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Final Contracts Outline

Final Contracts Outline

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Published by: Grant Burchfield on Dec 02, 2010
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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

will not include punitive damages. had the surgery never occurred. y If only consequence is compensatory.000 for LOSS of appearance Total Reliance recovery: $19. not $ she's paid out to other people: Only thing she has conferred on him is Dr. you've won" .000 P&S for 3rd operation. y Assigning the possible damages under the different theories of recovery: Restitution--awarding her back any amount she has conferred on Dr. O¶Connor.$300 for Dr. would only get $100 hospital fee for 3rd operation.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.600 Expectancy--had the promise been performed (benefit of the bargain): P was prepared for 2 operations. may be of benefit to breach.100 THE ECONOMICS OF REMEDIES: y y y Not meant to be punitive. $3. Total Restitution recovery: $300 Reliance--putting her back where she was before. Total Expectancy recovery: $33. $300 for Hospital fees ($100 per operation). $10.000 value of loss of appearance.000 for increased value of appearance had the surgery been performed correctly.¶s fees ($100 per operation). Efficient breaches arean economical issue.'s fee ($300). 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. $9. 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. $20.000 P&S. $10. Cannot get more than what you expected.

or destruction of a legal relation. until P turned 21. maintaining stadium and profit sharing. modification. 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. (3) The performance may consist of (a) An act other than a promise. if he refrained from smoking. 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. 29 Restatement (Second) § 71±Requirement of Exchange.SIDWAY (pg. 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.CONSIDERATION as a Basis for Enforcement²pg. 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. (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. D¶s estate refused to pay. or (b) A forbearance. or (c) The creation. 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). (Best statement of consideration) Since P gave up his legal right to do certain things on the belief that D would pay. In those situations. a performance or a return promise must be bargained for. P complied. . the bargain agreed upon will be an enforceable contract ± as opposed to an unenforceable promise. HAMER vs. D¶s promise will be enforced as a binding contract. Restatement (Second) § 74± Settlement of Claims²³forbearance of an invalid claim´ (1) Forbearance of the ability to assert a right. It may be given by the promisee or by some other person. or surrender of a claim or defense. drinking etc. his nephew.34)  D promised to pay P. Types of Exchange (1)To constitute consideration. 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. (4) The performance or return promise may be given to the promisor or to some other person.

B. or unlawful.BOEHM (pg. P made the claim in good faith and there was no proof of fraud or unfairness. .  Note (A. and which he believed to be well founded. P brought bastardy proceedings and sued D for breach: P can recover even though the child was not D¶s. D made payments until a blood test suggested that the child was not his. Contract had sufficient consideration because P did not exercise P¶s right to prosecute for bastardy in exchange for D¶s promise to pay. 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. D stopped payments. vexatious.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.FIEGE vs.P had valid reason to believe D was the father. P forebear (in good faith) from suing for bastardy charges in exchange for child support from D.): 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..

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

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

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. and takes a job elsewhere. y "The value of the performance and the ring do not have to be equal.57. . a new employment began once the agreement was signed." Economically they could be one-sided. (Giving up her land to move). Sued for breach of contract (noncompete agreement) o Appellate court does still remand case.58) Columber is fired from his job at Lake Land. but we cannot determine the value to the father of his daughter "showing up". Lunchtime at Tiffany's²pg. Employment Agreements LAKE LAND EMPLOYMENT GROUP vs. D intended to give it without anything in exchange from P.The Requirement of Bargain for Exchange KIRKSEY vs. he still was seeking her performance. note 3) y Courts determine that her act of giving out her personal info to receive the card was adequate consideration. 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.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. o Believe that the new agreement creates a new employment (an employment under the signed agreement of new terms). This is an old case.  Could have possibly sued on a restitution or reliance based argument. defendant moves plaintiff and her family to another site. 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. y Eventually kicking the plaintiff and her family off the land Rule: A gratuitous promise cannot be enforced. y In the courts mind. o Supreme Court believes there is consideration.COLUMBER (pg. Even if his motive was just to get her to show up. he could have done so at his own free will and quit his job. Million Dollar Swipe (pg. The court believed that D¶s promise was a gratuity and lacked the requisite consideration to sustain an enforceable contract. If Columber did not want to sign the ³non-compete´ agreement.KIRKSEY (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.Employment Handbooks METILLE vs. .GRIFFITH (pg.  Court finds that Mettille's continued at-will employment was sufficient consideration. y Court awards Mettille monetary sum. bank president.64) y y Griffith.

