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Final Contracts Outline

Final Contracts Outline

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01/13/2013

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Sections

  • Section 1: Meaning of ³Enforce´ --pg. 1
  • Section 2: Remedying Breach²pg. 8
  • Section 3: The Acceptance²pg. 147
  • Section 4: Termination of the Power of Acceptance²pg
  • Section 5: The Battle of the Forms and the UCC²

Outline for Contracts

Chapter 1: Bases for Enforcing Promises
TYPES OF CONTRACTS
I. EXPRESS CONTRACT ± Promises are communicated by language, there is a bargained for exchange. (e.g., I will agree to do this for you if you agree to give me this«) II. IMPLIED CONTRACT ± Parties¶ conduct indicates that they assented to be bound. (e.g., person fills their gas tank at a fuel station. There is a contract for the sale and purchase of gas implied in the person¶s performance of filling their tank.) III. QUASI-CONTRACT(Not a contract at all) ± One party is unjustly enriched at the expense of another party so that the enriched party must pay restitution to the other party equal to the unjust enrichment. (e.g., a person agrees to build a house for another party which then dies while only part of the house had been completed. P can recover the benefit conferred on D even though they are unable to sue on the contract.)

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Section 1: Meaning of ³Enforce´ --pg. 1
HAWKINS vs. MCGEE
y

Court believes that the words with the combination of the evidence (asking permission to conduct surgery) make it possible for the jury to find intentional forming of a contract.

BAYLINER MARINE vs. CROW 
P claims that "Prop matrixes" showing that the speed of the boat (30mph) created an express warranty.  Appellate court disagreed with trial court's findings²³your boat has to meet the exact same requirements o Stating no express warranty was made; warranties made in ³prop matrix´ were not for same boat as P¶s. y Court disagreed; stating that it was an opinion not an express warranty-not specific enough to create a promise Code § 8.2-313 (2)²³a statement purporting to be merely the seller¶s opinion or commendation of the goods does not create a warranty.´

Section 2: Remedying

Breach²pg. 8

THE PURPOSE OF REMEDIES: THREE PROTECTED INTERESTS
o o o

Expectancy±gives plaintiff what they expected to receive from the contract Reliance- gives plaintiff what they had before the contract or the promise was made. Restitution- gives plaintiff back what plaintiff gave to defendant.

Specific performance, courts will almost always award when concerning land o Real property treated as unique

U.S. NAVAL INSTITUTE vs. CHARTER COMMUNICATIONS
D and P had a licensing agreement for publishing a book y y y y y D shipped early; P sought injunction to stop D but court refused; D¶s early release was realized; P sued: P can recover from lost sales. o Not a UCC case--Case is re: publishing the book, not selling the book.

Trial judge dismissed because shipping early is custom y Court determined Naval not entitled to copyright infringement damages o "Lost profit damages" y Hard copy sales lost=compensatory damages
y y

Difficult for Naval to prove how much $ was lost in sales. Court says absolute certainty is not necessary to prove something occurred o Naval entitled to actual damages due to breach, base it off of August sales

Rule:Damages should be awarded based on P¶s loss, not D¶s gain y D is responsible for the loss of sales, not for P¶s potential profit because copyright infringement was not proven.

SULLIVAN vs. O¶CONNOR
D promised to perform nose job on P over course of 2 operations--make her ³nose more beautiful´  Appearance worsened, not improved. P can recover damages. Rule:P relied on D for a promised result, P awarded damages based on reliance interest of D¶s promise
o y Court ruled that restitution interestwas valid to fulfill Awarded y Reliance, pain and suffering, P can recover for her loss in value of appearance because of the surgeries. y Pain and suffering for 1st two operations, but not 3rd

Total Restitution recovery: $300 Reliance--putting her back where she was before. $20. BENKOWSKI y y y NEVER ANY PUNITIVE DAMAGES Analyzing assignment ofpunitive and compensatory damages The $1 was nothing more than a nominal damage to say that "hey.¶s fees ($100 per operation). Efficient breaches arean economical issue. $300 for Hospital fees ($100 per operation). not $ she's paid out to other people: Only thing she has conferred on him is Dr. $10.000 value of loss of appearance.000 P&S for 3rd operation. Total Expectancy recovery: $33. $9. $10. may be of benefit to breach. Cannot get more than what you expected.600 Expectancy--had the promise been performed (benefit of the bargain): P was prepared for 2 operations. had the surgery never occurred.000 for increased value of appearance had the surgery been performed correctly.'s fee ($300).100 THE ECONOMICS OF REMEDIES: y y y Not meant to be punitive. $3.$300 for Dr. y Assigning the possible damages under the different theories of recovery: Restitution--awarding her back any amount she has conferred on Dr. y If only consequence is compensatory.000 P&S. If breaching the promise is more economical then where is the harm? Right now the law allows and encourages efficient breaches Punitive Damages WHITE vs.y Plaintiff and Defendant are both arguing between Restitution and Reliance o Defendant appealed that too much $ was awarded Expectancy damageswere waived by the P so that she could keep the reliance damages. will not include punitive damages. would only get $100 hospital fee for 3rd operation. O¶Connor.000 for LOSS of appearance Total Reliance recovery: $19. you've won" .

Restatement (Second) § 74± Settlement of Claims²³forbearance of an invalid claim´ (1) Forbearance of the ability to assert a right. until P turned 21.34)  D promised to pay P. maintaining stadium and profit sharing. (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. the bargain agreed upon will be an enforceable contract ± as opposed to an unenforceable promise. y y Unilateral contracts-agreements in which only one party makes a promise Bilateral contracts-agreements in which each party makes a promise to each other-more common and economically significant GRATUITOUS PROMISES ³Sweetheart Stadium´-taxpayers upset that they're essentially "gifting" a new stadium to a private organization (Seattle Mariners). In those situations. or (b) The forbearing or surrendering party believes the claim or defense may be fairly deemed valid ± ³made in good faith´²*Fiege v Boehm (2) The execution of a written instrument surrendering a claim or defense by one who is under no duty to execute it is consideration if the execution thereof is bargained for even though he is not asserting the claim or defense and believes that no valid claim or defense exists. a performance or a return promise must be bargained for. It may be given by the promisee or by some other person. or surrender of a claim or defense. or (b) A forbearance. D breached and P could recover (there was a bargained for exchange) Rule: Any suspension or forbearance of a legal right at the request of another is sufficient consideration to sustain a promise. which proves to be invalid is not consideration unless (a) The claim or defense is doubtful due to the uncertainty of the facts or the law. modification. HAMER vs. Contend that it is prohibited under state constitution (forbidding gifts of public monies to private groups)²  Court determines there is ³consideration´ on the D¶s part (Seattle Mariners) in the form of playing home games. D¶s promise will be enforced as a binding contract.CONSIDERATION as a Basis for Enforcement²pg. drinking etc. 29 Restatement (Second) § 71±Requirement of Exchange. his nephew. if he refrained from smoking. Types of Exchange (1)To constitute consideration. (4) The performance or return promise may be given to the promisor or to some other person. or destruction of a legal relation. P complied.SIDWAY (pg. . or (c) The creation. D¶s estate refused to pay. (3) The performance may consist of (a) An act other than a promise. Consideration does not mean that one party to a contract has to profit so much as it might mean that one party may abandon or limit a legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first. (Best statement of consideration) Since P gave up his legal right to do certain things on the belief that D would pay.

D made payments until a blood test suggested that the child was not his.P had valid reason to believe D was the father. vexatious..B.  Note (A.40) P agreed not to bring bastardy proceedings against D in exchange for the promise that D would pay a certain amount in child support etc. P forebear (in good faith) from suing for bastardy charges in exchange for child support from D. Contract had sufficient consideration because P did not exercise P¶s right to prosecute for bastardy in exchange for D¶s promise to pay. P made the claim in good faith and there was no proof of fraud or unfairness. . Rule:Forbearance to sue for a lawful claim or demand is sufficient consideration for a promise to pay for the forbearance if the party forbearing had an honest intention to prosecute litigation which is not frivolous.BOEHM (pg. P brought bastardy proceedings and sued D for breach: P can recover even though the child was not D¶s. or unlawful.): It¶s possible for P to have suits against other men as longas they are in good faith ± P or any other man should just not enter into agreement until knew for certainty the paternity. D stopped payments.FIEGE vs. and which he believed to be well founded.

McGOWIN (pg. WEBB vs. (1)A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. Rule: Promise not enforceable because there was no consideration. she wouldn't have quit when she did had she not been promised discussed amount of $. executors of the will stop payments.52) o o o Instead of dropping the block. no bargained for exchange between P and D. or (b) To the extent that its value is disproportionate to the benefit. Rulesno consideration based on past performance.THE REQUIREMENT OF EXCHANGE--ACTION IN THE PAST FEINBERG vs. Reliance is an entirely separate claim for enforcement of the promise. GRATUITOUS PROMISE Ct. but family members who inherit the company decide to cut her off. (2) A promise is not binding under Subsection (1) (a) If the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched.50) D promised to pay P for medical care given to his son which was already given: not valid consideration because there was no bargained for exchange before the treatment was given. PFEIFFER CO. finding it to be a gift. Company makes payments for quite some time. Feinberg relied on the promise. crippling him for life In recognition of Webb saving his life. . Stating that she wouldn't have retired when she did had this promise not taken place.WYMAN (pg. (pg. y Meaning.46)    Company¶s owner promised to pay her a $200 a month pension whenever she chose to retire. Webb decides to fall with the block to save McGowin from injury/death Webb sustains numerous injuries. McGowin agrees to pay Webb $15 every two weeks for the rest of his life y Fulfills obligation until his death.  Feinberg wins on the contention that the company's promise resulted in a "change of position" on her part. or even P and D¶s son.²RELIANCE THEORY MORAL OBLIGATION MILLS vs. Restatement (Second) § 86 --Promise for Benefit Received. however.

o A moral obligation is a sufficient consideration to support subsequent promise to pay where the promisor has received a material benefit.Rule: Where the promisee cares for. improves and preserves the property of the promisor. o D gained a material benefit when P saved his life by risking his own. that the law gives the promise validity« o Wyman did not receive a material benefit. or he to whom it is made loses something. it is sufficient consideration for the promisor¶s subsequent promise to pay for the service because of the material benefit received. Is there a difference here between Mills and McGowin? It is only when the party making the promise gains something. o Benefit to the promisor or injury to the promisee is a sufficient legal consideration for the promisor¶s agreement to pay. thus holding him accountable for his promise to pay P. though done without his request. o . although there was no original duty or liability resting on the promisor.

y Eventually kicking the plaintiff and her family off the land Rule: A gratuitous promise cannot be enforced.  Could have possibly sued on a restitution or reliance based argument.57. The exchange of signing the agreement is exchanged for the promise not to fire right now. because the company benefits but the employee gains no new incentives by signing non-compete. Sued for breach of contract (noncompete agreement) o Appellate court does still remand case. Even if his motive was just to get her to show up.58) Columber is fired from his job at Lake Land. note 3) y Courts determine that her act of giving out her personal info to receive the card was adequate consideration. he still was seeking her performance. Lunchtime at Tiffany's²pg. y "The value of the performance and the ring do not have to be equal. stating that the terms of the agreement itself need to be re-analyzed as possibly being ³overly-restrictive´ o MOST AGREEMENTS DO NOT HAVE TO BE IN WRITING o Trial court believes there is no consideration. defendant moves plaintiff and her family to another site. o Believe that the new agreement creates a new employment (an employment under the signed agreement of new terms). and takes a job elsewhere. but we cannot determine the value to the father of his daughter "showing up"." Economically they could be one-sided. y In the courts mind. . Million Dollar Swipe (pg.COLUMBER (pg. The court believed that D¶s promise was a gratuity and lacked the requisite consideration to sustain an enforceable contract. he could have done so at his own free will and quit his job.The Requirement of Bargain for Exchange KIRKSEY vs. 57²promise for performance (note 2) y Dad promises to buy daughter a ring if she shows up for lunch y This is distinct from promise. (Giving up her land to move). o Supreme Court believes there is consideration. D intended to give it without anything in exchange from P. Employment Agreements LAKE LAND EMPLOYMENT GROUP vs.56) y y y Plaintiff/widow is offered land to live on by brother in law Plaintiff takes the brother-in-law up on his offer and packs up and moves After a period of two years. If Columber did not want to sign the ³non-compete´ agreement. a new employment began once the agreement was signed. This is an old case.KIRKSEY (pg.

bank president.Employment Handbooks METILLE vs.GRIFFITH (pg. hands out employee handbooks regarding company policies Mettille is later fired for negligent reasons regarding bank loans  Mettille sues Griffith and the bank for breach of contract stated by a "disciplinary policy" in the issued handbook. . y Court awards Mettille monetary sum.  Court finds that Mettille's continued at-will employment was sufficient consideration.64) y y Griffith.

