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

UNJUST ENRICHMENT, p.383-401

– a/k/a “quasi-contract” and “contract implied in law”

– Elements:

o Benefit conferred on recipient

o Unjust to retain benefit without compensation

– “Officious Intermeddler” – does not intend to give a gift, but cannot be paid for the service or goods because there would be no contractual obligation before the benefit was imposed

– Volunteer – intends to give the benefit as a gift

– Restitution = remedy for unjust enrichment

o Party must give benefit back (replevin)

– Quantum Meruit = reasonable value of services, valuation method

o Equal to market value of services conferred

o Quantum valebant = market value of goods conferred

Martin v. Little Brown, p.387

· Case where the law student found copyright infringement and gave help to victim company but could not be reimbursed

· Rule – Contract Implied in Fact is an actual K which arises where the parties agree upon the obligations to be incurred, but their intention, instead of being expressed in words, is inferred from their acts in the light of surrounding circumstances.

· Rule – Reasonable Expectation is a promise to pay for services can be implied when it is rendered in such circumstances as authorized by the party performing to entertain a reasonable expectation of their payment by the party benefited

· Quasi-Contract – not based on the apparent intentions of the parties to undertake the performances in question, nor are they promises. They are obligations created by law for reasons of justice. Quasi-Contracts are the basis to allow restitution in UE claims.

Feingold v. Pucello, p. 391

· Feingold has unclean hands because he violated the rules of ethics for attorneys and because his contingency fee was exorbitant, did not have a fee arrangement

· Court held that there was no benefit conferred

· Rule – the touchstone of UE is that someone would have to be enriched

Cleveland v. Gordon, p.394

· Is there an implied in fact contract? The court said, yes. There was a reasonable expectation that the niece would be compensated for her services

· Rule – there is a presumption that services for your family are a gift

Moral Obligations and UE

· Past consideration doesn’t support new promises

o Exception – when the promisor has a moral obligation to compensate the promisee

Webb v. McGowin, p.400

· The court analogizes this case to which basic form of UE, the ambulance or hospital that provides service to a patient

· We also have to consider that McGowin did not live but a few years after his life was saved

· The issue is what is the value of people falling with heavy objects

· Rule – Implied in evaluating the benefit conferred also includes the detriment received

· There is a problem with whether there is unjust benefit with too little detriment

· We are manufacturing a contract to come up with a remedy = Unjust enrichment

DFENSES

· Assuming we have a contract, how do we argue defenses?

· Defenses are implicated with formation problems.

· DIMSIMCUP – acronym for memorization

STATUTE OF FRAUDS, p.237-246

Not a huge Issue on the Exam, just understand the basic parameters

· Rule – some promises are not enforceable unless made in a signed writing

· Restatement §131 (General Requisites of a Memorandum)

o Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidenced 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

· We do not want contracts manipulated by false testimony, therefore we have the SOF

· Modern law points:

o Electronic records qualify under the statute of frauds

o Signature requirement is basically anything signifying an intent to be bound, many equitable doctrines bypass the SOF, there is authority arguments that PE can bypass the SOF, time and equity have poked holes in what used to be a strict doctrine

· Problem 18.1, Lucy v. Zehmer, p.244

o Was the agreement to sell the land unenforceable under SOF?

o The purpose of the SOF is to enforce agreements

· Roberts v. Karimi, p.245

o Case where seller tried to rescind K after finding termite damage, but several documents showed the buyers prior knowledge

o The court is stretching to prevent fraud

o Rule – There is nothing in the statutes that suggests that we can’t aggregate documents so long as we can show that fraud was not perpetrated

MISREPRESENTATION / FRAUD, p.403-410, 417-422, 426-431

· Rule – Agreement is voidable if assent justifiably induced by fraudulent or material misrepresentation

· Void = as if contract never happened

· Voidable = one party has option to deem contract void

· Unenforceable = valid contract but no remedy

· 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 create tort remedies—including punitive damages

· FOCUS ON THE FOLLOWING: Commission, concealment, omission

· Rule – If the party knows of the particular idiosyncrasy, it becomes material

o The choice of remedy might set a bar in terms of proof that you cannot meet

o Why should an individual be required to reveal all of these idiosyncrasy?

§ Sales/transa

· Rule – Do not contract with a minor

· Rule – Attorneys should not engage puffery

· Fraud – courts can impose punitive damages as a remedy

· Fraud in the Inducement – where a party offers false information in order to induce assent

· Fraud in Factum – where a party offers a false representation which pertains to the terms or conditions of the actual K itself

MISUNDERSTANDING / MISTAKE, p.611-626

Misunderstanding = parties use same words but attach irreconcilably different meanings to them

· Elements:

o Parties have different meanings for the same words

o Neither party knows the other’s meaning

o Words are material to the K

o One party’s meaning is not more reasonable that the

· Courts are not going to be thrilled to void a contract under these circumstances, but they may do so.

Mistake = erroneous assumption of fact by one/both parties

· Elements

o Facts exist at the time of K

o Parties are mistaken

o Facts relates to basic assumption underlying the K

o Mistake has a material effect on K’s value

o Complaining party doesn’t bear the risk.

o Risk allocations:

§ By K

§ Reckless about lack of knowledge

§ Reasonable for party to bear risk

The courts are going to pick between these two: Misunderstanding and Mistake

Wood v. Boynton, p. 618

· Wood sold stone to Boynton for $1 thinking it was a diamond and later found out it was a diamond.

· Wood wanted to rescind K to sell for $1,000

· Court said “No Mistake” and could not rescind

Sherwood v. Walker

· Sale of cow they thought was barren for $80

· Found out that the cow wasn’t barren

· Court allowed rescission of K

· Reconcile: the difference in the Wood and Sherwood, in Sherwood the whole substance of the agreement is confused, which is different from merely the identity of the item (the diamond). There is a difference between the whole substance being a mistake vs. a question of the mere value of an item.

The Normal Principle – the party bears the cost of their mistake unless that party can show that the cost should be shifted to another party.

· Just as we need a promise + something else for a contract, we need a mistake + something to avoid a contract.