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Note that your students can find the answers to the even-numbered For
Review questions in Appendix F at the end of the text. We repeat these
answers here as a convenience to you.
2A Elements of a contract
The basic elements for the formation of a valid contract are an agreement, consid-
eration, contractual capacity, and legality. Defenses to the enforcement of an oth-
erwise valid contract include the lack of genuineness of assent and improper form.
Discuss. Yes, the measure of damages imposed on Olins (the defendant) in this case
placed Pan (the plaintiff) in the same position that it would have been in if the lease
had been fully performed. And that is the standard measure of compensatory
damages. On finding that the defendant breached the lease, the court awarded the
plaintiff “compensatory damages in the amount of $146,000–$138,000 in unpaid rent
for the term of the lease and $8,000 in utility fees incurred by the plaintiff during the
lease period—plus interest, and attorney's fees.” On the defendant’s appeal, a state
intermediate appellate court affirmed the lower court’s judgment and award.
Before the lease period began, Pan spent funds to meet its obligations under
the parties’ contract. But this was not compensable as damages because the lease
required Pan to undertake these duties and they were accomplished before the
defendant’s breach. Later, in an attempt to reduce the amount of the damages, Pan
spent additional funds in an unsuccessful effort to find a new tenant. Neither court
included these funds in the measure of damages.
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accessible website, in whole or in part.
4 UNIT TWO: CONTRACTS
all of the cards with respect to their actual and future employees. Absent statutes and
case law that limits their abilities to break employment contracts on a whim,
employees would have no protections. Employees would face increased uncertainty
about the longevity of their jobs, which ultimately would reduce their
productivity. There would be more turnover in jobs, and more unemploy-
ment. Contracts are not made to be broken, but rather upheld—and that is where the
courts come in. The courts must be there to protect the rights of aggrieved former
employees.
Employers, even large corporations, do not “hold all of the cards,” contrary to
popular belief. All companies compete for workers. It would be foolish for companies
to break employment contracts on a whim. After all, it’s costly to train new
workers. The reality is that good workers are highly valued and companies must pay
competitive wages (or more) to keep workers. So, even if companies had no legal
constraints about how they honor their contracts with employees, they have a
business reason to honor those contracts—lower labor costs, greater employee
productivity, and ultimately, higher profits.
2A Dyna tells Ed that she will pay him $1,000 to set fire to her store, so that
she can collect under a fire insurance policy. Ed sets fire to the store but Dyna
refuses to pay. Can Ed recover? Why or why not? No. This contract, although not
fully executed, is for an illegal purpose and therefore is void. A void contract gives rise
to no legal obligation on the part of any party. A contract that is void is no contract.
There is nothing to enforce.
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accessible website, in whole or in part.
6 UNIT TWO: CONTRACTS
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accessible website, in whole or in part.
CHAPTER 8: NATURE AND CLASSIFICATION 7
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accessible website, in whole or in part.
8 UNIT TWO: CONTRACTS
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
CHAPTER 8: NATURE AND CLASSIFICATION 9
In this problem, the homeowner’s policy was a mix of express and implied
terms. As for the elements showing the existence of the implied terms, the payments
for the premiums on the policy continued after Ralph’s death, but the amounts were
paid from Douglas’s account. Undoubtedly, Douglas expected to receive coverage
under the policy in return for his payments. The insurer Allstate must have known that
Douglas expected the coverage—insurance has long been Allstate’s business, and
the company obviously understands the relationship between the payments of
premiums and the expectation of insurance coverage. And Allstate had the
opportunity to cancel the homeowner’s policy—as it had with Ralph’s auto insurance,
which was canceled—but did not terminate it.
In the actual case on which this problem is based, the court issued a judgment
in Allstate’s favor on the implied contract issue. The U.S. Court of Appeals for the
Sixth Circuit reversed this judgment—“A reasonable fact-finder could determine that
[Allstate’s] continuation of the premium payments constituted a contract implied in fact
with Douglas.”
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
10 UNIT TWO: CONTRACTS
were no conditions that Jensen could satisfy to create a binding contract before IBM
decided to pay him. IBM unambiguously characterized sales commissions as a form
of incentive pay that it intended to make but which it reserved the right to calculate or
even not make, even after sales were closed.” The brochure's reference to the
intranet “amounts to an incorporation by reference to intranet materials that establish
a special rate of commissions in ‘large opportunity’ transactions . . . . These are all
terms of the ‘offer’ on which Jensen relies.”
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accessible website, in whole or in part.
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no related content on Scribd:
“We know a great deal about a good many things,” said Mrs.
Maplebury.
“What is it, Bradbury?” said Mrs. Fisher.
“I’m afraid I shall have to leave you for a couple of days. Great
nuisance, but there it is. But, of course, I must be there.”
“Where?”
“Ah, where?” said Mrs. Maplebury.
