The Legally Enforceable Promise 11/22/10 1:32 PM
CHAPTER ONE: The Legally Enforceable Promise
I. Goals of Contract Remedies
A)Introduction: How is a compensatory sum measured? Three goals:
1) Expectation: In as good a position as he would have occupied had the promise been fulfilled
2) Reliance
3) Restitution: Plaintiff wants to recover the unjust enrichment of Defendant, NOT the cost of performance; the interest of a party in recovering values conferred on the other party through efforts to perform a contract
(a) Pay value of benefit received, not value of cost
4) Contracts for medical services
(a) Hawkins v. McGee: court says look at perfect hand v. post-op hand, NOT pre-op had v. post-op hand→EXPECTANCY
5) Building and Construction Contracts
(a) Owner breach: builder is entitled to profits he would’ve made on K
(i) If part-performance: expenditures plus profits
(ii) If full performance: full contract price plus profits
(b) Builder Breach: owner recovers amt extra it costs above K price to get building done, plus compensation for delay
(c) Groves v. John Wunder Co.: Construction contract→EXPECTANCY
(i) Π recovers cost to complete K, even though completion cost far exceeds value of the land
(d) Peevyhouse v. Garland Coal and Mining Co.
(i) This is the normal rule—market value. ***The usual rule in construction cases is cost of value rather than cost of completion because completion cost is such a bigger number
(ii) Measure of damages was cost of the land on which Δ did not perform K’d remedial work ($300) rather than cost of remedial work ($29,000)→sould only get cost of completion when=no undue expense
(e) Oil Well v. Ugly Fountain: is π looking for actual completion?
(f) Restatement (Second) § 348(2): in breaches resulting in unfinished construction, customary alternative bases for calculation the injured party’s loss in value=diminution in the market price of the property OR reasonable cost of completing performance or of remedying defects IF that cost is not clearly disproportionate to the probable loss in value to him
6) Contracts for Sale of Goods
(a) Standard measure of damages for breach of K for sale of goods is the different between the K price and the market price for the goods at the time and place where goods were to be delivered, whether breach is by seller or buyer
(b) Acme Mills and Elevator Co. v. Johnson: in the event that K price exceeded market price, π receives no damages—does NOT receive difference b/t K price and price Δ (seller) actually got by selling to 3rd party
7) Limitations under U.C.C.
(a) Buyer’s damages for cover under installment K: Traditional Measure
(i) Standard measure for failure to deliver goods is difference b/t mkt price(s) and K price at time(s) of delivery
(ii) Places risk of change in mkt price on buyer IF buyer chooses to “cover” with single K rather than covering on each separate date of delivery (cover: term for when buyer makes a replacement K when seller breaches)
(iii)Missouri Furnace Co. v. Cochran: seller breaches and buyer enters into another fwd K, buyer wants difference b/t 2 K’s. Ct says difference b/t original K and mkt price because buyer didn’t have to enter into another fwd K, could’ve relied on spot mkt
(iv)U.C.C. 2-712: buyer can recover for reasonable cover costs at time of breach, irrespective of mkt price on separate delivery dates
(b) Duty of nonrepudiating party to mitigate damages: not entitled to recover for damages he could’ve avoided
(c) Seller’s right to recovery for buyer’s refusal to purchase
(i) Has right to re-sell & recover diff b/t K and resale price rather that K and mkt price (U.C.C. 2-706)
(ii) If unable to re-sell, can recover full K price (2-709)
(iii)Neri v. Retail Marine Corp. (boat case)
(i) If seller re-sells to another buyer at same pr
ALLY ENFORCEABLE PROMISES
I. Introduction
A) What promises are legally enforceable?
1) Normally resolved by examining promise of CONSIDERATION
B) Promises can be divided into 4 categories:
1) Bargain promises
2) Promises based on past or moral consideration
3) Relied-upon promises
4) Promises of limited commitment
C) Formality: gratuitous promise=unenforceable BUT promise under seal=enforeceable even w/o consideration. ½ the states have changed this rule.
D) Nominal Consideration: has the form of a bargain but lacks substance because neither party really views each promised performance as the price of the other
E) Oral Promise to give a gift
1) Congregation Kadimah Toras-Moshe v. DeLeo: Decedent makes oral promise to give money, but lacks consideration. No consideration+no reliance→unenforceable
II. The Bargained-For Exchange
A) Bargain=each party views his promise or performance as the price of the other’s promise or performance
1) concluded by offer and acceptance
2) Bargain=consideration
B) Legal Detriment: Forbearance
1) Hamer v. Sidway: π’s refrain from vices=CONSIDERATION, because it was legal forfeiture of a right he would normally have
2) Consideration Doctrine: benefit to promisor OR detriment to promisee. Π must show a) there was a contract b)there was consideration
C) Restatement § 71: Requirement of Exchange; Types of Exchange
1) No bargain=no consideration
2) Bargain is sought by promisor
D) Restatement § 81: Consideration as Motive or Inducing Cause
