LAW PREVIEW

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CASE BRIEF
Embry v. Hargadine, Mkittrick Dry Goods Co.
NAME: FACTS: I. CONTRACT FORMATION. A. Mutual Assent. Embry v. Hargadine, Mkittrick Dry Goods Co., St. Louis Court of Appeals (1907). 00 P was employed by D (company) pursuant to a written employment contract that was set to expire on 12/15/03. 00 Several times prior to its expiration, P tried to extend the contract for another year. 00 P Testified that on 12/23/03, after the contract had lapsed, P tracked down Ds president and informed him that he would leave immediately unless he was re-employed for another year. 00 Ds president testified that he told P to get back to work. 00 P went back to work and, on 2/15/04, was notified that he was being laid off effective 3/1/04. PROCEDURE: P commenced an action against D alleging that D breached its employment agreement with P by hiring him. The action was tried and, after an appeal, retried. The jury found for D and P appealed questioning whether or not the jury charge was a correct statement of law in regard to what was necessary to constitute a contract between the parties. Whether what was said by the parties constituted a contract of re-employment pursuant to the terms of the previous contract irrespective of the intention or purpose of Ds president? Although D may not have intended to employ P by what transpired between them, yet if what D said would have been taken by a reasonable man to be an employment agreement, and P understood it as such, it constituted a valid contract of employment for the following year. Rule: If, whatever a mans real intention may be, he conducts himself so that a reasonable person would believe he was assenting to the terms proposed by the other party, and the other party upon that belief enters into a contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other partys terms. In light of Ps threat to quit unless he was re-employed, it was reasonable for P to construe Ds instruction t to P to get back to work as an assent by D to Ps demand for a new employment contract. The judgment in favor of D was reversed and the case was remanded to the trial court. None.

ISSUE: HOLDING:

REASONING:

DISPOSITION: DISSENT:

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CASE BRIEF
Lucy v. Zehmer
NAME: FACTS: I. CONTRACT FORMATION. A. Mutual Assent. Lucy v. Zehmer, Supreme Court of Appeals of Virginia (1954). 00 P approached D about purchasing his farmland for $50K. 00 D drafted, and then revised, a land sale contract to sell P land for $50K and had his wife sign the agreement, purportedly as a joke. 00 After the contract was signed, D informed P that he was never serious and had no intention to sell the farmland. PROCEDURE: ISSUE: HOLDING: REASONING: P sued D for specific performance of the contract. The trial court dismissed Ps complaint. P appealed. Whether a party can be bound to a contract when he/she secretly does not intend to enter into a contract with another and fails to disclose his/her intention to the other party? Yes, a party can be bound to a contract when he/she secretly does not intend to enter into a contract with another and fails to disclose his/her intention to the other party. Rule: When one party manifests an intention to be bound by an agreement, upon which another reasonably relies, a binding contract will have been created. Rule: The mental assent of the parties is not a prerequisite for the formation of a contract. Instead, whether contract is formed turns exclusively on the expressions of the parties intentions that are communicated between them. Whether the contract was the result of serious negotiations or the secret jest between D and Ds wife is of no consequence, because D manifested an intent to become bound by the terms of their agreement by: (1) verbally accepting Ps offer; (2) drafting an agreement; (3) revising the agreement; and (4) obtaining the signatures of all necessary parties to the agreement. Appellate court reversed the decision of the trial court and reinstated Ps complaint against D.

DISPOSITION:

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CASE BRIEF
Hamer v. Sidway
NAME: FACTS: I. CONTRACT FORMATION. B. Consideration: Bargained-for Value. Hamer v. Sidway, Court of Appeals of New York (1891). 00 D (uncle) promised to pay P (nephew) $5,000 if he refrained from drinking, smoking, swearing, or gambling until P turned 21 years old. 00 P performed his end of the bargain, and on his 21st birthday P wrote to D to inform him he was entitled to his $5,000. 00 Ds estate refused to pay, claiming that P was the only party to the bargain that benefited. PROCEDURE: ISSUE: HOLDING: REASONING: P wins at trial for breach of contract. Intermediate appellate court reversed and found for D. P appealed. Whether Ps actions constituted sufficient consideration even where it only benefited P? Yes. Ps actions constituted sufficient consideration even where it only benefited P. Rule: Any suspension or forbearance of a legal right at the request of another is sufficient consideration to sustain a promise. Rule: Consideration does not mean that one party to a contract has to profit so much as it might mean that one party may abandon or limit a legal right in the present in return for what is promised. In those situations, the bargain agreed upon will be an enforceable contract as opposed to an unenforceable promise. Since P gave up his legal right to do certain things on the belief that D would pay him $5,000, Ds promise will be enforced as a binding contract. Intermediate appellate decision reversed. Trial courts original decision in favor of P affirmed.

