Contracts Cases

Hawkins v. McGee, 84 N.H. 114, 146 A. 641 (1929): Plantiff entered into a contract with defendant, a surgeon, to remove a section of tissue from plantiff's chest and graft it in replacment of scar tissue on the palm of plantiff's right hand. Plantiff alleges that defendant at some point guaranteed that he would "make the hand... a hundred percent good hand". The jury was instructed to consider two elements of damage: (1) pain and suffering due to the operation, and (2) positive ill effects of the operation. Held The defendant owes the plantiff the difference in value between a "hundred percent good hand" and the hand in its present condition. The jury instructions were therefore incorrect. The measure of damages is the difference between the value of the item with the warranty, had it been true, and the actual condition of the item at the time of sale, and other damages as could be reasonably anticipated as likely to be caused by lack of performance.
Groves v. John Wunder Co., 205 Minn. 163, 286 N.W. 235. (1939): Plaintiff owned land and the plant for screening gravel that was on the land. Defendant owned a similar plant nearby. Plaintiff agreed for the defendant to lease the land, use the plant, and process the sand and gravel in the land, leaving the property at uniform grade, substantially the same grade as the road. Defendant paid $106,000 for the use of the land. Defendant removed only arbitrary gravel, leaving the land at the end of the lease not at any uniform grade. The ground was "broken, rugged, and uneven". Finishing removal of the gravel and grading would cost defendant over $60,000, but the end result of the land if the contract would have been upheld would be a little over $12,000. Held The defendant owes plaintiff, not the difference between the value of the land if defendant had performed and the original value of the land, but the value of the actual performance lacking by breach of the contract. The law aims to give the promisee what was promised, not the fair market value of the outcome of performance. One might contract for something that lowers the value of property, for instance, and the promisor would still be liable for the work, not the low-value result.
Acme Mills & Elevator Co. v. Johnson, 141 Ky. 718, 133 S.W. 784 (1911): Plaintiff contracted with defendant on 29 April 1909 for 2,000 bushels of wheat at $1.03 per bushel "to be delivered from [the] thresher", and supplied sacks for use in delivering the wheat. Defendant around 13-15 July 1909 sold his wheat to another party for the price of $1.16 per bushel. Defendant processed more wheat on 25 July 1909 and the wheat was ready for sale around 29 July 1909, at which time the price of wheat was below $1 per bushel. Held Failure to perform in a contract by not providing a product only brings about liability for the difference between the current market price of the product and the contract price. A defendant on failure is only liable for the difference in value between a contract price and the market price of the property at time of delivery. At the time defendant would have made delivery (the contract doesn't state any particular type of wheat), the market price for wheat was below the contract price, and the defendant's failure actually benefited the plaintiff.
Louise Caroline Nursing Home, Inc. v. Dix Constr. Corp. (1972): A construction company that did not finish construction on time is only liable for the amount it would cost to finish construction minus amount not paid. In this case, the amount not paid was more than it would cost to finish construction, so nothing was owed plaintiff.
Rockingham County v. Luten Bridge Co. (1929): A bridge company was contracted by a county to construct a bridge. After the county breached the contract and notified the company, the company continued and finished work anyway. The county is only liable for work performed up to the breach, not afterwards.
Leingang v. City of Mandan Weed Board (1991): When the Weed Board breached a contract by assigning weed cutting jobs to companies other than Leingang, the trial court said that Leingang must, besides taking the price of the lost jobs and subtracting per-job expenses, also subtract other costs such as insurance to arrive at a net profit. The appeal court held that fixed cost would have to be paid by plaintiff with or without breach, so subtracting those costs would make plaintiff pay for them twice—defendant therefore owed those costs as well.
Kearsarge Computer, Inc. v. Acme Staple Co. (1976): Acme breached a contract with Kearsarge in which Kearsarge was to perform services for Acme. Acme had to pay Kearsarge the full contract price, even though Kearsarge serviced other clients after the breach, because it wasn't shown that it would have been impossible to service the other clients but for the Acme breach.
Parker v. Twentieth Century-Fox Film Corp. (1970): Parker was awarded the entire amount of a breached acting contract, even though she turned down a similar contract Fox had offered her in its place for acting in another film of a different genre in a different location with slightly different provisions.
Billeter v. Posell (1949): Defendant was awarded full wages for employer hiring someone else (for "floor lady and designer") and offering defendant a lower wage. The amount owed does not subtract unemployment compensation, nor does it subtract the lower salary offered to the employee.
Missouri Furnace Co. v. Cochran (1881): Missouri contracted with Cochran to deliver a year's worth of coal at specified delivery dates, and when Cochran breached Missouri purchased the remainder from another individual. The courts ruled that Missouri is entitled only to the difference of the original contract price and the market price on each of the breached delivery dates—no forward purchasing.
Reliance Cooperage Corp. v. Treat: For a breach in September for staves due in December, a trial court awarded Reliance the difference between the contract price and the price at the time of breach, but on appeal the reversal said that "there is no duty to mitigate damages until there are damages to mitigate", so the difference between contract price and the price when the contract was due was awarded.
Neri v. Marine Retail Corp. (1972): Buyer breaching contract for boat from boat reseller is awarded repayment of downpayment minus the profit seller would have made as well as seller's incidental expenses, even though seller found another buyer for the boat.
Commonwealth Edison Co. v. Decker Coal Co. (1987): UCC 2-708 remedies are available only for sellers who are not entitled to the contract price, so 2-708 is a seller's "fallback" position and should be limited in scope.
Hadley v. Baxendale (1854): Mill that paid extra to have a new crank shaft created and delivered was not entitled to damages from lost profits from the new shaft being delivered days late, because the damages did not naturally flow from a late delivery in general and the special circumstances were not communicated to the other party.
Lamkins v. International Harvester Co. (1944): Farm owner that ordered a tractor with lights for running at night did not receive the lights for about a year, but could not collect for not being able to harvest a crop because of not running at night because, in the absence of an agreement with the dealer, it is unlikely the dealer agreed to be liable for these special circumstances in such large proporion to the cost of the lights. "tacit agreement" test.
Victoria Laundry (Windsor) Ltd. v. Newman Indus., Ltd. (1949): Laundry owner ordered boiler from engineering company and, because of damages, it delivered five months later than promised. Defendant is liable for lost profits except a few lucrative deals defendant could not have known about. There are two types of knowledge: imputed, that a reasonable person would know in the "ordinary course of things" would cause liability, and actual knowledge of special circumstances outside the "ordinary course of things". In this case it was the first, as the obvious purpose of the boiler by the launderers was for laundry; had the defendant known about the stopped mill in Hadley, it would have been the second.
Hector Martinez & Co. v. Southern Pacific Transp. Co. (1980): Shipping company late in delivering a dragline for strip mining was on appeal liable for the fair rental value for the period of delay. Unlike Hadley, the dragline was valuable in itself, and that it could have been rented "should have been foreseen", not that it was "the most foreseeable of possible harms."
Prutch v. Ford Motor Co. (1980): Ford is liable for crop damages from defective equipment, not because Ford foresaw the consequential damages, but that the damages were "foreseeable".
Valentine v. General American Credit, Inc. (1984): Valentine was not awarded damages from breach of employment contract for mental anguish because an employment contract is primarily about economic issues—emotional satisfaction through job security is secondary.
Hancock v. Northcut (1991): A contract for building a house is not sufficiently concerned with emotional well-being that a breach could bring about emotional disturbance damages.
Brown v. Fritz (1985): Plaintiff awarded damages for negligent infliction of emotional distress from breach of contract to sell land, but on appeal the court reversed the emotion-related damages. In a breach of contract case, there is no tort of inflicting emotional distress independent of the actual breach of contract.
Freund v. Washington Square Press, Inc. (1974): Plaintiff sued because publisher didn't publish his book as promised. Trial court wanted to give plaintiff $10,000 so that he could publish the books himself, but the Court of Appeals gave him nominal damages. Correct damages consist of the benefit to the plaintiff (in this case, the expected royalties), not the cost to the defendant (in this case, the cost of publishing), of contract performance.
Fera v. Village Plaza, Inc., 396 Mich. 639, 242 N.W.2d 372 (1976): Plaintiffs signed a 10-year lease for a "book and bottle shop" in defendants' proposed shopping center, but plaintiff's space was given to another tenant. Whether lost profits can be given as damages. Jury awarded plaintiff $200,000 in lost profits. Although earlier cases had not given profits, that's not a rule, just an indication of how hard it is to pin down lost profits. (In this case, there is a certain certainty of profits.) The precise amount is for the jury to decide.
Chicago Coliseum Club v. Dempsey, 256 Ill.App. 542 (1932): Club contracted with Dempsey for a boxing match, and Dempsey breached. Lost profits weren't awarded, because they were too speculative. Expenses made before the contract are never awarded. Expenses made trying to force the defendant to comply are not awarded as anything after the breach to try to get defendant to comply are made at the plaintiff's own risk. Some related expenses made after the contract could be awarded.
Security Stove & Mfg. Co. v. American Ry. Express Co., 227 Mo.App 175, 51 S.W.2d 572 (1932): Plaintiffs secured a booth at a conference and contracted with defendant to deliver a stove, stressing the urgency that it arrive on time. No profits were expected. Crucial parts of the stove did not arrive. Shipping costs were awarded (restitution). Hotel costs and employee wages (reliance) were awarded, even though they would have been made had the contract terms been performed. Booth costs (reliance) made before the contract were awarded, because it relied on the shipping contract, which was always available to be made.
Anglia Television Ltd. v. Reed, 3 All E.R. 690 (Court of Appeal, 1970): Anglia made arrangements to produce a play for television, spending £1895.35 before contracting with Reed for a leading man, and then spending £854.65 afterwards. Reed repudiated, and Anglia was awarded the entire £2750 because Reed knew and could have assumed he would be liable for this waste and still chose to accept the contract. (One can have lost profits and wasted expenditures, but not both.)
L. Albert & Son v. Armstrong Rubber Co., 178 F.2d 182 (2d Cir.1949): Plaintiff agreed to buy machines from defendant for reconditioning old rubber, and two of four were delivered after WWII had ended. Plaintiff had prepared foundations for the machines, but this cost might have been more than the profit plaintiff would have made. Plaintiff can be awarded reliance expenses minus whatever the defendant can show would have been plaintiff's loss had the contract been fulfilled.
Boone v. Coe, 153 Ky. 233, 154 S.W. 900 (1913): Coe verbally promised Boon he could live on a farm in Texas for 12 months and receive part of the crops, and promised to have a house constructed and waiting for him when he arrived. When plaintiff arrived with family after traveling 55 days from Kentucky, defendant breached and plaintiff had to return to Kentucky. Under the Kentucky statute of frauds, a verbal contract for performance over a year later is unenforceable, so plaintiff cannot receive damage of reliance expenses. (They could receive restitution interest if defendant had benefitted from the contract.)
United States v. Algernon Blair, Inc., 479 F.2d 638 (1973): Coastal Steel Erectors, Inc. subcontracted to Blair, who was contracted to the US, to erect steel using Blair's equipment. Blair refused to allow Coastal to use equipment, breaching contract, so Coastal stopped work. Even though Coastal would have made a loss under performance, under quantum meruit Coastal should be awarded full damages—not for contract amount but for what the services could have been purchased from one in the plaintiff's position (i.e. not what the defendant promised to begin with).
Kearns v. Andree, 107 Conn. 181, 139 A. 695 (1928)
Farash v. Sykes Datatronics, Inc., 59 N.Y.2d 500, 465 N.Y.S.2d 917, 452 N.E.2d 1245 (1985)
Curtis v. Smith, 48 Vt. 116 (1874)
Oliver v. Campbell, 43 Cal.2d 298, 273 P.2d 15 (1954): Read
Britton v. Turner, Supreme Court of New Hampshire, 6 N.H. 481 (1834): Plaintiff contracted to work a farm for $120/year, and then breached after 9.5 months, suing for $100. The jury awarded him $95. Is plaintiff entitled to what his labor was reasonably worth, even though he left without defendant's consent and without good cause? Yes; in this case, the defendant has received more than if the plaintiff had immediately breached, and without quantum meruit the plaintiff would be at a worse place than if he had immediately breached. (This is different than a construction project that, when finished, the owner may refuse it all and gain no benefit. The party contracting for labor does so with full knowledge that every day they are accepting performance.)
Cases skipped.
Pinches v. Swedish Evangelical Lutheran Church, Supreme Court of Errors of Connecticut, 55 Conn. 183, 10 A. 264 (1887): Plaintiff contracted to construct a building for defendant, but through a combined error of the plaintiff and the defendant's architect the ceilings were lower, the windows narrower, and the seats narrower than the specifications require. Should the plaintiff's contract price subtract the cost to correct the damages (which would result in partially dismantling the building), even though the plaintiff acted in good faith? The plaintiff should be compensated for services and materials under a special contract, not entire conformity, if the deviation was not willful, the other party benefitted, and the compensation is based on the benefit gained, referencing the contract price. Plaintiff should be awarded the contract price minus the diminuation in value from the deviation.