B.e. "This does not mean that the promise is NOT binding until the event occurs. a contract in which no promisor receives a promise as consideration for the promise given What Constitutes a Promise? Restatement (Second) § 76-. (2) A promise conditional on a performance by the promisor is a promise of alternative performances within §77 unless occurrence of the condition is also promised. if a guarantor promises to make good on the principal debtor¶s obligation ³as long as I think it¶s in my commercial interest.´ Unilateral and Bilateral Promises: Bilateral Contract± a contract in which each party promises a performance. Restatement (Second) § 77 --Illusory and Alternative Promises A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless (a) Each of the alternative performances would have been consideration if it alone had been bargained for. a contract in which the parties obligate themselves reciprocally.Conditional Promise (1) A conditional promise is not consideration if the promisor knows at the time of making the promise that the condition cannot occur.´ occurs. Uniform Commercial Code (UCC) Article 2³An apparent promise which. An illusory promise typically makes performance optional with the promisor. known as a ³condition. Such an expression is often called an illusory promise. so that the obligation of one party is correlative to the obligation of the other Unilateral Contract± a contract in which only one party makes a promise or undertakes a performance. so that each party is an obligor on that party¶s own promise and an obligee on the other¶s promise. Insurance contracts provide good examples of express conditions. (i. " Illusory Promises: a promise that appears so insubstantial as to impose no obligation on the promisor.Promises as consideration Types of Promises According to Dobbins (A. .´ the guarantor/promisor is not really bound. according to its terms. makes performance optional with the promisor no matter what may happen. an expression cloaked in promissory terms but actually containing no commitment by the promisor.): Conditional Promises: performance will become due only if a particular event. or no matter what course of conduct in other respects he may pursue. is in fact no promise. or (b) One of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternatives which would not have been consideration. but only that the event must occur before the promisor must perform.

And because his promise was illusory. however. as a promise to pay if her husband would not. SHEFFIELD o Plaintiff sold a business to the husband of the defendant. except on condition that the other party entered into an immediate and reciprocal obligation to do the thing requested. and mutual promises at the time are not essential unless it was the understanding that the promisor was not to be bound. o There was no consideration for D because there was no agreement for P to forbear for a fixed or reasonable time but only an agreement to forbear for such time as P should select. y Plaintiff made a promissory note with defendant. D¶s promise to pay was given in exchange for nothing. The promise is illusory because P could have collected at any time. o Rule: A request followed by performance is sufficient.): D¶s promise to pay is not enforceable because P¶s promise was illusory.  Nor would he sell the note to someone else. Notes (A. stating that he (plaintiff) would forebear on the lease if the defendant would sign the note. y Judge determines that there was no consideration on the plaintiff's part  The consideration was in regards to forbearance on the loan. because there was no promise on the part of D at the time. there is not sufficient consideration or obligation to perform. It was not a case of request to forbear.STRONG vs.B. The promise is illusory. followed byforbearance in pursuance of the request. because there was not an actual time frame (he could have collected on the loan right after the signing of the note) there was no true consideration to make the promise legally binding. . because he really had no obligation.

o Defendant decides that she no longer wishes to sell the property and informs plaintiff of decision.000 deposit. A "satisfaction clause" is inserted into agreement. Rule: Deposit receipts are binding and enforceable contracts. D threatened to cut off P¶s fuel supply if P did not agree to pay a higher price than stipulated in contract. HOPPER Plaintiff agrees to purchase property from defendant by signing of deposit receipt. I will need a certain amount of fuel.´(UCC §2-306(1)) y Courts determine that the preliminary injunction (to keep supplying fuel during the trial) will be made into a permanent injunction. stating that the plaintiff will only be obligated to follow through if he is able to find tenants for the commercial property. o Plaintiff claims that the satisfaction clause is illusory and lacks mutuality in obligation.  Essentially giving the plaintiff an ³opt-out´ clause if he is unable to find satisfactory tenants. y y y The deal states that Eastern will buy all of its fuel from Gulf. his promise is not "illusory".Contracts for the sale of Real Estate MATTEI vs. y Plaintiff sues for breach of contract based on signing by both parties of deposit receipt. Also pays the defendant $1. and is satisfied with the outcome. o Contracts for the Sale of Goods EASTERN AIRLINES vs. On the grounds that the courts have determined that both parties have formed a contract. and will buy that amount from Gulf. P argues there is not valid consideration because agreement appears illusory to them: Court ordered P to be granted specific performance by D Rule:³A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith. D supplied jet fuel to P based on a requirements contract for the fuel they would reasonably need. . GULF OIL CORP. Because he can be bound by the "satisfaction clause" and he must "act in good faith".  This is a requirements contract They instead say. y Eastern's promise to "buy whatever they need" can be viewed as being "illusory" Gulf argues that the contract is "illusory" because of Eastern¶s lack of obligation to buy. except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.

and for profits to be shared. y His obligation was implied because of his "reasonable efforts". or else it would have been a pointless contract" o Substitutes for Consideration o "A few states have general statutes that facilitate the making of binding gratuitous promises by recognizing some form of writing as a substitute for consideration." Section 4: RELIANCEas a Basis of Enforcement²pg. was not in fact "illusory". Court "this must have been what they intended. y Lucy argues that there was no consideration on the plaintiffs part o Court says that his promise to get endorsements on her behave. o Court says that his promise to get endorsements on her behave. y Court "this must have been what they intended. or else it would have been a pointless contract" The court reversed the judgment on the grounds that the marketer (P) gave valuable consideration by promising effective marketing and the splitting of profits pursuant to an implied contract. LUCY We have an exclusive licensing/agency agreement.WOOD vs.89 . y His obligation was implied because of his "reasonable efforts". y Plaintiff alleges that the defendant broke the promise for him to sell all designs. was not in fact "illusory".

The schools acceptance of the money made the school responsible to follow through with what they promised to do. THE DEVELOPMENT OF PROMISSORY Promissory Estoppel ESTOPPEL Alternative Enforcement Methods when there is no Consideration (A. thus the doctrine of equitable estoppel can be applied. If court does not find injustice then it can choose whether or not to enforce the contract.000. NATIONAL CHAUTAUQUA COUNTY BANK y y y Courts found consideration for her promise in the return promise of the college to set up the memorial fund which arose "by implication" from its acceptance of the $1. Feinberg VS. the court has to enforce the contract. or his executor. Set up the memorial fund.RICKETTS vs.B. ALLEGHENY COLLEGE vs. SCOTHORN Man says he willpay his granddaughter P money so she would not have to work. then we can look at alternative ways to enforce the promise. If there is consideration. admissions. reliance doesn¶t necessarily create an enforceable contract. to resist payment on the ground that the promise was given without consideration. Consideration was not necessary under the reliance standard so long as she incurred a material change due to her reliance on her grandfather¶s promise. One of these ways is reliance. it would be grossly inequitable to permit the maker. Promissory estoppel is about enforcement of a promise. she did this because gpa promised to pay her so she wouldn¶t have to work." o Difference of doctrine of equitable estoppel y "A right arising from acts. o Court.) If there is no considerationto support the promise we want to enforce."having intentionally influenced the plaintiff to alter her position for the worse on the faith of the note being paid when due. Cardozo-"There has grown up of recent days a doctrine that a substitute for consideration or an exception to its ordinary requirements can be found in what is styled 'a promissory estoppel". Pfeiffer Co ±continued . Rule: Prelied on her gpa¶s promise when quitting her job. It allows for a promise to be enforced without consideration if all the elements of promissory estoppel are met. however. this did not equate to a bargained for exchange and thus did not constitute consideration. or conduct which have induced a change of position in accordance with the real or apparent intention of the party against whom they are alleged«" o She's proven that there was a change of position.

o Justice would require expectation damages. " Defendants contend that her "inability" to seek further employment came about after payments were discontinued. Court disagreed. as A expected that he might. In stating that the plaintiff relied on the $200 a month upon her retirement. It would have been almost impossible for a woman of that age to find equal employment to what she once had. because she can't go back to work. The question is: What does justice require? . Anna Feinberg-should her recovery be limited to reliance? She retired based on the promise. B thereupon resigns a profitable employment. Would certainly have to compensate her for the lost wages. should her recovery be limited to reliance? Scothorn eventually went back to work.´ Plus the addition of the second factor. because she relied on the promise and chose to quit her job. there would have been continuous work (no break in wages). which does induce such action or forbearance and 3. had the promise not been made. Restatement (SECOND) § 90²PROMISE REASONABLY INDUCING ACTION or FOREBEARANCE 1. A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.[Court uses Restatement First § 90] Ex.Court earlier rejected the notion that Feinberg's continuing to work was ample consideration for the promise to receive payments for the rest of her life upon her retirement. A's promise is binding. B receives the annuity for some years.  Restatement second differs from First: No longer necessary requirement that the reliance be of ³a definite and substantial character. in the meantime becoming disqualified from again obtaining good employment.97 Katie Scothorn-if she were to recover under a promissory estoppel interest. She is entitled to expectancy here because she is elderly/retired and has developed cancer and cannot go back to work. stating that she retired at 57 and was 63 when payments discontinued. then that would be putting her back at her job. "A promises B to pay him an annuity during B's life. The second contention was regarding reliance. Judgment affirmed in favor of the plaintiff. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise or a third party and 2. is binding if injustice can be avoided only by enforcement of the promise. Applied Measures of Recovery-pg. y But this is not possible since she is not able to go back to work.The remedy granted for breach may be limited as justice requires. o If she was limited solely to reliance. 4.when she developed cancer in her body.

Reliance as a basis of enforcement . but what "justice" requires. Kirksey--her reliance interest would mean that she wouldn't have had to move. Issue is not to do what the "law" requires.One of the key features of the Restatement regarding Promissory Estoppel is its ability to choose which result justice requires. o It may be impossible for her to "put her back to what she gave up before the promise" could lead to the belief that she be awarded expectancy damages. o o Limitation to reliance might not necessarily be "just". And reliance would possibly put her in a place/house comparable to what she was living in before. she'd get her moving expenses back.

BACARDI IMPORTS  General is a liquor distributor for Northern Indiana. they would remain General¶s supplier. went back to prospective buyer and sold for $550. fully aware that Generalis in negotiations to sell. o Bacardi. y In reliance of Bacardi¶s promise. COWLES MEDIA COMPANY  Newspaper vows to keep P¶s identity secret. That they entered into an intentional contract.´ o Section 5: Restitutionas an alternative basis for recovery . yet all the elements of a contract formation are there. and never would. ±BARGAIN FOR EXCHANGEoccurred  Newspapers even testified that it is custom to keep confidentiality. Disclose that they received the info from him. o U. Supreme Court and Minnesota Supreme Court believe that promissory estoppel must ³be enforced to prevent an injustice´ o The papers contend that they had to disclose the identity in order to report the "whole truth". P is fired by his advertising firm. Newspapers knowledge that they were entering into a legally binding contract is irrelevant.´ o Bacardi opting to not follow through with promise gave National (prospective buyer) even more purchasing power when acquisition was revisited. no longer being able to operate.´ o General left with two decisions: sell or operate on smaller scale.Reporters were even adamant in saying promise should have been honored. D&G STOUT vs.COHEN vs.000 in compensatory damages.  Also contend that they didn¶t breach a contract. General had a reliance interest in Bacardi's promise. Editors who disclose his identity said they had never done it before. Bacardiwithdraws business from General o General.  Generalseeks to recover price differential based on the doctrine of Promissory Estoppel  Court of Appeals disagrees and remands Indiana adopts the Restatements (First) theory on promissory estoppel: "Thus the question has become whether the loss incurred from the price drop was attributable to lost expectations of future profits or resulted from an opportunity forgone in reliance on the promise. Generalturns down offer to sell.000 less than the original offer. but do not. o Cohen RELIED on the long standing tradition of informant anonymity y Court rules: ³remedy necessary to avoid injustice.S. Affirms General that if they don¶t sell. o Newspaper contends that granting promissory estoppel would be a violation of the papers First Amendment rights²because they were only reporting the truth. A market that is beginning to consolidate and two of Generals suppliers ³jump ship. o "Under these facts. P sues newspaper for breach of contract.´ o Court agrees with originally assigned damages.  One week later. o Jury awarded Cohen $200.  "It would seem that veiling Cohen's identity by publishing the source as someone close to the opposing ticket would have sufficed as a sufficient reporting of the "whole truth".

