Final Contracts Outline | Consideration | Damages

Outline for Contracts

Chapter 1: Bases for Enforcing Promises
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.)


Section 1: Meaning of ³Enforce´ --pg. 1

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.

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

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

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.

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

$20. Cannot get more than what you expected. had the surgery never occurred. would only get $100 hospital fee for 3rd operation.000 P&S for 3rd operation. $10. O¶Connor.'s fee ($300). y Assigning the possible damages under the different theories of recovery: Restitution--awarding her back any amount she has conferred on Dr. 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. Total Restitution recovery: $300 Reliance--putting her back where she was before. $9. you've won" . will not include punitive damages. 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.$300 for Dr. not $ she's paid out to other people: Only thing she has conferred on him is Dr.¶s fees ($100 per operation). Efficient breaches arean economical issue.000 P&S.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.000 for LOSS of appearance Total Reliance recovery: $19. $10.100 THE ECONOMICS OF REMEDIES: y y y Not meant to be punitive. $300 for Hospital fees ($100 per operation).000 for increased value of appearance had the surgery been performed correctly. $3. may be of benefit to breach.600 Expectancy--had the promise been performed (benefit of the bargain): P was prepared for 2 operations. Total Expectancy recovery: $33. y If only consequence is compensatory.000 value of loss of appearance.

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

BOEHM (pg. D made payments until a blood test suggested that the child was not his. P made the claim in good faith and there was no proof of fraud or unfairness.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.): 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. or unlawful. P forebear (in good faith) from suing for bastardy charges in exchange for child support from D.P had valid reason to believe D was the father. 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. 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. Contract had sufficient consideration because P did not exercise P¶s right to prosecute for bastardy in exchange for D¶s promise to pay. . vexatious.B.  Note (A.

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

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

" Economically they could be one-sided. Sued for breach of contract (noncompete agreement) o Appellate court does still remand case.57.58) Columber is fired from his job at Lake Land. D intended to give it without anything in exchange from P. (Giving up her land to move).The Requirement of Bargain for Exchange KIRKSEY vs. The exchange of signing the agreement is exchanged for the promise not to fire right now. This is an old case. y In the courts mind. If Columber did not want to sign the ³non-compete´ agreement.  Could have possibly sued on a restitution or reliance based argument. 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. o Supreme Court believes there is consideration. a new employment began once the agreement was signed.COLUMBER (pg. defendant moves plaintiff and her family to another site.KIRKSEY (pg. Employment Agreements LAKE LAND EMPLOYMENT GROUP vs. y "The value of the performance and the ring do not have to be equal. because the company benefits but the employee gains no new incentives by signing non-compete. The court believed that D¶s promise was a gratuity and lacked the requisite consideration to sustain an enforceable contract. Even if his motive was just to get her to show up.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. Million Dollar Swipe (pg. but we cannot determine the value to the father of his daughter "showing up". . o Believe that the new agreement creates a new employment (an employment under the signed agreement of new terms). y Eventually kicking the plaintiff and her family off the land Rule: A gratuitous promise cannot be enforced. Lunchtime at Tiffany's²pg. note 3) y Courts determine that her act of giving out her personal info to receive the card was adequate consideration. and takes a job elsewhere. he still was seeking her performance. he could have done so at his own free will and quit his job. 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.

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

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

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. D¶s promise to pay was given in exchange for nothing. except on condition that the other party entered into an immediate and reciprocal obligation to do the thing requested. Notes (A. followed byforbearance in pursuance of the request.STRONG vs. The promise is illusory. SHEFFIELD o Plaintiff sold a business to the husband of the defendant.  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. . And because his promise was illusory. y Plaintiff made a promissory note with defendant. It was not a case of request to forbear. there is not sufficient consideration or obligation to perform. o Rule: A request followed by performance is sufficient.B. because he really had no obligation. y Judge determines that there was no consideration on the plaintiff's part  The consideration was in regards to forbearance on the loan. 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. and mutual promises at the time are not essential unless it was the understanding that the promisor was not to be bound. however. as a promise to pay if her husband would not.): D¶s promise to pay is not enforceable because P¶s promise was illusory. The promise is illusory because P could have collected at any time. because there was no promise on the part of D at the time.

