove with a reasonable degree of certainty that any claimed loss of profits was caused by Ds breach. Restitution is based on the equitable principle that one who has been unjustly enriched at the expense of the other is required to make restitution to the other. The terms of the agreement do not control an award of restitution. The reasonable value of the benefit unjustly received, not the contract price, determined the amount of an award in restitution. The contract may provide probative evidence of the value of the benefit. In the absence of a readily available market price, the values the parties ascribed to a benefit may be the best valuation measure available to the court. Why does susi prevail? How does this tell us when we might make a choice under a or b under 371?

OSTEEN v. JOHNSON (restitution lost expectancy) FACTS: P paid $2,500 to D in return for which D was to promote their daughter Linda as a country music singer and composer. D agreed to advertise Linda for one year, to arrange for a studio for Linda to record songs, to prepare two records from those songs, to press and mail copies of one of the records to djs throughout the country, and if the first record met with any success to press and mail out copies of the second record. D did arrange for several recording sessions, a record was prepared of two songs, 1,000 copies were pressed, 340 were sent to DJs, 200 were mailed to P, and remainder were kept by D. The record received a favorable review and a high rating in a trade magazine. HISTORY: P brought suit for breach of oral contract. The court concluded that D had substantially performed his part of the contract and issued a judgment for P in the amount of $1.00 on the basis that D had wrongfully caused the name of another

party to appear on the label of the record as co-author of a song that had been solely written by Linda. The court also ordered D to deliver to P the master tapes and records in Ds possession. P appealed on the grounds that they found the trial courts damages inadequate. ISSUE: Did the trial court err in finding that P was entitled to only nominal damages? HOLDING: Yes. No evidence was presented upon which an award other than nominal damages could be based. However, P can rely on the remedy of restitution. It is clear from the record and the findings of the trial court that the first record met with some success, but the copies of the second record were neither pressed nor mailed out. This constituted a substantial breach of the contract and justifies the remedy of restitution. D partially performed the contract and should be allowed compensation for the reasonable value of his services. Restitution will not be enforced unless P returns what he has received as part performance by D. Trial court shall determine the reasonable value of the services D rendered on Ps behalf. Judgment reversed and remanded w/directions that a new trial be held to determine amount P is entitled to by way of restitution. Amount will be $2,500 less reasonable value of services D performed on behalf of P. REASONING: The remedy of restitution is available where there has been a substantial breach of contract. The injured party cannot maintain an action for restitution of what he has given D unless Ds non-performance is so material that it is held to go to the essence of the contract. It must be such a breach as would discharge the injured party from any further contractual duty on his own part. A minor breach by one party does not discharge the contractual duty of the other party and the latter still being bound to perform as agreed cannot be entitled to restitution of payments already made by him or to the value of other part performances rendered. KITCHEN v. HERRING (specific performance- land) FACTS: HISTORY ISSUE HOLDING: Specific performance granted to P REASONING: Land is assumed to have a peculiar value, so as to give equity for a specific performance, without reference to its quality or quantity. Land is inherently unique and thus damages cannot be an adequate remedy

CURTICE v. CATTS (Specific performance) FACTS: P is in the business of canning tomatoes and seeks specific performance of a contract wherein D agreed to sell to P the entire product of certain land planted with tomatoes. Ps factory has a capacity of about 1M can of tomatoes. The season for packing lasts about 6 weeks. Preparation for 6 weeks of work must be carried out in all features for the business to

succeed. Labor and equipment must be secured in advance. A refusal of the parties who contract to supply a given acreage to comply with their contracts leaves the factory helpless except to whatever extent an uncertain market may perchance supply the deficiency. HISTORY: D contests the power of court to grant equitable relief. ISSUE: Does the court have the power to grant specific performance? HOLDING: This contract bears no resemblance to that of an ordinary contract for the sale of merchandise in the course of an ordinary business. The business is extraordinary in that maintenance of all the conditions prearranged to secure the pack are a necessity to insure the successful operation of the plant. D may be restrained from selling the crop to others. REASONING: No inherent difference between real estate and personal property controls the exercise of the jurisdiction. Where no adequate remedy at law exists, specific performance of a contract touching the sale of personal property will be decreed with the same freedom as in the case of a contract for the sale of land.

PRATT v. MCBEE (efficient breach) FACTS: P entered into a contract with D to manufacture 90,000 chairs at a cost of $10/chair. D calculated that he would make $2/chair or $180,000 total profit. Before D had allocated any resources to Ps order, he received an order from a third party to manufacture 50,000 tables for a total profit of $350,000. However, D would have to break his contract with P to take the contract for the tables because his company could only take one more order. D calculated the profit and decided it would be more profitable to breach the contract with P and take the contract for the tables. HISTORY: P brought suit to enjoin D from making the tables, for an order of specific performance on the chairs, and should this be denied, for general damages and restitution of the profit D would realize by breaking the contract. Trial court denied specific performance and granted general damages and struck out Ps claim for punitive damages. The court determined that the fair market price on the day of the breach was $10/chair and awarded P $90K in damages. ISSUE: Did the trial court err by not granting P specific performance? HOLDING: UCC 2-716 allows specific performance where the goods are unique. Chairs are not unique. Judgment affirmed. REASONING: Efficient breach: occurs when the gain to the breaching party exceeds the loss to the party suffering the breach, allowing the movement of resources to their more optimal use.