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Contracts II
University of Toledo School of Law
Davis, Benjamin G.

Contracts II
Fall 2011
Shaheen v. Knight
Court of Common Pleas Pennsylvania (1957)
P sues D for an operation.  P alleges D contracted to make him sterile.  He received the operation on September 16 1954, and had a child with his wife February 11th 1956.  P does not allege any negligence by the D.  He is suing for all the living expenses for the child in question. The case is based on contract.
Should the doctor be liable for expenses to a child that occurred after a botched vasectomy?
The courts do not hold that this constitutes damage; they don’t feel the financial burden is worth the joys he would receive from raising a child. 
It is against public policy to consider a child as damages, rather the remedy available is adoption.
It would be different if the doctor says something like I’ll make a special promise and guarantee my work.
Agreement/Bargain : Agreement is a manifestation of mutual assent on the part of two or more persons.  A bargain is an agreement to exchange promises or to exchange a promise for a           performance or to exchange performances.
Section 1 Contract defined
A k is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some recognizes as a duty
Section 2 Promise; Promisor; Promisee; Beneficiary:
1. A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promise in understanding that a commitment has been made.
2.  The person manifesting the intention is promisor.
3. The person to whom the manifestation is addressed is promise.
4.  Where performance will benefit a person other than the promise, that person is a beneficiary.   
Section 3 Agreement Defined:
An agreement is a manifestation of mutual assent on the part of two or persons.  Bargain is agreement to exchange promises or to exchange a promise for a performance or to exchange performances.
Section 4 How a Promise May be Made:
A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct (silence when there’s a duty to speak, for example).
Contract law is state based, based on states common law system.  The Restatement is in place to summarize the majority rule of the states.  Restatement is not statutory law, rather persuasive authority.
UCC allows for rules of commerce to be uniform throughout the union, most of the UCC being adopted by 49 states.
The UCC or statutory law is highest precedent followed by case law and the persuasive authority.
Purpose is uniformity
Section 178 When a term is unenforceable on grounds of public policy
(1) A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms.
(2) In weighing the interest in the enforcement of a term, account is taken of
(a) the parties' justified expectations,
(b) any forfeiture that would result if enforcement were denied, and
(c) any special public interest in the enforcement of the particular term.
(3) In weighing a public policy against enforcement of a term, account is taken of
(a) the strength of that policy as manifested by legislation or judicial decisions,
(b) the likelihood that a refusal to enforce the term will further that policy,
(c) the seriousness of any misconduct involved and the extent to which it was deliberate, and
(d) the directness of the connection between that misconduct and the term.
Section 179 Bases of public policies against non enforcement
A public policy against the enforcement of promises or other terms may be derived by the court from
(a) legislation relevant to such a policy, or
(b) the need to protect some aspect of the public welfare, as is the case for the judicial policies against, for example,
(i) restraint of trade (§§ 186-188),
(ii) impairment of family relations (§§ 189-191), and
(iii) interference with other protected interests
Damage interests
Expectation (benefits of the bargain)
The court attempts to put the promissee in the position in which the promissee would have been had the promise been performed
Includes profits
Reliance (Detrimental Reliance)
Court attempts to put the promisee in the position it was in before the promise was made
Does not include lost profits
P has duty to mitigate
Restitution (Unjust Enrichment) – Court

Damages for breach of K
Sullivan v. O’ Connor
Supreme Judicial Court of Massachusetts (1973)
Sullivan contracted with a surgeon to fix her nose, she was a professional entertainer.
It took three surgeries to finally fix her nose, and Sullivan contends negligence caused her pain, suffering, and “flattened and broadened midpoint in her nose, which could not be improved with other surgeries.
In this case the reliance factor can be constituted as other loss, and thus pain and suffering could be awarded (Punitive damages not rewarded in k)
The P was not confined to the recovery of her out-of-pocket expenses; she was entitled to recover also for the worsening of her conditions, and for pain and distress from the third operation.
Court wants to put the D back to where she was before the surgery
In Sullivan, pain and suffering was characterized as something else; the third surgery that was not part of the original agreement in order to fix the Ds nose.
UCC 1-103 Supplementary general principles of k law applicable
Unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, Bankruptcy, or other validating or invalidating cause shall supplement its provisions.
UCC 2-102 Scope; certain security and other transactions excluded form this article
Unless the context otherwise requires, this Article applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this Article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.