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Wayne State University Law School
White, Katherine E.

Contracts Outline

I. Introduction

A. Contract Defined(Restatement (Second) of Contracts) [pg 11] 1. §1 Contract is promise or set of promises for the breach of which the law gives remedy, or performance of which law recognizes as a duty.
2. §2 Promise (oral, written or inferred from conduct): 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.
3. §3 Agreement: manifestation of mutual assent on part of two or more persons; Bargain: agreement to exchange promises or to exchange a promise for a performance or to exchange performance
B. Uneforceability due to Public Policy (Restatement) [pg 57] 1. §178 unenforceable if legislation say it’s unenforceable or the interest in its enforcement is clearly outweighed by public policy
2. In weighing interest for enforcement, take into account:
a. Parties’ justified expectations
b. Any forfeiture that would result if enforcement were denied, and
c. Any special public interest in the enforcement of particular term
3. In weighing a public policy against enforcement, take into account:
a. Strength of policy as manifested by legislation or judicial decision
b. Likelihood that a refusal to enforce will further that policy
c. Seriousness of misconduct involved and extent was deliberate and
d. The directness of connection between that misconduct and the term
4. §179 Bases of Public Policies Against Enforcement
a. legislation
b. need to protect public welfare, e.g. policies against:
1. restraint of trade
2. impairment of family relations
3. interference w/ other protected interests

Case 1: Shaheen v. Knight (Ct Com Pleas Pa 1957) – failed vas, unplanned child [pg. 8] I: does a failed vasectomy operation constitute a breach of contract between Physician and Patient?
R: Sterilization not against policy, but–if patient and doctor contracted for a particular result and result not obtained, patient has a cause of action for breach of contract – in absence of a special contract in writing, health care provider is never a warrantor or guaranteer of a cure.
H: P wants to keep child; no damage done to P, so none rewarded:

II. Damages

A. Three Damage Interests
1. “Expectation Interest” = Loss of value + other loss – loss avoided – loss avoided – §347 General Measure of Damages [pg 68] a. put promisee is as good a position as if K fufilled
1. preferred because encourages encourages only efficient breaches
2. “Reliance Interest” = expenditures made in prep. of performance – expenses saved in breach – § 349 [pg 117] a. put promisee in position had he never entered K
b. recovered when:
1. profits are too uncertain to determine but P can show expenses
2. no enforceable K, but P entitled to something under promissory estoppel
3. failure to perform on land K and jurisdiction doesn’t allow expectation

4. §2-713 “Non-delivery” – measure of dmg difference between K price/market price + incidental/consequential dmgs
5. §2-715 “Incidental and Consequential Dmgs”
a. incidental- dmgs reasonably incurred inspection, receipt, transportation, care/custody of goods rejected, expenses in cover or expenses incident to breach
b. consequential-any loss resulting from needs which seller had reason to know and could not reasonably be covered, and injury to person or property resultant from breach of warranty.
6. §2-217 “Principle of Deduction of Dmgs”-buyer may deduct dmgs from breach from monies owed to the seller.

Case 5: Tongish v. Thomas (SC Ka. 1992) [pg 79] F: Tongish agreed to sell seeds to Coop. Breached and sold to Thomas at higher price. Coop intervened in suit to recover sale price from Thomas. Coop was to sell seeds to third party for only a nominal handling fee.
I: Should Coop recover only lost profits (straight expectation UCC §1-106,) or rather difference between market price and K price (as per UCC §2-713)?
R: Difference between market/K price as set in UCC. Encourages adherence to K, and fair, since Coop stood to lose if market price went down.