Diana Bonilla Contract Law

Key Terms

Agreement: The manifestation by two or more persons of the substance of a contract. Bilateral Contract: A contract entered into by way of exchange of promises of the parties; a promises for a promise.! Consideration: "omething of legal #alue gi#en in exchange for a promise. Executed Contract: A contract that has been fully performed on both sides; a completed contract. Executory Contract: A contract that has not yet been fully completed or performed. Express Contract: An agreement that is expressed in written or oral words. Formal Contract: A contract that re$uires a special form or method of creation. Genuineness Of Assent: The re$uirement that a party%s assent to a contract be genuine. Informal Contracts: A contract that is not formal. &alid informal contracts are fully enforceable and may be sued upon if breached. Implied In Fact Contracts: A contract where agreement between parties has been inferred because of their conduct. Lawful O !ecti"e: 'here the focus or purpose of the contract is legal. O !ecti"e T#eory Of Contracts: A theory that says that the intent to contract is (udged by the reasonable person standard and not by the sub(ecti#e intent of the parties. Offeree: The party to whom an offer to enter into a contract is made. The party to whom an offer has been made. Offeror: The party whom ma)es an offer to enter into a contract. The party who ma)es an offer. $uasi Contract: An obligation created by the law to a#oid un(ust enrichment in the absence of an agreement between the parties. %easona le &erson 'tandard: The standard by which the court decides if the parties intended to create a contract. A reasonable person! is a fictitious person of ordinary prudence. (nilateral Contracts: A contract in which the offeror%s offer can be accepted only by the performance of an act by the offeree; a promise for an act.! )alid Contract: A contract that meets all of the essential elements to establish a contract; a contract that is enforceable by at least one of the parties.

Diana Bonilla Contract Law )oid Contract: A contract that has no legal effect; a nullity. Acceptance: Ac$uiescence *ail Box %ule: Counteroffer: A response by an offeree that contains terms and conditions different from or in addition to those of the offer. A counteroffer terminates an offer. Express Aut#ori+ation: A stipulation in the offer that says the acceptance must be by a specified means of communication. Implied Aut#ori+ation: *ode of acceptance that is implied from what is customary in similar transactions+ usage of trade+ or prior dealings between the parties. Implied Terms: A term in a contract that can reasonably be supplied by the courts. Lapse Of Time: An offer terminates when a stated time period expires. ,f so time is stated+ an offer terminates after a reasonable time. *irror Image %ule: "tates that for an acceptance to exist+ the offeree must accept the terms as stated in the offer. Offer: The manifestation of willingness to enter into a bargain+ so made as to (ustify another person in understanding that his assent to that bargain is in#ited and will conclude it. %e!ection Of An Offer By Offeree: 'uper"ening Illegality, The enactment of a statute+ regulation+ or court decision that ma)es the ob(ect of an offer illegal. This action terminates the offer. (ne-ui"ocal Acceptance: 'here acceptance of the contract is definite and absolute.

Diana Bonilla Contract Law

Key Terms C#apter . Accord, An agreement whereby the parties agree to accept something different in satisfaction of the original contract. Accord and satisfaction, The settlement of a contract dispute. Ade-uacy of consideration, A #alue of the bargain that is e$ual to or reasonably proportioned to the #alue of that for which it is gi#en. Bargained/for exc#ange, -xchange that parties engage in that leads to an enforceable contract. Best/efforts contract, A contract clause that re$uires one or both of the parties to use their best efforts to achie#e the ob(ecti#e of the contract. Consideration, "omething of legal #alue gi#en in exchange for a promise. E-uita le relief, The )ind of relief sought in a court with e$uity powers .e.g. in(unction+ specific performance of a contract/. E-uita le remedies, A remedy based upon settled rules of fairness+ (ustice+ and honesty. E-uity, A doctrine that permits (udges to ma)e decisions based on fairness+ e$uality+ moral rights+ and natural law. Gift promises, An unenforceable promise because it lac)s consideration. Illegal consideration, A promise to refrain from doing an illegal act. "uch a promise will not support a contract. Illusory promises, A contract into which both parties enterer+ but one or both of the parties can choose not to perform their contractual obligations. Thus the contract lac)s consideration. In!unction, A court order that prohibits a person from doing a certain act. Legal "alue, 'here the promise suffers a legal detriment or the promisor recei#es a legal benefit. *oral o ligation, A duty that rests on moral considerations alone and is not imposed or enforced by positi#e law; a duty binding in conscience but not in law. Output contract, A contract in which one party agrees to sell his or her entire output and the other agrees to buy it. &ast consideration, A prior act or performance. 0ast consideration .prior acts/ will not support a new contract. 1ew consideration must be gi#en.

Diana Bonilla Contract Law &reexisting duty, A promise lac)s consideration if a person promises to perform an act or do something he or she is already under an obligation to do. &romissory estoppel 0detrimental reliance1 %emedies at law, -conomic compensation in the form of real property+ personal property and money. %e-uirements contract, A contract in which the purchaser agrees to buy all of its needs of specified material from a particular supplier+ and then latter agrees to fill of the purchaser%s need during the period of the contract. %escission, An action to rescind .undo/ the contract. 2escission is a#ailable if there has been a material breach of contract+ fraud+ duress+ undue influence+ or mista)e. %estitution, 2etuning of goods or property recei#ed from the other party to rescind a contract; if the actual goods or property is not a#ailable+ a cash e$ui#alent must be made. 'atisfaction, The performance of an accord. 'pecific performance, A remedy that orders the breaching party to perform the acts promised in the contract; usually awarded in cases where the sub(ect matter is uni$ue+ such as in contracts in#ol#ing land+ heirlooms+ and paintings. 3udgments of the court ordering a licensor to specifically perform the license by ma)ing the contracted4for uni$ue information a#ailable to the licensee. A decree of the court that orders a seller or lessor to perform his or her obligations under the contract; usually occurs when the goods in $uestion are uni$ue+ such as art or anti$ues. Key Terms C#apter 2 *inor, A person who has not reached the age of ma(ority Infancy 3octrine, A doctrine that allows minors to disaffirm .cancel/ most contracts they ha#e entered into with adults. 3isaffirmance, The act of a minor to rescind a contract under the infancy doctrine. Disaffirmance may be done orally+ in writing or by the minor%s conduct. 3uty of %estitution, 'here+ upon disaffirmation+ the competent party returns the consideration to the contract bac) to the minor. 3uty of %estoration, 'here+ upon disaffirmance+ the minor returns the goods or property bac) to the competent party. %atification, The act of a minor after the minor has reached the age of ma(ority by which he5she accepts a contract entered into when he or she was a minor. 'hen a principal accepts an agent%s unauthori6ed contract. The acceptance by a corporation of an unauthori6ed act of a corporate office or agent. Emancipation, 'hen a minor #oluntarily lea#e home and li#es apart form his or her parents.

Diana Bonilla Contract Law 4ecessaries of Life, A minor must pay the reasonable #alue of food+ clothing+ shelter+ medical care+ and other items considered necessary to the maintenance of life. Legal Insanity, A state of contractual capacity as determined by law. Ad!udged Insane, A person who has been ad(udged insane by a proper court or administrati#e agency. A contract entered into by such a person is #oid. Insane ut not Ad!udged Insane, A person who is insane but has not been ad(udged insane by a court or administrati#e agency. A contract entered into by such person is generally #oidable. "ome states hold that such a contract is #oid. Intoxicated &erson, A person who is under contractual incapacity because of ingestion of alcohol or drugs to the point of incompetence. Lawful Contract, To be an enforceable contract+ the ob(ect of the contract must be lawful. (sury Law, A law that sets an upper limit on the interest rate that can be charged on certain types of loans. 'a at# Law, A law that prohibits or limits the carrying on of certain secular acti#ities on "undays. Contracts Contrary to &u lic &olicy, Contracts that ha#e a negati#e impact on society or that interfere with the public%s safety and welfare. Immoral Contract, A contract whose ob(ecti#e is the commission of an act that is considered immoral by society. Gam ling 'tatutes, "tatutes that ma)e certain forms of gambling illegal. In &ari 3elicto, An e$ual fault; e$ually culpable or criminal. Contract in %estraint of Trade, An economic policy of competition in the 7.".; Contracts restraining trade are illegal. %egulatory 'tatute, A licensing statute enacted to protect the public. %e"enue/%aising 'tatute, A licensing statute with the primary purpose of raising re#enue for the go#ernment. Exculpatory Clause, A contractual pro#ision that relie#es one .or both/ of the parties to the contract from tort liability for ordinary negligence. Co"enant not to Compete, An agreement where a party agrees not to engage in a similar business or occupation within a specified geographic area for a specified period of time following a sale. 3octrine of (nconsciona ility, 'here an otherwise lawful contract will not be enforced because it is so oppressi#e or manifestly unfair that it is un(ust.

Diana Bonilla Contract Law Key Terms C#apter 5 3uress, 8ccurs when one party threatens to do a wrongful act unless the other part enters into a contract. Economic 3uress, 8ccurs when one party to a contract refuses to perform his5her part contractual duties unless the other party pays an increased price+ enters into a second contract with the threatening party+ or underta)es a similar action. Fraud y Concealment, 8ccurs when one party ta)es specific action to conceal a material fact from another party. Fraud in t#e Inception, 8ccurs if a person is decei#ed as to the nature of his or her act and does not )now what he or she is signing. A real defense against the enforcement of a negotiable instrument; a person has been decei#ed into signing a negotiable instrument thin)ing that it is something else. Fraud in t#e Inducement, 8ccurs when the party )nows what he or she is signing but has been fraudulently induced o enter into the contract. A personal defense against the enforcement of a negotiable instrument; a wrongdoer ma)es a false statement to another person to lead that person to enter into a contract with the wrongdoer. Fraudulent *isrepresentation, 'here one person to a contract intentionally induces .or causes/ another person to rely and act on an assertion not in accord with the facts Genuine Assent, 'here an agreement .or assent/ to the contract by both parties is genuine and real. Genuineness of Assent, The re$uirement that a party%s assent to a contract be genuine. Innocent *isrepresentation, 8ccurs when a person ma)es a statement of fact that he or she honestly and reasonably belie#es to be true+ e#en though it is not. 8ccurs when an agent ma)es an untrue statement that he or she honestly and reasonably belie#es to be true. *isrepresentation of Law, 'hen a party to a contract misstates the law related to that contract4whether innocently or intentionally. *ista6e, An unintentional act+ omission+ or error arising from ignorance+ surprise+ imposition+ or misplaced confidence .mutual mista)e/. *utual *ista6e, A mista)e common to both contracting parties+ where each is laboring under the same misconception as to past or existing material fact. &ro Bono, 9or the good; wor) or ser#ices performed free of charge. %escission, An action to rescind .undo/ the contract. 2escission is a#ailable if there has been a material breach of contract+ fraud+ duress+ undue influence+ or mista)e. 'cienter, :uilty )nowledge; intent to decei#e or manipulate.

Diana Bonilla Contract Law (ndue Influence, Ta)ing ad#antage of a person%s wea)ness+ infirmity+ age+ or distress in order to change that person%s actions or decisions. (nilateral *ista6e, 'hen only one party is mista)en about a material fact regarding the sub(ect matter of the contract.

