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Rules After Midterm

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1. X owes Y $50, which was not a dispute, and X offered X $50 to paint car then: it is not consideration because it was already owed to Y. 2. X says I will pay Y $200 to paint car then it is consideration because it is more than what was already owed

Consideration: consists either in some right, interest, or benefit accruing to one party or some forbearance, detriment, or responsibility given, suffered or undertaken by the other valid consideration must be bargained for Must induce the return act or promise to be valid the purported consideration must not have been delivered before the promise is executed, that is, given without reference to promise Consideration is therefore a test of the enforceability of executor promises and has no legal effect when rendered in the past and apart from an alleged exchange in the present. (173) (1) To constitute consideration, a performance or a return promise must be bargained for. (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. (3) The performance may consist of (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation (4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

UCC Aids for Construction: 1. Usage of Trade Customs within the industry

2. Course of Dealing (multiple K) The parties conduct in past contracts with one another, relating to multiple contracts

3. Course of Performance (one K)

What parties do while performing this one contract (what the common law called practical construction)

Most Important: 1. Performance 2. Dealing 3. Usage of Trade Output K I will buy all of your 50,000 oranges for the season

Requirement K I will buy 10,000 of your 50,000 oranges and therefore you still have 40,000 to sell

Indefiniteness of a K (130) The court does not want to figure out the price of a K You have a right to come to the court and sue for damages but the court does not have to listen to you

Corbin on K (All English people are Coo Coo) 123 People do business in a very informal fashion. Must be shown by their antecedent expression, their past action and custom, and other circumstances

Indefiniteness (134) Even though one or more terms are left open, a K for sale does not fail for indefiniteness if the parties indented to make a K and there is a reasonably certain basis for giving an appropriate remedy 1. Common law o has a higher standard does not like indefiniteness o Common law does not have a provision so they do not have anything to fill in the gap 2. UCC- sale of goods only o Has a lower standard they are fine with indefiniteness o UCC has provisions that can fill in the gap

Problem 34 UCC 2-305 There can be a K without the price being settled Fixed by seller or buyer must be done in goodfaith If price left to be fixed then fault of the parties not fixed then: The other party can cancel or set a reasonable price If we intend not to be bound unless the price is fixed, then THERE IS NO K Then you make the deal undone o NO K in the problem o If they intend to enter K then it comes to a reasonable price (a price range, buyer will be low and the seller will be high, it all depends on who left the K terms left open) o Who was the naughty party?

UCC gives you a formula, a recipe UCC 2-305 There can be a K without the price being settled Fixed by seller or buyer must be done in goodfaith If price left to be fixed then fault of the parties not fixed then: The other party can cancel or set a reasonable price If we intend not to be bound unless the price is fixed, then THERE IS NO K Then you make the deal undone

UCC 2-308 (delivery) I am going to sell bikes to X, the ones in warehouse 1 will go to X and X burns down. Now I cant sell bikes. If you did not specify what warehouse then.

Goodfaith

Problem 35 (UCC 2-311) There is a K, but you do not know what burgers he wants. The seller must be reasonable you cant just sell hi the more expensive burgers. If he knows he will be bound by K and the buyer can ask for all cheaper

UCC 2-311 Corbin on Contracts SS 110 P. 138 The mere fact that one man promises something to another creates no legal duty and makes no legal remedy available in case of non performance. To be enforceable, the promise must be accompanied by some other factor. A contract is defined as a promise that the law will enforce. A TRUE contract will always contain at least one promise, and in a typical commercial setting that promise will be exchanged for something else, a quid pro quo. That something else is what the law calls CONSIDERATION Requirement of Exchange; Types of Exchange (Restatement) 1. To constitute consideration, a performance or a return promise must be bargained for. 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 3. The performance may consist of : o a. an act other than a promise, or o b. a forbearance, (or an intentional delay in collecting a debt or demanding performance on a contract, usually for a specific period of time. Forbearance is often consideration for a promise by the debtor to pay an added amount) o c. the creation, modification, or destruction of a legal relation 4. The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

Whether a K is valid

Any damage or suspension, or forbearance of a right will be sufficient to sustain a promise

Sufficiency (not uses by Restatement but does not mean it has vanished) That the offered consideration must be something that has value in the eyes of the law

Adequacy refers to the quantity of the amounts exchanged. Option Contract: restatement of contracts: 87 An offer is binding as an option contract if it Is in WRITING and SIGNED by the OFFEROR, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time OR

Is made irrevocable by statute An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice Comment C: False Recital of Nominal Consideration: A recital in a written agreement that a stated consideration has been given is evidence of the fact as against a party to the agreement, but such a recital may ordinarily be contradicted by evidence that no such consideration was given or expected Acceptance of delivery of the written instrument conclusively imports a promise to make good the recital, it is said and that promise furnishes consideration To have a Contract: Offer Acceptance

Consideration -Not all K are enforceable Gift You need an Offer Acceptance Consideration there are promises built in an offer

Consideration Rule (141) Consideration is the sense of the law may consist in some right, interest, profit, or benefit, or some forbearance, detriment, loss, or responsibility given suffered by the other Give you something in exchange for getting something else

Problem 38 A. If uncle gives $5,000 for nephew to like him is it a K? o Does Hamlet have a right to not like his uncle? Yes he has a right, so he would be giving up a right, in order to like his uncle for $5,000. Uncle said $5,000 if you are nice to me Hamlet says, ok and Hamlet is nice to uncle Consideration= giving a benefit or suffering a harm Is there consideration? Yes

B. Has she given consideration? Yes, she performed the consideration. She gave up something for another

Past Consideration Consideration given in the past, prior to the agreement Something you did prior to the agreement that was not in the agreement is not an agreement/consideration

Settlement of Claims (Restatement of K)- p156 1. Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless: o a. the claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or o b. the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid 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 of the written

instrument is bargained for even though he is not asserting the claim or defense and believes that no valid claim or defense exist. Corbin On Contracts SS 156 (p. 169) A promise to buy of another person or company all of some commodity or service that the promisor may thereafter need or require in his business is not an illusory promise. It is true that the amount to be delivered or paid can not be determined at the time of the contract made, but the terms of the promise give sufficiently definite objective standard to enable a court to determine the amount when the time comes for enforcement. It is not a promise to buy all that the buyer wishes or may thereafter choose to order, the amount is not left to the will of the promisor himself. Corbins basic test here-whether the promise states a limitation upon the promisors future liberty of action-is useful in determining whether any promise is illusory. Use it and the other ideas just quoted to resolve the following matters

Illusory and Alternative Promises (P. 170) (Restatment of K) A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless: o A. each of the alternative performances would have been consideration if it alone has been bargained for o 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 alternative which would not have been consideration Illusory Promise o Illusory promise appears to be a promise but with closer examination there was no promise

UCC 2-306 2-306. Output, Requirements and Exclusive Dealings. (1) A 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, 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. (2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale. UCC 2-309 2-309. Absence of Specific Time Provisions; Notice of Termination. (1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time. (2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party. (3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable. Mutuality of Obligation (p. 169) In a bilateral K it is often said that there must be mutuality of obligation. Both Parties must be bound or neither is bound.

