Beruflich Dokumente
Kultur Dokumente
** notes 2 and 3 at pg 37
Restatement 17
Restatement 21
Restatement 22
Restatement 24
Restatement 26
Restatement 33
Restatement 36
Restatement 50(1)
Restatement 60
Restatement 25,
Restatement 26,
Restatement 36,
Restatement 38,
Restatement 39
Restatement 40
Restatement 43
Restatement 58
Restatement 59
Restatement 63
Restatement 69
Unilateral Contract- pp. 51-63
Restatement
Restatement 32
Restatement 45
-the terms of the bonus program were that the bonuses were payable
at the end of the year**, starting Jan 1 of that 1991 ending Dec. 31.
Laiben was the partner and kept track of the bonuses in a separate
book.
2. Cook did not make any acceptance of the offer to give a bonus
(view the evidence in the light most favorable to the plaintiff Cook)-
not warranted of a directed verdict Plaintiff Cook presented evidence
of a:
B. Reasoning
2. Note: Williston and Corbin- Cook would have had to have had
rendered substantial performance
http://www.youtube.com/watch?v=q8SrTyc8i1c
http://www.snopes.com/business/market/mars.asp
UCC 2-105(1)
UCC 2-204
UCC 2-207(3)
ii. Buyer: Advance Steel Co.- denies liability, claiming that the
shipment of steel was late and was therefore properly rejected
under the contract
a. Most likely I would say so- I agree with the opinion that the
contract is formed when they both mutually assented to certain
thing over the phone/made the agreement then. However, in
that sense the delivery may be late and the contract void- if the
initial oral contract which stipulated that 1000 tons of steel
would be delivered from September-October -because the UCC
rules wouldnt apply. A solicitation was made by VanAs for the
availability of the Steel, an offer was made to purchase 1000
tons of that steel by Advance, and specifications were drawn up
and agreed upon. Then, the orders were all placed, both
parties sent confirmation letters which varied slightly, but only
with specification to delivery date- all of which were left
unsigned. What was agreed upon was the initial worksheet in
the telephone conversations- but there was.
Restatement 17
Restatement 71
Restatement 79
Restatement 81
http://www.carrollcitizens.com/ASH.html
** Consideration Hypos in Course Documents
Consideration
Defining Consideration
b. A forbearance
c) mutuality of obligation
Note: (this rule of the Restatement contradicts the reasoning for the
holding in Hamer- decision from 1891)
Section 81
1. The fact that what is bargained for does not itself induce the
making of a promise does not prevent it from being consideration
for the promise
- The nephew consented that the money should remain with the
uncle
- The uncle died on the 29th day of January without paying over
any of the money to the nephew.
Issue: Is this a contract?: Is the uncle indebted to the nephew for the
amount of $5000.00 that was promised to him- or was it merely a
promise that served more along the lines of a present/gift, to be
received upon a certain date?
5. Pennsy picked up the AggRite and used it for the paving project
in December 2001.
Procedure
Holding- the court reverses the trial courts dismissal on the first count
and reverse and remand for further proceedings
c. Resultant damages
1. Citing prior case law- the court holds that consideration requires
a benefit to the promisor or detriment to the promise that is
bargained for
Facts
1. Doughtery is now an 8 year old boy who received from his aunt,
the defendants administratrix, a promissory note for $3000.00
payable at her death or before
2. The promissory note was blank when filled out, but filled in and
signed- the aunt handed it to her nephew with the words you
have always done for me, and I have signed this note for you.
Now, do not lose it, Some day it will be valuable.
3. Trial Court: Dismissed the complaint (set aside the jury verdict
for the nephew)- and held that there was not sufficient evidence
of consideration for there to be a binding contract
6. Notes:
1. Promissory note
2. Promise under seal
3. Executed Gift
4. Testamentary Gift
5. Gift in Trust (trust fund)
1. The trial court below exacted that the 500,000 drachmaes were
of value of $750.00 US currency in addition to the other
consideration which plaintiff gave the defendant for the
instrument if he believed plaintiffs testimony-
7. Plaintiffis testify that they were told orally that the payments
would be given for the duration of their lives, and since the
agreement/contract was conferred upon the offer and
acceptance and consideration during the oral negotation and
acceptance.
Courts Holding/Reasoning
3. Consideration:
a. NOT: Past or Executed Consideration- self-
contradictory term: something given in exchancge for a
promise or in a reliance upon the promise cannot be
something which has been delivered before the promise is
executed and therefore made without reference to it.
Notes
a. Actuall Authority
b. Express Authority
d. Apparent Authority
6. Estoppel
a. Under Agency law, a principal may be estopped to deny
that its agents actions were unauthorized, where the
principal by words or actions caused the other to rely to his
detriment on the agents authority to act
Restatement 45
Restatement 87
Restatement 90
Restatement 90, 87
Problem 2-1
Problem 2-2
[Not assigned the issue if Gale was a Canadian which is covered by the
CISG]
1. Traditional mode of mutual assent: offer and acceptance; offer
revocable until accepted free revocability
a. Option Contracts- mode of making an offer irrevocable by
contract- a binding offer (during the period of the option).
i. Ex: landowner makes a promise to sell in exchange
for some consideration, usually money (but can be
performance); If the offeree accepts the offer,
decides to exercise the option, hes accepting the
offerees first promise to sell the land.
ii. Useful in commercial relations- permitting one who is
consideration a contractual transaction to delay
committing herself to the contemplated exchange
without fearing that such delay will cost her the
ability to enter into that contract, should she
eventually decide to accept it.
iii. Classical contact law: NO protection for OFFEREE who
relied on an offer not yet accepted (this is like the
Berryman case- where the landowner makes an offer
to keep the option open for sale of property for 120
days, without consideration
iv. Spawns a key issue: What effect should an offerees
pre-acceptance conduct (consideration) have on the
offerors power to withdraw his offer at will?
1. Restatement
Courts Reasoning
3. Notes p. 118
Berryman v. Kmoch 221Kan. 304 (1977)
1. Berryman is a landowner that gives an option contract to Kmoch.
4. Kmoch prepared the option contract dated June 19, 1973- and
the granting clause of the option contract read For $10 and
other valuable consideration I hereby grant unto you or your
assigns an option for 12 days after the date top purchase the
following described real estate
5. The option contract was signed by Berryman, but the $10 that
served as the primary mode of consideration (not other valuable
consideration) was NOT paid.
ii. Steel-
c. An option contract can be made binding and irrevocable by
subsequent action in reliance upon it even though its not
requested or gien in exchange for the option contract- but
it is rare that the option holder will have
Nominal Consideration
Services as consideration
Effectiveness of Revocation
6. Pops opened the cart pursuant to the offer- TCBY gave Pops the
OK for the franchise change after Taube requests.
10. Taube told Phoenix she needed to tell her landlord whether
she was renewing or not- and Phoenix told them that the deals
good to go, and they should pack up the store and plan on
moving
13. Early December 1994 Taube and atty met with Murtha,
General Counsel of Resorts, and Paul Ryan--> inform Taube that
they have to reschedule the meeting to finalize the terms of the
leasue intil agter the new year because of another
announcement of business venture that Resorts is in- but
assorted Taybe that Resorts wanted TCBY on the boardwalk for
the following season.
