Russell Contracts II Spring 2017
Enforceable Promises (Rest. 2) A contract is a promise or a set of promises for the breach of which the law gives remedy, or the performance of which the law in some way recognizes as a duty
Hawkins v. McGee (hairy hand)
Doctor’s promise to restore hand to 100%, using verbage such as “guarantee”, combined with his repeated solicitation for surgery made promise enforceable.
Inducement-guarantee and the solicitation
Bayliner Marine Corp. v. Crow (boat case)
A statement purporting to be merely the seller’s opinion does not create a warranty.
Boat was loaded with equipment, thus prop matrix isn’t deemed binding promise because it wasn’t the same boat. For a promise to be enforceable, must be referenced clearly to the product bought.
Remedying Breach
Restatement § 1
“A contract is a promise or set of promises for the breach of which the law gives remedy, or the performance of which the law in some way recognizes as a duty.”
Types of remedies Rest. 344
Expectancy-Plaintiff had a promise to have something, court fulfills it. Remedy is amount of $$ necessary to make promise as well off as if promise had been kept.
Restitution-Plaintiff has lost something, defendant has it. Not based on plaintiff loss but defendant’s gain.
Reliance-Plaintiff has changed his position to his detriment by relying on the promise. Protect the promisee’s interest in being reimbursed for loss caused by reliance.
United States Naval v. Charter Comm, Inc. (book sale)
Default remedy for breach of contract is to revert injured party back to where they’d be if contract had not been made.
Other company’s profits weren’t good measure for expectancy
Sullivan v. O’Connor (plastic surgery)
Pain, suffering, mental distresses are compensable for breach of contract under expectancy or reliance.
Plaintiff has burden of proof for what their expectancy is
An agreement between doctor and patient which calls for specified result can be enforced.
Paid to put her back where she’d be if contract was never made
Restitution is what she paid doctor
Reliance is loss in appearance, doc fees, hospital fees, Pain and suffering
Expectancy is expected appearance, 1 count of pain and suffering, loss of appearance, 1 count of hospital fee
Punitive damages Rest 355
In general, punitive damages not awarded in contract dispute.
White v. Benkowski (water well)
Defendants shutting off water to punish plaintiff’s overuse
In contract actions, damages recoverable are limited to compensation for pecuniary loss sustained by the breach.
Policy considerations: Efficient Breach theory, and court prefers arbitration
Consideration (basis for enforcement)
Bargain for exchange.
Must be reciprocal relation of inducement.
What does P1 want? What does P1 give? What does P2 want? What do they give?
Restatement §71
(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promise in exchange for that promise
(3) The performance may consist of
(a) an act other than a promise, or
(b) a forbearance, or
(c) the creation, modification, or destruction of a legal relation
iii. Bargained for if sought by promisor in exchange for promise/performance
iv. A peppercorn will do
Hamer v. Sidway (uncle promise to nephew)
Uncle promises money to nephew if he doesn’t party until he’s 21 years old. Nephew does it, uncle dies, nephew sues for the money
Forbearance of a legal right is sufficient consideration
Benefit to promisor=detriment to promise (Benefit-Detriment theory)
Address both bargain for exchange theory and benefit-detriment theory
Gratuitous promise alone ≠ consideration
Dyer v. National By-Products, Inc. (invalid legal claim)
Plaintiff loses foot, on full-paid leave, was promised lifetime employment if he didn’t sue the company, was then fired.
Compromise of a doubtful right asserted in good faith is sufficient consideration for a promise.
Restatement § 74 Settlement of Claims
Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless (places burden of proof on plaintiff)
The claim or defense is in fact doubtful because of uncertainty as the facts of the law; or
The forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid (must be in good faith)
If P knows it’s not a good claim, won’t be enforced
Feinberg v. Pfeiffer Co. (promised retirement plan)
Plaintiff, employee, was promised money every month after she retired, she retires year and a half later, pres of company dies and company stops giving checks
Past consideration cannot be bargained for, thus ≠ consideration
Restatement § 75
Consideration for a promise is
An act other than a promise; or
A forbearance; or
The creation, modification of a legal relation; or
A return promise
Bargained for and given in exchange for the promise
Mills v. Wyman (sick on a boat)
Plaintiff takes care of d’s son on boat trip, incurring expenses en route. D promised to pay expenses after he hears about it. D never pays, P sues
Moral obligation is not sufficient consideration, also past consideration is not consideration
For moral obligation to be enforceable, have to be some sort of restitution involved
Restatement § 86
A promise made in recognition of a ‘moral obligation’ arising out of a benefit received is not enforceable. A benefit conferred before a promise is made can hardly be said to have been given in exchange for the promise.
Webb v. McGowin (life-saving measures)
P dropping pine blocks, falls with one to avoid hitting defendant, saving his life. P seriously injured, D agrees to care and maintain him for the rest of his life by paying him every week. D dies, P sues for money
A moral obligation is sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit
Life has monetary value
Restatement § 86
A promise made in recognition of a benefit pre
Agreement predicated on requirement that P would obtain their total requirements from D with an option for D to price-match should P find a cheaper seller. P had two orders not filled and sued for breach of contract. D argues contract was illusory and lacked mutuality of obligation, saying P could order as much as they wanted from other people
Supply agreement bound P to order from D in GOOD FAITH, duty of good faith implied. Price protection clause didn’t make contract illusory because gave right of first refusal to D to retain their exclusive right. AKA if D price-matched, P was required to buy from them, MUTUALITY OF OBLIGATION.
UCC § 2-306
A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded
A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.
(Explained) It’s an obligation to have requirements in good faith, can’t just nullify agreement because they no longer want to buy anything
When you enter a requirements contract, you enter the risk that prices will go down
Wood v. Lucy, Lady Duff-Gordon (fashion designer)
D enters agreement with P giving him exclusive right to place her endorsements on designs and to sell or license her designs as well. She placed her endorsements on designs without his knowledge and withheld profits.
Promise to perform was implied in the nature of the agreement. He wouldn’t have entered into an agreement at all if he didn’t actually want to perform.
Reliance (substitute for consideration)
Reliance-Plaintiff has changed his position to his detriment by relying on the promise. Protect the promisee’s interest in being reimbursed for loss caused by reliance.
When contract fails for consideration, move to reliance
(1) promise (2) promisor expects inducement (3) Does induce (4) Binding if injustice
We are trying prohibit injustice, Fix the injustice
Promissory estoppel: if K fulfills elements of reliance, you can’t say there’s no consideration so K can’t be enforced