B. .´ occurs. according to its terms. " Illusory Promises: a promise that appears so insubstantial as to impose no obligation on the promisor. 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. so that each party is an obligor on that party¶s own promise and an obligee on the other¶s promise. an expression cloaked in promissory terms but actually containing no commitment by the promisor. "This does not mean that the promise is NOT binding until the event occurs.e. a contract in which no promisor receives a promise as consideration for the promise given What Constitutes a Promise? Restatement (Second) § 76-.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. 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.´ Unilateral and Bilateral Promises: Bilateral Contract± a contract in which each party promises a performance.): Conditional Promises: performance will become due only if a particular event. a contract in which the parties obligate themselves reciprocally. Insurance contracts provide good examples of express conditions. makes performance optional with the promisor no matter what may happen. or no matter what course of conduct in other respects he may pursue. if a guarantor promises to make good on the principal debtor¶s obligation ³as long as I think it¶s in my commercial interest. 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. Uniform Commercial Code (UCC) Article 2³An apparent promise which.Promises as consideration Types of Promises According to Dobbins (A. is in fact no promise. (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.´ the guarantor/promisor is not really bound. known as a ³condition. but only that the event must occur before the promisor must perform. (i. Such an expression is often called an illusory promise. An illusory promise typically makes performance optional with the promisor.

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

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. and will buy that amount from Gulf. his promise is not "illusory". Because he can be bound by the "satisfaction clause" and he must "act in good faith". Also pays the defendant $1. . y y y The deal states that Eastern will buy all of its fuel from Gulf. D threatened to cut off P¶s fuel supply if P did not agree to pay a higher price than stipulated in contract. On the grounds that the courts have determined that both parties have formed a contract.  This is a requirements contract They instead say. stating that the plaintiff will only be obligated to follow through if he is able to find tenants for the commercial property. A "satisfaction clause" is inserted into agreement. Rule: Deposit receipts are binding and enforceable contracts. y Plaintiff sues for breach of contract based on signing by both parties of deposit receipt. D supplied jet fuel to P based on a requirements contract for the fuel they would reasonably need. o Defendant decides that she no longer wishes to sell the property and informs plaintiff of decision.  Essentially giving the plaintiff an ³opt-out´ clause if he is unable to find satisfactory tenants.´(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. GULF OIL CORP. HOPPER Plaintiff agrees to purchase property from defendant by signing of deposit receipt.000 deposit. o Plaintiff claims that the satisfaction clause is illusory and lacks mutuality in obligation. 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. o Contracts for the Sale of Goods EASTERN AIRLINES vs. I will need a certain amount of fuel. and is satisfied with the outcome. 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.Contracts for the sale of Real Estate MATTEI vs.

o Court says that his promise to get endorsements on her behave. LUCY We have an exclusive licensing/agency agreement. was not in fact "illusory". 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. Court "this must have been what they intended. y Plaintiff alleges that the defendant broke the promise for him to sell all designs.89 . 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. y His obligation was implied because of his "reasonable efforts"." Section 4: RELIANCEas a Basis of Enforcement²pg. and for profits to be shared. y Lucy argues that there was no consideration on the plaintiffs part o Court says that his promise to get endorsements on her behave.WOOD vs. y Court "this must have been what they intended. y His obligation was implied because of his "reasonable efforts". was not in fact "illusory".

Feinberg VS. reliance doesn¶t necessarily create an enforceable contract. then we can look at alternative ways to enforce the promise.000. admissions. 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. or his executor. SCOTHORN Man says he willpay his granddaughter P money so she would not have to work. 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. to resist payment on the ground that the promise was given without consideration. Promissory estoppel is about enforcement of a promise. It allows for a promise to be enforced without consideration if all the elements of promissory estoppel are met. Set up the memorial fund. however. One of these ways is reliance. The schools acceptance of the money made the school responsible to follow through with what they promised to do. 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. If court does not find injustice then it can choose whether or not to enforce the contract. If there is consideration. thus the doctrine of equitable estoppel can be applied. Pfeiffer Co ±continued ."having intentionally influenced the plaintiff to alter her position for the worse on the faith of the note being paid when due. this did not equate to a bargained for exchange and thus did not constitute consideration. 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". o Court. Rule: Prelied on her gpa¶s promise when quitting her job." o Difference of doctrine of equitable estoppel y "A right arising from acts. it would be grossly inequitable to permit the maker. THE DEVELOPMENT OF PROMISSORY Promissory Estoppel ESTOPPEL Alternative Enforcement Methods when there is no Consideration (A. the court has to enforce the contract.B. ALLEGHENY COLLEGE vs. she did this because gpa promised to pay her so she wouldn¶t have to work.) If there is no considerationto support the promise we want to enforce.RICKETTS vs.