Key Terms C#apter 7

'tatutes of frauds, "tates statute that re$uires certain types of contracts to be in writing. %eal &roperty, The land itself as well as buildings+ trees+ soil+ minerals+ timber+ plants+ crops+ and other things permanently affixed to the land. *ortgage, An interest in real property gi#en to a lender as security for the repayment of a loan. 3eed of Trust, An instrument that gi#es the creditor a security interest in the debtor%s property that is pledged as collateral. Lease, A contract for the exclusi#e possession of lands or tenements for a determinate period; a contract by which the lessor grants the lessee the exclusi#e right to possess and use personal property of the lessor for a specific period. Life estate, An interest in the land for a person%s life time; upon that person%s death+ the interest will be transferred to another party. Easement, A right to us someone else%s land without owning or leasing it. A gi#en or re$uired right to ma)e limited use of someone else%s land without owning or leasing it. &art performance, An e$uitable doctrine that allows the court to order an oral contract for the sale of land or transfer of another interest in real property to be specifically performed if it has been partially performed and performance is necessary to a#oid in(ustice. One/year rule, An executory contract that can not be performed by its own terms within one year of its formation must be in writing. Guaranty contract, The contract between the guarantor and the original creditor. Original 0primary1 contract, ,n a guaranty situation+ this is the first contract between the debtor and the creditor. Guarantor, The person who agrees to pay the debt if the primary debtor does not. The third person who agrees to be liable in the guaranty agreement. *ain purpose or leading o !ect exception, ,f the main purpose of a transaction and an oral collateral contract is to pro#ide pecuniary benefit to the guarantor+ the collateral contract does not ha#e to be in writing to be enforced.

Diana Bonilla Contract Law 'ection 89: of t#e (niform Commercial Code, A rule sometimes referred to as the statute of frauds!; re$uiring that contracts for the sale of goods costing ;<== or more be in writing. (CC statute of frauds, A rule that re$uires all contracts for the sale of goods costing ;<== or more and lease contracts in#ol#ing payments of ;>+=== or more to be in writing. *odification, An alteration that does not change the general purpose and effect of that which is modified .modification of the agreement/. E-ual dignity rule, A rule that says that agents% contracts to sell property co#ered by the statute of frauds must be in writing to be anforceable. &renuptial agreement, A contract entered into by parties prior to their marriage that defines their ownership rights in each other%s property; it must be in writing. &romissory estoppel, An e$uitable doctrine that pre#ents the withdrawal of a promise by a promisor if it will ad#ersely affect a promisee who has ad(usted his or her position in (ustifiable reliance on the permits enforcement of oral contracts that should ha#e been in writing. ,t is applied to a#oid in(ustice. Integration of se"eral writings, 'here se#eral different writings or documents are considered to form one enforceable contract. Incorporation y reference, 'hen integration is made by express reference in one document that refers to and incorporates another document within it. Glossary, A detailed definition section in a written contract. 'tandards of interpretation, ,f the parties ha#e not defined the words and terms of a contract+ the courts apply those words and terms in the manner they normally are defined. *erger, 8ccurs when one corporation is absorbed into another corporation and ceases to exist. &arol e"idence, Any oral or written words outside the four corners of the written contract. &arol e"idence rule, A rule that says if a written contract is a complete and final statement of the parties% agreement+ any prior or contemporaneous oral or written statements that alter+ contradict+ or are in addiction to the terms of that written contract inadmissible in court regarding a dispute o#er the contract. Complete integration, 'here the written contract is a complete and final statement of the parties% agreement.

Key Terms C#apter ;

&ri"ity of contract, The state of two specified parties being in a contract. Assignment of rig#ts, The transfer by the parties of their contractual rights.

Diana Bonilla Contract Law Assignor, The party who transfer the rights. The transferor in an assignment situation. The oblige who transfers the right. Assignee, The part to whom the right has been transferred. The transferee in an assignment situation. The party to whom right ha#e been transferred. 'u se-uent assignee 0su assignee1, 'hen an assignee transfers the rights under the contract to yet another person. &ersonal ser"ice contract, Contracts for pro#iding personal ser#ices such as for an artist painting someone%s portrait. Assignment of future rig#ts, A currently nonexistent right that a party expects to ha#e sometime in the future. Anti/assignment clause, A clause that prohibits the assignment of rights under the contract. Appro"al of clause, A clause that permits the assignment of the contract only upon receipt of an obligor%s appro#al. 3elegation of duties, A transfer of contractual duties by the obligor to another party for performance. 3elegator, The obligor who transferred his or her duty. 3elegatee, The party to whom the duty has been transferred. Assumption of duties, 'hen a delegation of duties contains the term assumption+ , assume the duties+ or other similar language; the delegate is legally liable to the oblige for nonperformance. Anti/delegation clause, A clause that prohibits the delegation of duties under the contract. Assignment and delegation, Transfer of both and duties under the contract. 3onee eneficiary contract, A contract entered into with the intent to confer a benefit of gift on an intended third party. &romisee, 8ne to whom promise has been made. Commercial impractica ility, 1onperformance that is excused if an extreme or unexpected de#elopment or expenses ma)es it impractical for the promisor to perform. Condition precedent, A condition that must happen or be performed before some right dependent thereon accrues or some act dependent thereon is performed. Condition precedent ased on satisfaction, Clause in a contract that reser#es the right to a party to pay for the items or ser#ices contracted for only if they meet his or her satisfaction.

Diana Bonilla Contract Law Condition su se-uent, A condition+ if it occurs or doesn%t occur+ that automatically excuses the performance of an existing contractual duty to perform. Co"enant, An unconditional promise to perform. 3isc#arge, Actions or e#ents that relie#e certain parties from liabilities on negotiable instruments. There are three methods of discharge: .>/ payment of the instrument; .?/ cancellation; and .@/ impairment of the right of recourse. The termination of the legal duty of a debtor to pay debts that remain unpaid upon the completion of a ban)ruptcy proceeding. Creditors% claims that are not included in Chapter >> reorgani6ation are discharged. A discharge is granted to a debtor in a chapter >@ consumer debt ad(ustment ban)ruptcy only after all the payments under the plan are completed by debtor. Force ma!eure clause, Certain e#ents+ such as floods+ earth$ua)es or tornadoes that will excuse nonperformance of a contract. Implied/in/fact condition, A condition that can be implied from the circumstances surrounding a contract and the parties% conduct. Impossi ility of performance, *utual rescission, 'here the parties enter into a second agreement that expressly terminates the first one. 4o"ation, An agreement that substitutes a new party for one of the original contracting parties and relie#es the exiting part of liability on the contract. %easona le person test, 8b(ecti#e test that applies to commercial contracts and contracts in#ol#ing mechanical fitness. 'atisfaction, The performance of an accord. 'tatutes of limitations, "tatute that establishes the time period during which a lawsuit must be brought; if the lawsuit is not brought within this period+ the in(ured party loses the right to sue. 'u stituted contract, A new contract that re#o)es and discharges a prior contract. T#ird/party eneficiary, A third person that the contracting parties intended should recei#e a benefit from the contract.

Key Terms C#apter <

Anticipatory reac#, A breach that occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due. Breac# of contract, ,f a contracting party fails to perform an absolute duty owed under a contract. Compensatory 3amages, An award of money intended to compensate a nonbreaching party for the loss of the bargain; they place the nonbreaching party in the

Diana Bonilla Contract Law same position as if the contract had been fully performed by restoring the benefit of the bargain.! Damages that are generally e$ual to the difference between the #alue of the good as warranted and the actual #alue of the goods accepted at the time and place of acceptance. Complete 0strict1 performance, 8ccurs when a party to a contract renders performance exactly as re$uired by the contract; discharges that party%s obligations under the contract. Conse-uential 0special1 damages, 9oreseeable damages that arise from circumstances outside the contract. To be liable for these damages+ the breaching party must )now or ha#e reason to )now that the breach will cause special damages to the other party. Co"enant of good fait# and fair dealing, 7nder this implied co#enant+ the parties to a contract not only are held to the express terms of the contract but are also re$uired to at in good faith! and deal fairly in all respects in obtaining the ob(ecti#e of the contact. E-uita le remedies, 2emedies based on the concept of fairness+ such as specific performance+ reformation+ and in(unction. Executed contract, A contract that has been fully performed on both sides; a completed contract. Inferior performance, 8ccurs when a party fails to perform express or implied contractual obligations that impair or destroy the essence of the contract. In!unction, A court order that prohibits a person from doing a certain act. Intentional interference wit# contract relations, A tort that arises when a third party induces a contracting party to breach the contract with another party. Li-uidated damages, Damages to which parties to a contract agree in ad#ance if the contract is breached. Damages that are specified in the contract rather than determined by the court. Damages that will be paid upon a breach of contract and that are established in ad#ance. *aterial reac#, A breach that occurs when a party renders inferior performance of his or her contractual duties. *inor reac#, A breach that occurs when a party renders substantial performance of his or her contractual duties *itigation of damages, 'hen a contract has been breached the law places a duty of the innocent nonbreaching party to a#oid and reduce the resulting damages. *onetary damages, An award of money 4ominal damages, Damages awarded when the nonbreaching party sues the breaching party e#en though no financial loss has resulted from the breach; usually consist of ;> or some other small amount.

Diana Bonilla Contract Law &enalty, 0unishment imposed by law .imprisonment/. &uniti"e damages, Damages that are awarded to punish the defendant+ to deter the defendant from similar conduct in the future and to set an example for others. $uasi/contract, An obligation created by the law to a#oid un(ust enrichment in the absence of an agreement between the parties. %eformation, An e$uitable doctrine that permits the court to rewrite a contract to express the parties% true intention. %escission, An action to rescind .undo/ the contract. 2escission is a#ailable if there has been a material breach of contract+ fraud+ duress+ undue influence+ or mista)e. %estitution, 2etuning of goods or property recei#ed from the other party to rescind a contract; if the actual goods or property is not a#ailable+ a cash e$ui#alent must be made. 'pecific performance, A remedy that orders the breaching party to perform the acts promised in the contract; usually awarded in cases where the sub(ect matter is uni$ue+ such as in contracts in#ol#ing land+ heirlooms+ and paintings. 3udgments of the court ordering a licensor to specifically perform the license by ma)ing the contracted4for uni$ue information a#ailable to the licensee. A decree of the court that orders a seller or lessor to perform his or her obligations under the contract; usually occurs when the goods in $uestion are uni$ue+ such as art or anti$ues. 'u stantial performance, 0erformance by a contracting party that de#iates only slightly from complete performance. Tender of performance, An unconditional and absolute offer by a contracting party to perform his or her obligations under the contract. 8ccurs when a party who ahs the ability and willingness to perform offers to complete the performance of his or her duties under the contract. Tort, A wrong+ there are three categories: .>/ intentional torts+ .?/ unintentional torts+ and .@/ strict liability. Tort of ad fait#, A breach of the re$uirements that the parties act and deal fairly in all respects in obtaining the ob(ecti#e of the contract. =rit of attac#ment, A document that orders a sheriff or other go#ernment officer to sei6e the breaching party%s property+ and to sell the property at auction to satisfy a (udgment. =rit of garnis#ment, A document that orders the breaching party%s wages+ ban) accounts+ or other property held by a third party o#er to the nonbreaching party to satisfy a (udgment.