OAKWOOD PARK HOMES  o o o Pendergast buys a home and then employees Callano to plant shrubbery at his house. because the value of the property was enhanced by the value of the shrubbery o Court say¶s quasi-contract isn¶t applicable cause it would be unjust to allow recovery against Oakwood.Unjust enrichment of the husband. If this wasn't the case. payment for services rendered etc. PYEATTE Wife and husband agree that wife will put husband through law school and afterwards he would put her through grad school. Oakwood ends up selling the house to another couple WITH the bushes/trees that are planted in the yard. Callano's sue Oakwood Homes. o Focuses on -prevention of unjust enrichment. Husband leaves her after he graduates from school. PYEATTE vs. Payment of rendered services must be reasonable. but they're not the types that are recoverable. o Chapter 2: Contractual Obligations-Assent Subjective--we look to the subjective intent as to whether the parties intended to create a contract. Pendergast doesn't end up paying Callano for the bushes because he dies. y Not the case when the services/enrichment weren¶t wanted/asked for. As a society. o Should have sued against Pendergast¶s estate. and because he was in dire need of helpit is implied that the physicians can help and receive compensation for services rendered. not a contract theory. Must be a direct relationship to make the retention of a benefit unjust. then restitution might be appropriate. o Why can't there be a remedy for breach of contract? y There might have been promises exchanged. based off of what services were actually given. o She won on a count of restitution. . but if there is solely a benefit by one party member. o Pendergast made the promise to pay for the shrubbery. even if we're not going to obligate doctors to help. not a promise or contract involved. Courts aren't crazy about enforcing restitution between married couples. CALLANO vs. doctors seek amount for rendered services Harrison couldn't ask for rendered services. o Situation where retention of that benefit without paying would be unjust. y Unjust enrichment of the husband. So her "expectancy" of him to pay for her graduate school was not recoverable. WISDOM y y y y y Doctors render services  Harrison still dies.o Generally. o Wife then believes that there is a restitutionclaim. we should pay them for their services when they do help. COTNAM vs. and then refuse to pay because they "didn't ask to be saved/helped". o Court believes it would not be unjust to allow D to retain benefit w/o payment because there is no direct relationship between parties. But instead a contract implied by law. any person sent to the hospital cause of an emergency could have the work performed on them. Oakwood homes didn¶t.

Where there has been an express reservation of the right not to be bound in the absence of a writing Whether there has been partial performance of the contract Whether all of the terms of the alleged contract have been agreed upon Whether the agreement at issue is the type of contract that is usually committed to writing --Winston v.124 Section 2: The Offer²pg. would create chaos.²pg. Your actions show that you intended to be bound to the contract Gentleman's Agreements: If neither party intends to be bound. if were to use only the "objective" approach. then this would always be the case that someone could back out of an agreement for the same contention.  If we were to only to look at the "subjective". 126 Restatement (Second) § 24 Offer Defined-. could wind up with terms that neither party intended. ZEHMER²selling land while drunk What led the court to believe that Zehmer did in fact intend to enter into the contract? o Some evidence of revisions to agreement o 40 minutes to negotiate agreement o Mrs. Mediafare Entertainment Corp. 2.(Not actual wording) . Zehmer's signature on the revised contract Court believes his conduct and actions would lead one to believe that he was serious. How do we prove subjective intent?²almost always by circumstantial evidence Objective factors that show parties intended to be bound. 4. when a document is absent: 1. then the courts should not enforce the contract.Objective--we look to the objective intent.  Conversely. As you could not have enforceable contracts because someone could say that they did not intend to enter into a contract. If the court did not enforce this simply because Zehmer said he was kidding. 3.  DO YOUR ACTIONS OR INTENTIONS SHOW THAT YOU MEANT TO AGREE? LUCY vs.

For how much Rule: There was no language which specifically stated D would sell to P in their reply to plaintiff¶s inquiry. how would you suggest that he clarify his intent/actions? o "I would start to consider selling at $900«" "Bidding starts at $900«" FAIRMOUNT GLASS WORKS vs. they're subject to change. but instead was given for the specific purposes of placing an order. UCC §2-204: "An agreement sufficient to make a contract for sale may be found even though the moment of its making is undetermined"." o Rule:³There can have been no contract for the sale of the property desired." Why would we not want to consider quotes as offers? Because they're an estimate. Scenario: If you were advising Facey. so that the other party is justified in believing that their assent to that bargain is invited and that it will be concluded with assent.´ What kind of comment from Tunison COULD be considered an offer? "If you pay me $16.000 I will sell you this property«" HARVEY vs. This was a response to a specific request for information.An offer is a manifestation of willingness to enter into a bargain. . Court believes that the terms ³for immediate acceptance´ make this more than just a "quote" and more of an agreement/offer. They responded merely to the second question²of the lowest price it might accept²and did not specifically say they would sell to P. TUNISON  ³The courts don't want to bind people in circumstances where a person does not intend to be bound. Will you sell 2. No contract was implied to sell to P at the price quoted in the response. o Ideally. Only qualify as an offer if they are specific enough to be considered an offer. Court:"this information wasn¶t given out for general purposes. breaking down a contract is as simple as evaluating an offer and an acceptance. OWEN vs. stating exactly how much the supplies would cost. CRUNDEN-MARTIN WOODENWARE What was the alleged offer? o A QUOTE on certain supplies. no meeting of the minds of the owner and prospective purchaser. GENERAL RULE FOR PRICE QUOTES: Not typically considered an offer. unless there was an offer or proposal of sale. FACEY Two questions in the telegraph: 1.

but is told that he cannot purchase them because of an ³in house policy. LEFKOWITZ vs. GEISMAR vs. GREAT MINNEAPOLIS SURPLUS STORE  Man responds to ad in the newspaper. because the advertisement did not contain any "in house policy" that the store used to restrict his purchase from the item.Advertisements as Offers Advertisements are not typically viewed as an offer.´ Court held that he was entitled to buy the item. The advertisement contained: Item for sale Purchase Price "First Come First Serve"--specifying that there are limited supplies BUT did not mention any element regarding who is allowed to make the purchase. but a quote to sell an item for a certain amount.136 You can change your advertisement at any time. prior to acceptance of the original price quote. Construction Contracts . ABRAHAM & STRAUSS-pg.

School board clarifies with him. However. but this carelessness does not rise to constitute that of a "legal duty"". Not due to neglect of a legal duty. Court believes that to force the bid would be unjust. Next day realizes his mistake and tries to rescind on his quote. as Kastorff's bid does not include the plumbing. School district tries to hold him to his quote. Have to be aware that there was a clear mistake 7. this type of clerical error where the school district was informed by Kastorff can permit rescission. If performance of the contract would be unconscionable. no damages were incurred by the school. 5. Offered to restore any cost incurred by D as a result of its reliance on P promise. based on the evidence. and 4. o Trial court doesn¶t believe Kastorff¶s case that any error occurred o Supreme Court doesn¶t believe that trial courts finding was accurate. 3. D must have promptly alerted P of the mistake and 6. o Court will not allow ANY error to be sufficient to rescind a contract.ELSINORE UNION ELEMENTARY vs. o Also. Judgment reversed in favor of Kastorff Section 3: The Acceptance²pg. there was a mistake of fact which was material to the contract 2. 147 TWO WAYS TO ACCEPT: BY PROMISE OR PERFORMANCE . can the school district be placed in the "status quo"? Yes. Essentially they would be getting the plumbing for free. If P can be put back in status quo without enforcement. "Yes there was carelessness involved. KASTORFF Rescission--backing out of an already completed contract o Kastorff makes the clerical error from subcontractors quote.Kastorff fails to comply. and he reaffirms. Rule:Rescission of a contract can be made if 1.

Restatement (Second) § 54--Acceptance by Performance: Necessity of Notification to Offeror-(1) Where an offer invites an offeree to accept by rendering a performance. only if there was a valid belief that changes to a contract could be made in the belief that the contract was not complete and could be amended could they change the stipulations of the contract or reject it. CORLIES & TIFT . In this case.  P appealed again. So long as there is a meeting of the minds in the validity of the contract. INTERNATIONAL FILTER vs. of Civil Appeals. CONROE GIN. If you do not make this known.  Trial Judge found for D. WHITE vs. the contractual duty of the offeror is discharged unless (a) The offeree exercises reasonable diligence to notify the offeror of acceptance. ICE & LIGHT P proposed to sell its water filter product (industrial grade) to D at a set price for water softening. no notification is necessary to make such an acceptance effective unless the offer requests such a notification. it is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably. 218) or where the offer manifests a contrary intention. or (b) The offeror learns of the performance within a reasonable time. and who accepts it. P sued for breach of contract. or (c) The offer indicates that notification of acceptance is not required. D argued that acceptance of the contract was required to make it enforceable: y P can recover on the basis that acceptance was not required. P executive officer approved the agreement with an ³OK´ notation on the letter. the notation of ³OK´ was a valid acceptance. o o o The approval is the acceptance The offer is the response by Conroe Gin "The distinction is between who drafts the offer. it is valid. P appealed to Ct. (2) If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty. y Court affirmed. Restatement (Second) § 56--Acceptance by Promise." If you make the offer. and want to be notified of acceptance:Then you must include this request in the offer. correspondence of offer requested that D approve the offer and then pended approval of P executive officer in Chicago. then you are not required to be notified of acceptance. Necessity of Notification to Offeror-Except as stated in § 69 (Acceptance by Silence or Exercise of Dominion) (p. D sent a countermand two times thereafter. P then sent letter requesting a sample of D water prior to shipment as noted in the original offer. D approved proposal on the same date submitted in writing thereto. Rule: The important issue is the meeting of the minds.

Had he gone to the location and started working. GREEN "This agreement shall become binding only upon written acceptance hereof. What would have constituted notification? Ex. Believing that Ever-Tite responded within a reasonable time. but had simply shown up to do work. the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance. y Court does not believe that his was a reasonable means of acceptance because he did not communicate this to the other party. y Note can be read "after we reach an agreement THEN you can begin working' o White believes that his purchase of the goods was his method of "acceptance".o Quote to furnish office suites. and plaintiff acknowledges changes. Specifications by office owners are changed. y Court disagrees. o Green's believed that the timeframe in which everything occurred took too long for Ever-tite to respond. o Court "the proposition and its acceptance thus became a completed contract.Did not confer acceptance of changes to the other party. As Ever-Tite's acceptance was their showing up to do the work. As opposed to simply buying materials that can be used for general carpentry. o Ever-Tite believes that even if the Green's had called the night before to back out. Rule:Since the contract did not specify the time within which the offer was to be accepted²within which the work was to have been commenced²a reasonable time must be allowed. Contractor shows up at sight. y Communication to the other party to notify an attempt to accept. y Courts believe that these purchased goods could have easily been used on another project. What was the acceptance? o Commencement of the work by ever-tite was acceptance. Ever-Tite had not really done any work." Green's should have argued what the actual performance was.  If they tell you to perform or promise²apply §54 or §56  Or." o Conferring on the plaintiff the power to CREATE a contract. o Note saying: "Upon an agreement to finish the fitting up of offices 57 Broadway in two weeks from date. but essentially stating that a contract/agreement has yet to be formed. EVER-TITE ROOFING CORPORATION vs. not specific enough in regards to the current agreement in debate.A reasonable time is contemplated . they could have. by the principal or authorized officer of the contractor«" o Here they are trying to give themselves the ability to decline an offer. if they give you the option²apply § 62²you get to choose which one Restatement (Second) § 62--Effective of Performance by Offeree Where Offer Invites Either Performance of Promise-(1) Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance. and Green had already hired someone else to do the job. you can begin at once. Performance could have been argued. (2) Such an acceptance operates as a promise to render complete performance.

the commencement began with the loading of the trucks and transporting materials to D¶s home. Also. y y y Court finds that other methods of acceptance are admissible. LEDERLE LABS . FORD MOTOR CO. Purchase order included an "indemnity provision" Court believes that acceptance in this case. Actual commencement or performance of the work therefore began before any notice of dissent by D was given to P. Allied taking action--constitutes required acceptance.where no time is expressed. could in fact be performance. y Ex. The proposition and its acceptance became a completed contract ALLIED STEEL vs. o A return of the contract was not the only required form of acceptance. the delays to D¶s application were not unusual. ³It is well settled that acceptance of an offer by part performance in accordance with the terms of the offer is sufficient to complete the contract«" SHIPMENT OF GOODS AS ACCEPTANCE CORINTHIAN PHARM SYSTEMS vs. In this case.

