Contracts Williams Spring 2017
Bases for Enforcing Promises
Restatement § 2d §1 defines a Contract as a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty
Promise= A promise is a 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.
What would a reasonable person think was intended?
CONTEXT MATTERS
Uncertainties involved in a given setting and control of reducing those uncertainties impact determination
Note: there are subsets of promises that are required to be written
Hawkins v. McGee, 146 A. 641 (1929) – “Hairy Hands” Case
When one party breaches a contract, the non-breaching party may recover damages based on the difference between the value of the contracts as fully performed and the actual value of the non-breaching party’s present condition, plus any incidental damages reasonably foreseeable to all parties at the time of the contract formation.
Facts
McGee (defendant), a surgeon, performed a procedure on Hawkins (plaintiff) designed to remove scar tissue from Hawkins’ hand and replace it with a skin graft from Hawkins’ chest.
When asked by Hawkins and his father for more information about the operation, McGee allegedly said that he guaranteed to make a “one hundred percent good” hand.
Hawkins and his father agreed to the operation, but it was performed unsuccessfully. Because McGee had grafted skin from Hawkins’s chest, the graft caused thick hair to grow on Hawkins’s palm.
Procedural History
Hawkins brought suit against McGee on the ground that McGee violated an alleged warranty for the success of the operation.
The trial court instructed the jury that if it found Hawkins was entitled to relief, it should award him damages based on his pain and suffering from the operation, as well as the additional ill effects he suffered from the operation beyond his existing injury.
The jury awarded damages to Hawkins, but McGee moved to set aside the verdict because it was excessive.
The trial court agreed with McGee and said that if Hawkins did not return the damages awarded above $500, the verdict would be set aside.
Hawkins refused and the trial court set aside the verdict.
Hawkins appealed.
Issue
Whether a non-breaching party to a contract may recover damages for unforeseen losses based on another’s breach of contract.
Holding (Branch, J.)
No. The trial court and jury incorrectly assessed Hawkins’ damages based on McGee’s breach.
A reasonable jury could find for Hawkins.
The decision to set aside the verdict for damages over $500 should be remanded for reconsideration of damages under the proper standard.
Reasoning
When one party breaches a contract, the non-breaching party may recover damages based on the difference between the value of the contract as fully performed and the actual value of the non-breaching party’s present condition, plus any incidental damages reasonably foreseeable to all parties at the time of contract formation.
The purpose of this is to put the non-breaching party in as good a position as he would have been in had the breaching party kept the contract, and thus any additional losses not reasonably foreseeable to the parties at the time of contract formation cannot be considered when calculating damages.
There is no basis for holding that the jury acted erroneously in finding that McGee breached an implied warranty for the success of the operation based on his statements to Hawkins. However, after concluding that a breach occurred, the jury incorrectly considered damages based on irrelevant factors.
It should not have awarded damages for Hawkins’ pain and suffering, as this was a necessary part of the operation that was endured by Hawkins as consideration for McGee’s performance of the operation.
Additionally, no damages should have been awarded for any worsening of Hawkins’ hand by the operation, as damages can be sufficiently awarded based on McGee’s failure to follow through with his guarantee of producing a “one hundred percent good hand.”
Class Discussion
Potential Promise Language
“Three or four days, not over four” verbiage
Uncertainty of results in a hospital setting
“Guarantee to make the hand a hundred percent perfect hand or a hundred percent good hand” verbiage
Guarantee is a word that has some weight in indicating potentially a promise
The court looked at context of repeated solicitation & fact that doctor wanted opportunity to work on grafting
Doctor has something to gain by making a promise in this situation
Relevant Person Test
“Clearly” verbiage in a brief
Anglin v. Kleeman, 665 A.2d 747 (N.H. 1995)
Doctor uses the word “could” à language not as strong as in Hawkins
Doctor never solicited patient
More detailed verbiage starts to sound increasingly like a promise
Bayliner Marine Corp., 509 S.E.2d 499 (1999)
A merchant’s opinion about a product’s potential performance does not create an express warranty that the product will conform to that description
Facts
In August 1989, John R. Crow (plaintiff) purchased a boat manufactured by Bayliner Marine Corporation (Bayliner) (defendant) to be used for offshore fishing.
