Beruflich Dokumente
Kultur Dokumente
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Advanced, Inc. v. Defectively constructed house. Diminution in value Cost of When likely that P will use award to actually repair, not
Wilks Jury awarded cost of v. cost of performance. pocket it and sell home, then okay to award cost of
5 performance, even though higher performance. performance damages.
than diminution of value
damages.
Acme Mills & P to buy wheat from D at When should wheat Delivery date, July 27 was reasonable, when wheat was $0.975. Damages
Elevator Co. v. $1.03/bushel. No delivery date have been since none are $0.975-$1.03 <0. Means no damage award.
Johnson specified in K. On July 14, delivered? What are specified, is Spot market price at reasonable date of delivery was less than
5 wheat was $1.16. On July 27, damages? whatever is P would have had to pay D. So D doesn’t owe P anything.
down to $0.975. P wants reasonable. D would have owed P if spot market price was over $1.03.
anticipated profit of $1.16-1.03
=$0.13/bushel
Jacob & Youngs K required Reading pipes in Diminution in value Diminution in Cost of performance would require tearing down house to
v. Kent house. D installed non-Reading v. cost of value = value of replace non-Reading w/Reading pipes. Default rule for
5 pipes and refused to replace. performance. house w/ Reading expectation damages is diminution in value b/c normally you
pipes-value of are commercially, not emotionally, attached to the land.
house w/o
Reading pipes = 0 Doesn’t matter whether breach was willful. As long as
victim is put in same position as would have been had K been
performed, no legal reason to complain.
Louise Caroline D to build nursing home. Did Diminution in value Cost of Damages should not put P in better position than it would
Nursing Home, not complete work by K date. v. cost of performance=0. have been had K been performed.
Inc. v. Dix Constr. P wants diminution in value = performance K price-amount
Corp. market value of completed already paid to As long as cost of performance + amount already paid to D
6 building-value of building as D D>cost of does not exceed K price, no compensable damages since P
left it completion no can just hire someone else to finish at same cost as expected.
compensable
damages
Watt v. Nevada D’s train set fire to P’s hay, How do you value Market value P’s own use of hay was so conjectural that no estimate could
Central R.R. Co. which P was stockpiling for use hay which only had minus costs to be given for its value at the time of destruction.
7 as feed in case of severe winter value as emergency bring to market:
Hay would’ve sold for $10- feed? $12-2-6.50 = P wants damages equal to cost of replacing the hay, but this
12/ton $3.50/ton would result in huge profit for P, since he actually ended up
Cost of baling = $2/ton not buying replacement hay.
Cost of trans. = $6.50/ton
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LIMITATIONS ON EXPECTATION DAMAGES
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Missouri Furnace P to buy coal from D at Are damages K2-K1 Spot market price- D should have stuck to the spot market instead of entering
Co. v. Cochran $1.20/ton. Partway through price = $4-1.20 or K1 price. into a forward K w/someone else.
10 performance, D notified P of spot market price-
rescission. P entered into K1 price = $1.30- UCC §2-712 relaxes rule, however:
forward K w/Hutchinson at 1.20? Buyer may recover difference b/t cover price and K price
$4/ton. Shortly after price spiked plus incidental costs.
in spot market to that price, it
went down to $1.30.
Hadley Rule
Hadley v. Ps’ mill’s crankshaft broke; had Are damages too Yes. Hadley rule = absent special circumstances known by parties
Baxendale to send it through D carrier to get remote? at time of K, damages should be awarded that compensate
11 new one – told clerk to rush. Ps any naturally arising cost to the injured party and/or such as
received new shaft several days may reasonably be supposed to have been in the
late, resulting in loss of profits. contemplation of both parties at time of K as probable result
of the breach of it.
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Kearns v. Andree D breached K to buy P’s house Can P recover even Yes – even though P complied w/D’s requests w/expectation that D would
22 after P repainted and repapered if K was the attempted K compensate him. Doesn’t matter that D wasn’t benefited in
walls to D’s specifications. unenforceable? Can was the end.
