CONTRACTS OUTLINE (FALL 09)
CONTRACT
§ A promise or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty
§ Goods (UCC § 2-105)
o All things that are movable at the time of identification to a contract for sale
§ Merchants (UCC § 2-104)
o A person that deals in goods of the kind or otherwise holds itself out by occupation as having knowledge or skill peculiar to the practices or goods involved in the transaction or to which the knowledge or skill may be attributed by the person’s employment of an agent or broker or other intermediary that holds itself out by occupation as having the knowledge or skill.
I. ENFORCEABILITY AND CONSEQUENCES FOR BREACH
a. Expectation
i. Put promisee in as good a position as he would have been in had the contract been performed
1. Hawkins v. McGee “100% hand”
a. Doctor’s words and insistency induced P to have the surgery
b. P was entitled to expectancy damages plus incidental losses resulting from the breach
2. Bayliner Marine Corp. v. Crow
a. A statement purporting to be merely the seller’s opinion or commendation of the goods doesn’t create a warranty; statement in the brochure about boat delivering the performance you need for fishing only expressed manufacturer’s opinion
b. Crow couldn’t get relief b/c of seller’s “puffing”
b. Reliance
i. Being reimbursed for loss caused by reliance
1. Sullivan v. O’Connor “bad nose doctor”
a. P is entitled to recover reliance (included restitution) damages for expenditures made by her and for other detriment that was proximate and foreseeable from D’s failure to carry out his promise. No expectation
c. Restitution
i. Require promisor to return value of benefit promisee gave promisor
1. i.e. Cotnam v. Wisdom (see below)
d. Punitive Damages
i. White v. Benkowski “breach of water”
1. Compensatory damages given for breach of contract but not punitive damages b/c courts don’t want to punish people when a contract was entered into voluntarily
II. CONSIDERATION
a. Something of value that is required for a contract to be enforceable
i. A bargained-for-exchange b/t 2 parties and that which is bargained for must be considered of legal value (benefit to the promisor or detriment to the promise)
1. Unilateral Contract
a. 1 promise; promise to pay in return for performance
2. Bilateral Contract
a. Agreements in which each party makes a promise to the other
b. Purposes of Consideration (Lon Fuller)
i. Evidentiary
1. If there was consideration that was bargained for, then there is good evidence that there was a meeting of b/t the parties
ii. Cautionary
1. If there’s consideration, then it’s more likely that the parties thought about entering transaction
iii. Channeling
1. There are magic words spoken that constitute an understanding that there is mutual assent “I’ll give you ___ in return for ___”
c. Family Contracts
i. Traditionally, are more difficult to enforce
i. P sued D for breaching covenant not to compete b/c D started his own business that competed w/ P after he was fired
ii. Court held that the covenant was enforceable b/c there was consideration b/c he was able to keep his job when he worked for P; b/c they didn’t fire him when they had the right and ability to, there was sufficient consideration to enforce the agreement
1. This is a MINORITY opinion; many jurisdictions say that just showing up for work isn’t sufficient consideration for enforceability of non-competition agreements
ii. Employee handbooks can be binding
g. Rewards
i. A reward offer may be accepted by anyone who performs the service called for when the acceptor knows that it has been made and acts in performance of it
1. i.e. Broadnax v. Ledbetter
h. Conditional Promise
i. A promise is conditional if its performance will become due only if a particular event (condition) occurs
ii. Event must occur before the promisor must perform
