- Concurrent (constructive) condition – as opposed to conclude “a party has to perform”, always touch on when the performance is due under the contract
- Interpretation of contract provision, come up - ! a matter of law !!
Gift – within Statute of Frauds, authority?
Econ.
- “Target” lowered transaction cost, e.g. you can return the item bought in Target without cause. To let people easily buy things at Target. People do not have to be so careful when buying an item. Target is Hobbes society, e.g., in that people can take back the deal they once made.
- Liability rule v. property rule
- (p.21) efficient breach – a promisor will exercise an option to breach and pay expectation damages, instead of performing, when it is in her economic interest to do so,, when her gain from breaching exceeds the amount of damages she will have to pay to leave the promisee just as well of as he would have been, had the promisor performed
Rest § 344. Purposes of Remedies
- Judicial remedies …:
- (a) his “expectation interest,” which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed,
- (b) his “reliance interest,” which is his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made, or
- (c) his “restitution interest,” which is his interest in having restored to him any benefit that he has conferred on the other party.
measure of damage
- expectation / reliance / restitution /
- expectation : e.g. construct a house, through the deal, contractor will get 50, house owner will pay 50 to contractor and get house worth of 150. The house owner’s profit will be 100. the 100 is expectation, profit which would have been made.
- restitution – money one party already received
- reliance – cost one paid assuming that the transaction will be completed
Hawkins v. McGee, 1929, <scar tissue on his hand case , express warranty ), measure of damage> p.2
- P underwent surgery to repair scar tissue on his hand ; D surgeon gave P a 100% guarantee that he would repair the scar tissue ; the surgery was unsuccessful ;
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UCC § 2-313. express Warranties by Affirmation, Promise, Description, Sample; Remedial Promise.
- (1) “immediate buyer” … a buyer that enters into a contract with the seller.
- (2) Express warranties by the seller to the immediate buyer are created as follows:
- (a) Any affirmation of fact or promise made by the seller which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. ; (b) Any description of the goods …. ; (c) Any sample …
- (3) … not necessary … use formal words such as “warrant” or “guarantee” …, but … an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.
Sullivan v. O'Connor, 1973, <two plastic surgeries enough case , restitution measure, expectation p.14
- P, an entertainer, contracted with a plastic surgeon D for cosmetic surgery on her nose ; D surgeon promised that only two surgeries would be necessary ; after three operations, P’s nose had become asymmetrical and looked worse ; further improvement was impossible
- Held, P may recover (i) out-of-pocket expenditure (restitution measure, e.g. medical fee), (ii) worsening of her condition, i.e. difference (expectation measure), (iii) pain, suffering and mental distress involved in the third operation
- the uncertainties of medical science, doctors can seldom in good faith promise specific results ; but D made promise of a specific outcome
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- It is no defense to breach of contract that the promisor acted innocently and without negligence.
White v. Benkowski , p.23
- Punitive damages are given on basis of punishment to injured party not because he has been injured, which injury has been compensated with compensatory damages, but to punish wrongdoer for his malice and to deter others from like conduct. ; Without exception, punitive damages are not available in breach of contract actions even if breach is willful.
Nominal damage p.26
- A P who proves a breach of contract but fails to prove damages is traditionally awarded nominal damages ; such award may serve as a declaration of the P’s rights and may also carry with it an award of court costs
there must have been an exchange arrived at by way of bargain ; There must be a benefit to the promisor p.32
Hamer v. Sidway,
- Uncle promised nephew $5,000, if refrain from liquor, tobacco, until he become 21 yr old ; nephew performed his part, became of age, and notified his uncle ; Uncle replied that he admitted the agreement, had the money in bank, set apart, proposed to hold for him till he was capable of taking care of it, with no intention to interfere with the money ; it was agreed that the money remain in the hands of uncle ; uncle died
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- A person in the legal (i) possession of money or property (ii) acknowledging a trust with the assent of the cestui que trust, becomes from that time a trustee if the acknowledgment be founded on a valuable consideration
- Intention of the person to become a trustee is essential
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Fiege v. Boehm,
- contract between P (mother) and D (putative father) under which D would provide support for D’s illegitimate child, upon condition that she would refrain from instituting bastardy proceedings ; it turned out that D could not have been the father
whether forbearance to assert a claim is sufficient consideration, in particular, forbearance to institute bastardy proceedings
- forbearance to assert an valid, legal, well-founded claim by one with bona fide (honest) and reasonable belief in its possible validity is sufficient consideration for contract
- The contract should not be induced by fraud, oppression, or unfairness
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Feinberg v. Pfeiffer Co.,
- P former employee, D corporation ; BOD’s decision to afford her retirement pay of $200 per month for life ; P relied on it and retired from the job ; new CEO reduced the retirement pay ; P sue D
- D;s arg. (i) the decision of affording her retirement pay was a gift, gratuitous, no consideration, as opposed to contractual obligation ; (ii) past service - many yrs of faithful service – is not a valid consideration, ß P agreed
- <promissory estoppel>
- A promise which the promisor should reasonably expect to induce promisee into action or forbearance (of definite nature) and which actually induce such action or forbearance,,, is binding,,, if injustice can be avoided only by enforcement of the promise ; Promissory estoppel is a sort of consideration
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Mills v. Wyman,
- D’s adult son returned from a voyage at sea in distress and sick ; P took care of him till he died ; D knew of the care P provide to D’s adult son ; D promised to pay P for his expenses but did not ; P sue D
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Webb v. McGowin, (though, past service, without legal obligation, without request,,, if material benefit ) , p.52
- P was permanently injured while saving promisor’s life ; the promisor promised to give a sum of money to P (promisee) during the remainder of P’s life ; when promisor died, estate refused, P brought suit
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- benefit to promisor or injury to promisee is sufficient consideration for promisor’s agreement to pay
Kirksey v. Kirksey, , p.56
- P was a widow of his brother (D), and had several children. D resided about sixty miles off. D wrote to P that if she would come and see him, he would let her have a place to raise her family. Shortly after, she removed to his residence, and he for two years furnished her with a comfortable residence, and then required her to give it up. Here, a mere gratuity,.
