Contracts

Is there an agreement

Meeting of the minds ( Consensus Ad idem)

Mutual mistake of a material fact will void a contract

When there is no meeting of the minds there is no contract

Mutual assent is examined in two theories

Subjectic

Raffles v. Winchelhaus

The Peerless case

Courts will not enforce an agreement where there is a mistake at the essence of the contrat

Courts also required a complete meeting of the minds

Objective

Embry v. Hargadine- McKittrick

Look to see how a reasonable man would view the conduct of the other

Doesn't matter what the other party thought

If it seems like they accepted, they accepted

Offer

Look at the first communication

General test is manifestation of commitement

Content of communication

Writting or speech

Watch for unclear phrases

Find what is missing

Real estate requires price and description under statude of frauds

Examine the context of the bargiain

Advertisements are not offers

Unless pervious dealings say otherwise

Moulton v. Kershaw

Even though it said I am offering

Have to look at wording of the message

Offers are generally assumed to be bilatteral contracts

Davis v. Jacoby

Exchange of letters were unclear

Court decided it was bilateral

Would have performed if Whitehead died

Unsolicited goods are seen as gift with no coditions

What happens after offer

Termination of offer

Person dies

Lapse of time

Revocation of offer

requires notice

prevented in four situations

Option contracts

Requires payment as consideration

Mier v. Hadden

you are paing for time to decide

Consideration because you exchange money for option

Firm offer under UCC

Sale of goods

promise not to revoke

in wirting

by merchant

E.A. Coronis v, M. Gordon

Signed Writing is critica so no firm offerl, but can use Reliance on a promise

When there is reliance on the offer

Subcontractor is part of bid

James Baird v. Gimbel

Contractors did not accept off by putting in their bids

Contract acceptance after award on contract

no ground for reliance

Drennan v. Star Paving Co

Reliance because there is reasonble expectance

Hoped that other party would use bid

General contractor cannot delay or rebargain

Unilateral contracts where performance has begun

Brackenbury v. Hogdkins

The grandmother could not revoke once the performance had started

Grandmother was treated poorly

Their performance was substaintial

Acceptance

Only the offeree can accept

Hill v. Gateway 2000

Court held that vendor is offeror

Allowed them to specify terms of agreement

Klocek v. Gateway

Pruchaser is usually the offeror

call is offer, shipping is acceptance

Terms can control the method of acceptance

General rule is that anything reasonable will constitute an acceptance

Hobbs v. Massasoit Whip

Evidence of previous interaction allowed silence as acceptance

When there is no verbal response and performance begins

Bilateral contracts - Start of performance is an implied promise to perform

Unilateral contracts - start of perfromance is not sufficent

You cannot get a reward by saying you will start

Mailbox Rule

All communications are effective only when received except for acceptance

Is the response to Offer effective

Waited To long

Offeror Changes mind

As long as there is notice

Rejections

Direct Recjection

Indirect rejection

Counteroffer

Kill the offers and replaces it with anther other

Livingstone v. Ecans

The second telegram killed the offer

But the reply was a renewal of the original offer

Looked at the entire communication

Conditional acceptance

When and offer says if, provided so long as the offer process starts over again

Additional terms

Mirror Image Rule

In common Law, response must mirror all terms

For sale of Goods under UCC there is no mirror image rule between merchants

Is there any reason why this should not be enforced

Checking for Capacity to Contract/ People who made the deal

3 catagories

Minors

Intoxicated or imparied

Mental Impairment

Others cannont enforce against these, but they can enforce against others

When the contract is for necessaries, the contract is enforceable under restitution

How did parties deal with each other

Duress

Phyiscal threats

Ecomoic Duress

Improper Threat

No reasonable alternative

Generally in business

Austin Instruments v. Loral

Loral placed Austin in a position where it could do nothing

Smithwick v. Whitley

Durress exist only when there is unlaful act of another that deprives them of free will

Undue Influence

Domination

Unfair Persuasion

Wollums v. Horseley

Defendant was lulled into believe nothing would be done with his property

Courts will not enforce contract that is reasonable

Cleanup principle

Courts will give whatever remedy is needed to give a complete and final dispostion of issue rased

Includes withholding equitable relief

Generally between individuals

Misrepresentation

When object of contract is said to be something it is not

For example if someone says there is no termintes but there are, the contract is rescinded

Cushman v. Kirby

Mrs. Kirby's Fault

When party has full info but does not say everything and leads other to believe there is full discloruse = fraud

Saying it was just a little hard was fraud

Mr. Kirby's Fauil

Failure to correct constituted misrepresentation

should have corrected what Wife said

Nondisclosure

Required when there is information that other party could not reaosnably discover

Dickey v. Hurd

Party had a duty to inform once he understood the other party interpreted contract differently

Mistake

Mutual Mistake which is material to the agreement

Mistake does not include value of object -> risk of business

Sherwood v. Walker

The misinterpretation went to the essence of the contract

Requires three things

Very nature of merchandise is is different

mutual mistake about the thing

dollar consequence is large

Beachcomber Coins

Both parties must be of equal knowledge

Who accepts the risk?