Schwasnick v. Blandin, 65 F.2d 354 (2d Cir.1933): A lumberman contrated to cut timber left when defendant, claiming defective work, refused to pay a salary installment. The plaintiff should get the net benefit for his services minus any injuries from the defective work. If the promisee unwillfully breached, he may receive the amount his work benefitted the promisor. If the promisor breaches, the promisee may abandon the contract and sue for restitution based upon fair market value, not benefit to the promisor.
Kelley v. Hance, 108 Conn. 186, 142 A. 683 (1928): Plaintiff contracted to construct a sidewalk and curb, then left after only digging a hole. Plaintiff abandoned the work with no justification, and defendant didn't accept any of the work, so plaintiff is due nothing. (A contractor who deviates slightly in good faith can recover if there has been "substantial performance". If performance is not substantial but the breach is through negligence, contractor can recover through quasi-contract. Voluntary acceptance may create an implied promise.)
Vines v. Orchard Hills, Inc., Supreme Court of Connecticut, 181 Conn. 501, 435 A.2d 1022 (1980): Plaintiffs put a downpayment of $78,800 on real estate and then breached becaues of job transfer. They sued for the return of their deposit, claiming the fair market value of the property had doubled by the time of trial. A liquidated damages clause stipulated damages would be 10% of the purchase price. Does the presence of the liquidated damages clause and the breach of the plaintiff prevent the return of their deposit? A purchaser may recover in restitution if able to prove the seller was injustly enriched, but the burden is on the purchaser. Only partial performance triggers a claim for restitution, and partial performance will usually not be worse than no performance. Similarly, the liquidated damages clause is rebuttable if the purchaser can show that the seller's damages are substantially less than that specified in the clause, but the burden of proof is on the purchaser. (In this case, the purchaser must show that the property value was higher on the date of breach, not on the date of trial.)
De Leon v. Aldrete, 398 S.W.2d 160 (Tex.Civ.App.1965): Plaintiff contracted to buy defendant's land and, after late payments equalling two/thirds of the purchase price, defendant declared default and gave the land to someone else. Can plaintiff get payments back? Plaintiff can get back the payments minus the damage done to defendant. (A default in itself doesn't qualify the purchaser for restitution, nor does it terminate the contract or the vendor's contract rights, but it does give vendor the option to terminate the contract.)
Pacheco v. Scoblionko, 532 A.2d 1036 (Me.1987): Plaintiff paid full price of summer camp for child with a contract indicating no refunds were available after a certain date. After being informed that child had to take summer school, plaintiff called defendent but defendant wouldn't allow a refund. Is such a "no refund" clause enforceable? No; to be enforceable, the damages must be "difficult to estimate accurately" and the fixed amount must be a "reasonable forecast". Here, there was no evidence the amount was in any way in proportion to actual damage, and probably placed in the contract "for its in terrorem effect".
City of Rye v. Public Service Mut. Ins. Co., Court of Appeals of New York, 34 N.Y.2d 470, 358 N.Y.S.2d 391, 315 N.E.2d 458: City contracted with construction company to erect buildings, and the contract had a clause that charged developers $200/day for each day the buildings' completion was past due. The fee may not be recovered by the city. This was not a reasonable estimate of probably monetary harm to the city, and was therefore a penalty. Estimations of lost tax revenues are speculative, and other damages are not pecuniary in nature.
Yockey v. Horn, 880 F.2d 945 (7th Cir.1989): Yockey and Horn parted ways with an agreement not to participate in a suite against the other, with breach bringing damages of $50,000. Horn later voluntarily testified in a $110,00 suit against Yockey by a third party. Does Horn's actions warrant Yockey's recovery of $50,000 because of the liquidated damages clause? Rest.2d § 356 holds that a liquidated damages clause is enforcable if it was reasonable at the time of contracting or at the time of injury. Horn's testimony could have hurt Yockey in several hard-to-determine ways, such as in the business community, and was thus "difficult to evaluate"—exactly the purpose of such a clause. Furthermore, they were also "what was anticipated".
Muldon v. Lynch, 66 Cal. 536, 6 P. 417 (1885): Plaintiff agreed in writing to create for defendant in a San Francisco cemetery a marble monument, to be completed within 12 months for $18,788. The contract stipulated a "forfeiture" of $10/day for every day it was late. The marble waited for over two years in Italy, and the defendant tried to withold $7820 because of lateness. Defendant must pay entire price, as defendant had not suffered any damages that could be monetarily compensated, and the payment was therefore a penalty which cannot be recovered. (Anyway, the contract used "forfeiture", which is equivalent to "penalty".)
Massman Constr. Co. v. City Council of Greenville, Miss., 147 F.2d 925 (5th Cir.1945)
Equitable Lumber Corp. v. IPA Land Dev Corp., 38 N.Y.2d. 516, 381 N.Y.S.2d 459, 344 N.E.2d 391 (1976): UCC § 2-302 allows liquidation of damage clauses to be invalidated because of unconscionability, but in this case the parties were "commercial entities dealing at arms length with relative equity of bargaining power."
Wilt v. Waterfield, Supreme Court of Missouri, 273 S.W.2d 290 (1954): Defendant contracted to sell land for $19,000, plaintiff paid $1,900, and defendant breached and sold the land for $26,000. Is a liquidated damages clause of 10% of purchase price punitive and, if so, can defendant recover more than stated in the liquidated damages clause? Yes, and yes. Plaintiff was not harmed other than not getting the land, so the 10% is punative and invalid. [Wrong, says Garvey; this is not punative, but is a "shotgun clause" trying to cover crops and such with just one number.] The land is now worth $26,000, the plaintiff paid $1,900, so the difference between the unpaid $17,100 and the value $26,000 gives damages of $8,900.
City of Elmira v. Larry Walter, Inc., 76 N.Y.2d 912, 563 N.Y.S.2d 45, 564 N.E.2d 655 (1990): Defendant stopped work after disputes on contract for construction of parking garage. Liquidated damages clause was held not valid because it dealt with damages for "delay", not abandonment.
City of Boston v. New England Sales & Mfg. Corp., 386 Mass. 820, 438 N.E.2d 68 (1982): Plaintiff delayed building a bridge for defendant city, and although contract specified liquidated damages for delay based upon flow of traffic, the state didn't have a road ready to connect to the bridge. "[If] the contingency upon which the presupposition [of the damages a breach would incur] is based never happens, the presupposition must vanish," and the clause is unreasonable.
H.J. McGrath C. v. Wisner, 289 Md. 260, 55 A.2d 793 (1947): Farmer, after partial performance, sold tomatoes on the open market. Contract liquidated damages as difficult to determine and as calculation of the plaintiff's losses from expected partial performance. Liquidated damages unenforceable because they did not differentiate full and partial performance, and because damages from delivering tomatoes on the open market is ascertainable.
Fretwell v. Protection Alarm Co., Supreme Court of Oklahoma ,764 P.2d 149 (1988): Fretwells sued alarm company for negligently failing to fully investigate an alarm, resulting in $19,000 worth of property being stolen. Contract limited damages to $50. (Contract, with Fretwells, Inc., applies to the Fretwells, the third-party beneficiaries.) (A contract, which creates the duty for related negligence cases, can also be used to determine damages in a negligence case.) Clauses limiting damages are not the same as those liquidating damages and, if explicit, are valid. (From Laughlin v. Baltalden, Inc., 191 Pa.Super. 611, 159 A.2d 26 (1960), the name given a clause in a contract "is but of slight weight, and the controlling elements are the intention of the parties and the circumstances of the case.")
Van Wagner Advertising Corp. v. S & M Enterprises, Court of Appeals of New York, 67 N.Y.2d 186, 501 N.Y.S.2d 628, 492 N.E.2d 756 (1986): Van Wagner resold buildboard space, and S & M breached a lease contract when they bought a building from another company. The space was "unique as to location for the particular advertising purpose intented". Physical uniqueness of a property does not in itself warrant specific performance, but rather difficulty in determining the property's value for economically equitable damages to be calculated.
Curtice Bros Co v. Catts, 72 N.J.Eq 831, 66 A. 935 (Ch.1907): Canning plant sued farmer for not delivering his entire crop of tomatoes. (Specific performance can be administered for real estate or for personal property.) Specific performance is proper. Delivery of the tomatoes might not be able to be replaced monetarily, and this would directly affect the economic viability of the factory. "The breach of the contract by one planter differs but in degree from a breach by all."
Manchester Dairy System v. Hayward, 82 N.H. 193, 132 A. 12 (1926): Manchester sued Hayward for failing to deliver milk from his cows. The contract stipulated that the damages from a breach by one party would be hard to calculate, that there would be liquidated damages of $5 per cow, and that plaintiff would be entitled to specific performance. Held: (Parties cannot by contract decide for specific performance.) The $5 was inadequate, because the damages were far-reaching could not be measured. Specific performance is appropriate, because of the difficulty in assessing damages and to keep others from breaching. (Instead of affirmative specific performance, negative specific performance, in which the farmer cannot sell to others rather than being forced to sell to plaintiff, might be more manageable to the court.)
Paloukos v. Intermountain Chevrolet Co., 99 Idaho 740, 588 P.2d 939 (1978): Paloukos gave a downpayment and signed a contract for a 1974 Chevy pickup, and Intermountain later said that it could not give him one. Held: Specific performance is not appropripate and "remains an extraordinary remedy." 1) Market value is readily ascernable. 2) Paloukos doesn't allege that Intermountain has such a pickup, and the courts can't order the impossible.
Eastern Rolling Mill Co. v. Michlovitz, 157 Md. 51, 145 A. 378 (1929): Plaintiff sells scrap metal and contracted with Eastern to provide scrap metal (which it produced as a byproduct) for five years at $3 a ton less than the current market for scrap metal. Defendant breached. Held: Specific performance is appropriate. It is impossible to know how much scrap metal Eastern will produce, but specific performance will not be difficult, since Eastern will be producing scrap metal anyway.
Gartrell v. Stafford, 12 Neb. 545, 11 N.W. 732 (1982): Standard case that explains that, as land is unique with unique locality, soil, etc., an action for damages would not "afford adequate relief."
Loveless v. Diehl, 235 Ark. 805 364 S.W.2d 317 (1962): When plaintiff wanted to resell land (and could only resell it if the deal went through), the Arkansas Supreme Court at first awarded only $1,000 in damages. Upon rehearing, it said that land should be awarded specific performance as a matter of course. (The plaintiff had also invested $5,000 in improvements which would have unjustly enriched the defendant unless specific performance were granted.)
Fitzpatrick v. Michael, Court of Appeals of Maryland, 177 Md. 248, 9 A.2d 639 (1939): Michael, after the death of his wife, asked Fitzpatrick, their nurse, to manage the house, drive the car, and care for him when ill. In return, Michael would pay her $8/week and would in his will award her the house and cars. About two years later, Michael changed his mind. Is specific performance appropriate for rendering services? Held: No, because services (as opposed to property) are in general so personal there is no desire or ability of the court to enforce general performance without the assent of both parties.
Dallas Cowboys Football Club, Inc. v. Harris, 348 S.W.2d 37 (Tex.Civ.App.1961): Harris contracted to play exclusively for the Los Angeles Rams Football Club. The contract, specifying Harris as having "special, exceptional, and unique knowledge, skill and ability as a football player," gave the Rams the option to extend the contract. The Rams chose to renew, and Harris retired and then switched to Dallas. Is a football player unique to allow specific performance to force the player not to play for another team? Held: A football player is not unique, but other similar players may not be available. A temporary injunction was ordered and the case proceeded to trial.
Pingley v. Brunson, 272 S.C. 421, 252 S.E.2d 560 (1970): Brunson contracted to play organ for Pingley's restaurant for three nights a week for $50 per night, for three years. Brunson breached after 10 performances. Is specific performance appropriate to compel a musician to perform on a continued basis for a long period? Held: No, specific performance is not appropriate for continued services over a long period of time, and others with defendant's capabilities were available.
American Broadcasting Companies v. Wolf, Court of Appeals of New York, 52 N.Y.2d 394, 438 N.Y.S.2d 482, 420 N.E.2d 363 (1981): Wolf, a broadcaster at ABC, had signed a contract that contained A) a good-faith negotiation clause concerning the last 90 days of the contract, and B) a right of first refusal clause for three months after the contract. Before the contract was over, Wolf signed an exclusive contract with CBS. Did Wolf breach his contract, and is equitable relief warranted? Held Wolf breached the good-faith negotiation clause because the exclusive agreement with CBS did not permit him to sign with ABC. He did not breach the right of first refusal, because that was specified to be only after the contract expired. Equitable relief is not warranted, however; the courts do no like non-compete clauses after the contract has expired unless the defendant is engaging in unfair or illegal activities, because anticompetition impedes the market and keeps the defendant from earning a living. Injunction for service is both difficult to inforce and against the Thirteenth Amendment. Monetary damages may be available, though.