Forbear-legal right- not really your legal right- then there is consideration if your forbear is good faith Goodfaith honesty and reasonability

Illusory Promise (you are not promising anything) I will take you to the airport if I feel like it o 2 options by the person: 1. Take You 2. Or dont take you not a promise

I will see you my car for either $3,000 or Mickey Mantle baseball card o This is a promise-has to be a choice that has considerate

$3,000 or Mickey Mantle card Djdkjd

I will see you my car for either $3,000 or MM card and I will decide when we meet o The person shows up (meets the conditions of the offer) with $3,000 abd MM bb card---valid

Implied Terms Term that is not expressly in the K, not written it is implied Even though it is not written down you known it applies o 1. Implied in Fact Terms surrounding facts that will tell us what the term should be o 2. Implied in Law Terms legal fictions there were no legal meeting of the minds ( above did not agree if it was cash or check) Requirements Contract I can buy any large range of the goods from a lot to none o I promise to buy all the gravel I require from you, and I dont need any gravel, yes you are bound o If not in good faith then NO CONTRACT o The CONTRACT must be in goodfaith Good faith in the case of a merchant

Rules

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Promissory Estoppel: 1. There was a promise 2. The promisor should reasonably expect the promise to induce action or forbearance have to be definite and substantial of the promisee 3. It does induce such action or forbearance 4. If injustice avoided by enforcement

a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of its promise (175) Essential element: is that the promise must INDUCE the promises action or forbearance

Contracts implied require the element of consideration to support them as is required in express contracts, only difference is the manner in which the parties manifest their assent

Consideration: consists either in some right, interest, or benefit accruing to one party or some forbearance, detriment, or responsibility given, suffered or undertaken by the other valid consideration must be bargained for Consideration must be bargained for and induced by To be valid consideration it cant happen before you promise me o Ex: I go to a random house and mowed Xs lawn. Then I go up to X and say do u promise to give me $20. I did the act before there was a contract so it is not enforceable

IMPORTANT P- 171-187********* Promissory Estoppel: (175) (reliance on another person to fulfill their duty) a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and

which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of its promise Essential element: is that the promise must INDUCE the promises action or forbearance o What promises are enforceable and non promises are enforceable?

Past Consideration and Moral Obligation are the same thing Promissory Estoppel (Broken Down)****** ON FINAL EXAM A Promise Which the promisor should reasonably expect ( will know that promise will induce people to act in a certain way) To induce action (forbearance) On part of promisee Injustice can only be avoided by enforcing the promise o on exam define promise,, talk about forbearance to induce and if it is induced, you have to define each part!!! A Promise to Pay Indebtedness, Effect on the Statute of Limitations: Restatement of contracts: section 82: A promise to pay all or part of an antecedent contractual or quasi contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for the effect of a statute of limitations The following facts operate as such a promise unless other facts indicate a different intention: o A. A voluntary acknowledgement to the oblige, admitting the present existence of the antecedent indebtedness OR o B. A voluntary transfer of money, a negotiable instrument, or other thin by the obligor to the oblige, made as interest on or part payment of or collateral security for the antecedent indebtedness, OR o C. A statement to the oblige that the statute of limitations will not be pleaded as a defense Promise for Benefit Received (Restatement of contracts: 86)

A promise made in recognition of a benefit previously received by the promisor from the promise is binding to the extent necessary to prevent injustice A promise is NOT binding under subsection 1: o If the promise conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched OR To the extent that its value is disproportionate to the benefit

Moral Obligation Past Consideration You cant have past consideration unless u do o 1. Moral Consideration Unjust Enrichment Quasiai Contract Restitution Implied in Law ( a non promise) You dont need an offer, acceptance, or consideration

Detrimental Reliance Problem 47 (look at Ss 82 on p 181) A. No, because the statute of limitations ran out and it is unenforceable B. It has to be a good faith reasonable person belief claim, we will enforce this moral obligation C. It is binding whether you promise to pay all or part of D. We dont know if the payment is a half, monthly, or all of it, not enough information

Accord Executory (194) It is a bilateral contract (there has to be an offer, acceptance, and consideration) An agreement for the future discharge of an existing claim by a substituted performance Does not itself operate as a discharge of the previous claim, for the reason that it is not o intended or agreed.

Executory Accord (196) Does not discharge the underlying claim until it is performed. Until there is a breach of the accord or a justifiable change of position based upon prospective nonperformance, the original cause of action is suspended.

An Accord; Its Effect When Performed and When Broken The following rules are applicable to a contract to accept in the future a stated performance in satisfaction of an existing contractual duty, or a duty to make compensation A. Such contract does not discharge the duty, but suspends the right to enforce it as long as there has been neither a breach of the contract nor a justification for the creditor in changing his position because of its prospective non-performance B. If such a contract is performed, the previously existing duty is discharged C. If the debtor breaks such a contract the creditor has alternative rights. He can enforce either the original duty or the subsequent contract D. If the creditor breaks such a contract, the debtors original duty is not discharged. The debtor acquires a right of action for damages for the breach and if specific enforcement of that contract is practicable, he acquires an alternative right to the specific enforcement thereof. If the contract is enforced specifically, his original duty is discharged. o 1. The rules governing the validity and effect of accord and satisfaction are applicable as well where the preexisting duty arises from a tort as where it is based on contract 2-209. Modification, Rescission and Waiver. (Problem 53, 54) (1) An agreement modifying a contract within this Article needs no consideration to be binding. Modifications must be made in good faith Goof faith

(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party. (3) The requirements of the statute of frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its provisions. (4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver. (5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver. Rules That a promise to pay a man for doing that which he is already under contract to do is without consideration When a party merely does what he had already alleged himself to do, he cannot demand an addition compensation The defendant had the right to sue for damages if the plaintiff declined to go further on his contract

