Remedies for Breach of Contract Introduction

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Contracts I

Professor Collins

Fall 1999

  1. Remedies for Breach of Contract

    1. Introduction

      1. Interests Protected by Standard Contract Remedies

        1. restitution – interest of a party in recovering values conferred on the other party through efforts to perform a contract.

          1. goal is to prevent gain by defaulting promisor at expense of promisee

        2. reliance – party’s interest in recovering losses suffered by virtue of reliance on the contract, whether or not there was a corresponding gain to the opposite party.

          1. goal is to reimburse promisee for change of position in reliance on the contract “in as good a position as before promise made”

        3. expectation – interest of a party in realizing the value of the expectancy that was created by the other’s promise.

          1. goal put promisee in as good a position as he would have occupied had defendant performed his promise

    2. The Goals of Contract Damages

      1. Hawkins v. McGee

  • Court overrules use of reliance damages(put plaintiff in position he was in prior to performance of contract.

  • Should get expectation because the contract is forward looking. P gets value of perfect hand – value of scarred hairy hand he is left with = expectation.

        1. Sullivan v. O’Connor

  • operation on defective nose. 3 operations, 2 original and 1 remedy.

  • in medical world expectation more difficult than in commercial world

  • award reliance damages, only wants recovery for1 remedy operation

      1. Groves v. John Wunder Co.

  • D willfully breaches consturction K. P wants cost of completion instead of difference in value. P gets cost of completion, screw economic waste

  • Award is to complete contract…cost of completion

        1. Peevyhouse v. Garland Coal & Mining Co.

  • award is based on value

  • can’t recover greater amt. of damages for breach of obligation than would have gained by full performance

  • if cost of completion disproportionate than difference in value.

        1. Cost or Value in General Contract Law

        2. Restatement of Torts, Second $901 (General Principle Damages)

      1. Acme Mills & Elevator v. Johnson.

  • D to sell bushels to P at 1.03. Instead sells to another at 1.16. P wants diff b/t 1.16 and 1.03. Wants to get enrichment from breach that D got.

  • Court says no way. Can only sue for expectation, and right now bushels at 1.00.

  • Damages measured by diff in price of K and mkt price at time and place of delivery.

  • No recovery for gain of breach.

        1. Laurin v. DeCarolis Constr Co.

  • D removes gravel from property before turning property over. P essentially suing for gain from breach. Hinged on willfulness. P gets value of gravel.

  • Most states this would have been tort case of conversion.

        1. Damages as Punishment for Contract Breach – rarely applied. Don’t want punitive damages because like idea of efficient breach.

        2. Snepp v. U.S..

  • Signed K not to write without permission of CIA.

  • gov’t gets royalties since no way to measure damage

  • gain from breach was punishable, K was like a fiduciary relationship

      1. Louise Caroline Nursing Home v. Dix Construction.

  • P argues D should pay benefit of bargian (value of building as is – value of what it would be) Says mkt value would have exceeded contractual cost of construction

  • P had other builder finish job within K price.

  • No recovery for P, damages only to compensate P, since cost of completion < contract price, no damage.

  • Cost of completion ceiling on damages.

    1. Limitations on Expectation Damages

      1. Rockingham County v. Luten Bridge Co.

  • D K with P to build bridge to nowhere. D says stop and P continues to build.

  • Court establishes duty to mitigate. Don’t run up damages. Duty to mitigate costs.

  • P had duty not to run up. P can only get expenditures prior to breach + profit on the whole contract.

        1. Leingang v. City of Mandan Weed Board.

  • D can’t reduce by overhead b/c have that anyway.

  • Only reductions for expenses that could have been avoided.

          1. Kearsage Computer v. Acme Staple.

  • P fired by D and sues for breach. D felt that its damages reduced by savings of P and other money made by P.

  • No dice, P could expand and accept other bus, not like painter hired to do one painting.

  • Profit on other sales not deducted when expandable business.

