Select Page

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

 
 
 
 
 
 
Contracts II Outline
 
Professor David Levine
 
Elon University School of Law
 
Spring 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I.                   Unjust Enrichment
a.       An enforceable right even if there’s no promise (we create obligations for justice)
b.      Elements
                                                              i.      Benefits conferred upon recipient – one party must have been enriched by obtaining property, services, or other economic benefit from the other; and
                                                            ii.      Unjust to retain that benefit w/o compensation – the circumstances must be such that it would be unjust for the beneficiary to keep the benefit of that enrichment w/o paying or compensating the other party for it
c.       Remedies
                                                              i.      Always Restitution: gotta give it back
1.      May consist of an order to return the benefit itself (if tangible) or a money judgment for its value
2.      If consideration can be given back, it must be
                                                            ii.      Measured by a market standard:
1.      Quantum Meruit – market value of services
2.      Quantum Valebant – market value of goods
d.      Implied Contracts
                                                              i.      Contract Implied in Fact
1.      Actual contract where the agreement is created by conduct rather than expressed words
a.       Intentions expressed in acts, not words
2.      Has essential terms
3.      Note: The person who confers the benefit on the beneficiary must have a reasonable expectation of being reimbursed
                                                            ii.      Contract Implied in Law
1.      Not an actual contract; the law finds one out of fairness
2.      Fictional k created for equitable purposes
3.      Concept:
a.       A contract should have been formed but in actuality it was not
b.      Used when a court finds it appropriate to create obligations upon non-contracting parties to avoid injustice and to ensure fairness
c.       They aren’t true k’s; they aren’t even based on inherent intentions of the parties but we are going to create obligations in the interest of justice and only justice
4.      Remedy restricted to quantum valebant
e.       Exceptions: (Does Not Apply To/Cannot Claim UE)
                                                              i.      Officious Intermeddlers
1.      Benefit imposed on a person w/o that person’s consent
2.      Def: A person who doesn’t intend to give a gift but instead intends to be paid but can’t be paid because the benefit is imposed on another w/o the choice of that person, who didn’t request it and may not want it
a.       Feingold v. Pucello – attorneys fees should always go in writing
b.      Car washers at stoplights
3.      It is not unjust enrichment to retain a benefit that was imposed upon you and cannot be returned
4.      In determining whether there is an OI, look to whether the recipient requested the services or goods (whether they actually wanted them)
5.      Also consider which party was in a better position to avoid the risk
a.       Ie. E&E – $650 car repair for $200
6.      Mere permission is not the same as a request
a.       i.e.  E&E – concrete slab
7.      Exception: Under some circumstances, where an imminent threat to life or property creates an emergency and it is not possible to get authorization to act, a person who provides unrequested services may not be an intermeddler
                                                            ii.      Gifts
1.      Not UE if donor gives with gratuitous intent
2.      Money transfer btwn family members is typically a gift per k law
                                                          iii.      Volunteers
1.      Someone intending something to be a gift
a.       Confers a benefit gratuitously
2.      The person could do this bc he
a.       Has a deliberate intent to make a gift; or
b.      Simply lacks intent to be paid
3.      Voluntarily paying someone’s debt
a.       Unless
                                                                                                                                      i.      Compulsion of moral obligation
                                                                                                                                    ii.      Ignorance of the real facts
                                                                                                                                  iii.      Erroneous impression of one’s legal duties
                                                          iv.      Family Members
1.      Family members are gratuitous unless
a.       Proof of express agreement to pay for services
b.      Showing that the relative accepted benefit knowing/should have known that the payee expected reimbursement
                                                                                                                                      i.      Cleveland v. Gordon: sick aunt
                                                            v.      Moral Obligation
1.      Where a person makes a promise that is in effect a ratification of an existing but unenforceable or voidable legal doctrine, then courts will enforce
2.      An exception to disallowing “past consideration” as being sufficient for enforcing a contract
a.       Allows for past consideration
3.      Exceptions:
a.       Debts – if statute of limitations runs on an unpaid debt, courts will recognize a later promise to repay the debt even w/o additional consideration
b.      Minors – courts apply the moral obligation doctrine to a minor’s voidable contract where the minor ratifies the contract after becoming a major
                                                                                                                                      i.      K’s w/ minors are generally voidable but if the minor reaffirms the k after becoming a major, the k can be made effective w/o new consideration
 
4.      Elements:
a.       A person, acting w/ gratuitous intent, confers a benefit on another;
b.      The recipient should have paid, but didn’t, (and t/f his retention of the benefit unjustly enriched him);
c.       For some reason, the person who conferred the benefit didn’t or couldn’t sue to enforce the recipient’s original obligation to pay; and
d.      At some later time, the recipient makes a new promise to pay for the benefit that could not otherwise be compelled by legal action
f.       Cases
                                                              i.      Martin v. Little, Brown & Co.
1.      Martin found third party plagiarism and told LBC. Martin sued for money. Court found no implied k bc offer was not conditioned upon payment
2.      Rule: To sustain a claim for unjust enrichment, it must be shown by the facts pleaded that the person wrongly secured or passively received a benefit that it would be unconscionable to retain
                                                            ii.      Feingold v. Pucello
1.      Feingold (attorney) assumed himself the role of Pucello’s counsel and then sent him a hefty bill.
                                                          iii.      Cleveland v. Gorden
1.      Gorden cared (financially) for her sick aunt (Cleveland) and sought reimbursement. Court found Gorden was entitled to reimbursement due to an express agreement between the two
2.      Rule: A person who pays another’s debt bc of moral obligation is not an officious intermeddler and is entitled to reimbursement unless payment was gratuitous
g.      Final Note
                                                              i.      If the argument is that there is no consideration, then look to promissory estoppel. If promissory estoppel fails, then look to unjust enrichment. DON’T RELY ON THIS! Make a real effing contract ya dingdong!
 
 
 
 
 
 
 

ntended or known to be likely to prevent another from learning a fact is equivalent to an assertion that the fact does not exist
                                                                                                                                    ii.      Note:
1.      Contract law requires good faith negotiations. Concealment of pertinent, material facts is a functional equivalent of saying those fact do not exist
7.      Passive Fraud
a.       Rule: where a party fails to disclose facts under circumstances in which he has a duty to do so
b.      Silence = not always fraud; a party can keep some things to themselves unless: (i, ii, iii, iv)
c.       Restatement §161: A person’s non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only:
                                                                                                                                      i.      He knows that the disclosure is necessary to prevent a previous assertion from being misrepresentation of fraud
                                                                                                                                    ii.      He knows the disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the k and non-disclosure of the fact amounts to bad-faith/not in accordance with good-faith and fair dealing
                                                                                                                                  iii.      He knows that disclosure of the fact would correct a mistake of the other party as tot the contents or effect of a writing, evidencing an agreement in whole or in part
                                                                                                                                  iv.      The other party is entitled to know the fact because of a relationship of trust/confidence between them
d.      Stambovski v. Ackley (Haunted House)
                                                                                                                                      i.      Realtor failed to disclose that the house was haunted. Buyer was allowed to rescind k
                                                                                                                                    ii.      Rule: Caveat Emptor
1.      Where a condition, which has been created by the seller materially impairs the value of the k and is peculiarly w/in the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care, nondisclosure constitutes a basis for rescission as a matter of equity
e.       Psenicska v. Twentieth Century Fox (Borat Case)
                                                                                                                                      i.      Should have told them about “documentary style film”
                                                                                                                                    ii.      Would have been fraud but for the waiver
1.      A person cannot claim to have relied on a statement upon which he or she has explicitly disclaimed reliance