One way you can change compensation is if there is modification to the building plan (cost of production) A nudum pactum in Latin literally means 'Bare or Naked Promise.' In common law, it refers to a promise that is not legally enforceable for want of consideration. An example of a nudum pactum would be an offer to sell something without a corresponding offer of value in exchange. While the offer may bind a person morally, since the offer has not been created with any consideration, it is gratuitous and treated as a unilateral contract. The offer is therefore revocable at any time by the offeror before acceptance by the offeree. Preexisting Duty Rule (elements) performing a legal duty which is already owed under a contract

does not constitute consideration, unless that duty is doubtful or honestly disputed. You can not offer or accept gifts or rewards because its the persons duty (cop) It creates highway ROBBERY o pay less o pay more o public duty

Problem 51 (190) I: if a police officer has a preexisting duty to track down criminals can he get a reward for doing so I: Does a police officer have a preexisting duty to look for and apprehend criminals when off duty

R: Preexisting duty cant be consideration for a new bargain A: depends on the statute Problem 52 Binding, both parties agree to reallocate the contract

Problem 53 Problem 54 A contract cannot be made under duress/by a threat

Accord (193) Is the agreement to accept a substituted or different performance Satisfaction Is the execution of the new agreement

Signature (look under UCC) Not required unless it is required Any mark or symbolcontinued

Restatement Second of Contracts subsection 281

Promise Reasonably Inducing Action or Forbearance (Restatement) (206) 1. A promise which the promisor should reasonably expect to induce action or forbearance on the on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as injustice requires 2. A charitable subscription or a marriage settlement is binding under: o 1. Without that the promise induced action or forbearance

Binding Obligations or Not (looking at these 4) Gift (both enforceable and not) o promise to confer property on another Contract o Promise plus bargain exchange Promissory Estoppel o Promise plus detrimental reliance Restitution o No promise but confers a promise

Charitable Subscriptions If you are trying to enforce it is a gift, but the court will work really hard to find promissory Estoppel and consideration (even if its little)

MBEC Version (Common Law Contract) Manifestation of mutual assent To a bargain In exchange and Consideration

OAC version (Common Law Contract) Offer Acceptance Consideration

CISG and UCC Neither CISG nor UCC require consideration They therefore move away from the traditional (common law) approach contract formation

Allegeny College v. National Country Bank Rules Promissory Estoppel can stand in for consideration in charitable subscriptions cases Charitable subscriptions are unenforceable absent consideration Consideration must suffer detriment or incur benefit Was there consideration that would be sufficient to support a promise to make a charitable subscription

Problem 61 (207) Its a promise to give a gift (it is not completed)- not a gift Is it a contract? Aunt August gave consideration, but Earnest did not give consideration back, did he give up being depressed for his aunt? o It did induce him (step 1), but should it have induced him (step 2)? No Promissory Estoppel o Some sort of stopping action in relation to your promise o You are stopped from pulling back your promise

Apparent Authority (210) Is the power to bind a principal in the absence of actual authorization from the principal, but under circumstances in which the principal leads person with who his agent deals to believe that the agent has authority o Test for determining whether an agent possesses apparent authority is whether a man of ordinary prudence, diligence and discretion would have a right to believe and would actually believe that the agent possessed the authority he purported to exercise

. webb v. mcgowin p saved ds life at harm to himself. D promised to pay d 15$ every two weeks for the rest of ps life. He did until he died. Because P saved d from death and d subsequently

agreed to pay him for services rendered it was a valid and enforceable contract. Saving a life is more then sentimental value. It is a material benefit. In this case we presume that a previous request for service was made. Because if there was time we can assume he would have asked. Agency Law ******ON EXAM****

Roughly speaking an agent is a person authorized to act on behalf of another person called the principal o There are two ways an agent can have authority 1. Apparent Authority a third party reasonably believes the actor (the agent) has authority to act on behalf of the principal and that belief is traceable to the principals manifestations

2. Actual Authority at the time of taking action that has legal consequences for the principal the agent reasonably believes in accordance with the.

Can employee bind corporation? (agency) A principal is not bound by the unauthorized acts of the agent if the third person had notice of the agents lack of authority Was there a promissory Estoppel? Was there a promise? (it is the most important section****make sure to discuss on test) Was it the kind of promise that the promisor should reasonably have thought would induce action? Did it induce the right kind of action? o Important because of detrimental alliance Does justice require enforcing the promise? (****on exam)

Promissory Estoppel/Reliance:

I spent $5,000 and there is $30,000 in profits you would have made, I would get back the $5,000. If there was a contract, you could collect the $30,000 (expectation damages) o You would rather get your expectation damages, always file for breech of contracts, then promissory estoppel, then resitution

Damages A money award (pecuniary relief) compensating a plaintiff for loss or injury o Actual o o o o o o Damage Is the loss, hurt, or harm that results from the injury, and Damages Injury Is the illegal invasion of a legal right Are the compensation awarded for the damage suffered Compensatory Consequential Punitive Incidental Nominal ETC. (look in black book dictionary) On exam you must say which damage, not just the word damage

Consideration A counter offer can be consideration

Uniform Written Obligations Act Section 1: A written release or promise hereafter made and signed by the person releasing or promising shall not be invalid or unenforceable for lack of consideration, if the writing also contains an additional express statement, in any form of language, that the signer intends to be legally bound

UCC 2-205 (Firm Offer) 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, for lack of consideration,

during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror. UCC 1-107 Waiver or Renunciation of Claim or Right After Breach. Any claim or right arising out of an alleged breach can be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party.

Hoffman v. Red Owl Stores (222)-look at note 3 on 236 1. Should the court adopt an action called promissory estoppel -yes 2. In this instance, do the facts support a promissory estoppel cause of action o Hoffman has occurred a loss or detrimental reliance, he lost money for selling the bakery, you can claim future profits, money for rent, he has spent a lot of money o Promissory Estoppel/Reliance: I spent $5,000 and there is $30,000 in profits you would have made, I would get back the $5,000. o If there was a contract, you could collect the $30,000 3. What damages does not get lost profits from grocery store

Read Page 233 at the bottom Enforcement of a promise does not necessarily mean Specific Performance. It does not necessarily mean Damages for breach. Moreover the amount allowed as damages may be determined by the Ps expenditures OR change of position The wrong is not primarily depriving the P of the promised reward but in causing the P to change position to his detriment. It would follow that the damages should not exceed the loss caused by the change of position, which would never be more in amount, but might be less, than the promised reward

Damages (239) At the end of the complaint filed in lawsuit, the P must specify the relief requested. This part of the complaint is called, the prayer

The prayer may request extraordinary relief, such as injunction (a court offer forbidding certain conduct) or specific performance (a court decree commanding the other party to perform the contract as agreed), or simply a declaratory judgment ( a ruling interpreting the contract or resolving some other dispute between the parties without stating any specific relief.