Holding
2. Although the court has in the past ruled that an implied promise
to lend an unspecificed amount of money does not constitute a
clear and definite promise (Malaker)--> recent decisions have
tended to relax such strict adherence to the Malaker formula-->
Notes p. 135
5. Scholarly Commentary -
Problem 2-1
- Offer for Sale- by the city that owns the library- option
(agreement to sell the property to the church) until June 1, 2007-
final sale to take place when the fundraised moneys reached
$1million AND that amount was deposited with the city.
CONSIDERATION HYPOS
4. a. I CALL YOU AND SAY I AM AT THE MALL AND NEED A RIDE CAN
YOU COME GET ME? YOU SAY SURE. I THEN SAY I WILL GIVE YOU 10
POUNDS OF CHOCOLATE.
b. I CALL YOU AND SAY I AM AT THE MALL AND NEED A RIDE CAN YOU
COME GET ME AND I WILL GIVE YOU 10 POUNDS OF CHOCOLATE? YOU
SAY SURE BUT UNNECESSARY. YOU ARE MY FRIEND.
c. I CALL YOU AND SAY I AM AT THE MALL AND NEED A RIDE CAN YOU
COME GET ME AND I WILL GIVE YOU 10 POUNDS OF CHOCOLATE? YOU
SAY I WAS ON MY WAY ANYWAY.
1/31
Qualified Acceptance- Battle of the Forms- pp. 143-167
UCC 2-207
Restatement 59
- Primarily, the court deals with the issue of which law toi follow,
the UCC or the common law. The situation is difficult because
the contract covers both services and goods (parts that need to
be replaced, etc.). The court determines that the contract is
primarily for services rendered, so the common law conception of
bargain/exchange and mutual assent govern,
- With that decision, the court holds that GEs final reply to
Princesss Purchase order,entitled Final Price Quotation serves
as GEs counteroffer- in which they dictated the terms that GE
would only be liable up to the amount of the contract price,
which was $231,925.00.
- The court held that use of the UCC is not a mandatory source of
admiralty law (shipping laws)- has to be a contract primarily for
the exchange of goods.
HEADNOTES
2. United States Court of Appeals for the Fourth Circuit deems the
following factors significant in determining the nature of a
contract: (1) the language of the contract, (2) the nature of the
business of the supplier, and (3) the intrinsic worth of the
materials
5. NOTES
Holding:
1. The general rule is that price quotation is not an offer, but rather
an invidtation to enter into negotiations, or a metre suggestion to
induce offers by others --> price quotes can amount to an offer,
but it must REASONABLY APPEAR frotm he price quote that
assent to the quote is all that is needed to ripen the offer into a
contract.
Holding:
1. On appeal, the court reversed. The court found that there was no
indemnification agreement between the parties.
REVIEW FACTS OF: Harlow and Jones v. Advance steel Co. 424 F.
Supp. 770
Problem 2-4
Postponed Bargaining- pp.167-190
*** Have to take notes on 2/7/11 reading- compare with notes written
in spiral from class to make briefs/outline of the class--> re:
Postponed/incomplete bargaining***
UCC 2-305
UCC 2-204(3)
Restatement 27
Restatement 33
Problem 2-5
1. Where you represent one party and the other party is either
represented by another attorney, or pro se- and in that case, ethical
obgligation incurs to disclose the NON-atty-client relationship with the
opposing party.
2. Did the lawyer miss anything? Any other issues that should be
considered or covered? How do you decide if that is the case? If
something should be added how would you draft the clause?
3. In drafting should the lawyer create a one sided contract for her
client?
3/14
The court in register holds that Verio had assented and was
contractually obound by the terms of use of Registers website because
VERIO had used the site many times and was well aware of Registers
restrictions --> court uses the analogy of biting into an apple @ an
apple stand- the first time you may have carte blanche because you
didnt know the terms, but after a certain point of experience one
ought to know the terms and conditions associated
Mutual Assent in browsewrap transactions- court rejects the argument
that clicking I agree is essential to contract formation on the
internet--> True? Consider 4 requirements:
UCC 2-204
UCC 2-302
Restatement 69
http://www.mevis-research.de/~meyer/MISC/di/a.htm
Promissory Estoppel
Family -p.215-228
Restatement 90 [Compare First Restatement 90 at casebook p.113]
- Obligations are for the most part based on the relationship of the
parties ex: parental duty of support- rather than a contract
Notes
3. Does moral obligation factor into section 90? --> in one sense
yes, because it protects those from reliying to their detriment on
the promises of another but in the same sense it also harkens
to the UCC standard which states that there need not be
acceptance to form a contract- or even bargained for exchange if
both parties agree that a contract was formed prior = relatively
amoral standard as well.
OVERVIEW: The ex-husband argued that the trial court erred in its
legal conclusion that the facts authorized the imposition of an
obligation to provide support for his ex-wife's son. On appeal, the court
held that although the ex-husband was neither the natural or adoptive
father of his ex-wife's son, he was still liable for child support under the
contractual doctrine of promissory estoppel. The court found that the
ex-husband promised his ex-wife and her son that he would assume all
of the obligations and responsibilities of fatherhood by allowing himself
to be listed as the child's father on his birth certificate and giving the
child his last name. The court also found that the ex-wife and her son
relied upon the ex-husband's promise to their detriment by refraining
from identifying and seeking support from the child's natural father.
The court concluded that if the ex-husband were allowed to evade the
consequences of his promise, an injustice to his ex-wife and her son
would result.
OUTCOME: The court affirmed the lower court's order requiring the ex-
husband to pay child support for his ex-wife's son.
Notes
1. The trial court found that the former employee was entitled to the
pension
a. The court found the pension from Dare did not require Katz
to do anything and he was in fact free to work for another
company. The court found Katz did not give up anything to
which he was legally entitled when he elected to retire. The
court found that since Katz had the choice of accepting
retirement and a pension or being fired, that it could not be
said that he suffered any detriment or significant change of
position when he elected to retire
2. The appellate court reversed that decision, but the court found for
the former employee.
3. Under the doctrine of promissory estoppel, a promise could be
enforced if the promissee had detrimentally relied upon the
promise such that enforcement of the promise was necessary to
avoid injustice.
4. The court found that the former employee had retired in reliance
on the promise and noted that the former employer could have
terminated him but chose not to.
a. In the Fall of 1975, Katz began working for another company
on 3 to 4 half-days per week. At the end of that year
Shopmaker asked Katz if he could do part-time work for Dare
and Katz told him he could work one-half day on
Wednesdays. For the next two and one-half years Katz
continued to work for Dare one-half day per week.
b. In July, 1978, Dare sent a semi-monthly check for $250
instead of $500. Katz sent the check back and stated he was
entitled to the full $500. Thereafter Dare stopped sending
any checks
c. The fact remains that Katz was not fired, but instead did
voluntarily retire, but only after the board of directors had
adopted the resolution promising to pay Katz a pension of
$13,000 per year for life. Thus, the same facts are present in
this case as were present in Feinberg
d. There are three elements to be satisfied to invoke the
doctrine of promissory estoppel:
i. a promise;
ii. a detrimental reliance on such promise;
iii. that injustice can be avoided only by enforcement of
the promise
e. It is conceded Dare intended that Katz rely on its promise of
a pension and Dare does not contend Katz did not in fact
rely on such promise.
f. Thus, the element that injustice can be avoided only by
enforcement of the promise is present, because Katz cannot
now engage in a full-time job to return to the earnings which
he gave up in reliance on the pension
5. Further, the former employee was not required to invoke
consideration in order to enjoy the benefits of the promissory
estoppel doctrine.
