Contract- a promise that the law will enforce
· Agreement between 2 or more parties containing at least one promise and enforceable by law
· In most cases oral agreement is sufficient
· Usually governed by state law
· Parties voluntarily making these obligations that courts can then come into play
· An exchange relationship
· Created by an agreement
· Recognized as enforceable by law
· Setting rules voluntarily when we enter in to a contract- parties are creating their own legal rules
· Consensual obligation- the parties say this is what we want to do
· Some obligations the law can’t enforce
· Sources:
o Case law (common law), state statutes, treaty (federal law)
· Stems from “Common Law”
o Places great reliance on the role of the courts as participants in creating the law
o Used to distinguish judge-made laws from legislation and to describe an approach to legal analysis
· Uses Precedent
o Findings of the a court is binding in that jurisdiction and must be followed in subsequent cases with similar facts
o Only the rule or holding of the case is binding
· The Restatement
o Secondary authority
o Used as background
o Very influential- can be used as persuasive authority
o Secondary source
o can be made law when a court uses it in their opinion
· Theoretical Perspectives
o Classical period- contract was seen as an exercise of free will by autonomous parties acting on their right to order their private relationships by agreements (contracts)
§ Built on the free market belief
§ Sometimes known as formalists
§ Find and apply the correct rule
o Legal realism- much broader and more fluid approach
§ Took into account societal context
§ Mainstream of contract jurisprudence
Actual authority vs. apparent authority- when talking about agency
Cohen v. Cowles Media Co.
Issue: whether the law should superimpose a legal obligation on a moral and ethical obligation. Whether a newspaper’s breach of its reporter’s promise of anonymity to a news source is legally enforceable. Cohen wanted to get reimbursed for losing his job and for misrepresentation.
Facts: Cohen sued Cowles Media Co. because his promise of anonymity was broken. He came to the reporter who promised his anonymity in exchange for information. The editor of the newspaper than made the decision to publish his name anyway after the story was written. Information was on Johnson (Lt. Gov. candidate)- it was public records. Cohen gets fired when his name was released in the article and the newspaper goes after him for being sleazy.
Holding: court reversed the court of appeals decision which allowed the breach of contract claim.
Rule: contract- offer, acceptance and consideration. Has all three of these, but was this promise a contract?
Reasoning: Promise is not enforceable as a contract. The law cannot impose a legal obligation on a promise made at a media newsgathering. Moral obligation alone will not support a contract. The practice of keeping sources confidential is a moral, professional obligation and not a legal obligation.
Newspaper said it was promise made by a reporter and reporter’s promises can be overturned by the editor- editor believed that Cohen’s name should be published
Court felt it wasn’t a contract because to impose contract theory on this type of promise puts unwarranted legal rigidity on the ethical relationship between reporters and sources
Trial court gave $200,000 to plaintiff, appellate court reversed this
A lot of ambiguity- final word was with the Minnesota Supreme Court
Newspaper said contract was uncertain and clandestine- Court says the parties intent was different- they didn’t intend to make a contract
All corporations can only act through agents
Did Cohen have a reasonable belief that the reporter could guarantee anonymity
Agency issue wasn’t raised by attorneys so this court did not deal with it
4 sources of law for this case, but none of the authorities precisely match this issue- so court has to look beyond these rules and make its own policy- looking at the theory of contract law; what is the proper role of the courts
Contract Remedies
can make a contract enforceable
amount of compensation is determined by how much was lost when other party didn’t hold up their end of the contract
Restatement 2nd Section 344
Expectation interest – what party would have received if contract not breached; usually most common
Restitution – get back what you put into deal to other party (wine only)
Reliance – damages because of expected deal as if contract was never made – I went out and bought something in anticipation of contract
Operate on a compensation principle
Do not aim to deter, punish or exact revenge
Usually monetary compensation- get money to satisfy compensation
The deal had value and if I don’t carry out the deal it has lost that value so money satisfies this compensation
Injunction for specific performance- must carry out that specific thing that was in the contract
Can be an injunction
Purpose of: (Jacques v. Gourmand)- French chef contracts with Gouramnd p. 639
Expectation interest – what party would have received if contract not breached; usually most generous; the profit Jacques would have made on top of all of the other losses (start with the $1000)
Restitution – get back what you put into deal to other party (wine only- because that is all that has been conferred by the breaching party); usually the least generous
Reliance – damages because expected deal – I went out and bought something in anticipation of contract; all the expenditures and work Jacques put into it
Keltner v. Washington County,Oregon Supreme Court.
Upheld ruling of trial court and appellate court; Washington County wins.
Issue: whether the court should reconsider the general rule of law in Oregon that a plaintiff in an action for breach of contract may not recover damages for purely mental distress. (mental distress not connected with bodily injury) Whether Supreme Court was going to
g fired.
Yes, because the breach of his confidentiality would have likely resulted in a serious emotional disturbance- lost his job and vilified in papers
Yes, because he was fired and publicly ridiculed even though his anonymity was promised.
II. Chapter 2 Sales UCC
History
· early 20th century, sales of goods governed by contract – growing sentiment to unify state commercial law – lack of such created confusion and uncertainty in interstate transactions
· state legislatures sponsored organization: National Conference of Commissioners on Uniform State Laws (NCCUSL).
· Task is to form model statutes and recommend them to state legislatures for adoption
· ALI is involved with this also
· NCCUSL drafted a model sales law (based on English statute) – completed in 1906 and enacted in many states called: Uniform Sales Act major revision in 1950 and became Uniform Commercial Code
· enacted in all states except LA law of obligations (adopted parts of UCC, but not article 2) but not all states use precisely the recommended form
· strong expression of legal realism
· it is updated frequently
Article 1: Definitions and general principles; general purposes
Article 2: Governs sales of goods
· Article 2 is the law (when a state adopts it into their statutes; not a federal law). It binds courts, which must apply it where a sale of goods is involved
· Although UCC is law, does not mean that common law is irrelevant
· many rules of UCC are similar to common law
· one of the general provisions of Article 1 state that common law principles supplement Code provisions where it specifically displaces common law
· UCC itself is a model until adopted by state legislature – then becomes statutes
· definition 2-102- article 2 applies to the transactions of “goods” means all things that are movable other than money (not property)
· sale – contract and agreement are sales passing title from seller to the buyer for a price pg 33
· UCC 1-102. Purposes; Rules of Construction; Variation by Agreement
This act shale be liberally construed and applied to promote its underlying purpose
underlying purposes and policies of this act are:
to simplify, clarify and modernize the law governing commercial transactions
to permit the continued expansion of commercial practices through custom, usage and agreement of parties
to make uniform the law among the various jurisdictions