      1. Parker v. 20th Century Fox.

  • P to have leading role in musical. Instead offered drama western. P declines

  • only have to mitigate when you can do something similar. Doesn’t include different and inferior jobs.

  • Same field and same level of work for personal service cases.

  • Dissent says both acting jobs and shouldn’t be summ judg

          1. The Collateral Source Rule

  • some courts find that for wrongful discharge employment contract cases, fund received from collateral surces must be deducted, otherwise they would grant discharged person more in dmages than he wouldn’ve had if K hadn’t been breached.

  • other courts disagree.

      1. Missouri Furnace Co. v. Cochran.

  • When mitigating damages is difference between contract price and mkt price on date of actual delivery

  • this P had purchased forward price and lost a lot. Cover at own risk.

  • Common law case. Ignores commercial realities and is rejected by UCC

        1. Reliance Cooperage Corp. v. Treat.

  • D breaches K and P entitled to damages based on diff b/t cost in original K and cost on intended date of delivery.

  • No duty to mitigate until K actually breached, even tho aggrieved party knows K will be breached before delivery date.

  • D doesn’t get what he wants (date of breach when P knew). Instead breach is on day of K.

  • Allows P to wait around not mitigating. Also common law and rejected by UCC.

        1. Breach by Anticipatory Repudiation

          1. Common Law – Pre UCC no duty to cover and P bore risk as seen above. P must wait until non performance. Ignores commercial realities, UCC rejects

          2. 2-610 When a party repudiates K w/ respect to performance not yet due the aggrieved party may

  • for a reasonable time await performance

  • resort to any remedy for breach under 2-703/2-711 even if he’s notified breacher that he’s waiting.

        1. The Buyer’s Damages under the UCC

          1. 2-712 – buyer may cover in good faith and w/o reasonable delay and reasonable purchase goods in substitute. cover is difference b/t K price and cover price in addition to incidental or consequential damages. Failure of buyer to effect cover w/in this section doesn’t bar him from other remedy.

          2. 2-713 – if not cover, awarded mkt price at reasonable time after learned of breach – k price.

          3. Both include incidental (expenses incurred in response to breach) and consequential (additional forseeable damages) minus expenses saved due to not having to perform.

        2. The Seller’s Damages under UCC

          1. If resold (cover) in good faith awarded resale (mkt) price – k price (2-706)

          2. if not resold, awarded mkt price at time/place of tender – k price (2-708)

          3. If volume seller, then normal damages inadequate since would have been able to sell goods to breacher and others, so awarded lost profits (k price – seller’s costs.

          4. all plus incidental damages – saved expenses.

      1. Neri v. Retail Marine Corp.

  • P breaches K to buy boat and wants deposit back. D wants profit back b/c could have sold 2 boats.

  • Seller entitled to 2 profits (2-708(2)). Must show could have made profit on the sale.

  • Has to do with volume seller and putting them in as good a position as they would have been in had the contract been performed.

      1. Hadley v. Baxendale.

  • one of first cases to establish rules regarding trial damages for contract. What is appropriate measure for lost profits?

  • To be liable for consequential damages, breacher must be able to forsee the damages. Must be forseeable that breaching party is causing consequential damages.

        1. Lamkins v. International Harvester Co.

  • alternative to Hadley forseeability. Holmes thought rule was tacit agreement test.

  • Look at facts and determine if parties felt there was a tacit agreement that such losses would be recoverable.

  • Had Hadley been applied could have gotten lost night farming profits.

  • Most courts have rejected this test.

        1. 2-715 deals with difference between Hadley and Lamkins. Incidental damages from seller breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to delay or breach.

        2. Restatements 351– accepts Hadley rule, but restatement second say if result of giving consequential damages results in disproportionate recovery, no dice (sort of like tacit agreement)

        3. Victoria Laundry v. Newman Industries.

  • P launderers and needed huge boiler which broke. Which lost profits available? Boiler company should have known this was going to laundry

  • Normal profits are what a normal laundry company fails to make b/c boiler busted. Don’t get the lucrative dyeing profits b/c no reason for engineering company to know.

