Theories
Under what theory would you most likely analyze the following fact pattern?
Lucinda was in need of a new dress for a party she planned to attend. Rachel told Lucinda she could make her a dress from scratch if Lucinda paid Rachel $100. Lucinda sent over her measurements and told Rachel she would pay Rachel once the dressed was completed. The dress fit perfectly and Lucinda paid Rachel the $100.
Bargain theory. (offer + acceptance + consideration = contract)
List the elements necessary to form a contract under Williston and Holmes scheme to contract formation.
(1) Offer and Acceptance;
(2) Consideration;
(3) Competency to contract;
(4) Mutuality of Obligation;
(5) Legality; and
(6) Statute of Fraud.
Name one excuse for a breach of contract. (one of the multiple excuses for breach)
EXCUSES FOR BREACHES:
SkateOn,Inc. (SkateOn) was a company that assembles and ships skateboards to local retail stores for sale. SkateOn had a contract with WheelX, the company that produced the wheels SkateOn used to assemble and ship the skateboards. Under the contract, WheelX is required to produce and provide SkateOn with 1,000 wheels per month in exchange for $1,000 from SkateOn. On the first of the month, WheelX did just that, but SpaceOn did not pay WheelX any money.
If WheelX sues SpaceOn for breach of contract, what type of damages will WheelX be entitled to?
Expectation Damages (the $1,000). Expectation damages places the plaintiff in the position they would have been in if the promise had been kept.
List the violations of will theory.
It is a violation of will theory for a person to enter a contract due to
fraud,
duress,
undue influence,
mistake,
unconscionability, or
if they lacked the competency to contract.
Define Will Theory.
Under Will Theory, the desire to enter into a contract must originate within one’s self. A person cannot be forced or tricked into entering into a contract by somebody else.
David was the captain of his neighborhood basketball team. David's team was scheduled to play against another team in a competition at the end of this week. Unfortunately, one of David's basketball players got injured and could not play in the competition. Desiring to still play in the competition, David offered Marcus $80 to join David's team and play against the other basketball team in the competition. Marcus' response was that Marcus "would accept to join the team only if David agrees to pick him up at his house and drop him off after the competition."
At this point, what is Marcus' response considered under contract law?
A conditional acceptance. A conditional acceptance is an indirect rejection of the original offer.
An acceptance is conditional if the offeree accepts an offer “so long as” or “on the condition that” the other party obliges with the offeree’s request.
Professor Chuckni decided he would purchase textbooks for all the students enrolled in his upcoming Spring 2020 "Judicial Structure" course. Because of this, Professor Chuckni contracted with ABC-Textbook Company for them to ship 35 copies of a textbook titled "A Study of the American Court System". However, when Professor Chuckni received delivery of the order he noticed that ABC had sent him textbooks titled "A Study of the English Court System".
If Professor Chuckni decides to sue ABC, what kind of breach would Professor Chuckni likely argue ABC has committed?
A material breach. A material breach occurs when a party fails to perform the contract in a significant or substantial manner.
Robert and Sally entered into a construction contract. The contract stipulated that Robert would pay out of his own pocket for the supplies needed for the construction to begin, and then Sally would reimburse him for the expenses immediately thereafter. However, after Robert bought the lumber necessary for the construction project at a cost of $1,500, Sally decided to rescind the contract.
Under these facts, what type of damages is Robert entitled to?
Reliance Damages (i.e. out-of-pocket expenses). Puts the plaintiff in the position they were in before the contract was ever made.
What is the Statute of Frauds and what does it apply to?
Marriage;
Years (+1);
Land;
Executorship (in charge of a will);
Goods (over $500); and
Suretyship (grantor: promises to pay a debt for someone else).
James was a bright undergraduate student who did not plan to attend graduate school after receiving his bachelor's degree from UCF. James' Grandfather wanted James to follow in his footsteps and become a doctor just like him. Therefore, the grandfather told James that the grandfather would pay for all expenses associated with James attending medical school after James graduates from UCF. If James decides to enroll in medical school based on his grandfather's assurances that his grandfather would pay all medical school expenses, under what theory can James prevail if James' grandfather decides to not fulfil his agreement to James (leaving James with the expenses associated with James' enrollment in medical school)?
Reliance theory, specifically Promissory estoppel.
Promissory estoppel is a remedy used to enforce a promise and form a contract between parties.
To prove a case for promissory estoppel the plaintiff must prove three things.
[1] Promise, [2] Detrimental Reliance, and [3] injustice to plaintiff. Here, all three are satisfied.
Lauren was the owner of a prized race horse. Seth was Lauren's next door neighbor. Seth promised to wash Lauren's prize horse once a week as long as Lauren brings the Horse to Seth on Wednesdays. The following week, Lauren brought the horse to Seth on Thursday. Due to this, Seth refused to wash the horse.
In a breach of contract case, will Lauren likely prevail? Why or why not?
No, because Seth made an Illusory Promise accompanied by a true condition and Lauren did not satisfy the condition since she brought the horse a day late.