Fullerton Lumber Co. v. Torborg, 270 Wis. 133, 70 N.W.2d 585 (1955): Defendant was hired as a manager at plaintiff's lumber company, a Minnesota corporation. The contract had a 10-year non-compete clause. After three years, the company's business tripled and after 15 years of employment defendant left to start his own lumber company. Is the non-compete clause enforceable? Held No, because it is excessive, an unreasonable and illegal restraint of trade. (Although Wisconsin usually makes unreasonable restraints void, the court said it should be reduced and suggested three years, reflecting the time in which defendant had made the business successful.)
Data Management, Inc. v. Greene, 757 P.2d 62 (Alaska 1988): Plaintiff alleged breach of a five-year noncompetition contract for computer services covering all of Alaska. Is such an overbroad noncompetition contract modifiable by the courts? Held Yes, if the company acted in good faith the contract may be reasonably altered to render it inforceable. (There are two other options the court could take: simply characterizing the clause as "unconscionable" and making if void, and adopting the "blue pencil" rule by deleting parts of the clause if it is divisible.) If the company overreached willfully, alteration will be refused.
Northern Delaware Indus. Dev. Corp. v. E.W. Bliss Co., Court of Chancery of Delaware, 245 A.2d 431 (1968): Plaintiffs contracted with defendants to expand and modernize a steel mill. Work did not progress as quickly as planned, and plaintiffs claimed the contract allowed for extra workers to speed the work. Should the court order extra workers to get the job done? Held No; the court cannot get involved in supervising a complex construction project, and it's not even obvious that adding new workers would make the work progress more quickly. Besides, specific performance of personal services cannot be enforced. Plaintiffs can seek monetary damages later if appropriate.
City Stores Co. v. Ammerman, 266 F.Supp. 766 (D.D.C.1967): Defendant was constructing a shopping center and was trying to convince the Board of County Supervisors to rezone the land. Defendant convinced plaintiff, negotiating a lease at a rival company's site which was also petitioning for rezoning, to write a letter stating that he would become a tenant if the rezoning went through, and in return plaintiff could have a lease. Upon rezoning, defendant didn't allow plaintiff to have a lease in the shopping center. Can the court grant equity? Held Yes; damages are difficult to measure, and benefit to the plaintiff of expanding business in this location would be almost incalculable in the future. Specific performance would only be denied if the difficulty of enforcement by the court would exceed the benefit to the plaintiff.
Grayson-Robinson Stores v. Iris Constr. Corp., 8 N.Y.2d 133, 202 N.Y.S.2d 303, 168 N.E.2d 377 (1960): Iris owned a lot and contracted with Grayson to erect a building that Grayson could rent as a retail department store for 25 years. The contract stipulated that an arbitrator would handle all disputes. Iris then ran out of money, couldn't raise more, and told Grayson the work would stop unless Iris would pay more rent. An arbitrator said that there was no evidence Iris couldn't raise more money and ordered Iris to complete the job. Should the courts uphold the arbitrator's decision? Held Yes; A New York statute says that a written agreement stipulating arbitration means the court must enforce the decision, and the court must not make decisions about the merits of the dispute.
Staklinski v. Pyramid Electric Co., 6 N.Y.2d 159, 188 N.Y.S.2d 541, 160 N.E.2d 78 (1959): New York Court of Appeals upheld arbitration compelling specific performance by employer of employee.
Matter of Sprinzen and Nomberg, 46 N.Y.2d 623, 415 N.Y.S.2d 974, 389 N.E.2d 456 (1979): New York Court of Appeals upheld arbitrator's extremely long noncompete decision.
Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 386 N.Y.S.2d 831, 353 N.E.2d 793 (1976): New York Court of Appeals did not uphold an aribitrator's judgment of punitive damages.
John T. Brady & Co. v. Form-Eze Systems, Inc., 623 F.2d 261 (2d Cir.1980): New York Court of Appeals upheld arbitrator's large liquidated damages because they were not explicitly referred to as punitive.
Congregation Kadimah Toras-Moshe v. DeLeo, Supreme Judicial Court of Massachusetts, 405 Mass. 365, 540 N.E.2d 691 (1989): A dying man makes a promise to give money to a synagogue, put the expected money into their budget, and promised to convert a storage room into a library and name it after him. Should the estate be held to the man's oral statement? Held No, there was no consideration, as the synagogue declared their intention of what to do with the money independent of the man's promise. (Putting the money in the budget does not constitute reliance, but merely a record of the synagogue to itself that it expected the money.)
Hamer v. Sidway, Court of Appeals of New York, 124 N.Y. 538, 27 N.E. 256 (1891): Uncle promised nephew that, if the nephew would not drink, use tobacco, swear, or play cards until his 21st birthday, the uncle would give him $5,000. The nephew did so, and after the uncle died the nephew brought this action against the estate. Should the uncle be held to the promise, even if the nephew's actions helped the nephew rather than hurt him? Held Yes; a suspension of a legal right is consideration, regardless of whether it helps or hurts the party.
Earle v. Angell, 157 Mass. 294, 32 N.E. 164 (1892): Mary promised her nephew that, if he would come to her funeral in the event that he outlived her, she would give him $500 from her estate. Is a promise to give money after death in exchange for an action valid? Held Yes.
Written v. Greeley-Shaw, 520 A.2d 1307 (Me. 1987): A man and woman had participated in an extra-marital affair for some years. The woman wrote up a paper saying that the man would pay her money, buy her jewelry, visit her, call her, and take her on trips. The paper also said that the woman would not call the man at his homes or offices without his permission. Does this contract contain consideration? Held No, the clause put in by the woman does not express that it is a condition for the man's upholding the bargain. For valid consideration, there must be evidence that the party "sought after" and was "motivated by" the benefits.
Fischer v. Union Trust Co., Supreme Court of Michigan, 138 Mich. 612, 101 N.W. 852 (1904): A father gave his daughter a deed to his land, on which there were several mortgages, and in return the daughter gave him a dollar. After his death, the mortgages were not paid. Was there enough consideration to make this a valid contract? Held No; the dollar was obviously in context just a joke. The real consideration was the daughter's love and effection, which was meritorious but not sufficient to make this a contract rather than a gift. Since the father didn't pay the mortgages, the gift was not completed and, being null in one part, is null in its entirety.
Simmons v. United States, 308 F.2d 160 (4th Cir. 1962): American Brewery tagged a fish and offered an award for catching it. Simmons had heard of the award, but wasn't thinking of it when he caught the fish. Was the prize money taxable? Held Yes; If one knows of an offer in a unilateral contract, one may accept the offer by rendering performance even if the performance is unrelated to the author.
Schnell v. Nell, 17 Ind. 29 (1861): Zacharias Schnell made a contract to pay three persons $200 each in annual installments, and in return they would give one cent each (in addition to his wife's services and his love to her). Held The contract was invalid because the values were unequal, being "fixed"—not indeterminate. One cent is a nominal amount. (The wife's services and his love were irrelevant as they occurred in the past.)
Batsakis v. Demotsis Court of Civil Appeals of Texas, 226 S.W.2d 673 (1949): Defendant, in Greece during WWII, needed money so she asked plaintiff for 500,000 drachmas (US$25 at the time), and she signed a contract with plaintiff saying he had given her US$2,000 and that she would pay back US$2,000 with 8% per annum interest. Must defendant abide by the $2,000 plus interest in the contract even though plaintiff only loaned her the equivalent of $25? Held Yes; inadequacy of consideration does not void a contract. In effect, plaintiff paid defendant $25 to sign saying she owed him $2000, and the document in that agreement amounts to valuable consideration.
Embola v. Tuppela, 127 Wash. 285, 220 P. 789 (1923): Tuppela's $500,000 Alaskan gold mind was sold by his guardian while he was insane. He told the plaintiff, after loaning him $270, that if he would loan Tuppela $50 more, if he won his mine back in court he would give plaintiff $10,000. After winning back his mine, Tuppela (apparently incompetant again) asked his trustee to pay plaintiff the money. Was the contract unconscionable because of the disparity of sums? Held No; Tuppela was of a sound mind at the time and considered the contract fair and to his advantage. The uncertainty of the payback event supports the adequacy of the consideration.
Duncan v. Black, Court of Appeals of Missouri, 324 S.W.2d 483 (1959): Black contracted to sell Duncan 359 acres of farm land, with a 65 acre cotton allotment. The cotton allotment system was set up by the Secretary of Agriculture. When the land was only allotted 49.6 acres, Black let Duncan use a 15.4 acre allotment on adjacent land, but the next year Black refused to do the same. Is land allotment valid consideration? Held No; Consideration the party has no control over is not valid. Land under the Act was only allotted every year, so there is no way to know what land will be allotted the next year. Trying to sell an allottment is like the "purchase of the green cheese monopoly on the moon." (Besides, selling an allotment would contravert the Act and would therefore be illegal.) [This needs updated to talk about the $1500 note, which is the real promise, and if there is consideration in return.]
Military College Co. v. Brooks, 107 N.J.L. 28, 147 A. 488 (1929): Defendant wrote a note promising to pay son's school tuition and equipment. His son was discharged (wrongfully, the defendant claims), but defendant still wrote notes extending the payment because he was in no financial condition for a lawsuit. Even though his son was discharged, is there consideration to support the note? Held Yes; defendant wrote the note to buy himself time because he could not afford a lawsuit then alleging wrongful discharging of the son. The time he bought is adequate consideration to support the note.
Martin v. Little, Brown & Co., Superior Court of Pennsylvania, 304 Pa.Super. 424, 450 A.2d 984 (1981): Plaintiff told defendant publisher that parts of a book were plagiarized, and offered to provide a copy of a book with notes pointing out the plagiarized parts. Defendant accepted, and when plaintiff learned that the defendant was pressing claims for copyright violation, plaintiff sued for payment for his "services". Defendant sent plaintiff a check for $200, but plaintiff sued for a third of the damages received by defendant in the separate lawsuit. Defendant countersued. Was there an implied contract? Held No; An implied contract is one in which it is apparent that there was an agreement with consideration. Here, there was no negotiation of money in exchange for services. Was there a quasi-contract in which restitution is due? Held No; volunteers have no right to restitution, and plaintiff volunteered his services. Can plaintiff get damages for intentional infliction of mental distress because of the countersuit? Held No; mental distress damages only arise when the actions surrounding the action would lead a reasonable person to say "outrageous," and simply furthering the litigation started by the plaintiff is not outrageous.
Collins v. Lewis, 111 Conn. 299, 149 A. 668 (1930): Plaintiff sheriff attached cows from Kline and then realized they belonged to defendant but that Kline held them under a conditional sale contract. Kline wouldn't take them back and defendant didn't have any place to put them, so the sheriff kept them and sent a letter to defendant saying that the defendant would be responsible for paying for their upkeep. After the defendant sold the cows, the sheriff tried to collect for the 38 days' care and keep. Is there an implied contract? Held Yes, an implied contract in law, says the courts. An implied contract is when one party does something for another without being asked, expecting payment, and the other party, knowing the first expects to be paid, avails him/herself to the offered benefits. By selling the cows, defendant acknowledged and took advantage of the care and keep by plaintiff. (A true implied contract can only exist when there is no express one.)
Seaview Ass'n of Fire Island, N.Y., Inc. v. Williams, 69 N.Y.2d 987, 517 N.Y.S.2d 709, 510 N.E.2d 793 (1987): Defendants owned seven houses in Seaview but over an eight year period refused to pay homeowners' fees because they were not members and did not use the recreational facilities. Was there an implied contract to pay homeowners' fees? Held Yes; Defendants knew of the fees and, by owning houses implicitly took advantage of and must pay for the upkeep of facilities and services, even if they didn't use them all.
Martin v. Campanaro, 156 F.2d 127 (2d Cir.1946): Implied contracts are "implied in fact" and arise from intent, while quasi-contracts are "implied in law" and are "imposed by law ... irrespective of, and sometimes in violation of, ... intention." quantum meruit usually refers to quasi-contracts.
Mills v. Wyman, Supreme Judicial Court of Massachusetts, 20 Mass. (3 Pick.) 207 (1825): Defendant's 25-year-old son was travelling, fell ill, and was cared for by plaintiff. Defendant afterwards heard and wrote a letter to plaintiff promising to pay his expenses, but then later went back on his promise. Is a promise after the fact concerning a third party a valid contract? Held No, there is no legal consideration received. Although there may be a moral duty, there is no legal duty to pay this promise after the fact, making this an "imperfect obligation." (Some promises after the fact are valid if they involve prior obligations, such as debts barred by the Statute of Limitations, debts incurred by infants, and debts of bankrupts.)
