Select Page

Contracts
Temple University School of Law
Lipson, Jonathan C.

I. Enforcing Private Agreements
A. Introduction
i. 3 Dimensions of Law
a. Doctrine – rules and principles of law by which judges justify their decisions
b. Facts – actual application of doctrine by courts and its effects on contracting parties and public at large
c. Theory – rationales or reasons for legal doctrine
ii. Special К
a. Doctor and Patient can form a specific “special” contract (warranty of cure) for a particular results – Shaheen v. Knight, pg 13
b. Not covered under medical malpractice – McGee, pg. 68
iii. Public Policy – against PP to allow damages for birth of a healthy child, only when virtual unanimity – Shaheen v. Knight, pg 14
B. PP on Freedom of Contract
i. PP overrides the ability to make and uphold a К
a. Baby M, pg 39 – baby selling outrages SC judge, overrules parens patraie in favor or PP
(i) BIC – best interest is with the natural parents
ii. Intent Test – UPA in Cali. Law
iii. Calvert, pg 48 – PP not as strong, given rescission clause, surrogate approached 1st
C. Damages for Breach
i. Notes
a. Expectation – promisee in the position in which would have been had the promise been performed – fulfill expectations of the party who didn’t breach
b. Reliance – promisee back in the position in which would have been had the promise not been made – reimburse non-breacher for his ∆ in position
c. Restitution – promisor back in the position in which would have been had the promise not been made – take back benefits breacher received
d. Formula
(i) Basic Formula= PV(performance value) + OC(other costs) – AC(avoided costs) – AL(avoided losses)
ii. Monetary Remedies
a. Machine Analogy – π is owed the difference between the value of the machine if it corresponded to the warranty and its actual value – McGee, pg 65
b. “100% Perfect Hand” – McGee, pg 63 – be awarded the value of a perfect or good hand versus what he was left with
c. Restatement §347, Measure of Damages – pg 70
iii. Specific Performance Remedies
a. Replevin – person claims personal property in the possession of another but had been shown to include goods that were unique and could not be covered reasonably – used only when no other remedy is appropriate
b. UCC §2-716
(i) Inability to cover goods, where the goods are unique = SP or replevin
(ii) Has to show that cover was sought or was unattainable to achieve SP/replevin – Scholl, pg. 206
(iii)Unique/Other proper circumstances (wartime car shortage)– Sedmak, pg 208
II. Reaching an Agreement
A. General Notes – 2 basics elements: 1) mutual assent, 2) assent is the kind that law will enforce
B. Assent
i. Meeting of the minds – pg. 289
ii. OBJECTIVE vs. SUBJECTIVE
a. Intentions are immaterial until they OUTWARDLY MANIFEST themselves
(i) Conducts, acts, declarations – “Don’t let it worry you, go back to work” – Embry, pg. 290 – Restatement, pg. 296
b. Reasonable Person Test
(i) Type 1: What the judge or jury think the reasonable person would do? Has the chance to be arbitrary.
(ii) Type 2: Promisee- Embry- What a reasonable person in the promisee’s position would do?
(iii)Type 3: Promisor- McKittrick- What a reasonable person in the promisor’s position would think about the promise
c. Mental assent not requisite
d. Joking is not defense if not outward manifestation of joking are made – Lucy, pg. 296
iii. Restatement – Bargains and Conduct/Manifestation of Assent – pg. 304
C. Preliminary Negotiations
i. Restatement §24 – OFFER = “manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it”
ii. Advertisement vs. Offer – Nebraska Seed Co. pg. 305
a. Advertisement-
(i) General language, no “I offer” to sell language
(ii) Uncertainty – Restatement §33 – 1 or more material terms of К are left out (quantity, weight) – UCC §2-305 allows for open price terms
(i) No limitation on jets, К not allowed
(ii) Limitation of $1 fur coats (3, 1st come 1st serve) = К allowed (Lefkowitz)
(iii)Multiple Solicitations – sent to many people, if its upheld, then everyone he sent it to could sue – Pepsico, pg. 308 – if everyone sued for a jet, couldn’t fill the orders
b. Offer
(i) UCC – uncertainty doesn’t mean they didn’t intend to make a К and if there is a basis for remedy
(ii) More than just an invitation to trade
iii. Joke vs. True Offer (Pepsico, pg. 308)
a. Reasonable Person test – would a reasonable person take the offer seriously?
b. Context, subject matter = too good to be true
iv. Letters of Interest (Empro, pg. 319)
a. At most an agreement to agree, formalizes some information negotiated
b. Ne

ry to fill gaps but will NOT re-write К and will stop before that
c. Restatement §204 – when a term essential to the К is left out but the rest of the bargain is sufficiently defined, the court with supply that term – pg. 428
D. Illusory or Discretionary Terms of a Promise
i. Reasonable execution – NY Central Iron Works, pg. 429 – UCC §2-306, pg 432
a. Both parties bound to carry out in reasonable way in requirements К’s
(i) Reasonable amounts
(i) No speculation; allowed if jump in demand – NY Central Iron Works
ii. Foreseeable Risk
a. π and ∆ know of the risk when entering a requirement’s К and having relied on the other for years, won’t be allowed to back out
(i) Gulf Oil, pg 431 – Oil price sky-rocketing, still required ∆ to provide at contracted price
E. Good Faith Efforts
i. Implied – doesn’t have to specifically state – Lady Duff Gordon, pg. 434
a. “Best efforts” – obligations imported on π because they act on behalf of client
IV.Identifying Terms of a К
A. Adhesion Contracts
i. Forum Selection Clause
a. Must be made in “good faith”
(i) Carnival Cruises (pg. 445) – located in Florida, worldwide customers, not in bad faith to require arbitration there
b. Reasonableness (Unconsciousable) – Dissent in Carnival
(i) Party with little bargaining power (no refund if they don’t accept)
(ii) Couldn’t see the terms
B. Which terms were agreed to?
i. UCC §2-207 (pg. 467)
a. Extra terms can be included UNLESS they limit acceptance to the terms of the offer, MATERIALLY alter it, or notification of objection has already been given
b. Step Saver, pg. 457 – already agreed to terms on phone, then get package with extra terms (including no warranty clause) – did not agree to extra terms ~ extra terms not included
c. Only applies to sale of goods – Ardente (mirror image rule) because it was a house
V. Parol Evidence Rule