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

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

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

Pendergast doesn't end up paying Callano for the bushes because he dies. not a contract theory. Husband leaves her after he graduates from school. As a society. even if we're not going to obligate doctors to help. payment for services rendered etc. Oakwood homes didn¶t. then restitution might be appropriate. but they're not the types that are recoverable. o Wife then believes that there is a restitutionclaim. not a promise or contract involved.Unjust enrichment of the husband. 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. PYEATTE Wife and husband agree that wife will put husband through law school and afterwards he would put her through grad school. and then refuse to pay because they "didn't ask to be saved/helped". Oakwood ends up selling the house to another couple WITH the bushes/trees that are planted in the yard. based off of what services were actually given. CALLANO vs. Callano's sue Oakwood Homes. Courts aren't crazy about enforcing restitution between married couples. o Why can't there be a remedy for breach of contract? y There might have been promises exchanged. But instead a contract implied by law. . WISDOM y y y y y Doctors render services  Harrison still dies. o Chapter 2: Contractual Obligations-Assent Subjective--we look to the subjective intent as to whether the parties intended to create a contract. y Unjust enrichment of the husband. o Should have sued against Pendergast¶s estate. Payment of rendered services must be reasonable. any person sent to the hospital cause of an emergency could have the work performed on them. PYEATTE vs. o Focuses on -prevention of unjust enrichment. OAKWOOD PARK HOMES  o o o Pendergast buys a home and then employees Callano to plant shrubbery at his house. doctors seek amount for rendered services Harrison couldn't ask for rendered services. and because he was in dire need of helpit is implied that the physicians can help and receive compensation for services rendered. we should pay them for their services when they do help. o Situation where retention of that benefit without paying would be unjust. COTNAM vs. but if there is solely a benefit by one party member.o Generally. 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. y Not the case when the services/enrichment weren¶t wanted/asked for. o Pendergast made the promise to pay for the shrubbery. So her "expectancy" of him to pay for her graduate school was not recoverable. If this wasn't the case. o She won on a count of restitution. Must be a direct relationship to make the retention of a benefit unjust.

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.  DO YOUR ACTIONS OR INTENTIONS SHOW THAT YOU MEANT TO AGREE? LUCY vs. if were to use only the "objective" approach. could wind up with terms that neither party intended. 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. then this would always be the case that someone could back out of an agreement for the same contention. 126 Restatement (Second) § 24 Offer Defined-. when a document is absent: 1. 3.  Conversely. 4.124 Section 2: The Offer²pg.  If we were to only to look at the "subjective". As you could not have enforceable contracts because someone could say that they did not intend to enter into a contract.(Not actual wording) . How do we prove subjective intent?²almost always by circumstantial evidence Objective factors that show parties intended to be bound.Objective--we look to the objective intent. If the court did not enforce this simply because Zehmer said he was kidding. Your actions show that you intended to be bound to the contract Gentleman's Agreements: If neither party intends to be bound. Mediafare Entertainment Corp.²pg. Zehmer's signature on the revised contract Court believes his conduct and actions would lead one to believe that he was serious. then the courts should not enforce the contract. 2. would create chaos.

breaking down a contract is as simple as evaluating an offer and an acceptance. FACEY Two questions in the telegraph: 1. For how much Rule: There was no language which specifically stated D would sell to P in their reply to plaintiff¶s inquiry. no meeting of the minds of the owner and prospective purchaser." o Rule:³There can have been no contract for the sale of the property desired. UCC §2-204: "An agreement sufficient to make a contract for sale may be found even though the moment of its making is undetermined". Court:"this information wasn¶t given out for general purposes. 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.000 I will sell you this property«" HARVEY vs. Scenario: If you were advising Facey. stating exactly how much the supplies would cost. but instead was given for the specific purposes of placing an order. . OWEN vs.´ What kind of comment from Tunison COULD be considered an offer? "If you pay me $16. This was a response to a specific request for information.An offer is a manifestation of willingness to enter into a bargain. They responded merely to the second question²of the lowest price it might accept²and did not specifically say they would sell to P. o Ideally. 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. No contract was implied to sell to P at the price quoted in the response. TUNISON  ³The courts don't want to bind people in circumstances where a person does not intend to be bound." Why would we not want to consider quotes as offers? Because they're an estimate. Court believes that the terms ³for immediate acceptance´ make this more than just a "quote" and more of an agreement/offer. GENERAL RULE FOR PRICE QUOTES: Not typically considered an offer. they're subject to change. unless there was an offer or proposal of sale. CRUNDEN-MARTIN WOODENWARE What was the alleged offer? o A QUOTE on certain supplies. Will you sell 2. Only qualify as an offer if they are specific enough to be considered an offer.