Also to prevent spread of the item

Ambiguity in the Language of the Agreement

Must be term in contract that

Has 2 different reasonable meanings

Both parties see it differently

Neither party has reason to believe the other party thinks differently

Terms of the deal

Illegality in subject matter

Duncan v. Black

The sale of cotton shares was illegal

Superwood vorp v. Siemplkamp

Cannot recovery economic loss from transactions under tort theory of negligence

Violation of publicy policy

Coventants not to compete

Reasonble business need for protection

Reasonable Geographic Scope

Reasonable Time limitation

Data Management v. Greene

There was no reason to enforce this

Henningsen v. Bloomfield Motors

Adhenson contracts that were standard

Inequality in bargaining power is apartn

keep in part because of freedom of contract

Must be unfairly procured

Failure to point to relevant parts of the contract

Layman couldn't understand what he was giving up

Could not contract out of public requirement for paymetn of damages from injuries

Attempt to frustate protecton makes it void

Richards v.Richards

Trucker Contract to ride along was too broad

Violated Public policy

Three factors against enforcemendt

Serves two purpose not clearly identifiy

To broad and all inclusive

Standardized agreement with no oppurtuniy for negotioan

Adhesion contracts

Seller must point to all relevant terms

Language must be inconspicous

Cannot be unfair

Broemmer v. Abortion Services

Standardized form on a take it or leave it basis

Weakter parties have no choice of terms

Enforcement looks at 2 things

Reasonable Expectations of adhering party

If the contract is unconscionable

Here it was simply beyond the reasonable expectaction to arbitrate

Unconscionability

Despite being only in UCC, applies to most contracts

Always tested at time of contract

Willaims v. Walker Thomas furniture Co

Unconscionability is

Absence of meaningful choice with

terms unreasonably favorable to other party

Manner of contracting is also relvant

Look at terms in light of cirucumstance

Does a party have time to understand terms

Determined by Judges

Can just strike out specific terms

Statute of Frauds

Concerns about people coming to court and alleging agreements where there was not one

Requires Writing

Within the statute

Major

Exchange of interest in land

Does not include a one year lease

Service contracts not completable in a year

Agreements to perform more than a year later

Minor

Promise to excuse debt of others

Promise in consideration of marriage

executor's promise to pay debts of estate

Satsifiying the Statute

Written Agreements

Signed by the party being sued

one party cannot be an agent of the other party

Contains all material terms

Who is making agreement

What is being exhanged

Oral Agreement

Land (requires 2/3)

Part payment

Buyer is possesion of land

Buyer has mad significant improvements

Service Contracts

Part performance is insufficent

Recovery would be in restitution

Consideration

Bargained for exchange

Congregation v DeLeo

No enforcment of promise because there was no deteriment or reliance

Whitten v. Greeley Shaw

Promise inserted by hooker was insufficent

The promise but be sought by party

Determiment to promisor or benefit to promisee

Pitts v. Mcgraww

No benefits passes from promisee

Retirement payments were entirely voluntary

in Re Bayshor Yacht

a mere promise without consideration is unenforceable.

Hamer v. Sidway

Deteriment was forberance of right to drink

contract was enforceable

Earle v. Angell

Where going to a funeral was a valid consideration

Oberring v. Swain Roach

Limitation of future options is consdieration

Adequacy is always irrelevant

Fischer v. Union Trust

Generally the dollar would be sufficent, but it must be bargained for

The fake exchange did not make it consideration

Bargain must be in good faith and have some foundation

Duncan v. Black

Forberance of surrent of claim which proves to be invalid is not consideration unless

claim is doubtful because of uncerstantiy as to facts or law

surredneing party believe claim was valid

There is a writting

Past consideration is never sufficent

Mills v. Wyman

Moral obligation cannot be consideration

The vent occured in the past

Webb v. Mcgowin

If there is a material benefit recieved

moral obligation is sufficent if MB is providied

Harrington v. Taylor

Moral obligation was not enough

Exceptions exist if person performs expecting to be paid

Improving land

Doctor saving life

Taking care of a cow

Alternate promise are not cosideration unless

Each alternative is consideration

One is consideration and there is substaintial probability the other will be eliminated

Implied Promises

Contracts that create a requiremetn for reasonable effort

Wood v. Lady duff-Gordon

Exclusive rights

Made sense that there was an implied promise

Would not place it self at the mercy of others

Paul v. Rosen

Contract because of implied promise?