Lake Land Emp. Group of Akron, LLC v. Columber, , p.58
- A covenant-not-to-compete agreement
- Employee’s assent to the non-competition agreement is given in exchange for forbearance on the part of employer from terminating the employee ; the forbearance is a consideration to support a non-competition agreement ;
- Consideration may be either a detriment to the promisee or a benefit to the promisor
Strong v. Sheffield,
- D endorsed a promissory note made between her husband and P (payee, creditor) ; neither request to endorse on the part of payee nor request to forebear collection on the part of D ; the promissory note was due on demand, though not presented for two yrs ;
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- Consideration is either benefit to promisor or detriment to promisee
- Here, payee said he will demand when he needs money,,, the note did not in law extend the payment of the debt ; it was payable on demand (not forbearance of legal right) ; D did not receive any benefit in exchange for endorsement ; no consideration
Mattei v. Hopper, <satisfactory lease case, satisfaction clause – illusory – consideration , p.72
- P real estate developer , D property owner ; agreement for a sale of the property between P and D ; P paid deposit and had 120 days to consummate the purchase ; one provision under the agreement has satisfaction clause “P will be excused from performance if he was unable to arrange satisfactory lease” ; before 120 days period, D refused to sell the property ; P sue D for breach of contract
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- If one party free to perform or to withdraw from the agreement at his own unrestricted pleasure, the promise is deemed illusory, thus, no consideration
- Two types of satisfaction clause (i) satisfaction as to commercial value or quality. The standard of a reasonable person is used in determining whether satisfaction has been received , (ii) satisfaction as to fancy, taste or judgment, promisor’s good faith determination that he is not satisfied is a defense to breach of contract,, promisor’s duty to exercise his judgment in good faith is a consideration ;
Lucy, <Lucy fashion designer, exclusive endorsement contract, a promise to use reasonable efforts> , p.83
- D (Lucy) is a fashion designer, contracted with P for exclusive endorsement ; under the contract, P (promoter) receives half of the profit ; D placed endorsement on other article without knowledge of P ; P sue D ; D argued the contract lacked consideration – P does not bind himself to anything
- Held, although not in express terms, a promise to use reasonable efforts to bring profit to Lucy (D) is implied in exchange for exclusive privilege
- News source provided information to newspapers based on newspapers' promise of confidentiality ; Newspapers breached the promise of confidentiality and news source's employer terminated his employment, following the publication of a controversial story p.98
- <promissory estoppel, not as a consideration, but as a ground for breach of promise> A promise which the promisor should reasonably expect to induce promisee into action or forbearance (of definite nature) and which actually induce such action or forbearance,,, is binding,,, if injustice can be avoided only by enforcement of the promise
- News source was entitled to recover on basis of promissory estoppel for newspapers' breach of promise of confidentiality where, in reliance on promise of anonymity given by reporters, source turned over documents to reporters, and, when promises to keep his name confidential were broken, he lost his job. ; newspaper is promisor ; the source is promisee ;
- seller thought about selling its business, negotiated with a potential purchaser and at the same time sought assurances from distributor that the distributor was not planning to end its relationship with the seller. Distributor assured the seller of continuous supply. The seller decided not to sell based largely on the assurances and the next day distributor stopped supply. The seller was then forced to sell its business at a price significantly lower than it could have received only days earlier and the seller brought an action based in promissory estoppel.
- Here, distributors promise was such promise ; Promissory estoppel as a ground for breach of promise
