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Contracts
St. Louis University School of Law
Bodie, Matthew T.

 
What is a Promise? a contract. three types of contracts (express, implied in fact, implied in law=quasi contract=to avoid unjust enrichment)
Bailey v. West (1969) (lame horse case)
-implied in fact contract? NO. no contract was created through conduct. there must be a mutual agreement and “intent to promise” to establish contracted “implied in fact”
-implied in law/quasi contract? NO.
1.    benefit conferred upon D by P-Yes (care and boarding)
2.    appreciation by D of such benefit-yes (horse was taken care of)
3.    acceptance and retention by D of such benefit under such circumstances that it would be inequitable to retain benefit without payment
-Holding: Bailey volunteered his services. under no obligation to keep horse. unenforceable gift promise. West made it clear he did not want Bailey’s services. if there is an opportunity to make a contract and no contract is made, the court will find for a quasi contract.
Bolin Farms v. American Cotton Shippers Association (1974) (change in cotton prices)
Holding: once you enter into contract you cant nullify contract because terms are no longer good for you. price of cotton had gone up.
Measuring and Compensating Loss Resulting from a Breach. courts prefer monetary damages. efficient breach-breach in which society is better off(the party that has stayed true to the contract will be compensated to put them in a position they would have been in had the contract been followed through, while breaching party can just pay off the other and make a profit)
344-expectation (forward looking-most common. where u would have been had K been performed), reliance (backwards-where u would have been had K not been made-Promissory Estoppel), restitution (return of unjustly conferred benefit) 347-expectation-loss in value to him of other party’s performance caused by its failure or deficiency PLUS any other loss caused by breach MINUS any cost he has avoided by not having to perform349-reliance-expenditures made in preparation for performance less any loss the party in breach can prove with reasonable certainty the injured party would have suffered had contract been performed
Sullivan v. O’Connor (1973)(nose surgery case)
-court ordered combination of reliance and expectation damages. reliance damages for expenses and value of nose. expectation for P&S. 
Curtice Brothers Co. v. Catts (1907) (tomato case-Specific Performance)
Holding: since it cannot be guaranteed they can find quality tomatoes at specific time, D must adhere to contract. monetary damages would be very hard to calculate. impossible to determine loss of value because impact on market next year. workers may find work elsewhere. specific performance will not be awarded if damages are sufficient to protect the expectation interest of the injured party.
357-injunction. specific performance granted when damages are hard to calculate, when money cannot purchase a substitute for contracted-for-performance. 358-order of specific performance or an injunction need not be identical to contract. specific performance or injunction may only be required for part of contract.
Hadley v. Baxendale (1854) (shaft case-forseeability)
-special circumstances were unknown to party (no notice was given to them) breaking contract and therefore D cannot be held responsible for lost profits of the mill. D could not have known the mill would be closed because shaft was not ready. Hadley Rules. (1) If a reasonable person should have forseen the damages, the party in breach will be held liable (if they arise naturally) (2) if the consequences were remote and unusual, the court will award damages if the defendant had actual notice of the possibility of these consequences.
351- court may limit damages if justice so requires in order to avoid disproportionate compensation. 352-limitations on damages-damages are not recoverable for loss beyond an amount that evidence permits to be established with reasonable certainty. UCC-2-715-buyer’s incidental and consequential damages-expenses reasonably incurred. often left to judges to determine if actual notice is enuff for disproportionate damages.
The Consideration Requirement-consideration-keep in bargains, keep out gifts. there is no contract w/o consideration. consideration=a promise or performance AND a bargained for exchange. promise is supported by consideration if the promisee gave up something of value or circumscribed her liberty in some way (legal detriment) and promisor made promise as part of bargain; that is, he made his promise in exchange for promisee’s giving of value or circumscribing of liberty (bargain requirement)
Kirksey v. Kirksey (1845)(brothernlaw/sisternlaw). whether there was a bargain between BIL/SIL. . Holding: Promise made by BIL was a mere gratuity. there was no contract because no consideration. while SIL incurred a detriment of moving sixty miles and leaving her land, detriment was not bargained for by D. he did not offer place to stay so she would move 60 miles. it was a gift. detriment a side issue.
