Law Student Outlines Selected by
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Law Student Outline
Contracts Law Notes
Four Contract Questions
1. Is there a contract?
2. What are its terms?
3. Was it extinguished?
Did the parties perform as they were supposed to?
4. What are the damages?
Quasi Contractual Relief
Reliance, Restitution, Reformation
Specific Performances do what one has promised
Substitution, Damages - Pay money to compensate for the
breach of the promise
Common law did not historically like specific performance.
Specific remedy only given as exception in England Common
Law because of Law and Equity Courts.
Specific remedies are the preferred remedy in the LCC
1986 If the obligor fails to deliver the thing or not to
do an act, or to execute an instrument, the court shall
grant specific performance plus damages for delay if the
obligee so demands. If specific performance is impracticable,
the court may award damages to the obligee.
If the obligation had another object, such as an obligation
to grant specific performance is at the discretion of the
Law and Equity Courts
A. Kings Courts were common law courts
Remedy there was damages Law Cts. damages or title Legal
B. Equity courts were a branch of the courts
Chancellor presided and granted writs of access to common
Chancellor compelled individuals to do or not to do things.
Chancellor was a religious counselor or the Kings conscience.
Equitable Remedy injunction particular jurisdiction
1485 1776 Development of the Royal Courts
Writ breve brief
Hawkins v. McGee
P suit of negligence is non-suited. Goes forward on contract
theory. Pain and suffering not recoverable.
Ct. looked at the value of the good hand (Promised hand)
Value of the hand after the operation
To put in the position the promisee would have been if the
promisor had performed as promised
Physician statement that he would make the hand a 100% good
hand was a guarantee and enforceable as such.
Hadley v. Baxendale
Several different case reports
P presents two theories of the case. Nolle proseque dont
want to prosecute
1. Contract claim I was promised by a date certain to
deliver a shaft Employee made the promise did he have agency
or authority to do so. P gave up contract claim
2. Common carrier claim goes forth on that theory
25 pounds into the court + jury awarded another 25
Today we assume insurance
This case is not about enforcing a promise but about common
Nurse v. Barnes
Recover reliance damages - not what he would have earned.
pure reliance v. restitution
Restitution getting back what was given.
Common law contracts cases were reported by lawyers for
often there were errors
This is a strange case
Rule Nisi Unless P can show cause why new trial should
A new trial should occur.
New rule comes from the French Civil code Art 1995
A breach + B. profit he has been deprived of
Dammnum Loss sustained
emergens lucrum cessans
Only liable for what is foreseeable when the contract was
as a direct consequence of the breach.
Damages are recoverable even if not foreseeable at time
Frau Sedgewick translation closer to duress or violence
than our definition of it.
If communicated then special damages can be had.
If you take an additional risk you would expect to make
more profit. Justification for the rule for extraordinary
service you should pay an extraordinary price.
Is this call mutual benefit?ASK********************
Louisiana Case Guy was told by boss to move his residence
then boss changed his mind. Cause was defeated. Both known
by buyer and seller. If seller had said well thats not
my risk then he would not be liable.
Photo example not liable for consequential damages. Boxtop
contracts read the paper given to you.***********ASK
Morrow v. FNB of Hot Springs
Coins stolen from safety deposit box. Nothing was given
in exchange never an acceptance There was an acceptance
by silence. Offer was request. Must prove more than mere
knowledge - there must be an agreement.
Nonfeasance failure to act
Misfeasance wrongful act
Hector Martin v. Southern Pacific Transportation Co.
Unreasonable delay in transportation.
Dragline used in strip-mining equipment
Commercial context is different than Hadley v. Baxendale
What is foreseeable today is different than what was foreseeable
Not so remote as to make it unforeseeable
Held New Trial
Jack Dempsey Case
Anglia v. Reed
TV show double booking case
Reliance damages expenditures
Did not dispute liability only damages. Wasted expenditure
was not recoverable
Expenditures before contract or after contract was realized.
Reliance and Expectation meet here. You will make back your
investment you need to show that you would have profited.
Mistletoe v. Locke
Could terminate by thirty-day notice.
