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Penn State School of Law
Mootz, Francis Jay

Contracts Outline Prof. Mootz Penn State spring 2008
I.                   Introduction to Contract Law
a.       The study of contract law
                                                              i.      Legal recognition and consequences of promises, agreements, and exchanges
                                                            ii.      Emphasis on choice
                                                          iii.      Ideas of market- economics, free trade, negotiating
                                                          iv.      Idea of voluntariness
1.      self-determination
                                                            v.      note- on the history of contract law
1.      idea of progress- 18th century (political slogan of American Revolution)
2.      Christopher Columbus Langdell
a.       Case method
b.      “Contract law is separate from other areas of the law because it is uniquely based on individual consent and that the whole of contract law can be deprived from fundamental elements of consensual obligation”- Classical Contract Law (agreement is the product of discrete, voluntary, communicative acts)
                                                                                                                                      i.      features idea of objectivity and the reasonable person
3.      current contract law
a.       conflicting ideologies contribute
                                                          vi.      sample contract of Hawaiian sugar plantations
1.      “standard form contract”- fill in names, dates, signatures, etc. (details)
2.      early contract breaches treated as criminal
a.       changed into a separate action in contract
                                                        vii.      H.J. Coolidge v. Pua’aiki and Kea
1.      problems with the contract:
a.       wife signed, rather than man land-owner, therefore not binding
                                                                                                                                      i.      no authority in writing to carry out business of plantation
                                                                                                                                    ii.      agent was appointed before the law could go into effect (therefore, law not binding)
                                                                                                                                  iii.      indefinite, “not sufficiently particular”
                                                      viii.      note- anatomy of a judicial decision
1.      law
a.       refers to “rules of action or conduct…principles, standards, and…doctrine or procedure of the common law”
2.      fact
a.       refers to “a thing done; an action performed or an incident transpiring; an event or circumstance; an actual occurrence; an actual happening in time or space or an event mental or physical; that which has taken place…events or things the actual occurrence or existence of which is to be determined by evidence”
3.      law
a.       legal categories (tort, contract, statute)
                                                                                                                                      i.      “choice of category makes available and limits the kinds of arguments that appropriately or effectively can be made by each party”
                                                                                                                                    ii.      tells what kind of parties are involved (i.e. contract- between private individuals, criminal- between defendant and state)
                                                                                                                                  iii.      incorporate set of factual assumptions that inform what doctrine is used
b.      ideas viewed as having special significance to the determination of parties’ rights and obligations
                                                                                                                                      i.      doctrine/principles
1.      legal rules, tests, or standards
2.      doctrine- also applies to principles, values, theories, tenets, beliefs, philosophies
a.       or an acknowledged set of rules
                                                                                                                                    ii.      legal rules
c.       authoritative texts- enact, recognize, explain a legal rule or term
                                                                                                                                      i.      previous decisions
                                                                                                                                    ii.      statutes
1.      UCC
                                                                                                                                  iii.      Restatements
b.      Three Principles of Contract Law
                                                              i.      The Bargain Principle
1.      “central belief that an agreement to exchange one thing for another gives rise to mutual obligations”
2.      a deal is a deal
3.      values
a.       person ought to do what they promise
b.      people think of promises as obligatory
4.      why are deals obligatory?
a.       Both sides are committed
b.      The other person will count on the deal and spend money or make commitments because he or she believes the deal will be fulfilled
c.       Deal making is the way people make a living- and so the promises made in this context are particularly serious and therefore obligatory
d.      Commercial exchange is crucial to our economy, and if people do not live up to their deals, business people will be unable to plan for the future, people won’t be willing to make deals, businesses will shut down, people will be unemployed
e.       Deals and the fulfillment of deals are crucial to a free market system and a free market is essential to individual freedom
5.      who is burdened by

                                                                                                                                   i.      “Having entered into the contract, however, the producer may not break it without incurring liability for damages according to the law of contracts”
                                                                                                                                    ii.      “Under Massachusetts law, damages may be awarded for consequential harm is such harm was within the contemplation of the parties and was caused ‘directly’ by the breach or ‘indirectly’ by the combined effect of the breach and foreseeable intervening causes.”
1.      consequences foreseeable to a person of reasonable prudence in the position of the party charged with the breach
                                                                                                                                  iii.      “Plaintiffs have the burden of showing not merely a reduction of professional opportunities after the breach as compared to those opportunities that would have been expected for one with plaintiff’s qualifications…they must demonstrate the difference between the professional opportunities she had after the breach and the opportunities she would have had but for the breach”
c.       note- on bargain, injury, and expectation damages
                                                                                                                                      i.      greatest when there are major shifts in the market
                                                            ii.      Reliance: Trust, Responsibility, Injury
1.      people rely on each other
2.      this reliance is often morally and politically valuable
3.      trust is necessary for society
4.      “The reliance principle includes and is limited by the belief that there should be limits to trust and reliance”
a.       “reasonable reliance ought to be protected”
5.      reliance principle “emphasizes promises, the belief that promises should be kept, and in a more controversial way, the question whether obligation should ever be imposed in the absence of a promise”
6.      a person who has been injured ought to be compensated for that injury
7.      Ricketts v. Scothorn- 1898
a.       “The instrument in suit, being given without any valuable consideration, was nothing more than a promise to make a gift in the future of the sum of money therein named.”