6. The facts in this case are strikingly similar to Trexler. Shopmaker
undoubtedly wanted to reduce his overhead by reducing the
amount being paid to Katz and it is true that Katz could have been
summarily discharged. However, it is also true that Shopmaker
refused to fire Katz, but instead patiently negotiated for about 13
months to work out a pension which Katz did agree to accept and
voluntarily retired. Trexler's Estate, 27 Pa.Dist. & Co. Rep. 4
(1936)
Notes p. 243
OUTCOME: The court reversed and remanded the part of the trial
court's order that granted summary judgment for appellee
mortgagee against appellant mortgagor's promissory estoppel
claim, holding that there were genuine issues of material fact
regarding whether appellee promised to obtain the insurance and
appellant's reliance on that promise. The court affirmed the grant
of summary judgment against appellant's fraud and breach of
contract claims.
A. Graddon v. Knight, 138 Cal. App. 2d 577, 292 P.2d 632 (Cal.App.
1956), a California appellate court considered whether homeowners,
who were obligated under a deed of trust to procure and maintain
fire insurance on their home, could establish a cause of action
based upon an oral promise by a bank to obtain the [**11]
insurance on the homeowners' behalf. The court first considered
whether the bank's promise to obtain fire insurance was
inconsistent with the term of the deed of trust that required the
homeowners to procure and maintain fire insurance. 292 P.2d at
635. The court concluded that the bank's promise was not
inconsistent with the homeowners' obligation under the deed of
trust because the deed required only that the homeowners procure
and maintain insurance; the deed did not bar them from making a
separate agreement under which another party would procure the
insurance on their behalf. 292 P.2d at 635-36. The court then held
that the evidence presented by the plaintiffs was sufficient to
establish a cause of action in promissory estoppel because the
plaintiffs relied to their detriment on the bank's promise to obtain
insurance
Notes p. 249
Restitution
pp. 253-286
http://www.kenjiyoshino.com/articles/for_gays_read_fine_print_ny_times
.pdf
Notes p. 290:
- The court in Mills clearly holds that the law will not necessarily
enforce every promise, regardless of the morality of failing to
honor a promise seriously made --> there aere great interests of
society which justify withholding the coercive arm of the law from
these duties of imperfect obligation. What Interests? Should we
follow morality instead?
- Debts barred by time: Promises to pay debts barred by the
statute of limitations are enforceable because the debt is a
preexisting legal obligation
- Debts discharged in bankruptcy: Promises to pay debts
previously discharged in bankruptcy
- Statutory restrictions on promises to receive debts: At common
law a promse to pay a debt barred by the statute limitations or
disharcged in bankruptcy was binding even though made orally--
> many states require it to be in writing
- Obligations of Minors: Contracts made by a minor prior to the
time a minor reaches the legal age of majority are Unenforceable
unless they are for necessaries ie goods and services needed
by the minor--> AFTER reaching the legal age, the minor
becomes legally liable on any contracts made durin g minority
that the minor elects to affirm.
a) Rest 85- reflects the rule that a minors promise when he
reaches the age of majority to pervform a contract made
during minority is legally binding.
"On the 3d day of August, 1925, appellant while in the employ of the
W. T. Smith Lumber Company, a corporation, and acting within the
scope of his employment, was engaged in clearing the upper floor of
mill No. 2 of the company. While so engaged he was in the act of
dropping a pine block from the upper floor of the mill to the ground
below; this being the usual and ordinary way of clearing the floor, and
it being the duty of the plaintiff in the course of his employment to so
drop it. The block weighed about 75 pounds.
"As appellant was in the act of dropping the block to the ground below,
he was on the edge of the upper floor of the mill. As he started to turn
the [***6] block loose so that it would drop to the ground, he saw J.
Greeley McGowin, testator of the defendants, on the ground below and
directly under where the block would have fallen had appellant turned
it loose. Had he turned it loose it would have struck McGowin with such
force as to have caused him serious bodily harm or death. Appellant
could have remained safely on the upper floor of the mill by turning the
block loose and allowing it to drop, but had he done this the block
would have fallen on McGowin and caused him serious injuries or
death. The only safe and reasonable way to prevent this was for
appellant to hold to the block and divert its direction in falling from the
place where McGowin was standing and the only safe way to divert it
so as to prevent its coming into contact with McGowin was for
[**197] appellant to fall with it to the ground below. Appellant did
this, and by holding to the block and falling with it to the ground below,
he diverted the course of its fall in such way that McGowin was not
injured. In thus preventing the injuries to McGowin appellant himself
received serious bodily injuries, resulting in his right leg being broken,
the heel of his right foot [***7] torn off and his right arm broken. He
was badly crippled for life and rendered unable to do physical or
mental labor.
The action was for the unpaid installments accruing after January 27,
1934, to the time of the suit.
1. Overview
2. Classes of Contracts Covered
3. General Principle: Scope and Application
Company policy is that pilots are supposed to use their best efforts to
avoid the risk of harm to civilians aka doesnt want to eject, leave
the plane unmanned, and have it crash into the ground and people
below.
-Rogers suffered serious injuries, partial paralysis, and the end of his
test pilot career; Hospitalized for several months.
President of alliance visits him in the hospital and says that the
company planned to provide for him financially
Rogers got the checks for several months afterward, visited the place,
and even met with pilots, offered advice, etc. = good continued
relationship.
Answer
2. Another issue that supports the claim that the terms of pension
seem more like a promise to pay, or a gift to help take care of
him for the injuries he sustained, are that it is seemingly
revocable at anytime the company is not in a solid financial
position. This is relative and arbitrary, and evokes the notion
that the promise to continue to provide for the gift is dependent
upon an assessment (not defined by whom in the terms of the
contract) of the solidarity of Allegiances financial situation. Like
in the classic Mills v. Wyman, even a father is not obligated to
pay for the present and future medical expenses of his own son
that he is not legally obligated to provide for. Any payment
made towards his health or safety do not consitute any
consideration.
3. So there is no bargain for exchange here because consideration
cannot be made of a past performance, and it was only a
promise to pay going forward for his dedicated past
performances with the company. Thus the question turns on a
claim of promissory estoppel: including four factors for a
potential promissory estoppel claim:
a. (1) a Promise: there was a promise to pay $7500 monthly
for as long as the company was financially sound
b. (2)Forseeability- If it was foreseeable for Agnew to think
that Buck would rely on his promise: It seems that because
he was a test pilot, blue collar worker of a decent age, and
injured while doing work for the company and going above
and beyond, to the point of sacrificing his shown health
and livelihood for the sake of the companys equipment
and social policies; he most likely could not have paid for
his extensive hospital stay as a result of the accident
without the assistance of the company. Nor could he have
any real source of income going forward, because he was
partially paralyzed and could not longer practice his
profession. It is reasonable to say that Agnew would
believe that Rogers would rely
c. (3) a Detrimental reliance to be found by Rogers, in his
reliance on the monthly $7500.00 payments to cover living
and medical expenses, as a result of his performance. In
this case, our facts become analogous to Katz. V. Danny
Dare, that places promissory estoppel in the commercial
context. There promissory estoppel was invoked as a
substitute for a bargain and exchange and consideration.