Advertisements as Offers Advertisements are not typically viewed as an offer. GREAT MINNEAPOLIS SURPLUS STORE  Man responds to ad in the newspaper. but is told that he cannot purchase them because of an ³in house policy. LEFKOWITZ vs.136 You can change your advertisement at any time.´ Court held that he was entitled to buy the item. ABRAHAM & STRAUSS-pg. GEISMAR vs. prior to acceptance of the original price quote. but a quote to sell an item for a certain amount. 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. Construction Contracts . because the advertisement did not contain any "in house policy" that the store used to restrict his purchase from the item.

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

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

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

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

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.D¶s notice of price increase was sent to D¶s sales rep but not to customers respectively. It is the notice that it was a mere accommodation that bars this from being viewed as an acceptance. Then we view your acceptance as legitimate.32 each saying it is ³an accommodation´.00/vial to be shipped on June 16 and the order was cancelable before June 13.C. it is reasonable that the offeree should notify the offeror if he does not intend to accept.000 vials and sent confirmation of the order. .  If the shipment is a mere accommodation then it is not an acceptance of an offer. P got the info before it was made known to public and ordered 1. Then Lederle would be required for specific performance of the offer. enclosed letter of price when the shipment was made. It was more like a quote or an estimate. c) Where because of previous dealings or otherwise. D sent invoice to P for 50 vials of DPT priced $64. 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. the balance owed would have been $171. and the court holds that quotes and estimates are not to be treated as "offers". "We don't want to require people to have to follow offers if they don't intend to accept" a) Ex. What could be considered acceptance? U.  If this shipment was treated as an acceptance. § 2-206-shipment of conforming and non-conforming goods could be viewed as acceptance. but in light of the magnitude of price increase. b) Where the offereror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction. Junk mail--being bound to act.C. 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. D decided to make an exception and ship a portion of the order at the lower price. SILENCE NOT ORDINARILY ACCEPTANCE y If you intend to accept by silence of your actions. as opposed to just throwing the mail away. and the offeree in remaining silent and inactive intends to accept the offer.

If you reject an offer.C. (3) Unless otherwise indicated by the language or the circumstances. at the end of a reasonable time. Offeree's rejection i. 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. . ³FIRM OFFERS´ UNDER THE U. 167 Four factors that can terminate: 1. Revocation of Offers y Common law rule--"you can revoke an offer any time before actual acceptance" OPTION CONTRACTS ARE FORMED THREE WAYS: CONSIDERATION. Akers v Sedberrry²³Ordinarily. 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.´ Is going to be based on what is a "reasonable amount of time" LORING vs. (2) What is a reasonable time is a question of fact.Section 4: Termination of the Power of Acceptance²pg. Offeror's death or incapacity 4. Offeror changes their mind 3. or. Don't want to give someone the power to accept an offer 50 some odd years down the road« 2. 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. and subject to the rule stated in § 49.C. depending on all the circumstances existing when the offer and attempted acceptance are made. if no time is specified. 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. and cannot be accepted thereafter. Lapse of time i.. an offer made by one to another in a face to face conversation is deemed to continue only to the close of their conversation. Revocation i.

. 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. P can¶t recover. there was no concluded agreement then made for it was in effect and substance only an offer to sell. Unless both parties had then agreed. ±IF YOU¶RE AWARE IT¶S BEEN REVOKED. There was no consideration given for the undertaking or promise. 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. D sold to someone else before P accepted.DICKINSON vs. to keep the property unsold until P decided to accept. CANNOT ACCEPT-. 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.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. DODDS D made an offer to sell land to P with a date which the offer would no longer be available. 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. to whatever extent it may be considered binding.

