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Contracts II
Elon University School of Law
Levine, David S.

 
Levine Contracts II Spring 2013 Outline
Friday, January 04, 2013
3:20 PM
 
            I.            Unjust Enrichment
 
·         Not based on promise but cause of action that arises where claimant has conferred a benefit on the recipient under circumstances that make it unjust for the recipient to keep the benefit without paying for it
·         One party must have been enriched by obtaining property, services, etc. and circumstances must be such that it would be unjust for the beneficiary to keep the benefit of that enrichment without paying or compensating the other party for the benefit
o    Remedy is usually restitution (order for return of benefit or money judgment for it's value)
 
·         Elements
o    Benefit conferred on recipient
o    Unjust to retain benefit without compensation
 
·         “Officious Intermeddler”
o    Intends to get paid for his gift but can't be paid because benefit is imposed on the recipient
·         Meaning the recipient has no choice
·         Recipient didn’t request benefit and may not want it
o    Ex: window washers that do it and then ask for money
 
·         Volunteer
o    Intends to confer a gift
o    No contractual promise involved
 
·         Restitution- remedy for unjust payment
o    Party must give benefit back
 
·         Quantum Meruit = valuation method
o    Equal to market value of services conferred
o    Quantum valebant = market value of goods conferred
 
Cases for Unjust Enrichment
 
Martin v. Little, Brown & Co.
 
·         Facts
o    Person wrote letter to publisher saying portions of a book had been plagiarized by authors of another book
o    Found they were pursuing claim of copyright infringement and so he demanded compensation for his services
·         Issue
o    Can someone who volunteered information be compensated for it
·         Holding
o    No – he has no right for payment
·         Reasoning
o    Facts don’t show that a contract was formed – payment was never discussed
·         Court treats this as gratuitous gift
o    When someone volunteers work or effort then intention to pay can't be inferred
 
Feingold v. Pucello
 
·         Facts
o    Pucello was involved in car wreck and through a co-worker got Feingold's info (was a personal injury attorney)
o    They talked about him representing Pucello but didn’t discuss fees – Pucello gave basic info and Feingold began working on the case (still never met him in person)
o    Later that month Feingold sent contingency fee agreement where he would get 50/50 and Pucello balked at high fee and found other counsel
·         Issue
o    Was it ethical for Feingold to not tell client upfront about his fee?
·         Rule
o    Standard practice was for attorneys to tell clients their fees upfront (rules of professional conduct)
·         Reasoning
o    Trial court found he worked on case without agreement to his own risk
·         Feingold argues that facts imply control to support quantum meruit recovery
o    Trial court found 50% fee unethically high
o    Pucello even told Feingold to keep the work he had done so no benefits had been transferred
 
·         Lessons
o    When an attorney sues a client in a fee dispute the client wins (almost always)
·         Courts are very careful in protecting clients in fee disputes for lawyers
o    Get your client relationships documented up front
·         Not just because it is required but because it is good practice
 
Estate of Cleveland v. Gorden
 
·         Facts
o    Gorden paid for care of her Aunt out of her pocket for 5 years – about 100K
o    Kept records for these expenses so she could be reimbursed later (she was told by bank she would be)
·         Issue
o    Was Gorden an intermeddler or not?
·         Holding
o    No because she isn't doing this as a gift
o    She is just being a good family member
·         Reasoning
o    Generally family members don’t owe each other monetary debts
o    Contract law has no place inside family relationships
·         There is an exception to this general rule at play here
o    If you show evidence that you don't intend your acts as a gift and beneficiary understands this then contracts can be applicable
 
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Moral Obligations
 
·         General rule
o    Past consideration does not support new promises
 
·         Exception
o    All of this is out the window when the promisor has a moral obligation
·         In this case we overlook the lack of consideration
 
·         Where a person makes a promise that is in effect a ratification of an existing but unenforceable or voidable legal obligation
o    Creates an exception to past consideration rule and permits enforcement of the later promise
·         Usually promisor promises to pay a debt that has become unenforceable because of the statute of limitations
·         Can also happen when minors have voided contracts but they renew promise when they are of age
 
Case for Moral Obligation
 
Webb v. McGowin
 
·         Facts
o    About guy hurting himself to avoid killing a guy
o    Other guy promised to pay $15 every 2 weeks until he died
o    Original guy died and payments stopped so he sued the estate
·         Reasoni

and the other will clearly lose
 
·         So negotiations are important
 Inspections are important so sometimes easier to just ask the party and get statements
 Generally true that human nature is to trust others (esp. when they appear credible)
 Also human nature for some people to take advantage of others
 
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               ·            Misrepresentation and Fraud
 
               ·            Agreement is voidable if assent justifiably induced by fraudulent or material misrepresentation
               ·            Covers:
o    Lies
o    Overconfident factual statements
o    Actions taken to hide facts
o    Innocent but material misstatements
o    Failure to volunteer facts (in limited situations)
 
               ·            Fraud may also create tort remedies- including punitive damages
o    Punitive damages are not awarded for breach of contract
 
Cases for Misrepresentation
 
Sarvis v. Vermont State Colleges
 
               ·            Facts
o    He lied to college in his resume in order to get hired (had criminal background in fraud and served in prison for it)
o    But he sues for wrongful termination and then wants money from them
               ·            Issue
o    Did plaintiff misrepresent and commit fraud in order to get contract?
               ·            Rules
o    For just cause conduct must be egregious enough to make firing reasonable and employee must have had fair notice that conduct would result in discharge
               ·            Holding
o    They were correct in firing him for just cause for the fraud and misrep.
               ·            Reasoning
o    Party induced into contract by fraud or misrep can rescind contract and avoid liability
o    Plaintiff fraudulently incuded defendant into entering into contracts by misrepresenting facts that were relied on for hiring
 
               ·            What remedy does employer want here?
o    They only want the right to let Sarvis go
o    Wants to terminate the contract
·         Not get money from Sarvis