When the worker in Katz was injured, he was essentially
persuaded by his company to retire at a loss of his then
current salary. However, he was able to subsidize his lost
wages with other employment opportunities and even
moonlighting some shifts at his former employer. He had
been receiving checks over the course of several years-
and it seems as though he was relying on them- however
he had just written a book that gained nationwide
recognitition (best-selling), and surely gained some
money from its proceeds AKA providing an alternative
source of income.
d. (4)Injustice- Would it be an injustice to Buck to not
continue his pension? Would he have relief by some other
means? There is some evidence, having visited the
company after the incident and even meeting with
pilots/offer advice etc; that his working life was not entirely
finished, he did not die and was not completely paralyzed-
although he could not work at all as a pilot anymore.
Thus it seems like a claim for promissory estoppel may have some
traction given our facts. There were no clauses in the initial promise,
written in a letter and signed by Agnew, that Rogers need do anything
in exchange for this promise, thus no consideration seems present.
However it seems that any claims to the detrimental reliance pillar of
promissory estoppel could be argued away and dismiss the promissory
estoppel claim. Buck had other sources of income, and one was at the
expense of the industry providing his pension- so would it really be
reliance to his detriment? There is a different between relying on the
promised payments, and expecting them to come. I think the claim
would likely have much stronger footing if in fact Buck was not capable
of working in any capacity, had no alternative sources of income, no
ability to pay his hospital bills or ongoing expenses without Alliances
promised pension. It seems that writing an expose on the very
industry providing your pension would not be indicate of a personal
detrimental reliance.
A few days later, Crabtree 'phoned Mr. Johns and telegraphed Miss
Arden; he accepted the "invitation to join the Arden organization", and
Miss Arden wired back her "welcome". When he reported for work, a
"pay-roll change" card was made up and initialed by Mr. Johns, and
then forwarded to the payroll department. Reciting that it was
prepared on September 30, 1947, and was to be effective as of
October 22d, it [*53] specified the names of the parties, Crabtree's
"Job Classification" and, in addition, contained [***10] the notation
that "This employee is to be paid as follows:
1. The Statute of Frauds (Personal Property Law, 31) which states that
an agreement not to be performed within one year is void unless
"some note or memorandum thereof be in writing, and subscribed by
the party to be charged", was satisfied in this case by (a) an unsigned
memorandum which defendant corporation's president had her
personal secretary write, as follows: "Employment Agreement with
Nate Crabtree Date Sept 26-1947 Begin 20000. 6 months 25000. 6
months 30000. 5000.-per year Expense money [2 years to make good]
Arrangement with Mr Crabtree By Miss Arden Present Miss Arden Mr.
John Mr. Crabtree Miss OLeary", [***3] and (b) a payroll card effective
as of October 22, 1947, initialed by defendant's executive vice-
president, and reading that plaintiff was to be sales manager "to be
paid as follows: First six months of employment $20,000. per annum
Next six months of employment 25,000. per annum After one year of
employment 30,000. per annum", and (c) a payroll change card for
plaintiff, effective October 23, 1948, reading "Salary increase per
contractual arrangements with Miss Arden * * * $30,000 per annum",
to which is appended the signature of defendant's comptroller, and (d)
oral testimony showing the connection among such papers - all of
which on their face refer to the same transaction - and showing the
assent of defendant corporation to the contents of the unsigned
memorandum.
4. The phrase, "2 years to make good", when viewed with the rest of
that memorandum, [***5] signified a two-year term, not a mere
employment at will. But if the phrase was ambiguous, parol evidence
was admissible to explain its meaning. The parol evidence of the
negotiations in which plaintiff had insisted on security of employment
warranted the trier of the facts in finding that the purpose of the
phrase was to make at least a two-year contract.
Notes
Comment:
Electronic Signatures 101(a)(b) and 106(5)in Rules book. p 272 & 279
Restatement 139
Notes
"* * * the felonious abstraction of insured property (1) from within the
premises by a person making felonious entry therein by actual force
and violence, of which force and violence there are visible marks made
by tools, explosives, electricity or chemicals upon, or physical damage
to, the exterior of the premises at the place of such entry * * *."
OUTCOME: The court reversed the lower court's order that was
rendered in favor of defendant because the provision of the policy did
not comport with the reasonable expectation of a reasonable person,
was unconscionable, and was a breach of an implied warranty.
1. The question of interpretation or the meaning to be given
contractual words, is one to be determined by the court unless
the interpretation depends on extrinsic evidence or on a choice
among reasonable inferences to be drawn from extrinsic
evidence- Construction of a contract is always a matter of law for
the court.
2. Insurance contracts continue to be contracts of adhesion, under
which the insured is left little choice beyond electing among
standardized provisions offered to him, even when the standard
forms are prescribed by public officials rather than insurers.
3. The objectively reasonable expectations of applicants and
intended beneficiaries regarding the terms of insurance contracts
will be honored even though painstaking study of the policy
provisions would have negated those expectations
4. Although customers typically adhere to standardized agreements
and are bound by them without even appearing to know the
standard terms in detail, they are not bound to unknown terms
which are beyond the range of reasonable expectation.
a. A debtor who delivers a check to his creditor with the
amount blank does not authorize the insertion of an infinite
figure. Similarly, a party who adheres to the other party's
standard terms does not assent to a term if the other party
has reason to believe that the adhering party would not
have accepted the agreement if he had known that the
agreement contained the particular term.
b. Such a belief or assumption may be shown by the prior
negotiations or inferred from the circumstances.
c. Reason to believe may be inferred from the fact that the
term is bizarre or oppressive, from the fact that it
eviscerates the non-standard terms explicitly agreed to, or
from the fact that it eliminates the dominant purpose of
the transaction.
d. The inference is reinforced if the adhering party never had
an opportunity to read the term, or if it is illegible or
otherwise hidden from view.
e. This rule is closely related to the policy against
unconscionable terms and the rule of interpretation against
the draftsman.
5. Statement in written sales contract that it contains the entire
agreement does not exclude implied warranty.
6. Although implied warranties of fitness for intended purpose have
traditionally been attached only to sales of tangible products,
there is no reason why they should not be attached to sales of
promises as well. Whether a product is tangible or intangible, its
creator ordinarily has reason to know of the purposes for which
the buyer intends to use it, and buyers ordinarily rely on the
creator's skill or judgment in furnishing it.
7. Standardized contracts such as insurance policies, drafted by
powerful commercial units and put before individuals on the
"accept this or get nothing" basis, are carefully scrutinized by the
courts for the purpose of avoiding enforcement of
"unconscionable" clauses.
3/14
UCC 2-202
OUTCOME: The court reversed the trial court's order, which refused
the vendor a new trial in his action against the purchaser to recover
the purchase money.
Determining Integration:
Scope of Parole Evidence Rule- Where Parole evidence rule does NOT
apply:
OVERVIEW: The insured sought damages against the insurer for bad
faith damages, asserting that the insurer improperly failed to settle a
claim within policy limits, resulting in a large excess verdict against the
insured. (The Rings eventually settled with State Farm. Taylor,
however, sued State Farm for bad faith seeking damages for the
excess Rivers judgment, claiming, among other things, that State Farm
improperly failed to settle the Rivers matter within policy limits.)