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. ±DOES NOT REQUIRE CONSIDERATION RAGOSTA vs. P sued for specific performance.  Thus. (D) Rejection Restatement (Second) § 38²Rejection-- . for lack of consideration. the promise was not enforceable and D could revoke at any time before P accepted.FIRM OFFERS UNDER THE U. No bargained for exchange. P can¶t recover. an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. (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. but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror. during the time stated or if no time is stated for a reasonable time. P received the counter-offer and called D to confirm the acceptance. 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. 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. an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. y What is tendered or begun must be part of the actual performance invited in order to preclude revocation. Rule:Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance. 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. P was merely engaged in preparation for performance which they began even before an offer was made by D.C. 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. Whatever detriment that P suffered to obtain financing was not in exchange for D¶s promise to keep the offer to sell open. D received no consideration for the offer or the promise to keep the offer open unless sold to another buyer. which there was no consideration for. This (like Lake Land) created a new contract. but in no event may such period of irrevocability exceed three months.  P changed the date previously discussed for acceptance and D called revoking the offer. (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.

unless the offeror has manifested a contrary intention. .(1) An offeree¶s power of acceptance is terminated by his rejection of the offer. (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.

o Ex. Restatement (Second) § 63--Time when Acceptance Takes Effect-Unless the offer provides otherwise." Ex. A should not be held liable to sell his car for $25. instead of receipt. without regard to whether it ever reaches the offeror. If the acceptance does not reflect the offer.REJECTION AND THE MIRROR IMAGE RULE Mirror Image--if your acceptance is not an exact reflection of the offer.000. ---date that you mailed the acceptance Ex. and then adds a change.² . the other party can still be bound by an acceptance they didn't even know existed. (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. then you instead have a counter-offer. but (b) An acceptance under an option contract is not operative until received by the offeror. When the offeree accepts. Then the contract is null and void. 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. A offers to sell his car to B for $1.--USPS loses your acceptance. B replies saying "sure. 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. Then they have already accepted the original offer. The Mailbox Rule --acceptance is effective as of dispatch. I'll buy your car for $25". Like the jars and glass case --Acceptance may articulate terms that were implied by the 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. 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. Last Shot Rule--"whoever sent the last terms before performance began." "The only way you have a contract is if the acceptance mirrors the offer.

The general contractor bid was in reliance of the subcontractors bid. --if you don't. Distinction between whether there is contractual liability DRENNAN vs. then you do not have an obligation.Section 6: Pre-contractual Liability²pg. 220 "If you don't have a binding contract. Court believes that the subcontractor should have expected the general contractor to use its bid. . and you say you changed your mind when he's almost done. General contractor bound himself based on the bid from the subcontractor. Whereas § 62 is legally binding from the start of performance. § 45--the beginning of the performance doesn't bind either contract. they are allowed a certain amount of time to complete performance. As there is an injustice if the promise is not enforced. ---Kastorff believes this is different. subcontractor cannot revoke his bid cause then the general could not have used that bid in his own bid. 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. 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." ---the start of performance makes the contract irrevocable for an allowed period of time. The promise that is going to be enforced is the subcontractors promise not to revoke. ---Man starts doing construction on your home.

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

o This is precontractual.CHANNEL HOMES vs.  The binding agreement to negotiate in good faith is the agreement that was breached. and yet there is still a party seeking recovery. 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. GROSSMAN²re-read  Situation where no final agreement reached between the parties. .

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

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

If acceptance expressly made conditional i. What is in fact reasonable 3." If you do not expressly agree/assent. that statement must be expressly accepted as well. Cannot be vague or differ wildly from offer 2.Section 5: The Battle of the Forms and the UCC² pg. (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. Silence is not assent.C. "If you expressly agree to the provisions in my acceptance. Definite and seasonable expression of acceptance i.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. then there will be a contract. A definite and seasonable expression of acceptance or a written confirmationwhich is sent within a b.C. Between merchants such terms become part of the contract unless: (a) The offer expressly limits acceptance to the terms of the offer. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree.--then the contract is governed under § 2-207  If the contract is not governed under the U.-then the "mirror rule" can apply. together with any supplementary terms incorporated under any other provisions of this Act. c. reasonable time operates as an acceptanceeven though it states terms additional to or different from those offered or agreed upon. 188  If a contract is governed under the U.C. 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. MUST BE EXPRESS. y Must be a definite and seasonable expression of acceptance or a written confirmation o --If there is a conditional statement. UCC § 2-207--Additional Terms in Acceptance and Confirmation-- (1)a. there is no contract.C. 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). Essentially a counter-offer that must be expressly accepted . Was it sent within a reasonable time i. Must expressly agree to terms that differ from the original offer 1. Elements of Paragraph 1 1. (b) They materially alter it. NOT IMPLIED i. a. Defining a contract can be important in determining how the contract is actually governed. then we use (2) to evaluate the terms.

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.