Key Terms C#apter >

Diana Bonilla Contract Law Access contract, 'here a software licensor grants the licensee the right to access information in the possession of the licensor for an agreed4upon or for a number of uses Anticy ers-uatting consume protection act, A law specifically aimed at cybers$uaters! Apersons who register internet domain names of famous companies and people and hold them hostage by demanding ransom payments from the famous companies or people. Attri ution procedure, A procedure using codes+ algorithms+ identifying words or number+ encryption+ callbac)+ or other ac)nowledgement to #erify an authentication of a record. Aut#enticate, "igning the contract or executing an electronic symbol+ sound+ or message attached to+ included in+ or lin)ed with the record. Cancellation, The termination of a contract by a contracting party upon the material breach of the contract by the other party A buyer or lessee my cancel a sales or lease contract if the seller or lessor fails to deli#er conforming goods or repudiates the contract or if the buyer or the lessee rightfully re(ects the goods or (ustifiable re#o)es acceptance of the goods. Computer information transaction, A computer information transaction is an agreement to create+ transfer or license computer information or informational rights.! Counterfeit access de"ice and computer fraud and a use Act, Co"er, 2ight of a buyer or lessee to purchase or lease substitute goods if a seller or lessor fails to ma)e deli#ery of the goods or repudiates the contract or if the buyer or lessee rightfully re(ects the goods or (ustifiable re#o)es their acceptance. The licensee%s right to engage in a commercially reasonable substitute transaction after the licensor has breached the contract. 3omain name, A uni$ue name that identifies an indi#idual%s or company%s website. E/commerce, The sale of goods and ser#ices by computer o#er the internet. Electronic communication pri"acy act, A federal law that+ with some exceptions+ ma)es it a crime to intercept an electronic communication. Electronic funds transfer, A law regulating the payment and deposit of funds by electronic transfer. Electronic mail, -lectronic written communication between indi#iduals using computers connected to the internet. Electronic signature in glo al and national commerce act, A federal statute designed to recogni6e electronic contracts as meeting the writing re$uirement of the statute of frauds Exclusi"e license, The license that grants the licensee exclusi#e rights to use informational rights for a specified duration.

Diana Bonilla Contract Law Express warranty, Any affirmation of fact or promise by the licensor about the $uality of its software or information. A warranty that is created when a seller or lessor ma)es an affirmation that the goods he or she is selling or leasing meet certain standards of $uality+ description+ performance+ or condition. Identity t#eft and assumption deterrence act, Implied warranty of fitness for a particular purpose, Implied warranty of merc#anta ility of t#e computer program, Information Infrastructure protection act, Internet, Internet ser"ice pro"ider, Licensee?s damages, Licensing agreement, Licensor, Licensor?s damages, Li-uidated damages, %ig#t to cure, (niform computer information transactions act, (niform electronic transactions act, =orld intellectual property organi+ation, =orld wide we ,

Diana Bonilla Contract Law Law @ Et#ics $uestions A &age B :5 >. =#at does t#e o !ecti"e t#eory of contracts pro"ideC ,t pro#ides that the existence of a contract is determined by the legal significance of the external acts of a party to a purported agreement+ rather than by the actual intent of the parties. 3o you t#in6 t#at t#e Academy #ad t#e su !ecti"e intent to pro"ide in t#e contract t#at it #ad t#e rig#t of first refusal if =elles tried to sell t#e original OscarC 3oes t#is matter in contract lawB , thin) it did but unfortunately for the Academy , belie#e that since 'elles is not a member of the Academy+ the right of first refusal does not apply to it. And this term does apply in contract interpretation. &age B 8: >. =#at does t#e doctrine of Implied/in/fact contract pro"ideC That in contract law+ not all contracts need to be in writing. That a contract may exist if your conduct or act lead to belie#e so. 'e"eral terms were used in t#is case t#at t#e paralegal student needs to 6now to fully understand t#is caseD Loo6 up t#e terms, summary !udgmentE material factE and puniti"e damages. "ummary 3udgment: a court order ruling that no factual issues remain to be tried and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. *aterial 9act: A fact that would be important to a reasonable person in deciding whether to engage or not to engage in a particular transaction; an important fact as distinguished from some unimportant or tri#ial detail. 0uniti#e Damages: damages awarded in a lawsuit as a punishment and example to others for malicious+ e#il or particularly fraudulent acts. &age B 82 =#at does t#e doctrine of -uasi/contract pro"ideC The principle that no one should be permitted to enrich himself un(ustly at the expense of another. Et#ics, was it et#ical for 'usan T#ompson/&owell to not pay ac6 #alf of t#e money orrowed from 'amuel ED &owell 'rDC Although "usan benefited from the sale of the property+ she was not part of the contract and therefore she has no obligation with *r. "amuel "r. Et#ics, =#at is t#e doctrine of -uasi/contract designed to pre"entC 7n(ustified enrichment.

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Diana Bonilla Contract Law

ETFIC' CA'E' C#apD . A .D8 :oodwest 2ubber #s. *uno6+ ?>C Cal. 2ptr. C=D .Ct. App. >EF</ 8n 8ctober >C+ >EGF+ plaintiff and defendant entered into a written option agreement. 0laintiff leased defendantHs property for fi#e years with an option to buy at fair mar)et #alue.! This agreement was extended. 0laintiff sought to exercise its option within the extension period by tendering to defendant ;F=+===. Defendant re(ected this offer. 0laintiff filed a complaint see)ing+ among other things+ specific performance of the option agreement. Defendant mo#ed for summary (udgment asserting that a price term of fair mar)et #alue! is so indefinite and uncertain an action for specific performance would not lie as a matter of law. The trial court granted the summary (udgment motion. Lessee appealed The court of appeal held that price designation of fair mar)et #alue! in option contract was definite enough to support an action for specific performance. "pecifying fair mar)et #alue! as the price to be paid when exercising the option to purchase does not re$uire future agreement of the buyer and seller. ,t is a proper substitute for a specific purchase price and will support an action for specific performance. 3udgment 2e#ersed. ETFIC' CA'E' C#apD . A .D2 Ioffman #s. 2ed 8wl "tores+ ,nc.+ >@@ 1.'.?d ?CG .'is. >EC</ The complaint alleged that Lu)owit6+ as agent for 2ed 8wl+ represented to and agreed with plaintiffs that 2ed 8wl would build a store building in Chilton and stoc) it with merchandise for Ioffman to operate in return for which plaintiffs were to put up and in#est a total sum of ;>F+===; that in reliance upon the abo#e mentioned agreement and representations plaintiffs sold their ba)ery building and business and their grocery store and business; also in reliance on the agreement and representations Ioffman purchased the building site in Chilton and rented a residence for himself and his family in Chilton; plaintiffsH actions in reliance on the representations and agreement disrupted their personal and business life; plaintiffs lost substantial amounts of income and expended large sums of money as expenses. 0laintiffs demanded reco#ery of damages for the breach of defendantsH representations and agreements. The action was tried to a court and (ury. The facts hereafter stated are ta)en from the e#idence adduced at the trial. 'here there was a conflict in the e#idence the #ersion fa#orable to plaintiffs has been accepted since the #erdict rendered was in fa#or of plaintiffs. The Circuit Court for 8utagamie County entered (udgment appro#ing all portions of #erdict except for damages as to one item and the defendants appealed and the plaintiffs cross4appealed. The "upreme Court held that in(ustice would result if plaintiffs were not granted damages because of failure of corporation to )eep promises made concerning operation of franchise agency

Diana Bonilla Contract Law store by plaintiffs who had been induced to act to their detriment by those promises. 'ith respect to doctrine of promissory estoppel+ the re$uirements that promise must be one that promisor should reasonably expect to induce action or forbearance of definite and substantial character on part of promisee and that promise did induce such action or forbearance present issues of fact which would ordinarily be resol#ed by (ury+ and the third re$uirement that remedy can only be in#o)ed when necessary to a#oid in(ustice in#ol#es policy decision by court which necessarily embraces element of discretion. ETFIC' CA'E' C#apD 2 A 2D: &lumlee "sD &addoc6E <.8 'D=D8d ;5; 0TexD AppD :><81D 3oe 0lumlee owned and operated an ambulance company. Ie alleged that the law firm of 0addoc)+ Lo#eless J 2oach agreed to him an up4front fee and a percentage of the law firm%s fees generated from personal in(ury case referrals. 'hen the firm did not pay him+ he sued to reco#er damages for breach of contract. Texas law prohibits lawyers from sharing fees with laypersons and a disciplinary rule also forbids such acti#ity. The law firm asserted that the contract can not be enforced because it would be an illegal contract. =#o winsC The >Gth District Court entered a ta)e4nothing summary (udgment in fa#or of attorneys+ and owner appealed. The Court of Appeals+ 9arris+ 3.+ held that the alleged contract+ if one existed+ was illegal and #oid as against public policy. 3udgment affirmed. ETFIC' CA'E' C#apD 5A 5D: 9irst Baptist Church of *oultrie #s. Barber Contracting Co.+ @GG ".-.?d G>G .:A. Ct. App.>EFE/. Church brought suit against contractor and surety see)ing to reco#er amount of bid bond for construction of music+ education and recreation building. The "uperior Court denied cross motions for summary (udgment+ and interlocutory appeals were granted. The Court of Appeals held that contractorHs clerical mista)e in submitting bid for construction of building for church of ;>+FC=+===+ which should ha#e been ;>D@+>?= higher if material costs had been added correctly+ was not negligence pre#enting e$uitable relief+ and thus+ contractor was entitled to rescind its bid upon disco#ering that it was based upon miscalculation. =#o winsC 3id Bar er act et#ically in trying to get out of t#e contractC ,n this case Barber+ the contractor+ promptly notified the plaintiff that a mista)e was made in calculating the amount of the bid. The plaintiff had actual )nowledge of the mista)e before it forwarded a contract to Barber. The mista)e was a simple clerical error.! M.J. McGough Co. v. Jane Lamb Memorial Hosp., @=? 9."upp. DF?+ DF<+ supra. ,t did not amount to negligence pre#enting e$uitable relief. 9urthermore+ it was a mista)e which was material to the contract.