HEADNOTES
1. When two parties have made a contract and have expressed it in
a writing to which they have both assented as the complete and
accurate integration of that contract, evidence, whether parol or
otherwise, of antecedent understandings and negotiations will
not be admitted for the purpose of varying or contradicting the
writing. Antecedent understandings and negotiations may be
admissible for purposes other than varying or contradicting a
final agreement. Interpretation is one such purpose.
2. Interpretation is the process by which the court determines the
meaning of words in a contract. A court will attempt to enforce a
contract according to the parties' intent.
3. When interpreting a contract, it is fundamental that a court
attempt to ascertain and give effect to the intention of the
parties at the time the contract was made if at all possible
4. *** The better rule is that the judge first considers the offered
evidence and, if he or she finds that the contract language is
"reasonably susceptible" to the interpretation asserted by its
proponent, the evidence is admissible to determine the meaning
intended by the parties***
a. The judge first considers the offered evidence and, if he or
she finds that the contract language is reasonably
susceptible to the interpretation asserted by its proponent,
the evidence is admissible to determine the meaning
intended by the parties.
b. A contract should be read in light of the parties' intentions
as reflected by their language and in view of all the
circumstances.
c. Broad language releasing "all" claims "whether in contract,
tort or otherwise" necessarily includes a bad faith claim.
d. Whether contract language is reasonably susceptible to
more than one interpretation so that extrinsic evidence is
admissible is a question of law for the court.
5. Was the release so clear that the trial judge erred in
admitting extrinsic evidence to interpret it?
a. The proper inquiry is not whether the claim was
contractual in nature or whether the judge believed it was
contractual but, instead, what the parties intended to
release when they used language conspicuously less
inclusive than the release of "all claims."
b. Of course, the true doctrinal nature of the claim, if it could
be determined, would be relevant evidence in the search
for the parties' contracting intent. If bad faith was
ordinarily and universally thought of as a "contract" claim,
it would be very difficult for Taylor to argue that the
specific language in the agreement, releasing all
"contractual" matters, was reasonably susceptible to his
interpretation
c. Bad faith has its genesis in contract. However, the precise
legal character of a bad faith claim may depend on the
context of the discussion.
d. Despite the contractual origin of an insurance bad faith
claim, the seminal Arizona decision on the subject, less
than six months old at the time State Farm and Taylor
made the agreement, declared that such conduct is a tort
e. Because the legal character of bad faith was and is not
universally established, the release reasonably could be
interpreted as Taylor asserts. The trial court, therefore, did
not err in concluding that the text of the release did not
necessarily cover claims for bad faith
6. Was the release language reasonably susceptible to
differing interpretations, including that the bad faith
claim was not released despite the contractual quality of
such a claim?
a. Although occurring later, the Rings garnished State Farm
seeking to satisfy their entire judgment, including the
excess above the policy limits, based on State Farm's
liability to Taylor for alleged bad faith.
b. There was some evidence that Hofmann (although ruled as
hearsay), on behalf of State Farm, directed that "general
release language" be used in the agreement without
expressly mentioning "bad faith." 6 The document's cryptic
language supports this for purposes here, hearsay
evidence satisfies the inquiry because not assessing the
truth of the hearsay evidence, just whether it existed.
c. Was there extrinsic evidence to support the
conclusion that the release language was
reasonably susceptible to Taylor's interpretation?
The potential size of Taylor's bad faith claim was obvious.
We recognize that, with few exceptions, parties are free to
structure a deal in any way they wish. Nevertheless, it is
arguably reasonable to conclude that Taylor and his
counsel would seek something more than just the payment
of a potentially bona fide $15,000 UM claim to release a
bad faith claim possibly worth millions of dollars
d. Perhaps most telling, is the fact that the parties used
limiting language in the release. It is reasonable to believe
that if the parties had agreed to release the bad faith
claim, they would not have drawn the release so narrowly
-- confining it to "contractual" and "subsequent" matters,
with no mention of tort claims or bad faith.
e. The release language is broad enough to release
something more than just the contractual UM claim
f. All of the evidence, however, does not render the release
language impervious to Taylor's interpretation. Instead, it
demonstrates that there were three reasonable, but
conflicting, interpretations of the language used in the
agreement: (1) the parties agreed to release the bad faith
claim; (2) the parties agreed to exclude the bad faith claim;
and (3) the parties did not reach any agreement regarding
release of the bad faith claim (in which case, of course, the
claim would not be released). In light of this, the trial judge
correctly concluded that the release could not as a matter
of law be interpreted to include or exclude Taylor's bad
faith claim
7. Was the parol evidence for the jury?
a. Because interpretation was needed and because the
extrinsic evidence established controversy over what
occurred and what inferences to draw from the events, the
matter was properly submitted to the jury
8. Distinction:
a. Classical View = Restrictive View 4 corners view: Under
the restrictive "plain meaning" view of the parol evidence
rule, evidence of prior negotiations may be used for
interpretation only upon a finding that some language in
the contract is unclear, ambiguous, or vague. E. Allan
Farns-worth, Farnsworth on Contracts 7.12, at 270 (1990)
("Farnsworth"). Under this approach, "if a writing, or the
term in question, appears to be plain and unambiguous on
its face, its meaning must be determined from the four
corners of the instrument without resort to extrinsic
evidence of any nature."
i. A contract may be susceptible to multiple
interpretations and therefore truly ambiguous yet,
given the context in which it was negotiated, not
susceptible to a clearly contradicting and wholly
unpersuasive interpretation asserted by the
proponent of extrinsic evidence.
ii. seems clear that a court should exclude that
evidence as violating the parol evidence rule despite
the presence of some contract ambiguity.
iii. ** the ambiguity determination distracts the court
from its primary objective -- to enforce the contract
as intended by the parties.**
b. Modern = Corbin View: there is no need to make a
preliminary finding of ambiguity before the judge considers
extrinsic evidence. Restatement 212 comment(b)
i. Court considers all of the proffered evidence to
determine its relevance to the parties' intent and
then applies the parol evidence rule to exclude from
the fact finder's consideration only the evidence that
contradicts or varies the meaning of the agreement.
ii. The court cannot apply the parol evidence rule
without first understanding the meaning the parties
intended to give the agreement. Id. To understand
the agreement, the judge cannot be restricted to the
four corners of the document. Again, even under the
Corbin view, the court can admit evidence for
interpretation but must stop short of contradiction.
9. Concurrence- Potential Issue = Inconsistency: The canon of
interpretation which we propound today is amorphous. The
problem with an amorphous rule is that in the end, only this
court can make a final determination in construing any contract.
Our interpretation will be based upon which parol evidence
impresses us the most. That ultimately means that this court
must decide every contract dispute subject to this analysis. As
the history of this case shows, the trial court may go one way
and the court of appeals another and this court yet another
CISG
Issue: Sherrodd contends that while its officer William Sherrodd was
examining the building site in preparation for submitting a bid on this
project, a representative of Morrison-Knudsen told him that there were
25,000 cubic yards of excavation to be performed on the job. It claims
that its bid of $ 97,500 on the subcontract was made in reliance on
that representation, based on $ 3.90 per cubic yard for 25,000 cubic
yards. Morrison-Knudsen denies that its representative made any such
statement to William Sherrodd--> Sherrodd's bid, and, in turn, COP's
bid including Sherrodd's bid, were submitted and accepted. Sherrodd
began work before a written contract was signed. While performing the
earthwork, Sherrodd discovered that the quantity of work far exceeded
25,000 cubic yards.