        1. 2-719(3) – consequential damages may be limited or excluded unless limitation or exclusion is unconscionable. Limitation of consequential damages for injury to person in case of consumer goods is prima facia unconscionable but limitation of damages where commercial loss is not.

      1. Valentine v. General American Credit Inc.

  • P sues for mental distress b/c fired and lost peace of mind of job. Relies on Hadley b/c damages flow from.

  • SC says all would flow, have to draw line somewhere.

        1. Note: Emotional Distress Damages - Only get punitive damages when independent tort exists. If K is of personal nature. Used to be could do for marriage

      1. Freund v. Washington Square Press, Inc.

  • P sues to get damages for delay of academic promotion, 10% of royalties, and cost of publishing book himself. Trial gave 10K to publish, but rest too speculative.

  • SC says no 10K b/c put him in better position. 10K not what P could have expected were book published. If published would get royalties, not 10K.

        1. Fera v. Village Plaza, Inc.

  • P signs lease for specific spot, is offered other spot, sues for lost profits. Trial awards lost profits, intermediate says new business can’t figure out profits, SC says test is only whether or not profits speculative

        1. Restatement Contracts, Second $352, Comment b – proof of profits. Varies with nature of the transaction.

    1. Alternative Interests: Reliance and Restitution.

      1. Reliance Damages

        1. When Granted?

          1. when expectation damages are too speculative or unmeasurable (Hawkins v. McGee)

          2. when vendor in land contract has tried to convey land title, but failed.

          3. promisory estoppel cases.

        2. How are they measured?

          1. intended to put P back in position he occupied before K was entered into. compensate for detriments suffered from reliance on K

          2. Any measures taken by P after entering into K can be recovered as reliance

          3. Measures taken before K entered into or in anticipation of K generally not recoverable.

      2. Chicago Coliseum Club v. Dempsey.

  • Wanted expenses prior to signing of agreement, expenses incurred after signing (before breach), and profits they would have received if fight had gone on.

  • D breaks K to do a fight. P wants expectation damages, profits they would have made had Dempsey not breached K. Court says too speculative.

  • Can only get reliance damages it incurred after signing contract.

  • Don’t get money for money spent before K entered into. Also don’t get litigational expenses, undertook at their own risk.

        1. Security Stove & Mfg v. American Ry Express.

  • Carrier fails to take most important part to show. P loses chance of making sales. Can’t determine lost profits.

  • Court allowed P to get reliance damages, even though some expenses were incurred before K

  • Court applies forseeability test. Would carrier forsee that exhibit would be entirely forseeable.

        1. Anglia Television Ltd v. Reed.

  • minority rule: reliance damages granted, even for expenses incurred prior to signing of K, Reed should have known that there would be damages if he breached.

        1. Restatement Contracts, Second $ 349

        2. Albert & Son v. Armstrong Rubber.

  • buyer agreed to buy 4 machines, won’t accept b/c 2 delivered late.

  • Promisee can get outlay in prep for performance, subject toprivelege of promisor to reduce it by as much as he can show the promisee would have lost, if the contract had been performed.

        1. Equity Relief in Advance of Trial – temporary restraining orders and temporary injunctions.

      1. Boone v. Coe.

  • Statute of Frauds raised as defense in this case. Had K for family to move down to Texas and have farm/house/barn/materials.

  • If K can’t be performed in less than a year then need writing. Also need a writing for transfer for interest in real estate.

  • P also can’t recover b/c can’t show a loss and gain on part of defendant. none of expenses incurred can be treated as benefits that are recoverable. Under theory of restitution could be recoverable, but not reliance.

