Select Page

Contracts
University of Florida School of Law
Davis, Jeffrey

CONTRACTS

DAVIS, FALL 2015

FORMATION

CH. 1 – BASES FOR ENFORCING PROMISES

1.1 – ENFORCEABLE PROMISES

· CONTRACT = a legally enforceable promise (Restatement § 1)

· PROMISE = an undertaking to act or refrain from acting in a specified way at a future time (Restatement § 2)

o An offer is not a promise until it is accepted!

· An ENFORCEABLE CONTRACT requires:

o Agreement

o Basis for enforcing the promise

o Capacity to contract

· Contract for SERVICES à RESTATEMENT (COMMON LAW)

· Contract for GOODS à UCC ARTICLE 2

· UCC § 2-105 – DEFINITION OF GOODS

o A moveable thing

· UCC § 2-104 – DEFINITION OF MERCHANT

o A person who deals in good of the kind

o Or otherwise by his occupation holds himself out as having knowledge or skills peculiar to the practices or goods involved in the transaction

· Hawkins v. McGee (hairy hand)

o OBJECTIVE MANIFESTATION is what matters – promisee must REASONABLY BELIEVE from the promisor’s words and actions that a promise has been made

o SUBJECTIVE INTENT (whether or not the promisor intended to make a promise) does not matter

o The statements made by the doctor could reasonably be seen by the jury as the making of a promise

· Bayliner Marine Corp. v. Crow (slow boat)

o UCC 2-313 – EXPRESS WARRANTIES

§ Any…

· Affirmation of fact or promise by the seller to the buyer which relates to the goods

· Description of the goods

· Sample or model

§ Becomes part of the basis of the bargain and

§ Creates an EXPRESS WARRANTY that the

§ Goods shall CONFORM to the affirmation or promise, to the description of the goods, or to the sample or model

o Seller does not have to use the word “guarantee” to create a warranty

o An affirmation merely of the VALUE of the goods or a statement that is merely the seller’s OPINION or commendation of the goods does NOT create a warranty

o No express warranty here b/c buyer bought a different boat than one in brochure (did not “relate to goods”)

o UCC 2-314 – IMPLIED WARRANTY OF MERCHANTABILITY

§ If the seller is a merchant w/ respect to goods of that kind, then a warranty that the goods shall be MERCHANTABLE is implied in a K for their sale

§ MERCHANTABLE goods must be FIT FOR THE ORDINARY PURPOSE for which such goods are used

o Boat here was fit for its ordinary purpose

1.2 – REMEDYING BREACH

· Appropriate form of relief is usually SUBSTITUTIONAL (money damages) rather than SPECIFIC (compels performance of exactly what was promised, but only where money damages are inadequate)

· Restatement 344 – PURPOSE OF REMEDIES is to protect THREE INTERESTS:

o EXPECTATION INTEREST = what position the PROMISEE would have been in had the promise been KEPT

§ Promisee given the benefit of the bargain

o RELIANCE INTEREST = what position the PROMISEE would have been in had the promise NOT BEEN MADE

§ Promisee reimbursed for loss caused by reliance on the K

o RESTITUTION INTEREST = what position the PROMISOR would have been in had the promise NOT BEEN MADE

§ Benefit conferred to promisor restored to promisee

· Restatement 352 – UNCERTAINTY AS A LIMITATION ON DAMAGES

o Damages are not recoverable for loss beyond an amount that the evidence permits to be established w/ reasonable certainty

1.3 – CONSIDERATION AS A BASIS FOR ENFORCEMENT

· CONSIDERATION = a GOOD ENOUGH THING that’s BARGAINED FOR (Restatement 71)

· GOOD ENOUGH THINGS

o A promise

o An act

o A forbearance (a non-act)

§ Hamer v. Sidway (uncle promised nephew money if stopped life of debauchery)

· Consideration requires detriment to nephew and benefit to uncle

o DETRIMENT = any relinquishment of a legal right

o BENEFIT = getting what he sought in exchange

§ Dyer v. National (employee lost foot on job, employer promised lifetime job if didn’t sue for negligence)

· Forbearance to assert a claim that proves to be invalid IS consideration if the forbearing party BELIEVES that the claim may be fairly determined to be valid (Restatement 74)

· NOT GOOD ENOUGH THINGS

o A PRE-EXISTING DUTY

§ Pre-existing duty rule = one does not suffer a detriment by doing or promising to do something that one is already obliged to do, or by forbearing to do something that is already forbidden

§ Feinberg v. Pfeiffer Co. (old lady was promised money for rest of her life, could retire whenever she wanted)

· Past performance is not consideration b/c it can’t be sought in exchange

o MORAL OBLIGATIONS

§ Mills v. Wyman (father promised to pay man for taking care of his sick son)

· Moral obligation is not consideration

· Taking care of son was gratuitous and in the past

§ Webb v. McGowin (W saved M’s life and was badly injured, M promised to pay)

· Restatement 86 – PROMISE FOR BENEFIT RECEIVED

o A promise made in recognition of a benefit previ

ge à no bargain

o If sought something in exchange à bargain

§ If there was no bargained for exchange, then even her reliance on the contract did not make it enforceable

o Lake Land Employment v. Columber (at-will employee made promise not to compete)

§ No increase in salary, benefits, or other remunerations given as consideration for signing of non-compete agreement

§ Court says continued employment was sufficient consideration

§ Dissent says no consideration, b/c nothing was given in exchange – employee got nothing that he didn’t already have

o RIGHT v. DUTY

§ PROMISOR has a DUTY to perform the promise

§ PROMISEE has a RIGHT to receive that performance

o UNILATERAL v. BILATERAL CONTRACTS

§ UNILATERAL CONTRACT = only one party has an outstanding promise

· Seeking performance in exchange for a promise

· Right on one side, duty on the other

· REWARDS are unilateral contracts

§ BILATERAL CONTRACT = both parties have outstanding promises

· Seeking a promise in exchange for a promise

· Right and duty on both sides

1.4 – RELIANCE AS A BASIS FOR ENFORCEMENT

· Restatement 90 – PROMISSORY ESTOPPEL (when promisee detrimentally relies on promise, and changes his/her position for the worse)

o A promise which the promisor should REASONABLY EXPECT to induce action or forbearance on the party of the promisee or a third person and which DOES INDUCE such action or forbearance is BINDING if INJUSTICE CAN BE AVOIDED only by enforcement of the promise

o The remedy granted for breach may be limited as justice requires

· Ricketts v. Scothorn (paid grandchild so she would stop working)

o EQUITABLE ESTOPPEL = when person relies on deliberately misleading words or conduct (?)

o He intended her to rely on his promise, and she did

o Promissory estoppel à enforceable

· Feinberg v. Pfeiffer (promise to pay her every week after retirement)

o Gave up job in reliance, reliance could be foreseen