Topical Outline for Contracts I
Types of Contacts
I. Express Contract – Promises are communicated by language, there is a bargained for exchange. (e.g., I will agree to do this for you if you agree to give me this…)
II. Implied Contract – Parties’ conduct indicates that they assented to be bound. (e.g., person fills their gas tank at a fuel station. There is a contract for the sale and purchase of gas implied in the person’s performance of filling their tank.)
III.Quasi-Contract (Not a contract at all) – One party is unjustly enriched at the expense of another party so that the enriched party must pay restitution to the other party equal to the unjust enrichment. (e.g., a person agrees to build a house for another party which then dies while only part of the house had been completed. P can recover the benefit conferred on D even though they are unable to sue on the contract.)
(Section 1) Consideration
Chapter 1 – Basis for Enforcement of a Promise
I. The Meaning of “Enforce” [Three Interests of Recovery for Breach of Promise] United States Naval Institute v. Charter Communications, U.S. App. Ct. 2nd Circ. (1991) (936 F.2d 692) p. 2
► D and P had a licensing agreement for publishing a book in which D would be the sole distributor of the paperback edition of the book set for a specific release date; D shipped early; P sought injunction to stop D but court refused; D’s early release was realized; P sued: P can recover damages due to breach of contract and loss of sales in its hardback edition due to D’s early release.
Rule: Damages for breach of contract are appropriate when used to compensate the injured party for the loss caused by the breach; such damages are generally measured by the plaintiff’s actual loss. The focus in determining recovery should be on P’s loss, not on D’s gain.
▪ D is responsible for the loss of sales that P would likely have made during that month. P cannot recover award of profits because they could not prove a case for copyright infringement.
The Economics of Remedies
Sullivan v. O’Connor, (Mass. 1973) (296 N.E.2d 183) p. 8
► D promised to perform a nose job on P over the course of 2 operations; P was a professional entertainer and her appearance increased her value as such; P underwent 3 surgeries during which her appearance was worsened and could not be improved through further surgery; P can recover damages.
Rule:Since P relied on D for a promised result, P should be awarded damages based on a reliance interest. P suffered an unfixable detriment in reliance upon D’s promise.
Note (A.B.): Calculation of P’s damages based on restitution interest:
▪ Reliance damages – gives plaintiff what plaintiff had before the contract or the promise was made. P can recover for her loss in value of appearance because of the surgeries.
▪ Restitution damages – gives plaintiff back wha
or defense and believes that no valid claim or defense exists.
(A) Fundamentals of Consideration, p. 22
Family Contracts: A Typical Category, pp. 26-27
Hamer v. Sidway, N.Y. App. Ct. (1891) (27 N.E. 256; 124 N.Y. 538) p. 27
► D promised to pay P, his nephew, if he refrained from smoking, drinking etc. until P turned 21; P complied; D’s estate refused to pay; D breached and P could recover (there was a bargained for exchange)
Rule: Any suspension or forbearance of a legal right at the request of another is sufficient consideration to sustain a promise.
▪ Consideration does not mean that one party to a contract has to profit so much as it might mean that one party may abandon or limit a legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first. In those situations, the bargain agreed upon will be an enforceable contract – as opposed to an unenforceable promise. (best statement of consideration)
▪ Since P gave up his legal right to do certain things on the belief that D would pay, D’s promise will be enforced as a binding contract.
(See notes fm. 9/5)