P got the info before it was made known to public and ordered 1.32 each saying it is ³an accommodation´. D sent invoice to P for 50 vials of DPT priced $64. enclosed letter of price when the shipment was made. the balance owed would have been $171. § 2-206-shipment of conforming and non-conforming goods could be viewed as acceptance. Then Lederle would be required for specific performance of the offer. It was more like a quote or an estimate. it is reasonable that the offeree should notify the offeror if he does not intend to accept. b) Where the offereror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction. It is the notice that it was a mere accommodation that bars this from being viewed as an acceptance. and the court holds that quotes and estimates are not to be treated as "offers". as opposed to just throwing the mail away. D decided to make an exception and ship a portion of the order at the lower price. What could be considered acceptance? U. SILENCE NOT ORDINARILY ACCEPTANCE y If you intend to accept by silence of your actions. .C. c) Where because of previous dealings or otherwise. y Except per Restatement § 69 a) Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they offered with expectation of compensation. P can¶t recover specific performance Rule:A shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.C.000 vials and sent confirmation of the order.  If the shipment is a mere accommodation then it is not an acceptance of an offer. Then we view your acceptance as legitimate.D¶s notice of price increase was sent to D¶s sales rep but not to customers respectively. but in light of the magnitude of price increase.00/vial to be shipped on June 16 and the order was cancelable before June 13. and the offeree in remaining silent and inactive intends to accept the offer.  If this shipment was treated as an acceptance. Junk mail--being bound to act. the shipment of non-conforming goods is treated as a counteroffer because it was an accommodation and P may accept or reject the counteroffer under normal contract rules Why is the price list not an offer? o It was subject to change. "We don't want to require people to have to follow offers if they don't intend to accept" a) Ex.

Lapse of time i. RELIANCE²VIA PROMISSORY OR EQUITABLE ESTOPPEL Restatement (Second) § 25--Options Contract-An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor¶s power to revoke an offer. Revocation of Offers y Common law rule--"you can revoke an offer any time before actual acceptance" OPTION CONTRACTS ARE FORMED THREE WAYS: CONSIDERATION. if no time is specified. Offeror's death or incapacity 4..´ Is going to be based on what is a "reasonable amount of time" LORING vs. and cannot be accepted thereafter. Revocation i. 167 Four factors that can terminate: 1. ³FIRM OFFERS´ UNDER THE U. . Akers v Sedberrry²³Ordinarily. and subject to the rule stated in § 49. depending on all the circumstances existing when the offer and attempted acceptance are made. Offeree's rejection i. an offer sent by mail is seasonably accepted if an acceptance is mailed at any time before midnight on the day on which the offer is received. Offeror changes their mind 3. If you reject an offer. (2) What is a reasonable time is a question of fact. CITY OF BOSTON²Reward for a Criminal-lapse of time y Offer was said to have lapsed because the circumstances were not as notorious several years later. Don't want to give someone the power to accept an offer 50 some odd years down the road« 2.C. (3) Unless otherwise indicated by the language or the circumstances. then that waives your power to accept Restatement (Second) § 41--Lapse of Time-(1) An offeree¶s power of acceptance is terminated at the time specified in the offer. an offer made by one to another in a face to face conversation is deemed to continue only to the close of their conversation.Section 4: Termination of the Power of Acceptance²pg.C. at the end of a reasonable time. or.

. D sold to someone else before P accepted. CANNOT ACCEPT-. There was no consideration given for the undertaking or promise. the offeree¶s power of acceptance is terminated when a notice of termination is given publicity by advertisement or other general notification equal to that given to the offer and no better means of notification is reasonably available. Unless both parties had then agreed. Restatement § 43--Indirect Communication of Revocation-An offeree¶s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect. P can¶t recover. there was no concluded agreement then made for it was in effect and substance only an offer to sell. Restatement (Second) §46--Revocation of General Offer-Where an offer is made by advertisement in a newspaper or other general notification to the public to a number of persons whose identity is unknown to the offeror. to whatever extent it may be considered binding. to keep the property unsold until P decided to accept. Rule:So long as the offeree is aware at the time he accepts the offer that the offeror has revoked the offer then the contract is not enforceable. ±IF YOU¶RE AWARE IT¶S BEEN REVOKED.CONSIDERATION OR LACK OF AWARENESS WOULD MAKE IT ENFORCEABLE there was an offer made and P acknowledged that he required time to decide whether or not to enter into an agreement.DICKINSON vs. DODDS D made an offer to sell land to P with a date which the offer would no longer be available.

UCC § 2-205--Firm Offers-An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable.C. No bargained for exchange. P sued for specific performance. D received no consideration for the offer or the promise to keep the offer open unless sold to another buyer. P received the counter-offer and called D to confirm the acceptance. an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. but in no event may such period of irrevocability exceed three months. ±DOES NOT REQUIRE CONSIDERATION RAGOSTA vs. which there was no consideration for. D returned the check and made a counter-offer stating that if P showed up with money at any time up until a certain date at a specific location.C. (2) The offeror¶s duty of performance under any option contract so created is conditional on completion or tender of the incited performance in accordance with the terms of the offer. P can¶t recover. (C) Death of an Offeror Restatement (Second) § 48--Death or Incapacity of Offeror or Offeree-An offeree¶s power of acceptance is terminated when the offeree or offeror dies. y What is tendered or begun must be part of the actual performance invited in order to preclude revocation. Restatement (Second) § 45--Option Contract Created by Part Performance or Tender-(1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance. Rule:Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance. an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. the promise was not enforceable and D could revoke at any time before P accepted. D returned the check which would have constituted consideration for the promise to keep the offer open because D probably did not wish to make a firm offer. during the time stated or if no time is stated for a reasonable time. for lack of consideration. (D) Rejection Restatement (Second) § 38²Rejection-- . P was merely engaged in preparation for performance which they began even before an offer was made by D. Whatever detriment that P suffered to obtain financing was not in exchange for D¶s promise to keep the offer to sell open.  P changed the date previously discussed for acceptance and D called revoking the offer. This (like Lake Land) created a new contract. but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.FIRM OFFERS UNDER THE U.  Thus. WILDER--REREAD D considered selling some real property and P mailed letter offering to purchase it along with a check and made arrangements for the necessary financing.

. (2) A manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it under further advisement. unless the offeror has manifested a contrary intention.(1) An offeree¶s power of acceptance is terminated by his rejection of the offer.

without regard to whether it ever reaches the offeror. A should not be held liable to sell his car for $25. When the offeree accepts. The Mailbox Rule --acceptance is effective as of dispatch." "The only way you have a contract is if the acceptance mirrors the offer. Last Shot Rule--"whoever sent the last terms before performance began.² . and then adds a change. B replies saying "sure. ---date that you mailed the acceptance Ex. (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree¶s possession. those terms will be the binding terms"²Allied Steel v Ford ---Fulfilling the performance after the last correspondence/offer ---So parties need to make sure that they do not perform until they have come to terms that they can agree on. then you instead have a counter-offer. Restatement (Second) § 42--Revocationby Communication from Offeror Received by Offeree-An offeree¶s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.--USPS loses your acceptance. If the acceptance does not reflect the offer. the other party can still be bound by an acceptance they didn't even know existed. Like the jars and glass case --Acceptance may articulate terms that were implied by the offer.REJECTION AND THE MIRROR IMAGE RULE Mirror Image--if your acceptance is not an exact reflection of the offer.000. Restatement (Second) § 63--Time when Acceptance Takes Effect-Unless the offer provides otherwise. Then they have already accepted the original offer. Restatement (Second) § 40--Time When Rejection or Counter-offerTerminates the Power of Acceptance-Rejection or counter-offer by mail or telegram does not terminate the power of acceptance until received by the offeror. instead of receipt. I'll buy your car for $25". but (b) An acceptance under an option contract is not operative until received by the offeror. o Ex." Ex. Then the contract is null and void. A offers to sell his car to B for $1. but limits the power so that a letter or telegram of acceptance started after the sending of an otherwise effective rejection or counter-offer is only a counter-offer unless the acceptance is received by the offeror before he receives the rejection or counter-offer.

" ---the start of performance makes the contract irrevocable for an allowed period of time. General contractor bound himself based on the bid from the subcontractor. ---Kastorff believes this is different. Whereas § 62 is legally binding from the start of performance. then you do not have contractual liability´ Brooklyn Bridge Hypo Restatement § 45--"if an offer requires acceptance by performance and does not allow acceptance by promise then once the offeree begins performance. As there is an injustice if the promise is not enforced. § 45--the beginning of the performance doesn't bind either contract. subcontractor cannot revoke his bid cause then the general could not have used that bid in his own bid. and you say you changed your mind when he's almost done. then you do not have an obligation. Court believes that the subcontractor should have expected the general contractor to use its bid. they are allowed a certain amount of time to complete performance. The general contractor bid was in reliance of the subcontractors bid. . 220 "If you don't have a binding contract. The promise that is going to be enforced is the subcontractors promise not to revoke. ---Man starts doing construction on your home. STAR PAVING Subcontractor makes mistake in submitting bid to general contractor--very similar to Kastorff case Unilateral--acceptance by performance Bilateral²promise in exchange for a promise Section 90 requires²Reliance-Promissory Estoppel²would require that the difference between the subcontractors bid and the next lowest bid be enforced.Section 6: Pre-contractual Liability²pg. Distinction between whether there is contractual liability DRENNAN vs. --if you don't.

Court limits recovery to July. o Court: believes no binding contract has been formed o Instead. So Cyberchron moves forward and fulfills their side of the soon-to-be agreement. Should only be rewarding the damages that are necessary to prevent injustice. Court believes that there is nothing in Section 90 that requires that the contract be so detailed as stated by Red Owl. RED OWL STORES Plaintiff sues stores because he sold his bakery.Section 90 says that the promise has to be one to encourage reliance by the other party member. CYBERCHRON vs.´ IF YOU'RE SAYING THAT SECTION 90 APPLIES. Believe they are owed under Promissory Estoppel. Because in Mid-July. As there was foreseeable reliance of Cyberchron to believe that Calldata would pay. ³The magnitude and effect of the actions taken by Hoffman would rise to an injustice if recovery were not allowed. CALLDATA SYSTEMS o Dispute between purchases of equipment. NEED TO BE ABLE TO TALK ABOUT THE INJUSTICE THAT WOULD LEAD TO THIS RECOVERY. o Court believes that Cyberchron RELIED on Grumman rep¶s comments Court believes that there was a promise to purchase the equipment. there was no "unjust enrichment" because Grumman never took over the equipment produced by Cyberchron. ---All of the terms of the negotiation had yet to be agreed upon. This is the point in date where they were justified in relying on Grumman statements. Cyberchron was told to move forward.LIABILITY WHEN NEGOTIATIONS FAIL HOFFMAN vs. --Quit his job --Moved his family --RELIED on Owl Stores Not rewarding expectancy damages under promissory estoppel. However. grocery store and took on expenses because he was promised to be able to open up a franchise of the defendant. Cyberchron was told that ³an agreement will be reached down the road´. --believing that ALL details of contract need to have been agreed upon in order to implement promissory estoppel. o o . because no contract was ever reached. o Red Owl argues that no recovery should be allowed under promissory estoppel on reliance. o However. Court could not enforce the contract. Parties agree that no contract/agreement was ever reached. the promises that were made did not give rise to a binding contract.

o This is precontractual. .  The binding agreement to negotiate in good faith is the agreement that was breached. because there is a contract to negotiate a contract.  Grossman argued that a promise to negotiate on good faith is only enforceable if the other issues were agreed upon.CHANNEL HOMES vs. GROSSMAN²re-read  Situation where no final agreement reached between the parties. and yet there is still a party seeking recovery.

---If the court is called upon to enforce the contract. because a contract was fulfilled inappropriately. FLEXIBLE PRICING OLGEBAY NORTON CO vs. Restatements 33²if you¶re going to renegotiate based on the current market rate.7: The 246 Requirement of definiteness²pg. TOYS vs. Burlington gives Toys the right and ability to renew their lease. o Court believes that the contract didn't actually say that they would negotiate a new rate. .  Consequence of finding a contract that is "too indefinite. would they actually be able to. thus making the contract definite in nature.  Based on industry averages and reviews. need to specify that you are looking to renegotiate. BURLINGTON COMPANY o o Issue arises between the two companies for renewing a lease.---Was the contract "definite enough" in nature so that an obligation and appropriate remedy can be determined? --There must be a minimum level of definiteness VARNEY vs. when Armco does not agree with the quoted shipping rate. Also a difference between common law and the U." --A court could possibly find for recovery under a restitution theory. based on the "prevailing rate" at the time of renewal.C.C.  Court believes that since the amount was an amount of "pure conjecture" that the contract did in fact lack definiteness. y They create a pricing mechanism that will help determine what the appropriate cost to ship should be. ARMCO o Armco and Olgebay make agreement for Olgebay to take care of all shipments for Armco's iron ore. But instead would use the "prevailing rate". y Agreement goes smoothly from forming of contract in 1957 until 1986. This in turn makes it impossible for the court to determine what the necessary action to be taken is. DITMARS  Court is forced to determine what is fair.