Wants expenses for meeting D’s the law imply an unenforceable, it Work was done to satisfy D’s desires under terms of
specs, for meeting purchaser’s agreement to make showed the agreement for sale in good faith w/honest belief that
specs, and for difference b/t K reasonable parties’ agreement was enforceable; therefore P entitled to reasonable
and resale prices. compensation? expectation of compensation, less any benefit to P by doing work requested
compensation. by D.
Oliver v. P lawyer agreed to represent D in Did P effectively Yes. Had P been Rule is when P is fired before completion, repudiates K and
Campbell divorce proceeding for $850. 29- finish performing fired at any time K is no longer relied upon as fixing limit of compensation.
23 day trial. D fired P. Court filed under K at time he before effective But P’s performance was “in effect” complete at time of
findings in favor of D’s wife. was fired, thus completion of K, wrongful discharge.
Reasonable value of P’s services entitling him only to would’ve been
was $5000. the K price? entitled to Notes: other courts would disagree; would pro-rate the K
restitution in price according to how much work P finished.
amount of But restitution is to prevent unjust enrichment.
reasonable value
of services.
Britton v. Turner P to work under term K on D’s Can P recover if he Yes, so long as D Employer must pay value of services received; laborer must
23 farm for 1 yr for $120. Left after voluntarily breaches received value, he pay damages incurred by employer if laborer fails to
9.5 mos. Wants $100 in quautum K? must pay complete performance. No incentive for employer to drive
meruit = worth of work done. D reasonable worth employee away or for employee to abandon before
doesn’t seek damages for P’s of what he completion. They will both be punished.
breach. received.
Notes: court is transforming a term K into an at-will K. Bad
b/c employee has no incentive to stay. But on flip-side,
employer can drive employee away so he won’t have to pay.
Thach v. Durham D to sell sheep to P. P breached. Can breaching buyer No. D (seller) was willing to perform. Breaching buyer should
24 P seeks restitution of $3100 get his down not be favored over this seller.
down payment. payment back?
Purpose of down payment is ex ante form of restitution
should buyer breach.
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CONTRACTUAL CONTROLS ON THE DAMAGE REMEDY
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Injunctions
Dallas Cowboys P sought injunction to restrain D Negative injunction Yes – case On appeal, court held verdict unsupported by evidence –
Football Club, from playing football for anyone appropriate? remanded to definition of “unique” too narrow. No other players equal to
Inc. v. Harris except them. Jury rendered determine whether or better than D available to P. Temporary injunction
34 special verdict that D not D was unique and granted.
exceptional or unique football whether
player. substitutes
available.
Pingley v. D organ player to play in P S.p. and injunctive No. S.p. not ordinarily a remedy for personal services K unless
Brunson restaurant for 3 yrs. D quit after relief appropriate? performer has unique/exceptional skill. 5 other organists of
34 playing 10 nights. P awarded s.p. comparable ability in area available for hire.
and order enjoining D from
playing for anyone else during Injunctive relief erroneous b/c no express covenant in K to
times in conflict w/K. not compete or perform elsewhere. Absent express negative
covenant, court won’t enjoin services to another during term
of breached K.
Covenant not to compete
Fullerton Lumber P operates retail lumber yards; K restraint Somewhat. In Appropriate length of time for covenant not to compete is 3
Co. v. Torborg hired D to manage yard; K has unreasonable and business where yrs, since that’s how long it took D to build up P’s business –
35 noncompete covenant, unnecessary to customer contacts a competent manager can do the same.
prohibiting D from working for protect P’s interests? very important,
any other building material co. employer needs Notes:
for 10 yrs after leaving P w/in 15 protection. Covenant not to compete clause is injunction equivalent to
mi of any yard where D was However, 10 yrs liquidated damages clause. Employer is allowed to protect
employed as manager. Under D, is excessive. own interests, but can’t be unreasonable.
yard business tripled in 3 years.