      1. United States v. Algernon Blair, Inc. **important

  • Sub to provide parts of steel structure and sub completed 28% and general didn’t pay. Sub sues, D avers that if sub had finished they would have lost money. D wants to use expectation, and using that, no damages.

  • P wants quantum meruit, money for work and labor done.

  • Court says value of services rendered is recoverable, loss that would occur is irrelevant. Also, if services far exceeded value of K would still be recoverable. If P can show value far in excess of K price then can recover.

  • Odd, b/c if injured party fully performed then there is limit to amount recoverable

  • If P can’t recover on K since would have lost $ can still recover restitution off K for reasonable value of part performance—goods/services suplied to D—under quantum meruit.

        1. Kearns v. Andree.

  • D makes demands and P complies. Court says unenforceable K, won’t award damages for repapering and repainting done after D refused to purchase. P gets $ for work done to adapt to defendant.

  • Case pushes restitution a little further.

        1. Curtis v. Smith.

  • P had K to bulid stone walls around D bakery. D repudiates before installation but after stone removed from quarry.

  • Court says P suit to recover money spent in quarrying fails, P at work for self, can’t get restitution

        1. Doing and Giving Problem

        2. Oliver v. Campbell.

  • Lawyer providing services at reduced rate and is fired right at end. Sues for amount services worth

  • Gets K price b/c had pretty much finished work.

  • Limit to Algernon

        1. Discontinuity at Full Performance

        2. The Common Counts and Restitution

      1. Britton v. Turner.

  • P K with D to work for year at 120. D says shouldn’t have to pay at all, P says should get value of 9.5 mo. work. Court agrees. D can sue for damages resulting from having to hire someone else for the rest of the time. Diff b/t K price and mkt price.

  • Both went in knowing one or the other could back out, employment at will.

  • Used to be other way around…so one who does some work worse off than one who does nothing.

        1. 2-718(2) – deals with case where buyer makes down pmt and defauts. Buyer entitled to get down payment back but seller entitled to keep up to 20% of value of K but no more than 500. Code doesn’t prevent seller to recover damages by buyer’s breach, if mkt price declines after buyer breach seller entitled to that in form of damages.

        2. Thach v. Durham.

  • Buyer wants back 3100 down payment for sale of sheep.

  • Court says no way get back down payment, seller does this in order to protect self from breach.

  • This rule has been changed by legislation.

      1. Pinches v. Swedish Evangelical Lutheran Church.

  • P has K to build church. P fucks up part of church, and as soon as D realizes informs and refuses to pay.

  • Court applies substantial performance, recovery is allowed. What are damages.

  • P entitled to restitution for work done and materials provided, less diminution of value due to fucked up building.

  • Contractor allowed to recover even tho hadn’t complied with K – substantial performance.

        1. In regards to substantial performance, NY says if you can’t sue under substantial performance then you can’t get anything. However, NY has more liberal notion of what falls under substantial performance.

        2. Kelley v. Hance.

  • places willful breach above unjust enrichment.

  • Contractor digs hole for sidewalk and stops.

  • P wanted reasonable value of work done.

  • P abandoned work without justification before any part of sidewalk built, not in good faith, no explanation, no indication that person had accepted work of contractor.

        1. Willful Breach – usually willfullness of breach can’t bar recovery. RST and UCC: no willfullness bar.

      1. Vines v. Orchard Hills, Inc.

  • I: Concerns right of purchasers of real property after their own default, to recovery moneys paid at time of execution of a valid contract of sale.

  • P puts down pmt, didn’t take title b/c transferred. P sues for dwn pmt.

  • SC decides that purchaser whose breach isn’t willful has restitutionary claim to moneys that unjustly enrich his seller. Defaulting buyer must show

  • seller unjustly enriched

  • damages suffered by seller are less than money received by seller from buyer.

  • No evidence that seller wasn’t injured, no reason to disregard liquidated damages clause. To uphold liquidated damages

  • bears a relationship to damages

  • actual damages are difficult to determine

  • 10% of real estate case is presumptively okay. Used for long time.