An illusory promise accompanied by a true condition occurs when a condition is specifically set out in a contract that determines whether the promisor will fulfil with their promise or not.
Note: If the condition comes to fruition then the illusory promise no longer exist and instead, the promisor is obligated to fulfill what was once their illusory promise.
Cynthia was an aspiring actress. Her dream is to become a big movie star. To accomplish this, Cynthia contracted with Oliver (an up and coming movie director) to direct an original short film that Cynthia had wrote for herself. A week later, Oliver was approached by a big time Hollywood executive who offered Oliver the opportunity to direct a big Hollywood Movie. Oliver entered into the very lucrative deal because he figured he could just pay Cynthia damages for cancelling the contract they had together and still make a profit from the new Hollywood contract.
Under these facts, how would you classify Oliver's breach of contract? In other words, what type of breach is Oliver committing against Cynthia's contract?
Efficient Breach. An efficient breach occurs when a breaching party profits from their breach of contract, despite paying damages to the non-breaching party.
While at the courthouse, a business man dressed in a nice suit noticed his dress shoes were all dirty from the outside mud. A shoe polisher noticed the business man contemplating whether to enter the courtroom with dirty shoes and told the business man that the shoe polisher could "make the shoes look as good as new for a small $10 fee". Disgruntled, the business man sat in the chair and allowed the shoepolisher to do his job. By the end, the businessman's dress shoes were indeed "as good as new", but the businessman refused to pay the shoepolisher because the businessman said he never orally agreed to shoepolisher's terms.
If the shoepolisher really wanted to recover the $10 fee in a court of law, what type of damage remedy would the shoepolisher ask for from the court?
Restitution. Restitution is a remedy that gives the plaintiff what the defendant has gained, due to the defendant’s breach, to prevent unjust enrichment.
Here, the shoepolisher provided a $10 service, which the businessman retained the benefits of. Therefore, the shoepolisher would be entitled to $10 in restitution to prevent the businessman from being unjustly enriched.
Rosa is a lover of pottery. Unfortunately, Rosa personally is not very good at making pottery out of clay. However, Rosa knows that her friend Caroline is excellent at making bowls and plates out of clay. Because of this, Rosa entered into a contract with Caroline where Caroline would be obligated to make a set of plates and bowls for Rosa in exchange for Rosa paying Caroline $200. After Caroline began working on Rosa's order, Rosa informed Caroline that she had forgotten to include ceramic cups in the contract and sought to include them now and told Caroline that she would continue to pay Caroline the $200 as consideration if Caroline agreed to add ceramic cups to the contract.
What contract issue has arisen based on these facts?
The pre-existing legal duty rule. Under the pre-existing legal duty rule a promise to provide something that the party was already bound to do is not valid consideration.
Lets say Mario could have prevented himself from gaining a benefit from Luigi by telling Luigi not to perform, but instead Mario chose not to stop Luigi from fully performing.
In this case, if Luigi sues Mario, can Mario claim that no bargain has been struck between the parties in court and prevail?
No. Mario cannot claim that no bargain has been struck between the parties under the theory of Quasi-Contract. A quasi-contract arises when one party has retained a benefit from another party without compensating the other party. Recall that a quasi-contract is a substitute for offer and acceptance.
Carlos and Maria were neighbors. Due to Maria's old age, Carlos would from time to time mow Maria's front yard so the grass would not grow too tall. Maria was always very appreciative of Carlos' gesture and would always say thank you to Carlos, since she could not mow the lawn herself. However, Carlos abruptly stopped mowing both his own lawn and Maria's lawn, causing Maria's lawn to overgrow and become an eye soar in the community.
If Maria wants to sue Carlos for breach of contract, was there a legally enforceable contract in this case? Why or why not?
No, because there was no mutuality of obligation. Recall that mutuality of obligation refers to the need for there to be consideration on both sides in a contract. Both parties must be bound to the contract and the contract must have been made in good faith.
What is the formula for calculating seller's cover damages.
(For instance, if the seller and buyer have a contract and the buyer breaches. & the seller decides to cover, how would the court calculate the seller's cover damage remedy?)
Contract price - market price = seller's cover damages
Sullivan is the town's local suit maker. Sullivan is known for designing and creating suits for all occasions. As part of his business platform, Sullivan allows patrons to choose one of many suits that Sullivan has already created and then customize it to the patron's liking. One day, Edward walked into Sullivan's store and asked to have bedazzled a suit that was worth $374.99 in its current condition. After Sullivan bedazzled the suit as Edward had requested, Edward opted to rescind the contract. The suit is now worth $174.99 in its bedazzled state.
If Sullivan sues Edward, what can Sullivan recover from Edward in regards to the price of the suit? What is the name of the damage remedy?
Ans: The $200 difference. Recall: Diminution in value is a measure of contract damages reflecting the difference in the value of an item before the breach and its value after a breach.
Usually refers to how the value decreased due to a breach of contract.