1. Rule 56(c), M.R.Civ.P. The District Court held that, under the
[*285] parol evidence [***5] rule, Sherrodd could not
introduce evidence of the alleged oral misrepresentations by
either the Morrison-Knudsen representative or the COP officer.
Therefore, it concluded that even taking the evidence in the light
most favorable to Sherrodd, summary judgment for defendants
was proper.
2. Section 28-2-904, MCA, provides that: "The execution of a
contract in writing, whether the law requires it to be written or
not, supersedes all the oral negotiations or stipulations
concerning its matter which preceded or accompanied the
execution of the instrument."
Nanakuli Paving and Rock Co. v. Shell Oil Co. 664 F.2d
772
- Nanakuli case: exemplar of Modern Parole Evidence Theory- UCC
theory vs. Common law theory- largely trades on the concept defining
contracts generally under the UCC that a contract may be formed by
words/the parties intent, that may not be written in the express terms
of a contract (trade usage)
Personal Note: You have good notes in the text p 418-432 but did
not put them in outline form.
** You read and took notes in the book- need to turn into
outline form **
Good faith
Pp. 462-491
UCC 2-306
Restatement 228
Requirements Contracts
Outputs contracts
Morin Building Products Co. v. Baystone Construction
717 F.2d 413 (7th cir. 1983)
PROCEDURAL POSTURE: Defendant contractor sought review of a
decision of the United States District Court for the Southern District of
Indiana, which granted a judgment in favor of plaintiff subcontractor in
a breach of contract action.
OUTCOME: Order affirmed; appellant could not sue for breach of the
implied duty of good faith and fair dealing, where the underlying claim
was for termination of an at-will employment relationship; defendant
employer's grievance procedure imposed no separate contractual
duties on it; superior work performance could not overcome at-will
employment presumption
Problem 6-1
Introduction to Warranty
Pp. 497-500
Problem 6-1 p. 491 Insurance agent has his own business, persuaded
by Fran of neighboring big accountant firm to come work for him; asks
company to match his $5k/month profits --> come with us and you
should do even better than that. Ed is on probation status as
employee for 3 months, terms in contract is the entire employment
agreement from the parties- his profits increase, making $5k+ $3k
commission, and he is given a manager award for his performance -->
gives criticism to company practices and involved in inter-office
relationship, asked to stop --> then transferred to small suburban
branch making $3k/month. Does he have a claim for relief? What
issues would arise?
1. Course of typical business- only 2 managers in last 10 yrs have
been demoted/fired, and only b/c they inflated their figures.
2. What Issues Would Arise?
Problem 7-1
Restatement 14- not void, but voidable at the election of the minor
Restatement 15
Restatement 16
Court:
1. Traditionally: Goes through the history of child/infant/minority
cases --> underlying rule of infancy doctrine = to protect minrs
from their lack of judgment and from quandering their wealth
through improvident contracts with crafty adults who would take
advantage of them in the marketplace.
2. Modern Trend: balancing the rights if minors against those of
innocent merchants --> 2 monority- rules have emerged:
a. Benefit Rule- upon recission, recovery of full purchase price
is subject to a decution for the minors use of the
merchandize bound where he failed to restore what he
has received to the extent of the benefit actually derived
by him from what he has received from another party to
the transaction.
b. Use Rule- recovery of the full purchase price is subject to a
deduction of the minors use of the consideration he or
she has received under the contract, or for a
depreciation/deterioration of the consideration in their
possession
3. Court: Rule to Follow where the minor has not been
overreached in any way, and there has been no undue influence,
and the contract is fair/reasonable, the minor has actually paid
money on the purchase price, and taken and used the article
purchased, that he ought NOT to be permitted to recover the
amount actually paid, without allowing the vendor of the goods
reasonable compensation for the use of, depreciation, and willful
OR negligent damage to the article purchased while in his hands
a. Any fraud = unfair = rule does not apply
b. Overreaching/fair value = issues of FACT.
c. Meant to adapt to the modern conditions under which
minors can do a great deal of business themselves
d. Burdensome for everyone concerned if merchants cannot
deal with minorities of age in a hair and reasonable way
e. Doesnt teach kids anything about the realities of
contracting if they get a full refund after using it for X amt
of time, simply because theyre not of legal age.
f. Remand the case for the trier of fact to determine:
i. Counterclaim for tortuous damage
ii. Gross negligence vs. intentional conduct that engine
blew up
iii. Amount of damage by hit and run driver
OUTCOME: The court affirmed the circuit court's orders, which voided
the loan to the debtor and ordered the bank to return the borrower's
collateral. The court affirmed the dismissal of the bank's claim for
proceeds. The court affirmed the denial of attorney's fees to the
borrower
Restatement 175
Restatement 176
Restatement 177
Notes:
CASE ANALYSIS
Notes:
Restatement 175
Restatement 176
Restatement 177
Misrepresentation- p. 556-584
Misrepresentation and Non Disclosure (p. 556-584)
(Look at Restatement in this order : Restatement 164, 159 , 162 ,
163; 168, 169 161)
Restatement 161-
Restatement 162-
Restatement 163-
Restatement 164-
Restatement 168-
Restatement 169-
CASE SUMMARY
OVERVIEW: The elderly widow first went to the dance studio as a gift
from a friend. On her second visit, she was sold a small course of
lessons. Thereafter, the studio sold the widow more than 4,000 hours
of instruction, including 3 lifetime memberships, and told her falsely
that she could be a professional dancer. Upon the widow's filing of a
lawsuit, the owners persuaded her to settle for a relatively insignificant
amount and drop the action. A second release for more money was
obtained, but nothing was paid on that release. The widow filed a
second action for fraud and misrepresentation in the several sales to
her and in obtaining the dismissal of the previous lawsuit and the
releases. The jury returned a verdict for the widow. On appeal, the
court held that the evidence was adequate to find there was a
concerted effort constituting fraudulent overreaching. The question of
exemplary damages was properly submitted to the jury, and the
evidence of shocking greed and avariciousness supported the award of
such damages.
Notes:
Facts:
Court:
Notes
Issue: Whether the trial court erred in finding that Park 100 used
fraudulent means to procure the signatures of the Karteses on the
guaranty of the lease at issue.
http://www.youtube.com/watch?v=OMOBdQykKQY
Notes:
Notes
2. Employment Arbitration
a. Unions Started the trend now commonplace in
employment contracts
b. Employees will find it difficult to avoid enforcement of an
agreement to arbitrate
c. Derivative of the commercial arbitration model
d. Due Process Protocolpromote fairness in workplace
arbitration
e. Two Types- Employment Arbitration Rules
i. Employer-promulgated plans
1. Cost-affordable b/c compelled to arbitration
and shouldnt be forced to bear burden of costs
to do so
ii. Individually negotiated employment agreements
3. Consumer Arbitration
a. Dramatic increase in use preserves the right to go to local
small claims courts instead of arbitration if the claims
meets the courts jurisdictional requirements
b. Similar to commercial model
c. No hearing unless $10k @ stake or greater
d. Built in cost restrictions to pay for arbitrator fees, etc.
Mistake
pp. 663- 684
Restatement 152, 153, 154, 157
Mistake article in Course Documents
MISTAKE
* Excuses from performance arising NOT from overreaching or
deception by either party, but from changes in circumstance that have
either occurred or come to light since the original agreement was
made
Issue: Void contacts that turn out to be bad for one party? Should the
law permit one party to escape from the obligations of performance
simply because it turned out bad?