        1. Maxton Builders v. Lo Galbo.

  • NY SC unanimously concludes that policy of denying defaulting purchasers recovery of down payments of real estate contracts should be retained.

        1. Pacheco v. Scoblionko

  • Kid to go to camp, wants 3100 dwn pmt back b/c has to go to summer school. Was liquidated damages clause in K stating 500 deposit lost if don’t cancel.

  • SC says P gets full 3100. D didn’t show that damages were anticipated by P’s cancellation

  • Non-breacher must show that damages difficult to estimate accurately, amount fixed is reasonable forecast of what is required to justly compensate injured party.

        1. DeLeon v. Aldrete.

        2. The Forfeiture Rule

    1. Contractual Controls on the Damage Remedy.

      1. City of Rye v. Public Service Insurance.

  • Whether or not surety bond was penalty or legitimate liquidated damages clause.

  • City trying to recover on bond wasn’t able to show any damages, court doesn’t buy the lost tax revenue argument.

        1. Yockey v. Horn.

  • D K with P not to voluntarily participate in litigation against P.

  • P sues for the 50K in contract, court says can recover b/c testimony hurt P reputation, hard to determine exact amount.

        1. Muldoon v. Lynch.

  • P K with D to build monument. Delay b/c granite in Italy. P tries to offset her pmt by liquidated damage clause.

  • Court says no relation b/t her pain and suffering and $10/day damages. Also, court doesn’t want to compensate pain and suffering via liquidated dam clause.

  • K law doesn’t recognize pain and suffering like tort law

        1. The Penal Bond

        2. Restatement of Contracts, Second $356(1)

        3. Equitable Lumber Corp. v. IPA Land Dev.

      1. Wilt v. Waterfield.

  • P puts down 1900 on farm and D sells to another. D says dam limited to 0% of K price and P says it’s a penalty, not dam limit. P wants expectation interest 7K

  • If liq dam clause enforceable then case over.

  • Court says clause penalty b/c 1.9 activated for any of breaches possible in K. 1.9K like buckshot, covers too wide range of possibilities from minimal to substantial damages (blunderbuss clause).

        1. Applying Damages Clauses

      1. Fretwell v. Protection Alarm Co.

  • Alarm company has clause says not insurer. P robbed and sues D company for 91K (what burlars got).

  • SC says not liquidated dam clause, is limit of liability.

  • If it were liquidated damages clause would be floor and ceiling, here is 50 bucks or actual, whichever less, not a floor and ceiling.

  • Okay to limit liability, just don’t call it liquidated dam clause.

        1. 2-719 – consequential damages limited or excluded unless unconscionable. can’t agree to do things that are unconscionable. Breach of warranty with respect to consumer goods the limitation of liability clause in contract is prima facia unconscionable. Limits of liability clauses are enforceable

        2. The Penalty Rule and “Efficiency”

    1. Enforcement in Equity.

      1. Introduction – sometimes use equitable remedies instead of usually monetary damags

        1. no adequate remedy exists at law

        2. definiteness – K terms must be definite in order to grant equitable relief. Must be more definite for relief in equity than for relief at law.

        3. equity must not work inequity

        4. equitymust not be difficult to enforce

      2. Van Wagner Advertising Corp. v. S&M Enterprises.

  • Basic rule for granting specific performance is that legal remedy is inadequate. Sale of real property rule is that usually get specific performance.

  • With lease of real property is different, doesn’t have long history.

  • W/ lease better way to value loss, don’t just look to see if unique, also look to see how hard it is to value property.

  • Court says project into future to determine damages.

        1. Curtice Bros. v. Catts.

  • Judge says not just K to purchase tomatoes, this was specific time for packing tomatoes.

  • P has K with lots of farmers and can’t easily get other tomatoes. Normally would be diff b/t K price and mkt. price, but here packer can’t get other tomatoes.