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

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

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

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

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

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

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

Zehmer's signature on the revised contract Court believes his conduct and actions would lead one to believe that he was serious. Your actions show that you intended to be bound to the contract Gentleman's Agreements: If neither party intends to be bound. if were to use only the "objective" approach. 2. Mediafare Entertainment Corp.124 Section 2: The Offer²pg. when a document is absent: 1.  DO YOUR ACTIONS OR INTENTIONS SHOW THAT YOU MEANT TO AGREE? LUCY vs. If the court did not enforce this simply because Zehmer said he was kidding.  Conversely. 4.²pg.Objective--we look to the objective intent.(Not actual wording) . then this would always be the case that someone could back out of an agreement for the same contention. 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. 3. could wind up with terms that neither party intended. then the courts should not enforce the contract. How do we prove subjective intent?²almost always by circumstantial evidence Objective factors that show parties intended to be bound.  If we were to only to look at the "subjective". 126 Restatement (Second) § 24 Offer Defined-. As you could not have enforceable contracts because someone could say that they did not intend to enter into a contract. would create chaos. 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

C.C. 3. 2-305(1)is strictly regulatory towards the sale of goods. If they did.C. 2. Court believes yes. Equitable jurisdiction--Does the court have the power to order parties to negotiate? i. even if the pricing mechanisms that were the "backup plans" failed them. then the court would be enforcing what both parties wanted. can be used as persuasive. To be able to find a rate to be used.C. . Court then determines that the $6.25 was in fact a reasonable rate. Did the parties intend to be bound? i. --However. ii. The first issue that the court believes need to be addressed: 1. as binding authority.C. This is not a sale of goods issue. the U. even if there was a dispute over the pricing.Armco does not believe that there is a valid contract. 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. as the U.C. Did the court actually have the proper "reasonable rate"? Court cannot rely on the U. as the two companies have failed to reach an appropriate rate based on the pricing mechanisms that were determined in the contract.

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

Applying Paragraph 1 DORTON vs. COLLINS &AIKMAN

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.


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.

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".

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

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.

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

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

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

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

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

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

and thus the original agreement was still in play. §89 One way that parties can get around the pre-existing duty by giving new consideration for the new agreement. "Parties are always free to change their agreements. so long as those changes are reasonable.-- WATKINS & SON vs. but there is also a new consideration that will make the new or modified agreement binding. If the modification is fair and equitable in view of circumstances not anticipated. o Court believes that the NEW oral agreement "superseded" the original written agreement. the result was also proper. it is only fair for you to be bound to it. o After work is completed. instead they found that the preexisting duty of the workers was not waived. Restatement § 89²Modification of Contract: a.  Both parties went through the appropriate steps necessary to address the revelation of the new information to complete the job. However. y Contract is amended and agreed on that homeowner will pay the amount according to the new contract." Legal ground was not found for Alaska Packers under a theory of duress. Superintendent even stated that he "had no authority to make the agreement. 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. Could have sued to enforce the original agreement. That way. o They determine that there is granite that will require more time and money to excavate. the obligation to fulfill the 2nd agreement should be enforced. --This case occurred in 1902. the first agreement was not rescinded. 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.  Believing that this same work follows to the original agreement and that because of this. . or c. if you agree to a modification.´ Because they followed the proper steps. the doctrine of duress was not applicable at the time. CARRIG Excavators and homeowners form an agreement to dig up land to build a cellar. ³There was a valid reason that the amount for the work was going to cost more. To the extent of the provided statute. there is not only an adjustment in performance. homeowner refuses to pay the amount. or b." As long as there was this agreement to discharge the original agreement. and because of this.