Jury awarded damages at 19,400.00$
Mitigation of damages P shows foreseeable
No duty to mitigate damages
P not at liberty to make D pay for damages that P further
inflicts on himself.
D says you could have avoided these extra expenditures by
An affirmative defense.
Hooker v. Roberts Cabinets
Hooker General Contractor Roberts Subcontractor
Hooker Breaches. Dispute arose over who would dispose of
cabinets. . Dispute not about sale of goods but of a service
installation and removal. Hooker let him go but offered
to buy the cabinets already made.
How to measure Roberts damages?
Roberts had to store extra cabinets during the dispute,
pay employee whose time was spent on breached contract.
Roberts demanded an additional 23,000 as installation neared.
Trail Ct. found Hooker had no right to unilaterally terminate
$42,870 found damages
storage costs 1440
administrative costs 1760
lost profits 30,000
Held received all damages but the amount he wanted to
recover for storage. He would have had that space empty
anyway so he could not recover for it.
Tongish v. Thomas
Farmer/seller breaches contract to sell sunflower seeds
at fixed price when market price went up.
But co-op/buyer itself had a contract to resell each unit
for cost + 55 cents
Assume sale price $4, market price at 10$, what are damages
per unit 55cents or 6 dollars?
2 sources of distinguishability
Seller argues 55cents puts him in same place if he had performed
the contract buyer argues difference in market price and
contract price is what he should get because the prices
a have increased so dramatically.
106 says I should give you exactly what you need to be
if the position you would be if I had performed.
Trial Ct. applied 713
Appellate reversed and applied 106
Supreme Ct. back to trial ct. 713 applied
Contest between general principle (expectation) and specific
damages measure when seller breaches (contract market difference)
S.Ct applies specific measure overcompensates PP?
1. Remoteness of harm
2. Certainty of harm
3. Avoid ability of harm
Kemble v. Ferren
Action to recover for liquidated damages for the violation
of appearing for 4 seasons at Covent Garden.
Jury awarded with a sliding scale.
D. Needs to show cause why verdict for P should not be increased
from 750 to 1000.
Held increase not allowed.
Rat Action was brought for breach of a clause of an uncertain
Issue Penalties clauses unenforceable
Liquidated damages enforceable
Historically penal bonds are defeasable
Ex. I owe you 200.00 but if I pay you by a certain date
I only have to pay 100.00.
Theory began to be held in disfavor. Promisee is put in
a better position by the other partys breach of the contract.
Wassenaar v. Towne Hotel
General manager for the hotel sued for breach of contract
Is clause stipulating liquidated damages enforceable or
is it really a penalty clause and thus unenforceable.
The Efficient Breach Theory you should have the possibility
of breach for a better deal. When all three come out ahead.
***********When you elect specific performance as a preferred
remedy you are using the efficient breach theory?
They serve several purposes
1. Allow parties to control their exposure to risk by setting
payment for breach in advance
2. Avoid uncertainty
3. P., 179
Trial Ct. 24,640 awards to P
Supreme Ct. back to Trial Ct. decision
Buyer breaches because of sellers theory in order to put
me in position I would have been I need the profit I would
have received from the buyer
Lost volume rule seller is in better position if buyer
1. Contract price does not work
2. Lost volume measure
Damages that cannot be mitigated.
Rule on mitigation Section 350
Garrity v. Lyle Stuart, Inc.
Issue Does arbitrator have power to allow punitive damages?
Even though the punitive damages were agreed upon by contract
this goes against public policy. Awarding of penalties does
not go against public policy. Punitive are a social sanction
reserved for the court.
Rat under arbitration rules the court does not supervise
Arbitration mostly outside of the legal system
No judge or state employee supervises so no punitive damages
LCC damages 3546
If you have a thin contractual skin I should raise my price.
Wedding dress example
Damages Common law tort actions
Loss of consortium, pain and suffering
Contract has barrier to this
SLOW TO GIVE MORAL DAMAGES FOR CONTRACT BREACH
Willoughby Roofing v. Kajima
Rat Federal policy does not prohibit arbitrators from
awarding punitive damages if stipulated in the contract
If bias plays a part in the award it can be vacated.