  • D restricted from selling crop to others

        1. Manchester Dairy System v. Hayward.

  • D to sell all dairy products to P for 3 years. K has specifric performance clause.

  • Spec perf available but not b/c of K. Can’t tell equity court what to do

        1. The History of Equity

        2. Restatment of Contracts, Second $360

        3. Paloukos v. Intermountain Chevy.

  • P puts down pmt on truck. D says we’re out of trucks.

  • Can’t get specfic performance b/c not unique, and a market, other legal remedy.

  • Would grant for 77 Vette pace car.

        1. Eastern Rolling Mill v. Michlovitz.

  • More liberal specific performance than in past.

  • P K with D to buy all scrap from D operations. Default and court orders specific performance (pre-code). Can’t tell what D output is so hard to measure damages.

        1. The Vendee’s Equity Action

          1. Vendee usually gets spec perf. However some land cases vendee makes resale K at higher price to turn land into money, if doing just for money them some reluctance by court to grant spec perf.

          2. In case where D sells land to P for development. D strips gravel before handing over. P brings case b/c had equitable ownership.

          3. Equitable Clean-Up

  • bring action against party seeking spec perf and they refuse to give you property. Vendor conveys to third party after you bring action. If third party a bona fide purchaser you are screwed, have to get damages, but how do you do that in equity court?

          1. Timko v. Useful Homes Corp. (Collins likes this case)

  • Buys property on installments from developer, get deed at end. While paying off, builder sells to other developer. New developer assumes all obligations of first, sold to third company who assumed no obligations (second purchaser makes profit on sale).

  • Property becomes worthless. Buyer doesn’t want peoperty anymore, wants gain from breach, money back and gain from breach. No BFP here

      1. Fitzpatrick v. Michael.

  • Court won’t enforce personal service K, even if part performance no way to enforce.

  • Rule for personal services, equity will not enforce negatively a contract which it could not enforce affirmatively: wouldn’t order her to work for him if she quit, and will not do vice versa.

        1. Dallas Cowboys v. Harris.

  • Won’t grant spec perf. That’s for equity courts. Harris not unique, but granted temp injunction b/c no other similar available at time.

  • Many sports cases describe the atheletes as unique.

        1. Pingley v. Brunson.

      1. ABC v. Wolf.

  • Court says breach of good faith negotiations provision b/c negotiated with others.

  • First refusal not breach, could prior to end of K negotiate with someone else and no right of first refusal.

  • P seeks injunction for first 3 mo, but court doesn’t want to grant b/c term of contrac up, would grant if K term not yet up and services unique

  • Post K period won’t provide negative enforcement if in writing and then restrict only if equitable relief available only to prevent injury from unfair competition or similar tortious behavior

        1. Fullerton Lumber Co. v. Torborg.

  • Won’t enforce negative injunction for excessive period, reduced from 10 yrs to 3. New, didn’t use to be able to reduce time. All or nothing

  • Today overbroad clause just unconscionable.

        1. 2-302

          1. If K or part of K unconscionable court can refuse to enforce, or can enforce remainder of K w/o bad clause, or limit bad clause.

          2. when climaed that K unconscionable parties can present evidence to commercial setting, purpose and effect

          3. 2-302 does what Fullterton case does and gives court powers to change K.

        2. Data Management Inc. v. Greene.

      1. Northern Delaware Indus Dev. v. E.W. Bliss.

  • D falls behind schedule P wants court to give spec perf make D put up night shift.

  • Court refuses, not sure there are another 300 workers, court shouldn’t supervise shit like this, plans not specific enough.

        1. City Stores v. Ammerman.

  • P wrote letter supporting rezoning for D in order to get space in building

  • Court does grant spec perf b/c that’s what parties contemplated, detailed plan, no problem, special master to work out not too intrusive.