D quit and set up own yard in
same town. P sued to enjoin him
from working in town.
Data P alleges breach of 5-yr Did co. act in good Yes. Court Previous approaches to overbroad covenants:
Management, Inc. noncompete covenant covering faith, and if so, can chooses to alter 1) Hold them “unconscionable” and hence unenforceable.
v. Greene all of Alaska. Trial ct found covenant reasonably covenant to render This approach can lead to unduly harsh results.
36 covenant overbroad, denied P’s be altered? it enforceable 2) “Blue pencil” rule – court renders it enforceable by
action for injunction. since co. acted in deleting specific words. This approach values wording over
good faith. substance.
3) If drafted in good faith, that is, employer did not willfully
overreach, court can reasonably alter it to render it
enforceable.
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S.p. of a right exercised in a K
Northern D to remodel P’s plant. P has K Should court grant No. Not court’s S.p. inappropriate b/c impractical here to try to enforce it. P
Delaware Indus. right to order a two turn-week s.p. of the K right job to supervise may claim damages later if delay results in damages.
Dev. Corp. v. work – designate day & night and order hiring of construction
E.W. Bliss Co. shifts over full work week and add’l workers? projects.
36 entitled to court order directing D
to employ at least 300 workers
for these shifts.
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CHAPTER 2: GROUNDS FOR ENFORCING PROMISES
FORMALITY
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PROMISES GROUNDED IN THE PAST
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RELIANCE ON A PROMISE
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Seavey v. Drake Father promises son land but no Should promise not Here, yes. Son took possession and improved land = partial
50 deed transfer. Son takes in writing (violates performance; father knew about it. Would’ve been fraud had
possession, improves it. Father Statute of Frauds) & father never intended to give land to son but stood by while
knows. Son claims enforceable w/o consideration be receiving benefit (improved land).
promise. enforced?
Forrer v. Sears, Employee left employer; Can employee No, b/c employer Default rule as to kind of employment: terminable, at-will.
Roebuck & Co. employer asked him to come prevail on kept his promise; Why?
51 back for “permanent promissory estoppel the real dispute Don’t want employees to be stuck.
employment” argument? was whether Employment relationships are at-will unless otherwise
but fires him after 6 mos. “permanent specified.
employment”
means “for-cause” Promissory estoppel test:
or “at-will.” 1) Should D have reasonably expected the action P
took?
2) Did promise induce the action or forbearance?
3) Can injustice be avoided only by enforcement of the
promise?
Hunter v. Hayes Employer promised to hire P, but Can employee Yes. Employer didn’t keep promise and P met requirements of PE
52 never did. prevail on grounds test. Opposite outcome from Forrer b/c D here didn’t keep
of PE? promise.
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Levine v. P leased store premises to D for 2 Were terms of the No, b/c alteration Even if ct believed D’s version, same outcome:
Blumenthal yrs - $175/mo for 1st yr, written lease was not supported Promise: I’ll reduce rent by $25/mo
54 $200/mo for 2nd. D couldn’t pay changed by the by consideration. Consideration: I promise to not go out of business.
$200 rent w/o going out of subsequent oral But this is just a promise not to breach, and D can’t waive
business. P orally agreed to agreement? right to bankruptcy. Not consideration.
accept $175. P suing on final
month’s rent plus $25 difference *Ct seems to suggest that any nominal consideration would
times 11 mos. suffice.
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CHAPTER 3: THE MAKING OF AGREEMENTS
MUTUAL ASSENT
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Moulton v. P received letter from D, stating Whether D’s letter No – D’s letter According to the Restatement, vagueness is indicative of a
Kershaw that it had salt for sale at certain and P’s telegram was an invitation lack of intention to be bound.