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

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

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

Mel noticed that Casper¶s electrical and plumbing bids were identical. Casper¶s bid manager²Shelton²was left to do most of the preparations for both bids by himself. 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. so that both of Casper¶s bids were noted on the same spreadsheet.000 (the bid on Casper¶s form) to $160. Shelton accidentally used the price from the plumbing bid spreadsheet in the final bid form for the electrical contract. but they were both opened and reviewed by Mel. We¶re stuck and now so are you. Casper¶s bid on the plumbing contract was $15. The next lowest bid was $90. When the bids were opened at noon on February 1.m.000. The bids were submitted to Sky High only moments before the noon January 31 deadline. but he got distracted and never got around to it. ³but we used your bid for the electrical work and we got the contract. As a result. The bid was due at noon on February 1. The subcontractor bids were due at noon on January 31. Sky High was the lowest bidder and was awarded the contract. When Mel returned to the office. 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. Mel submitted Sky High¶s bid at 11:30 a. He thought about calling Casper to confirm the bids.000 higher than the lowest bid. In his haste to prepare the final bids. both the electrical and plumbing bid forms included a $70.000? . a contracting firm. on February 1.000 bid. Casper Contractors submitted separate bids for the plumbing and electrical work. Shelton calculated each bid using a spreadsheet program. Casper¶s electrical and plumbing bids were opened separately. Shelton looked at his copy of the bid forms and noticed his mistake. Mel solicited bids from several subcontractors for various aspects of the job.´ Is Casper obligated to perform the electrical work for $70. he received Shelton¶s messages and called him back.TEST QUESTIONS AND MODEL ANSWERS Fall 2003 Contracts I Exam Question 2 (45 minutes) Mel is president of Sky High Construction. Based on his calculations. The bids were noted on a master spreadsheet along with all of the other subcontract bids. Sky High noted that Casper¶s bid for the electrical contract was the lowest. Sky High received an invitation to bid on a contract to build an office building in Los Angeles. creating separate files for the electrical and plumbing bids.´ Mel told Shelton. Shelton intended to bid $110.000 but the bids ranged from $70. The master spreadsheet included the bids for all aspects of the job. Because several of its key employees were out with the flu. ³I¶m sorry about your mistake. When all of the bids were opened. He correctly included the price from the plumbing bid spreadsheet in the final bid form for the plumbing contract. Later that afternoon. and Mel thought it curious.000 for the plumbing contract.000 for the electrical contract and $70.

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

so I would appreciate it if you would call me right away if you want to accept. Meredith¶s assistant Betsy told Gabrielle that Meredith was in a meeting. Elgin directed her to the troubled . so Gabrielle left a message telling Meredith that she wanted to accept the job. I would prefer to work for you. Gabrielle had received a call from Microsoft offering her a position as an intern. I would be happy to have you work for me. The morning of March 17.000 per month. On March 10. I will have to accept. Meredith received resumes from 10 persons and interviewed 6. 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.´ Meredith told her. but I interviewed with Microsoft last week for a permanent position and if they offer me the job.´ ³I understand. It¶s just going to get worse over the next few weeks and if I don¶t hire someone soon. that she was there from Computer MD to take a look at his computers. 2005 and ends on May 20.Essay Question 1 (75 minutes) Meredith Declan owns a computer service and repair business called Computer MD. 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.´ On March 15. She called Microsoft that evening and rejected the internship offer. She also knew that working for Meredith would be much more challenging and rewarding than the internship. Earlier that day. ³The job starts on March 20. Gabrielle got home that evening and listened to the message. papers and projects. 2005. Meredith called back but Gabrielle was not home. two have the necessary experience and availability: Ashton and Gabrielle. Gabrielle was confident that she would do well in the internship. 2005.´ Meredith said. She called Meredith to ask about the technician position but Meredith was out of the office. Of those 6. In March 2005. but Betsy promised to have Meredith call Gabrielle as soon as the meeting was over. the Kinko¶s on Main Street is having trouble with their computers and I need to send someone over as soon as possible. Gabrielle found out that she did not get the job at Microsoft. Give me a call by March 17 if you want the job and we¶ll talk. I really can¶t afford to pay that much but I¶m already swamped with work. she often gets calls from students who encounter problems while preparing for final exams. It was not a full time or permanent position. Meredith called Gabrielle first and offered her the job. but she wanted to know whether she would receive any medical or dental benefits with the job. she sometimes adds temporary workers to her staff. Gabrielle was anxious to get to work so she went to the Kinko¶s on Main and told the assistant manager. March 16. 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. I can only hold the job open for another two days. I¶ve heard wonderful things about your company and I know that working for you would be a great experience. I¶ll have to turn down business from some very good customers. In fact. but she felt bad for Meredith. Gabrielle called Meredith¶s office. Gabrielle replied. so Meredith left the following message on Gabrielle¶s answering machine: I¶m so glad you called. ³Thank you for the offer. Elgin. you can get started right away on the problems at Kinko¶s. She also wanted to know if the salary was negotiable. I should hear from them by next week. To handle the large volume of business at these peak times. Meredith seeks to hire one such temporary worker to get her through the April busy season.000 per month. Gabrielle was sick with 24-hour stomach flu and she did not get around to calling Meredith back. but Gabrielle knew that most of the interns who do good work receive permanent positions after the internship ends. but Gabrielle decided to wait until the next morning to call Meredith back. 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. The next day. and the salary is $4. ³If the job at Microsoft does not come through. If you accept.