Measure of Damages in General (240) Subject to limitation stated in SS 350-353, the injured party has a right to damages based on his expectation interest as measured by: o A. the loss in the value to him of the other partys performance caused by its failure or deficiency, plus o B. Any other less, including incidental or consequential loss, cause by the breach, less o C. any cost or other loss that he has avoided by not having to perform Consequential damages are those that would never have occurred but for the breach o Ex: if a breach of warranty causes personal injury and the buyer end up in the hospital, the costs of this medical problem would be consequential, and must be tacked to the expectancy if the injured party is to be made whole Damages NO person can recover a greater amount in damages for the breach of an obligation, than he would have gained by the full performance thereof on both sides Damages, must, in all cases, be reasonable, and where an obligation of any kind appears to create a right to unconscionable and grossly oppressive dames, contrary to substantial justice no more than reasonable damages can be recovered

Damages for Defective Construction (255) 1. The reasonable cost of construction and completion in accordance with the contract, if this is possible and dos not involve unreasonable economic waste (repaid rule), OR 2. The difference between the value that the product contracted for would have had and the value of the performance that has been received by the P, if construction and completion in accordance with the contract would involve unreasonable economic waste

Restitution (263) Damages, an amount corresponding to any benefit conferred by the P upon the D in the performance of the contract disrupted by the defendants breach

Restitution Damages (263) An amount corresponding to any benefit conferred by the P upon the D in the performance of the contract disrupted by the Defendants breach

Reliance connected to promissory estoppel acting upon another's statement of alleged fact, claim or promise

Wasted Expenditure Restatement 349 Damages Based on Reliance Interest (269) As an alternative to the measure of damages stated in 347, the injured party has a right to damages based on reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed Presumption of Breaking Even (269) If the expectancy is to difficult to prove, the P is entitled to recover out-of-pocket expenses unless the D can prove that the contract was a losing one and that the P would not have made enough from the contract to make up these expenditures. Thus the courts in effect are indulging a presumption that the P will break even; that the expectancy would have been at least the amount of the expenditures. Reasonable reliance and restitution expenses are awarded on the assumption that the value of the contract would at least have covered the outlay If the D can carry the burden of showing that the contract was really a losing one, the court will deduct the loss from the Ps outlay

Limitations on the Recovery (270)

Damages representing a loss in value to the P because of the breach (general damages)-incidental and consequential damages (special damages) may also be included in the final award o 1. Consequential Damages expenses or other losses beyond general damages that the P would never have incurred but for the breach Ex: if the breach involves a faulty furnace that blows up and injures a family, the consequential damages would include pain and suffering and medical expenses

o 2. Incidental Damages are consequential damages incurred in ascertaining and trying to prevent the breach Ex: storage costs incurred by nonbreaching seller who holds goods for a buyer for a reasonable time after the buyer fails to pick up the goods as promised MBEC Contract-same as offer, acceptance, consideration o Bargain in which there is a manifestation of mutual assent to exchange and consideration

OAC-Offer, Acceptance, Contract-theses are the same thing Bargain Is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances

Acceptance A manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer ****start with offer, if there is no offer then forget the rest

nonenforceable contracts (you can contract a hit man but the law wont enforce it), Problem 66 (260)*****important, on exam***** K= Expected $24,000 cost, but a $4,000 profit, $20,000 cost The real expectation is how much she would make (profit)

*********Expectations Damages Formula******** promises received Loss in value + other loss (incidental or consequential loss)-cost avoided-lost avoided (Loss in Vagina and other ladies that come around licking ass) $24,000 (promised) -5,000 (received-given already)+ (0 consequential or incidental)-$5,000 (Spent $15,000 and was suppose to spend $20,000- however if you spend only 10,000 when you though it would cost 15,000 then the $5,000 is irrelevant and not iused) $,4000+$15,000-$5,000-$2,000=$12,000 1. Loss in Value o Difference between contract price and the market price o If no performance is rendered, the loss in value caused by the breach is equal to the value that the performance would have had to the injured party. If defective or partial performance is rendered the loss in value caused by the breach is equal to the difference between the value that the performance 2.. Other loss = incidental and consequential damages (caused by the breach) o Incidental Consist of expenses reasonably incurred to deal with the consequences of breach including reasonable expenses in mitigation of damages o Consequential Damages Loses incurred in other contracts as a result of the principle contract Must pass the forseeabilty test of Hadley Test, provides tat consequential damages are recoverable only if they either arise in the ordinary course of events or result from special circumstances or which the breaching party had reason to know 3. Cost Avoided o sometimes the breach itself results in a saving of some cost that the injured party would have incurred he would have had to perform

347. MEASURE OF DAMAGES IN GENERAL

Subject to the limitations stated in 350-53, the injured party has a right to damages based on his expectation interest as measured by (a) the loss in the value to him of the other party's performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach, less (c) any cost or other loss that he has avoided by not having to perform. Other loss. Subject to the limitations stated in 350-53, the injured party is entitled to recover for all loss actually suffered. Items of loss other than loss in value of the other party's performance are often characterized as incidental or consequential. Incidental losses include costs incurred in a reasonable effort, whether successful or not, to avoid loss, as where a party pays brokerage fees in arranging or attempting to arrange a substitute transaction. See Illustration 3. Consequential losses include such items as injury to person or property resulting from defective performance. See Illustration 4. The terms used to describe the type of loss are not, however, controlling, and the general principle is that all losses, however described, are recoverable. Cost or other loss avoided. Sometimes the breach itself results in a saving of some cost that the injured party would have incurred if he had had to perform. See Illustration 5. Furthermore, the injured party is expected to take reasonable steps to avoid further loss. See 350. Where he does this by discontinuing his own performance, he avoids incurring additional costs of performance. See Illustrations 6 and 8. This cost avoided is subtracted from the loss in value caused by the breach in calculating his damages. If the injured party avoids further loss by making substitute arrangements for the use of his resources that are no longer needed to perform the contract, the net profit from such arrangements is also subtracted. See Illustration 9. The value to him of any salvageable materials that he has acquired for performance is also subtracted. See Illustration 7. Loss avoided is subtracted only if the saving results from the injured party not having to perform rather than from some unrelated event. See Illustration 10. If no cost or other loss has been avoided, however, the injured party's damages include the full amount of the loss in value with no subtraction, subject to the limitations stated in 350-53. See Illustration 11. The intended "donee" beneficiary of a gift promise usually suffers loss to the full extent of the value of the promised performance, since he is ordinarily not required to do anything, and so avoids no cost on breach. See 302(1)(b).

