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

 
David Levin
 
Contracts 2
 
Spring 2013
 
 
Unjust Enrichment- enforceable rights even when there are no promises. In some cases we manufacture a contract that was never created for the sole purpose of creating remedies.
 
The cleanest example is where a patient comes into a hospital unconscious. The doctors and hospital that worked on him have still worked on him.
 
Unjust enrichment cause of action
–          a/k/a “quasi-contract” and “contract implied in law”
–          Elements:
o   Benefits conferred on recipient
o   Unjust to retain benefit without compensation
–          “Officious intermeddler” – The recipient does not request the service and may not want the service but a service is imposed on them anyway
–          Volunteer – the volunteer either expressively or implied intends to give.
Restitution = Remedy
Remedy for unjust enrichment is Restitution
–          Party must give benefit back
Quantum meruit – valuation method
–          Equal to market value of services conferred }key is services
–          Quantum valebant – market value of goods conferred}key is goods
 
 
Martin v. Little Brown
 
–          September 28: Law student Martin sends letter to publisher saying he found copyright infringement
–          Martin offers to send his highlighted copy to the publisher
–          Oct. 21 Publisher invites Martin to send copy
–          Publisher sues infringer
–          Martin sues for 1/3 of recovered amount
 
Do we have a contract? Is there a manifestation of assent, is there consideration? What are the terms?
 
Expressed implied contract –
 
1.      Question Presented to the court? (QP) – Was there a promise to pay James L. Martin from Bantam Books or any of its subsidiaries for copy right infringements stemming from plagiarism of his book?
2.      Holding- No there can be any recovery because there had been no contract made. Martin was a volunteer. He contacted the publisher and they did not ask for his services. There was no discussion on negotiation regarding payment from Bantam to Martin.
3.      Important Facts-  See notes
4.      Rule of Law- Cameron v. Eynon pg. 288 and Home protection Building & Loan and Shott v. Westinghouse for Quasi contract page 389
5.      Rational? (law/policy)- When one person’s work effort has been voluntarily given to another, and intention to pay cannot be inferred.
 
Feingold v. Pucello
 
1.      Question Presented – Did Feingold and Pucello have a contract or understanding that Feingold would be doing preliminary work towards his case even though there was no contingency/fee agreement signed
2.      Holding – No there was no contract. Feingold was bound by the rules of conduct to make his fee known early on or within a reasonable time.
3.      Important facts: see notes
4.      Rule of Law- rules of professional conduct for Lawyers
5.      Rational –
 
Moral obligations in unjust enrichments
 
Default rule: past considerations do not support the enforcement of the promise later.
Clevland v. Gordon
Web v. McGowan pg. 400
 
 
WE HAVE COMPLETED FORMATION
 
Statute of Frauds
 
Some promises are not enforceable unless made in a signed writing
 
Examples
–          Land sales or > 1 year property leases
–          Sales of goods > $500 (revised UCC $5K)
–          Contracts that can’t be performed in 1 year
 
Restatement §131
 
Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidence by any writing, signed by or on behalf of the party to be charged, which
a)      Reasonably identifies the subject matter of the contract
b)      Is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and
c)      States with reasonable certainty the essential terms of the unperformed promises in the contract.
 
Most contracts do not have to be in writing. If you don’t have writing your proof will be based on testimony, memory, etc…
 
Some promises are so important that we don’t want them manipulated by false testimony. That is where you are required to have it in writing.
 
Types of Defenses Intro
 
Void = as if contract never happened
 
Voidable = one party has option to deem the contract void
 
–          Courts usually treat contracts as voidable rather than void
 
Unenforceable = valid contract but there is no remedy
 
Misrepresentation/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
 
Material – whether the information itself will induce a reasonable person to act or not.
 
You have to be careful in making statements. When you are negotiating and don’t know the other side it can be dangerous.
 
Sarvis v. Vermont State College
 
Remedy matters. Savis fraudulently gained employment by lying on his application. The employer found out and resends the contract. The employer had two options. Resend the contract or two keep the contract and sue on non-performance or recovery. Remedy’s matter.
Fraud and misrepresentation
For fraudulent and material statements you can bring a tort action
For fraudulent a

ects basic contract assumption & makes performance impractical/moot, performance excused unless contract specifies otherwise
 
See page 450-451
 
Why is Krell not a mistake case page 651 and 652?
 
 
7200 page 653
 
The risk allocation was shifted in this case. Summary judgment in favor of the plaintiff and remanded
 
How does Frustration of purpose differ from implacability?
 
Frustration of purpose – the change of circumstance makes one party performance worthless
 
Impracticability – says the change in circumstance make on parties performance impractical
 
 
Changed circumstance
 
Changed circumstances = facts occurring after contract formation that affect basic contract assumption
–          Impracticability = supervening fact makes performance impractical
–          Frustration of purpose = supervening fact makes performance moot
–          Force majeure = act of God/event outside parties reasonable control
 
If force majeure affects basic contract assumption & makes performance impracticable/moot, performance excused unless contract specifies
 
Unconscionability
 
Unconscionability = absence of choice + unreasonable terms
 
–          Procedural unconscionability = defects in bargaining process
o   Contracts of adhesion = usually non- negotiable form/standardized contracts. Can mean any offer that is take it or leave it scenario
–          Substantive unconscionability = unfair terms
 
There is a sliding scale between Procedural and Substantive unconscionability.  If both are present and there is a strong showing in one but not the other then you go with the one that is stronger.
 
Unfair surprise –
 
Procedural unfair surprise – someone didn’t see a contract terms
 
Substantive unfair surprise – the outcome of the deal is too harsh
pg 464
 
List of red flags:
 
Context of negotiation should count.
Penalty clauses
Liquidated damages provisions
Contracts with one sided terms
Uneven bargaining power
 
As a drafter of contracts don’t ignore your gut. If you think you are getting away with something you probably are. Don’t draft something that you yourself would not sign
 
Party’s cannot contract around public laws