  • Contrast to Northern Delaware

        1. Grayson Robinson Stores v. Iris Corp.

          1. D build and lease to P. D can’t get financing, really tried. Arbitrator says build.

          2. K can’t empower equity court to make spec perf, but can do it for arbitrator

        2. Comment on Arbitration

          1. Bad Things

  • no discovery

  • No way to appeal, only if cheated.

  • No requirements or qualifications for arbitrators by statue

  • English courts don’t like it.

  1. Grounds for Enforcing Promises.

    1. Formality.

      1. Congregation Kadimah Toras v. DeLeo.

  • Decedent orally promises 25K for synagogue. P sues estate to get it.

  • Court rules that hope or expectation of 25K in budget not equivalent to legal detriment or reliance, hadn’t started construction of library.

  • No legal benefit to promisor and no legal detriment to promisee and thus no consideration.

        1. Consideration and Form

        2. Formalism and the Seal

        3. Gifts and Promises

        4. Donative Promiss

    1. Exchange Through Bargain.

      1. Introduction “Promise must induce detriment, detriment must induce promise; where only one party present its promissory estoppel.

      2. Hamer v. Sidway.

  • Kid doesn’t drink and court says that is consideration.

  • Consideration when one party abandons legal right in present or limits his legal freedom of action in the future as inducement for the promise of the first.

        1. Earle v. Angell.

  • If P agreed to attend funeral of aunt she gives him 500

  • Promise for a promise, all good.

        1. Whitten v. Greeley-Shaw.

  • K where D’s duty as man and P duty as mistress

  • D hadn’t bargained for it so it didn’t count. Mistriss put in a clause b/c she felt he deserved something (she admits)

        1. Restatement Second $71 – Requirement of exchange.

        2. Restatement Second $81 – Consideration as Motive or Inducing Cause

        3. Apology for Consideration

      1. Fischer v. Union Trust.

  • Slow girl pays 1 buck for farm. Mortgages on property foreclosed and girl sues for damages. Wants to be paid for loss b/c Dad didn’t pay off mortgage.

  • No consideration, promise to pay debt on land isn’t enforceable as promise

  • Nominal consideration is no consideration at all. Not looking at evidence surrounding the bargain, but whether or not the bargain in an conceivable world could have been struck.

        1. Meritorious Consideration

        2. Simmons v. United States.

        3. Nominal Consideration – no consideration at all.

      1. Batsakis v. Demotsis.

  • Note where P wants 2000 when note was 25. D doesn’t want to pay b/c unequal.

  • Court says consideration sufficient, inadequacy of consideration not issue for court as long as court finds a deal.

  • Doctrine of unconscionability not yet formed.

        1. Embola v. Tuppela

  • Give me 50 and I’ll give you 10,000 if I get land back.

  • Not unconscionable, D’s mind good when gave promise.

  • Contingency that never occur makes a transaction such as this an investement, not loan, so no usury.

        1. Adequacy of Consideration

      1. Duncan v. Black.

  • P supposed to get cotton allottment. D backs out second year.

  • Court says no valid consideration for note. Original land K not envorceable and can’t be used as consideration for 1500 note, original promise to make up acreage is against public policy and is therefore no good, that part of K unenforceable.

  • Alleged consideration of 1500 note is forbearance of suing D over the 65 acres, however had no right to sue, no forbearance, no consideration.

        1. Military College v. Brooks.

        2. Restatement Second $74

      1. Martin v. Little, Brown & Co.

  • P goes to D with plagarized book. P wants returns from court victory.

  • No express promise, what about implied?

  • To get implied one performs with other’s knowledge a useful service of character usually charged for and latter avails himself of service. Only implied where reasonable expectation. Wasn’t reasonable.

  • If wanted to get quasi K would have to show person wrongly secured or passively received benefit that would be unconscionable to retain.

        1. Collins v. Lewis.

  • Guy holds cows and says going to charge D. D knew services rendered.