Court then determines that the $6. ii.C. as the two companies have failed to reach an appropriate rate based on the pricing mechanisms that were determined in the contract. Did the court actually have the proper "reasonable rate"? Court cannot rely on the U. 2-305(1)is strictly regulatory towards the sale of goods. even if there was a dispute over the pricing. Equitable jurisdiction--Does the court have the power to order parties to negotiate? i.C.C. Court believes yes. The first issue that the court believes need to be addressed: 1. . 3. 2.C.Armco does not believe that there is a valid contract. can be used as persuasive. --However. Did the parties intend to be bound? i. Court believes that the long standing business relationship and the pricing mechanisms were both elements that indicated that the parties wanted the contractual relationship to continue.C. then the court would be enforcing what both parties wanted. as binding authority. This is not a sale of goods issue.25 was in fact a reasonable rate.C. the U. even if the pricing mechanisms that were the "backup plans" failed them. If they did. as the U. To be able to find a rate to be used.

then we use (2) to evaluate the terms.C. Between merchants such terms become part of the contract unless: (a) The offer expressly limits acceptance to the terms of the offer. Essentially a counter-offer that must be expressly accepted . or (c) Notification of the objection to them has already been given or is given with a reasonable time after notice of them is received. "If you expressly agree to the provisions in my acceptance. If acceptance expressly made conditional i.Section 5: The Battle of the Forms and the UCC² pg. reasonable time operates as an acceptanceeven though it states terms additional to or different from those offered or agreed upon.C. that statement must be expressly accepted as well.C.unless acceptance is expressly made conditional on assent to the additional or different terms (2) The additional terms are to be construed as proposals for addition to the contract. there is no contract. Silence is not assent. together with any supplementary terms incorporated under any other provisions of this Act. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree. y Must be a definite and seasonable expression of acceptance or a written confirmation o --If there is a conditional statement.-then the "mirror rule" can apply. a. 188  If a contract is governed under the U. NOT IMPLIED i. A definite and seasonable expression of acceptance or a written confirmationwhich is sent within a b. Defining a contract can be important in determining how the contract is actually governed. MUST BE EXPRESS. Cannot be vague or differ wildly from offer 2. c. What is in fact reasonable 3.--then the contract is governed under § 2-207  If the contract is not governed under the U. Definite and seasonable expression of acceptance i." If you do not expressly agree/assent.C. UCC § 2-207--Additional Terms in Acceptance and Confirmation-- (1)a. Was it sent within a reasonable time i. (3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writing of the parties does not otherwise establish a contract. Analysis of § 2-207²IS THERE A CONTRACT UNDER UCC § 2-207? PARAGRAPH 1 o Paragraph1 tells us whether there is a contract based on the exchange of the writings  If no contract under (1)-then we SKIP to (3) to decide  If there is a contract under (1). Elements of Paragraph 1 1. then there will be a contract. Must expressly agree to terms that differ from the original offer 1. (b) They materially alter it.

Applying Paragraph 1 DORTON vs. COLLINS &AIKMAN
TRANSACTIONAL FACTS/PROCESS:
o

In order for The Carpet Mart to place an order, they would make a phone call and process the order. y Then, Collins & Aikman would send an "acknowledgement form´. Then at some point the carpet would be shipped.

U.C.C. § 2-207 can apply even when there is only one form. "Acceptance or a written confirmation" In this case, the court was trying to decide one of 4 possibilities: 1. Could have been an oral agreement that included arbitration agreement 1. --could have included this during the oral phone call, making the acknowledgement form a written confirmation 2. Could have an oral agreement that did NOT include arbitration agreement 1. In this case, the acknowledgement form would still be a written confirmation 3. Could have oral offer, acknowledgment form served as the acceptance with additional terms 4. Acknowledgement NOT acceptance, instead parties conduct created the contract First court must determine whether or not the acknowledgment was a confirmation of an oral agreement or an acceptance. --Court does not decide on this matter; instead believe that this is something that will need to be decided on by the trial court on remand. Was this" last provision" invoked by the parties? --No. The oral agreement did not address this provision, and Carpet Mart never expressly accepted the provisions. Court believes "you cannot have express assent by doing nothing". There was no action that showed acceptance of provisions. Under U.C.C. § 2-207(1), there was in fact a contract. Is the arbitration a different term or an additional term? --This is determined by Paragraph (2). Deciding which terms are to be parts of the contract. U.C.C.§ 2-207 (2)
y y

First, are both parties merchants? o Yes Do provisions materially alter the contract? o Ex. In this case, does the arbitration clause materially alter the contract? y Believes that this will be for the trial court to decide. As an analysis of facts. Court is unable to decide if the arbitration clause is enforceable or not, because there are still material facts that have to be ruled on by the trial court.

ITOH vs. JORDAN
y

Purchase order, followed by an acknowledgement form. o Acknowledgment form contains provisions o Based on § 2-207(1) first two parts, there was in fact a contract. o Was the acceptance expressly conditioned on the buyers assent? y Yes, acceptance was in fact conditional. o So there is NO contract, unless assent to those conditional terms is actually given. o Assent is NOT EXPRESSLY given, and it is not enough to simply move forward. Inaction is not assent. y IF NO EXPRESS ASSENT TO PROVISIONS=NO CONTRACT BETWEEN PARTIES What if CONDUCT shows that we do have a contract even though articles under paragraph (1) say that we do not. The contract consists solely on which the parties agree, and any supplementary terms incorporated under the agreed provisions.

NORTHROP CORP vs. LITRONIC INDUSTRIES 
Issue here is that Paragraph 1 addresses additional and different terms, but that Paragraph 2 does not address "different terms." 

Because Paragraph 2 of 2-207 does not address ³different terms´, we instead apply the ³knockout rule´ and insert U.C.C.Gap Fillers.
What were the three tests that the court applied? 1. "Knockout rule"--that the terms knock each other out 2. That we stick with the terms in the offer 3. Equate the different terms as "additional" 1. Which means that we would then apply paragraph 2 i. Judge Posner likes this practice/resolution
o o o

However, since Illinois will typically follow the majority rule, they in turn apply the "knockout rule". If applying the "knockout rule" is different from applying paragraph 3. If there is a contract under paragraph 3. Then it will drop out any terms that were not expressly agreed upon by the parties. The "knockout rule" focuses solely on "different terms".

STEP-SAVERS DATA SYSTEMS vs. WYSE TECHNOLOGY
Here, we have provisions included on the items box that contain language that was not discussed during agreements between parties. "Box top" terms are not considered to be conditional provisions, but instead are just additional terms. Because these are just ³additional terms´ there is a contract under 2-207. Under article (2), when and how the contract was formed can be significant in determining whether we have a contract under paragraph 1 or 3.

Chapter 3: The
1. 2. 3. 4. 5. 6. 7. 8. 9.

Statute of Frauds

9 Agreements that are not enforceable if only an oral agreement. An agreement for performance that cannot be completed within one year of making agreement. An agreement for the transfer of an interest in real estate Sale of goods for $500 + Lease of goods for $1,000 + An agreement by a person or firm to be the "surety" of another parties obligation/debt Agreement where personal property stands as security for an obligation (Collateral) An agreement where performance will not be completed before the end of ones life An agreement to pay a commission for the services of a real-estate broker An agreement where a firm or person lends $ to another

Statute of frauds
y

Originated in England, and adopted here in the U.S. o Since then England has repealed these statutes

Statute that requires certain types of agreements to be in writing in order to be enforceable. Reverse--if there is no equitable statute of frauds, the agreement does not have to be in writing to be enforceable. Difficulty in oral agreement is that you have to prove that your version of the contract in dispute is actually correct. y If you can prove that the contract exists, then you can enforce the agreement. o Unless there is some statute that says that the agreement must be in writing. For example: Sale of goods contracts--will have statutes regarding writing requirements in the U.C.C. Missouri Statute of Frauds- 432.010--Contracts to be in writing

Why were these statutes originally enacted? y At the time, people were not allowed to testify in a case where they were a member of one of the parties in the disagreement. y Was also a lot of worry about perjury o Fearing that peoples willingness to lie in court would run ramped In regards to Real Property, if an oral agreement was enforceable, it could open up a slew of problems that people claim property was sold to them. --Because these properties are important to society, we value the need for a writing requirement to protect these priorities.

If the note or memorandum were to reference a contract that would be substantial enough to prove that there is a contract in play.  If a client says. your duties to your client will typically trump your overall thoughts on an issue being ethical. and Otherwise Recording and Ameliorating What do we mean by a writing? Memorandum or note? y y These terms have the potential to be complicated. and there is no evidence that they'll be abolished by the U. --While a court will use these for evaluation. Typically the note or memorandum does not need to be the contract itself. "yes. they might do so with reluctance.S.  They still cannot be ignored. y Does this qualify as a "writing"? If the statutes of frauds did not apply. Signing. Then there would be way too many emails and pdfs that would not qualify as contracts. --That being said. Sometimes called the "composite document doctrine" .  Ethical issue is raised between a lawyer and his client. o More and more terms are continuing to be electronic. --They're still in existence. typically a court will allow a collection of correspondences to put together an agreement. Also. A client asking you to perform a duty that you believe to be unethical to your code as a lawyer.Statutes of frauds have lost a lot of their support over the years." y Should you be forced to follow your ethical code? Or should you instead try and advise your client to the best of your abilities? __________________________________________________________Section 2: Writing. --Where is the line drawn on ethical actions? Ex. whether they have fallen out of favor or not. I made the contract.

Critical test is what the agreement says. Duration of Performance: The One-Year and Lifetime Clauses KLEWIN vs.  Because the plaintiffs were originally renting. What do the plaintiffs need to establish in order to fulfill part performance?²PARTIAL PERFORMANCE o If they can prove that payments were applied towards the purchase price. . unless the agreement explicitly says that the performance cannot occur within the provision of a year.  Court finds that the combination of some of these factors: improvements. substantial payments of the purchase price or possession can be enough to avoid the statute of frauds. not the rent. If it does not. they would need to prove at what point their payments were applied to the purchase. 269 a. o Why was their possession not sufficient? y Because Norman claimed that they were simply renting. then the legislature would have changed the wording of the statute of frauds. Court believes that if the legislature had an issue with the wording. FLAGSHIP y y y y Connecticut Statute of Frauds says that if this is a contract of "indefinite duration" then it is not governed by the Statute of Frauds o Court believes that it is a contract of "indefinite duration". The contract must explicitly state that performance cannot take place within one year. IN ORDER FOR THE ORAL AGREEMENT BETWEEN THE TWO PARTIES TO NOT BE ENFORCEABLE. b. then the statute of fraudsdoes not apply. and not just rent. IT WOULD NEED TO BE CLEARLY STATED THAT THIS PROJECT WOULD TAKE LONGER THAN A YEAR.Section 3: Statutory Scope²pg. RULE:If the STATUTE OF FRAUDS does not apply. RICHARD y y An oral agreement is made between a son and his wife with the son¶s dad to take over the possession of the home. then you can go ahead and try and prove your case that there was an oral agreement. then that could be used as evidence of a sales price. Interests in Real Property RICHARD vs. because the agreement does not specify a due date for completion of full performance.