A mother walked into a local market store that sells a variety of items. She approached the store employee at the front counter and informed him that she was searching for some noise cancelling headphones. The mother further explained to the employee that she needed the noise cancelling headphones to be able to fit on the head of a 5-year-old child because the mother is a science major and needs to take her 5-year-old daughter with her to the mother's human anatomy class where they would be learning about the male and female reproductive systems and the mother did not want her 5-year-old to hear anything that the child may later repeat at elementary school. The store employee recommended the "NoiseBeGone" brand headphones and spoke about its good online reviews. The mother purchased the headphones the store employee recommended, but was upset to discover that the headphones were meant to fit only adult sized heads and would not fit her 5-year-old daughter. Furthermore, the mother was upset because when the mother tried on the headphones, she could hear her daughter making noises in the background. Thus, her daughter would still be able to hear the anatomy class lecture even if the headphones were to fit the daughter.
What warranty, if any, may the mother sue the local market store under?
Ans: The Implied Warranty: Fitness for Particular Purpose. If a buyer has outlined to the seller what the buyer wants from the good during contract negotiations, but then the buyer receives something completely different than what the buyer outlined to the seller (not what was agreed upon) a then a breach of the implied warranty of fitness for a particular purpose has occurred under UCC §2-315.
Important: jurisdictional reach is sellers. (Note: sellers are defined broader than “merchants”)
Lets say your neighbor hires you to mow his lawn every Friday for the entire summer. You mow your neighbor’s lawn for the first three weekends of the summer and get paid on Saturday morning each time. The fourth Friday you mow the lawn and when you arrive at your neighbor’s house on Saturday morning, your neighbor refuses to pay you.
Is there an legally enforceable contract?
Yes. The law will infer that there is a contract between you and your neighbor, even though you never put anything in writing. This is an implied in-fact contract. Your neighbor is obligated to pay you because you performed your part of the bargain, there was an agreement based on both parties' prior conduct, and your neighbor was enriched by your performance.
A pedestrian was standing at a cross-walk. While an older lady was crossing the street, the pedestrian noticed a car speeding in her direction. The pedestrian jumped into the street to save the woman's life but in the process the pedestrian resulted crippled. The older woman, who was rich, was so grateful to the pedestrian that she agreed to pay the pedestrian a monthly amount of gratuity. Once the older lady died, her estate refused to continue making payments to the police officer.
Can the pedestrian require the estate to continue making payments despite the woman being dead?
Yes, generally, a party cannot use moral obligation to enforce a contract, however, this hypo falls under an exception to this general rule.
The Cheesecake Factory ("TCF") entered into a 12 month contract with a new cream cheese supplier, Cake Co., in which Cake Co. would supply and deliver 500 pounds of cream cheese on the 15th of every month at a purchase price of $4 per pound. Four months into the contract, Cake Co informed TCF that it would not deliver this month's supply unless TCF agreed to increase the purchase amount from 500 pounds to 650 pounds a month. TCF refused to increase their order.
Has Cake Co. committed a breach of performance? If so, what is it?
Yes, Cake Co has committed anticipatory repudiation breach. Anticipatory repudiation occurs when a promisor, prior to time for performance of his promise, indicates that he will not perform when the time comes.
When anticipatory repudiation occurs, the non-repudiating party has the option to treat the repudiation as a total breach and sue immediately.
A seller and a buyer entered into a contract for the sale of 65" Smart TV. The seller had agreed to sell the Smart TV as part of the seller's Black Friday Sale. Because of the black Friday sale, the contract price for the TV was $479.95 (significantly lower than what it would otherwise be on any other day). The caveat was that the buyer would have to wait for the Smart TV to be shipped to the buyer's home within 5-7 business days. Two weeks passed, and the buyer had still not received the Smart TV. When questioned about the delay, the seller informed the buyer that the seller was going to rescind the contract because the TV was worth a lot more now. Because of the breach, the buyer went to different electronic stores searching for another 65" Smart TV at the same price. However, the best alternative the buyer could find was a 65" Smart TV at the price of $649.95.
If the buyer purchases the $649.95 TV, what kind of damage remedy can the buyer seek from the seller?
Cover damages. Under §2-712, the buyer has the option to go out in the market and take advantage of the next best opportunity to get a suitable substitute for the good the seller was supposed to provide, prior to the seller breaching. The buyer must act in good faith when “covering”.
market price - contract price = buyer's cover damages
In this case, $649.95 - $479.95 = $170 cover damages.
The President is eating dinner at a restaurant and chokes on his food. A doctor is seated at a table nearby and observes the president choking. The doctor rushes over to perform the Heimlich maneuver and saves the president's life. He later sends a medical bill for services rendered to the diner he saved.
Is the President obligated to pay the doctor's medical bill? If so, under what contract law doctrine? If not, why not?
Yes, the president is obligated to pay the doctor even though he had no intent to enter into an agreement with him because otherwise he would be unfairly enriched by the doctor’s services. To avoid this outcome, the law will find an implied at-law contract and require the president to pay fair value for the services he received from the doctor.