1. Public Policy
a. Shaheen v. Knight
i. Plaintiff contracted with defendant for vasectomy; brought suit after his wife had an additional child.
ii. A doctor and a patient can bargain and contract for a particular result which can be the basis for a suit if it is not achieved. This contract is not against public policy; however, to allow damages for the birth of a normal child is. Dismissed.
b. Restatement (Second) § 1: Contract Defined
i. A contract is a promise or a set of promises for the breach of which the law gives a remedy
c. Restatement (Second) § 2: Promise; Promisor; Promisee; Beneficiary
i. A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.
ii. The person manifesting the intention is the promisor.
iii. The person to whom the manifestation is addressed is the promisee.
iv. Where performance will benefit a person other than the promisee, that person is a beneficiary.
d. Restatement (Second) § 3: Agreement Defined; Bargain Defined
i. An agreement is a manifestation of mutual assent on the part of two or more persons. A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.
e. In the Matter of Baby “M” #1
i. Plaintiffs entered into a surrogacy contract with defendant. After giving birth, defendant kept the child.
ii. A surrogacy contract may be renounced and terminated by the surrogate up until the time of conception. After conception the terms of the agreement are fixed. Although adoption laws in NJ forbid the purchasing of a child, the father pays the surrogate to carry the child; thus the adoption laws do not apply. Defendants are compelled to give the child to the plaintiffs and terminate parental rights.
f. In the Matter of Baby “M” #2
i. A surrogacy contract is illegal and invalid as contrary to both statutory law and public policy.
g. Restatement (Second) § 178: When a term is unenforceable b/c Public Policy
i. If legislation provides that it is unenforceable or the interest in its enforcement is outweighed by a public policy against enforcement
ii. In weighing interests in enforcement, take account of:
1. justified expectations
2. forfeiture that would result if enforcement would be denied
3. special public interest in the enforcement of the particular term
iii. In weighing public policy, account is taken of:
1. Strength of that policy as manifested by legislation or judicial decisions
2. likelihood that a refusal to enforce the term will further that policy
3. seriousness of any misconduct involved and extent to which it was deliberate
4. directness of the connection between that misconduct and the term
h. Restatement (Second) § 179: Bases of Public Policies Against Enforcement
i. Public policy may be derived from
1. legislation relevant to such a policy
2. the need to protect some aspect of the public welfare
a. restraint of trade (Restatement (Second) § 186-88)
b. impairment of family relations (189-191)
c. interference with protected interests (192-196, 356)
2. REMEDIES: DAMAGES
a. Three Protected Interests
i. Expectation Interest
1. “Benefit of the bargain:” put the promisee in the position in which they would have been had the promise been performed.
ii. Reliance Interest
1. Put the promisee back in the position in which they would have been had the promise never been made.
iii. Restitution Interest
1. Put the promisor back in the position in which they would have been had the promise not been made.
iv. Hawkins v. McGee
1. “Hairy hand case;” plaintiff was guaranteed a “100% perfect hand.” Sued for breach of contract when he started growing hair on his palm.
2. The true measure of damage is the difference between the value of the goods as they would have been if the warranty as to 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. In this case, damages are the difference between the value to plaintiff of a perfect hand and the value of his hand in its present condition, including any incidental damages. This does not include sufferin
e until the fight was over. Defendant repudiated and instead fought another person. Plaintiffs got a restraining order and then filed suit against defendant for damages.
2. An aggrieved party may recover lost profits for breach of an executory contract if such damages are definite and certain and not too speculative. An injured party may not recover for costs incurred in preparing the contract; negotiation costs which each party bears do not naturally flow from a subsequent breach. Costs incurred that naturally flow from the breach are recoverable.
ii. Restatement (Second) § 346: Availability of Damages
1. The injured party has a right to damages for any breach by a party against whom the contract is enforceable unless the claim for damages has been suspended or discharged.
2. If the breach caused no loss or if the amount of the loss is not proved under the rules stated in this Chapter, a small sum fixed without regard to the amount of loss will be awarded as nominal damages.
iii. Restatement (Second) § 349: Damages Based on Reliance Interest
1. As an alternative to the measure of damages above, the injured party has a right to damages based on his reliance interest, including expenditures made in preparation of performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party avoided.
iv. Restatement (Second) § 352: Uncertainty as a Limitation on Damages
1. Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.
v. Anglia Television Ltd. v. Reed
1. Defendant contracted with plaintiff to perform in a play. Defendant then repudiate. Plaintiff sued for expenditures wasted in paying the director, designers and managers.
In a breach of contract action, wasted expenditures can be recovered when it is wasted by reason of the defendant’s breach of contract. A plaintiff can sue for loss of profits or for wasted expenditures but