Restatement Section 139--If the problem is not consideration. then the promise might still be enforceable to avoid an injustice. in certain circumstances where the Statute of Frauds deems a contract unenforceable. based on the promise of his parents that he would receive the land. Defendant contends that: An estoppel can only be applied when: --there is misrepresentation that indicates that writing is not necessary --when Statute of Frauds will not be applied as a defense  Court says: Yes there are cases were estoppel was refused. after devoting his life to stay and work the family land. Plaintiff sues. however. and decides to give land to a grandchild. LO GRECO y y y Plaintiff forgoes leaving his parents to go follow his own pursuits to stay at work at home. MONARCO vs. these were cases where no unconscionable injury was incurred. Dad ends up getting mad at end of his life.  Court finds that it would be unjust to not enforce the oral agreement .Section 4: Reliance and Other Equities  Applying the doctrine of ESTOPPEL.

married women. but not old enough to vote That being said. ---Who should be held to a binding contract.Chapter 4: Policing the Bargaining Process Three types of POLICING concerns: 1. Able to drive a car. and the mentally infirm Behavior --disparities in bargaining power between parties Issue is who is allowed to enter into a contract?  The real issue is. but not old enough to buy a car. The Substance-of the resulting bargain The idea is that these groups need to be "protected from themselves". and who should not? ---There is a fine line. we don't want to disaffirm anyone from a contract. The Behavior-of parties during the bargaining process. --Old enough to fight in the war. y Tries to disaffirm his contract by pleading that he was not of the legal age to be held to a contract. but we don't want to bind those that are truly not mentally capable. status-based policing measures disqualify certain classes of persons from committing themselves by contract. but ends up wanting to return the car because it breaks.310 KIEFER vs. Status --in their strongest form. Court mentions inconsistencies: Ex. Historically--minors. The Status-of the party seeking relief from a promise 2. at what age minors should be answerable for their contracts. . and 3. "We¶re not going to change the rule"--court believes that this is a decision/change that should be made by the legislature. Group: Persons suffering from a mental infirmary. FRED HOWE MOTORS Kiefer purchases a car before his 21st birthday.  Whether or not he would have been satisfied with his purchase had the car not broken down is irrelevant. Section 1: Capacity²pg.

who clearly is suffering from mental psychosis. typically at amount less than their true value o Wife contends that her husband was not mentally competent to contract In Oterlere."  Husband also claims that "the system" that is fully aware that she was on leave for "mental illness" should not have allowed her to clean out her pension. . business renegotiations w/ wife and lawyer and his family¶s inability to see any difference in the rancher led the court to find that there was no actual incapacity to contract. The court finds it difficult to believe that he was supposedly lacking mental capacity. ---OTHER PARTY DOES NOT NEED TO KNOW. The difference between void and voidable. LIKE ORT Court finds it compelling that: y The rancher and his wife participated in renegotiations with the D. there are some "fishy" factors in this case. but yet no one in his family noticed this. o The wife that is declared to be mentally incompetent was the "accountant" of the family. over the course of a year and a half  While it is possible to see how his actions could be considered ³unreasonable. claiming that she was not of the mental capacity to be bound to such a contract.´ The combination of time. Restatement of Contracts§ 15 give us a new test: 1. TEACHERS¶ RETIREMENT RD y y Woman.ORTELERE vs. maxes out her pension without the knowledge of her husband.  While the court does find for the husband. The husband testified that even during her mental breakdowns. whereas here the question is whether or not the rancher was able to UNDERSTAND rationally. BROADBENT y 59 year old rancher continued to sell his properties. Void-the agreement is void based on the given facts Voidable--contract can be void if it is established that they were not capable of contracting. A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect (b) he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition. the question was whether or not she could act rationally. "A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect« (b) he is unable CUNDICK vs. Question is whether the rancher lacked the capacity to contract? y Even if it is found that the rancher was in fact lacking the mental capacity to contract o It could also be found that the defendant was "overreaching" his bound to take advantage of the rancher's mental capacity. she was still in charge of all the financial matters. o Woman dies two months later Husband sues.

based on the fact that they could not hire any alternate employees. Pressure in Bargaining: The Pre-Existing Duty Rule Duress and Fraud "When does pressure become impermissible to give rise to a claim of duress?" Fraud can exist in two ways:  Misrepresentation--either deliberately or innocently  And failing to provide another party with information that is required to make a sound decision. and then the workers tell the superintendent that they will not work unless they pay them $100 instead. o They then sail to the location.  A waiver must be intentional and voluntary. finding that there was "no waiver" of the workers original obligation.  Of course Packers could have refrained from agreeing and sued for lost profits. . When evaluating whether or not a person was "under duress" to make a decision. But the likelihood that they would be able to actually collect was low (as it's highly unlikely that the workers had the amount of money that the damages would result to). what level of duress is TOO MUCH? The Pre-Existing Duty Rule y The arguments for why these contracts should not be enforced are because they lack consideration.Section 2: Overreaching c.  On appeal. Workers won judgment. as they are out in the middle of nowhere. and the workers sue. and here it is not clear that the superintendent was waiving the workers prior obligation. Packers argue that they were put in a position where they were forced to agree with the new conditions.  Court agrees with Alaska Packers. y Superintendent is forced to agree to the terms in order to get the work done.  Upon arrival back to shore: Packers choose not to pay the 2nd agreements amount. need to determine what LEVEL of duress that party was under? What level of duress is admissible. DOMENICO y Alaska Packers agrees to pay workers $50 for the job. ALASKA PACKERS vs. and Packers appealed.

CARRIG Excavators and homeowners form an agreement to dig up land to build a cellar. §89 One way that parties can get around the pre-existing duty by giving new consideration for the new agreement. so long as those changes are reasonable.  Believing that this same work follows to the original agreement and that because of this. there is not only an adjustment in performance.-- WATKINS & SON vs. To the extent that just requires enforcement in view of material change of position in reliance on the promise There was nothing that required that both parties HAVE to agree to the modification. . Superintendent even stated that he "had no authority to make the agreement." As long as there was this agreement to discharge the original agreement. and thus the original agreement was still in play. y Excavators sue for the oral agreement To pay the new amount o Homeowner refuses to pay amount y Contending that the excavator didn't have to do anything differently than he had already planned on doing. o They determine that there is granite that will require more time and money to excavate. However.  Both parties went through the appropriate steps necessary to address the revelation of the new information to complete the job. To the extent of the provided statute. the result was also proper. instead they found that the preexisting duty of the workers was not waived. or c. but there is also a new consideration that will make the new or modified agreement binding. "Parties are always free to change their agreements. o Court believes that the NEW oral agreement "superseded" the original written agreement. if you agree to a modification. it is only fair for you to be bound to it. and because of this. Could have sued to enforce the original agreement. If the modification is fair and equitable in view of circumstances not anticipated. o After work is completed.´ Because they followed the proper steps. or b. That way. --This case occurred in 1902. the first agreement was not rescinded. homeowner refuses to pay the amount." Legal ground was not found for Alaska Packers under a theory of duress. the obligation to fulfill the 2nd agreement should be enforced. y Contract is amended and agreed on that homeowner will pay the amount according to the new contract. Restatement § 89²Modification of Contract: a. ³There was a valid reason that the amount for the work was going to cost more. the doctrine of duress was not applicable at the time.

Now cases such as Austin have been used to show where duress can be applied "economically". Court of Appeals disagreed. Instead. o Consideration can also be refraining from not doing something that you have a legal right to do. . PACHELLI Duress must deprive the person of "free will".Pre-existing Duty to a Third Party y y Father in law agrees to pay a couple if they get married. The lower court believed that the fact that Loral only looked to suppliers they had worked and spoken with before did not constitute duress. but instead under duress in order to move fulfill their contract requirements with the government. but then stops paying. it is adequate enough to provide that you had no real good options. Additionally. How was Loral placed under duress by Austin? --Not only was Loral under strict time constraints from their contract with the government. d. Father pays them for a while." y NY court of appeals equates Loral's "immediate need of goods" to "a threat that overcomes their free will«" o It is not necessary to prove that you had NO other options.. so their marrying was not contingent on his payments.Where they have no good choice. y Father's defense is that the couple was already planning on getting married. Duress in Business Austin v Loral Originally. PACHELLI vs. but they also were unable to receive alternate bids from other suppliers. That the options that you did have were not as viable options as the previous one. Austin was withholding their agreed upon (from first contract) supplies unless Loral agreed to not only award Austin with ALL of the supplies for the 2nd bid. duress was only applied in regards to "physical force". "A contract is voidable on the ground of duress when it is established that the party making the claim was forced to agree to it by means of a wrongful threat precluding the exercise of free will. -Additionally. the fact that Loral protested by writing shows that this agreement was not voluntary. What remedy was Austin actually seeking? --Compensatory revenue that Loral agreed to pay upon Austin's attempt to re-negotiate the original contract. but also for additional amounts.

instead. the court states that there is no issue of "duress" because the defendant's actions were not unlawful. Undue Influence y Different than duress Odorizzi v Bloomfield School District Undue influence--persuasion that tends to be coercive in nature." While the lower and higher courts disagreed about when exactly duress occurs. This point could be viewed against the defendants. Yes 5. Yes 7. Typically duress will be focused around a breach of contract. the government made up a substantial amount of Loral's business/revenue. Yes 4. Generally speaking. You are going to have to prove that you did not really want to make an agreement. 349) 1. you had no other choice but to move forward with the unfair agreement. They did however agree on the actual definition of duress. Yes Because of the presence of multiple factors. Yes 6. and Loralwas also looking to receive future bids/work. Court of appeals disagreed. and thus the plaintiff has a valid contention to go to court. but because of economic duress. "It's not sufficient that Loral could have found another vendor to "fill in the gap". undue influence could likely be considered. a claim of duress is not easy. but also in favor of the defendants (could be viewed as sympathetic action) 2. it is not necessary that Loraldid not submit such a request w/ the government." . but instead are referring to the fact that "the facts COULD lead one to find undue influence. Court does not believe that Undue Influence MUST be found. Not really. could they find a vendor who would be able to match Austin. so that no economic harm would occur.  Every time you face a difficult business decision is not a ground for duress. Court gives a 7 point test when considering over-persuasion (pg. Because it is so fact intensive and conducting business comes with pressure. Because of the fact that asking for an extension could have jeopardized future contracts.Austin's contention was that Loral could have reached out to the government for an extension. In this case. was at his house 3.

SWINTON vs. it is a statement of fact not opinion . it doesn't bar them from recovery if they were acting in reliance of the misrepresented information. unless you have some dutyto speak. in this case. When Annino goes to sell the building. she listed it as an apt building o Also is advertised in a way that would allow to (keep current tenants) o Her partial disclosure was misleading in nature. WHITINSVILLE SAVINGS BANK y y y Defendant sells home. without the necessary permits. Arthur Murray  If you have superior knowledge.  That being said. and they say no. "We don't impose a duty on a person to disprove that another person is telling the truth. While yes there was a fair amount of disclosure. but she was fully aware of Kannavos intent to continue to use the building as a rental property. the zoning laws are of public knowledge. and later becomes aware of this infestation and incurs damages and repair fees to fix the problem Plaintiff sues the defendant for concealing the existence/knowledge of the termites  Court does not agree that simply because the defendant did not disclose his knowledge as to the termites existence does not necessarily mean that there was concealment. when in fact they've been a smoker all their life--misrepresentation o Whether or not that misrepresentation EFFECTED the value of the contract Vokes vs.That being said. there is an evaluation as to whether what you said was deliberately misleading. the information which she disclosed was misleading. Difference between Misrepresentation of Fact and Misrepresentation of Law Material Fact: o A person that is seeking insurance coverage for their lung cancer o Insurance company asks the insured if they've ever smoked."Just because Kannavos had access to prove that Annino's information was false. Plaintiff buys the home. Concealment and Misrepresentation  Silence is not normally going to be a cause for liability. And Kannavos did not take advantage of this opportunity. KANNAVOSvs. Not only was her advertising deceptive in nature. Whereas with misrepresentation. and in complete disregard of the zoning laws. This case differs from Swintonin that: Here. doesn't mean that he should be required to. the court may take into consideration how reasonable your reliance was in the first place.  Cannot be charged with not disclosing information when there is no duty to speak. ANNINO y y y Annino rehabs a house into an 8 apt building. that he is aware has termites.e.