61 price; “shall be pleased to receive order constitute a K. to deal or an
your order.” P ordered 2000 Offer vs. invitation advertisement, not Language of the letter was not what a businessman would use
barrels. Next day, D withdrew to deal. an offer. to offer to sell a definite amt of property to a specific indiv.
letter and refused to deliver. P Word “sell” not used. It was a general letter addressed
sued for breach of K. generally to those D thought might be interested in buying
salt. Advertisement.
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Empro Mfg. Co. P wants ct to enforce letter of Was the writing an No. Ct refuses to “Sliding scale” of bindingness:
v. Ball-Co Mfg., intent as binding agreement. P enforceable K? enforce the sale. - letter of intent
Inc. left itself lots of escape clauses, - option K
64 but D ended up pulling out of - regular K
deal. Easterbrook doesn’t buy the argument that it was an
[enforceable] option K.
Misunderstanding
Raffles v. Agreement to buy cotton from D (buyer) argues no Ct agrees. Subjective standard. Isn’t this bad? Maybe if we say the K
Whichelhaus “Peerless” (ship) – but 11 boats K b/c no meeting of was too ambiguous, so not going to enforce it at all.
64 w/that name. 1st Peerless left in the minds. Is that
Oct. 2nd one left in Dec. Buyer right? Actually, it’s a misunderstanding case – parties attach
says, I meant Oct. Peerless. different meanings to same words.
Seller says, I meant Dec.
Flower City K to paint units. Sub says only Who’s right? Can ct. Would expect ct No meeting of the minds. Maybe ct went easy on sub since it
Painting interior. General says int. and enforce according to to agree was new to the business (unsophisticated).
Contractors v. exterior – consistent w/trade trade usage? w/general. But
Gumina Constr. usage. instead says no K Misunderstanding again.
Co.
65
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Davis v. Jacoby Rupert Whitehead lost lots of What kind of K was Whitehead’s letter Promise exchanged for a promise. “So if you can come, Caro
67 money. Has niece Caro, raised as it – unilateral or was an offer to will inherit everything.”
daughter. Asked her and husband bilateral? enter into a Ct grants s.p. Caro and husband win.
Frank to come save him; bilateral K, which
promised they would receive all was accepted by Restatement says that the preferred interpretation for when
his wealth. They accepted, but Caro and husband unclear whether unilateral or bilateral K is that it’s a bilateral
didn’t come before he killed by letter before K since it immediately and fully protects both parties.
himself. He had willed Rupert’s death. Presumption in favor of bilateral.
everything to nephews.
Also, facts of case point towards presumption that Whitehead
meant bilateral, since the K would have required Caro to be
there until Mrs. Whitehead’s death; if Mr. Whitehead died
first, he would have to rely on Caro’s promise to stay until
his wife died.
Methods of Termination of the Power of Acceptance
Petterson v. Offer: if you pay mortgage by Was there a K? No – offer was to Since offeror withdrew the offer before the offeree accepted
Pattberg certain time, I’ll give you a enter into a by performance, the offer never became a binding promise
67 discount. Debtor shows up unilateral K. and no K was ever made.
w/money in hand, creditor tells Promise only
him that he already sold becomes binding
mortgage to someone else. when performance
is made.
PRECONTRACTUAL OBLIGATION
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James Baird Co. 12/24: D (sub) sent offer to P P sues based on No K; p.e. N/A. Offeror (D) provided for acceptance only after the awarding
v. Gimbel Bros. (general) based on incorrect promissory estoppel. of the general K. Since offer was revoked prior to award, no
(J. Hand) estimate of linoleum cost. D denies existence acceptance possible.
70 12/28: P received letter, made bid of a K, and thus also
to Dept. of Hwys; D telegraphed existence of a P.e. N/A b/c “an offer for an exchange is not meant to
notice of w/drawal promise on which P become a promise until a consideration has been received.”
