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Temple University School of Law
Smyth, Sophie E.

Contracts outline

I. Enforcing Private Agreements
Chapter I.—Introduction to Contract Law

v Shaheen v. Knight—(Ineffective Vasectomy) Knight wanted Shaheen to pay for the costs of raising his unwanted child.

Holding: The court refused to award damages because doing so would violate public policy
· “only when a given policy is so obviously for or against the public health, safety, morals or welfare that there is a virtual unanimity of opinion in regard to it, that a court may constitute itself the voice of the community in declaring such policy void. 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 just and right and in the interest of the public weal.”
Restatment sec. 1 –Contract Defined
Restatement sec. 2 – Promise; Promisor; Promisee; Beneficiary
Restatement sec. 3- Agreement Defined; Bargain Defined

v Baby M—(Traditional Surrogacy Contestation. Should public policy ever override consent?)

Holding: The K is valid and enforceable
· If not for the K Whitehead would not have had the baby
· Surrogate is not forced into relationship because she is not pregnant yet, not baby buying money for surrogates willingness, laws of adoption do not apply to surrogacy Ks in NJ surrogacy was unknown when laws were created, supports traditional notions of family by giving child to childless couple, everyone wants to propagate the species even the poor, parties have equal bargaining power
· Baby M Supreme Court of NJ
· Holding: Invalidates the surrogacy K because it conflicts with the law and public policy of the state
o Reasoning: contrary to state statutes on adoption

v Johnson v. Calvert –(Gestational surrogacy contested )

Holding: Contract is valid.Where there are competing presumptions of parentage the courts must consider the parties intentions. The woman who intended to procreate, who intended to bring about birth of a child that she intended to raise as her own is the natural mother under CA law.
· Parentage should be determined by best interests of the child not parents intentions
Restatement sec. 178
Restatement sec. 179

Chapter II. – Damages for Breach of Contract

v Remedy sought will reveal info about formation of K
v Three damage interests (Courts usually award a compensation)
o Expectation: the benefit of the bargain
o Reliance: put promissee back in position in which she would have been in had the promise been made (deprive the promissee)
o Restitution: put the promisor back in the position he would have been in had the promise not been made (deprive the promisor)

v Hawkins v. McGee (The Hairy Hand)

Facts: D guaranteed P a perfect hand
Holding: trial jury told to consider pain and suffering and positive ill effects of the operation on hand. Supreme Court says difference between value of a perfect hand (such as one promised) and the value of the hand in its present condition
Restatement sec. 347


v Nurse v. Barns

Holding: Jury can award damages for money spent in reliance

v Hadley v. Baxendale (Damaged shaft, mill ships for repair and is delayed)

Holding: The special circumstances of plaintiffs needing the mill was not communicated to the defendants so plaintiffs cannot recover for loss profits because that was not a reasonable and natural consequence of their agreement. Not fairly and reasonable contemplated by parties when they made this K. arising naturally or within contemplation.

v Martinez

ntingencies and too dependent on the fluctuations of the market. Distinguished from profits that can be recovered because they are definitely ascertained by some standard furnished by the k itself or by the law.

Restatement §§ 346, 349, 352

v Anglia Television LTD. v. Reed (all arrangements made for film and then get D to agree to play lead, Reed repudiates/ can P recover expenses incurred before K was concluded as wasted expenditure)

Holding: if party cannot prove what profits would have been he can claim in the alternative the expenditure which has been thrown away, that is, wasted, by reason of the breach. If claims wasted expenditure not limited to the expenditure incurred after the k was concluded. He can claim also the expenditure incurred before provided such would reasonably be in the contemplation of the parties as likely to be wasted if the k was broken. (Not analogous to holding in Dempsey)

v Mistletoe Express Service v. Locke (after P repudiated D closed her business and suffered financial hardship. P says D can only be put in position she would have been in had k been performed and she was losing money so jury award would have put her in better position)

Holding: Locke can recover reliance expenses. In order for P to prove D benefited from repudiation must show figures calculating the loss. The breaching party has the burden of proving that loss.

v Von Mises (statement on value)