“At Sing-Sing. I see in the paper that to-morrow and the day after
they are inaugurating the new Osborne Stadium. All the men of my
class will be attending, and I must go, too.”
“Must you really?”
“I certainly must. Not to do so would be to show a lack of college
spirit. The boys are playing Yale, and there is to be a big dinner
afterwards. I shouldn’t wonder if I had to make a speech. But don’t
worry, honey,” he said, kissing his wife affectionately. “I shall be back
before you know I’ve gone.” He turned sharply to Mrs. Maplebury. “I
beg your pardon?” he said, stiffly.
“I did not speak.”
“I thought you did.”
“I merely inhaled. I simply drew in air through my nostrils. If I am
not at liberty to draw in air through my nostrils in your house, pray
inform me.”
“I would prefer that you didn’t,” said Bradbury, between set teeth.
“Then I would suffocate.”
“Yes,” said Bradbury Fisher.
And what of Felicia, meanwhile? She was, alas, far from returning
the devotion which scorched Chester’s vital organs. He seemed to
her precisely the sort of man she most disliked. From childhood up
Felicia Blakeney had lived in an atmosphere of highbrowism, and the
type of husband she had always seen in her daydreams was the
man who was simple and straightforward and earthy and did not
know whether Artbashiekeff was a suburb of Moscow or a new kind
of Russian drink. A man like Chester, who on his own statement
would rather read one of her mother’s novels than eat, revolted her.
And his warm affection for her brother Crispin set the seal on her
distaste.
Felicia was a dutiful child, and she loved her parents. It took a bit
of doing, but she did it. But at her brother Crispin she drew the line.
He wouldn’t do, and his friends were worse than he was. They were
high-voiced, supercilious, pince-nezed young men who talked
patronisingly of Life and Art, and Chester’s unblushing confession
that he was one of them had put him ten down and nine to play right
away.
You may wonder why the boy’s undeniable skill on the links had no
power to soften the girl. The unfortunate fact was that all the good
effects of his prowess were neutralised by his behaviour while
playing. All her life she had treated golf with a proper reverence and
awe, and in Chester’s attitude towards the game she seemed to
detect a horrible shallowness. The fact is, Chester, in his efforts to
keep himself from using strong language, had found a sort of relief in
a girlish giggle, and it made her shudder every time she heard it.
His deportment, therefore, in the space of time leading up to the
proposal could not have been more injurious to his cause. They
started out quite happily, Chester doing a nice two-hundred-yarder
off the first tee, which for a moment awoke the girl’s respect. But at
the fourth, after a lovely brassie-shot, he found his ball deeply
embedded in the print of a woman’s high heel. It was just one of
those rubs of the green which normally would have caused him to
ease his bosom with a flood of sturdy protest, but now he was on his
guard.
“Tee-hee!” simpered Chester, reaching for his niblick. “Too bad, too
bad!” and the girl shuddered to the depths of her soul.
Having holed out, he proceeded to enliven the walk to the next tee
with a few remarks on her mother’s literary style, and it was while
they were walking after their drives that he proposed.
His proposal, considering the circumstances, could hardly have
been less happily worded. Little knowing that he was rushing upon
his doom, Chester stressed the Crispin note. He gave Felicia the
impression that he was suggesting this marriage more for Crispin’s
sake than anything else. He conveyed the idea that he thought how
nice it would be for brother Crispin to have his old chum in the family.
He drew a picture of their little home, with Crispin for ever popping in
and out like a rabbit. It is not to be wondered at that, when at length
he had finished and she had time to speak, the horrified girl turned
him down with a thud.
It is at moments such as these that a man reaps the reward of a
good upbringing.
In similar circumstances those who have not had the benefit of a
sound training in golf are too apt to go wrong. Goaded by the sudden
anguish, they take to drink, plunge into dissipation, and write vers
libre. Chester was mercifully saved from this. I saw him the day after
he had been handed the mitten, and was struck by the look of grim
determination in his face. Deeply wounded though he was, I could
see that he was the master of his fate and the captain of his soul.
“I am sorry, my boy,” I said, sympathetically, when he had told me
the painful news.
“It can’t be helped,” he replied, bravely.
“Her decision was final?”
“Quite.”
“You do not contemplate having another pop at her?”
“No good. I know when I’m licked.”
I patted him on the shoulder and said the only thing it seemed
possible to say.
“After all, there is always golf.”
He nodded.
“Yes. My game needs a lot of tuning up. Now is the time to do it.
From now on I go at this pastime seriously. I make it my life-work.
Who knows?” he murmured, with a sudden gleam in his eyes. “The
Amateur Championship—”
“The Open!” I cried, falling gladly into his mood.
“The American Amateur,” said Chester, flushing.
“The American Open,” I chorused.
“No one has ever copped all four.”
“No one.”
“Watch me!” said Chester Meredith, simply.