12/30: Dept. accepts P’s bid could rely. Offer + acceptance = promise. W/o the acceptance can’t
12/31: P receives D’s argue p.e.
confirmation of w/drawal
1/2: P formally accepts D’s offer. This was a regular offer to enter into a bilateral K. Offer
could only be accepted after awarding of general K. Since
offer revoked before that, no more offer to accept.
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Implied vs. express K
Morone v. Unmarried couple living Whether a K as to No, yes. Express Ct refuses to imply a K from services by/between these
Morone together; P (woman) has two earnings and assets K enforceable. people b/c assumption is that services are gratuitous based on
81 causes of action based on: may be implied in nature of relationship – pt of relationship is mutual
(1) Reliance arg/P.E. fact from couple enjoyment of co. Risk of fraud as well.
(2) Partnership agreement living together, and
Wants money for both. whether an express Ct holds that an express agreement b/t these people is
K is enforceable. enforceable b/c it’s an express K – immaterial what their
personal relationship is w.r.t. the K’s validity.
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Luria Bros. & Co. K to sell scrap steel to P, who Was parol evidence Yes. D argued that D’s confirmation form said “this order constitutes the entire
v. Pielet Bros. sued upon D’s non-performance properly excluded as K was expressly agreement b/t the parties” – therefore UCC §2-202 is
Scrap Iron & and won; D offered oral inadmissible under conditional upon applicable:
Metal, Inc. agreement evidence UCC 2-202? being able to get Can never admit parol evidence which contradicts the terms
88 the scrap from of the written K.
supplier. Cannot admit parol evidence when the writing is intended to
be complete.
Promissory Fraud; Parol Evidence Rule
Lipsit v. Leonard Employment arrangement = P sues for breach of Alleged oral NY law allows parol evidence where P seeks rescission or
88 series of annual letter K by breaking oral promises restitution, as opposed to affirmation and enforcement.
agreements. P claims specific promises; also tort inadmissible
oral promises accompanied claim based on fraud under parol See p. 90 for more on tort action for promissory fraud.
writings, e.g., P would be given in the inducement. evidence rule.
equity interest in the business But fraud claim
improperly
dismissed.
Bank of America Ds offered to prove they signed Parol evidence No. Not admissible to prove a promise contradictory to the
Nat. Trust & Sav. promissory note after bank admissible? writing.
Ass’n v. promised them uninterrupted Only admissible where it relates to some independent fact,
Pendergrass operation of ranch for 1 yr. “some fraud in the procurement... or some breach of
90 confidence...”
Sabo v. Delman Parol evidence allowable here b/c P seeks to set aside
91 agreement on basis of fraud (as opposed to proving breach of
K or enforce promise)
Pacific Gas & K to replace metal cover of P’s Offered extrinsic Parol evidence Parol evidence offered was the admissions of P’s agents and
Elec. Co. v. G.W. turbine. Indemnity clause: D to evidence that parties should have been D’s conduct under similar Ks w/P.
Thomas Drayage perform “at own risk and intended the admitted. Trail ct’s plain language interpretation left K unambiguous to
& Rigging Co. expense” and to indemnify P indemnity clause judge; therefore any extrinsic evidence inadmissible (“four-
91 “against all loss, damage... only cover injury to corners” rule)
liability... in any way connected property of 3rd Application of this rule here denies relevance of parties’
w/this K.” parties and not to intentions.
P’s. K terms weren’t detailed enough. Extrinsic evidence
demonstrates intentions.
Spaulding v. Trust: beneficiary receives What happens if Literal v. Have to go w/intention of trust creator – did not intend that
Morse $1200/yr, then after entering beneficiary doesn’t purposive beneficiary keep receiving payments even if he didn’t go to
92 college, $2200/yr up to 4 yrs. go to college? interpretation college.