Webb v. McGowin, Court of Appeals of Alabama, 27 Ala.App. 82, 168 So. 196 (1935): Plaintiff Webb, dropping from an upper level a heavy block as part of his job saw defendant McGowin below and, in order to save him from death by the block, fell with the block and seriously injured himself. Defendant agreed to support him for the rest of plaintiff's life, but after defendant's death the estate tried to stop payments. Is a promise based upon moral obligation a valid contract? Held In this case, yes, because plaintiff conferred upon McGowin sufficient legal consideration in saving his life, something that was worth more than, for example, keeping a cow for someone.
Harrington v. Taylor, 225 N.C. 690, 36 S.E.2d 227 (1945): Defendant was assaulting his wife when she knocked him down and attempted to "split his head open" with an ax. Plaintiff stopped her, which mutilated his hand, and defendant promised to pay defendant her damages, but later stopped payments. Held A voluntary humanitarian act is not legal consideration.
Edson v. Poppe, 24 S.D. 466, 124 N.W. 441 (1910): Defendant asked plaintiff to dig a well, and plaintiff later noted the value of the well so defendant promised to pay defendant. Held Digging of the well was not voluntary and it conveyed value, so it is sufficient legal consideration to uphold the contract.
Muir v. Kane, 55 Wash. 131, 104 P. 153 (1909): Defendants promised orally to pay plaintiff, a real estate broker, to find a purchaser for their home. A state statute of frauds said that any such oral agreement was void. After plaintiff found a buyer, defendants and buyer signed an agreement containing a clause to pay $200 to plaintiff. Held Even though the original agreement was still void, the clause was a valid promise based on past consideration, just like a promise after the end of a statute of limitations period.
In Re Schoenkerman's Estate, 236 Wis. 311, 294 N.W. 810 (1940): Schoenkerman, after his wife died, asked his wife's mother and sister to move in and held take care of the kids. Before he died, he executed notes promising to pay them. Held The note is valid, as it acknowledged a moral obligation that "afforded more than ample consideration", even if there was no prior legally enforceable obligation.
Kirksey v. Kirksey, Supreme Court of Alabama, 8 Ala. 131 (1845): Defendant, upon hearing that his brother had died, told his brother's wife and children to come live on some of his land. They abandoned their house, seventy miles away. Two years later he told them to move off his land. Does reliance on defendant's promise make the promise enforceable? Held No, defendant's promise was "a mere gatuity".
Ricketts v. Scothorn, 57 Neb. 51, 77 N.W. 365 (1898): Katie's grandfather promised to pay her $2000 if she were to quit her job (because none of his grandchildren should work), so she quit her job. Does quitting her job, relying on his promise, equitably estop the need for consideration? Held Yes; the plaintiff altered her position for the worse on the faith that the note would be paid.
Prescott v. Jones, 69 N.H. 305, 41 A. 352 (1898): Defendant insurance agents sent a letter saying they would renew an insurance policy for another year unless the plaintiff notified them otherwise. When the building was destroyed by fire, the defendants maintained the policy was not in effect. Held The plaintiff did not pursue any actions in return (such as answering with a letter) so there was acceptance and no contract. The statement by the defendant was not a statement of a current state of fact but of future intentions, subject to be modified, and therefore the doctrine of estoppel does not apply.
Allegheny College v. National Chautauqua County Bank, Court of Appeals of New York, 246 N.Y. 369, 159 N.E. 173 (1927): A woman promised a $5,000 donation to the college after her death if they would set up a fund in her name. She gave them $1,000, the plaintiff accepted, and then plaintiff sued for the rest after her death. Held The condition of the fund in her name was sufficient consideration, and the plaintiff accepted those terms, so there is a valid contract with no need to consider promisory estoppel. (The general rule is that consideration must be a benefit to the promisor or a detriment to the promisee, and that detriment must be something bargained for in exchange for the promise. Promisory estoppel is really an exception to this rule, in which the detriment is something that isn't necessarily a bargained for condition but is nevertheless done in reliance of the promise, estopping the need for consideration.)
Siegel v. Spear & Co., 234 N.Y. 479, 138 N.E. 414 (1923): Siegel had purchased furniture from defendant, but had done so by giving them a mortgage. Plaintiff needed some place to store the furniture for a while, so defendant offered to store them and to insure them because he could get a cheaper rate which plaintiff could pay with the next installment. The furniture perished in a fire with no insurance. Was the promise to provide insurance binding? Held Yes, because plaintiff's bringing the furniture after the promise to get insurance was consideration to make the promise binding. (Whether the defendant relied on the promise to not get insurance therefore not need be considered.)
Carr v. Maine Central R.R., 78 N.H. 502, 102 A. 532 (1917): Plaintiff shippers were overcharged by defendant, who said they could not give a refund without the permission of the Interstate Commerce Commission. Defendant promised, if plaintiff would fill out the papers, to forward the request to the ICC, but then failed to do so before the expiration date, barring any refund. Held By accepting the papers for the purpose of forwarding them, defendant is liable for whatever harm occurred, because their promise imposed upon them a tort duty. As a contract, though, there was no consideration to make this a legally enforceable agreement.
Hart v. Ludwig, 347 Mich. 559, 79 N.W.2d 895 (1956): Defendant promised to care for plaintiff's orchard, but stopped after the first year. Can an action be brought in tort for nonperformance? Held No; misfeasance may bring either a contract or a tort action alleging negligence, but nonfeasance—"simply the violation of a promise to perform the agreement"—may only bring a contract action, as there is no duty separate from the contract.
Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (1992): Plaintiff sued defendant fire alarm monitoring company in tort for damages in not reporting a fire quickly enough. Held When duty arises out of law, an action should be in tort, and when a duty arises out of an agreement, the action should be on contract. Special relationships will allow a tort, but not simple claims of negligence arising out of a contract. The action should proceed under contract when essentially the plaintiff is seeking enforcement of a bargain. The terms "misfeasance" and "nonfeasance" should not be controlling.
East Providence Credit Union v. Geremia, Supreme Court of Rhode Island, 103 R.I. 597, 239 A.2d 725 (1968): Plaintiff loaned defendant money, holding a vehicle for collateral with a promise from defendant to pay insurance on it. Defendant became unable to pay insurance and plaintiff agreed to pay insurance, adding the insurance plus interest to plaintiff's bill. The vehicle was involved in a collision. Is plaintiff precluded from recovering on its loan contract because it failed to fulfill its promise to pay the insurance? Held Yes; the interest promised in return is legal consideration. Even if there were no interest (i.e. this is a purely gratuitous promise), under the Restatement there would have been promisory estoppel (promise of future action, in contrast with equitable estoppel, a promise based on the current facts) because 1) there was a promise that would reasonably induce action or forebearance, 2) the forebearance occurred, and 3) injustice can only be avoided by enforcing the promise.
I. & I. Holding Corp. v. Gainsburg, 276 N.Y. 427, 12 N.E.2d 532 (1938): Defendant promised money to the Beth Israel Hospital Ass'n to help with its humanitarian work. Held The promise can be enforced as a unilateral contract binding when acted upon, without resort to promissory estoppel, because the Ass'n incurs expenses in its humanitarian work and the gift was for those expenses. Dissent There needs to be evidence that the promise induced the acts of the Ass'n and that the acts would not have occurred but for the promise.
Salsbury v. Northwestern Bell Tel. Co., 221 N.W.2d 609 (Iowa 1974): Defendant telephone company sent a letter to a newly-formed college promising to pay $15,000. The college failed shortly after opening. Held Charitable subscriptions should be enforced even in the absence of consideration, unless the fund raising compaign does not call for binding subscriptions. This is for public policy reasons, and to follow the tentative draft of Restatement of Contracts § 90(2).
Seavey v. Drake, Supreme Court of New Hampshire, 62 N.H. 393 (1882): Plaintiff alleged Seavey was his father and that Seavey had given him a strip of land. In return, plaintiff had gave up defendant's debt of $200. Plaintiff thereafter improved the land and built a house. Held In equity, the improvement of the land is sufficient consideration, whether the promise was a promise to give or to sell the land—the giving up of the debt is irrelevant. This part performance allows the equity court to get around the statute of frauds concerning transfer of land not in writing.
Monarco v. Lo Greco, 35 Cal.2d 621, 220 P.2d 737 (1950): Natale and Carmela Castiglia were married in 1919 and convinced Carmela's son Christie to come work on the farm they bought half ownership in. In return, Natale promised to give Christie their half of the farm. After 20 years, Natale died and in a will left everything to his grandson. Held The farm goes to Christie. Christie's reliance in working half his life on the farm estopped the grandson from pleading the statue of frauds.
Forrer v. Sears, Roebuck & Co., Supreme Court of Wisconsin, 36 Wis.2d 388, 153 N.W.2d 587 (1967): Sears (defendant) convinced plaintiff farmer, who used to work at Sears, to leave his farm and come back to Sears to receive "permanent employement." Plaintiff sold his farm and rented his barn at a loss and, four months after becoming a permanent employee at Sears, was discharged without cause. Held There is no cause of action. The promise given by Sears was one that was foreseeable to induce an action, and the plaintiff did perform that action, but there's no justice that only promisory estoppel can bring about, as the promise for "permanent employment", which can be terminated at will, was performed the moment plaintiff was hired. (There was furthermore no additional consideration that would have prevented permanent employment from being terminable at will.)
Hunter v. Hayes 533 P.2d 952 (Colo.Ct.App.1975): Defendant promised plaintiff a job on a construction project if she would quit her $350/month job at a telephone company. Plaintiff quit, defendant refused to hire her, so Plaintiff went without work for two months. Held Plaintiff awarded $700 because of promissory estoppel. Damages are calculated by the reliance interest loss.
Stearns v. Emery-Waterhouse Co., Supreme Judicial Court of Maine, 596 A.2d 72 (1991): Defendant hardware store orally promised 50-year-old plaintiff a job until he turned 55. Plaintiff left his job at Sears and was hired by defendant. Plaintiff's position was eliminated before he turned 55. Does plaintiff's detrimental reliance on the promise get around the statute of frauds stipulation against oral contracts that cannot be performed in one year? Held No; although other jurisdictions have held otherwise, reliance actions by the plaintiff cannot bring about promissory estoppel to counteract the statute of frauds unless the promisor is shown to have fraudulent intent. (Similarly part performance is rejected in counteracting the statute of frauds in an employment context.) (Equitable estoppel can avoid application of the statute of frauds for employment.) (If services were performed, plaintiff can seek application of quantum meruit.)
Goldstick v. ICM Realty, 788 F.2d 456, 465 (7th Cir.1986): Using promissory estoppel to get around the statute of frauds for continued employment is particularly troublesome because it is too easy to show reliance and most employment is employment at will.
Goodman v. Dicker, United States Court of Appeals, District of Columbia, 169 F.2d 684 (1948): Defendants, local distributors for Emerson Radio & Phonograph Corp. in D.C., told plaintiffs that their application for a franchise had been approved and that radios were coming. Plaintiffs hired salespeople and sold radios, but no radios came and the franchise was not approved. Held The detrimental actions by plaintiffs because of defendants' promise estopped the lack of proving there was a contract. Under such promissory estoppel, the damage is the loss sustained—the cash outlays (reliance), not the lost profits (expectancy).
American Nat'l Bank v. A.g. Sommerville, Inc., 191 Cal. 364, 216 P. 376 (1923): Sommerville sold Tomlinson (defendant) two automobiles, and Tomlinson signed two contracts stating that he received the automobiles and that if Sommerville assigned the payments to a third party, Tomlinson could not claim lack of consideration or lack of delivery. Sommerville assigned debts to investment company who assigned debts to plaintiff Bank, and Tomlinson claimed the automobiles had never existed. Held The wording of the contract cannot of their own force preclude Tomlinson from claiming lack of consideration, but if plaintiff relied on the statements in the contract, estoppel in pais would preclude Tomlinson from showing the falsity of those statements.
D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 520 A.2d 217, 221-223 (1987): Held Even though a misrepresentation is not sufficiently promissory or definite to invoke promissory estoppel in contract, if the representation contained false information defendant might still be liable in tort even for innocent misrepresentation if defendant had a duty to know the truth.
Fried v. Fisher, 328 Pa. 497, 196 A. 39 (1938): Brill and Fisher were partners in a florist business, and they leased a building from Fried. Fisher wanted to get out of the florist business and start a restaurant in another town, so Brill agreed and Fried said that he would release Fisher from his obligation under the lease. Brill later defaulted, and Fried sued Fisher. Held Fried's promise to release Fisher from the lease caused Fisher to reliantly change his position, so under promissory estoppel Fried's promise must be enforced.
Mahban v. MGM Grand Hotels, Inc., 100 Nev. 593, 100 Nev. 593, 691 P.2d 421 (1984): Defendant leased space in a hotel for an arcade, and the contract gave either party the right to terminate if premises were damaged and lessor could not put them in tenatable condition within 180 days. The building burned, but 10 weeks later defendant sent a letter saying that reconstruction would occur. After defendant decided not to reopen, is defendant liable for breach? Held Yes; although the letter did not waive the right to terminate, the doctrine of equitable estoppel precludes defendant from using the right to terminate because of the implications of the letter. Equitable estoppel is thus here a defense to a defense, not in itself a cause of action.