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

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

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

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

the question was whether or not she could act rationally. The husband testified that even during her mental breakdowns. BROADBENT y 59 year old rancher continued to sell his properties. there are some "fishy" factors in this case.  While the court does find for the husband. over the course of a year and a half  While it is possible to see how his actions could be considered ³unreasonable. TEACHERS¶ RETIREMENT RD y y Woman. whereas here the question is whether or not the rancher was able to UNDERSTAND rationally. o The wife that is declared to be mentally incompetent was the "accountant" of the family. 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. who clearly is suffering from mental psychosis.ORTELERE vs. "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. o Woman dies two months later Husband sues. 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 combination of time. 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. 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. she was still in charge of all the financial matters. typically at amount less than their true value o Wife contends that her husband was not mentally competent to contract In Oterlere. maxes out her pension without the knowledge of her husband. The court finds it difficult to believe that he was supposedly lacking mental capacity. ---OTHER PARTY DOES NOT NEED TO KNOW. claiming that she was not of the mental capacity to be bound to such a contract. . Restatement of Contracts§ 15 give us a new test: 1. 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."  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. but yet no one in his family noticed this.

Workers won judgment. 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). finding that there was "no waiver" of the workers original obligation.  Upon arrival back to shore: Packers choose not to pay the 2nd agreements amount. and here it is not clear that the superintendent was waiving the workers prior obligation. and Packers appealed. When evaluating whether or not a person was "under duress" to make a decision. and then the workers tell the superintendent that they will not work unless they pay them $100 instead.Section 2: Overreaching c. y Superintendent is forced to agree to the terms in order to get the work done. need to determine what LEVEL of duress that party was under? What level of duress is admissible.  On appeal. as they are out in the middle of nowhere. 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. Packers argue that they were put in a position where they were forced to agree with the new conditions. and the workers sue.  A waiver must be intentional and voluntary.  Of course Packers could have refrained from agreeing and sued for lost profits. DOMENICO y Alaska Packers agrees to pay workers $50 for the job. based on the fact that they could not hire any alternate employees. ALASKA PACKERS vs.  Court agrees with Alaska Packers. o They then sail to the location. 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. .

homeowner refuses to pay the amount.´ Because they followed the proper steps. o After work is completed. However. "Parties are always free to change their agreements. y Contract is amended and agreed on that homeowner will pay the amount according to the new contract.-- WATKINS & SON vs. the obligation to fulfill the 2nd agreement should be enforced. instead they found that the preexisting duty of the workers was not waived. the result was also proper. or b. so long as those changes are reasonable. . it is only fair for you to be bound to it. §89 One way that parties can get around the pre-existing duty by giving new consideration for the new agreement." As long as there was this agreement to discharge the original agreement. the doctrine of duress was not applicable at the time. there is not only an adjustment in performance. o Court believes that the NEW oral agreement "superseded" the original written agreement. or c. but there is also a new consideration that will make the new or modified agreement binding.  Both parties went through the appropriate steps necessary to address the revelation of the new information to complete the job. 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. --This case occurred in 1902. if you agree to a modification. If the modification is fair and equitable in view of circumstances not anticipated. the first agreement was not rescinded. and thus the original agreement was still in play. CARRIG Excavators and homeowners form an agreement to dig up land to build a cellar.  Believing that this same work follows to the original agreement and that because of this. o They determine that there is granite that will require more time and money to excavate. and because of this. Restatement § 89²Modification of Contract: a. ³There was a valid reason that the amount for the work was going to cost more. Could have sued to enforce the original agreement. To the extent of the provided statute." Legal ground was not found for Alaska Packers under a theory of duress. That way. 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.

" 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. PACHELLI vs. That the options that you did have were not as viable options as the previous one. it is adequate enough to provide that you had no real good options. Instead.. -Additionally. the fact that Loral protested by writing shows that this agreement was not voluntary.Where they have no good choice. What remedy was Austin actually seeking? --Compensatory revenue that Loral agreed to pay upon Austin's attempt to re-negotiate the original contract. "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. but then stops paying. but instead under duress in order to move fulfill their contract requirements with the government. y Father's defense is that the couple was already planning on getting married. o Consideration can also be refraining from not doing something that you have a legal right to do.Pre-existing Duty to a Third Party y y Father in law agrees to pay a couple if they get married. Court of Appeals disagreed. PACHELLI Duress must deprive the person of "free will". 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 they also were unable to receive alternate bids from other suppliers. Additionally. duress was only applied in regards to "physical force". so their marrying was not contingent on his payments. How was Loral placed under duress by Austin? --Not only was Loral under strict time constraints from their contract with the government. Father pays them for a while. Now cases such as Austin have been used to show where duress can be applied "economically". but also for additional amounts. d. . 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 in Business Austin v Loral Originally.