In his haste to prepare the final bids. He correctly included the price from the plumbing bid spreadsheet in the final bid form for the plumbing contract.000? . Casper¶s bid on the plumbing contract was $15. When Mel returned to the office. Sky High was the lowest bidder and was awarded the contract. Casper¶s bid manager²Shelton²was left to do most of the preparations for both bids by himself. but he got distracted and never got around to it. creating separate files for the electrical and plumbing bids. ³but we used your bid for the electrical work and we got the contract. The bids were submitted to Sky High only moments before the noon January 31 deadline. Casper Contractors submitted separate bids for the plumbing and electrical work.000 but the bids ranged from $70. on February 1. and Mel thought it curious. Sky High noted that Casper¶s bid for the electrical contract was the lowest.000 bid. He called Sky High and left several frantic messages explaining the error on the electrical contract bid form and said that he wanted to withdraw the electrical bid. Because several of its key employees were out with the flu. When the bids were opened at noon on February 1. Casper¶s electrical and plumbing bids were opened separately.TEST QUESTIONS AND MODEL ANSWERS Fall 2003 Contracts I Exam Question 2 (45 minutes) Mel is president of Sky High Construction. Mel used Casper¶s electrical bid in its bid for the general contract and identified Casper as the electrical contractor that Sky High intended to use if it was awarded the contract. Mel solicited bids from several subcontractors for various aspects of the job. but they were both opened and reviewed by Mel. Shelton intended to bid $110. The subcontractor bids were due at noon on January 31. so that both of Casper¶s bids were noted on the same spreadsheet. Based on his calculations.000 (the bid on Casper¶s form) to $160.´ Mel told Shelton. he received Shelton¶s messages and called him back. The master spreadsheet included the bids for all aspects of the job.000.´ Is Casper obligated to perform the electrical work for $70. He thought about calling Casper to confirm the bids. Shelton looked at his copy of the bid forms and noticed his mistake.000 for the plumbing contract. As a result.m.000 higher than the lowest bid. Shelton calculated each bid using a spreadsheet program. The next lowest bid was $90. Shelton accidentally used the price from the plumbing bid spreadsheet in the final bid form for the electrical contract. The bid was due at noon on February 1. both the electrical and plumbing bid forms included a $70.000 for the electrical contract and $70. Sky High received an invitation to bid on a contract to build an office building in Los Angeles. Mel submitted Sky High¶s bid at 11:30 a. a contracting firm. Later that afternoon. When all of the bids were opened. We¶re stuck and now so are you. ³I¶m sorry about your mistake. Mel noticed that Casper¶s electrical and plumbing bids were identical. The bids were noted on a master spreadsheet along with all of the other subcontract bids.

As in Elsinore. it was the price. Finally.000 and $90. Mel will further distinguish the case from Elsinore by pointing out that in that case. Mel will bolster his argument by noting that this holding has been influential enough to create a Restatement (Second) section stating the same: § 87(2). But Mel will point out a few things. Unlike in Elsinore where things were calculated wrong. the court went on to hold that a promise by a subcontractor not to revoke its bid is implied when a subcontractor bid is used by a general contractor. The mistake was clerical rather than due to negligence or neglect of a legal duty or purposeful deceit. Casper will argue that enforcement would be unconscionable since he would be out $40. Mel can use the next lowest bidder per Holman.ANSWER: This is an edited version of one of the better student answers to Question 2 from the Fall 2003 Exam. here Casper could easily have checked the bids before submitting them to discover his mistake. Casper tried to give prompt notice by phoning repeatedly immediately. . he may have an argument that Casper¶s error was not merely clerical but was due to negligence. rejected a rescission argument. Of course.000. Casper¶s best chance for recovery is relying on Elsinore¶s rescission rule. and the general contractor¶s bid was chosen. because the general contractor¶s bid had been accepted. the next lowest bid. the general contractor could not be placed in status quo were rescission granted.000.000. and Casper will also point out that Mel had reason to know there was an error due to the identical bids and Mel¶s own statement that he suspected something was wrong. in Drennan this was the difference between the subcontractor¶s bid and the next lowest bid. but per Drennan he does owe the difference between his bid and the next lowest. (3) the mistake was clerical not purposeful. but does a good job of identifying and analyzing most of the key issues. But Mel¶s most potent argument will come from the holdings in Drennan and Holman. First. Casper will argue that this case fits that pattern. In Drennan. the subcontractor spoke right away to notify the general contractor of the mistake. (6) the offeree knew or had reason to know the price was incorrect²but not just because it was too low. In Elsinore. The case laid out the following elements of rescission: (1) a mistake that was material to the contract. But furthermore.000. So Mel will be free to use the $90. First. (2) the mistake is not the result of a neglect of legal duty or negligence. (5) prompt notice of the mistake was given. He immediately told the school district once he discovered his mistake. Casper is not obligated to perform the electrical work for $70. a general contractor does not accept a subcontractor¶s bid by using the bid in his bid. (4) enforcement would be unconscionable. ³reason to know´ will suffice. but he may be obligated to pay Mel the difference between $70. Casper is not obligated to perform the electrical work for $70. The answer is not perfect. In Elsinore. which specifically held that although a subcontractor implies a promise not to revoke when it bids. the contractor made a bid that had a clerical mistake. The mistake was material to the contract. a necessary element of rescission. (7) the offeror can be placed in status quo. Casper will argue that under R2d § 153(b). The court. Mel had only a slight suspicion. the school district had actual knowledge of the mistake before accepting whereas here. so here that difference is $20. the contractor met these requirements and was relieved of responsibility for his offer (bid). however.000. and promissory estoppel is therefore appropriate. the subcontractor made a mistake in his bid.000 bid since he never accepted but Casper will have to pay reliance damages as per the Drennan holding.

´ Meredith told her. ³The job starts on March 20. Meredith¶s assistant Betsy told Gabrielle that Meredith was in a meeting. so Meredith left the following message on Gabrielle¶s answering machine: I¶m so glad you called. Gabrielle found out that she did not get the job at Microsoft. ³If the job at Microsoft does not come through. If you accept. so I would appreciate it if you would call me right away if you want to accept. but I interviewed with Microsoft last week for a permanent position and if they offer me the job. I know you have experience with the PC¶s and software they use and you would be the perfect person to help with that customer. Of those 6. I¶ll have to turn down business from some very good customers. Meredith received resumes from 10 persons and interviewed 6.´ Meredith said. I should hear from them by next week. Elgin. 2005. 2005.´ ³I understand. so Gabrielle left a message telling Meredith that she wanted to accept the job. you can get started right away on the problems at Kinko¶s.Essay Question 1 (75 minutes) Meredith Declan owns a computer service and repair business called Computer MD. but she wanted to know whether she would receive any medical or dental benefits with the job. In March 2005. but she felt bad for Meredith.000 per month. Gabrielle called Meredith¶s office. ³Thank you for the offer. Give me a call by March 17 if you want the job and we¶ll talk. She called Meredith to ask about the technician position but Meredith was out of the office. She also knew that working for Meredith would be much more challenging and rewarding than the internship. Meredith called Gabrielle first and offered her the job. I would be happy to have you work for me. It was not a full time or permanent position. She called Microsoft that evening and rejected the internship offer. I offered the position to a man named Ashton but he said that he won¶t take the job unless I agree to pay him $5. The morning of March 17. but I need to help pay for my mother¶s medical bills so I can¶t turn down a permanent position with such a prominent company. 2005 and ends on May 20. The next day. two have the necessary experience and availability: Ashton and Gabrielle. Gabrielle had received a call from Microsoft offering her a position as an intern. Gabrielle got home that evening and listened to the message. she sometimes adds temporary workers to her staff. the Kinko¶s on Main Street is having trouble with their computers and I need to send someone over as soon as possible. She also wanted to know if the salary was negotiable. papers and projects. she often gets calls from students who encounter problems while preparing for final exams. Gabrielle was anxious to get to work so she went to the Kinko¶s on Main and told the assistant manager. I¶ve heard wonderful things about your company and I know that working for you would be a great experience. and the salary is $4. Gabrielle replied. March 16. Gabrielle was confident that she would do well in the internship.´ On March 15. but Gabrielle decided to wait until the next morning to call Meredith back. To handle the large volume of business at these peak times. It¶s just going to get worse over the next few weeks and if I don¶t hire someone soon. The beginning of December and the end of April are always busy times of the year for Meredith because in addition to her regular customers. Meredith called back but Gabrielle was not home. I would prefer to work for you. Gabrielle was sick with 24-hour stomach flu and she did not get around to calling Meredith back. Meredith seeks to hire one such temporary worker to get her through the April busy season. Earlier that day. that she was there from Computer MD to take a look at his computers. but Gabrielle knew that most of the interns who do good work receive permanent positions after the internship ends. I will have to accept. I really can¶t afford to pay that much but I¶m already swamped with work. On March 10. In fact. Elgin directed her to the troubled . but Betsy promised to have Meredith call Gabrielle as soon as the meeting was over.000 per month. I can only hold the job open for another two days.

´ Meredith comes to you for advice. I hated to do it. but if she decides to hire her and get out of her contract with Ashton she will have breached her contract with Ashton. As she was explaining to Elgin what she had done. I fixed the computers at Kinko¶s. she could not accept the offer because there was no meeting of the minds. She answered the phone and before Meredith could say a word. walked into to the room. He came to my office and signed a contract this morning. When I didn¶t hear from you I called everyone I could think of. He knew how desperate I was and he actually laughed at me and told me that he had another job offer (some internship at Microsoft).000 per month.´ Meredith responded. Gabrielle knew that Meredith had already hired another employee based on the conversation she heard between Jamal and Elgin and based on the message from Meredith in which Meredith informed her of the possibility of hiring Ashton. Next Gabrielle will argue that when Meredith left a message saying to call her right away to accept and that if she wanted to accept she could get started right away.´ ³Oh dear.´ Jamal says. she just began performance on March 17. Gabrielle will probably argue that she has formed a contract with Meredith at one of three different times between March 15 and March 17. but her conditions on acceptance do not actually form the offer. She would like to get out of the contract with Ashton. ³I accept the job offer. He threatened to take the job at Microsoft unless I paid him $6. She looked at the caller ID and saw that the call was from Meredith. . that Meredith was giving Gabrielle the option of accepting by promise or performance. Jamal. I¶ve already started. he¶s not nearly as experienced as you are. acceptance by performance without notice is probably not binding. However. Gabrielle said. so I called Ashton and offered him the job at $5.computers and described the problem. If I lost their business I would have to cut my staff and would barely have enough to pay the company¶s bills. Gabrielle may then argue that her acceptance over the phone should constitute valid acceptance because she gave it prior to direct revocation and within a reasonable time. including everyone who applied for the job. but she is afraid that he will sue her for breach of contract. but Kinko¶s was threatening to hire another company if I didn¶t send someone over there today. ³I was calling to let you know that I hired Ashton this morning. Thus. Like in Dickinsonv. Meredith¶s offer was indirectly revoked when Meredith took action that was inconsistent with the intention to enter into the proposed contract and Gabrielle learned of this action. She will argue that her phone message on March 15 said that she wanted to accept. I had no choice.Dodds. Thus. Gabrielle¶s cell phone rang. the general manager. I cannot possibly hire you too. So you see. based on R 2d § 43.000 per month. but I agreed. ³I spoke to Meredith an hour ago and she told me that she was sending a man named Ashton over to fix the computer later this afternoon. In fact. I really didn¶t want to hire him.Elgin introduced Gabrielle as the ³technician from Computer MD. commencing performance constituted acceptance (R 2d § 62).´ At that moment. Gabrielle got to work and resolved the problem by lunchtime. How do you advise her? Essay Question 1 (75 minutes) Meredith will probably not be liable for a breach of contract action against Gabrielle. and they¶re one of my biggest and best customers. The language of the offer suggests that notice of acceptance should be given to performance (R 2d § 54) and because this notice appears to be required. She is also concerned that Gabrielle might try to sue her for breach of contract. Gabrielle did not bother to call her rightaway and perform.´ ³That¶s odd. However. but no one else could start right away. once Gabrielle learned of Ashton being hired. they merely form a counteroffer (R 2d § 58 and R 2d § 39).