Levine v. Blumenthal, Supreme Court of New Jersey, 117 N.J.L. 23, 186 A. 457 (1936): Plaintiff leased space to defendants for a women's clothing store at $2100 for the first year and $2400 for the second year, divided into equal montly payments. Defendant during the first year said that because of economic conditions they could not pay the increased price for the second year, and would go out if business if forced to pay the original second year price, so plaintiff continued to accept the first year's monthly rate for the second year. Plaintiff then sued to collect the difference. Held The original agreement is enforceable. Any agreement to lower the agreed price is a separate agreement and must come with its own consideration—promising to pay what one legally already had a duty to pay is not consideration. General economic adversity would not have released defendants from their original obligation to pay. (Acceptance of part payment does not relieve defendant from full performance, but slight variations, such as prepayment, could be considered consideration.)
Davis v. General Foods Corp., 21 F.Supp. 445 (S.D.N.Y.1937): Plaintiff wrote defendant saying she had created a recipe, and defendant wrote back saying any compensation would be at defendant's discretion. Held A letter giving defendant unlimited right to decide later the nature and extent of compensation is not consideration. (Since there is no contract, there is consequently no recovery in quantum meruit.)
Nat Nal Service Stations, Inc. v. Wolf, 304 N.Y. 332, 107 N.E.2d 473 (1952): Defendant, wishing to get a discount from its supplier, told plaintiff Wolf that if he purchased gasoline from defendant and they accepted the order, they would pass on their discount. Is this a contract not to be completed within one year and consequently barred by the statute of frauds? Held There is no contract covered under the statute of frauds. [There was a cause of action on completed sales.] The original contract did not bind either party to take any action—the defendant could buy gas anywhere, the defendant could decline to accept the order, and defendant could at any time decline to give future discounts. Each time defendant accepted an order a separate contract forcing a discount, which was not covered by the statute of frauds, came into play.
Obering v. Swain-Roach Lumber Co., Appellate Court of Indiana, 86 Ind.App. 632, 155 N.E. 712 (1927): Plaintiff lumber company signed a contract with defendants, relatives and heirs of J. Henry Buhner, that if plaintiff bought Buhner's land plaintiff would sell it to defendants and keep the lumber from it. Does this contract have mutuality? Held Yes; even though the contract upon signing was binding on neither party because it was contingent upon an act by plaintiff, the moment plaintiff performed that act the content was binding on both parties. If a contract is dependent upon a future act of plaintiff, that act will provide an acceptance of the offer and consideration.
Paul v. Rosen, 3 Ill.App.2d 423, 122 N.E.2d 603 (1954): Defendant made an agreement to sell retail liquor business to plaintiff at a price to be determined by inventory, contingent on plaintiff securing a five-year lease from the owner. Before defendant could get the lease, plaintiff refused to do an inventory, so defendant sued claiming an anticipatory breach. Held The contract was void and therefore unenforceable because it was contingent on plaintiff securing the lease but put no duty on plaintiff so secure it, so there was no mutuality.
Gurfein v. Werbelovsky, 97 Conn. 703, 118 A. 32 (1922): Defendant sold plate glass to plaintiff with the option of plaintiff to cancel the order up to the time of shipment. Can the plaintiff sue for specific performance? Held Yes; As the plaintiff only had an option to cancel before shipment, after shipment the contract would be binding on plaintiff so there was consideration to make this a binding contract.
Wood v. Lucy, Lady Duff-Gordon, Court of Appeals of New York, 222 N.Y. 88, 118 N.E. 214 (1917): Lady defendant, who gave her approval to apparel, made an agreement with plaintiff to have the exclusive right to place her indorsements on articles of clothing, subject to her approval. In return he would give her one half of all profits, take out any needed copyrights and trademarks, and provide reports of sales. Defendant breached the exclusivity and marketed her own designs, claiming the orginal agreement was void because, under it, the plaintiff was not obligated to do anything. Held The agreement might not have obligated plaintiff in so many words, but the exclusivity of the agreement implied he was to make his best efforts to sell her label, giving consideration to the agreement.
Omni Group, Inc. v. Seattle-First Nat'1 Bank, Court of Appeals of Washington, 32 Wash.App. 22, 645 P.2d 727 (1982): Defendants Clarks (now represented by First National Bank) sold property to Omni with a contract that Omni would get an engineer's and architect's feasibility report and, if satisfactory, would notify defendants. Omni didn't express whether it was satisfied or not. The Clarks refused to proceed with the purchase, claiming the contract was not valid because Omni's promise was illusory. Held Omni, if satisfied, was obligated to notify Clarks of their acceptance, so their promise was not illusory. This falls into the strain of cases in involving promisor "satisfaction" and is therefore not an illusory promise.
Lima Locomotive & Mach. Co. v. National Steel Castings Co., 155 F. 77 (6th Cir. 1907): Agreement for purchase of steel stated that seller would supply "all [the buyer's] requirements in steel castings for the remainder of the present year ...." Held There is mutuality because the buyer is not just promising to supply the steel the buyer desires, but all the steel the buyer requires for the business, and the buyer is obligated to buy from the seller.
Feld v. Henry S. Levy & Sons, Inc., Court of Appeals of New York, 37 N.Y.2d 466, 373 N.Y.S.2d 102, 335 N.E.2d 320 (1975): Plaintiff, owner of the Crushed Toast Co., made an agreement to purchase and defendant to sell all the bread crumbs produced by defendant, with six-month notification by either party for termination. Defendant stopped producing breadcrumbs and, after plaintiff refused to pay a higher price, dismantled the equipment and started selling the input bread product to others. Defendant maintains the contract did not require it to produce bread crumbs, only to sell those it produced. Held This is known as an "output" contract and under section 2-306 of the UCC there is sufficient mutuality to uphold the contract. The UCC also states that for exclusive agreements the seller must use good-faith efforts to supply the product—something that is a question of fact here. Only a "genuine imperiling of the very existence of its entire business caused by the production of the crumbs would warrant cessation of production of that item."
Fort Wayne Corrugated Paper Co. v. Anchor Hocking Glass Corp., 130 F.2d 471 (3d Cir.1942): Fort Wayne contracted to supply corrugated paper to Capstan Glass Co. for packaging glass products, and Capstan agreed to buy it. The agreement could be cancelled with a one-year notification, with stipulations of how much paper had to be supplied and purchased during that period. Capstan's parent corporation suspended all glass production, but Capstan didn't give notice for over a year. Held Fort Wayne had no cause of action because Capstan's requirements had ceased. Cancellation by notice, on the other hand, was appropriate when Capstan wanted to avoid its obligations, which was not the case here.
Corenswet, Inc. v. Amana Refrigeration, Inc., 594 F.2d 129 (5th Cir.1979): Corenswet had an exclusive wholesale dealership which Amana wanted to terminate based upon a contract for indefinite duration but that any party could terminate "at any time for any reason." Corenswet said the termination was "arbitrary and capricious." The UCC has a general obligation of good faith, but § 2-309(2) allows successive, indefinite contracts to be terminated at any time. Held UCC § 2-309(2) applies, allowing termination with the notice given in the contract for franchises and dealerships. Both parties were given equal ability to "cut the knot" should the relationship turn sour. "What public policy does abhor is economic overreaching—the use of superior bargaining power to secure grossly unfair advantage." That's different from the "good faith" provision.
Sheets v. Teddy's Frosted Foods, Inc., Supreme Court of Connecticut, 179 Conn. 471, 427 A.2d 385 (1980): Defendant had hired Sheets indefinitely as a quality control director. Plaintiff alerted defendant to substandard quality of frozen food products that violated the Connecticut Uniform Food, Drug and Cosmetic Act, and in return defendant fired plaintiff. Should the defendant's motion for strike based upon insufficient complaint be sustained? Held No; Although contracts terminable at will do not require a showing of just cause, an employer can be "responsible for damages in tort for a demonstrably improper reason for dismissal, a reason whose impropriety is derived from some important violation of public policy." The employee's job and expertise was to check quality, so the employer can't make him chose between termination and criminal sanction. Dissent This ruling would give employees a "sword" to force their employers to keep them. The Act in this case concerned grades of food and did not jeopardize consumer safety, so the plaintiff should have called in an anonymous tip to the commissioner. Besides, this is the sort of decisions the legislature makes, so it's out of scope for the judiciary.
Price v. Carmack Datsun, Inc., 109 I11.2d 65, 485 N.E.2d 359 (1985): Plaintiff Price was injured in an automobile accident and filed under his employer's group health insurance plan. Defendant, who had sought to discourage him from filing, discharged the plaintiff. Held Plaintiff failed to state a cause of action. Discharge can only sanctioned if it violates a "clearly mandated public policy," but this was a private matter. "We consider that the discharge of an employee for filing a claim under a policy in which he is a beneficiary does not violate a clearly mandated public policy."
Embry v. Hargadine-McKittrick Dry Goods Co., Court of Appeals, Missouri, 127 Mo.App. 383, 105 S.W. 777 (1907): Plaintiff empry had been requesting a decision on reemployment from defendant McKittrick, so a few days before the end of the year he went to see McKittrick to say that, if he wasn't given an answer on reemployment, he would quit then and there. Defendant asked how his work was going, and plaintiff said they were busy. Defendant said, "Go ahead, you are all right. Get your men out, and do not let that worry you." Is defendant held to a reemployment contract? Held Yes; Even though there must be a meeting of minds by an agreement of intentions in a contract, intentions are judged by words and actions, and in this case a reasonable person would judge defendant's words as promising reemployment.
Kabil Developments Corp. v. Mignot, Supreme Court of Oregon, 279 Or. 151, 566 P.2d 505 (1977): Plaintiff Kabil negotiated an oral contract with Mignot's Inland Helicopters for helicopter service, but Mignot later claimed that there was no contract. Defense objected to letting the jury hear Kabil's testimony that Mr. Monroe (Kabil's vice president) thought there was a contract. Held Even though an objective test has won over the old "actual intent" or "meeting of the minds" test, and even though the actual words of the contract as interpreted by a reasonable person still win, that's no reason to prevent testimony of one's intent to have a contract, which is different than intent of terms of the contract, anway.
New York Trust Co. v. Island Oil & Transport Corp., 34 F.2d 655 (2d Cir.1929): Island Oil, in order to operate near Mexico, set up subsidiaries operated by Mexicans and sold oil back to Island. Some of these subsidiaries were mortgaged and lost by foreclosure, and one of them sued the company that had bought Island to pay for the oil it had "purchased." Held There was no contract to uphold. Besides writings, the general situation should be examined to determine intent, and a reasonable personal would have seen that this was a sham to evade the law and that there were really no sales or commercial transactions going on.
Robbins v. Lynch, 836 F.2d 330, 332 (7th Cir.1988): In law, intent is a conclusion rather than a fact.
McDonald v. Mobil Coal Producing, Inc., Supreme Court of Wyoming, 820 P.2d 986 (1991): McDonald was terminated from Mobile, and he sued alleging that the employee handbook, which indicated that open communication was better than unionizing, overrode the original at-will contract. The handbook contained a welcome letter that indicated that its contents would be in effect until changed, and also contained the sentence, "It is not a comprehensive policies and procedures manual, nor an employment contract." Held (The "nor an employment contract" disclaimer was not conspicuous, so it isn't valid.) "Mobil's subjective 'intent' to contract is irrelevant, if Mobil's intentional, objective manifestations to McDonald indicated assent to a contractual relationship." Whether the objective manifestations of assent were sufficient is a mixed question of law and fact that must be determined through further proceedings. Dissent The handbook was available before McDonald signed the original contract, so how could it modify the original contract? This decision effectively does away with employment-at-will in Wyoming, because it says that a company might inadvertently by any communication alter the original contract. Besides, there was insufficient consideration for the alteration.
Kari v. General Motors Corp., 79 Mich.App. 93, 261 N.W.2d 222 (1977): An employee handbook talked about severance pay but stated in two sections that the handbook did not constitute a contract. Held The handbook was not a contract as it contained no promise and no expectations of the employee to perform so as to rely on the promise. There's hardly any way the defendant could have indicated more that this was not a contract other than by not mentioning the severance plan.
Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983): An employee handbook can be a contract if it contains an offer and it is communicated to an employee by dissemination. In an at-will situation, the employee's continued employment can be considered acceptance and consideration for a new unilateral contract.
Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 662 A.2d 89 (1995): Held 1) All employer-employee relationship have a contract, if only implied. 2) The default rule for implied employment contracts is employment at will. ... (the rest is semi-important as a summary)
Moulton v. Kershaw, Supreme Court of Wisconsin, 59 Wis. 316, 18 N.W. 172 (1884): Defendant sent plaintiff a wire stating that they were in the position to offer Michegan salt at a low price. Plaintiff wired back ordering 2,000 barrels of salt, but defendant wired back withdrawing their letter. Was there a contract (i.e. an offer an acceptance)? Held No, this was just a general business notice trying to get the plaintiff to deal with them. There was no offer to sell a specific quantity of salt. (This is not to say that an offer might not specifically allow the specific quantity to be specified later, but this was not one of those offers.)
Joseph Martin, Jr. Delicatessen v. Schumacher, Court of Appeals of New York, 52 N.Y.2d 105, 436 N.Y.S.2d 247, 417 N.E.2d 541 (1981): Plaintiff tenant and landlord agreed to rent an apartment for five years from $500/month for the first year up to $650 for the fifth, with a renewal option for five years more "at annual rentals to be agreed upon." Landlord, when the tendant wanted to renew, raised the price to $900/month. Was there a contract for the renewal? Held No; an agreement to agree with a material term left for future negotiation is unforceable. There was not even a hint of what the price might be.
Southwest Eng'g Co. v. Martin Tractor Co., 205 Kan. 684, 473 P.2d 18 (1970): Parties did not reach agreement on terms of payment for a generator. Held The contract is enforceable—even though one or more terms are left open does not make the contract indefinite, if the parties intended to make the contract and there is a reasonably certain basis for remedy.
Empro Mfg. Co. v. Ball-Co Mfg., Inc., United States Court of Appeals, Seventh Circuit, 870 F.2d 423 (1989): Empro gave Ball-Co a letter of intent to buy the latter, "subject to" the approval of the Empro board of directors and shareholders, and with general terms and conditions to be placed in a later "Asset Purchase Agreement." Ball-Co backed out, and Empro sued. Held The letter is not binding. Terms missing does not always make the contract invalid. (The key thing is whether the missing terms are so important that a contract would not arise even if the parties wished to be bound.) The words "subject to" should not be dispositive, but in this case they objectively indicate that the parties did not intend to be bound. (Expenditures surrounding drafting the letter do not make the letter a valid contract.)
Wheeler v. White, Supreme Court of Texas, 398 S.W.2d 93 (1965): White promised Wheeler that he would get him a loan from a third party and that, if he couldn't get him a loan, he would loan him the money himself. Terms such as amount and payment of interest were not spelled out. White said that Wheeler could go ahead and tear down buildings and prepare land in preparation for the construction Wheeler wanted to do. White couldn't get the loan, so Wheeler sued. Held The contract is indefinite and therefore unenforceable, but White cannot plead this because he is estopped by his tacitly allowing Wheeler to reliantly tear down buildings. There is no contract, so damages are only the reliance costs, not the loss of future profits.
Howard v. Beavers, 128 Colo. 541, 264 P.2d 858 (1953): Plaintiff in Colorado agreed to exchange houses with defendant in Hollywood, who owned a more expensive house, with a mortgage for the difference in price. Mortgage repayment terms were not spelled out. Defendant refused to move. Held The terms are too indefinite for there to be a contract, but plaintiff is due his $36 expenditures in coming to Hollywood to see the house.
Raffles v. Wichelhaus, Court of Exchequer, 2 Hurlstone & Coltman 906 (1864): Defendant contracted with plaintiff to buy cotton arriving from Bombay, and the contract noted that the cotton would be aboard the Peerless. A ship named Peerless arrived in October with nothing aboard, and when another ship named Peerless arrived in December with the cotton, defendant refused to buy the cotton. Held If the two parties meant two different ships named Peerless, there is ambiguity in the contract and therefore no contract.
Flower City Painting Contractors v. Gumina Constr. Co., 591 F.2d 162 (2d Cir. 1979): Flower contracted to paint apartments, and Flower took the terms to mean that Flower would only paint the internal walls. When Flower refused to paint the external walls, Gumina cancelled the contract. Held The contract could be intepreted two different ways, so as there was no meeting of the minds there was no contract. There was an industry standard practice that could interpret the express terms to mean both internal and external walls, but Flower was a new contractor and couldn't be expected to know that.
Dickey v. Hurd, 33 F.2d 415 (1st Cir.1929): Hurd in Massachussetts offered to Dickey in Georgia to sell land in Georgia, stipulating that Dickey had until 18 July 1926 to accept. Hurd really meant that the price should have be paid by then, but Dickey only thought he had to accept by then, which he did. Hurd refused to sell the land. Held The contract is effective, because Dickey made it clear his interpretation in letters, so Hurd cannot sit by and allow Dickey's misinterpretation until the time limit expires.
Cobaugh v. Klick-Lewis, Inc., Superior Court of Pennsylvania, 385 Pa.Super. 587, 561 A.2d 1248 (1989): Golfer Cobaugh, upon reaching the ninth hole, found a car with signs indicating that anyone making a hole-in-one would win the car. Cobaugh did, but defendant refused to give the car, saying that it was a prize for a tournament two days earlier. Held Cobaugh gets the car. A offeror is held to the manifest intent, not subjective intent. Klick-Lewis should have taken down the signs or specified which tournament the car was for. Plaintiff had no reason to know that the car was for a different tournament, so the mistake was unilateral. (There was also consideration: the promisor benefitted by the publicity it gets when it gives away a car.) Dissent A hole-in-one is governed by chance, so this was a gambling contract, illegal under Pennsylvania law, even though many illegal gamblings occur all the time for charity events.
Glover v. Jewish War Veterans of United States, Post No. 58, 68 A.2d 233 (D.C.Mun.Ct.App. 1949): Held Offers of reward are governed by contract law, so if a party does not know of they offer they are not eligible for the reward, even if they perform.
Caldwell v. Cline, 109 W.Va. 553, 156 S.E. 55 (1930): Cline sent a letter offering to sell Caldwell land but that Caldwell must accept within eight days. Caldwell accepted within six days of receiving the letter, which was more than eight days after it was sent. Held An offer made by post is made when it is received—before that, the words have "no legal existence."
Textron, Inc. v. Froelich, 223 Pa.Super. 506, 302 A.2d 426 (1973): A broker had a telephone conversation to sell rods, and the buyer said he would check and get back to the seller. Five weeks later the buyer called back and accepted, to which the seller replied, "Fine, thank you." Do oral offers terminate at the end of the conversation? Held Not necessarily; if no expiration is specified, the offer terminates at the end of a reasonable time based upon the nature of the contract and the circumstances either knows or has reason to know.
Allied Steel & Conveyors, Inc. v. Ford Motor Co., United States Court of Appeals, Sixth Circuit, 277 F.2d 907 (1960): Ford purchased machinery from Allied and sent them an agreement that said it was not binding until signed by Allied. The agreement also said that Allied would be liable for injuries from Allied negligence and from Ford negligence during installation. While installing the machinery, an Allied employee was hurt from a Ford employee's negligence. Allied, who later signed the agreement, claimed the agreement was not in effect at the time of injury. Held Allied accepted the contract when it began the installation, and the later signing was just a record of that agreement. An indication of a method of acceptance did not exclude other methods of acceptance, and acceptance occurred when Allied started performance.
Panhandle Eastern Pipe Line Co. v. Smith, 637 P.2d 1020, 1022 (Wyo.1981): Held Exclusive methods of acceptance, especially if unreasonable, must be expressed explicitly if they are to be upheld.
Davis v. Jacoby, Supreme Court of California, 1 Cal.2d 370, 34 P.2d 1026 (1934): Caro Davis was treated as a daughter by her uncle and aunt Whitehead, so years later when the Davises were living in Canada and Mrs. Whitehead became ill, Mr. Whitehead wrote them and asked them to come look after him and Mrs. Whitehead. Mr. Whitehead promised that, if they were to come care for the Whiteheads, the Whiteheads would leave the Davises everything in their will. Mr. Davis said they would come after finishing up some business, and on the day the business was taken care of they found out Mr. Whitehead had committed suicide. After arriving and caring for Mrs. Whitehead, the Davises discovered everything had been left to nephews. Held Mr. Whitehead made a contract to create a will, and Mr. Davis accepted his offer with a promise to come care for Mrs. Whitehead. In ambiguous cases such as this, the law is predisposed to find a bilateral rather than a unilateral contract—that is, a promise for a promise rather than a promise for performance.
Jordan v. Dobbins, 122 Mass. 168 (1877): Dobbins promised Jordan that if Moore refused to pay Jordan for goods sold on credit, Dobbins would guarantee the amount. Jordan sold goods to Jordan not knowing that Dobbins had died. Held The death of Dobbins revoked the offer because Jordan had not need performed. [The same goes for incapacity as for death.]
Petterson v. Pattberg, Court of Appeals of New York, 248 N.Y. 86, 161 N.E. 428 (1928): Defendant had a bond on Petterson secured by a mortgage on land. Defendant told Petterson that if he paid off the mortgage early, he would write off the $780 bond. When Petterson came to defendant's house, defendant said that he had sold the mortgage and that the deal was off. Held The offeror can revoke a unilateral offer at any time, even immediately before acceptance by the offeree—even if the offeror sees the offer coming to accept. [Now Restatement of Contracts Section 45 says that once performance begins, the offer cannot be revoked, as an option contract has been created.]
Brackenbury v. Hodgkin, Supreme Judicial Court of Maine, 116 Me. 399, 102 A. 106 (1917): A mother asked a daughter in a letter to come live with her and take care of her, and in return the daughter could have the house. After plaintiff daughter moved in the mother instigated arguments and finally deeded the house to a son. Held The mother owes the daughter the land, because the mother's letter was an offer, in writing as required for land, and the plaintiff came and began performance on the offer.
Dickinson v. Dodds, (Court of Appeal, Chancery Division), 2 Ch.D. 463: Dodds on Wednesday offered in writing to sell Dickenson a piece of property and said the offer would be open until Friday. On Thursday Dodds sold the property to Allan, and Berry told this to Dickenson. Held Dodds could withdraw the offer at any time, even though he said it would be open for a certain amount of time, because there was no consideration. Barry's informing Dickenson of the sale was adequate notice of Dodd's revocation.
Thomason v. Bescher, Supreme Court of North Carolina, 176 N.C. 622, 97 S.E. 654 (1918): Defendants Bescher executed a writing under seal promising, with consideration of $1, to convey land to Thomason if he paid $6,000 before a certain time. Thomason within that time declared his acceptance and indicated he was willing to pay, after which Bescher tried to withdraw the offer. Held Bescher must give specific performance without need for consideration, because the writing was under seal. Once plaintiff indicated acceptance and was ready and willing to comply, defendant has to perform.
Marsh v. Lott, 8 CalApp. 384, 97 P. 163 (1908): Plaintiff paid defendant $0.25 for the option to buy property, and the option could be extended for 30 days. Defendant extended the option and the next day the defendant withdrew the option. Held The plaintiff is owed specific performance; the $0.25 is not too small consideration for an option. Any consideration, however small, is sufficient for an option, because § 3391 only says that there has to be adequate consideration for the exchange, and the price of the land itself was sufficient.
Smith v. Wheeler, 233 Ga. 166, 210 S.E.2d 702 (1974): Held A seller may not withdraw from an option even if the consideration for the option was not actually given, because an agreement that says there is consideration is an implied promise to pay that consideration.
James Baird Co. v. Gimbel Bros., Inc., United States Court of Appeals, Second Circuit, 64 F.2d 344 (1933): Plaintiff and other contractors were bidding on a project. Defendant measured amount of linoleum needed, underestimating by 50%, and sent an offer to all contractors. Plaintiff got the bid but before accepting the offer for the linoleum, the defendant rescinded the offer. Held Defendant could withdraw the offer before it was accepted. Plaintiff's acceptance of a separate bid does not create promissory estoppel and would not constitute acceptance, because plaintiff would not have been bound to the defendant by the acceptance of the bid. There was no consideration for an option, either.
Drennan v. Star Paving Co., Supreme Court of California, 51 Cal.2d 409, 333 P.2d 757 (1958): Plaintiff contractor was creating a proposal for the "Monte Vista School Job", and defendant telephoned a bid. Plaintiff received the contract, but when conveying acceptance to defendant, defendant rescinded the offer because they had made a mistake. Held Defendant is bound to the offer. Referencing Restatement Section 90, defendant submitted the bid with the full knowledge and indeed the desire that plaintiff would rely on the bid in bidding for the larger contract. The loss resulting from the mistake should fall on the party who caused it. (General contractor is not free to delay acceptance in hopes of getting a better price, though.) [Drennan is "the law in most places" (407).]
Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757, 384 N.E.2d 176 (1978)
E.A. Coronis Associates v. M. Gordon Constr. Co., 90 N.J.Super. 69, 216 A.2d 246 (1966): Subcontractor Coronis gave a bid to Gordon, and Gordon's general contracting bid was accepted. Before Gordon accepted Coronis' offer, Coronis revoked it. Held The promise could be enforced under promissory estoppel, but under UCC § 2-205 the promise could not be enforced because there was no writing indicating the offer would be held open.
