Contracts Flashcards

Invitation: Lefkowitz v. Great Minneapolis
Gratuity: Kirksey v. Kirksey
Past Consideration/Promissory Estoppel: Feinberg v. Pfeiffer Co.
Negotiation: Hoffman v. Red Owl

Performance: Ever-Tite Roofing Company v. Green
Unknown Terms/Rolling Offer: ProCD v. Zeidenberg
Parol Evidence: Lucy v. Zehmer
Consensus Ad Idem: Raffles v. Wichelhaus

Forbearence: Hamer v. Sidway
Implied Terms: Wood v. Lucy Lady Duff
Adequacy of Consideration: Batsakis v. Demotsis

Expectations: Hawkins v. McGee
Duress: Alaska Packers v. Domenico
Unconscionablilty: Henningson v. Bloomfield
Incidental Feature Economic Waste: Peevyhouse v. Garland Coal and Mining
Foreseeability: Hadley v. Baxendale
Mitigation: Rockingham County v. Luten Bridge Co.
Quantum Meruit: Britton v. Turner

Rule: An offer that is clear, definite, explicit, and leaves nothing open for negotiation constitutes an offer.
*An offer is found when performance is invited in return for something.

Ruling: Without a bargained-for-exchange, courts can see promises as mere gratuity.
*As a gratuity, a person can take back that gratuity at any time.

Rule: Promissory Estoppel, past consideration is not used in a new promise.

1: There is a promise that has been made
2: The promisor should reasonable expect the promisee to act on the promise
3: The promisee does act in reliance on the promise, to their own detriement
4: The only way injustice can be avoided is through enforcement of the original promise.

Issue: Can a party asset promissory estoppel when negotiations break down before a contact has been formed.
Ruling: A promise given rise to the cause of action does not need to be do comprehensive in scope to meet the requierments of an offer that would ripen into a contact if accepted by the promisee.

Issue: When may an offer be withdrawn? Is commencement of performance a valid method of lawful acceptance of an offer?
Ruling: An offer proposed may be withdrawn before it's acceptance with no obligation, but if no time is specified, the contract can be terminated at the end of a reasonable time. (Reasonable time is industry standard, ambigous)
The contract was accepetd by the plaintiff by the commencement of the performance of the work contracted to be done.

Issue: Are the terms of a shrink-wrap a part of the contract? Do buyers have to act in accordance of the terms of a rolling contract?
Rule: A vendor may invite acceptance by conduct, and may propose limitations on the kinds of conduct that constituted acceptance.

Ruling: Intent to Contract and form a present commitment is judged by a reasonable person (objective) standard and not by the subjective intent of the parties.

Once a contract is written the terms of the writing are generally enforcable.
This is important due to the Freedom to Contract

Ruling: Consensus ad idem is required for there to be a legally binding contract.
The formation of a contract is presupposed mutual assent, so that if each party assents to a different proposition, there is nothing to enforce and that contract is void.

Meeting of the Minds

Ruling: Consideration is valid as long as the promisee abandons some legal right in the present or limits future actions.

The act of giving up a legal right, counts as consideration.

Ruling: Every contract includes an implied promise of good faith and reasonable efforts.
Precise words are not required for a contract to be enforcable.

A promise that appears on its face to be insubstantial as to impose no obligation on the promisor (lacks consideration)
"if and when" is too ambigous to be a promise
*when nothing is given and no promise is made

Ruling: Inadequacy connot void a contract, as courts do not inquire into the sufficiency of consideration.
Freedom of Contract: A party that makes a bad deal is bound to that and cannot claim unfairness under grounds of consideration.

Expectations damages awarded the non-breaching party enough money to put that party in the same position they would have been in if the contract has been performed.

1: Figure out what the position of the non-breaching party would have been in if the promise had not been breached.
2: Figure out the position that the non-breacher is presently in as a result of the breach
3: Figure out how much they need to get from the present position to the position they would have been in if the contact had been performed.

Ruling: Under duress, a modification of a contract for a pre-existing duty rule is unconscionable.

1: One party must commit a wrongful act
2: The wrongful act must preclude the other party from exercising their free will
*Duress must be purposeful, not acting in good faith and fair dealings

Traditional Duress: Threats of physical harm, violence, or false imprisonment precluding a party from exercising their free will.
Economic Duress: Threats of contract breach or demands for modifications (pre-existing duty rule.)

Parties are already obligated to perform under contract.

Issue: Is the limited libalility clause in a purchase contract valid and enforcable, when the consumer is not aware of it and the remedy is overly burdensome?
Rule: The elements of Unconscionability

1: The parties possessed severly unequal bargaining power
2: The dominant party unreasonably used it unequal bargainig power to obtain opressive or manifestly unfair contract terms
3: The adhering party had no reasonable alternatives
*This doctrine may not be used merely to save a contracting party from a bad bargain.

Issue: The cost of peroformance rule vs. the diminution in value rule

A party's lost expectancy can be measured objectively, based on the market value of the promised performance to a hypothetical "reasonable person".

A party's lost expectancy can be measured subjectively, based on the loss in overall value resulting from the performance of the injured party.

Section 346(1)(a): The promisee in defective or unfinished construction is entitled to...
(i) the reasonable cost of contruction and completion in accordance with the contract, if this is possible and does not involve unreasonable economic waste; or
(ii) the differnece between the value that the product contracted for would have had and the value of the performance that has been received by the plaintiff; if construction and completion in accordance with the contract would involve unreasonable economic waste.

Rule: Where two parties have made a contract which one of them has broken, the damages which the other party ought to recieve in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

Rule: The non-breaching party has a duty to mitigate damages caused by a breach of contract. An injured party cannit recover for losses that, with reasonable effort, he could have avoided after the promisors breach became known.

The non-breaching party has a duty to avoid or reduce damages caused by a breach of contract. The extent of mitigation depends on the type of contract.

Rule: Any kind of labor is to be performed at a specific price, that the party who voluntarily fails to fulfill the contract by performing the whole labor contracted for, is not entitled to recover anything for the labor actually performed, however much he may have done towards the performance.

Value added by labor/performance - any additional costs or damages = Quantum Meruit