Sylvester Contracts Spring 2014
Contract law is state law. The law of the state where the contract is made.
o Common law
§ That is distilled in the Restatement (second) of Contracts
§ Real Estate
§ P. 16 (supplement)
UCC, Article 2 (Bayliner)
§ Harmonizes the law of the 50 states about the law of
· Goods – Section 2-105
· Everything else is governed in common law
· P. 293 (supplement)
I: Was the promise enforceable?
R: Generally, promises by doctors are typically not enforceable at a contract level.
A: Hawkins v. McGee – This case was an exception. A doctor’s promise will be enforced when the doctor promises as an inducement and when solicitation induces consent.
R: Not all promises are enforceable.
A: Bayliner Marine Corp v. Crow – Prop matrix was referring to a boat with different characteristics and the sales brochure was merely a commendation and did not prescribe a particular characteristic of the boat.
I: Are punitive damages an option?/ What is the goal of enforcement of K?
R: R2D §355. PUNITIVE DAMAGES – Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.
R: We are not here to punish the promisor, we are here to relieve the promisee. Contracts are here to facilitate commerce. Goal of Enforcement is to compensate the injured party for breach of K and make them whole
A: U.S. Naval Institute v. Charter Communications, Inc. – Hunt for Red October; sent out paperback too early.
· punitive damages are not compensated for breach of K
· The loss caused by the breach is to be calculated by how many less hardcovers were sold, not by totaling the profit made by paperback sales.
· Not all of those who purchased paperbacks would have purchased hardcovers, they would have waited until October.
· Reversed the calculation of Berkeley’s profits.
A: White v. Benkowski – P sued D for breach of contract and punitive damages for shut off the well periodically.
· You do not get punitive damages
· It doesn’t matter is they breached on purpose
· Intent, motive, etc. doesn’t matter
I: How are damages calculated?
· Expectancy: She deserves to get the promised nose. She bargained for the pain and suffering of the first two surgeries, since she expected two surgeries. She did not expect or bargain for a third surgery. She doesn’t get her out of pocket expenses because she expected to pay for (the first two) surgeries. EXPECTANCY PREFERRED REMEDY IN CONTRACT LAW. We want to encourage deals.
· Reliance: Back to the status quo; from the worsened result to the status quo. Putting her back where she was before she met the doctor. She would get the out of pocket expenses back too; she had it before she met the doctor. Not part of what was expected, this goes the other way; toward the status quo, not toward the expectation.
· Restitution: Benefit conferred on the other party. Defendant gives back what was received. Defendant gets no benefit from what happened. So, only the portion of the out of pocket expenses; only what the doctor received, only what is in his pocket, what he has retained (not what he paid as expenses e.g. to the hospital, etc.
A: Sullivan v. O’Connor – NOTE: This opinion was bad because it used reliance and expectancy. Restitution seems to meager. Expectancy may be excessive and it is difficult for the fact finder to determine what might have resulted.
I: Was there Consideration? (A bargained for exchange?)
R: To constitute consideration, a performance or a return promise must be bargained for. A performance may consist of a forbearance.
A: Hamer v Sidway – Forbearance of a legal right is valid consideration. Uncle promises to pay if nephew will stop drinking, gambling, smoking, etc
R: There is no such thing as past consideration.
A: Feinberg v. Pfeiffer co.- Retirement gift for years of service. She was not required to stay at work.
A: Webb v McGowin – Webb sacrifices himself by falling with a wooden block from the up
· Continued job performance is consideration.
Promise as Consideration
o Bilateral means unperformed promises on both sides.
o Unilateral after one side has performed the promise.
I: Was the promise consideration (or illusory)?
R: If there is a way out of the promise (where the performance or withdrawal is optional) at his own unrestricted pleasure it is an illusory promise and not consideration.
A: Strong v Sheffield – Niece signed so that the uncle would hold off on suing her husband. But similar to at-will employment, the letter only stated that he would promise to hold the note until he collected the money. It would have been different if he said he would wait a specific period of time. She got nothing in exchange and he could collect at anytime.
R: Duty of Good faith and fair dealing in its performance and it enforcement. R2d 205.
A: Mattei v Hooper – Written agreement on a deposit receipt. P paid $1000, and was given 120 days to examine the title and consummate the purchase and secure leases for the shopping center buildings. Before the 120 days, D changed mind and would not tender the lease.
· You have to exercise good faith and find satisfactory leases, you cannot look for un-satisfactory leases or not look at all.
· You have no free way out.
· You bound by the requirement to be honest.
o Satisfaction Clauses:
§ Objective or commercial clauses are based on a reasonable person standard. Articulate some reasons.
§ Subjective (individual whim, taste and fancy). Personal preferences. Things that part of the point is its up to personal distinctive taste. Standard – good faith standard.
· The court says its subjective, but its not. Its very situation specific. You need an anchor tenant, its based on demographics. You would have to have experts on the stand providing data.