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STANDARDIZED FORMS
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CHAPTER 4: POLICING THE BARGAIN
COMPETENCY TO CONTRACT
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Odorizzi v. P teacher arrested on crim Was resignation Yes – sufficient Undue influence: coercive persuasion, overcomes the will
Bloomfield charges of homosexual activity; invalid? elements to justify w/o convincing the judgment, high pressure working on
School Dist. superintendent of sch dist and rescission of mental/emotional weakness; victim is unduly susceptible
101 principal came to his apt, consent b/c of and/or person(s) exerting influence in dominant role,
encouraged him to resign, no undue influence. mismatch resulting in unfair advantage.
time to consult lawyer, said they
were helping him
Von Hake v. 82 yr-old P distressed over Was there a No. Typical fraud case. No confidential relationship – no long-
Thomas foreclosure sale of ranch; D confidential standing relationship of trust, no substitution of will, no
102 induced him to believe that he relationship b/t the fiduciary duty.
wanted to save the ranch; gained parties?
P’s trust
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Alaska Packers’ Fishermen hired to go to Alaska; Are amendments to No. Pre-existing Fishermen would get paid more even through they didn’t
Assn’ v. payment was $50 for the season Ks enforceable? duty rule. promise to do more. Pre-existing duty doctrine is an
Domenico and 2 cents for each salmon application of the consideration doctrine. It’s an alternative
104 caught. After unloading vessel, invocation to the duress doctrine.
fishermen stopped working,
demanded $100 each and unless “hold up” – demand almost as much money as employer
paid, would return to S.F. would lose if they don’t work at all.
Impossible to get replacements,
so gave in. See p. 105 for distinguishing bad kind of K modification
from the good kind.
Schwartzreich v. Original K - $90/wk salary; new P fired after one mo. Yes. P testified that he received offer for $110/wk from someone
Bauman-Basch, K - $100/wk wage; both Ks for 1 Can he recover? else, and D offered $100 to make him stay. D testified that it
Inc. yr was too late to get replacement if P left, so offered $100.
106 Can make new K in which promises are consideration for
each other. I promise to stay if you promise to pay me more.
Brian Constr. & P general hired D sub to perform New K void? No. B/c of unforeseen burden, pre-existing duty rule doesn’t
Dev. Co. v. excavation work; D discovered apply. Sub was doing more work for more money.
Brighenti considerable rubble underground,
106 requiring excavation depth
beyond plans, not covered by K
Universal “No oral modification clause” – Can P recover Yes. K provision Unless K for sale of goods, K can be changed through oral
Builders, Inc. v. all change orders must be in expenses for the need not be agreement even if there’s no oral modification clause.
Moon Motor writing and signed by D and/or extras D’s agent enforced. Condition is considered waived when enforcement would
Lodge, Inc. Architect requested? result in something approaching fraud.
107
Hackley v. K1: Headley to cut & deliver Headley claims Headley accepted Don’t want to discourage people from making Ks w/people
Headley logs, to be scaled by person $6200 according to the $4000 bc who are or seem to be in financial distress.
108 selected by Hackley. Scribner scale, needed money; Cts want parties to settle their disputes on their own;
K2: After Headley sued Hackley, Hackley only gave can he now uncomfortable w/deciding what the price should be.
Headley released all claims for $4000, which was recover balance
$4000, but now claims duress. according to Doyle on ground of
scale duress? No.
Marton “Time and materials” K to Can he recover No. Cashing check constituted an accord and satisfaction that
Remodeling v. remodel house; refused check for $1500 balance after could not be altered by words added.
Jensen $1500 less than bill. But then cashing the check?
109 cashed it after writing “not full
payment.”
Denney v. Reppert Several claimants for reward for Who can claim 3 employees of robbed bank: no, they have duty
110 arrest of bank robbers. reward? 4 of general public: no, didn’t follow procedure
3 state policemen: 2 on duty, no. 1 off duty, yes
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Board of Everett Bible wanted for murder Who gets reward for Johnson and Officers not obligated to arrest fugitives from other states.
