Chapter 1 – Bases for Enforcing Promises
1. The meaning of “enforce”
United States Naval Institute v. Charter Communications, Inc.
FACTS: K stated that the selling of paperbacks by D could not occur before October. D sent books to distributors before selling date, as is customary; however, the distributors then took the opportunity to sell the publication before October. P sought preliminary injunction that was unsuccessful b/c D was not the actual seller. P alleges now that D breached contract based on early selling/shipment. P says they would have earned more from hardcover sales than the damages assigned by trial court, D says the trial court is overestimating damages (which were calculated to include profits and loss). Amount lost/profit on sales that would have taken place had the contract not been breached: 35,000 (affirmed); Amount D profited: 7,760 (reversed – because it is punitive rather than corrective)
HOLDING: Berkley is not liable for copyright infringement. Damage calculation was correct under trial court’s estimation b/c some people would not have paid for the hardcover that did pay for the paperback.
* point of case: damages for breach of contract (expectation damages) – consists of benefits of performance from the standpoint of promisee
Sullivan v. O’Connor- Judge Kaplan
FACTS: P suing D, doctor, for malpractice and breach of contract (doctor had promised an outcome – of a particular quality of nose – and the actual outcome was worse than the original, requiring further surgeries). At trial, breach of contract claim returned for P and malpractice returned for D. D filed a bill of exceptions saying compensatory damages should not be given.
HOLDING: SC finds a middle ground between strict restitution and expectation damages à reliance restitution granted: puts the plaintiff in the same place she would occupy if there had been no contract at all. Kaplan is using contract law as a consumer protection device by issuing a warning to cosmetic surgeons advertising miracles
Specific Performance for Breach of Contract…assumption in contracts is that the appropriate form of relief is substitutional, in the form of a judgment awarding money damages to be paid to the aggrieved promisee, rather than specific, in the form of a court order directing the promisor to perform its promise. Classic situation where this exception is applied is of a contract for the sale of land. P17
Punitive Damages for Breach of Contract: Although punitive, or exemplary, damages are not traditionally granted for breach of contract, they may be granted for tortuous conduct that is sufficiently “outrageous” to justify punishment. Some courts have departed from the strict rule that denies punitive damages for breach of contract when the breach is accompanied by “fraudulent” conduct or by an “independent” tort sufficiently outrageous to justify such damages. P18
Intent: In contracts you are held accountable regardless of intent/negligence/bad motives/defect/etc. when breach occurs.
2. Consideration as a basis for enforcement
A. Fundamentals of Consideration
Hammer v. Sidway
FACTS: This is a contract issue between D (executor of uncle’s estate) and P (the assignee of the wife of the nephew), arising out of the following circumstances. At a wedding reception, Story Sr. promised his nephew William E. Story II, in the presence of family and guests, that if he refrained from drinking, using tobacco, swearing and playing cards or billiards for money until he became 21, he would pay him $5,000. The nephew assented, and performed the duties until he was 21, and wrote to his uncle informing him that he had completed his end of the bargain. The uncle replied in a letter, saying that the money was his, but that he would keep it, with interest, so that the nephew would not make unwise investments on it. The nephew agreed. The uncle died prematurely, never paying the nephew. The plaintiff assignee then claimed $5000 from the executor of the uncle’s will; request was denied. Defendant executor contended that the contract
was a gift or b) the value of the promise is disproportionate to the benefit received to the promisor.
§90 – Promise Reasonably Inducing Action or Forbearance: a unilateral promise is binding when the promisor has reason to believe that the promisee will be induced to performance (or forbearance) and injustice can only be avoided by enforcement of the promise.
Feinberg v. Pfeiffer Co.
FACTS: Action on an alleged contract by D to pay P a specified monthly amount upon her retirement from D’s employ. After hearing of this retirement package, P retired and D was, eventually, unwilling to continue paying the monthly allowances created for in the alleged contract.
HOLDING: Retirement package was a gift and no consideration existed for it, such that a promise based on past services would be without consideration and there is no language in the resolution predicating plaintiff’s right to a pension upon her continued employment (had there been such a clause in the resolution to give a retirement package, then there would have been consideration).
Mills v. Wyman
FACTS: Son of D returned from a sea voyage ill and P took him in. After all costs had been incurred by P, D sent him a letter stating that he would pay for those expenses. D did not pay for the expenses and P brings suit for breach of contract.
HOLDING: “It is only when the party making the promise gains something, or he to whom it is made loses something, that the law gives a promise [usually considered to be without consideration] validity” p44. In cases where there is no bargain prior to promise/exchange, there must be a consideration of benefit.