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Contracts
Temple University School of Law
Smyth, Sophie E.

Fall 2011 Smyth Contracts
I.                  OVERVIEW
a.       Nature and History of Contract
i.      Shaheen v. Knight
1.      Facts: P contracted with D, a physician, to perform a vasectomy on him, but P’s wife became pregnant and gave birth to their fifth child after the sterilization was performed.
2.      Rule: A doctor and his patient can bargain and contract for a particular result, which, if not achieved, can be the basis for an action for breach of contract.
3.      Public Policy: There must be a positive, well-defined, universal public sentiment, deeply integrated in the customs and beliefs of the people and in their conviction of what is just and right and in the interests of the public weal.
b.      Freedom of Contract & Public Policy
i.      In the Matter of Baby M, I
1.      Facts: D, a surrogate mother, tried to maintain physical custody of her child after having agreed to give the baby to the Ps, biological father and wife.
2.      Rule: A surrogacy contract may be renounced and terminated by the surrogate up until the time of conception.
ii.      In the Matter of Baby M, II
1.      Facts: D contended that a surrogacy contract between her and Ps, under which she agreed to be artificially inseminated by the husband, carry the P’s baby to term, and thereafter relinquish her parental rights, was illegal and unenforceable
2.      Rule: A surrogacy contract is illegal and invalid as contrary to both statutory law and public policy.
3.      Public Policy: A court may declare a contract invalid as contrary to public policy if the primary goals of the agreement are contrary to the values and traditions of American culture. Where a contract is contrary to public policy, the court has the option of voiding the entire agreement or simply striking the violative provisions, but if a material provision is taken out, the entire contract may be voided.
iii.      Johnson v. Calvert
1.      Facts: The sperm and egg of the Ps was implanted into D, who carried the baby to term and then refused to give the child up.
2.      Rule: The woman who intended to bring about the birth of a child and intended to raise the child is the natural mother.

II.               REMEDIES
a.       Three Damage Interests
i.      Overview
1.      Expectancy Interest (Restatement §347)
a.       Standard measure for damages
b.      Tries to put you in the position you would have been in if the contract had been performed.
c.       Monetizes the value of the performed contract.
2.      Reliance Interest
a.       Puts you in a position you would have been in if the contract had never been entered into.
b.      You can recover expenses that you incurred based on your reliance on the contract.
3.      Restitution Interest
a.       Requires the breaching party to disgorge ill-gotten gains from innocent party.
ii.      Hawkins v. McGee
1.      Facts: P sued D for not making his hand perfect after D operated on it.
2.      Rule: The true measure of a buyer’s damages is the difference between the value of the goods as they would have been if the warranty as to the quality had  been true and the actual value at the time of sale, including any incidental consequences within the contemplation of the parties when they made their contract.
iii.      Nurse v. Barnes
1.      Facts: Special damages were given for the loss of stock laid in for the use of iron mills.
2.      Rule: Special damages may be awarded for breach of contract.
iv.      Sullivan v. O’Connor
1.      Facts: D, a plastic surgeon, promised to enhance P’s beauty by performing an operation on her nose.
2.      Rules:
a.       Where an offer promises to enhance physical beauty, breach of the contract would permit recovery for pain and suffering, mental distress, and a worsening of the condition.
b.      A reliance measure should be applied to such actions under which the patient plaintiff should recover “any expenditures made by him and for other detriment following proximately and foreseeably upon the defendant’s failure to carry out his promise.

reason to foresee as a probable result of the breach when the contract was made.
b.      (2) Loss may be foreseeable as a probable result of a breach because it follows from the breach
i.      (a) in the ordinary course of events, or
ii.      (b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.
c.       (3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.
ii.      Certainty
1.      Chicago Coliseum v. Dempsey
a.       Facts: D, who contracted with P to fight Wills in an upcoming bout, later repudiated the contract whereupon P brought suit for damages.
b.      Rule:
i.      An aggrieved party may not recover lost profits unless such damages are definite and certain.
ii.      Costs incurred in preparing a contract are not recoverable.
iii.      Attorney fees and court costs are not recoverable unless provided for in the contract