Comm’rs of in KS. Didn’t pay after eating in Bible’s arrest? police officers Had they not stopped fight, Bible probably would’ve shot
Montgomery Johnson’s diner in OK. Chased split it equally. Johnson.
County v. Johnson him, fired shots at each other. 3 Had Johnson not tackled him, officers wouldn’t have noticed
111 officers broke it up. him.
In re Estate of 64 yr-old widow made oral Can Lord compel No. Void as against public policy. Want to discourage people
Lord v. Lord promise to Lord that if he estate to fulfill from marrying for money. Caring for spouse is already a duty
111 married her and cared for her, she promise? – can’t K for it.
would leave him her entire estate.
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The Warranty Alternative (to Mistake)
Tribe v. Peterson Everyone w/prior experience Did sellers make an This was just an Description of horse was just a well-founded opinion. No
115 w/horse found him to be calm assertion or state an opinion. Does not misrepresentation abt horse’s disposition.
and gentle. Buyer alleges “no- opinion? constitute an An express warranty is created by any affirmation of fact
buck guarantee” – sues for express warranty. which buyer relies upon to make decision to purchase.
breach of express warranty when Seller did not give a warranty as to horse’s future behavior;
horse throws him and wife. at most, gave warranty as to its past behavior.
UCC §2-313.
Hinson v. Deed restricted use of land to Can buyer get Yes – seller Where a deed explicitly restricts use of land, there is implied
Jefferson residential purposes; turned out rescission and breached implied warranty that the land can be used w/in the restriction.
117 that land could not support restitution? warranty. *Most cts have not followed Hinson for implied warranty.
sewage system required for See UCC §2-314, Implied Warranty; only applicable to sale
residential building. of goods, not land.
Warranty and Misrepresentation
Johnson v. Healy Negotiations for sale of new Can P get damages Damages for Can now invoke breach of warranties in real estate K actions.
118 house – D said that house made or only rescission breach of express
of best material, nothing wrong for negligent and implied Calc of damages: trial ct awarded cost of repairs so far
w/it. P purchased; 3 yrs later, misrepresentation? warranties. No ($5000). Incorrect. Damages for breach of warranty is to put
foundation walls cracked, longer caveat P in position he would have been in had the house been as
causing damage. Alleges emptor rule for warranted. But damages limited to cost of diminution in
misrepresentation & negligence. sale of new homes value of house if cost of fixing exceeds value of entire house.
Nondisclosure and Concealment
Cushman v. Kirby Mrs. Kirby told Ps that “water Were there Yes. Sellers owed duty to make full disclosure upon being asked.
120 conditioner” apparatus made actionable Mrs. Kirby represented that she had full information but
water “good, fine, a little hard, misrepresentations disclosed only part of it. Mr. Kirby’s silence constituted
but system takes care of it.” Mr. made by the Kirbys? misrep b/c he had affirmative duty to speak.
Kirby silent. Ps bought house. Remember: buyer must have relied on misrep in order to get
Sued for misrepresentation when rescission.
found that water was sulfuric.
Restatement §161 applies to both buyer and seller.
Eytan v. Bach Buyers thought paintings were Can buyers recover No. Dealer had no Buyers expected paintings to be far more valuable than the
121 originals but didn’t ask seller. on ground of fraud duty to disclose. price they paid, when they found out they were wrong and
Paid a little less than what they or the paintings were worth only a little more than price, cannot
were worth. misrepresentation? sue for not getting a better bargain. Seller didn’t lie.
No misrep b/c the prices speak for themselves?
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CHANGED CIRCUMSTANCES JUSTIFYING NONPERFORMANCE
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American Trading Charterer hired tank owner to Can owner recover No. Add’l expense Suez was the probable route, not required. Cape was well-
& Prod. Corp. v. transport oil from TX to based on was neither recognized alternate route. Add’l expense less than 1/3 K
Shell Int’l Marine, Bombay. Price based on weight impossibility and extreme nor price.