Actual loss caused by breach. The injured party is limited to damages based on his actual loss caused by the breach. If he makes an especially favorable substitute transaction, so that he sustains a smaller loss than might have been expected, his damages are reduced by the loss avoided as a result of that transaction. See Illustration 12. If he arranges a substitute transaction that he would not have been expected to do under the rules on avoidability ( 350), his damages are similarly limited by the loss so avoided. See Illustration 13. Recovery can be had only for loss that would not have occurred but for the breach. See 346. If, after the breach, an event occurs that would have discharged the party in breach on grounds of impracticability of performance or frustration of purpose, damages are limited to the loss sustained prior to that event. See Illustration 15. Compare 254(2). The principle that a party's liability is not reduced by payments or other benefits received by the injured party from collateral sources is less compelling in the case of a breach of contract than in the case of a tort. See Restatement, Second, Torts 920A. The effect of the receipt of unemployment benefits by a discharged employee will turn on the court's perception of legislative policy rather than on the rule stated in this Section. See Illustration 14. Expectation Damages interest in having the benefit of bargain by being put in as good as a position as he would have been if had the contract been performed

Loss in Value The difference between value of the performance that should have been received and value of what was received Incidental and consequential damages o Incidental Includes additional costs incurred after the breach in a reasonable attempt to avoid loss o Consequential Losses beyond general damages that the plaintiff would never have incurred but for the breach Cost Avoided Amount saved by nonbreaching party because of not having to make expenditutres that would have been occurred Amount saved by nonbreaching party by avoiding some loss

Other Loss

Loss Avoided

Problem 1 from Quiz 10.27 What did you promise and what did you get? *****************Expectations damages**************** Price=200,000 Cost=180,000 Paid=70,000 (was paid 70,000) Spent=95,000 (out of pocket) Salvage=10,000 Loss in Value = 200,000- 70,000= 130,000 =because it is the difference between what was promised and what was performed Other Loss = none, no cosequential or incidental loss Cost Avoided= 180,000-95,000= -85,000 Loss Avoided = 10,000 (Resale of Materials) Total Damages = 35,000 Problem 2 from Quiz10/27 (-----------6--------9-------12---------------------24) Promise 50,000*2 years=100,000 Got 25,000 for 6 months of employment Loss in Value = 100,000-25,000=75,000 Other Loss =1,000 its incidental because its resulting from the breach but it wasnt because of the breach.can make a case for consequential if you apply the rule and make a case Cost Avoided = None Loss Avoided = -45,000 Total Damages = 31,000 Sullivan v. OConnor (261) Messed up on nose in surgery When a dr. makes a promises is it a promises?

o If you go to plastic surgeon and you say u dont want a scar or u will go to someone else will and he promises no scar that is a promise

283-296 UCC 2-714 Entitled Damages of Buyer for breach in regard to accepted goods ********* 2. Measure of damages for breach of warranty. The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount o Example: If I ask for 10 bikes at $1000 and you give me 5 bikes at $500, the contract was for 10 but you gave me 5, so the damages would be $500 3. Incidental and consequential damages. In a proper case any incidental and consequential damages under section 2-715 (relating to incidental and consequential damages of buyer) may also be recovered.

UCC 2-715 Incidental and Consequential Damages of Buyer (288) 1. Incidental damages o Incidental damages resulting from the breach of the seller include C. any other reasonable expense indecent to the delay or other breach (Measures you try and take to try to prevent the breach from occurring) (breach already occurred so u take action to avoid further loss) Quiz question where she paid $1,000 to agency to find her a job 2. Consequential Damages o resulting from the breach of the seller include: any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably prevented by cover or otherwise In addition to general damages, there are 3 types of lost profits recoverable as consequential damages that may flow from a breach of warranty; (289)

UCC (dealing with goods) o 1. Loss of primary profits difference between what the buyer would have earned from reselling the goods in questions had there been no breach and what was earned after the breach occurred I buy tires for $2,500 and I get them with holes in them, however if I can prove I would sell them for $5,000 then I would be able to claim an additional $2,500 for loss of profits o 2. Loss of secondary profits and (cant sell without tires, depend on tires) o PG 291 GOOD EXAMPLE the sales of other products suffered as a result of breach of warranty Ex: If my tires have holes in them and I need those tires to sell the hubcaps then I cant sell the hubcaps and I love profits o 3. A loss of good will damages (or prospective damages, as they are sometimes termed refer to profits lost on future sales rather than on sales of the defective goods themselves Ex: if the buyers regular customers were so disgruntled about the defective tires that they no longer frequented the buyers business and began to patronize a competitors business, the buyer would have suffered a loss of good will beyond the direct loss of profits from the nonconforming goods; his future business would be adversely affected as a result of the defective tires

General Damages (UCC) Difference between the value of goods as promised and the goods received Expected Damages loss in value is the diff between the value of the performance that was promised and the difference that should have been received

UCC 1-106 (291) The remedies provided by this title shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully

performed but neither consequential or special nor penal damages may be had except as specifically provided in this title or by other rule of law o The point of damages is to put the injured party as good of a position as if the other party would have performed the contract Restatement of Contracts 353: Loss Due to Emotional Disturbance (295) Recovery for emotional disturbance will be excluded unless the breach also causes bodily harm or the contract or the breach is of such a kind that serious emotional disturbance was a particularly likely result.

Anglia Television Ltd. v. Reed (RELIANCE) 2 contracts, one with ACTOR and one with another TV station to broadcast show, but can only choose one law suit and can collect waste of expenditure, if waste occurred due to breach of contract o You can either claim future profits (if you can prove it) or past expenses o In this case they signed a contract for X amount of $ and the future profits could be proved o Even though he breached they couldnt right a replacement actor and as a result the play was not performed o 1905 pounds was reliance damages ad 854 was o Did Anglia rely such that they should get reliance damages on reeds promise of performance? Promise-on November 1, Reed promises to act in the play Should they rely? Yes, after he contracts with him they should and they did rely October 1-there was no promise by Reed, s

WASTED EXPENDITURE Expenses (directors fees, managers fees, all this money was wasted because he didnt perform his contract) If he didnt breach the contract then it wouldnt have been wasted Problem 67 (270)

Could probably predict the expectancy (profit) because there were 13 previous editions of her tour guide, it gives you some sort of evidence If you see there is a history then be aware of that history If we give her reliance damages then she would be double dipping, reliance plus profits What if it said Royalties plus EXPENDITURES