Diana Bonilla Contract Law To allow the plaintiff to ta)e ad#antage of the mista)e would not be (ust. 3udgment affirmed in part and re#ersed in part. ETFIC' CA'E' C#apD 5A 5D8 "ul6er Binghma 0umps+ ,nc. #s. Loc)heed *issiles J "pace Co.+ EDG 9?d >@C? .Eth Cir. >EE>/. This appeal arises out of an unusual dispute between a ma(or go#ernment contractor and a subcontractor pro#iding components for the 7nited "tates 1a#yHs Trident ,, nuclear submarines. The contractor+ Loc)heed *issiles J "pace Company+ awarded a subcontract to the low bidder for the subcontract+ the appellee "ul6er Bingham 0umps+ ,nc. "ul6er BinghamHs bid+ howe#er+ was in fact millions of dollars lower than it would ha#e been if "ul6er Bingham had not committed a series of errors in preparing the bid. According to the findings of the respected district (udge who heard the e#idence+ Loc)heed doubted that "ul6er Bingham could perform the contract at that price+ but ne#ertheless awarded the contract for the bid price+ resulting in an unconscionably low price. The district court concluded that Loc)heedHs conduct amounted to o#erreaching in #iolation of basic contractual principles+ and that its failure to as) the subcontractor to #erify its bid #iolated the terms of the subcontract. The district court declined to rescind the contract. The district court did+ howe#er+ award "ul6er Bingham some e$uitable relief in the form of the actual costs it incurred abo#e the contract price+ in a total amount which was not to exceed the next lowest bid. Loc)heed appeals. ,n its appeal+ Loc)heed raises two principal contentions. The first is that the terms of its contract did not incorporate the 9ederal Ac$uisition 2egulations+ and therefore did not re$uire Loc)heed to call the underbid to "ul6er BinghamHs attention and as) for #erification of the suspect bid. The second is that go#ernment contract law does not permit a court e#er to ad(ust the contract price where the underbid is the product of (udgment errors as opposed to arithmetic miscalculations. 'e affirm the district court because we agree with the district court that Loc)heed did breach the terms of its contract by failing to as) "ul6er Bingham to #erify the bid+ and that Loc)heed therefore must bear substantial responsibility for the unconscionably low price. 'e further agree with the district court that in these circumstances+ the court was not foreclosed from fashioning e$uitable relief. The district court held that Loc)heed breached its duty to "ul6er Bingham by not notifying "ul6er Bingham that it suspected a mista)e+ and not informing "ul6er Bingham that the bid was much lower than all other bids. 3udgment Affirmed

ETFIC' CA'E' C#apD 7D: Blye #s. American Broad. Co. *erch+ ,nc.+ DGC 1.K.".?d FGD .App. Di#. >EFD/.

Diana Bonilla Contract Law 0laintiff4appellants *ar) Blye and 0aul ")lar brought this action to reco#er a commission or finderHs fee claimed under an alleged contract with defendant4respondent Colonial Corp. of America. According to the complaint+ defendant4respondent American Broadcasting Companies+ ,nc. . ABC!/+ as exclusi#e licensing agent for endorsements by fashion model Cheryl Tiegs+ re$uested plaintiffs to find a clothing manufacturer willing to produce a line of clothing to be mar)ed with TiegsH endorsement. The "upreme Court granted motions by defendants for summary (udgment dismissing the complaint on the ground that the action is barred by the "tatute of 9rauds stating that the letter is nothing more than a discussion of ongoing negotiations.! 0laintiff appealed The issue on this appeal is whether the "tatute of 9rauds is satisfied by a letter sent by one of the defendant4respondents to plaintiff4appellants. 'e hold that the letter satisfies the statute+ and accordingly re#erse.

Diana Bonilla Contract Law

C%ITICAL LEGAL TFI4KI4G CA'E' C#apD . A .D: 9rasier #s. Carter+ D@? 0.?d @? .,daho >ECF/. D. L. Carter and plaintiff were brother and sister. 0laintiff is the sur#i#ing widow of 3ohn '. 9rasier who died testate *arch F+ >EC=. "ur#i#ing him+ in addition to plaintiff+ were three children. The estate consisted of both separate property of deceased and community property of plaintiff and deceased. By his will 9rasier de#ised and be$ueathed all of the separate and community property to plaintiff and the three children. The specific de#ises and be$uests to the plaintiff were more #aluable than her interest in the community property. Iowe#er+ the specific de#ises and be$uests were conditioned upon a wai#er by the plaintiff of her interest in the community property+ and the will pro#ided that if she failed to wai#e her community property rights then she would recei#e her interest in the community property and nothing more. Carter failed to file the wai#er on Lena%s behalf. Lena recei#es her interest in the community property+ but it was less than she would ha#e recei#ed under the will. Carter wrote a letter promising her that he will ma)e up any balance to her in payments as suits his con#enience and will pay interest on the lost at C percent. 3udgment was entered against Lena. 8n this issue of consideration defendant contends there was no e#idence that Carter was acting as plaintiffHs attorney. 'hile there was no e#idence of a specific agreement for a fee+ the e#idence presumpti#ely shows that he was acting as plaintiffHs attorney in ad#ising her relati#e to her interest in her deceased husbandHs estate. -#en so+ lac) of proof of a specific agreement of employment of Carter as plaintiffHs attorney and the compensation to be paid therefor+ was not e#idence of a character+ or sufficient+ to o#ercome the presumption of consideration arising from the written promise. The correspondence between Carter and the attorneys for the co4executors indicates that the latter recogni6ed Carter as plaintiffHs attorney. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD 2 A 2D: / %atification Bo y Floars ToyotaE IncD "sD 'mit#E 87> 'DED8d .89 04DCD CtD AppD :><91

"eller of automobile brought action against buyer to reco#er amount due under purchase money security agreement. The District Court+ 'ayne County+ Lenneth 2. -llis+ 3.+ dismissed plaintiffHs complaint+ and plaintiff appealed. The Court of Appeals+ *orris+ C. 3.+ held that where buyer purchased automobile when he was >G years old+ and buyer continued to possess and operate automobile after his >Fth birthday and continued to ma)e monthly payments as re$uired by note for ten months after becoming >F+ buyerHs acceptance of benefits and continuance of payments under the contract constituted ratification of contract+ precluding his subse$uent disaffirmance. 2e#ersed and remanded.

Diana Bonilla Contract Law =#o is correctB The dealership+ because when "mith disaffirmed the contract and stopped ma)ing payments he had already reached the age of eighteen and was no longer a minor. *oreo#er the fact that he )ept ma)ing payments after he reached the ma(ority of age+ only ratified the agreement C%ITICAL LEGAL TFI4KI4G CA'E' 2D. / Intoxication Galloway "sD GallowayE 8<: 4D=D8d <9204D3D:>;>1D Betty :alloway+ an alcoholic+ signed a settlement agreement upon her di#orce from her husband+ Ienry :alloway. Ienry+ in Betty%s absence in court+ stated that she had lucid inter#als from her alcoholism and had been sober for two months+ and was lucid when she signed the settlement agreement. 3udgment was entered on "eptember ??+ >EGF+ and thereafter+ on "eptember ?G+ >EGF+ Betty+ ha#ing then retained present counsel+ mo#ed to #acate the (udgment. 8n 3anuary ?@+ >EGE+ Betty was declared incompetent to handle her person and her affairs+ and a guardian and a conser#ator were appointed. The motion was heard on 3anuary ?D+ >EGE+ at which time BettyHs counsel mo#ed that the guardian and conser#ator be substituted as defendant. Betty through her guardian+ sued to ha#e the settlement agreement #oided. =#o winsB The motion to #acate the (udgment was denied by the trial court. 1e#ertheless+ the appeal court re#ersed that order and direct that the (udgment be #acated. "ection >D4=>4=?+ 1DCC+ pro#ides in part that a . . . contract of a person of unsound mind+ but not entirely without understanding+ made before his incapacity has been determined (udicially upon application for the appointment of a guardian is sub(ect to rescission as pro#ided by the laws of this state. C%ITICAL LEGAL TFI4KI4G CA'E' 2D5 A Co"enant not to Compete Gann "sD *orrisE 5>7 &D8d 2. 0Ari+D CtD AppD :>;>1D :erry *orris owned a sil) screening business and lettering shop in Ari6ona. *orris entered into a contract to sell the business to Alfred and Connie :ann. The seller agreed not to engage in a similar business or occupation within a specified geographic area for a specified period of time. The buyer sought damages for sellerHs breach of a co#enant not to compete. The "uperior Court+ 0ima County+ awarded damages to buyers+ and seller appealed. Is t#e co"enant not to compete "alid and enforcea le in t#is caseC Kes+ The Court of Appeals+ held that: .>/ scope of co#enant was not unreasonable as broader than necessary to protect interest of buyers of small sil) screening business+ and .?/ buyers would be entitled to lost profits for sales made in #iolation of agreement. 3udgment affirmed. C%ITICAL LEGAL TFI4KI4G CA'E' 2D;/ Exculpatory Clause Koc# "sD 'pauldingE 58> 4DED8d :> 0IIID AppD CtD :><<1D

Diana Bonilla Contract Law 2acetrac) flagman sued racetrac) owner and race car dri#er for personal in(uries. The Circuit Court of *adison County+ denied racetrac) ownerHs motion for summary (udgment+ but thereafter+ the Circuit Court+ :eorge 3. *oran+ 3.+ granted ownerHs motion to certify an important $uestion of law. The Appellate Court granted the appeal and held that: .>/ exculpatory agreement barred plaintiffHs action against racetrac) owner+ and .?/ issue of whether release was in#alid for lac) of ade$uate consideration was not properly before court. 3udgment #acated and remanded Defendant "palding contends that the abo#ementioned release bars plaintiffHs cause of action for negligence in this case. 7nder the facts certified by the circuit courtHs statement+ we agree. An exculpatory agreement may be set aside if there is either fraud in the inducement or fraud in the execution of the agreement. 2acetrac) flagman was not induced through fraud to execute racetrac)Hs exculpatory agreement where flagman had been in#ol#ed in automobile racing for ten years and had signed similar agreements prior to entering restricted areas of other racetrac)s+ he admitted he had not read the agreement but was not pre#ented from doing so prior to signing it+ he understood prior to signing that release meant that racetrac) was not liable should an accident occur+ he was aware that document he was signing was a release; and composition of release was sufficient to alert flagman as to the nature of the document he was signing. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD 5D8 A (nilateral mista6e "chult6 #s. County of Contract Costa+ Cal.+?=@ Cal. 2ptr. GC= .Ct. App. >EFD/. 0laintiff bought a #acant piece of property from the County of Contra Costa+ California+ with the intention to build a house. 0laintiff in$uired with the county and was told that the property was not in the countyHs (urisdiction. The next day+ plaintiff+ because he had to wor)+ had two cowor)ers contact the City of -l Cerrito regarding the lot. 0laintiff recei#ed no ad#erse information about the lot. Ie as)ed a friend at 9ounderHs Title Company to chec) the title and went to the company to loo) at records for the property. There were no liens or (udgments on the property. 0laintiff was surprised when he learned that city%s 6oning laws pre#ented building a residence on the lot. "chult6 sue to rescind the contract. Can t#e contract e rescindedB The "uperior Court rescinded the contract and the county appealed. The Court of Appeal+ held that: .>/ remedy of rescission was a#ailable pursuant to a sale from a public entity to a pri#ate party; .?/ purchaserHs cause of action for rescission of the tax deed was directed at the contract of purchase and sale+ the deed being merely the instrument by which the county performed; thus+ general rule that a deed is not sub(ect to contract laws of rescission did not pre#ent rescission; .@/ purchaser was not entitled to rescission on claim of failure of consideration where there was no e#idence that the deed was conditioned on countyHs performance; .D/ purchaser who erroneously belie#ed that he would be able to build a home on the land he