Charitable donations

I&I v. Gainsburg

No consideration exist

Salsbury v. Northwestern Bell

Public policy to enforce promise.

Only in a place where subscription is unequvical that pledge should keep his word

Mutuality of Consideration

Examined at the point of contracting

Indefinite promises fail to create obligation

Davis v. General Foods

Pre-existing duty rule

No consideration for modifications

Reliance on the Promise

Promise that is

Relied upon by in a reasonable and forseeable way

Seavy v. Drake

Where building on land giving by father was enough

1st National v. Logan

A promise by promissor

Made with expectation that promissee will rely

Induces reliance

Definet and substaintial relance

injustice can be avoided by enforcement

Unjust when there is lack of enforcemant.

Prescot v. Jones

Applies only where a promise made causes another to act in detrimental reliance

Was created in early 1900

Ricketts v. Scothorm

Because he induced her to leave her job promise enforced

Kirksey v. Kirksey

Held that there was no consideration

Reliance did no exist

What are the terms of the contract

Sale Goods

Implied warrenty of Merchantability

Must be good for what is was sold for

Seller must be in business of selling goods of that kind

Hinson v. Jefferson

Mutual mistake has evolved into implied warrenty of habitability

If you cannot use something for the very reason you bought it, the item is in breach of warranty

Contract is then rescinded

Other don't all adopt this

Parol Evidence Rule

Gives superior power to the writting

Mitchel v. Lath

Substance not form is the test

Three things required

Agreement must be collateral

Must not Contradict express or implied provision

Must be something parties woudl no ordinaly expect to be embodied in contract

Removal of Ice house should have been in contract, so no PER

WWW. v. Gianconteri

Courts first look to give due weight to the writting

Evidence from the outside is generally in admissiable

Evidence cannot be used to create ambiguity

Pacific Gas v. G.W. Thomas

Courts should look at other evidence to determine the intent

There should be atleast an initial examiniation of extrinsic evidence

Intent is the cornerstone of the bargain

Integrated Agreements

A written agreement that court concludes to be final verion of the deal

Hatley v. Stafford

Have to consider the experience of the parties

No lawyers preesnt

Courts can consider if literal reading leads to unreasonable reults

If it appears complete to it facts it is complete

Look to see if natural for parties situated as they were to agree

Focus on intent of parties

Only express terms can be contradicted

Hayden v. Hoadley

Court used gap filler to say that a reasonable time is allowed

Prevented Evidence because it said contract was complete

Implied terms cannot be contradicted

Can be complete or Partial Integration

Is anything that is a statment by parties before entering into the agreement

Exceptions

Always admissable to explain ambigous terms

Luria Brothrs v. Pielet

Party tried to argue that this explained terms

Court said no, it was contradicition,

Had it said per our coversation, would have allowed evidence to clear up condition precedent

