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University of Iowa School of Law
Linder, Marc

Contracts Outline

What constitutes a contract? And who is protected by them?

A contract is an agreement which the law will enforce in some way.
In Miller v. Miller the court decided that there are contracts that while they might have a good foundation, are not enforceable by the courts. In this case the court would not intervene to see if a contract for carrying out the duties of a marriage was being fulfilled. The contract was a violation of public policy since it deals with the domestic realm which is not one of public inquiry.
Simone v. Simone

We should not take the economic status of people into account when evaluating the strength and validity of a contract
The court should not intervene into the fairness matter of a contract, as long as it is willfully entered with knowledge, then it is binding regardless of the content.

In Suthers v. Booker (hospital case)

Legal questions should be decided by judges, while questions of fact can be determined by juries.
Third parties indirect beneficiaries cannot be covered by contracts unless they are explicitly listed within the contract, or it is so obvious that they are the beneficiaries that it is not necessary to list them.

In the Matter of Baby M

Contracts need to be able to be bought out of, you can’t impose torts damages on contracts because the idea of a contract is that if you break it you are limited in your damages to the scope of the contract. If you can’t buy your way out of a contract then it is not truly a fair contract.
There are also values that cannot be purchased with monetary sums and life should be one of those values.

Contracts have to have consideration otherwise it’s a gift, there must be a duty on both sides.

Bases for Enforcing Contracts

Enforceable Promises

Hawkins v. McGee (Hairy hand case)

Guarantees are enforceable where a reasonable person would have thought that the promise was a prudent one to make. This is especially true if the promise is used to illicit consent for an action.

Remedying Breach

Suillivan v. O’Connor (Nose case)

Efficient breach = P is to recover any expenditures made by her and for other detriment following proximately and foreseeably upon the D’s failure to carry out her promise. Not limited to the restoration of the fees paid (as in restitution) but can include amounts paid for medicine and nurses, and for any worsening of the P’s condition due to the breach.
Compensatory/Expectancy damages = am amount intended to put the P in the position she would be in if the contract had been performed.
Restitution damages = an amount corresponding to any benefit conferred by the P upon the D in the performance of the contract disrupted by the D’s breach. (So the fee for the surgery) may be to little to properly compensate the P.
Reliance measure = Put the P back in the position she occupied just before the parties entered upon the agreement, to compensate her for the detriments she suffered in reliance up on the agreement.

White v. Benkowski

Court rules you can’t have punitive damages under a contract because precedent says you can’t. No damages for anything more then the value of the breach of the contract (which cannot be more then the contract was entered for).
You can only enforce what is in the contract, to assign punitive damages would be to undermine the contract and over-enforce it. But you need a way to punish people who are malicious, you could relable it as something other then a contract claim, like a tort.

Consideration as a Basis for Enforcement

Hamer v. Sideway (21 year old getting money from uncle)

D argues the contract benefited the P so he shouldn’t be paid for it. But that creates a need to weigh each contract to see if it is good or not for one of the members, and that requires an amount of scrutiny that the courts don’t want to open the door for.
You have to show that he had a legal right to engage in these activities and if he then abstains then the contract is enforceable.
To refrain from certain activities (that you lawfully could have partaken in) is enough to uphold the consideration.
Consideration need not be monetary and need not benefit the receiver.

Fiege v. Boehm (bastardry case)

Giving up a legitimate legal claim constitutes consideration even if the claim is invalid, as long as the person honestly believes they have a claim.
The restatement: Only calls for the P to believe that the claim is valid or must be uncertainty invalid.

Feinberg v. Pfeiffer (old woman pension plan)

Past consideration is not enough.

Mills v. Wyman (Sick kid whose parent’s wouldn’t pay)

A promise to pay for services received in the past is usually not held to be supported by consideration.
Moral obligation creates no consideration.

Webb v. McGowin (guy save other guys life with falling beam)

In assumpsit: 1. An express or implied promise, not under seal, by which one person undertakes to do some act or pay something to another <an assumpsit to pay a debt>. 2. A common-law action for breach of such a promise or for breach of a contract < the creditor’s assumpsit against the debtor>.
Enforcement for past services which were extremely valuable or where denial would be extremely unjust.

Kirksey v. Kirksey

Court finds that there is reliance but reliance does not equal consideration and so its not enforceable.
Promissory Estoppel – When a promisor makes an unenforceable promise which induces substantial reliance by the promisee, the promisor may be required to reimburse the promisee’s reliance expenses.

lied contract for the reasonable value of services.
Not actually a contract but an obligation imposed by law.

Callano v. Oakwood Park

Can you recover on a quasi contract when an alternative remedy based on an actual contract exist?

No. Courts should not employ the legal fiction of quasi-contracts to substitute one promisor or debtor for another.

Pyeatte v. Pyeatte

Unjust enrichment –
Restitution is sometimes an appropriate remedy in divorce proceedings but only where there was a spousal agreement and one spouses made extraordinary or unilateral efforts which inured to the other’s sole benefit.
Presumption is gratuitous but can be rebutted in some cases.
Restitution is not appropriate in the course of a normal marriage, but only in situations where one goes to extraordinary lengths for the other

The Bargaining Process



A contract is enforceable despite one party’s subjective belief that the parties are joking.


However, a contract is not enforceable is a reasonable person would have known that the offer was a joke.



Responding to a request for a price quote is an invitation to negotiate and not a binding offer.


Stating a possible sale price is not binding as an offer to sell for that price.

Fairmount Glass Works

A price quote may give rise to an enforceable contract if it contains detailed language regarding the required method of acceptance.
If the language is not such as a business man would use, therefore its not an offer or a contract.
The problem with breaching contracts is that you loose the opportunity cost associated with creating that contract with another person. That’s the downside of easily broken contracts.

Lefkowitz v.

An advertisement which is definite, explicit and which leaves nothing open to negotiation creates a binding contract upon the acceptance of a prospective purchaser.