Diana Bonilla Contract Law purchased mista)enly e#aluated the contractual exchange+ and his mista)e of fact was material; .</ purchaserHs mista)e did not result from his own negligence; .C/ fact that purchaserHs outward manifestation of expression ne#er con#eyed that his purpose in purchasing the land was to build a house on it did not pre#ent rescission. 3udgment affirmed. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD 5D2 A Fraud Campbell #s. *cClure+ ??G Cal. 2ptr. D<= .Ct. App. >EFC/. Campbell was loo)ing for a new business to purchase. 9rom a business bro)er Campbell recei#ed a brochure describing *cClureHs motor #ehicle sal#age and rebuilding business. That brochure represented that during >EF> the business grossed ;<F>+>>G and netted ;>D?+G?G. Campbell contacted *cClure and entered upon negotiations to purchase the business. Campbell hired a C0A who re#iewed *cClureHs business records including folders or (ac)ets! showing the history of each rebuilt and sold #ehicle+ wor)sheets+ ban) deposit boo)s and chec)s+ and the "chedule C to *cClureHs >EF> income tax return. The accountant could not reconcile the records with the tax return nor could he establish the businessH income+ and he therefore told Campbell he could not ad#ise him about the state of the business. Campbell consulted an attorney+ re#ealing these facts+ and was ad#ised not to purchase the business without a warranty of the accuracy of the representations in the brochure. The attorney drafted for Campbell the following warranty+ which was incorporated into the escrow instructions for the sale of the business+ and signed by both parties: "eller warrants to the buyer herein that the complete brochure ... is true and correct to the best of sellerHs )nowledge and that seller understands that the brochure is a material inducement to the buyer to entering into this purchase.! Campbell bought the business based on the representations. Iowe#er+ although operated in the same manner as when owned by *cClure+ the business failed to yield a net income similar to that warranted by *cClure. Campbell sued *cClure for damages for fraud. =#o winsC The court entered a (udgment in fa#or of buyer and seller appealed. The (udgment orders rescission of the transaction and damages for intentional fraud: compensatory damages of ;>F>+?E>.>@; exemplary damages of ;EE+@E@.>E; and attorneysH and expert witness fees of ;>C+@>>.C= and ;@+??<+ respecti#ely. The (udgment recites that the exemplary damages are for the sa)e of example and to punish *cClure and would be reduced to ;>+=== if *cClure demonstrated his good faith and rehabilitation by paying the (udgment in full. Iere the e#idence shows that *cClure signed escrow instructions which to his )nowledge guaranteed the accuracy of his sales brochure+ and *cClure has admitted on the stand that when he filed his >EF> income tax return+ at a time close to the time the business was sold+ he )new the business did not ma)e as much money as represented in the brochure. 9urther+ expert testimony establishes the business records are misleading. Both Campbell and his attorney testified to the formerHs reliance on the accuracy of the sales brochure; )nowing

Diana Bonilla Contract Law the problematic state of the business records+ Campbell would not buy the business unless he at least were assured that it did indeed generate net profits in the neighborhood of ;><=+=== in >EF>. *cClure allowed Campbell to belie#e that representation+ with no reasonable basis to conclude it was true. Accordingly+ the trial court properly found the elements of fraud in the inducement of contract to be established here. 3udgment affirmed. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD 5D7 A Innocent misrepresentation Kost #s. 2ie#e -nterprises+ ,nc.+ DC> "o. ?d >GF .9la. Dist. Ct. App. >EFD/. 2estaurant purchaser brought action against #endor see)ing rescission and cancellation of agreement and damages. &endor brought action against purchaser for default on promissory note and breach of security agreement. &endorHs real estate agent brought action against #endor for unpaid balance owing on bro)erHs commission. The cases were consolidated for trial. The Circuit Court declared the promissory note+ security agreement+ and lease null and #oid+ ruled that agent was not entitled to reco#er balance of commission+ and awarded compensatory damages in fa#or of purchaser and against #endor in sum of ;>=+===. &endor and agent appealed. 0urchaser cross4appealed against #endor. The District Court of Appeal held that: .>/ contract could be rescinded because of #endorHs misrepresentations+ e#en if they were innocently made; .?/ trial court did not abuse its discretion in denying #endor damages caused by purchaserHs breach of the subse$uently rescinded contract; .@/ purchaser was entitled to refund of total purchase price; and .D/ denial of balance of commission was affirmed+ since e#idence supported finding that real estate agent was a party to the fraud. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD 7D: A 'tatutes of Fraud Ioffman #s. "un &alley Co.+ C?F 0.?d ?>F .,daho >EF>/. The case concerns the negotiations and alleged contractual relationship between Ioffman49rey and the "un &alley Company in#ol#ing the purchase and sale of a >.CD acre unde#eloped lot then owned by "un &alley and commonly )nown as the 2uud *ountain 0roperty.! 9rey and Ioffman brought suit in contract to compel specific performance of the alleged agreement and in the alternati#e sought damages upon #arious other theories. 9ollowing trial+ the district court concluded that while an oral understanding for the sale of the property existed+ there was ne#ertheless failure to ade$uately comply with the statute of frauds and thus the agreement was unenforceable. The court also concluded that the e$uitable doctrines of part performance and estoppel were inapplicable. =#o winsC The appeal court agreed with the lower court that those findings indicate the existence of an oral agreement between the parties. The district court further concluded that while there was an oral understanding for the sale of the property+ there was failure to ade$uately comply with the statute of frauds and hence the oral agreement was unenforceable+ (udgment affirm.

Diana Bonilla Contract Law C%ITICAL LEGAL TFI4KI4G CA'E' C#apD 7D; A 'ufficiency of a writing Le#in #s. Lnight+ FC< 9.?d >?G> .Eth Cir. >EFE/. This di#ersity action arises from an aborted attempt of plaintiffs ,r#ing I. Le#in and Iarold A. Lipton to sell the "an Diego Clippers bas)etball team to defendant 0hilip L. Lnight. Le#in and Lipton .hereafter Le#in/ appeal from a directed #erdict in fa#or of Lnight. Le#in sued Lnight for breach of a contract that Le#in alleges Lnight entered into in a meeting on December @+ >EF=. Le#in also alleged fraud on the part of Lnight+ in that he entered the contract with no intent to perform. The contract was allegedly memoriali6ed in a memorandum handwritten by Le#in and initialed by Lnight. ,n >EFD+ the district court granted summary (udgment in fa#or of Lnight on the ground that the memorandum was insufficient+ as a matter of law+ to o#ercome the statute of frauds. This court re#ersed and held that+ if all disputed matters were resol#ed in plaintiffsH fa#or+ the memorandum indicated sufficiently the few terms deemed essential to satisfy the statute of frauds under California law. 8n remand+ the case proceeded to trial. After plaintiffs had presented their e#idence+ the district court granted defendantHs motion for a directed #erdict. The district court held that there was no meeting of minds and that the December @ memorandum merely embodied an agreement to agree. *aterial terms+ the court ruled+ had been left out of the written memorandum and were yet to be negotiated. The district court also ruled that the contract #iolated the federal securities laws. 9inally+ it held that no fraud was shown. =#o winsC 'e agree that there was no contract+ and hold that the fraud claim was properly dismissed. 'e therefore affirm. ,n #iew of our resolution we do not reach plaintiffsH securities defense. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD 7D: A 'tatutes of Fraud Ioffman #s. "un &alley Co.+ C?F 0.?d ?>F .,daho >EF>/. The case concerns the negotiations and alleged contractual relationship between Ioffman49rey and the "un &alley Company in#ol#ing the purchase and sale of a >.CD acre unde#eloped lot then owned by "un &alley and commonly )nown as the 2uud *ountain 0roperty.! 9rey and Ioffman brought suit in contract to compel specific performance of the alleged agreement and in the alternati#e sought damages upon #arious other theories. 9ollowing trial+ the district court concluded that while an oral understanding for the sale of the property existed+ there was ne#ertheless failure to ade$uately comply with the statute of frauds and thus the agreement was unenforceable. The court also concluded that the e$uitable doctrines of part performance and estoppel were inapplicable. =#o winsC The appeal court agreed with the lower court that those findings indicate the existence of an oral agreement between the parties. The district court further concluded that while there was an oral understanding for the sale of the property+ there was failure to ade$uately comply with the statute of frauds and hence the oral agreement was unenforceable+ (udgment affirm.

Diana Bonilla Contract Law C%ITICAL LEGAL TFI4KI4G CA'E' C#apD 7D; A 'ufficiency of a writing Le#in #s. Lnight+ FC< 9.?d >?G> .Eth Cir. >EFE/. This di#ersity action arises from an aborted attempt of plaintiffs ,r#ing I. Le#in and Iarold A. Lipton to sell the "an Diego Clippers bas)etball team to defendant 0hilip L. Lnight. Le#in and Lipton .hereafter Le#in/ appeal from a directed #erdict in fa#or of Lnight. Le#in sued Lnight for breach of a contract that Le#in alleges Lnight entered into in a meeting on December @+ >EF=. Le#in also alleged fraud on the part of Lnight+ in that he entered the contract with no intent to perform. The contract was allegedly memoriali6ed in a memorandum handwritten by Le#in and initialed by Lnight. ,n >EFD+ the district court granted summary (udgment in fa#or of Lnight on the ground that the memorandum was insufficient+ as a matter of law+ to o#ercome the statute of frauds. This court re#ersed and held that+ if all disputed matters were resol#ed in plaintiffsH fa#or+ the memorandum indicated sufficiently the few terms deemed essential to satisfy the statute of frauds under California law. 8n remand+ the case proceeded to trial. After plaintiffs had presented their e#idence+ the district court granted defendantHs motion for a directed #erdict. The district court held that there was no meeting of minds and that the December @ memorandum merely embodied an agreement to agree. *aterial terms+ the court ruled+ had been left out of the written memorandum and were yet to be negotiated. The district court also ruled that the contract #iolated the federal securities laws. 9inally+ it held that no fraud was shown. =#o winsC 'e agree that there was no contract+ and hold that the fraud claim was properly dismissed. 'e therefore affirm. ,n #iew of our resolution we do not reach plaintiffsH securities defense. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD ;D:/T#ird party Lucas #s. Iamm+ @CD 0.?d CF< .Cal. >EC?/. -ugene I. -mmic) hired L. ". Iamm+ an attorney+ to draft his will. The will named 2obert Lucas and others as beneficiaries. 'hen -mmic) died+ it was disco#ered that the will was improperly drafted+ #iolated state law+ and was therefore ineffecti#e. -mmic)%s estate was transferred pursuant to the state%s intestate laws. Lucas did not recei#e the ;G<+=== he would ha#e other wise recei#ed had the will been #alid. Lucas sued Iamm for breach of the -mmic) A Iamm contract to reco#er what he would ha#e recei#ed under the will. =#o winsC The "uperior Court of "an 9rancisco dismissed the complaint and the plaintiffs appealed. The "upreme Court held that the attorney+ who allegedly drafted the will so that trust pro#isions #iolated rules as to perpetuities and restraint on alienation+ was not liable to beneficiaries+ on basis of negligence or breach of contract. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD ;D./ Assignment *uncha) Corp. #s. Cunningham+ D<G 9.?d G?> .Dth Cir. >EG?/.

