Coenen Contract Outline
Chapter 1 – Introduction
A. General Theories of Obligation and Remedies
– elements for cause of action for breach of contract
1. There has to be a promise
2. The promise has to be broken
– a breaching party can recover damages when a breach of contract occurs when there is
– substantial performance;
– acceptance; OR
– divisible contract case – you actually have part of the product in a tangible form
1. Remedies – 3 kinds
1. Restitution – any benefit given to the D by the P
2. Reliance – to put the P in the position the P was in had he never made a contract, ie the position before the contract was entered into
3. Expectancy – puts the P in the position she would have been had the contract been fully performed
– this is the standard measure of damages for breach of contract
2. Sullivan v O’Connor
– P patient alleges that D doctor broke his contract by messing up her nose job
– promises made by the doctor: fix the nose, only in two operations
– the P was awarded money – and the D is appealing saying that the trial judge should have limited recovery to $622 (reliance damages)
– the P appeals and says that the wants the expectancy damages – the difference between her new worse nose and her would-be way better nose
– the worsening of the P’s nose is recoverable under either expectancy or reliance theory – since we have to put her in a pre-contract condition and when we have to compensate for the diminution in value of her nose
– the court says that it doesn’t have to choose between reliance theory and expectancy theory
– pain and suffering from the 3rd operation are recoverable under both
– Kaplan (the judge) seems to be leaning more towards reliance damages
– cause of action are suspect – doctors rarely promise specific outcomes
– expectancy is excessive – factors suggest that moderation is appropriate, and the doctor was absolved of negligence at trial
3. White v Benkowski
– Ds agreed to supply Ps with water prior to P’s buying of house next door
– relationship deteriorated, and Ds cut of water, etc
– contract drawn up by Joe – the real estate agent
– biggest problem with the contract = ambiguity of the term “adequate water supply”
– other problems – no renewal clause, non contingency plan to assess damages, no limitations on water usage on either the supply or use side, quality of the water
– there is a breach of contract claim – but the issue is on the remedies
– at trial, the jury awards compensatory damages of $10 and punitive damages of a bunch
– appeals court struck the punitive damages and reduced compensatory damages to $1
– Wis Sup Ct reinstated the $10 award – since the jury believed that this was predicated on actual injury
– they agree with appeals court about the punitive damages – but say that punitive damages cannot be awarded in an breach of contract case
– reasons for this holding –
– no such cases exist, relies later on persuasive authority from other jurisdictions, relies on Chitty, Simpson, Corbin – legal thinkers
Chapter 2 – General Theories of Obligation
A. Agreement with Consideration – the leading theory
– consideration (per Restatement) = something (a performance or return promise)
sought by the promisor
given by the promisee
in exchange for the promise
– courts are prepared to find there is consideration even if its clear that the exchange related motives – the appearing motives – of the promisor and the promisee are subordinate or subsidiary to other motives
1. Hardesty v Smith
– lamp invention that turned out to be crap case – the buyer is claiming that the invention was crap, so he shouldn’t have to pay
– for a promise to be enforceable, there has to be consideration for the promise
– in this case – there is consideration – in return for the promise to pay money, the seller transferred the rights to the invention to the buyer
– courts do not look at the adequacy of consideration
– would have to measure the relative value of things
– do not want the courts to become price judgers, etc
– so the buyer loses and has to pay for the crappy invention
2. Dougherty v Salt
– Aunt Tilly and Napoleon case
– she promises to give him money in the future if he is a good dude
– there isn’t any consideration for the promise – no exchange took place, so the promise is unenforceable
– based on the facts, it doesn’t show that the kid ever made a promise – so there was never anything given by the kid to the aunt in return for the promise of the aunt to give money
– could argue that the guardian filling out the paper is consideration – but this wasn’t don in exchange for the promise – only incidental to the promise
– a gratuitous promise is never enforced
– however, a completed gift is enforceable – since it is now in the promisee’s possession, and the promisor clearly had an intent to give
– what if Napoleon had given Aunt Tilly a flower and a kiss after she gave him the note – still not enforceable – since it wasn’t’ sought by the promisor
3. Fuller – Requirements for Consideration
a. functions performed by legal formalities
1. Evidentiary – provides in writing or by notary evidence of contract is case of controversy
– need evidence that the promise was really made
2. Cautionary – to deter inconsiderate action – make sure that it’s thought out and not spontaneous
3. Channeling – getting what you want on paper so that an outsider can understand it
b. substantive bases of contract liability
1. Private autonomy
2. Reliance on promise (expectation promise will be fulfilled)
3. Unjust enrichment (more immediate reason for judicial intervention than just reliance)
c. policies
1. An unenforceable promise is one that is gratuitous or not relied upon
2. Half-completed exchange is more enforceable than when nothing has happened ie Weiner, Seavy
4. Maughs v Porter
– guy advertised in the paper that if people came to his auction, they might win a new car – P goes to the auction, wins the car and sues the D for delivery of the car
– there is consideration for the promise
– something – the detriment of the promisee of going to the auction
5. Hamer v Sidway
– there is a promise – if the nephew is good until he turns 21, the uncle will give him $5000 – but the gift isn’t complete
– there is consideration for the promise – the kid gave up his legal right to do the bad things
– argument made by the uncle’s estate is that the giving up of the privileges benefitted the nephew – the court says that this doesn’t matter
– there was consideration under the Restatement definition
6. Tramp Hypothetical
– the promisee – the tramp – does what is asked and walks to the store – down the block – but the promisor runs up and says I revoke
– this is a conditional gift – there is no consideration here, because her walking didn’t provide a benefit to the promisor
– if you are in this world of conditional gift, you should look at the factor or whether the condition benefitted the promisor – because then it would be sought by the promisor in exchange for the promise