Allows additional terms if the contract is a partial agreement

Can be used to establish defense of misrepresentation

Accord and Satisfaction

When there is unliquidated sum = bona fide dispute

Marton Remdelling v. Jenson

When a check says payment in full is cashed, the dispute is resolved

Intent is the critical factor in determining

This was ruled accord and satisfaction

cannot scratch out than cash

Courts favor compromise

Schoollines v. Barcomb

Rule does not apply when there is not dispute about sums owed

Kilander v. Blickle

No need to talk about consideration

Executory Accord Example

Creditor Rejects accord

Creditor can revoke with notification

Creditor becomes impatient

Debtor could only seek defense in equity

debtor Defaults

Does creditor get accord or orignal amount owe

Not generally a substituted contract

Could be an amendmend

Modification of at-will Employment

Majority of people are at will employees

Courts generally don't like this but won't chang e system

established limits

Public policy exceptions to terminating at will

Sheets v. Teddy Frosted Foods

Breach because person was fired for proteting public safety

Union Activity

Jury Duty

Refuse to commit perjury

File Workman's Comp

Try to make contracts into For Cause terminations

Mcdonald v. Mobil Coal

Modifited contract according to handbook

Looked at the intent of the managers

Told him they would follow policy

Relied on this promise

Dissent argues would kill at-will

Strict Constructive

Reading something differently to ensure enforcemant

Was there Contract Performed

Render-Tender Rule

UCC requires Perfect tender

Oshinky

Requires shipment of everything asked for in the same number and type

Otherwise other party does not have to pay

Tender is required before you can sure for performance

Bell v. Elder

Could not sue because they had not tendered

Ziehen v. Smith

If it is imposible for D to perform you are exucused

Was not impossible

Failure to tender results in no suit

Best to always tender performance

In relesate, Good title is not required when contracting

Neves v. Wright

Caproal v. Rubine

Must be able to tender

Since he didn't have a right to tender

Could sue for right to tender

Material Breach

When breach goes to the essence of the contract

Fact dependant

REynolds v Armstead

Damage of apperace of house

Prevented recovery in contract

some recover in restitution

Tichnor v Evans

Promise not to sell to others ws not material breach

Jacobs & Young v. Kent

Wrong pipe was not material because other pipes were of same quality

see also Aielle v. Nationwide where miss one payment it not material breach

Substantial performance

Other side of coin from material breach

Completion of project to the essence of the contract

Plante v. Jacobe

Construction was essence

Defectes we small none material breaches

Turner Concrete v. Chester

Party was wrong to breach for such a small breach

Termination required reasonble time and propert notice

Defednant had substaintiall performed so other party could not leave teh site

Satisfaction

Utilitarian

Haymore v. Levingson

Contracts for constuction are judged by reasonable person standard

Berslow v. Gotham

Service contracts are utlitarian if they are not personal in nature

Morin Bldg

Reasonblness is read into contract

Personal Aesthetics

Furscmidt v. Hotel Abbey

Contract was at whim of hotel so it was personal standard

Judge on good faith acceptance because it is made for party contracting

Third Party Acceptance

In construction last payment is often withheld until certification

Architect certifys but it must be in good faith

2nd Nation bank v. Pan American

Bad faith for architect to deny

Architect approved plans that were later unsatisfatory

Is there an excuse for non-performance

Other paties breach

If there is material breach you are excused from performance

Other parties statements

Anticipatory Repudiation

When it seems apparant the other party will not perform you can breach

Determining what is a repudiation is difficult

No anticaptory breach for unilateral contracts for money

Can't use it to accelerate payments

Does actions of other consitute breach

express statements

Refusal to do something essiental to contract

Insiisting on new conditions

Where D belives he has comleped his obligations and regues to perfom other, court determins this is wrong and D still must perforam. D's refusal is not a refusal

Greguhn v. Mutual

Company wrongly believe it was no longer required to pay

courts said you still have to

Can you get rest of money

No You have to bring sepate suits

Did Greguhn Totally peform?

Court thinks unilateral so no AR

Frees up parties to redistrubute wealth effectively.

This equals total breach

P can terminate and sue, or wait for failure to perform

Only if Bilateral K and P has not completed performance

But not if Unilateral K or Bilateral K where P has fully performed

Wavier

A disclaimer of a right

Cannot be revoked

Estoppel

When a party mislead you with it comments

Can be revoked by clearing up the misleading

Gilbert v. Rutgers Fire

condtion excused during estoppel

Once estoppel Revoked had to act in a reasonble time

Unforseen circumstances

Impossibiliy

When events make performance impossible

Taylor v. Caldwell

Burning down of the hall prevent any performance

Increase is price = impossibility

Semmes v. HartFord

Impossiblity will excuse conditions as well here it was war

Frustration of Purpose

When performance is possible but the mutually understood purpose is frustrated

Krell v. Henry

Cancellation of coronation frustated understood purpose of the contract

Kel Kim v. Central Markets

Prupose was not frustated because they could do something other than skating rink

Obligated to get insurance because it protect central markets

Conditions

Dual Identity of Property

obligation of Promissor

condition of Promisse

Interdependace of Promisise

Courts used to view Everything as indpendant

Nichols v. Raynbred

Two seperate actions must be maintained

Introduction of conditions

Kingston v. Preston

Performance was excused because of the non performace of the other party

Prevented injustice between Parties

If condition is not meet performance is excused

Merrit Hill v. Windy Heights

Codtion has to occur unless its nonoccurence is excused

Conditions will be excused to avoid forfiture

Howard v. FCIC

Courts will try to prevent loss of insurance premiums

Therefore they will rule certain thigns as condition subsquent instead

Atena Cas v. Murphy

Conditions will not be enforced to prevent foritfute it they do not prejudice the other party

Express conditions must be strictly complied with

Courts will Generally promise as depdentant unless something else is said

When performance of another promise occurs after on promise are indepedant obligations

Price v . Van Lint

Pefromance occuring after was not a condition excusing performance

What are the consequences

Contract Damages

Expectancy damages

PLace party in position they would have been in

Illinios Central R.R. v. Crail

Market price is but means of getting at loss suffered

use appropriate price wholesae v. market

Watt v. Nevada

Replace goods as they are valued by plaintiff

Contruction contracts

Owner Breach

Profits that would have been made less any payments or damages

Contractor Breach

Cost of completion or Dimunation in value if C/C too high

Groves v. John Wonder

Cost of completion was awarded even though it was higher

Peevyhouse v. Garland Coal

Normally dimunation if value is followed.