Diana Bonilla Contract Law 0laintiffs+ the owners and operators of the bas)etball club The Carolina Cougars! .the Cougars!/+ sued to en(oin defendant+ 'illiam 3ohn Cunningham . Cunningham!/+ a professional bas)etball player+ from performing ser#ices as a bas)etball player for any bas)etball club other than the Cougars in #iolation of a contract between the Cougars and Cunningham. The district court+ finding that Cunningham had contracted to play for the Cougars+ ne#ertheless concluded that e#en if Cunningham had failed and refused to perform his contract+ plaintiffs had unclean hands and had breached their contract with Cunningham. ,t+ therefore+ denied in(uncti#e relief. ,n this appeal+ we conclude that plaintiffs did not ha#e unclean hands+ that any breach of contract on the part of plaintiffs was too insubstantial to (ustify the denial of in(uncti#e relief+ and that CunninghamHs additional argument that his contract was not assignable is lac)ing in merit. Accordingly+ we re#erse and remand the case for entry of an in(unction restraining Cunningham from playing for any team other than the Cougars+ for the duration of his contract with that club. C%ITICAL LEGAL TFI4KI4G CA'E' C#apD ;D5/ Anti/assignment clause 0ortland -lec. And 0lumbing Co. #s. City of &ancou#er+ C?G 0.?d >@<= .'ash. Ct. App. >EF>/. 0ortland -lectric and 0lumbing Company .0-0Co/+ as an assignee of B J B Contracting Corporation .B J B/+ appeals from a summary (udgment dismissing its suit against the City of &ancou#er .City/. The court determined that 0-0CoHs claim was barred by a contract term entered into by the City and B J B which prohibited B J B from assigning claims for monies due+ absent the CityHs consent. The basic issue presented on appeal is whether 0-0CoHs suit for Breach of Contract and5or 7n(ust -nrichment! is a claim for monies due and co#ered by the anti4assignment clause. 'e begin with a brief re#iew of the facts. ,n >EGC the City contracted with B J B for construction of a well pump at a city4owned water station. The wor) was not completedM?ED on time and the City withheld ;F+>E= li$uidated damages from the contract price. B J B disputed the claim for damages. The City explains it paid B J B an additional ;>+CF= to settle! the contro#ersy. 2egrettably+ no written release was obtained from B J B at that time. 'ithout the CityHs permission+ B J B assigned its remaining claim for ;C+<>= to 0-0Co. 0-0Co filed this suit against the City alleging that The City has breached the ... Contract by its wrongful refusal to pay ;C+<>=.== under that Contract+ which was wrongfully withheld as li$uidated damages and which is now due and owing under said Contract ...! The City mo#ed for summary (udgment contending that absent the CityHs permission+ the claim was one for monies due and barred by the following contract pro#ision: The Contractor shall not assign this contract or any part thereof+ or any moneys due or to become due thereunder+ without the written prior appro#al of the 8wner. The court agreed and dismissed 0-0CoHs suit with pre(udice. 3udgment affirmed C%ITICAL LEGAL TFI4KI4G CA'E' C#apD ;D; A Condition

Diana Bonilla Contract Law 0ace Construction Corp. #s. 8B" Co.+ <@> "o. ?d G@G .9la. Dist. Ct. App. >EFF/. 0ace+ a general contractor+ entered into a contract with "humann ,n#estments+ ,nc. .the owner/ for the construction of 8utlet 'orld of 0asco County.! Transamerica and "eaboard pro#ided the labor and material payment bond on the pro(ect. 0ace subse$uently entered into a subcontract with 8B" whereby 8B" was to perform the framing+ dry wall+ insulation+ and stucco wor) on the pro(ect. After satisfactorily completing the wor) described in the subcontract agreement+ 8B" was unable to collect final payment from 0ace and unable to collect against the payment bond and+ therefore+ filed a two count complaint against the appellants "ubcontractor brought suit against contractor and contractorHs sureties to reco#er for labor and material furnished on pro(ect. The Circuit Court for "arasota County+ Durand 3. Adams+ 3.+ entered summary (udgment in fa#or of subcontractor+ and contractor and sureties appealed. The District Court of Appeal+ "choono#er+ 3.+ held that: .>/ subcontract agreement shifted ris) of owner nonpayment from contractor to subcontractor+ and .?/ subcontractor could not collect on payment bond from sureties until contractor recei#ed payment from owner. 2e#ersed and remanded.

Diana Bonilla Contract Law

Case Brief >. Case 4ame, 0:A Tour+ ,nc. #s. *artin <@? 7.". CC>+ >?> ".Ct. >FGE+ 8D Facts, .a/0:A Tour+ ,nc. is a nonprofit organi6ation that sponsors professional golf tournaments. .b/The 0:A establishes rules for its golf tournaments. 8ne of the rules re$uires golfers to wal) the golf course and not use golf carts. .c/Casey *artin is a professional golfer who suffers from Llippel4Trenaunay4 'eber "yndrome+ a degenerati#e circulatory disorder that atrophied *artin%s right leg and causes him pain+ fatigue and anxiety when wal)ing. .d/'hen *artin petitioned the 0:A to use a golf cart during golf tournaments+ the 0:A refused. .e/*artin sued the 0:A+ alleging discrimination against a disable indi#idual in #iolation of the Americans with Disabilities Act of >EE=+ a federal statute. @. &rocedural Fistory, The 7". "upreme Court entered a (udgment in fa#or of plaintiff+ Casey *artin a professional disable golfer who filed a law suit against defendant+ 0:A Tour+ ,nc. on the grounds of discrimination under the ADA after the 0:A refused to let *artin use golf carts during the tournaments. 0laintiff appealed the court%s decision 2D Issues, .a/ Does the Americans with Disabilities Act re$uires the 0:A to accommodate *artin by permitting him to use a golf cart while playing in 0:A tournamentsB <. Folding, Kes+ The "upreme Court held that the 0:A must allow *artin to use a golf cart when competing in 0:A golf tournaments. C. Legal %easoning, The "upreme Court held that: .a/ *artin was disable and co#ered by the ac. .b/ :olf courses are public accommodations! co#ered by the act. .c/ The use of golf carts is not a fundamental character of the game of golf carts. .d/ 8ther than the 0:A rule+ there is no rule of golf that forbids the use of golf carts.

Diana Bonilla Contract Law .e/ ,t is impossible to guarantee that all players in golf will play under exactly the same conditions+ so allowing *artin to use a golf cart gi#es him a ad#antage o#er other golfers. .f/ *artin+ because of his disease+ will probably suffer more fatigue playing golf using a golf cart than other golfers will suffer without using a cart. .g/ The 0:A%s wal)ing rule! is only peripheral to the game of golf and not a fundamental part of golf. .h/ Allowing *artin to use a golf cart will not fundamentally alter the 0:A%s highest4le#el professional golf tournaments. G. Conclusion, 3udgment is affirmed.

Diana Bonilla Contract Law

Case Brief >. Case 4ame, *ar) 2ealty+ ,nc. #s. 2ogness+ D>F "o. ?d @G@ .9LA. Dist. CT. App. >EF?/ ?. Facts, .a/ Tim 2ogness+ owner entered into four separated agreements with *ar) 2ealty+ ,nc. a real estate bro)er. .b/ The bro)er had the exclusi#e right of sale for a certain period of time and on certain terms. .c/ 8wner sold property during the time pro#ide in the agreement. .d/ The bro)er sued the owner on the four agreements for bro)erage commission. .e/ 8wner alleges that he had canceled+ re#o)ed and terminated the bro)erage agreements before the property were sold. @. &rocedural Fistory, A trial court render a (udgment against plaintiff *ar) 2ealty+ ,nc. constructing that the bro)erage agreements constitute mere offers to enter into unilateral contracts+ the bro)er would be entitled to a commission only if he found a purchaser of the property. 0laintiff appealed the (udgment. D. Issues, .a/ Did the trial court err in finding the contracts as unilateral contractsB .b/ ,s the bro)er entitled to his commissionB <. Folding, Kes+ the appeal court found that the contract is bilateral because it contains mutual promises made in exchange for each other by each of the two contracting parties. Kes+ an owner who puts his land in the hands of a bro)er for sale usually clearly promises to pay a commission but the bro)er rarely promises in return that he will produce a purchaser+ he5 she often promises to ma)e certain efforts to do so. C. Legal %easoning, The appeal court ruled based on that the documents illustrated what has been termed the usual practice! in the ma)ing of bargains. 8ne party indicates what he will do and what he re$uires in exchange and the other then agrees. This constituted offers which+ when accepted by bro)er+ constituted contracts. The contract is bilateral because it contains mutual promises made in exchange for each other by each of the two contracting parties. The only contemplated contract between the owner is a unilateral

Diana Bonilla Contract Law contract A a promise to pay commission for series rendered+ but such an offer of a promise to pay a commission for ser#ices render is re#ocable by the owner by notice before the bro)er has rendered any part of the re$uested ser#ice. *oreo#er+ an owner who puts his land on the hands of a bro)er for sale usually clearly promise to pay a commission but a bro)er rarely promises in return that he will produced a purchaser+ although he often promises that he will ma)e certain efforts to do so. G. Conclusion, The final (udgment is re#ersed.

Diana Bonilla Contract Law

Case Brief >. ?. Case 4ame, Congregation Ladimah Toras4*oshe #s. Deleo+ <D= 1.-.?d CE> .*ass. >EFE/. Facts: .a/ "ynagogue brought action to compel administrator of estate to fulfill oral promise of the decedent to gi#e synagogue ;?<+===. .b/ The "uperior Court transferred case to the Boston *unicipal Court+ which rendered summary (udgment for estate+ on the grounds that consideration for oral promise did not exist. .c/ Congregation appealed. @. &rocedural Fistory, "ynagogue brought action to compel administrator of estate to fulfill oral promise to gi#e synagogue ;?<+===. The "uperior Court transferred case to the Boston *unicipal Court+ which rendered summary (udgment for estate. The case was then transferred bac)+ and the "uperior Court+ -lbert Tuttle+ 3.+ also rendered summary (udgment for estate and dismissed synagogueHs complaint. After grant of application for direct appellate re#iew+ the "upreme 3udicial Court held that: .>/ consideration for oral promise did not exist so as to render promise enforceable against promisorHs estate+ and .?/ inclusion of promised ;?<+=== in synagogue budget was not sufficient to find reliance or enforceable obligation. ,ssues: .a/ Did consideration exist on the oral promise to gi#e synagogue ;?<+=== so as to ma)e the promise enforceable after promisorHs deathB <. Folding, 1o+ The court said that this was an oral gratuitous pledge+ with no indication as what the Congregation was re$uired to do if anything in return for this promise. Legal %easoning, The "uperior Court (udge determined that this was an oral gratuitous pledge+ with no indication as to how the money should be used+ or what the Congregation was re$uired to do if anything in return for this promise.! There was neither legal benefit to the promisor nor detriment to the promisee+ and thus no consideration. 9urthermore+ there is no e#idence in the record that the CongregationHs plans to name a library after the decedent induced him to ma)e or to renew his promise. A moral obligation is not a legal obligation. Conclusion, 3udgment affirmed.