DISPOSITION:

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CASE BRIEF
Sherwood v. Walker
NAME: FACTS: III. CONTRACT AVOIDANCE DOCTRINES. C. Mutual Mistake. Sherwood v. Walker, Supreme Court of Michigan (1887). 00 D told P to go to Ds farm and look at some cows D was selling. 00 (5/5/86) P and D agreed upon the sale of a specific cow for $80, because both believed that the cow was unable to breed. If it had been able to breed it would have been worth between $750 and $1,000. 00 (5/15/86) D sent P a letter confirming the sale and instructed a third party to deliver the cow to P. After Ds letter was sent, D learned that the cow was pregnant. 00 (5/19/86) P wrote the third party and told him he would pick up the cow on 5/21. 00 (5/20/86) D sent P a telegraph informing him that the cow was pregnant and that D could not sell her. 00 (5/21/86) When P went to pick up the cow the third party refused to deliver, claiming that D instructed him not to turn over the cow. PROCEDURE: ISSUE: HOLDING: REASONING: P sued D for replevin (to recover personal property) and won. D appealed. Whether one party can repudiate a contract when he/she learns that the subject matter of the contract which both parties originally bargained for was, in fact, different than the parties believed? Yes. One party can repudiate a contract when he/she learns that the subject matter of the contract which both parties originally bargained for was, in fact, different than the parties believed. Rule: A party to a contract may refuse to execute a contract (or avoid a contract after it has been executed) if he/she learns that his/her assent was based on the mistake of a material fact like the subject matter of the contract, the price or some collateral fact materially inducing the agreement. Rule: If the thing contracted for is different from the thing actually delivered, then there was never any contract -- but only if the mistake went to the substance of the agreement. 00 Here, the parties both believed that the cow was barren and that is why D agreed to sell her for only $80. 00 If the parties had know that the cow could breed then there could never have been any contract. DISPOSITION: DISSENT: Intermediate appellate court held that the wrong jury instruction was given and reversed and remanded to the trial court to give proper jury instruction. There was nothing in the record showing that P bought the cow for beef thinking that it was sterile. D represented that the cow was in all probability sterile. The truth is that neither party knew the quality of the cow and P was willing to take the risk that it might breed. Since each party was equally ignorant of the facts, each took their chances by contracting for the agreed upon price.

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CASE BRIEF
Williams v. Walker-Thomas Furniture Co.
NAME: FACTS: III. CONTRACT AVOIDANCE DOCTRINES. G. Unconscionability. Williams v. Walker-Thomas Furniture Co., D.C. Circuit Court of Appeals (1965). 00 P entered into rent-to-own agreement with D (Furniture Co.). 00 Ds standard contract had a provision that stated each new item a customer would rent-to-own would be secured with a security interest (a lien) on items previously rented by the customer that were not yet paid off. If a customer defaulted on a payment for any item, then all the items they had rented, but not paid off, could be repossessed by D. 00 P received welfare in the amount of $218 which was used to feed/clothe herself and her seven children. 00 P had rented several items from D from 1957-1962. 00 In 1962, P rented a stereo with a value of $541.95. When P defaulted, all the items she had rented since 1957 were repossessed by D even though the other items were, for the most part, paid off. PROCEDURE: ISSUE: HOLDING: REASONING: P sued D alleging that the contracts were unenforceable because they were unconscionable. P lost below and appealed. Whether the contracts were unenforceable because they were unconscionable? Yes, the contracts were unenforceable because they were unconscionable. Rule: Where the element of unconscionability is present at the time the contract is made, the contract should not be enforced. Rule: Unconscionability has been recognized as: (1) the absence of a meaningful choice by one of the parties; together with (2) contract terms that are unreasonably favorable to the other party. Rule: Whether a meaningful choice exists depends upon, among other things: (1) the gross inequality of bargaining power; (2) the manner in which the contract was entered into; (3) whether each party understood the full effect of the terms of the contract; and (4) whether deceptive sales practices were used. Rule: When determining reasonableness you must consider the terms of the contract and the circumstances of the parties which existed at the time the contract was made. Reversed and remanded to the trial court for a determination of whether the P: (1) had a meaningful choice; and (2) whether the contact terms were unreasonably favorable to D. The law for so long has allowed parties to make their own contracts. Because there are thousands of installment credit transactions annually, the majoritys opinion may have a drastic effect on these transactions and cases arising out of these transactions.

