Prof. Michael Fischl (Fall 2016)
Casebook, Knapp, Crystal & Prince, Problems in Contract Law: Cases and Materials (Wolters Kluwer 8th ed. 2016)
I. AN INTRODUCTION TO CONTRACTS AND LEGAL REASONING
A. An Intro to the Study of Contract Law (Casebook pgs. 1-17)
Definition of Contract – agreement between two or more persons as to something that is to be done in the future by one or both.
For Lawyers, contract usually refers to an agreement that has legal effect
It creates obligations for which some sort of legal enforcement will be available if performance is not forthcoming as promised
Three elements in a transaction, each of which might be called a “contract”.
the agreement in fact between the parties
the agreement as written (which may or may not correspond accurately to the agreement in fact)
the set of rights and duties created by (1) and (2).
Core Task of Contract Law – Enforcement of obligations voluntarily assumed by private agreement. Contract Law is mainly concerned with identifying and enforcing those agreements that do have legal effect.
Contract Law has Several Principle Divisions
Formation – Begins with an agreement something will be done by one or more of them in the future; Examples: 1. offers/counter-offer back and forth until they reach a final agreement. 2. One person prepares the agreement and invites the other party to express his or her assent to be bound. 3. A promisor makes a promise to another person that can be legally enforceable.
Interpretation and Implication – Knowing what obligations the parties have undertaken by their words but also their conduct. The court might have to interpret both words and actions, as they may be unclear and to consider whether there are additional rights/duties the law might permit or require the court to interpolate into that agreement.
Defenses to Enforcement – Two main categories for avoiding enforcement
some misconduct by one party in the making of the agreement that allows the other party to “avoid the contract.
Some aspect of the agreement violates a public policy strong enough to justify withholding enforcement
Nonperformance and its Consequences – Sometimes the agreement provides that the failure of the condition to occur may simply mean performance will not take place. If there is an unexcused failure to perform, this is typically regarded as a “breach” and the consequences vary. If a court concludes wrongful nonperformance has taken place, it faces the question of the appropriate remedy to compensate the injured party or protect it from the consequences of the other parties breach.
Rights and Duties of Third Parties – Persons other than the original parties may acquire rights and/or become subject to duties under that contract. I.e. whether the original parties intended to confer enforceable rights of some sort on one or more third parties, to make other persons beneficiaries of that contract. Intent may be clear from the parties’ agrt but may involve a difficult judgment call for the court. Another example is the power to transfer their rights under a contract (“assign” rights) or arrange for someone else to perform their obligations (“delegate” performance of the contractual dutues). Rights can also be sold as “collateral” for a loan.
Sources of Contract Law (Authority)
1677 English Parliament enacted “Statute of Frauds”, adopted in virtually every American State. Statute of Frauds – Requires certain types of contracts to be evidenced by a signed writing to be enforceable in court. Predominantly judge-made rather than statutory.
Uniform Commercial Code (1940s)
Consumer Protection Statutes (1960s) – modified contract principles
The Restatements – Formed by the American Law Institute in response to growing uncertainty and lack of uniformity in laws. Black-letter statements of the “general rule” (or, where the cases appeared to conflict, the “better rule” – supported by commentary, illustrations).
The Perspective of Contract History
Willistonian Period – Contract law viewed as universal rules distilled from decided cases
“Formalist” approach – Cases decided by virtually mechanical application of rules to reach a doctrinally correct result. Judges basically not allowed to use moral or political values when deciding.
“Sociological Jurisprudence” – (Early 20th century, Dean Roscoe Pound of HLS) Rules of law would evaluated on the basis of the social interests they served.
Legal Realists – 1920’s and 30’s – Called for “realistic” jurisprudence. Court decisions were end results of decision-making process where finding of facts and application of rules were affected by personalities, points of view, interests and goals of the decision-makers. Legal rules should be the result of a conscious application of all relevant knowledge of human affairs. Legal realists were critical of the “black-letter” approach to the Restatments.
Karl Llewellen – Realist and principal drafter of UCC – Judges should reach decisions only after having immersed themselves in the factual details of the disputes. Out of this would come a situation sense leading to the right result. One can see his influence of UCC with standards such as good faith and unconscionability.
Deconstruction and Reconstruction – Attempt to show failure of old systems and find new basis to legitimize legal principles regarding contract disputes.
Economic analysis to legal issues –School of thought, efficiency increased when cost of transactions in society is reduced.
Later theories (p. 14-15):
Chicago School Theorists
Critical Legal Studies
Return of Formalism
John Murry-Return to Practical Reasoning of Corbin and Llewellyn
New Issues (p. 15)
Academic attention on “contracts of adhesion” and “boilerplate contracting”
B. Introduction to the Course (Including Hurley v. Eddingfield and the questions that follow)
Remedies for Breach of Contract
Specified relief – make the party do something
Hurley v. Eddingfield
Facts: Dispute between the administrator of the deceased and the doctor. Dangerously ill, needed immediate attention, sent for his own doctor, the family physician; when the messenger went to the doctor, the doctor refused; he was offered some money for the service, no other physician available. So as a result of not getting treated, patient died. Administrator sued doctor for $10,000 for wrongful death. Case was thrown out on demurrer and patient lost.
Issue: Whether the doctor’s refusal to enter the contract of employment with the patient was a wrongful act? Holding: No
Reasoning: In its
deformed. The patient claimed this caused her pain in body and mind and subjected her to other damage and expense. Initially her nose was straight but long and prominent. The defendant did two operations to reduce the prominence and somewhat shorten it. But after the third operation, the patient’s appearance worsened. She had a concave line that became bulbous and viewed frontally, the nose from the bridge to midpoint was flattened and broadened. The two sides of the tip lost symmetry. There could be no corrective surgery to fix the problem.
Issue: Can a patient recover damages for pain and suffering and emotional distress from a breach of contract involving a botched nose job?
Holding: Yes, can get damages for breach of contract. No malpractice was found.
Rule: A patient can win expectancy or reliance damages if his/her patient and suffering and emotional distress flow naturally from a breach of contract.
Class Notes Sept. 13, 2016
Rule – Appropriate damages is expectation in breach of contract (Hawkins rule). Put the victim where they would have been if the contract would have been performed.
Aggrieved party may elect to seek restitution instead (noted by Sullivan). People go for restitution damages if they are greater than expectation damages.
Reliance is a relatively rare measure (FN 4 in Sullivan; when it’s hard to measure expectations).
Specific Performance – Generally an alternative to money damages, also known as injunctive relief (the court’s order to stop specific act or behavior). Judges usually decide injunctive relief, juries decide damages.
If person refuses to pay, sheriff can take the property and sell it to recover the damages.
Specific Performance – if you don’t do what you are told, you are in contempt and can get put in jail. Tradition of thinking specific performance as intrusive and problematic, seeming like involuntary servitude. It was disfavored in past, but more common now.
Specific Performance is like expectation damages. Expectation damages can force SP.
Pros of Specific Performance
It’s what you promised. Avoids problem of mismatch between dollar signs and life
Cons of Specific Performance
Harder to hold someone accountable, i.e. Copylease case; like a shotgun marriage.
Puts court in supervisory role, making court insure the work gets done.
Black Letter Rule – Specific performance available as remedy only when money damages are inadequate; this is the threshold showing.
2 situations that have historically been treated as automatic
Sale of residential property
Heirlooms and rare items
Today also they remain straightforward cases.