D.

C.

G.

Diana Bonilla Contract Law Case Brief >. ?. Case 4ame: Iammer #s. "idway >?D 1.K. <@F+ ?G 1.-. ?<C .>FE>/. Facts, .a/ 8ne 'illiam -. "tory+ "r. promised his nephew 'illiam -. "tory+ ?nd that he would pay him ;<=== if he refrain from drin)ing+ using tobacco+ swearing+ and playing cards or billiards for money until he became ?> years of age. .b/ The nephew agreed and fully performed the conditions. .c/ Both party came to an agreement that the money should stay in the hands of the uncle in the ban) earning interest. .b/ An action was brought to court for breach of contract. @. &rocedural Fistory, This action was brought to court upon an alleged contract. 0laintiff presented a claim to the executor of 'illiam "tory "r.+ for ;<+=== and interest. The claim was re(ected by the executor. Issues, .a/ Did consideration exist for the agreement to be enforceableB .b/ ,s restraint or forbearance of rights a #alid considerationB <. Folding, .a/ Kes+ there was an agreement between both parties and it was founded upon a good consideration. (b) Kes+ A #aluable consideration in the sense of the law may consist either in some right+ interest+ profit+ or benefit accruing to the one party+ or some forbearance+ detriment+ loss+ or responsibility gi#en+ suffered+ or underta)en by the other. C. Legal %easoning, An agreement was made between both parties and after the action was performed they came to an agreement that the money will be held in the ban) earning interest. ,t was founded upon a good consideration and therefore is #alid and enforceable. ,t is not essential in order to ma)e out a good consideration for a promise to show that the promisor was benefited or the promisee in(ured+ a wai#er of any legal right at the re$uest of another party is a sufficient consideration for a promise. The nephew had a legal right to use tobacco and drin) alcohol. Ie ga#e up this right for a period of years to comply with the promise hence the re$uirement of consideration was met. Therefore the contract was enforceable. G. Conclusion, 2e#ersed Case Brief

D.

Diana Bonilla Contract Law >. ?. Case 4ame, Carni#al Leisure ,ndustries+ LTD. &s. Aubin+ E@F 9.?d C?D .<th Cir. >EE>/. Facts:

.a/8n a #isit to the Bahamas+ :eorge Aubin #isited Cable Beach Iotel and Casino+ owned and operated by Carni#al Leisure ,ndustries+ Ltd. .b/'hile gambling+ Aubin recei#ed chips from the casino+ and in exchanged the casino drafts drawn on Aubin%s ban) accounts in Texas. .c/Aubin ultimately gambled and lost ;?<+===+ ha#ing gi#en the ban) the same amount in drafts. .d/Carni#al Leisure was unable to cash the ban) drafts because Aubin had directed his ban) to stop payment. .e/Carni#al sued Aubin in the 7"DC to enforce the debt. @. D. <. &rocedural Fistory, The 7"D court entered a (udgment in fa#or of Carni#al Leisure in the amount of ;?<+=== to which Aubin appealed. Issues, Does Texas public policy pre#ents enforcement of gambling debtB Folding, Kes+ the court of appeal held that public policy in Texas against gambling on credit pre#ents enforcement of a debt incurred for the purpose of gambling. Legal %easoning, The court of appeal held that while it is true that Texas enacted statutes legali6ing some forms of gambling+ such statutes hardly introduce a (udicially cogni6able change in public policy with respect to gambling generally. Although Aubin could have used the loaned chips for non-gambling purposes
at the Casino, it is undisputed that they were in fact used exclusively for gambling. Aubin's gambling debt therefore fits squarely within the terms of the public policy of Texas prohibiting enforcement of gambling debts owed to gambling participants incurred for the purpose of gambling.

C.

G.

Conclusion, 2e#ersed and 2emand.

Diana Bonilla Contract Law Case Brief >. ?. Case 4ame, Continental Airlines+ ,nc. #s.*cDonnell Douglas Corp.+ ?CD Cal.2ptr. GGE .Ct. App. >EFE/. Facts: .a/ Continental purchased the DC4>= aircraft from Douglas Corp. .b/ The aircraft%s brochure contained statements that the fuel tan) will not rupture under crash load conditions; that the landing gear are designed for wipe4off without rupturing the wing fuel tan). .c/ The brochure also stated that the support structure was designed to a higher strength than the gear to pre#ent fuel tan) rupture due to an accidental landing gear o#erload. That the DC4>= was not only designed but tested for crash worthiness. .d/ Continental aircraft DC4>= was on it ta)e4off roll at Los Angeles ,nternational Airport when two tires burst on the left landing gear. The captain try to stop the plane+ but it run off the end of the runway at F miles per hour. The landing gear bro)e through the tarmac+ burrowed into the ground and was ripped from the wing+ ma)ing a @.G hole which allowed fuel to pour from the wing fuel tan)s. .e/ The plane was se#erely damaged by the resulting fire and rendered unrepairable. .f/ Continental sued Douglas for fraud by misrepresentation+ and fraud by nondisclosure of )nown facts. @. &rocedural Fistory, This action was commenced by plaintiff and respondent Continental Airlines .Continental/ in the Los Angeles "uperior Court on December @+ >EGE+ and alleged+ against defendant and appellant *cDonnell Douglas Corporation .Douglas/+ causes of action for negligence+ strict liability+ deceit+ breach of warranty and breach of contract. A (udgment was granted in fa#or of plaintiff to which plaintiff appealed. Issues: .a/ 'here the statements on the brochure actionable fraudulent statementsB .b/ 'as there substantial e#idence that DouglasH misrepresentations were material or that Continental reasonably relied on them in deciding to purchase the DC4>=B <. Folding,

D.

Diana Bonilla Contract Law .a/ Kes+ 0romises of safety are not statements of opinion+ they are representations o fact. .b/ Kes+ any airline shopping for aircraft to ser#ice its customers naturally searches for planes that are safe+ and Continental not only relied but trusted Douglas% information. C. Legal %easoning, The concluded that the alleged false representations in the sub(ect brochures were not statements of opinion! or mere puffing.! They were+ in essence+ representations that the DC4>= was a safe aircraft. Iere+ the e#idence is o#erwhelming that DouglasH representations+ that the landing gear were designed to brea)away from the wing without rupturing the wing fuel tan) were material and Continental (ustifiably relied on them. Conclusion: Affirmed

G.

Diana Bonilla Contract Law Case Brief >. ?. Case 4ame, Iampton #s. 9ederal -xpress Corp.+ E>G 9.?D >>>E .Fth Cir. >EE=/. Facts: .a/ Carl :erome Iampton a >@4year old cancer patient at Children%s *emorial Iospital was awaiting for a bone marrow transplant. .b/ Carl%s blood samples were sent to Dr. :oe)en by the hospital to match with the most suitable donor. .c/ The Children%s *emorial Iospital entered into a contract with carrier+ 9ederal -xpress+ for the transport of the blood sample. .d/ ,n a paragraph entitled damages or loss+! stated that 9edex was liable for no more than ;>== per pac)age in the e#ent of loss or damages unless you fill in and pay a higher authori6ed and declared #alue. .e/ The blood samples were ne#er recei#ed by the doctor nor did the patient recei#e the bone marrow transplant+ as result the patient died. .f/ 0atient%s father sued 9ederal -xpress for negligence. @. &rocedural Fistory, "ur#i#ors of a cancer patient sued air carrier for negligent failure to deli#er blood samples of patient that had to be matched with a potential bone marrow donor. The 7nited "tates District Court granted partial summary (udgment to carrier+ limiting plaintiffHs reco#ery to ;>== in damages. 0laintiff appealed. Issues: .a/ Did the district court err in determining that 9ederal -xpress was entitled to partial summary (udgment limiting its liability to ;>==B .b/ "hould 9ederal -xpress be held liable for the damages caused to the sur#i#or of cancer patientB <. Folding: .a/ 18+ because this was the amount stated in the contract of carriage between it and the shipper. .b/ 18+ special importance of the shipment was not )nown to defendant+ 9ederal -xpress owned not duty to cancer patent. C. Legal %easoning, The court of appeal held that the contract entered into by the shipper+ the ChildrenHs *emorial Iospital+ with the carrier+ 9ederal -xpress+ clearly limited the liability of the carrier to ;>==+ and although the contract pro#ided the shipper with an opportunity to declare a higher #alue+ the hospital did not do it. 7nder these circumstances of this case+ it would seem

D.

Diana Bonilla Contract Law unreasonable and un(ust to hold 9ederal -xpress liable to Iampton. ,f 9ederal -xpress had )nown of the contents of the pac)age+ it might ha#e charged a higher rate+ exercised additional care+ ha#e obtained insurance+ or might not ha#e accepted the responsibility. "ince 9ederal -xpress had no )nowledge of the contents+ and hence could not reasonably foresee the in(ury and damages that could be suffered+ plaintiff Iampton cannot reco#er on its cause of action founded in tort. 9ederal -xpress+ howe#er+ does not appeal from the district courtHs award of ;>== in damages to Iampton+ on partial summary (udgment. Ience+ 9ederal -xpressH liability is limited to ;>==+ the amount declared in the airbill. G. Conclusion, 3udgment affirmed. Case Brief >. Case 4ame, Chase 0recast Corp. #s. 3ohn 3. 0aonessa Co.+ <CC 1.-.?D C=@ .*ass. >EE>/.

8D Facts, .a/Commonwealth+ through the Department of 0ublic 'or)ers+ entered into two contracts with 0aonessa for resurfacing and impro#ements of route >?F. .b/0aonessa Co. entered into two contracts with Chase 0recast+ in which Chase was to supply median barriers in a highway construction pro(ect of the Commonwealth. .c/2esidents who ob(ected to use of concrete barriers and remo#al of the grass median strips+ filed an action in the "uperior Court to stop installation of the same and other aspects of the wor). .d/Anticipating modification by the department+ 0aonessa notified Chase to stop producing concrete barriers for the pro(ect+ which it did. .e/Before stopping production+ Chase had produced one4half of the concrete median barriers+ and had deli#ered most of them+ .f/0aonessa paid Chase for all that it had produced+ at the contract price+ and Chase suffered no out4of4poc)et expenses a result of cancellation of the remaining portion of the barriers. .g/Chase brought an action against 0aonessa for cancellation of contracts and to reco#er its anticipated profit. @. &rocedural Fistory, "ubcontractor pro#iding concrete median barriers for highway reconstruction pro(ect brought action against general contractor to reco#er lost profits after highway department decided not to install barriers. The "uperior Court dismissed the action+ and appeal was ta)en. 2D Issues, .a/ Did the trial court err on ruling in fa#or of 0aonessa Co.B