Prior to purchasing the boat, Crow asked the retailer what the maximum speed of the boat was, and the retailer gave him Bayliner’s promotional materials for the model that Crow had test driven.
The materials described that model as having a maximum speed of 30 miles per hour provided certain conditions and specifications were in place.
The materials also stated that this model was well suited for offshore fishing.
Crow took delivery of the boat and noticed max. speed of 13 miles per hour. He immediately returned the boat and reported the problem. The company proceeded to make adjustments.
A representative from Bayliner sent Crow a letter in July indicating the performance representations were incorrect and that the boat had a maximum speed of 23-25 miles per hour.
As a result, Crow found the boat unsuitable for offshore fishing. Crow’s boat had different specifications than the boat described in the promotional materials, including a smaller propeller and a higher gear weight.
Procedural History
Crow brought an action against Bayliner as well as the retailer and the manufacturer of the engine alleging that the promotional materials created an express warranty that the boat he purchased would reach the maximum speed of 30 miles per hour as described in the written materials. He also alleged breaches of the implied warranty of merchantability and fitness for a particular purpose.
The trial court held in favor of Crow.
The defendants appealed.
Issue
Does a merchant’s opinion about a product’s potential performance made in promotional materials create an express warranty that the product will conform to that description?
Holding (Keenan, J.)
No. A merchant’s statement of opinion about a product does not create an express warranty.
Trial court’s judgment in favor of Crow is reversed. Judgment entered for Bayliner.
Reasoning
Under Virginia Code, a merchant creates an express warranty when the merchant makes an affirmation or promise regarding the goods, and that promise becomes part of the bargain, or when a description of the product becomes part of the bargain.
However, the Code also provides that a warranty is not created by the merchant’s statements of opinion regarding the product. The promotional m
orceable contract may consist of either a right, interest, profit, or benefit accrued to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.
Facts
Hamer (plaintiff) received several assignments of $5,000 and interest from William E. Story II (Story).
Story made the assignments based on money he was to receive from his uncle, William E. Story, Sr.
Several years previously, Story’s uncle promised him that if he would abstain from “drinking, using tobaccos, swearing, and playing cards or billiards for money” until he reached age twenty-one, he would be paid $5,000.
Story agreed and fully honored the promise by abstaining from these things until after his twenty-first birthday.
At that time, he wrote to his uncle and informed him that he had upheld his promise. His uncle wrote back and said that he was entitled to the $5,000, and that the money was being held for him at a bank. However, Story’s uncle said that it would not be paid to him until he felt Story was capable of “taking care of it.”
Story agreed and the money remained at the bank.
Procedural History
Story’s uncle died without paying him the money, and this claim was brought by Hamer to Sidway (defendant), the Executor of Story’s uncle’s estate.
The executor rejected the claim, and Hamer brought suit in New York state court seeking to enforce the promise to Story.
The trial court upheld the promise, but the appellate court reversed.
Hamer appealed to the Court of Appeals of New York.
Issue
Whether adequate consideration sufficient to form a valid and enforceable contract requires the promisor to actually receive a benefit and the promisee to incur a detriment
Holding (Parker, J.)
No. Story incurred a limitation on his legal right to engage in certain activities sufficient to constitute adequate consideration to form a valid and enforceable contract with his uncle.
The decision of the appellate court is reversed, and the decision of the trial court is affirmed.
Reasoning
Adequate consideration sufficient to form a valid and enforceable contract may consist of either a right, interest, profit, or benefit accrued to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.
It does not matter whether one party actually received a benefit or whether the thing which forms the consideration is of any substantial value to either party.
Adequate consideration does not depend so much on a promisor’s benefit from a contract as it does on the promisee’s voluntary limitation of his legal rights or freedoms in exchange for the promise.
In exchange for his uncle’s promise of $5,000, Story voluntarily restricted his legal freedom to engage in drinking, smoking, swearing, and gambling.
It is irrelevant whether his uncle actually received any benefit from Story’s actions.
Story’s voluntary agreement to incur these limitations constitutes adequate consideration to form a valid and enforceable contract with his uncle.