Hamer(Story owed Hamer $) v. Sidway (executor) (1891)(refrain from drinking for $5,000) surrender of Story’s legal right to drinking, tobacco. swearing, and playing cards for $ until he turned 21 caused the promise. abandonment of such activity was sufficient consideration to uphold promise. each side has to provide a benefit or “suffer” a detriment as part of the bargain.
Jara v. Suprema Meats (2004)
-cannot be construed as a bid to enter into a bilateral contract. Jara Sr.’s testimony does not indicate he tried to bind his son to bilateral contract he now describes. Jara Jr. sought his dad’s advice. he volunteered a promise he was not required to keep(that any compensation increase would have to be agreed upon by all three shareholders)-it was a gift. he made promise wo expectation of any exchange promise or performance
Moral Obligation: Promise plus Antecedent Benefit. Restitution & the Scope of Quasi-Contract
Bailey v. West, Petrie v. LeVan (1990) (house damaged before closing)
-whether LeVan received unjust enrichment from Petries when he obtained $ from his insurance provider for damage to his house. YES. person who has been unjustly enriched at expense of another is required to make restitution to the other. Petries get $ received by LeVan from insurance policy. 1. levan was enriched by receipt of purchase price for property and insurance money. 2. petries paid purchase price. 3. unjust
Moral Obligation Mills v. Wyman (1825) (father promised to pay for 25yr old son’s care)
-after all expenses had been incurred father sent a letter to P promising to pay him such expenses. moral obligation is not consideration. no bargained for exchange here. he made the promise after the service was rendered, thereby making it impossible that he bargained for the performance of that service. if it had occurred during service we would have consideration. holding:unenforceable gift promise
Restatement 82-Promise to Pay Indebtedness, effect on SOL
-promise to pay an antecedent contractual or quasi-contractual indebtedness owed by promisor is binding if indebtedness is still enforceable or would be except for statute of limitations. promise includes voluntary acknowledgment to obligee admitting existence of antecedent indebtedness OR voluntary transfer of money by obligor to obligee made as interest

in declining to enforce decedent’s promise. while §90(2) dispenses with absolute requirement of consideration or reliance, to enforce such a promise would be against public policy. kadimah did not ask for library to be named after him.
Blinn v. Beatrice Community Hospital and Health Center, Inc. (2006)
-whether Blinn had a contract? promissory estoppel?
-breach of contract-NO genuine issue of material fact. no meeting of minds. “we’ve got at least five more years of work to do” is not a clear definite offer of employment and does not manifest an intent to create a unilateral contract. employee’s subjective understanding of job security is insufficient to establish implied contract of employment. promissory estoppel-YES-genuine issue of material fact as to whether Blinn was promised terms of employment that could reasonably have been expected to induce Blinn to forgo job opp. in KS of which he had informed Beatrice. Employer need to intend to contractually modify an employee’s at-will employment in order for employee to reasonably and forseeably believe his or her terms of employment have been changed, and therefore, act in reliance on that belief.
CONTRACT FORMATION-The Agreement Process: Manifestation of Mutual Assent, the “Objective” Test-meeting of minds
18-manifestation of mutual assent to an xchange requires each party either make a promise or begin or render a performance. 22-mode of assent: offer and acceptance. manifestation of mutual assent may be made even though no offer nor acceptance can be identified and even though moment of formation cannot be determined
Embry v. Hargadine, McKittrick Dry Goods Co. (1907) (employment)
-whether D’s statement, “you’re all right” constitutes a contract of reemployment
-McKittrick may not have intended to employ Embry yet if what McKittrick said would have been taken by a reasonable man to be an employment, and Embry so understood it, it constituted a valid contract of employment for ensuing year. Holding: court erred in making formation of contract depend on a finding that both parties intended to make one
Lucy v. Zehmer (1954) (drinking, sale of land, specific performance)
-whether complainants established their right to specific performance. YES. person cannot set up that he was merely jesting when conduct and words warrant reasonable person to believe he intended real agreement. holding: specific performance. evidence indicates P took them seriously, and he was not unreasonable in doing so. However, if purchasing party is aware of actual intent of the other (even though the actor’s actions point to the opposite intent) the purchasing party cannot point to the other’s actions to trump this known intent.
Implied-in-Fact Agreement. Restatement 19-conduct as manifestation of assent. written or spoken words or by acts or by failure to act. conduct is not effective unless he intends to engage in conduct and has reason to know other party may infer