Diana Bonilla Contract Law .b/ "hould 0aonessa be held liable for breach of contractB 5D Folding, .a/ 18+ the court did not err on its ruling. 'hen performance becomes impossible from accidental perishing of thing without fault of either party+ parties shall be excused from the contract. .b/ 1o+ (udge ruled for 0aonessa on the basis of impossibility of performance C. Legal %easoning,
This court has long recogni ed and applied the doctrine of impossibility as a defense to an action for breach of contract, !nder that doctrine, "where from the nature of the contract it appears that the parties must from the beginning have contemplated the continued existence of some particular specified thing as the foundation of what was to be done, then, in the absence of any warranty that the thing shall exist ... the parties shall be excused ... #when$ performance becomes impossible from the accidental perishing of the thing without the fault of either party

G. Conclusion, 3udgment affirmed Case Brief >. Case 4ame, -.B. Iar#ey J Co. #s. 0rotecti#e "K".+ ,nc.+ 1o. CA 1o. FD=+ >EFE Tenn. Lexis >=<+ at M> .Ct. App. 9eb. >E >EFE/. ?. Facts, .a/ -.B. Iar#ey is engaged in the manufacture and wholesale of fine (ewelry. .b/ ,t maintains an in#entory in excess of ;>million and some of its (ewelry is on consignment and it re$uires insurance. .c/ Iar#ey entered into a contract with 0rotecti#e "ystems+ which maintains and furnish an 7nderwriters Laboratory4appro#ed AA burglary protection system. .d/ The contract stated that the company was not acting as an insure and that payments are solely based upon the #alue of the ser#ice. .e/ The contract also stated that 0rotecti#e assumes no responsibility for any losses occasioned by malfeasance+ burglary+ fire+ theft+ under this contract. .f/ 0rotecti#e%s computer system for wee)s had been indicating an inordinate number of outage signals. They notified the phone company and the policy+ neither could found a problem. .g/ The following day and employee disco#ered that burglary had ta)en place. ;?==+== worth of (ewelry and in#entory. .h/ Iar#ey sue protecti#e for damages. @. &rocedural Fistory, Iar#ey sued 0rotecti#e for damages resulting from the burglary from which Iar#ey lost ;?==+== worth of (ewelry and in#entory. The trial court entered a (udgment in fa#or of 0rotecti#e+ and Iar#ey appealed.

Diana Bonilla Contract Law 2D Issues, 5D Folding, 7D Legal %easoning, G. Conclusion, 3udgment affirmed

82LD8C" >><C<GD@ >

Diana Bonilla Contract Law CONTRACT CO4T%ACT+ made and concluded this August ?+ ?==E+ by and between "arah "mith of the city of Altamonte "prings+ "tate of 9lorida+ and Lelly Ienry of the city of 8rlando+ "tate of 9lorida. The said parties agree to this contract as follow: The buyer agrees to buy from seller a one4carat s$uare diamond ring . as is!/. The ring has a slight flaw in it+ which seller has made buyer aware of it. Lelly Ienry . the buyer!/ contracts and agrees to pay to "arah "mith . .the seller!/+ for the same+ the sum of eight hundred dollars+ lawful money of the 7nited "tates. 0ayment is to be made in a lump sum upon deli#ery of the ring. I4 =IT4E'' =FE%EOF+ the parties to these present ha#e hereunto set their hands and seals+ the day and year first abo#e written. NNNNNNNNNNNNNNNNNNNNNNNNNN "arah "mith A.seller/

NNNNNNNNNNNNNNNNNNNNNNNNNNNN Lelly Ienry .buyer/

Diana Bonilla Contract Law &romissory 4ote 982 &AL7- 2-C-,&-D+ the undersigned Lelly Ienry promises to pay to "arah "mith and NNNNNNNNNNNNNNND8LLA2" .; /

on the >st day of each and e#ery month thereafter until this 1ote is fully paid+ except that the final payment of principal and interest+ if not sooner paid+ shall be due on the day of August >+ ?=>=. All such payments on account of the indebtedness e#idenced by this 1ote shall be applied first to accrued and unpaid interest on the unpaid principal balance and the remainder to principal. At the option of the legal holder hereof and without notice+ the principal sum remaining unpaid hereon+ together with accrued interest thereon+ shall become at once due and payable at the place of payment aforesaid in case default shall occur in the payment+ when due+ of any installment of principal or interest in accordance with the terms hereof. All parties hereto se#erally wai#e presentment for payment+ notice of dishonor+ protest and notice of protest. NNNNNNNNNNNNNNNNNNNNNNNNNN "ignature

"TAT- 89: 9lorida +

C871TK 8f; 8range

The foregoing instrument was ac)nowledged to before me this August day of ><+ ?==E. NNNNNNNNNNNNNNNNNNN 1otary 0ublic "tate of: 9lorida Commission -xpires: ?=>=

Diana Bonilla Contract Law &ersonal 'er"ice Contract A Case B ;D2 ,n 1o#ember+ >E<E plaintiff went to the Arthur *urray "tudio in 8a) 0ar) to redeem a certificate entitling him to three free dancing lessons. At that time he was a @G year4old college4educated bachelor who li#ed alone in a one4room attic apartment in Berwyn+ ,llinois. During the free lessons the instructor told plaintiff he had Oexceptional potential to be a fine and accomplished dancer% and generally encouraged further participation. 0laintiff thereupon signed a contract for G< hours of lessons at a cost of ;>===. At the bottom of the contract were the bold4type words+ O181 CA1C-LLABL-M 1-:8T,ABL- C81T2ACT.% This initial encounter set the pattern for the future relationship between the parties. 0laintiff attended lessons regularly. Ie was praised and encouraged regularly by the instructors+ despite his lac) of progress. Contract extensions and new contracts for additional instructional hours were executed. -ach written extension contained the bold4type words+ O1814CA1C-LLABL- C81T2ACT+% and each written contract contained the bold4type words+ O1814CA1C-LLABL1-:8T,ABL- C81T2ACT.% "ome of the agreements also contained the bold4type statement+ O, 71D-2"TA1D TIAT 18 2-971D" ',LL B- *AD- 71D-2 TIT-2*" 89 TI," C81T2ACT.% 8n "eptember ?D+ >EC> plaintiff was se#erely in(ured in an automobile collision+ rendering him incapable of continuing his dancing lessons. At that time he had contracted for a total of ?G@D hours of lessons+ for which he had paid ;?D+F>?.F=. Despite written demand defendants refused to return any of the money+ and this suit in e$uity ensued. The sole issue raised by defendants is whether the terms of the contracts barred plaintiff from asserting the doctrine of impossibility of performance as the basis for see)ing recision under Count , of the complaint. The sole issue raised by plaintiff on his cross4appeal is whether the court erred in dismissing his Count ,,+ which sought recision and puniti#e damages on the grounds of fraud. 0laintiff was granted recision on the ground of impossibility of performance. The applicable legal doctrine is expressed in the 2estatement of Contracts+ PD<E+ as follows: A duty that re$uires for its performance action that can be rendered only by the promisor or some other particular person is discharged by his death or by such illness as ma)es the necessary action by him impossible or seriously in(urious to his health+ unless the contract indicates a contrary intention or there is contributing fault on the part of the person sub(ect to the duty. 3udgment affirmed.

Diana Bonilla Contract Law

MEMO RAN DU M
TO: FROM: DATE: RE: Mr. Riegler Diana Bonilla August 14, !!" Oli#er Da$ou%& B.O.'.'. Finan(ial )). * +eneral Agree,ent

Brief Chronology B.O.'.'. Finan(ial ))- $.i(. is a Flori%a registere% (o,/an0, entere% into an agree,ent $it. Oli#er Da$ou%. Mr. Da$ou% intrusting B.O.'.'. Finan(ial 14!,!!! to in#est in (urren(0 e2(.ange ,ar3et, in return 1!4 a ,ont. o5 total in#est,ent. B.O.'.'. Finan(ial agree% to re/a0 earning o5 14,!!! a ,ont. 5or 1 ,ot.s. B.O.'.' Finan(ial not onl0 too3 Mr. Da$ou% s6 4!,!!! but ne#er re(ei#e% an0 interest 5ro, t.e it. Analysis Base% on ,0 re#ie$ o5 t.e %o(u,ents t.at 7 .a#e re(ei#e%, t.ere $ere signi5i(ant legal ris3s in t.is agree,ent. 8ossible (lai,s b0 Mr. Da$ou% $oul% in(lu%e: (1) Fraud: T.e agree,ent .as e#i%en(e o5 5rau% or 5rau%ulent intent. ( ) Fraud in the Inducement: Alt.oug. .e 3ne$ $.at .e $as signing, Mr. Da$ou% $as 5rau%ulentl0 in%u(e% to enter into t.e (ontra(t. B.O.'.'. Finan(ial not onl0 ,a%e 5alse state,ents but ne#er inten%e% to en5or(e t.e (ontra(t. Durland vs. United States (9) Meeting of the Minds: 7t is (learl0 state% t.at Mr. Da$ou% un%erstoo% t.e ris3s, loss an% BENEF7T' o5 t.e 5oreign e2(.ange but it6s also ob#ious t.at B.O.'.'. Finan(ial ne#er inten%e% to in#est .is ,one0. (4) Consideration: T.e ,ere 5a(t o5 agree,ent alone %oes not ,a3e a (ontra(t. Bot. /arties to t.e (ontra(t ,ust /ro#i%e (onsi%eration, t.is ,eans t.at ea(. si%e ,ust /ro,ise to gi#e or %o so,et.ing 5or t.e ot.er. 7n t.is (ase Mr. Da$ou% ga#e ,one0 in e2(.ange o5 a /ro,ise. (:) Illusory Promise: A state,ent t.at a//ears to assure a /er5or,an(e an% 5or, a (ontra(t but, $.en s(rutini;e%, lea#es to t.e s/ea3er t.e (.oi(e o5 /er5or,an(e or non/er5or,an(e, $.i(. ,eans t.at t.e s/ea3er %oes not legall0 bin% .i,sel5 or .ersel5 to a(t. ISS ! Ne#ert.eless, base% on t.e /resent situation /resente% be5ore us, it a//ears t.at B.O.'.'. Finan(ial is not li(ense% to transa(t business in t.e state o5 Flori%a, t.e F). 'tatute Regulation o5 Tra%e, -o,,er(e, in#est,ents, an% 'oli(itations <:=!, sa0s t.at: Aut.ori;e% #en%or> ,eans a /erson %esignate% b0 a ,one0 ser#i(es business li(ense% un%er /art 77 o5 t.is (.a/ter to a(t on be.al5 o5 t.e li(ensee at lo(ations in t.is state /ursuant to a $ritten (ontra(t $it. t.e li(ensee. Moreo#er, 7 (on%u(te% t.e ,ost /ru%ent route 5ro, a legal /ers/e(ti#e $oul% be to 5ollo$ t.e

Diana Bonilla Contract Law nor,al (ourse an% /ro#i%e. 7t also states t.at a /erson ,a0 not engage in t.e business o5 a ,one0 ser#i(es business or %e5erre% /resent,ent /ro#i%er in t.is state unless t.e /erson is li(ense% or e2e,/te% 5ro, li(ensure un%er t.is (.a/ter, 5ailure to (o,/l0 $it. it ,a0 be sub?e(t to /enalties. CONC" SION Un%er t.ese (ir(u,stan(es Mr. Da$ou% (oul% #er0 $ell 5ile a la$suit against B.O.'.' Finan(ial ))-