Southern California Acoustics Co. v. C.V. Holder, Inc., 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975 (1969): Holder used subcontractor Acoustic's bid in its own bid, publishing Acoustic as the subcontractor, but then later changed subcontractors. Acoustic sued claiming they had forgone subcontracting with other general contracts because of the publication. Held Holder was not bound to use Acoustic; there was no promissory estoppel because there was no promise to uphold—Holder did not promise Acoustic anything.
Hoffman v. Red Owl Stores, Inc., Supreme Court of Wisconsin, 26 Wis.2d 683, 133 N.W.2d 267 (1965): Red Owl Stores promised Hoffman that he could have a franchise for $18,000, so Hoffman sold his store's fixtures an inventory, bought a lot, bought a house in another town and moved his family, all on Red Owl's suggestion. Red Owl later raised the price Held Hoffman should be awarded the price of his actions through promissory estoppel under Restatement § 90 (Hoffman relied on promises that would reasonably induce action), paying amounts to avoid injustice. Held That specific terms such as lease, building space, etc. were not presence does not matter, as promissory estoppel is not a breach of contract concept. Held Promissory estoppel applies to Hoffman's wife's selling of a bakery building, even though § 90 does not usually apply to third parties, because Red Owl's had reason to foresee action by the third party in reliance on the promise.
Skycom Corp. v. Telstar Corp., 813 F.2d 810 (7th Cir. 1987): Citing Hoffman, Held "Even when a contract fails to become effective as a whole, particular terms may bind under promissory estoppel ...."
Livingstone v. Evans, Supreme Court of Alberta, 4 D.L.R. 769 (1925): Defendant offered to sell land to plaintiff for $1800. Plaintiff wired back to send the lowest price, offering to pay $1600. Defendant wired back that he could not lower the price. Plaintiff then accepted the original offer, but defendant had already sold the land. Held There is an enforceable contract. Even though the counter-offer by plaintiff amounts to a rejection (even though it was attached to an inquiry), defendant's specifically standing by the original price amounts to a reinstatement of the original offer.
Idaho Power Co. v. Westinghouse Electric Corp., United States Court of Appeals, Ninth Circuit, 596 F.2d 924 (1979): Idaho Power inquired to Westinghouse about a voltage generator, and Westinghouse sent back a price quote that limited their liability. Idaho Power sent back a purchase order that did not include any liability limitations and claimed that it "supercedes all previous agreements." The generator allegedly caused fire damage. Held Idaho Power's purchase order constituted acceptance to Westinghouse's offer because it contained essentially the same terms. It was not a counter-offer, even though some things differed, because UCC § 2-207(1) changes the common law to allow a "definite and seasonable expression of acceptance or a written confirmation" to constitute an acceptance. Held The acceptance was valid because the variances did not expressly make the contract conditional upon them, as provided for by UCC § 2-207(1). Held The "knockout" rule, in which differing terms can be decided later, does not apply because there were no explicit liability limitations in the purchase order.
Roto-Lith, Ltd. v. P.P. Bartlett Co., 297 F.2d 497 (1st Cir. 1962): Roto-Lith ordered adhesive that proved to be defective from Bartlett. Bartlett sent an acknowledgement with the shipment that denied warranties, and stated that the buyer should notify seller if that was unacceptable. Held The terms were not part of the original contract, as they constitute material alterations under UCC § 2-207(2). Held The reply, though, was not an unconditional acceptance under UCC § 2-207(1) because it was contingent upon acceptance of the buyer of the new demands. The seller did not intend to make an unconditional acceptance, because the additions were only burdensome to the offeror—the buyer. Held The buyer is bound to the clause disclaiming warranties, because the reply constituted a counter-offer, and the buyer accepted that offer by its use of the product. [Roto-Lith was later overruled.]
Morrison v. Thoelke, District Court of Appeal of Florida, 155 So.2d 889 (1963): Buyers of property in Orange County sent a contract to the owners in Texas, who signed the contract and sent it to the buyers' attorney in Florida. Before the letter reached the attorney, the sellers called the attorney and repudiated the acceptance. Since the mail service allows delivery to be stopped, should the postal service be considered an agent of the offeree, making acceptance binding upon receipt? Held The repudiation was invalid, and the buyers own the land. An acceptance is binding upon being deposited in the mail, not upon receipt. The line must be drawn somewhere, and precedent has usualy went with binding-upon-mailing.
Kibler v. Caplis, 140 Mich. 28, 103 N.W. 531 (1905): Caplis gave Kibler an option to buy hides, the option set to expire at a certain point. Kibler accepted by telegram and confirmed by letter. The telegram was never delivered, and the letter arrived after the option had expired. Held There is no contract, because both parties knew that the option would expire at the given time. With options, the acceptance is valid upon receipt.
H.B. Toms Tree Surgery, Inc. v. Brant, Supreme Court of Connecticut, 187 Conn. 343, 446 A.2d 1 (1982): Toms contracted with defendant to do landscaping work. Defendant kept asking the workers to do more work, and after a while Toms requested that Defendant pay more, which Defendant did. This kept occuring for the rest of the work, and Toms couldn't keep track of everything defendant kept asking the workers to do, so the trial court awarded Toms more money "on a time basis" on the theory of imlied contract. Does the presence of an express contract preclude recovery under an implied contract? Held In theory, yes, but here there was no "factual foundation" for the express contract. In other words, both Toms and the defendant knew that work wasn't going according to the express contract and did not intend to commit themselves to it.
Hobbs v. Massasoit Whip Co., Supreme Judicial Court of Massachusetts, 158 Mass. 194, 33 N.E. 495 (1893): Plaintiff sent eel skins to the defendant, who kept them for several months before destroying them. Plaintiff had sent eel skins in the past, and defendant had paid for them. Held Defendant's silence constitute an acceptance of an implied contract to purchase the skins that the defendant had sent, because past actions had created a pattern of dealing that would make it reasonable for the plaintiff to expect payment for the skins. This does not mean that anyone can unilaterally impose a duty on someone, forcing them to incur an expense in rejecting an offer.
Austin v. Burge, 156 Mo.App. 286, 137 S.W. 618 (1911): Defendant's father-in-law bought gift subscription to a newspaper for defendant. After the subscription expired, defendant paid several bills from plaintiff, telling plaintiff not to send more. The newspapers kept coming, and defendant took them home and read them. Held There is an implied contract. Even though the defendant hadn't ordered the newspapers, by using them the defendant implicitly agreed to pay their value.
Morone v. Morone, Court of Appeals of New York, 50 N.Y.2d 481, 429 N.Y.S.2d 592, 413 N.E.2d 1154 (1980): An unmarried couple had been living together since 1952, with the woman performing "domestic duties and business services", expecting to be paid for her services. The man, moreover, orally told her that he would in return take care of her and share the net profits of his business with her. Can there be an implicit contract between an unmarried couple living together? Held No, because if people are living together there is oftentimes an assumptions that work will be performed gratuitously. Allowing implied contracts raises the risk of misunderstanding and allows for fraud. Can there be an explicit contract between unmarried people living together? Held Yes; nothing about living together precludes an explicit agreement from being put into place, as long as sexual services doesn't form part of the consideration.
Mitchill v. Lath, Court of Appeals of New York, 247 N.Y. 377, 160 N.E. 646 (1928): Mrs. Mitchill wanted to buy a farm from the Laths, but she didn't like the ice house. The defendants orally promised that if she bought the farm, they would remove the ice house. Mrs. Mitchell bought the farm, with a written agreement, and started improving it, but Laths didn't remove the ice house. Is the agreement to buy the ice house valid? Held No; that oral agreement is obviously linked to, though legally separate from, the written agreement to buy the farm. Such an oral contract that modifies the written one is only valid if 1) the agrement is a collateral one, 2) it doesn't contradict express or implied provisions in the written contract, and 3) it relates to things one wouldn't expect would be in the written contract. In this case, the written contract seems to be full and complete, and one would expect anything relating to an ice house to be included in the written contract. Dissent A written contract is only meant to cover a "limited field," so it couldn't be expected to necessarily cover later negotiations that rely on the first agreement. The rule for parole agreements should be 1) there is sufficient evident of such an agreement, and 2) that the written contract does not expressly or implicitly preclude any other provisions outside the written contract.
Hatley v. Stafford, Supreme Court of Oregon, 284 Or. 523, 588 P.2d 603 (1978): Stafford, manager of Stafford Farm, agreed to rent land to Hatley. The written agreement said that Stafford could buy out Hatley at a price not to exceed $70 per acre. Almost eight months later Stafford tried to buy out Hatley, but Hatley wanted $400 per ace because he had wheat growing on the field. Stafford came in and cut down the wheat. Hatley claimed there was an oral agreement that the buyout period in the written agreement would only last for 30-60 days from the execution of the lease. The parties do not dispute that there was no consideration for the oral agreement. Does the parole evidence rule throw out the oral agreement, if there was one? Held No. (The court only decides whether the parole agreement, if there was one, would legally be effective. If the court determines it would be, the jury decides whether there actually was a parole agreement.) The parol evidence rule applies only to those aspects of a bargain that the parties intended to go into the written document. The court should assume the written agreement was complete and only allow a parole agreement if there is substantial evidence the parties did not intend the writing to embody the entire agreement. 1) A parole agreement must not be "inconsistent" with the written document. It is only "inconsistent" if it condradicts an express term in the written contract. It must be a term not naturally placed in the document. Whether a term "naturally" should have been included in a written document should be construed liberally. Parties with less business experience may be included not to include all terms in the written document. Dissent The parole evidence statute in Oregon says that a written agreement contains all the terms of the agreement, and it should be interpreted that way.
Hayen v. Hoadley, 94 Vt. 345, 111 A. 343 (1920): Two parties contracted in writing to exchange properties. As part of the deal, defendants promised to fix up the property by shingling the barn, fixing the house roof, and repairing the cellar wall. Defendants claim there was an oral agreement that they would have "until October 1, 1919" to complete repairs, would only use up to $60, and would use No. 2 shingles. Held Evidence of the oral agreement cannot be introduced. The written contract was complete in itself. (An incomplete written agreement can be supplemented by parole.) As it was silent as to the length of repairs, a reasonable time was implied by the law, and this is part of the written contract just as much as it had said "reasonable time," so the court can't allow evidence of oral agreements to change the written agreement. The plaintiff might have introduced evidence of an oral agreement to specify what the reasonable time should be, but they didn't do that.
Interform Co. v. Mitchell, 575 F.2d 1270, 1275-1277 (9th Cir.1978): There are two views as to integration. The first holds written agreements to be special and to be integrated as a reasonble person would see it. Courts can make most of the decisions here. The other view, held by Corbin, is that written agreements have unique compelling force and are integrated when the parties desire them to be and they mean what the parties intend to mean—what a reasonable person would think doesn't really matter. Here, the jury has a bigger responsibility of determining when the written agreement means what the parties want to express. Corbin's view holds more sway today, but most jurisdictions don't hold one view to the exclusion of the other.
Luria Bros. & Co. v. Pielet Bros. Scrap Iron & Metal, Inc., 600 F.2d 103 (7th Cir. 1979): Pielet contracted with Luria to deliver a large quantity of scrap metal but completely did not perform. Pielet claimed that they had an oral understanding beforehand that Pielet was depending upon another company for shipment and that they may not come through, in which case Pielet would not be able to deliver. Held Parole evidence is not allowable. Pielet's own form contained a merger clause, bringing UCC § 2-202 into play. This court views "inconsistent" as meaning the absence of reasonable harmony with explicit terms as well as language and respective obligations of the parties. The written agreement was for an unconditional shipment of goods, making any oral agreement of conditional shipment inconsistent with the written agreement. Held Furthermore, parole evidence of additional terms must be excluded if they would have almost certainly been included in the document if agreed upon, and here an agreement of conditional shipping of such a large order would likely have been included in the written agreement.
Long Island Trust Co. v. International Inst. for Packaging Educ., Ltd., Court of Appeals of New York, 38 N.Y.2d 493, 381 N.Y.S.2d 445, 344 N.E.2d 377 (1976): Long Island Trust, plaintiff, loaned the defendant $25,000 for 90 days, and then later renewed the loan for another 30 days and loaned an additional $10,000. Defendant claims the latter note is not enforceable, because one of the signators had discussed with the officer of the bank that certain other guarantors, and one guarantors was missing. Held The note could unenforceable because of the oral agreement—there cannot be summary judgment against the defendant. The note did not expressly state that it was an unconditional guarantee, and therefore the oral agreement did not contradict it. (The defendants were not "untrustworthy," "devious," or "negligent," any of which would have made the parole agreement invalid.)