1. Defendants could escape punitive damages by simply agreeing
to arbitration if Garrity were upheld.
2. Also. Arbitration would be disfavored if you could not
allow punitive damages.
Common Law everything beyond compensation is punitive
Civil Law not to punish but to compensate for harm suffered
just difficult to determine for damages
Eggshell sensitive P
Tough doesnt suffer
These prior two do not suffer the same
Common law says we cant determine what to give so make
sure you bargain more money from the sensitive P
Different states have different measures of damages
Loveless v. Diehl
Loveless owns 79-acre farm. Leased it to Diehl. Was an option
contract to purchase.
Land is a liquid market but in the law it is still considered
Specific performance is the preferred remedy.
We need to enforce option so they will be desirable?
Contracts for Goods
Cumbest v. Harris
Courts of chancery do not usually decree specific performance.
Security interests not a sale.
Decided by analogy
Scholl v. Hartzell
Just because he put down a deposit does not mean the contract
was completely executed.
Rat Specific performance should only be when there is
no adequate remedy at law.
Not replevin (give it back) but assumpsit.
Sedmak v. Charlies Chevrolet
Put 500.00 deposit on Corvette used as a pace car.
Specific type of engine and stereo
Dealer asked to keep car as a model.
D had to give specific performance
She is free to contract but not to be a servant involuntarily
Lumley v. Wagner
Pepper pot painting Sumpter Priddy III figured out Crimmel
was very valuable.
Bought it for 1,300 sold it for 385,000.
Cowboys v. Harris
Bush v. Canfield
2000 barrels $7 barrel superfine wheat if only fine grade
then 50 cents less
P paid in advance 5,000
3,000 at 4 months
1000 4 months at interest
Failed to deliver flour
Trial ct. found for P $6,771
Defendants owed 7 barrel plus interest notwithstanding that
the price had dropped to 5.50 a barrel
Restitution damages Field codes precommon law codification
Quasi contract is a remedy not a type of contract
Act as if it were a contract
Disgorgement Cough up the profits not merely the value
of the thing in her hands.
What was the contract?
Discussion on earnest money - ??????????
Contract made but failed
Vice of Consent
LCC 1967 Detrimental Reliance
P not relied upon a remedy of offer and acceptance cause
is illicit quasi contractual
Warranty of redhibition/ fit for particular use
Britton v. Turner
Common counts certain kind of writ to get into court increased
# of writs decreed every now and then they would try to
Equity Chancery v. Common Law Quantum Meruit Indibitatis
Was indebted and promised to pay provided services have
not been paid.
Amount of value things rendered (services) meruit what
the goods are worth in the market.
Contract Defined is a promise or a set of promises for
the breach of which the law gives a remedy or the performance
of which the law in some way recognizes as a duty
Promise is a manifestation of intention to act or refrain
from acting in a specified way so made as to justify a promise
in understanding that a commitment has been made.
The person manifesting the intention is the promisor
The person to whom the manifestation is addressed is the
Where performance will benefit a person other than the promisee
that person is a beneficiary
An agreement is a manifestation of mutual assent on the
part of two or more persons. A bargain is an agreement to
exchange promises or to exchange a promise for a performance
or to exchange performances.
How a promise may be made
Measure of damages in general
The injured party has a right to damages based on his expectation
interest as measured by
(a) The loss in value to him or the other partys performance
caused by its failure or deficiency plus
(b) By other loss, including incidental or consequential
loss caused by the breach
(c) Any cost or other loss that he has avoided by not having
Lumley v. Gye
Wagner breached contract with Lumley to work for Gye.
Lumley sued Gye on tortious interference of contractual
Common law action of enticement
P wins but only nominal damages
Section 766 of Restatement of Torts
Is subject to liability to the other for the pecuniary loss
resulting from the failure of the 3rd person to perform
What did the judges look at?