DISPOSITION: DISSENT:

CLASS NOTES:

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CASE BRIEF
Homan v. Red Owl Stores, Inc.
NAME: FACTS: IV. PROMISSORY ESTOPPEL. B. Fairness/Equity. Hoffman v. Red Owl Stores, Inc., Supreme Court of Wisconsin (1965). 00 D (Red Owl) entered into negotiations with Ps where it was agreed that D would build the store and stock it with merchandise if Ps would invest $18K. 00 In reliance on these negotiations Ps sold their old business, bought a plot of land in another city, moved their family to the new city, etc. 00 Ultimately, after Ps had invested substantial time and money and sold/disrupted their previous business, D sought $34K from Ps, not $18K. 00 Negotiations broke off. PROCEDURE: Ps sued D seeking damages for breach of Ds representations and agreements. Jury verdict for Ps and Ds request for a JNOV was denied in part, with the trial court granting a new trial on the issue of damages alone. D appealed. P cross-appealed. (1) Whether the court should recognize a cause of action for promissory estoppel? (2) Whether the facts of this case support a cause of action for promissory estoppel? (3) Are the jurys findings with respect to damages sustained by the evidence? (1) Yes, the court should recognize a cause of action for promissory estoppel. (2) Yes, the facts of this case support a cause of action for promissory estoppel. (3) No, while the facts of this case support a cause of action for promissory estoppel, P was only entitled to foreseeable damages. Rule: The doctrine of promissory estoppel states that a promise that the promisor should: (1) reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and (2) which does induce such action or forbearance is binding, if (3) injustice would result. Rule: The measure of damages in a promissory estoppel case is those damages that were foreseeable by the promisor -- only the amount necessary to prevent injustice. 00 As applied to the facts in this case: (1) D made promises to Ps; that (2) made Ps act to their detriment; and (3) injustice would result if Ps were not granted some relief. 00 Jury had awarded $16K in damages for Ps sale of their previous store. The proper measure of damages would have been the difference between the fair market value of the store they sold and the price they actually received. 00 Since there was no evidence presented as to the fair market value of the store, the trial court properly granted a new trial on the issue of damages. DISPOSITION: CLASS NOTES: Decision of the trial court affirmed and case remanded for a trial solely on the issue of damages.

ISSUE(S): HOLDING(S): REASONING:

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CASE BRIEF
Hawkins v. McGee
V. REMEDIES FOR CONTRACT BREACHES. A. General Principle of Expectancy. 2. Expectancy Damages. NAME: FACTS: Hawkins v. McGee, Supreme Court of New Hampshire (1929). 00 D (doctor) claimed that he could perform a skin graft on Ps injured hand and make a 100% perfect hand. 00 D botched up the surgery and P sued D seeking, among other things, damages for pain and suffering. PROCEDURE: ISSUE: HOLDING: REASONING: P sued D and trial court gave jury instruction which, if followed, would allow P to recover damages for pain and suffering. Jury award to P of $500. D appealed. Whether the trial court erroneously gave the jury an instruction which, if followed, would allow P to collect damages for pain and suffering? Yes, the trial court erroneously gave the jury an instruction which, if followed, would allow P to collect damages for pain and suffering. Rule: The only damages that can be said to come within the terms of a contract are those that the parties must have had in mind when the contract was made (expectancy damages). Rule: Damages that are not limited by the parties expectations, although naturally resulting from a breach, are not to be given. 00 The proper measure of damages in this case is the difference between the value of what was promised and the value of what was actually delivered, plus any incidental (foreseeable) amages resulting from the breach. 00 Since the extent of Ps suffering does not measure this difference in value, the jurys verdict was excessive. DISPOSITION: The appellate court reversed and ordered a new trial.

CLASS NOTES:

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