-Ordinarily NOT: parties make contracts with the aim of binding despite
the myriad of possible changes of circumstance that may occur before
performance (Thats why they do it in the first place!)
Restatement 152
Restatement 153
Restatement 154
Restatement 157
Lenawee County Board of Health v. Messerly 417
Mich. 17 (1982)
PROCEDURAL POSTURE: The Court of Appeals (Michigan) entered
judgment in favor of plaintiff buyers in their action initiated against
defendant sellers that sought to rescind the parties' land sale contract.
OVERVIEW:
OUTCOME: The court reversed the decision because the buyers were
not entitled to rescind the parties' land sale contract
Notes:
1. Factual context
2. Lack of consistency in mutual mistake cases- Gartner v. Eikill 319
N.W.2d 397 (1982) purchaser sought rescission on grounds of
mutual mistake b/c of special unknown zoning restrictions that
neither party was aware of--> court allowed rescission based on
mutual mistake of fact
a. Reconciled with Messerly?
3. Limiting earlier court decisions court limits the earlier decisions
in A&M case and Barren Cow case to their facts, destroying their
value as precedent--> is the process outlined in Messerly better?
4. Effect of as is clause most courts will deny a claim for relief
on mutual mistake and other grounds when the contract
contained an as is or similar clause
5. Conscious Ignorance- another form of assumption of risk is based
on a partys conscious ignorance of the facts before entering into
an agreement --> Restatement 154(b)- being consciously
ignorant of the specs, etc (buyer beware)
6. Mistake in Written Expression- reformation of the contract to
express the parties mutual intent is the usual remedy
7. Equitable Relief- ordinarily rescission, along with any restitution
that may appear appropriate; often use creative ingenuity for
relief to fashion a remedy to fit the nature of the mistake
8. Personal Injury Settlement Cases- common mistake of taking a
settlement and then wanting to rescind because your injury was
actually worse than you thought -->Tension: social policies of
finality of litigation AND fair compensation for injury
OVERVIEW:
1. After the contractor submitted a bid for work, along with the
required $ 100,000 deposit, to the sanitary district, it discovered
that its excavating subcontractor had given an erroneous quote
for its part of the job, which was $ 150,000 too low.
2. In challenging the judgment of recission of the contract, the
sanitary district claimed the contractor failed to show clear and
positive evidence that the subcontractor's mistake was a
material one.
a. The sanitary district also claimed that the mistake was
mathematical in nature and was not a proper basis for
recission.
3. The court found that materiality was shown, primarily because
the subcontractor's error represented 17 percent of the bid
amount.
4. The court also found that the other elements necessary for
recission were present:
a. Given the substantial loss which would have been incurred
by the contractor, enforcement of the contract would be
unconscionable;
b. Because the project had not begun, the status quo could
easily be restored; and
c. The contractor had used due care in submitting its bid.
d. The court noted that the nature of the mistake should be
determined by the facts surrounding it, not a label, such as
"mathematical."
Notes:
I will discuss the exam in the last class and with time go over at
least one sample exam question in the Course Documents.
On Monday we will go over Problem 8-1 which is the last problem
we will do. Since the problems are like exam questions, you may
want to try to write out an answer and compare it to how we go
over it in class.- A student asked if the problem is only to be
answered with regard to the UCC and the answer is NO. The
common law is required.
Restatement 262,
Restatement 263
Restatement 264
Restatement 265
Problem 8-1
UCC 2-615
http://www.youtube.com/watch?v=sXsb2BV69gQ&feature=user[Krell
case p686]
Impossibility:
Restatement 262
Restatement 263
Restatement 264
Impracticability:
Restatement 261
Restatement 266
Frustration:
Restatement 265
UCC 2-615
Notes:
1. Farnsworth: Views impracticability and frustration as relatively
identical- both have to show:
a. Substantial reduction of the value of the contract
b. Because the occurrence of an event, the nonoccurrence of
which was the basic assumption of the contract
c. Without the partys fault
d. The party seeking relief not bearing the risk of that
occurrence of the event either in language of the contract
or the surrounding circumstances
2. Increase cost as a basis for relief- most courts refuse to grant
relief (unless TREMENDOUS COST INCURRED, i.e. unquantifiable
amount of incurred costs)
3. Natural Disaster or War as a basis for relief- Have been invoked,
but even here courts are generally unwilling to grant relief
4. Impracticability based on terrorism- Invoked on temporarily when
it creates a grave circumstance that prevents performance after
a certain date BUT CONSDER: should fears of travel because of
terrorism be cause to excuse contract performance?
5. Death or incapacity of particular person necessary for
performance- more likelihood for excuse
6. Role of Forseeability- Some court have tended to require a
showing that the event complained of was at leas unforeseen-
perhaps even unforeseeable; but not always required, because
not always possible.
7. Economic Analysis- When the conract specifically allocates the
risk to a party, that party is the superior risk bearer. In the
absence of any, the risk should be assigned to the party who is in
the best position to prevent the event from occurring,/minimize
consequences at the lowest cost (usually insurance)
8. Decision by judge or Jury- Restatement: Mistakt, Impracticability,
or frustration should be decided by the court as a matter of law,
rather than being submitted to the jury for a finding of fact
B. Procedure
Problem 8-1- You are atty consulted by Barlow, proprietor of florist shop
in your city:
My Notes: I think the problem that Barlow ultimately has is that the
land thats being torn down isnt the flower shop- the flower shop ran
its operations under the impression that the hospital would still be
open, yes, and that the hospital was an extremely significant portion of
their business- so- steps of analysis:
1. Hes not going to make a claim for impossibility- because its not
that it will be impossible for him to pay back the money, because
his building is not being torn down
2. So his claim will either be for impracticability or Frustration of
Purpose
3. Restatement
4. Restatement
5. Summarize that both of them are ultimately the same for the
purposes of showing that you need:
a. Principal purpose
b. Substantial
c. Basic assumption on which the contract was made
Modification - p. 713-740
Restatement 73, 89; UCC 2-209 2-201 2-306
Notes:
Notes:
Notes:
Problem 8-3
Third Parties- p. 741-754; notes pp. 760-762
Restatement 302
Restatement 309
Restatement 311
- The rights and duties of another, 3rd, party, who is not a party to
the contract, though still may be bound by or enforceable
against as a result of the formation of a contract.
- Third Parties as Contract Beneficiaries
o Contracts can affect third parties- and in that sense may
affect a third parties right to freely do as it wishes to the
extent not forbidden by law
o A contract between A and B cannot adversely affect a
LEGAL RIGHT of a third party- any invasion of an individuals
rights/freedoms would be actionable wrong
o Parties CAN CREATE a contract right in some third person
(often the case where A owes B, and C owes B, so C owes A
o Lawrence v. Fox (1859) Lawrence loaned $ to Holly, Holly
loaned same $ to Fox --> Although Lawrence is not a party
to the transaction between Holly and Fox- he was not in
privity with fox- but the cause of action would lie Court
equates it to being a trustee of a property under a trust
created by another with instructions to sell the trust
property and convey proceeds to plaintiff --> Plaintiff then
= BENEFICIARY of trust and would have right to enforce
obligation against the promisor
o Known as THIRD PARTY BENEFICIARY of the defendants
promise- where plaintiff is the creditor of the promisee =
Creditor Beneficiary
o Typically limited to this type of 3rd party involvement -->
COURT HAVE extended recovery to hases where promisee
had apparently sought to confer the promise on a child,
parent, or some member of the promisees family -->
Seaver v. Ransom (1918)- dying wife wants to correct her
will to add niece, but she may die before executing new
will- so husband promises to provide for niece in his will,
but he doesnt, and niece sues husbands estate to enforce
promise husband made to dying wife -->
Court extended Lawrence to allow Seaver because of the
close relationship between promisor and promisee.
o THUS the principal that a third party may have standing
to recover on a contract is now universally accepted by
American Courts
Fundamental Distinction: INTENDED beneficiaries vs.