(Callano v. It is questionable whether there is a direct relationship between Meredith and Gabrielle but based on the message left by Meredith the court will probably find that Gabrielle acted with the impression of a direct relationship because she would not have actually done the service without an understanding or implication of an employment relationship. Although there may have been a need for immediate contract formation. Based on Odorizzi v. which was a reasonable manner of acceptance (R 2d § 30). He made a counteroffer when he requested $6. Based on Lucy v. Meredith will rightfully argue that there was no consideration for this option contract so she is not bound by it. Red Owl) (R 2d § 90). Meredith¶s words and actions manifested every intention of entering into a contract. Although there were no known third party advisors. the court will probably award Gabrielle the minimum amount of damages necessary to avoid injustice to Gabrielle without punishing Meredith (the lesser amount between the benefit to Meredith and the cost to Gabrielle). . However. Gabrielle probably won¶t recover under promissory estoppel for her lost opportunities with Microsoft. Ashton was making a permissible threat when he threatened to take another job (R 2d § 176). Zehmer it does not matter that she had unspoken reservations regarding the contract because Ashton reasonably relied on her conduct and her actions in accepting his counteroffer. Gabrielle¶s failure to call by March 17 may justify Meredith¶s hiring another individual and in this case Gabrielle could not be given reliance based remedies for relying on more than what Meredith promised (which was to keep the offer open only up until March 17). The contract was formed at an appropriate place. Furthermore Meredith probably cannot assert that she was subject to undue influence. Thus in giving up her job with Microsoft Gabrielle was reasonably relying on Meredith¶s promise to keep the job open and hire her (Hoffman v. Gabrielle expected to be compensated for her services based on Meredith¶s message on March 15. Oakwood). Meredith may have tried to argue that she made the $6. Gabrielle may be able to recover restitution damages for unjust enrichment. Thus the contract between Meredith and Ashton is enforceable. Thus. Gabrielle can recover for unjust enrichment if she expected remuneration and if there is a direct relationship between the parties (Callano v. Thus because of this over-reliance on Meredith¶s promise. time. She made him an offer when she offered him $5. In any case. she requested that they talk by March 17 and they did not actually do so until the 17th. however. Gabrielle may be able to recover reliance based damages for her lost opportunities with Microsoft.) In this case there was unjust enrichment because Gabrielle performed a service to Kinkos for which Meredith will be monetarily compensated. by equal number of parties and they had been in negotiations for about a week. Ashton would certainly have breach of contract action against Meredith if she tried to get out of the contract with him. Ashton was dealing at arms length with Meredith and so she cannot assert that she was subject to over-persuasion based on their relationship.000 contract with Ashton under duress because he knew of her desperate situation and threatened not to take the job.Gabrielle may argue that the information she acquired from Jamal was not reliable but the court probably won¶t rule in her favor on that issue. The relative status of the parties is equal and his power to negotiate the deal he did was not based on their relationship. Meredith promised to keep the job open and reaffirmed her interest in hiring Gabrielle on March 15. Gabrielle may argue that Meredith¶s promise to hold the offer open until March 17 was an option contract. Thus because none of these ³acceptances´ were valid enough to formulate a contract Gabrielle probably won¶t recover on a breach of contract action. Ashton did not subject Meredith to over-persuasion in making the decision. However. this was not insisted upon by Ashton. Bloomfield.000 a month. Meredith agreed over the phone. Oakwood Park Homes Corp. this should not be a basis alone for invalidating a contract especially when there is no evidence to suggest that Ashton insisted they go ahead with the contract without advisors.000 a month. Furthermore the signing of the contract in her office constituted a validation of that acceptance.

Consequently. will she prevail? Probably not. She accepted his offer by performing²she got the ticket dismissed. Martha went to dinner at her grandparents¶ home. she did not know and had no reason to know that he was kidding when he made the promise. ³You could give me $75. Mark sought her performance (fixing the ticket) in exchange for his promise (to pay her loans) and her performance was given in exchange for that promise. Martha insists they had a binding contract. her secret dream is to accept a position working for the Legal Aid office in her small Midwest hometown. Martha knows in her heart that big firm life is not for her. If his words and acts.´ . Martha faxes the following letter to Mark at work: Dear Mark. If Martha sues Mark to enforce the agreement. She will further argue that the promise was supported by consideration since her performance was bargained for.´ On Monday afternoon. While impressed with the firm¶s attorneys and client base (not to mention generous starting salary and signing bonus). Martha can also argue that although Mark now claims that he was kidding. Now Mark must fulfill his promise to pay the loans. Instead.Contracts Sample Exam Questions Question 1 (40 minutes) Martha just finished a summer clerkship at a prominent Chicago law firm. ³the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts. Noting Martha¶s unusually sullen mood. manifest an intention to agree. Thank you so much for offering to pay my student loans in exchange for getting your ticket fixed.000 to pay off my law school loans. I can¶t go to traffic school again and my insurance rates will shoot sky high if I have another ticket on my record. and owns a successful marketing business. One Sunday shortly after she received her offer.´ Martha said with a sarcastic smirk. Mark asked if there was anything he could do to cheer her up. Several other family members were there. Mark is several years older than Martha. Martha will have over $75. Mark made a comfortable living.000 in student loans to repay when she graduates from law school next year. ³I¶ll pay off your loans. Zehmer explained. He immediately calls Martha and tells her that he was only kidding about paying the loans. Mark offered to pay her school loans if she got his speeding ticket dismissed. Martha When Mark gets the fax on Monday evening. Martha can argue that they entered into a binding unilateral contract. A lawyer friend of mine has managed to get your speeding ticket dismissed earlier this morning. it is immaterial what may be the real but unexpressed state of his mind. judged by a reasonable standard. including her cousin Mark.´ Mark pulled Martha aside after dinner to congratulate her on her job offer. At the bottom of this letter are the loan account numbers with exact amount required to pay off each loan in full. See Restatement (Second) of Contracts § 71. You loving cousin. I have also included the names and addresses of the lenders so you can send checks in the appropriate amounts. As the court in Lucy v. Unfortunately. although he was not what most people would consider ³rich. he is horrified. ³if you use your legal connections to fix the speeding ticket I got on my way over here.´ Mark replied with a short laugh. The law firm has offered her a position as an associate after she graduates next spring.

Pfeiffer. However. The night that the agreement was signed. the ³offer´ was made during a casual conversation after a family dinner.´ He knew that she had been offered a job at a prominent law firm with a high salary but did not know that she wanted to take a job at Legal Aid with a much lower salary. Martha can argue that she should recover under a promissory estoppel theory. there is no evidence from the problem that Mark and Martha had ever talked about this subject before. that would likely be what it would have cost him to get the ticket fixed himself. Moreover. Additionally. and they included crucial details.In this case. the prospect of a high income) complaining about relatively manageable money problems. presumably. on the other hand. no reasonable person would have believed that his ³offer´ was serious. she would have to prove that injustice can be avoided only by enforcement of the promise. in this case. Feinberg v. he wanted Martha to get the ticket fixed. In contrast to this very informal. Additionally. If that were the case. the conversation is more reasonably interpreted as two people with high incomes (or. can argue that no binding contract was formed because he had no intent to enter into a contract. Oakwood Park Homes Corp. In this case. Moreover. They took the time to write. While this alone would not prevent a court from finding that a valid contract existed. the parties discussed the matter for forty minutes or more. Martha will argue that Mark¶s words had only one reasonable meaning. He will argue that in this context. so no reasonable person would believe that he would so casually take on a $75. Mark probably has the more persuasive argument.000 debt just to avoid higher insurance rates (which. there was no benefit that she conferred on him that must be restored to her. This situation is distinguishable from Lucy v. then there is a stronger case for unjust enrichment. Mark was not a rich man. Zehmer had been discussing the possibility of Zehmer selling the land for a long time. Martha is unlikely to win because Mark should not have reasonably expected that his joking promise would induce action by Martha. therefore. In this case. Martha should not be able to recover under a restitution or quantum meruittheory since she did not perform any work to get the ticket fixed (her friend did). In exchange. then re-write their agreement. He was concerned about his driving record and its effect on his insurance rates and. there is no . See Restatement (Second) of Contracts § 371. Zehmer because based on his words and acts. Moreover. If we assume that Martha did expend significant effort to get the ticket fixed (perhaps she will have to pay the friend for taking care of the ticket). Martha has conferred a benefit on Mark and retention of that benefit without payment would be unjust. Therefore. Martha is unlikely to be able to convince a court that a binding contract existed. There is also no indication that Mark knew of Martha¶s concerns about repaying the loans. the parties in Lucy v. Callano v. Mark. First. he would pay off her loans. Martha¶s recovery should be limited to her restitution interest. See Restatement (Second) of Contracts § 90. Therefore. would amount to far less than that amount). She will argue that he cannot now claim that he was joking when his words warranted a reasonable person to believe that he intended to enter into a real agreement. it is a factor that should be considered in determining whether a reasonable person would believe that Mark intended to enter into a binding contract. 370. there would be a binding contract. in Martha¶s case. nothing was put in writing and no details were discussed. She would have to prove that Mark made a promise that he should reasonably have expected would induce action by Martha (getting the speeding ticket dismissed) and that Martha did in fact take such action. Moreover. the monetary value of Mark¶s alleged promise is far higher than the value of her performance (her performance apparently cost her only the time it took to make the phone call to her friend who fixed the ticket). See Restatement (Second) of Contracts § 344(c). brief conversation. Her comment was made with a ³sarcastic smirk. Mark laughed when he made the statement.

but damages are likely to be limited to her reliance interest (the cost of fixing the ticket). promissory estoppel might be more appropriate. . she did perform any substantial services.injustice in refusing to enforce this promise. Promissory estoppel is particularly inappropriate in this case because if Mark should reasonably be expected to induce action by Martha. Zehmer. if we assume that Martha did expend substantial effort in getting the ticket fixed. then the contract itself should be enforceable under Lucy v. Martha simply made a phone call. Again.

´ replied Robert. Gus has a brand new fence that was built primarily for his benefit (because of his dog). but within a year. Several weeks later. whose dog ran away shortly before work on the fence began. Robert mentioned that his neighbor Gus would be splitting the cost of the fence. Robert. a local contractor. ³Paying for the whole thing was really going to put a strain on my budget.´ When Robert talked to the contractor the next day to confirm the fence installation date. Not likely. ³[a] plaintiff is not entitled to employ the legal fiction of quasi-contract to µsubstitute one promisor or debtor for another. the court noted that the plaintiff had a remedy against the estate of the other party to the contract. It is true that Robert told Picket Fences that Gus had agreed to split the cost of the fence with Robert. Of course. Gus even recognized his moral duty. finally fed up with the situation. He stopped by Gus¶ house to tell him about the fence so that Gus could make sure that the dog was not in the yard while the contractor was working. Gus apologized for the dog¶s actions and offered to fix the holes. but that would be very expensive and it would not be able to use those materials in any other job. It will argue that Gus should not be allowed to enrich himself unjustly at the expense of Picket Fences. In fact. ³I¶ll split the cost of the fence with you. Robert didn¶t mind so much when the puppy was small. [We did not cover this in class. They had adjoining backyards. Oakwood Park Homes Corp. it is not entitled to substitute Gus for Robert as a defendant. Picket Fences has no contract with Gus.¶ . given his financial difficulties. Moreover. Can Picket Fences force Gus to pay for the fence? Assume that Picket Fences did not and could not have a valid lien on the property. it does not create any contract between Gus and Picket Fences.´ ³Thanks. is now refusing to pay for any part of the cost.´ In that case. However.Question 2 (30 minutes) Robert and Gus were neighbors. While Picket Fences may have trouble locating Robert or recovering from him. Recovery on the theory of quasi-contract was developed under the law to provide a remedy where none existed. the adorable little puppy had grown into an out-of-control 75 pound dog whose favorite pastime was digging holes. Gus realized that the fence was only necessary because of his inability to control his dog. and realized that the fence would increase the value of his property.´ said Gus. Robert packed up in the middle of the night and moved to another state. 110 and make the following observations: . many of these holes were on Robert¶s side of the yard. Picket Fences could rip out the fence. but that is only evidence of an agreement between Robert and Gus. Robert lost his job when the factory where he worked burned down. explained. contracted with Picket Fences. Picket Fences is unable to find Robert to collect the outstanding balance under their contract. straying frequently onto Robert¶s half of the yard. Picket Fences could argue that it should be able to recover on a quasi-contract theory. One day Gus brought home an adorable little German Shepherd puppy. but no fence to separate the yards. Likewise. ³I¶ll tell you what. but some students may read Note 2 on p. to build a fence between his yard and Gus¶. when the fence was nearly finished. Gus. there is no evidence that Picket Fences ever even spoke to Gus. As the court in Callano v. Picket Fences has a remedy: it can sue Robert for breach of contract. Depressed and unable to find a new job. which is the reason he offered to split the cost in the first place. Picket Fences cannot argue that it relied on Gus¶ promise because it had a legal obligation to install the fence based in its previously executed contract with Robert. . The puppy would romp around in the back yards. . this moral duty does not equate to a legal duty. but he was unable to keep the dog on his own side of the yard.

the court appeared willing to allow the jury to determine whether the defendant had been so unjustly enriched at the detriment of the plaintiff as to require the defendant to compensate the plaintiff. For example. . In this case.] . v. However. where the work is done under a special contract with another . the court in Paschall¶s Inc. . the situation is dissimilar where a person furnishes materials and labor under a contract for the benefit of a third party. Picket Fences could argue that the facts are even more compelling in this case because Gus actually agreed to pay for half of the fence. Dozier noted that while an ³implied undertaking cannot arise against one benefited by the work performed. and that contract becomes unenforceable or invalid.Some courts may be more willing to allow recovery on a quasi-contract theory in this case. even the Paschall¶s court would require Picket Fences to exhaust its remedies against Robert before seeking recovery against Gus. the Paschall¶s court might be willing to let a jury determine whether Gus was so unjustly enriched at the detriment of Picket Fences that Gus should be required to compensate Picket Fences.´ In that situation.

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