  • Was implied K here, D knew about services and later sold cows to third party

        1. Quasi v. Implied in Fact Contracts.

          1. held up by robber can’t imply K to repay person held up.

          2. quasi contract more related to preventing unjust enrichment. restitution to prevent unjust enrichment (what is this)

    1. Promises Grounded in the Past.

      1. Introduction – here don’t have promise inducing detriment, only have detriment inducing the promise.

      2. Mills v. Wyman.

  • Sick kid cared for by promisee. Sick kid Dad later says I’ll pay.

  • Detriment induced the promise, but promise didn’t induce detriment.

  • No enforceable obligation against father, maybe agains son. Past consideration worthles

        1. Promises to Pay Barred Obligations.

          1. if prior enforceable obligation, then subsequent promise to pay the obligation in whole or in part is enforceable even tho no new consideration.

          2. if debotor promises to pay on different terms or for less also enforceable, and only enforceable on terms specified by debtor

          3. if bankrupt later promises to repay debt enforceable

          4. can ratify a contract from minority.

          5. In NY second promise is enforceable if in writing and signed by both parties.

      1. Webb v. McGowin.

  • P drops to floor to save D. D promises to pay pension for life and payed for long time. Estate won’t pay.

  • Detriment induced the promise, promise didn’t induce the detriment.

  • However court carves exception and says promisor received material benefit and that equals valid consideration

        1. Harrington v. Taylor.

  • P blocks axe, D promises to pay savior

  • No basis b/c past consideration. Detriment induced promise, but promise didn’t induce detriment. North Carolina doesn’t go with Webb exception

        1. Restatement Restitution $112

        2. Restitution Absent Later Promise

        3. Promises Grounded in Past: Unjust Enrichment and Law of Contracts

      1. Restatement Contracts Second $86. Goes with Webb/McGowin as law reform doctrine. Promise made in recognition of benefit previously received by promisor from promisee is binding to extent necessary to prevent injustice. Would change result in Harrington.

    1. Reliance on a Promise. – when talking reliance you are talking detriment didn’t induce the promise.

      1. Kirksey v. Kirksey.

  • P abandons land live with brother in law. Had to leave her house for crappy one then kicked out.

  • No consideration here. Promise induced the detriment, but detriment didn’t induce the promise

  • Leaving her land not consideration.

        1. Ricketts v. Scothorn.

  • D grandpa gives P note for 2K says don’t work. Took note, quit job.

  • This case isn’t reliance on statement of facts, reliance on a promise.

        1. Prescott v. Jones.

  • Insurance company say will renew if don’t respond. Court doesn’t extend promissory estoppel.

  • Would be enforceable promise in most jurisdictions.

      1. Allegheny College v. National Chautauqua Bank.

  • D pledges form memorial fund. Repudieates and dies. D executor won’t pay the rest.

  • Court says consideration, P subjected self to duty at request of D to make fund in her name. College has implied duty to create the fund.

  • Promissory estoppel is equivalent to consideration in charitable subscription.

  • Find contract on implied consideration, could have just done promissory estoppel.

        1. Restatement Second 90-2 – don’t need reliance to enforce a charitable subscription.

        2. Cardozo in Allegheny College

        3. Siegel v. Spear & Co.

        4. Carr v. Maine Central R.R..

        5. Misfeasance and Nonfeasance

      1. East Providence Credit v. Geremia.

  • D borrowed from P secured loan. D supposed to keep car insured. P said would pay insurance.

  • P induced D action by promissory estoppel. Since had relied.

        1. I&I Holding Corp v. Gainsburg.

        1. Salsbury v. Northwestern Bell.

  • Court rules that D has to pay charitable subscription.

  • Most courts say not prima facie enforceable.

      1. Seavey v. Drake.

  • D gave P some land. P has occupied land and done lots of stuff. P detriment didn’t induce promise by father. Was also oral K. Father said would give P land.

  • Court says promise induced change in position of plaintiff (promise induced the detriment)

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