Adavnaced, Inc v. Wilks

Replacement if there is special value

Sale of Goods Contracts

Seller Breach

Buyer gets market price minus contract Price

Acme Mills v. Johnson

Damages were not awarded because market price was lower

Buyer Breach

Seller can recover Contract Price minus Market price at tme and place of tender

Sevice/ Employment Contracts

contracter Breach

Employee is entitled to lost wages minus anything that could reasonably have been earned

Reasonable effort to find new job

Does not need to accept far away or lesser position

Employer must prove

Parker v. 20th Century

Another movie rule was not similar and did hot have to be taken

Biltletter c. Posner

No decduction from unemployment

no deduction for lesser position

Contractee Breach

If a party is a common carrier they are responsible for all damages forseeable

Security Stove v. American Ry. Express

Damages include everything surrounding the event

They knew what would happen if the shipment was late

Hadley v. Baxendale

Damages for lost profits were not allowed because they were not foreseeable

If the shipper had been told damages would have been awarded

Reliance damages

Place party where the were

You cannot get money for things you would have done anywats

Mt Pleasant v. steinberg

No money for horse because they would have lost money anyways

Chicago Colseum Club v. Dempsy

when expectancy cannot be proved with more than a proponderance of evidence

Ddi not award reliance, only gave restitution for money paid to dempset

Anglia v. Reed

Damages were awarded for everything made in preperation of contract

The actor could reasonably forsee what he was getting into

Restitution

Prevent injustice

Resitution

Damages to prevent unjust enrichment outside of contract

Thach v. Durham

Courts of Equity will sometimes do nothing

This include not returning a down payment for a wilful breach

Measured by reasonable value of services rendered minus payment made

US v. Algernon Blair

There was a material breach

Would have lost money on the contract, but sued in restitution instead

Can sue even if you are in breach, or would lose money

Britton v. Turner

Money awarded for work that was already done

Limited by contract because plaintiff was suing.

also subtract any damages that result from breach

Get money back that was spent on an oral contract.

Kearns v. Andree

Money for painting the house returned but not money spent after

Work done under terms of oral agreement with good faith belief that contract was enforceable

Cannot get when you have fully performed

Oliver v. Campbell

Substaintial performance means only money from contract

Equity

Specific Perofrmance

Generally Avaliable unless there are problems with judical enforcemant

The rule is that it is only awarded when the remedy at law was inadequate

This occurs when there is trouble in determining value

Van Wagner v. S&M Enterprises

No SP, because remedy was easy to determine

There was no troubl in determining uniqueness

City Stores v. Ammerman

"essential criterion ... is the relative inadequaac of legal remedies"

Real estate

Buyer can nearly always get SP

Service Contracts

Specific performance is generall not permited

Fitzpatrick v. Michael

Enforcement would

Force unwanted employee on employer

Created an indentured servent

Enforcement coudl occur ifThere was a unique skill

Pingly v. Brunson

Performer was not unique

Injunctive relief is available

Sale of Goods

Only when the goods are unique

Critical Goods will be awarded

Curtice Brothers v. Catts

SP because the Tomatos were critical for function

Limitations on compensation

Parties must do everything in there power to stop incurring losses

Rockingham County v. Luten Bridge Co.

The continuation of building was a failure to mitigate damages

note: anticaptory repduatiion is present here

Who was the true party they were getting order from

Bridge company was caught and did the best it coudl ahve

Fixed cost - Constant overhead expenses are gennerally not substracted from Damages

Lenigang v. weed board

Damages were incorrect because they subtracted cost that woudl ahve occured with or without contract

Variable Cost - Other money made is not subtracted unless they only occured because of breach

Kersarge Computer

A business is assumed to be able to expand infinetly

Unlike personal sevice contract

Damages must be forseeable

Mental Damages are beyond scope of forseeability

Valentine v. General American Credit

Courts generally concern themselves with economic damages

Only exceptions are for extremely personal contracts

breach of marraige

failed child delivery

failure to pay insuracnce that resulted in mental distress

Hancock v. Northcutt

no mental damages for poor house