Intentional v. Negligent
Original theater owner
First person new theatre owner
Third person singer
Texaco v. Pennzoil
Other 3rd person
Texaco First Person
Basic remedy for breach of contract
Common Law damages expectation are there to say what will
be the harm suffered by the person not in breach
By giving P $ value of expected performance
Specific performance is a preferred remedy
Action for tortuous interference Makes no sense??????????????
If the party in breach gives expectation damages
Any remedy against a third party will be over compensatory
Efficient Breach Theory Damages at common law
Should someone benefit by a breach
If person who interfered with an existing contract is competing
the court will place emphasis on
this. Remedy in damages which included lost profits.
If party coming in is willing to breach and still make $
common law is saying go ahead and do it.
768 of Torts
Rest-Torts (Contents) s766
Usually they will mesh?
P needs to figure a more generous measure.
LCC has a test - Impracticability
Ring is not there to be delivered
1967 Detrimental reliance
White v. Corlies and Tiff
D gave P specifications for building offices and asked for
D took the estimate altered and returned it to P.
P began the work before the contract was fully formed.
P never accepted in the correct form. He began performance.
Acceptance must be by an appropriate act.
Held No Contract
Crook v. Cowan
Facts D ordered carpet from P. Refused delivery because
he purchased from another the carpets. D never received
confirmation of his order.
P received award for breach of contract
Issue Order was unconditional
Rat. Merchant (p) offer was advertisement (d) Cowan placing
order was an acceptance. So the contract was formed at that
Note D should have made the acceptance conditional. Intent
to be bound by the offeror.
The offeror is bound before he knows he is bound.
Advertisements are not normally offers but when the offer
or advertisement is very specific and sets out all elements
of offer then performance can be acceptance.
Leftowitz v. Big Store
Carbolic Smoke Ball bargain to pay for the ball. Benefit
to the offeror. Bargain for the promissee to do something
he doesnt have to do.
Changing his position detriment top promisee. Flag pole
case if you walk across the Brooklyn Bridge I will pay you
100.00. Seems hard to see the
a. Benefit to the promisir one kind of consideration
b. Detriment to the promisee another kind of consideration
Consideration benefit to the promisor
1st Restatement kept it split
2nd Restatement tried to do away with the split. One or
another or both.
Did the offeror get what he wanted?
Common Law Based on idea of bargain or exchange
Gifts are not contracts they are unilateral
Civil Law We dont look for bargains we look for agreements.
Loan for use, unilateral agreements offers can be irrevocable.
Option contracts can be irrevocable.
Mailbox Rule and acceptance by performance have a common
characteristic. The offeror may be bound before he knows
he is bound.
Buyer is making an offer Evertite Roofing
Chicago Refrigerator selling refrigerators in the south.
They are not bound until they get back to their offices
Section 30 Acceptance in any manner and by any medium
reasonable. In the circumstances.
Section 32 - as the offeree chooses.
Mortgagor/creditor says pay me a discount of the mortgage
Creditor says you have to perform to accept but then sells
the debt to a third party.
Dickerson v. Dodd
In LA you can make an irrevocable offer by saying so
An option unilateral contract
In Common Law you cant do this
You must get paid for it.
This is a valuable right and must be paid for.
Offeree must give consideration.. Nothing done gratuitously
at common law.
Offeror hiding because he has changed his mind.
Talking heads agreement?********************
Option Contract created by part performance or tender
Benefit is to detriment of offerree not benefit of the offeror
Section 50 acceptance of offer defined
Acceptance by performance
Acceptance by promise
FLA/ ALABAMA job offer
Objective theory of contract
1. Subjective belief there is an agreement
2. And that belief is reasonable
Baron Bramwell one party must intend an agreement
I was only joking?
I was drinking.
If you were joking you let the joke go on too long.
UsGovt. v. Braunstein
Error Clerical slip
Offer and acceptance
$1 offer per pound Braun $1 accept ton gov.
Government loses summary judgment granted
Mutual assent based on third party error
Neither party was at fault
There is no contract because there was no acceptance
Language of contract
Ambiguous language is different
Reformation fix the contract
Preliminary Negotiations p. 356
Nebraska Seed Co. v. Harsh
Invitations to negotiate or bargain thinks he is accepting
Mutual assent offer and acceptance
Empro Mfg. v. Ball Co.