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

Ashton would certainly have breach of contract action against Meredith if she tried to get out of the contract with him. The relative status of the parties is equal and his power to negotiate the deal he did was not based on their relationship.000 a month. Bloomfield. Gabrielle may be able to recover reliance based damages for her lost opportunities with Microsoft.) In this case there was unjust enrichment because Gabrielle performed a service to Kinkos for which Meredith will be monetarily compensated. Gabrielle can recover for unjust enrichment if she expected remuneration and if there is a direct relationship between the parties (Callano v. In any case. time. Red Owl) (R 2d § 90). by equal number of parties and they had been in negotiations for about a week. this was not insisted upon by Ashton. However. which was a reasonable manner of acceptance (R 2d § 30). 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. Meredith agreed over the phone. She made him an offer when she offered him $5.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. (Callano v. Gabrielle probably won¶t recover under promissory estoppel for her lost opportunities with Microsoft. 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. Thus. Furthermore Meredith probably cannot assert that she was subject to undue influence. Although there may have been a need for immediate contract formation. Oakwood Park Homes Corp. however. Ashton was making a permissible threat when he threatened to take another job (R 2d § 176). Although there were no known third party advisors. Oakwood). Ashton was dealing at arms length with Meredith and so she cannot assert that she was subject to over-persuasion based on their relationship. 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. He made a counteroffer when he requested $6. Based on Odorizzi v. Meredith will rightfully argue that there was no consideration for this option contract so she is not bound by it. However. Furthermore the signing of the contract in her office constituted a validation of that acceptance. Thus because none of these ³acceptances´ were valid enough to formulate a contract Gabrielle probably won¶t recover on a breach of contract action. Thus the contract between Meredith and Ashton is enforceable. 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. Thus because of this over-reliance on Meredith¶s promise. Meredith promised to keep the job open and reaffirmed her interest in hiring Gabrielle on March 15.000 contract with Ashton under duress because he knew of her desperate situation and threatened not to take the job. Gabrielle may be able to recover restitution damages for unjust enrichment. Based on Lucy v. Meredith¶s words and actions manifested every intention of entering into a contract. Ashton did not subject Meredith to over-persuasion in making the decision. Gabrielle expected to be compensated for her services based on Meredith¶s message on March 15. Gabrielle may argue that Meredith¶s promise to hold the offer open until March 17 was an option contract. Meredith may have tried to argue that she made the $6. 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).000 a month. The contract was formed at an appropriate place. she requested that they talk by March 17 and they did not actually do so until the 17th. 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). .

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

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

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

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

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

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