Restatements: Summarizing Common Law
UCC: Commercial Goods
Enforcing Promises:
1. Not all promises are going to be enforced
a. Enforceable Promise: That there will be some remedy or legal consequence for not completing the bargained for elements
2. Promise: Manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made § 2(1)
a. promisor: person making the promise
b. promisee: person receiving the promise
c. beneficiary: person who benefits from the promise
3. Restatement Section Four: a promise may be stated in words either oral or written or may be inferred wholly or partly from conduct
4. Shaheen v. Knight: Doctor performs vasectomy and P still fathers a child
a. Contract: someone has voluntary agreed to bear the cost
i. in this case, no damages since having a child will not be considered damages as void against public policy
5. Default v. Mandatory Rules:
a. Default: a rule that the law will presume a particular contract term exists unless the parties involved say otherwise
b. Mandatory: A rule that cannot be contracted around
i. Usually rests in public policy considerations
6. Baby “M”:
a. Contract of Adhesion: a contract in which one party has no alternatives but to accept or reject the other party’s terms and there are no options by which the party may obtain the product or service
b. Chancery Court: The parties expressed their respective offers an acceptances to each other and reduced their understanding to a writing
c. Supreme Court of N.J.: Contract attempted to strip natural mother of all parental rights-this is what is incorrect about the Chancery court’s decision
7. Johnson v. Calvert: Husband and wife implant egg and sperm in another woman who gives birth-she then files to be declared mother
a. Court (Ca): no clear express prohibition of surrogacy contracts and we will defer to the legislature to tell us if the contracts should be declared invalidated or regulated through legislation
Freedom of Contract: Consideration for enforcement/un enforcement
1. Limitations:
2. Restatement 178: when a term is unenforceable on public policy grounds
3. If legislation provides it is unenforceable
a. This need not be an express prohibition-Baby M adoption statutes
4. Interest in its enforcement is clearly outweighed by public policy against the enforcement of such terms
a. In weighing the interest of enforcement of a term (contract):
i. The parties justified expectations
ii. Any forfeiture that would result if enforcement was denied
iii. Any special public interest in the enforcement of the particular terms
b. In weighing public policy against enforcement:
i. The strength of the policy is manifested by legislation or judicial decisions
ii. The likelihood that a refusal to enforce the term will further the policy
iii. The seriousness of any misconduct involved and the extent to which is was deliberate
iv. The directness of the connection between that misconduct and the term
c. How to Remedy a Contract if a Particular Term is Invalid:
i. Term can be found to be so fundamental that it is not severable from the contract
ii. Term can be peripheral and a remedy for how to deal with the term may be involved
Remedies:
1. Goal: Make injured party whole again/ensure parties are not injured by nonperformance of one party to a K
2. Two forms:
a. Damages
i. Punitive
ii. Compensatory
1. Expectation/Reliance/Restitution
a. ***General Rule: Amount limited by expectation interest
b. Specific Performance
i. Punitive damages and Specific Performance are rare forms of remedies
3. Expectation Interest/damages: “the benefit of the bargain”- court attempts to put the promisee in the position in which the promisee would have been had the promise been performed
a. Restatement 347:
4. Reliance Interest/damages: court attempts to put the promisee back in the position in which the promisee would have been in had the promise not been made
a. promisee changed its position in detriment in reliance on the promise
b. Essential reliance: preparation for or performance under the contract: the price the promisee would have to pay to get the K benefit- costs incurred
c. Incidental Reliance: performance under or preparation for collateral transactions: transactions that are made under reliance of the contract but are not necessary essential for the promisee to perform their own obligations
5. Restitution Interest/damages: Court attempts to put the promisor back in the position in which the promisor would have been in had the contract never been made (unjust enrichment)
a. promisee conferred a benefit on the promisor-deprive the promisor of this benefit
6. Void v. Voidable:
a. Void: unenforceable by anyone
b. Voidable: Can be voided if someone so chooses Ex ante: decisions made in advance about a future exchange
7. Hawkins v. McGee (Hairy Hand)
a. Expectancy Damages: value of good hand – value of existing hand
b. in addition, any other incidental loss fairly within contemplation of the parties when they made the K: we must have some ability to foresee the damages that were suffered
i. Hawkins v. McGee Standard: difference between the promised performance and the actual performance + any incidental consequences (other losses) that were fairly within the contemplation of the parties
1. **if incidental damages are fairly within contemplation, then incidental reliance damages may be recovered even if the damage amount then exceeds the expectation interest
8. Restatement 347: the loss in value
Incidental:
b. Expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected (evaluating the delivery)
c. Any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach
7. Consequential Damages:
a. Any loss
b. General/particular requests
c. of which the seller at the time of contracting
d. had reason to know
e. and which could not have been prevented by cover or otherwise
8. UCC 1-106: Remedies to be liberally administered (administer remedies in this act (provisions 2-713 Is part of this act)
a. ***Market price- K price is the correct equation if we take into account a third party buyer who will bring suit against the original buyer if seller breaches the contract
b. ***market price calculation takes in account the endless stream of commerce agreements to award to first party damaged by the breach the proper amount of money to protect the party from lawsuits of breach of future arrangements to deliver goods in first breached K
i. Output K: The buyer agrees to purchase whatever amount of stock the seller has to sell to it
Limitations on Damages: Remoteness or Foreseeability of Harm
1. Common Law Approach:
2. Hadley v. Baxendale Rule: Damages are only recoverable if they are fairly and reasonably be considered (Foreseeable to a reasonable person)
a. Foreseeable if:
i. Damages arise naturally
1. Hector Martinez and Co. v. Southern Pacific Transportation Co.: loss of use of non-delivered tractor is a naturally occurring harm
ii. Contemplated by both parties (notice)
b. Not naturally occurring (Special damages):
i. Notice at time of K
1. If notice, then liable (acceptance is assumed) unless agreement says otherwise (express disavowement of liability)
c. Hadley is a default rule: it presumes both of these above clauses without additional factual assertions by the parties
d. In cases a repeat players (Fedex), Hadley forces this player to set the default rule at the one-shot player’s involvement (creation of K)
3. Restatement 351: this places a limit on recovery that Hadley does not place
a. Damages may only be collected in the event of a breach if the party in breach has a reason to foresee them as a probable result of the breach when the K was made