Ltd. and cost of passage through Suez quantum meruit? unreasonable.
129 Canal. It closed. Owner had to go How much add’l expense constitutes “extreme and
via Cape of Good Hope. Wants unreasonable?”
extra compensation for extra UCC §2-615, cmt. 4 states that the rise in cost must “alter the
mileage. essential nature of the performance”
Frustration
Krell v. Henry D rented flat to view coronation Can D recover? Yes, there was Taylor v. Caldwell implied condition rule. Ceremony taking
130 processions; event was cancelled; implied condition. place was the condition.
wants money back 3-part test for frustration:
What was the foundation of the K?
Was performance prevented?
Was the event preventing performance reasonably
foreseeable?
Lloyd v. Murphy Car dealership lease allowed for Can D invoke No. D failed to Frustration test: whether unanticipated circumstance, the risk
131 new auto sales and limited used frustration doctrine prove that the of which should not be fairly thrown on the promisor, has
auto sales, plus repair shop/gas to excuse parties value of the lease made performance vitally different from what was
station. Fed gov’t ordered new from lease was destroyed. reasonably to be expected.
car sales discontinued except for agreement? (1) But war and its consequences were reasonably
narrow class of people. D foreseeable at time of K. (2) New car sales were only
repudiated on ground of restricted, not made impossible or illegal. (3) D was able to
commercial frustration. sell new autos at other locations.
Chase Precast Supplier K’d w/general to Can supplier recover No. Frustration Test: event cannot be foreseeable, nor can the risk have been
Corp. v. John J. provide concrete median barriers anticipated profits? excuses both of the kind tacitly assigned to the promisor.
Paonessa Co. for hwy project. After producing parties. General’s K w/Dept. of Hwys had std provision allowing
132 1/2 the barriers, general told Dept. to eliminate items found unnecessary. Supplier knew
supplier to stop, paid it for all the abt this provision and that it also prohibited claims for
barriers it had already produced. anticipated profit.
UNCONSCIONABLE INEQUALITY
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Duty of Good Faith and Fair Dealing (Restatement §205)
Gianni Sport Ltd. June: D submitted purchase order Is agreement invalid Yes. Clause did Purpose of doctrine is to prevent oppression and unfair
v. Gantos, Inc. for women’s holiday clothing for on ground of not merely surprise. Case law est. two considerations:
142 delivery on Oct. 10 unconscionability of allocate risks (in (1) Relative bargaining power, relative economic
Clause: “Buyer reserves right to the cancellation which case it strength, and alt. sources of supply
terminate any or all of order clause? would not be (2) Substantive reasonableness of challenged term
w.r.t. Goods that have not been unconscionable)
shipped or which are not timely Nature of women’s fashion industry – changes all the time.
delivered.” Seller can’t just put holiday apparel back on shelf after last
Late Sept.: D cancelled; P agreed minute cancellation of a special order. P forced to absorb loss
to 50% price reduction if D or sell to D for lower price.
would accept goods Also, no evidence that clause was negotiable.
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CHAPTER 6: THE RIGHTS AND DUTIES OF NON-PARTIES
THIRD PARTY BENEFICIARIES
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H.R. Moch Co. v. D K’d w/city to provide adequate Can P maintain No. P is an City doesn’t have legal duty to supply inhabitants w/fire
Rensselaer Water water supply and pressure for fire action against D for incidental protection. Would be super-expensive liability for Ds to take
Co. hydrants; fire spread to P’s breach of K w/in beneficiary of the on. No indication in K that D intended to be answerable to
149 warehouse; inadequate water Lawrence v. Fox? K. indiv members of public.
pressure to put it out. Cardozo is worried about infinite expansion of liability.
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CHAPTER 5: THE MATURING AND BREACH OF CONTRACT DUTIES
THE EFFECTS OF EXPRESS CONDITIONS