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

KANNAVOSvs. Plaintiff buys the home. "We don't impose a duty on a person to disprove that another person is telling the truth. And Kannavos did not take advantage of this opportunity. This case differs from Swintonin that: Here. 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. Whereas with misrepresentation."Just because Kannavos had access to prove that Annino's information was false. in this case. the information which she disclosed was misleading. WHITINSVILLE SAVINGS BANK y y y Defendant sells home.That being said. While yes there was a fair amount of disclosure. without the necessary permits. it is a statement of fact not opinion .e. When Annino goes to sell the building. but she was fully aware of Kannavos intent to continue to use the building as a rental property. there is an evaluation as to whether what you said was deliberately misleading.  That being said. 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. the zoning laws are of public knowledge. SWINTON vs. ANNINO y y y Annino rehabs a house into an 8 apt building. and they say no. that he is aware has termites.  Cannot be charged with not disclosing information when there is no duty to speak. Concealment and Misrepresentation  Silence is not normally going to be a cause for liability. unless you have some dutyto speak. the court may take into consideration how reasonable your reliance was in the first place. 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. Not only was her advertising deceptive in nature. 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. it doesn't bar them from recovery if they were acting in reliance of the misrepresented information. Arthur Murray  If you have superior knowledge. and in complete disregard of the zoning laws. doesn't mean that he should be required to.

000 for the electrical contract and $70. Sky High noted that Casper¶s bid for the electrical contract was the lowest.000 higher than the lowest bid. The subcontractor bids were due at noon on January 31. He correctly included the price from the plumbing bid spreadsheet in the final bid form for the plumbing contract. Sky High was the lowest bidder and was awarded the contract. The next lowest bid was $90.000? . The bid was due at noon on February 1. Casper¶s electrical and plumbing bids were opened separately. both the electrical and plumbing bid forms included a $70. 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. so that both of Casper¶s bids were noted on the same spreadsheet. Shelton intended to bid $110. ³I¶m sorry about your mistake. He thought about calling Casper to confirm the bids. but they were both opened and reviewed by Mel.TEST QUESTIONS AND MODEL ANSWERS Fall 2003 Contracts I Exam Question 2 (45 minutes) Mel is president of Sky High Construction. Casper Contractors submitted separate bids for the plumbing and electrical work. When the bids were opened at noon on February 1. Casper¶s bid manager²Shelton²was left to do most of the preparations for both bids by himself.´ Is Casper obligated to perform the electrical work for $70. Based on his calculations. creating separate files for the electrical and plumbing bids. Because several of its key employees were out with the flu. he received Shelton¶s messages and called him back. but he got distracted and never got around to it. Casper¶s bid on the plumbing contract was $15. The master spreadsheet included the bids for all aspects of the job. Sky High received an invitation to bid on a contract to build an office building in Los Angeles. We¶re stuck and now so are you. Mel solicited bids from several subcontractors for various aspects of the job. 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. As a result. 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.000 but the bids ranged from $70.´ Mel told Shelton. Later that afternoon.m.000 (the bid on Casper¶s form) to $160. Mel submitted Sky High¶s bid at 11:30 a.000. Shelton accidentally used the price from the plumbing bid spreadsheet in the final bid form for the electrical contract. a contracting firm. When Mel returned to the office.000 for the plumbing contract. When all of the bids were opened. The bids were submitted to Sky High only moments before the noon January 31 deadline. Shelton calculated each bid using a spreadsheet program.000 bid. on February 1. and Mel thought it curious. Shelton looked at his copy of the bid forms and noticed his mistake. In his haste to prepare the final bids. ³but we used your bid for the electrical work and we got the contract.