Langdell worse to be in a deal you did not know you were
Llewellyn offeror is in the stronger position he can draft
and protect himself.
Hobbs v. Massasoit Whip Co.
Jury instructions Was there a contract if the buyer had
reason to believe that the seller would understand buyers
receipt of skins and silence over several months was acceptance.
LCC reprealed 1816
Owner of property mortgagor/debtor tries to accept
Shows up with money
Whats missing is length of time for price. Could be fixed
by quarterly or monthly.
They knew they were contracting and thought that they were
bound but the court found that no contract existed. Would
be decided differently today agreements to agree.
Vague terms in law of sale.
Quantity LCC 1974
By determinable third person
May be detrimental reliance if the third person does not
supply the price.
You can survive summary judgment.
Parties have stipulates reasonable price only for movables.
Agree to negotiate. Or reasonable price. They survive a
Gulf wanted to increase their gas prices Eastern filed for
an injunction for breach of contract. Gulf said a lack of
mutuality and impracticability. Issue Is the contract
Good Faith demands are what is important. Consideration
is adequate from the seller to sell only to that buyer and
for the buyer to buy from only that seller.??????
Iron Works v. Radiators If market price goes way up isnt
good Faith to turn around and resell when before you were
simply making radiators?
LCC 1770 Suspensive and resolutory conditions.
Cant be bound by a whim. Potestative. Future uncertain
event. Suspensive condition is a loan. Frustration of purpose/
mistake as to assumption of the contract
LCC 1975 Output of performance
Measured by good faith
No mutuality does this mean mutually advantageous? Contracting
her name for selling goods. She is held to her promise.
Carbolic Smoke Ball
Offer held out to the public. 100 Pounds. Offer was accepted
by performance. Co. had to pay Carlill.
Good Faith in the UCC
Good Faith in the LCC
UCC is not applicable to construction contracts or immovable
New York radiator would be decided wrongly under the 306
Ratio in infinity
Look at past performance for good faith. If buyer requirements
last year were 100 units could the parties think that the
order the following year would be 0.
Is there good Faith?
If buyer wants to argue good faith does he have authority
to do so? Yes
X Infinite regression?
Garrity v. Lyle Stuart Inc
Royalties were withheld from a book publisher
Arbitrator could not award punitive damages
Against public policy Contract Law
Prohibits unless TioC and can only be found by the court
Arbitratorsa are subject to pressure by the parties.
Dissent Weve allowed treble damages which is similar
P alleges done to coerce here too drop 1971 case suit
Federal law allows punitive awards from arbitrators
Federal Policy says arbitrators lawful does not undermine
Punitive punishes wrongdoer deters others who might engage
in similar conduct.
By agreeing to arbitrate escaping punitive awards
Free to spevify in contract to exclude the possibility of
Raffles v. Wichelhaus
Understanding was P would sell to D 125 bales of cotton.
2 Peerles ships/ Bombay to Liverpool. D would not accept
because he thought he had contracted for the Oct. ship.
The Seller thought he had contracted for the December ship.
Parol evidence was allowed. If ambiguity is to an ambiguous
term there is no contract Material term. No meeting of the
minds. Standard of reasonable expectation. Therefore there
was no contract.
Read what Gilmore and Simpson have to say
One term used that became ambiguous because there were 2
If you can tell from outward manifestations that they wanted
to be in a contract, then the court can resolve tha mbiguous
Breach D refused to accept goods or pay.
He thought Oct.
D thought Dec.
P demurrs in the plea (so what)
Milward time of sailing no part of contract
Mellish Peerless latent ambiguity
Ex Peerless means risk of loss on neither party contract
Oswald v. Allen
Two Swiss coin collections. Dr. Oswald thought he was purchasing
the coins from one Swiss collection. They were really coins
form both collections. They were using an interpreter. Ambiguous
so No Contract. (Mutual Error). Rescinded contract .
LCC unilateral error one party may owe damages to the
2474 - Seller