7. Baehr v Penn-O-Tex Oil
– a promise is made – there is an assurance given that the assignee would pay the accounts’ rent for the gas station
– court rules that there is no consideration
– D debt assumer promised to pay Kemp’s rent to P lessor
– the alleged promise is P’s promise not to sue the D – debt assumer
– this is a something – but it wasn’t sought by the promisor (since there is nothing in the evidence to indicate that he did seek it) – although you can argue that it is in his interest since no one wants to be sued
– another 2nd and independent reason that there was no consideration – there really was no forbearance – since he waited until it was convenient for him to sue
– so the forbearance isn’t consideration since it wasn’t sought by the promisor OR given by the promisee
8. Springsteed v Nees
– Sophia and George (Ds) make an alleged contract with the other siblings (Ps) to not take the P’s interest in one property in exchange for the Ds getting all of another property
– the consideration is forbearance (not asserting a claim) about the 2nd property
– 2 doctrine of forbearance per Corbin
1. Colorable claim doctrine – claimant who forbears must have a reasonable claim – a colorable claim
2. Honest belief doctrine – all the forbearer needs to have is an honest belief in the claim – even if the claim is totally invalid
– as a practical matter, the difference between these two doctrines might not be all that great
– the court says that the claim by the Ps isn’t colorable – says that it is clearly invalid
– there was nothing in the evidence to say that the Ps had an honest belief in their claim – since they didn’t object to the division of the property at the outset (it was the Ds who raised the issue)
9. Dyer v National By-Products
– employer gave employee the promise of lifetime employment
– consideration for the promise – promise not to sue for the chopped foot
– court applies the honest belief test here – and the case is remanded
– this test allows more cases to be tried and more Ps to win than the colorable claim test – since all the P has to have is an honest belief
– they don’t apply the colorable claim test – although even the courts that allow the honest belief test say that the absence of a colorable claim is evidence that there is no honest belief
10. De Los Santos v Great Western Sugar Company
– transaction between the hauler and haulee (beet owner), deal is to pay money for hauling such tonnage as may be loaded, reverse promise is to haul the beets
– here, the beet owner doesn’t employ the hauler enough, so hauler sues
– court said that the haulee w
reasoning: the company didn’t breach the promise, because the condition under which it was bound to keep the plants operating never occurred
C. Obligation Arising from Unjust Enrichment
1. implied-in-fact contract
– has elements of binding agreement
– courts can infer a contractual relationship based on circumstances and surrounding contexts, even if there isn’t an expressed or written promissory exchange
– to establish an implied-in-fact contract to pay for services
1. Services carried out so recipient should understand that a) performed for recipients and b) services were gratuitous
2. 2 limitations on ability to recover under UE theory (per Dobbs)
1. Volunteer – gave it as a gift
2. Intermeddler – didn’t give the opportunity to prevent the gift
– in a situation where there is no opportunity to reject the benefit, UE can’t occur in the absence of some special policy
3. Bloomgarden v Coyer
– introduction by Bloom, the deal-arranger, or Coyer to Carley – which whom Bloom has a pre-existing business relationship
– Bloom never mentioned his expectation of a finder’s fee – and the Ds thought that he was going to benefit by increasing business or something
– cause of action for unjust enrichment isn’t good – since he never told the people that he wanted a finder’s fee – and even when he did insinuate it, it was after he introduced the people (essentially never giving them a chance to turn it down)
– here, the Ds weren’t unjustly enriched – since they didn’t have a warning that they were going to have to pay – and thus couldn’t prevent the action
4. Dog house painter hypo
– a painter mistakenly paints wrong house, while the owner watches, but doesn’t stop him – can the painter recover under UE? Yes – the owner was unjustly enriched – since he had the opportunity to stop him and didn’t
5. Brown v Brown
– courts will presume that services rendered from one sibling to another are gratuitous
6. Sparks v Gustafson
– G sues the Sparks estate to recover money for G’s services rendered
– G manages Sparks’ building for many years and then sues for money after Sparks dies
– using Brown, could argue that there was a relationship established between G and Sparks that G was willing to manage the property for free
– and he doesn’t sue for the services until after Sparks is dead – indicating that he didn’t intend to get money from Sparks
– but G gets money here because his actions as manager can’t be considered gratuitous – they went above and beyond what a friend would do
7. Gay v Mooney
– the P – nephew-in-law and his wife – house the wife’s uncle for many years prior to his death – and they did this in exchange for him giving a house for the nephew’s kids
– the breach of contract cause of action doesn’t work because this type of transaction needs to be in writing
– the terms of the unrecoverable contract are determinants with respect to the UE cause of action
– P wasn’t a volunteer – since the lodging wasn’t a gift
– P wasn’t an intermeddler – since D promised the house and there was a deal
– there was UE because his living there was based on a condition
8. Kerns v Andree
– P and D have an oral contract that D will buy a house if P makes certain changes to the house
– P makes the changes, then D decides not to buy
– P finds another buyer, but has to make other changes
– court says that P can recover money spent by fulfilling D’s demands – since it is what D wanted, if D had continued with the contract, he would have benefitted
– the money spent making changes to suit the new buyer aren’t recoverable – since theses didn’t benefit the D
9. Posner v Seder
– cause of action – quantum meruit – reasonable value – of services
– P sues employer for overtime worked – his contract said that he would be paid $17/week for an entire year – regardless of hours worked – the D fired the P, so D broke the contract
– court says that the P is allowed to recover the reasonable value of all services rendered to the employer – issue is how to determine that given the contract
– P claims that he should get money for overtime worked thus far
– D claims that P should get nothing – since the contract said no matter how many hours he worked, he was going to get $17