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

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

but I agreed. including everyone who applied for the job. I¶ve already started. the general manager. 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. Like in Dickinsonv.´ ³Oh dear. based on R 2d § 43. 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).Dodds. As she was explaining to Elgin what she had done. she just began performance on March 17. Jamal. 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. that Meredith was giving Gabrielle the option of accepting by promise or performance. walked into to the room. However. they merely form a counteroffer (R 2d § 58 and R 2d § 39). She would like to get out of the contract with Ashton. However. but no one else could start right away. so I called Ashton and offered him the job at $5. She is also concerned that Gabrielle might try to sue her for breach of contract. I hated to do it. but her conditions on acceptance do not actually form the offer. I fixed the computers at Kinko¶s. Gabrielle got to work and resolved the problem by lunchtime. Gabrielle said. She looked at the caller ID and saw that the call was from Meredith. ³I accept the job offer. He threatened to take the job at Microsoft unless I paid him $6. acceptance by performance without notice is probably not binding. ³I was calling to let you know that I hired Ashton this morning.´ Jamal says. Gabrielle did not bother to call her rightaway and perform.000 per month. In fact. I really didn¶t want to hire him. I cannot possibly hire you too. Thus. but if she decides to hire her and get out of her contract with Ashton she will have breached her contract with Ashton. once Gabrielle learned of Ashton being hired.000 per month. She answered the phone and before Meredith could say a word.´ Meredith comes to you for advice. she could not accept the offer because there was no meeting of the minds. 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. How do you advise her? Essay Question 1 (75 minutes) Meredith will probably not be liable for a breach of contract action against Gabrielle. So you see. Thus. 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. He came to my office and signed a contract this morning. 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. . and they¶re one of my biggest and best customers. When I didn¶t hear from you I called everyone I could think of. She will argue that her phone message on March 15 said that she wanted to accept. but she is afraid that he will sue her for breach of contract. 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. 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 Kinko¶s was threatening to hire another company if I didn¶t send someone over there today.Elgin introduced Gabrielle as the ³technician from Computer MD.´ ³That¶s odd.computers and described the problem. commencing performance constituted acceptance (R 2d § 62). If I lost their business I would have to cut my staff and would barely have enough to pay the company¶s bills.´ Meredith responded. he¶s not nearly as experienced as you are.´ At that moment. I had no choice. Gabrielle¶s cell phone rang.

She made him an offer when she offered him $5. Meredith agreed over the phone. 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. Bloomfield.) In this case there was unjust enrichment because Gabrielle performed a service to Kinkos for which Meredith will be monetarily compensated. Thus the contract between Meredith and Ashton is enforceable. Ashton was making a permissible threat when he threatened to take another job (R 2d § 176). (Callano v. He made a counteroffer when he requested $6. Thus because of this over-reliance on Meredith¶s promise. Meredith¶s words and actions manifested every intention of entering into a contract. 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 may be able to recover restitution damages for unjust enrichment. Based on Lucy v. by equal number of parties and they had been in negotiations for about a week. However. 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. 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).000 contract with Ashton under duress because he knew of her desperate situation and threatened not to take the job. The relative status of the parties is equal and his power to negotiate the deal he did was not based on their relationship. Oakwood). she requested that they talk by March 17 and they did not actually do so until the 17th. this was not insisted upon by Ashton. However. Red Owl) (R 2d § 90). Meredith promised to keep the job open and reaffirmed her interest in hiring Gabrielle on March 15. . Thus because none of these ³acceptances´ were valid enough to formulate a contract Gabrielle probably won¶t recover on a breach of contract action. Gabrielle may argue that Meredith¶s promise to hold the offer open until March 17 was an option contract. In any case. Meredith may have tried to argue that she made the $6. Although there were no known third party advisors. 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. Based on Odorizzi v. Ashton would certainly have breach of contract action against Meredith if she tried to get out of the contract with him. 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). Gabrielle may be able to recover reliance based damages for her lost opportunities with Microsoft. Furthermore Meredith probably cannot assert that she was subject to undue influence. Although there may have been a need for immediate contract formation.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. Gabrielle can recover for unjust enrichment if she expected remuneration and if there is a direct relationship between the parties (Callano v. time. Oakwood Park Homes Corp. Meredith will rightfully argue that there was no consideration for this option contract so she is not bound by it. Gabrielle expected to be compensated for her services based on Meredith¶s message on March 15. Gabrielle probably won¶t recover under promissory estoppel for her lost opportunities with Microsoft.000 a month. The contract was formed at an appropriate place. which was a reasonable manner of acceptance (R 2d § 30).000 a month. Ashton was dealing at arms length with Meredith and so she cannot assert that she was subject to over-persuasion based on their relationship. Ashton did not subject Meredith to over-persuasion in making the decision. Furthermore the signing of the contract in her office constituted a validation of that acceptance. however. Thus.

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

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

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

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

In this case. 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. 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. v. . the situation is dissimilar where a person furnishes materials and labor under a contract for the benefit of a third party. where the work is done under a special contract with another . For example. .Some courts may be more willing to allow recovery on a quasi-contract theory in this case. the court in Paschall¶s Inc. Dozier noted that while an ³implied undertaking cannot arise against one benefited by the work performed. and that contract becomes unenforceable or invalid.] . However. 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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