Incidental beneficiaries
Restatement 302
Restatement 309
Restatement 311
OUTCOME: The decision of the court of appeals was vacated, and the
court affirmed the judgment of the district court in favor of appellee
homeowners because damages for sums advanced to the contractor
by the bank, based on an inaccurate progress report from appellant,
were not beyond appellant's contemplation at the time its contract
with the bank was made.
2. Evidence of intent
3. Incidental beneficiaries
Assignments- p. 762-765
Restatement 317 assignmnent of contract right
Restatement 225
Restatement 226,
Restatement 227
Restatement 228
- Restatement 229,
Whether by the express terms of the contract/parties agreenebt,
performance by one party is a presently due obligation
o Sometimes states explicitly what duty is owed
o Sometimes stated explicitly NOT owed UNLESS some event
occurs. (like real estate agreements = no sale unless
obtain financing from lender)
o Obligor = the parties whose performance is so conditioned
(the one whose obligation is at issue)
o Obligee = the one whom the performance obligation is
owed (and presumably attempting to enforce it)
Restatement 224
Restatement 225
Restatement 226
Restatement 227
Restatement 228
Restatement 229
OVERVIEW:
OVERVIEW:
Notes:
1. Meaning of forfeiture
2. Excuse of condition to avoid forfeiture
3. Conditions of timely notice in options to purchase real estate
4. JNA- Legal Theory-
5. Counseling clients facing JNA-type issues
Restatement 234
Restatement 235
Restatement 237
Restatement 241
Restatement 242
Restatement 243(1)(4),
http://www.firehydrant.org/pictures/reading-foundry.html
Court Reasoning/Holding
Notes:
1. Commercial Context wrought iron is 30% more expensive but it
would achieve substantial savings b/c of durability and low
maintenance --> genuine wrought pipe was used, just not of the
Reading kind (which is why the higher court ruled it immaterial)
--> Seems like Kent was displeased with the delay and was
seeking a way to get after J&Y.
2. The Doctrine of Constructive Conditions *(plus additional
comment)- Cardozo uses the notion of dependent promises-
treated like conditions --> used to answer: When will one partys
duty of performance be dependent on/ conditioned on some
performance by the other party
a. Constructive Conditions in cases where it seems to the
court that one partys failure to perform (or tender
performance) should constitute a sufficient justification for
the other partys withholding of its performance in return
b. Judicially created devices used to determine the
consequences of the breach when the parties have failed
to spell it out in their agreement
c. Restatement 226 Abandons the former distinctions and
defines conditions as :
i. Express Conditions- condition within terms of
contract
ii. Implied in Fact Conditions inferred from conduct of
parties
iii. Constructive Conditions created by court of reasons
of justice
d. Restatement 234- Conventional rules on order of
performance
i. Performances that can be rendered at the same time
are due simultaneously
ii. If performances cannot be rendered at the same
time, the performance requiring the longer period of
time must be rendered before the performance
requiring the short period of time will be do.
e. UCC- provisions are rules of construction only and are not
applicable if the parties agreement provides otherwise
f. Stark v. Parker (1824)- Plaintiff not entitled to recover any
part of wages for the year and also denied any recovery in
restitution for the value of services performed (quit
employment just shy of 1 year mark).
3. Possible application of rules Governing Express Conditions- Nolan
v. Whitney (1882)- architect could not properly refute to issue a
certificate if the contractor had substantially performed
a. OTHER COURTS = MAJORITY VIEW = If the contractors right
to receive payment is expressly conditioned on the
issuance of the architects certificate, the condition will be
strictly enforced and the contractor denied recovery unless
the contractor can show fraud or bad faith by the architect.
4. The Principal of Substantial Performance- Restatement 237-
Each partys duty of performance is implicitly conditioned on
there being no uncured material failure or performance by the
other party
5. Standard for Substantial Performance
a. California where the variance from the specs of the
contract does not impair the building or structure as a
whole, or where the defects can be remedied without great
expenditure/material damagte to other parts of structure;
but NOT running throughout the entire work.
b. Wisconsin- failing to do under $5k of work on a $50k
contract = NOT substantial performance = ONLY when
details are inconsiderable and not the fault of the
contractor.
6. Measure of Damages- often turns on the degree and quality of
the performance rendered
a. Cost of completion or repair
7. Effect of Willful Breach
a. Revised Restatement 241(2)= Corbin View = A willful
breach does not automatically bar recovery, but the motive
of a breaching party is a factor to be considered in
determining whether performance was substantial.
8. Other Grounds for Recovery: Restitution and Divisibility
a. Restatement 240- Divisibility- if the contract is divisible,
the court may allow for recovery for the portions that have
been completed = 2 REQUIREMENTS:
i. Possible to apportion the performances of the parties
into corresponding pairs of part performances
ii. Must be proper to treat these pairs of part
performances as agreed equivalents
Courts Reasoning
1. Since the trial court found that it was NOT IMPOSSIBLe to Sackett
to perform subject to the contract = Breach (unjustified or
unexcused failure to perform all or any part of what is promised
in a contract
Notes
Anticipatory Repudiation
pp. 824-841
Restatement 250
Restatement 251
Restatement 253
Restatement 256
4/20/2011
- COURT REASONING:
o Breach?
Trial court made a factual finding that Lukas
actually did NOT resign for health purposes =
breach.
o Recoverable Damages?
Rule: the nonbreaching party is entitled to full
compensation for the loss of her bargain =
losses necessarily flowing from the breach
which are proven with a reasonable certainty
and within the contemplation of the parties
awhent he contract was made
Damages for breach of Employment Contract
= cost of obtaining an equivalent to that
promised but not performed, plus any
forseeable consequential damages.
The additional cost $1026 necessarily flowed
from the breach and was within the
contemplation of the parties when the
contract was made
The court of appeals and Lukas IMPROPERTLY
focus on the objective calue of the services
the Board received rather than that for which
it pbargained (expectations)--> the Board
EXPECTED to receive the services of a speech
therapists with Lukas education and
exsprience at the salary agreed upon NOT
expected a more experienced/educated one
that had to be paid more
THUS, the Board lost the benefit of its
bargain.
o Dissent: the resignation was justified because of
medical condition
Notes:
1. Courts almost NEVER order specific performance in
employment
Restatement 344
Restatement 347
Restatement 350
Restatement 351
Restatement 352
p. 886-890; 904-910
p. UCC 2-708
UCC 2-708
Restatement 349
Restatement 371
Restatement 373
Restatement 374
Restatement 375
Restatement 376
Restatement 377
Restatement 360
Restatement 366
Review first of two exam questions in Course Documents (if time both
will be reviewed)