Freund v. Washington Square Press Got 6 cents in nominal damages, there are NOMINAL DAMAGES you get when damages cant be proven or are to speculative but we know there has been a breach

I publish a book like Harry Potter and X is my publisher and X fails to publish it, how would I figure out my damages? I would try to find comparable books, get an expert to say what the book is comparable to and if it is well written, but how do you compare if they have never published a book Problem 68 (275) Companies argument: cant tell who will win if you are 1 our of 4 contestants left Contestant: it is certain 1 person would have won Counter offer business-its not certain Counteroffer Contestant: its a chance I would have won and I want of the $25,000 Bring in other contestants and agree over price and say give us the $25,000 and we will split up how they decide

Expected Probability The probability of the events times (x) the utility of the event

The new business rule says if I start a new pizza place it is possible to determine the future profits (I put pizza place inside Walmart store, then they have expected profits/marketing models) Hadley v. Baxendale (283) **************TEST****** Expectation Damages Issue Whether Loss of Value +other loss (consequential or incidental)-cost avoided-loss avoided

Rule Special circumstance then you can collect on that (price has been communicated) Arising naturally Foreseeability (we put a limit on consequential damages, if you can prove them) Exam questions Are these reasonable expected damages? Drive my car from Florida to California and I need it by tomorrow, is this reasonable? You must be able to price it

Problem 69 (286) Restatement (in power points) Damages are not recoverable for loss that the party in beach did not have reason to FORESEE as a probable result of the breach when the contract was made 2. Loss may be FORESEEABLE as a probable result of a breach because it follows from the breach 297-310 Rockingham County v. Luten Bridge Co. Trying to Collect Damages if the other Party Breach (said stop building bridge) While a contract is executory a party has the power to stop performance on the other side by an explicit direction to that effect, subjecting himself to such damages as will compensate the other party for being stopped in the performance on his past at the stage in execution of the contract..cont Basically when one party says to the other stop building the bride (they are breaching the contract) you can only collect damages up to what you already spent and if you continue to build the bridge you will not be paid for those expenses a. in the ordinary course of the events, or b

Measure of Recovery for Wrongfully Discharged Employee (304) Measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon for the period of service, MINUS the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment

However, before projected earnings from other employment opportunities not sought or accepted by the discharged employee can be applied in mitigation, the employer must show that the other employment was comparable, or substantially similar, to that of which the employee has been deprived; the employees rejection of or failure to seek other available employment of a different or inferior kind may not be resorted to in order to mitigate damages

UCC 1-106 The remedies provided by this Act shall be liberally administered by the end that the aggrieved party may be put in as good as a position as if the other party had fully performed but neither consequential or special nor penal damages may be had except as specially provided in this Act or by other rule of law UCC 2-714 (if you dont accept them(gave u 5 bikes but suppose to get 10 then it doesnt apply) 1. Seller Breach 2. Buyer Breach-break up into flow chart

UCC 2-715 I asked for 500 girls bikes and you send me 500 boy bikes, and I reject this order but have to store them in my warehouse in order to ship them out that is incidental damages Problem 70 (295) In general contract law does not like emotional or punitive damages Restatement 353, things relating to dead bodies we take as emotional disturbances Problem 71 UCC 2-608- 1. buyer can revoke commercial unit ( ) whose non conformity (sent the wrong item-you asked for red you got blue) substantially impairs its value to him if he has accepted it. o A. goods showed up at the door and noticed they were nonconforming can be cured- took it to dealership multiple times to fixapplies o B. didnt realize the goods were wrong (u ordered 23 inch bikes and you sent me 24 inch bikes and I didnt realize 2. If revoking must revoke within a reasonable time, he took in and was relying on the dealership to fix it (if its 3 years maybe a problem) and without any substantial change in condition- 3,000 miles on a car is not a substantial change because he brought it in, you can make an argument Remedies (before UCC 2-711 you needed to work through UCC 2-608)

The buyer may cancel and whether or not he has done so may in addition to recovering the price

Reasonable person Test Rockingham County v. Luten Bridge Co. when one party to an executory contract (something that is in the process of being executed or completed) directs the other side to stop performance the breaching party subjects itself to damages but action after breach by the nonbreaching party that would increase the damages it not compensation

1. Expectation Damages (302) Loss in Value+ other loss- cost avoided-loss avoided (10,000-0) + 0 - (going to spend 7,000-3000 (actually spent) 0 or (+4,000 =6,000 (Promised-nothing) 311-329 Restatement of Contacts 356 (1) Liquidation Damages and Penalties Damage for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is enforceable on grounds of public policy as a penalty

Punitive Damages (Restatement of contracts 355) Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable

Inefficient Breaches (313) Breaches that cost the victim more than the gain to the contract breaker

Restatement (2nd) 356(1) Liquidated Damages and Penalties. Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages [or which could have easily been determined at the time of breach] is unenforceable on grounds of public policy as a penalty.

o Liquidated damages are enforceable o Penalty Damages are unenforceable Reasons to have Liquidated Damages a. Encourage performance (particularly where expectation damages may be speculative) b. Reduce litigation costs c. Add certainty to outcome (esp. when expectation damages may be speculative) d. Avoid over investment to prevent breach (Roller coaster hypo, advertising for fair) e. Downside, however, is that is may discourage efficient breach (where liquidated damages are more than expectation damages) 2-719. Contractual Modification or Limitation of Remedy. (1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages, (a) the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts; and (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy. (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

P. 171-187
*****On the BAR****** Past Consideration: pages 171-187 Hayes v. Plantations Steel Co.:

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They never discussed pensions, the P never induced or bargained for the pension

Facts: Hayes was an employee of Plantations Steel Co. For 3 years Hayes received the annual sum of 5 grand In 1977 the company refused t make any further payments In 1972 he announced his retirement from the company After retiring he spoke with an officer and a stockholder of plantations concerning the pension to hayes during retirement It was stated that he would be taken care of but no sum of money or percentage of salary was stated There was no formal authorization for payments by the companys shareholders/ board of directors The first payment was sent and it was stated by the companys and the officer stated thatit was implied that the check would continue on an annual basis and that it was his personal intention that the payments would continue for as long as he was around Trial court held: That the officer stating that he would take care of Hayes was a promise And that the four payments of the 5 grand established an unspecified term of the contract And the consideration was Hayes retiring bc he didnt have to do that, he volunteered Hayes depended on this payment Holding: Reversed Issues: Did Hayes Supply required consideration that would make the promise by the officer binding? If he did not supply the consideration, was his alleged reliance sufficiently induced by the promise to estop defendant from denying its obligation to him? There is an implied contract based on conduct and words Contracts implied: require the element of consideration to support them as is required in express contracts, only difference is the manner in which the parties manifest their assent Rule:

