CLASS NOTES 8/25/09
Contract – A promise that the law will recognize
· Contract damages are calculated based on actual loss
· Gateway to all commercial law
· What turns a contract into a binding agreement?
Hawkins v. McGee
· “I promise to make your hand 100% better.
· Dr. says his “100%” promise shouldn’t be taken at face value because all surgeries are uncertain.
HAWKINS v. MCGEE
Facts – Hawkins – injured/scarred hand. McGee – skin-graft surgeon. McGee repeatedly solicited Hawkins for opportunity to perform experimental skin-graft surgery on Hawkins’ hand. McGee promised to deliver a 100% good hand. Hawkins hand in fact wound up hairy and mangled.
Issue – The issue is whether instructions to the jury as relates to “pain and suffering” were erroneous.
Holding – Yes.
Reasoning – “Damages” is a term intended as compensation for a breach, measured in the terms of the contract. It is “based upon what the defendant should have given the plaintiff, not what the plaintiff has given the defendant or otherwise expended.
The true measure of damages is the difference between the value to him of a good hand (which was promised) and the value of his hand at present, including those consequences fairly within the contemplation of both parties when the contract was made. Since surgeries’ outcomes are uncertain, damages aren’t given to consequences of the surgery.
Two Fundamental Assumptions in Enforcing Promises
· The law is concerned with relief of promises to redress breach
· The relief granted should protect the promisee’s expectation by attempting to put them in a position as if breach never occurred.
US NAVAL INSTITUTE v CHARTER – Hunt for Red October
SULLIVAN v O’CONNOR – Hedy Lamar nose
Briefs in notebook
Expectation – for difference in value between Hedy Lamar nose and the value of her current nose.
Restitution – taking from the doctor whatever he got. Pretend the contract didn’t happen. Disgorge from the doctor whatever she paid for the surgery.
Three Methods of Remedies pg. 14-15
· Primary- Expectation interest – the interest of a party to a breached contract in receiving the benefit of the bargain by being put in a position as good as that which would have resulted had the contract been performed
· Reliance interest – the interest of a party to a breached contract in being compensated for detriments suffered (expenses incurred) in reliance on the agreement (and for not making other agreements)
· Restitution interest – th
breach” – in addition to breaching the contract, a party seeks to shield itself by denying (in bad faith) the existence of the breach pg. 18
· More flexible and informal than judicial procedures
· Trade associations and chambers of commerce employ rules for arbitration
Two rules/principles of Arbitration pg. 20
01. Arbitration can only validly take place if the parties have agreed to it
02. Arbitrators can occasionally render decisions which a trial court cannot
Contract Remedies in Practice
· Since litigation bears expenses for parties involved, many disputes are settled out-of-court
· Merchant is in a better position to cope with costs because he is in a position to have disputes handled in bulk
· Consumer may not even know a lawyer, has often adhered to the contract
· They are inherently on unequal footing
Solutions: 1) Increasing successful consumer’s recovery. 2) Have others subsidize their representation (class action, free/cheap legal services