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Contracts
Wayne State University Law School
White, Katherine E.

I. INTRO
a.                  NATURE OF A CONTRACT; WHY COURT DOESN’T AWARD DAMAGES IN CERTAIN SITUATIONS
a.      CASE LAW: Shaheen v. Knight (vasectomy)
·         rule: Dr/patient K for result, if not achieved, breach of K.
·         agnst pub. plcy to award man dmges when he was enjoying gift, another child. Only remedy to make whole is give child up/relinquish parental rights. Therefore, no remedy, no K.
·         no malpractice allged in this case (no warranty to cure / malpractice only sustained by proof of negligence)     
b.      RESTATEMENT (SECOND) of CONTRACTS: (what is the Rest)
(K law – state issued / Restatements “restate” what the majority rule is / Not binding, persuasive authority / common law & case law & modern view)
·         R §1: K DEFINED
·         R §2: PROMISE; PROMISOR; PROMISEE; BENEFICIARY
·         R §3: AGREEMENT DEFINED; BARGAIN DEFINED
·         R §178: WHEN A TERM IS UNENFORCEABLE ON GROUNDS OF PUBLIC POLICY
·        
The more a promise is like a family member promise, the less likely we’ll enforce it

The more it is like commerce, the more likely we’ll enforce it
Restatement §179: BASES OF PULBIC POLICIES AGAINST ENFORCEMENT
c.       CLASS NOTES
·         K law à nonfeasance à no act (don’t do anything) (theories of obligation that require compensation ($))
·         Writ of assumpsit à common law / breach of K today
·         frdm to K & frdm from K: not bound by something didn’t prom
·         DON’T DEAL w/: emotional/family promises
·         DOES DEAL w/: cmmrcial promises – based in capitalism, bargains, bargains for exchanges, to facilitate econ / Detrimental reliance: person relies to his or her detriment
·         No punitive dmges in K law (measure compnstn bsd on mrkt)
b.      WHY REMEDIES FIRST; THREE DAMAGE INTERESTS AND DISTINCTIONS BETWEEN THEM; HOW WE MEASURE DAMAGE INTERESTS
a.      CLASS NOTES: Why Remedies First?
·         Remedy often drives what must be shown to prove an obligation has been broken and should be compensated
·         No rmdy = no K (Judges ask: Does society want to enforce this K?)
b.      CASE LAW: Hawkins v. McGee (hairy hand)
·         True measure of a buyer’s dmges is the difference between the value of the goods as they would have been if the warranty as to the quality had been true and the actual value at the time of sale, including any incidental consequences w/in the contemplation of the parties when thy made their K.
·         D says no K / Crt says D hounded Hawkins till he relented to surgery
·         No pain and suffering in K case
·         put Hawkins in position he would have been in had the K been performed: 100% hand – hairy hand = expectation interest
o   even though you don’t get exactly what you want, you get something (hairy hand) and you have to subtract that out
·         Warranty of cure is what allowed the crt to award expectation interest
c.       CASE LAW: Nurse v. Barns (iron mills)
·         special dmges for the loss of stock laid in for the use of iron mills
·         rule: special dmges may be awarded for breach of K
d.      RESTATEMENT
·         Restatement §347: MEASURE OF DAMAGES IN GENERAL: GM=Loss in Value + Other Lost – Cost Avoided – Loss Avoided
o   Loss in Value=Value of Promisor’s promised performance
o   Other Loss=incidental or forseeable consequential dmges
o   Costs Avoided=Expenditures Promisee would have made but did not have to because of promisor’s breach
o   Loss avoided=Losses promisee would have had but did not have because of promisor’s breach
CLASS NOTES: Three Damage Interests
·         Expectation interest (normal measure of rcvry, aka K dmges) focuses on promisee: Crt attempts to put the promisee in the position the promisee would have been in, if the promise had been performed
·         Reliance interest (detrimental reliance) focuses on promisee: Crt attempts to put the promisee in the position it was in before the promise was made. (No lost profits)
·         Restitution interest (unjust enrichment) focuses on promisor: Crt attempts to put the promisor in the position it was in before the promise was made
II.                DMGES FOR BREACH OF CONTRACT
a.      Breach K in sits. where benefit more economically by breaching (Tongish v. Thomas not looked upon as beh. to be rewarded –WRONGLY DECIDED)
b.      Breach = market stability; continuously breach =  people will not trust you
c.       Not all promises should be enforced: Not all promises are a K/have a remedy (i.e. gift); familial/emotional
d.      CASE LAW: J.O. Hooker & Sons v. Roberts Cabinet Co. (Cabinets)
·         Fact summary: when Hooker (D), a general contractor for the renovation of public housing residences, terminated Roberts’ (P) subK due to a dispute o

xpectation damages attempt to put the promisee in the same position s/he would have been in had the k been performed
§ Breach was efficient
UCC Sections
·         UCC §1-106: REMEDIES TO BE LIBERALLY ADMINISTERED
·         Cover: rsnble effort to purchase gds to sub those you didn’t get
·         UCC §2-712: COVER; BUYER’S PROCUREMENT OF SUBSTITUTE GOODS
·         repudiation: Threatened breach of K / Repudiation: actions or statements of a party to a K that evidence his intent not to perform, or to continue to perform, of his duties or obligations thereunder
·         §2-713: BUYER’S DAMAGES FOR NON-DELIVERY OR REPUDIATION
·         incidental & consequential dmges: Any cmmrcly rsnble charges
·         §2-715: BUYER’S INCIDENTAL AND CONSEQUENTIAL DAMAGES
·         prncple of dedctn of dmges: Buyer takes dmges out of what he owes seller
·         §2-717: DEDUCTION OF DAMAGES FROM THE PRICE
II b. FORESEABILITY; CERTAINTY OF HARM; AVOIDABILITY OF HARM
A. three limitations on damages
a.     
Reed would have to show that they weren’t going to get their wasted expenditures back; victim of breach is not as burdened as they were in Chicago Coliseum; Mistletoe goes a little bit farther

lmtatns in K cases b/c dmgs not punitive. Prevents unjust enrichment / overcompensation. 
·         expectation provides normal (“upper”) limit to K dmges (when lmtatns on expctn. apply, crt may award reliance or restitution damages)
·         usu expectation consequences wld be most dmges but not always
o   In “exceptional” cases, reliance damages are considered the most appropriate. See Restatement § 349.
·         Limitations expectation & reliance:  (see p 28/29 of long outline)
§ Foreseeability of Harm
§ Certainty of Harm (pt of certainty of harm is to cap expectation damages – Reed)
§ Avoidability of Harm
Von Mises p123: Subjectivity of value – subjctve values