Consideration: consists either in some right, interest, or benefit accruing to one party or some forbearance, detriment, or responsibility given, suffered or undertaken by the other valid consideration must be bargained for Must induce the return act or promise to be valid the purported consideration must not have been delivered before the promise is executed, that is, given without reference to promise Consideration is therefore a test of the enforceability of executor promises and has no legal effect when rendered in the past and apart from an alleged exchange in the present. (173) Promissory Estoppel: a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of its promise (175) Essential element: is that the promise must INDUCE the promises action or forbearance In this case consideration is not present: Hayes had announced his intent to retire well in advance of any promise and therefore the intention to retire was arrived at without regard to any promise by plantations Hayes had an expectation for the payment but those expectations was not based on any statement or conduct made by the company In addition hayes acted on his own initative to retire The promise was not made to refrain hayes from doing something or to encourage long service from the start of his employment The promise was intended as a token of appreciation for Hayes for many years of service Notes: Some pensions are enforceable under statute (Employee Retirement Income Security Act of 1974)

Miles v. Wyman: Facts: The defendant wrote a letter to the plaintiff promising to pay back the plaintiff for all the expenses that the plaintiff paid for (board and nursing services for defendants son) There was no consideration for the promise, except for what grew out of the relation between mills and woman The defendant did not pay as he promised Supreme Court decision:

There was no consideration for defendants promise to pay plaintiffs expenses The kindness and services provided for defendants son were not bestowed at defendants request The defendant was not legally obligated to support his son in any way Since the defendants son was an adult who was responsible for his own debts, any debt he incurred created no obligation upon defendant Without consideration, defendants promise founded upon such a debt had no legally binding force The court affirmed the judgment of the lower courts decision because the defendants promise to pay expenses incurred for the care of his ADULT son was NOT supported by consideration because the services provided for the defendants son were not bestowed at defendants request and defendant was not legally obligated to support his son in any way Rules: There must be a pre-existing obligation to form a basis for an effective promise Express promises founded on such pre-existing equitable obligations may be enforced, there is a good consideration for them, they merely remove an impediment created by law to the recovery of debts honestly due, but which public policy protects the debtors from being compelled to pay. A deliberate promise, in writing, made freely and without any mistake, one which may lead the party to whom it is made into contracts and expenses, cannot be broken without a violation of moral duty. But if there was nothing paid or promised for it, the law, perhaps wisely, leaves the execution of it to the conscience of him who makes it pg 178 Notes: The difficulty we see with the doctrine is that if a mere moral obligation were recognized as valid consideration for a contract, that would practically erode to the vanishing point the necessity for finding a consideration The principle that in order for a contract to be valid and binding, each party must be bound to give some legal consideration to the other by conferring a benefit upon him or suffering a legal detriment at his request is firmly implanted in the roots of our law Exceptions to the general rule: If a defaulting obligor promises not to plead the statute of limitations or undertakes to pay a debt voidable because of the statite, the promise is enforceable The mere acknowledgement of the debt or the part payment of principal or intrest may be found to be an enforceable implied promise to pay the obligationon Upon reaching majority, if a person voluntarily and with knowledge of the facts promises to pay an obligation that was voidable because that person was a minor when the contract was made,

the new promise is enforceable another rationale that is often used for enforcing such promises is that the obligor has affirmed the originally promise made during infancy

Problem 47:

Restatement of contracts: section 82: A promise to pay indebtedness, effect on the statute of limitations: A promise to pay all or part of an antecedent contractual or quasi contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for the effect of a statute of limitations The following facts operate as such a promise unless other facts indicate a different intention: A voluntary acknowledgement to the oblige, admitting the present existence of the antecedent indebtedness OR A voluntary transfer of money, a negotiable instrument, or other thin by the obligor to the oblige, made as interest on or part payment of or collateral security for the antecedent indebtedness, OR A statement to the oblige that the statute of limitations will not be pleaded as a defense Problem 48:

Webb v. Mcgowin: Issue: Is saving another persons life sufficient consideration for a contract? Facts: The appellant dropped a block to the ground but he did not turn the block loose because otherwise he would have hit mcgowin and killed him or causing him serious bodily injury As a result, webb saved mcgowin from death or serios bodily injury but sustained bodily injury himself crippling him for life Mcgowin agreed to care for webs injuries for the remainder of his life, paying him $15 every 2 weeks Mcgowin complied with this agreement until he died and the payments were discontinued until a month after his mcgowins death Principle grounds of demurror to the original and amended complaint:

It states no cause of action It averments show the contract was without consideration It fails to allege that mcgowin had at or before the services were rendered agreed to pay appellant for them The contract declared on is void under the statute of frauds where the promise cares for, improves, and preserves the property of the primsor, though done without his request, it is sufficient consideration for the promisors subsequent agreement to pay for the service, because of the material benefit received pg 183 Rule: A moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit (Ex- saving a persons life), although there was no original duty or liability resting on the promisor (page 184) For a moral obligation to support a subsequent promise to pay, there must have existed a proper legal or equitable obligation, which for some reason had become unenforceable, but for which the promisor was still morally bound. It is subject to qualification in those cases where the promisor having receieved a material benefit from the prpomisee, is morally bound to compensate him for the services rendered and in consideration of this obligation promises to pay. In such cases, the subsequent promise to pay is an affirmance or ratification of the services rendered carrying with it the presumption that a previous request for the service was made (page 185) Lexis: CASE SUMMARY PROCEDURAL POSTURE: Plaintiff appealed from a judgment of the Circuit Court, Butler County (Alabama), which sustained the defendants' demurrers to plaintiff's action for unpaid installments on an alleged contract made when plaintiff was permanently injured while saving promisor's life. OVERVIEW: The plaintiff was permanently injured while saving the promisor's life. The promisor agreed to pay plaintiff a monetary amount every two weeks during the remainder of plaintiff's life. The promisor complied with this agreement up to the time of his death. Plaintiff brought a complaint against defendants, the executors of the deceased promisor's estate, to enforce the promise and to continue to receive payments. The court granted defendants' demurrer to the complaint. On appeal, the court reversed, holding that the contract was enforceable because the injury to the plaintiff was sufficient legal consideration for the promisor's agreement to pay.

OUTCOME: The court reversed and remanded the case holding that the contract was enforceable because the injury to the plaintiff in saving the promisor's life was sufficient legal consideration to enforce the promise to pay.