Western Commerce Bank v. Gillespie, 108 N.M. 535, 775 P.2d 737 (1989): The Gillespie estate owed Western $316,000, but the estate made a deal with Western to settle for $275,000 if the estate could secure financing within a reasonable time. When the estate had almost secured the funding, Western tried to repudiate. Held Western cannot repudiate. The "reasonable time" term was a condition upon performance of the contract, not on its formation. The contract was formed, and if Gillespie performs within a reasonable time, Western cannot repudiate the contract.
Hargrave v. Oki Nursery, Inc., 636 F.2d 897 (2d Cir. 1980): Vinyard plaintiffs brought a suit against Oki after purchasing grape vines, alleging Oki had represented the vines to be healty, disease-free, and suitable for growing grapes. Held One can sue for a tort of fraudulent misrepresentation separate from the contract if there is harm to the plaintiff, not just a dispute about holding the defendant to a promise.
Lipsit v. Leonard, Supreme Court of New Jersey, 64 N.J. 276, 315 A.2d 25 (1974): Plaintiff Lipsit worked for Leonard for nine years in New York under written contracts (during which time Leonard became incorporated), with Leonard allegedly promising Lipsit that he would get equity in the business. When they discussed equity, the terms were unacceptable by the plaintiff. Lipsit accuses Leonard of breach of contract and fraud because Leonard allegedly never intended to give Lipsit a stake in the company. Should summary judgment be issued against the breach of contract complaint? Held Summary judgment is valid against the complaint of breach of contract, because 1) the oral discussions never reached the stage of an enfoceable contract, and 2) the parole evidence rule would bar the oral discussions because of the written employment contracts. Should the tort of fraud and misrepresentation be allowed? Held The tort action should be allowed to proceed. New York law allows tort cases based upon fraud to go forward even if not grounded in breach of contract. However, the damages will not be based on expectation of the contract, but on restitution—the "out of pocket rule." If successful, the plaintiff will only be able to recover out of pocket expenses. [Would he be able to recove any equity at all?]
Bank of America Nat. Trust & Sav. Ass'n v. Pendergrass, 4 Cal.2d 258, 48 P.2d 659 (1935): Defendants signed a promissory note with the bank "payable on demand." When the bank tried to collect, defendants claimed the bank had promised them that they would be allowed to operate the ranch on which they farmed for 1932 without being bothered, that they made the promise without intending to keep it, and that the bank soon seized the land on which the mortgage was held after the note was signed. Held Parole evidence to prove a tort of fraud is inadmissable here. Parole evidence is allowed to prove independent facts, but this promise effectively extended the payment of the note for another year, directly contradicting the words of the written agreement. [Courts that make an intrinsic/extrinsic distinction of the parole evidence rule for preventing the rule to allow claims for fraud in tort are in the minority and criticized.]
Sabo v. Delman, 3 N.Y.2d 155, 164 N.Y.S.2d 714, 143 N.E.2d 906 (1957): Defendant made a written conract to get plaintiff's patent on a shoe-cutting machine, and promised orally before signing the contract to manufacture the machine and use best efforts to promote it. Defendant only made two machines, and plaintiff sued for fraud in tort to anull the contract. Does the parole evidence rule preclude a request to set aside a contract by the oral arrangement's contradicting the written contract? Held No; the oral arrangement isn't contracting the terms of the written contract, but instead there is a complaint of fraud based upon previous oral arrangement and the request is to set aside the agreement, not enforce a new term. [Why does this case say that extrinsic evidence would ever not be disallowed? Isn't it intrinsic parole evidence that's disallowed?]
LaFazia v. Howe, Supreme Court of Rhode Island, 575 A.2d 182 (1990): The Howes purchased a deli from plaintiffs Arthur LaFazia and Dennis Gasrow. The plaintiffs said that, as they dealt in cash, they didn't have records of income. They showed tax records, but said that the low numbers were not indicative of the actual income. The Howes were convinced the deli would make money, so they bought it. There were clauses in the contract stating that the Buyer was relying on their judgment, thta no representations or warranties were made, and that the agreement constituted the whole agreement. The business never was profitable, but the Howes kept paying on the contract. They finally sold the deli and refused to pay the rest. Plaintiffs filed a suit for the money, and the Howes filed a counter-claim for misrepresentation. Held The Howes cannot claim misrepresentation, because they understood and signed a contract that stated they had not relied on other representation, while represented by an attorney (who happened to be their son). This was more than a merger clause—it was specific that there was no other representation. If the non-reliance clause isn't true, then there is no way for two parties dealing at arms length to indicate no reliance. (A person induced by fraud may normally either sue on the contract to rescind the contract or sue in tort for damages.)
Rio Grande Jewelers Supply v. Data General Corp., 101 N.M. 798, 689 P.2d 1269 (1984): A buyer of a computer system sued claiming negligent representation of the system's capabilities. The contract disclaimed all prior representations. Held The plaintiff cannot collect damages, because if a contract that is valid under the UCC and has a valid disclaimer of warranties under UCC 2-316, allowing the claim to go forward would effectively allow the contract to be written and the UCC to be circumvented.
Hoffman v. Chapman, Court of Appeals of Maryland, 1943, 182 Md. 208, 34 A.2d 438: Joseph Stanley Hoffman and his wife sold a house on Lot 4 at Kensington, on which defendants lived after the agreement was made, but the draftsperson accidentally made up a deed conferring the entire lot, not just Lot 4. Plaintiffs sued in equity to have the deed modified. Should parole evidence be excluded from modifying the written agreement? Held No, because fraud, accident and mistake are exceptions to the parole rule. Is the agreement so vague that the contract must be void? Held No, a contract must be upheld if by its express terms or implications the intent of the parties can be determined. Here, there was no mistake between the parties as to the identity of the property, there was only an incorrect description. Is there unilateral negligence on the part of plaintiffs that would allow the defendants to keep the land? Held No, mere mistake does not necessarily indicate negligence, and the error of the draftperson modified the agreement to contradict the understanding of both parties, so it was not a unilateral mistake.
Bethlehem Steel Co. v. Turner Constr. Co., 2 N.Y.2d 456, 161 N.Y.S.2d 90, 141 N.E.2d 590 (1957): Plaintiff Bethlehem Steel contracted with a general contractor to furnish steel for a project. The contract said that prices could be adjusted up to $15 per ton if "prices for component materials, labor rates applicable to the fabrication and erection thereof and freight rates" increased or decreased. Bethlehem raised prices based upon steel items, and defendant said that the adjustment clause only referred to materials used to make steel. Held Plaintiff should be granted summary judgment, because when the clause is clear on its face, information extrinsic to the contract cannot be used to modify the written contract. Dissent The contract is ambiguous, and the plaintiff is trying to assign other meanings to commonly used language.
Robert Indus., Inc. v. Spence, 362 Mass. 751, 291 N.E.2d 407 (1973): While external evidence may not be used to contradict or change terms, the facts and circumstances surrounding the transaction may be used to elucidate that terms and remove or explain any uncertainty.
Pacific Gas & Elec. Co. v. G.W. Thomas Drayage & Rigging Co., Supreme Court of California, 1968, 69 Cal.2d 33, 69 Cal.Rptr. 561, 442 P.2d 641: Defendant contracted to fix plaintiff's steam turbine, and the contract indemnified and insured the plaintiff against damage to property. Defendant damaged plaintiff's turbine during the work and plaintiff sued defendant. Defendant claimed the contract only referred to the property of third parties. Is the contract unambiguous on its face to disallow extrinsic information of the circumstances surrounding the contract? Held No. Even though extrinsic evidence may not be used if a contract is unambiguous, that extrinsic evidence of circumstances may be used to determine if the words of the contract actually are ambiguous. Words are mere symbols that represent ideas which may be different than those of the judge, and in California "magic words" may not override the intent of the parties.
Federal Dep. Ins. Corp. v. W.R. Grace & Co., 877 F.2d 614 (7th Cir.1989): Posner: The old "four corners" rule, limiting inerpretation to the words on the page if they appear unambiguous, has some merit by reducing litigation.
Spaulding v. Morse, 322 Mass. 149, 76 N.E.2d 137 (1947): Defendant and ex-wife had set up a trust that would pay son Richard D. Morse (through trustee) $1200/year until he entered college or university, and then pay him $2400/year for four years. When Richard joined the US Army, defendant stopped paying. Held Defendant doesn't have to pay. The agreement should be interpreted in light of the material circumstances and pertinent facts of which they had knowledge. The purpose of the trust was to provide for Richard's maintenance and education, and this was not needed when he was in the Army.
Allied Van Lines, Inc. v. Bratton, 351 So.2d 344 (Fla. 1977): Held One cannot defend against enforcement of a contract on the grounds that the party signed the contract without reading it.
Agricultural Ins. Co. v. Constantine, 144 Ohio St. 275, 58 N.E.2d 658 (1944): Woman parked her car at an attended parking lot twice a week for five or six years. She always received a ticket after leaving the keys in the ignition saying the parking lot was not liable for the car, but she never read it. One day she came back to find her car had been stolen and damaged, so she sued for the price she had to pay to repair the car after her insurance paid the rest. Was the woman bound to the terms on the ticket? Held No. 1) Since the attendant assumed control over the automobile, the defendant became a bailee, not a mere lessor of a parking space. 2) The ticket was only a "token of identification," not a bailment contract. The woman had never read it and the attendant had never pointed out what it said. 3) Even if she would have read the ticket, public policy does not allow bailees to relieve themselves of liability from negligence.
Mundy v. Lumberman's Mut. Cas. Co., United States Court of Appeals, First Circuit, 1986, 783 F.2d 21: Some silverware was stolen from the Mundys, and their insurance policy limited the liability for theft of silverware to $1,000. The insurance policy did not originally have such a limitation, and when the change occurred an update was sent out informing the Mundays of the change. The Mundays claim the notice was insufficient. Are the Mundays bound to the new terms? Held Yes; the notice included a distinctive heading noting that there had been changes, there was a special section noting the changes (including the one in question), and the actual new text was printed in its own section.
Weisz v. Parke-Bernet Galleries, Inc. 67 Misc.2d 1077, 325 N.Y.S.2d 576 (N.Y.Civ.Ct.1971): Weisz and Schwartz bought paintings purportedly by Raoul Dufy for ~$3,000 and ~$9,000, respectively, and then found out they were fakes. The Park-Bernet catalog contained a disclaiming stating that, although attempts had been made to verify authenticity, there was no warranty of such. The auctioneer also announced the disclaimer at the start of the auction. Held Weisz was not held to the disclaimer, because he didn't know about it. Held The Schwartz' are not bound by the disclaimer, because even though they knew about it the reputation of Park-Bernet and the form of the catalog gave the air of authenticity and implied that warnings should be taken lightly. [The judgment for Weisz was reversed because the display in the catalog was prominent and auctions have in general an implication of caveat emptor.]
Henningsen v. Bloomfield Motors, Inc., Supreme Court of New Jersey, 1960, 32 N.J. 358, 161 A.2d 69: Henningsen purchased a new car from Bloomfield. At ten days and 468 miles the steering wheel spun while his wife was driving and the car was totalled. The sales contract contained, in small print, a merger clause and a paragraph limiting the warranty to replacement of defective parts to 90 days or 4,000 miles, whichever was shorter. They sued to recover for personal injuries, and Bloomfield said that the warranty disclaimer precluded suits for personal injury. Is the warranty disclaimer valid? Held No. 1) The disclaimer was in a small font in the midst of other text that made it hard to find, and there is no evidence that the plaintiff ever read it. 2) As public policy, the dealership had unequal bargaining power in relation to the customer, so the warranty wasn't really bargained for—the salesperson didn't have the authority to change the clause if he would have wanted to. 3) Even if the warranty disclaimer were valid, it was ambiguous to a normal person because it made it seem like it was only limiting a warranty for parts, not for personal liability.
Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159 (Minn.1981): Plaintiff purchased a press from defendant. The press failed and plaintiff sued defendant for negligence. Is a manufacturer of defective equipment liable in tort for negligence or strict liability? Held No, those are contracts-based issues that are covered by the UCC.
Richards v. Richards, Supreme Court of Wisconsin, 1994, 181 Wis.2d 1007, 513 N.W.2d 118: Mrs. Richards wanted to ride with her husband as he drove a truck for Monkem Co. They said that she could if she would sign a "Passenger Authorization" form that authorized her to ride in a particular vehicle, as well as purported to release Monkem from liability from any future injury in any Monkem vehicle or on any Monkem property. Mr. Richards had an accident, pinning Mrs. Richards in the truck, so she sued. Is the exculpatory contract valid? Held No, the exculpatory contract is void as against public policy. The point of tort law is to compensate people for their injuries and provide a deterrance for harmful behavior. Courts disfavor exculpatory contracts but do not categorically deny them. This contract had three problems, none of which alone would have invalidated the contract: 1) the exculpatory purpose is not evident from the title of the agreement; 2) the release is overly broad an all-inclusive, allowing riding in one vehicle but relieving liability for all vehicles;, and 3) it is a standardized form that did not give plaintiff any room to neg