Problem 49:

Restatement of contracts: 86 Promise for benefit received: A promise made in recognition of a benefit previously received by the promisor from the promise is binding to the extent necessary to prevent injustice A promise is NOT binding under subsection 1: If the promise conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched OR To the extent that its value is disproportionate to the benefit

187-198
Harris v. Watson

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Whether a promise to perform your (original) duties under an existing contract are sufficient to form a new contract Determined to be in the scope of his original duties They were not doing anything they werent already required to do

Stilk v. Myrick P. 187 Facts Rules That a promise to pay a man for doing that which he is already under contract to do is without consideration 2 Seamen deserted the ship If the captain discharged the men Action for seamans wages, on voyage from London to the Baltic and back

Lingenfelder v. Wainwright Brewery Co. Facts P was the executor of the estate of Edmund Jungenfeld, who was employed by the D brewery as an architect

Rule History In favor of P Reversed in favor of D When a party merely does what he has already obligated himself to do, he cant demand an additional compensation

Clark v. Elza Facts Issue

Whether an executory oral agreement to settle a pending law suit may be raised as a defense to prevent a P from pursuing his original cause of action

I agree to pay you $9,500 if you dont sue me. X says ok. Then X goes to a doctor and turns out it will cost $20,000 to fix? Can I back out? The person must pay only 9,500 Signature (look under UCC) Not required unless it is required Any mark or symbol

208-223
Universal Computer Systems v. Medical Services Issue

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Whether an agent/employee had authority to make a binding promise to pick up a bid from a potential bidder, and if so is the principal bound by that promise?

Facts Gebert received all of the calls from the bidders and was the sole contact but the court found Universal should have been aware that Gebert lacked the authority to promise pick up and therefore Blue Shield was not bound by the promise History P ends up winning

James Baird Co. v. Gimbel Bros. P. 215 Rule Defendant withdrew the offer before the plaintiff had accepted. Thus, the defendant legally withdrew from the contract. The plaintiff could also not recover under promissory estoppel, because the contract lacked consideration

Branco Enterprises, Inc. v. Delta Roofing, Inc. Issue Whether there was a contract between the parties based on the doctrine of promissory estoppel where Df made a bid to pl sufficient to expect performance which pl relied upon to its detriment? Holding Yes there was a K under promissory estoppel

P. 223-238
Hoffman v. Red Owl Stores P. 223

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Red Owl told hi you need a bigger store and more experience so he quit his job and sold bakery, he relocated to another apartment to be closer to the store. Took a night shirt at a local bakery to make money and Red Owl says they need more money So basically Red Owl told him to do all these things and then backed out o o Issue was whether it was a real promise The promisor was saying x,y,z towards Hoffman which was inducing Hoffman to do all of these things. They all happened over a few months The court decided it would be unjust if they didnt enforce it Damages (whatever he was induced to do) awarded damages that was induced (like him moving) not the profits

Rule

P 239-261
Damages (239)

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At the end of the complaint filed in lawsuit, the P must specify the relief requested. This part of the complaint is called, the prayer The prayer may request extraordinary relief, such as injunction (a court offer forbidding certain conduct) or specific performance (a court decree commanding the other party to perform the contract as agreed), or simply a declaratory judgment ( a ruling interpreting the contract or resolving some other dispute between the parties without stating any specific relief.

Measure of Damages in General (240) Subject to limitation stated in SS 350-353, the injured party has a right to damages based on his expectation interest as measured by: o A. the loss in the value to him of the other partys performance caused by its failure or deficiency, plus o B. Any other less, including incidental or consequential loss, cause by the breach, less o C. any cost or other loss that he has avoided by not having to perform

Consequential damages are those that would never have occurred but for the breach o Ex: if a breach of warranty causes personal injury and the buyer end up in the hospital, the costs of this medical problem would be consequential, and must be tacked to the expectancy if the injured party is to be made whole NO person can recover a greater amount in damages for the breach of an obligation, than he would have gained by the full performance thereof on both sides Damages, must, in all cases, be reasonable, and where an obligation of any kind appears to create a right to unconscionable and grossly oppressive dames, contrary to substantial justice no more than reasonable damages can be recovered Damages for Defective Construction (255) 1. The reasonable cost of construction and completion in accordance with the contract, if this is possible and dos not involve unreasonable economic waste (repaid rule), OR 2. The difference between the value that the product contracted for would have had and the value of the performance that has been received by the P, if construction and

Damages

completion in accordance with the contract would involve unreasonable economic waste

261-270
Sullivan v. Oconnor

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The jury found for P on the breach of contract count and for D on negligence. P was awarded damages for out-of-pocket expenses and for the pain, suffering, and mental distress arising from the third operation. D appealed, asserting that pain, suffering, and mental distress are not proper damages for a breach of contract.

Compensatory (expectancy) Damages (263) Amount intended to put the P in the position he would be in if the contract had been performed, or, presumably, at the Ps election

Restitution Damages (263) An amount corresponding to any benefit conferred by the P upon the D in the performance of the contract disrupted by the Defendants breach

Reliance connected to promissory estoppel acting upon another's statement of alleged fact, claim or promise

Wasted Expenditure Restatement 349 Damages Based on Reliance Interest (269) As an alternative to the measure of damages stated in 347, the injured party has a right to damages based on reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed

Presumption of Breaking Even (269) If the expectancy is to difficult to prove, the P is entitled to recover out-of-pocket expenses unless the D can prove that the contract was a losing one and that the P would not have made enough from the contract to make up these expenditures. Thus the courts in effect are indulging a presumption that the P will break even; that the expectancy would have been at least the amount of the expenditures. Reasonable reliance and restitution expenses are awarded on the assumption that the value of the contract would at least have covered the outlay

If the D can carry the burden of showing that the contract was really a losing one, the court will dedeuct the loss from the Ps outlay

Limitations on the Recovery (270) Damages representing a loss in value to the P because of the breach (general damages)-incidental and consequential damages (special damages) may also be included in the final award o 1. Consequential Damages expenses or other losses beyond general damages that the P would never have incurred but for the breach Ex: if the breach involves a faulty furnace that blows up and injures a family, the consequential damages would include pain and suffering and medical expenses

o 2. Incidental Damages are consequential damages incurred in ascertaining and trying to prevent the breach Ex: storage costs incurred by nonbreaching seller who holds goods for a buyer for a reasonable time after the buyer fails to pick up the goods as promised

11/5/2010 12:11:00 PM

11/5/2010 12:11:00 PM