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ELEMENTS OUTLINE FALL 2007 STOTZKY
SELF HELP AND RECOVERY IN KIND
Terminology –
•
Replevin - cause of action for return of property which has been unlawfully taken
• Doesn't always include Detinue
 You get the object back as well as damages - which depends on the case
 Have to prove there was an unlawful taking and that you have superior
ownership of the item
 Allege that a demand has been made to get the ring back before you can
sue for it
 As soon as you file the motion you get the item back
• If the person doesn't want to give it back, they can file a replevin
bond, and put up the value of the item up, and he gets to keep the
item
 Difference between Replevin and Detinue – with Replevin you get the item back
right away
 Limitations of Replevin –
• Even with judgment, you might not get the item back
• The goods have to found
• Defendant may refuse to turn over the goods or hide them
• Even if location is known, the law may prevent discovery
•
Conversion: unauthorized assumption of another's property
 You have to prove that the goods are your property and that the
defendant's has those goods in his possession, and you can get the value of
the object
 You can't get the item back, only the value of those items
•
Detinue - unlawful detention an object even it was taken legally
 Can get the item at the end of the action
 You either get the item or the value of the item
•
Redelivery Bond – act for the return of something
• Demand is necessary
•
Trover – an action at common law to recover the value of chattels or goods wrongfully
converted by another to his or her own use
•
Lien: legally right or interest that a creditor has in the property until the debt is settled
•
Trespass:
o Definition: unlawful interference with someone else's property
o
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Requirement: don't need to show substantial harm to show
action
Must be in possession of property
o
o
•
Remedy: nominal damages, or damages for rental value
You need to sue continuously, every incident – if it is enough you can sue for
nuisance
Nuisance: interference with the use and enjoyment of the property - you need actual
harm, doesn't have to take place on your own property
o
Requirement:
• Actual interference/harm
• Doesn’t have to take place on your own property – like can be noise from
next door
o
Remedy – Damages, stop action
Ejectment: an action brought by someone claiming a right to possess property against
another who has wrongfully taken possession of that property
o
Requirement:
• plaintiff was in possession of the land and wrongfully lost
• it, right to retake possession, and
• ability to ask the sheriff to get it back
o
Remedy:
• establish title – determination of ownership
• nominal damages for the value of use of land during interference
•
•
Injunction – a court order ordering or preventing an action
 Remedy – Protects against future injury – no award/remedy for past injury
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Butler v. Wolf Sussman, Inc.
221 Ind. 47 (Supreme Court of Indiana, p. 36)
Rule: If the defendant’s behavior constitutes an affirmative attempt to establish title of disputed
property, the defendant waives his/her right for the plaintiff’s demand
Statement of Case – This is an action for replevin and conversion of a diamond ring by an
owner with superior possessory rights, against a licensed pawnbroker for a ring taken and
pawned by the claimant’s husband without her consent.
Facts:
The Appellant inherited the right in 1920 from her mother. She afterwards married and lived
with her husband for 13 years; separating from him on January 8, 1940. They are not divorced,
but the husband’s location is unknown.
After the separation she noticed the ring was missing and made a demand on her
husband, with the threat of suit, for the return of the ring. He presented a ticket to her disclosing
that on November 18, 1938, he had pledged the ring as his own to Wolf Sussman, a licensed
pawnbroker, for a loan of $25, which was increased to $35. This was without the prior
knowledge of Mrs. Butler. Mr. Butler is missing.
Procedure:
 The complaint was on three counts: 2 for replevin (one for unlawful taking and one for
unlawful detaining) and 1 conversion.
 The defendant answered a general denial.
 The appellant waived her entitlement for a judgment on the pleadings by going to trial on
the merits of the allegations.
 In the bench trial the judge awarded judgment to the defendant and the plaintiff took
nothing.
 Plaintiff appeals.
Issue:
Where the defendant claimed title to the ring in controversy over the asserted ownership of the
plaintiff, did the trial court err in ruling that a demand by the plaintiff was necessary prior to
commencement of the action for replevin against the defendant?
Result on Appeal: Reversed with directions to sustain the appellant’s motion for a new trial and
further proceeding
Holding: The court erred in granting judgment to the defendant because when the defendant
claimed title to the ring, defendant waived the necessity of a demand by the plaintiff
• Narrow – If a pawnbroker claims ownership under the Act of Burns, the plaintiff does
not need to make a demand for possession.
• Broad – when a statue is used contrary to the law, new trial will be granted
Rationale:
• Doctrinal:
o Hays v. Burns – no demand is necessary where the party in possession assumes a
position disclosing that is a demand had been made it would have been unvailing
o Jordan v. Jordan – waiver of demand may result from the character of the defense
made to the action as well as from the statements and conduct of the defendant
prior there to
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o Statute in the state of Indidana since 1881: A married woman has been authorized
to take, acquire and hold personal property and to sell, barter, exchange, and
convey the same as if she were unmarried
• Policy
o Since a D may offer to disclaim any interest in the property, any affirmative
conduct on his part calculated to establish title in himself, whether by pleading or
proof, ought to waive a demand (his actions showed he would not have complied
with a demand)
o A spouse can’t claim or dispose of an item w/o the permission of the other spouse,
if the other is the rightful owner
The statute Issue:
• Issue #2 – whether the application of the Pawnbroker’s act violates the Due Process
clause in a case where the P’s husband pawned the item without her knowledge or
permission
• Holding – where a married woman is authorized to acquire, hold and sell personal
property as if she were unmarried, one spouse might be held to have committed larceny
Other things We talked about:
• Why no jury –
• Mistakes of the lawyers
o Sussman’s lawyers
 Answered in general denial
 Everything he did that caused him to lose on the issue of demand
• File redelivery bond although would have been bad for business
not to do this
• Raised issued of demand to support judgment below
o Butler’s lawyers
 Could have moved for judgment on the pleadings
 Should have made a demand on the pawnbroker
Situational Context of case?
• Why not suing husband? Judgment proof, cannot be found doesn’t have the ring now
• Husband and wife could be scamming the pawnbroker
Limits of Replevin
• Even with a judgment, Might not get back the ring
• Goods must be found and return
• Defendant may refuse the Sheriff’s help in finding goods and might conceal the goods
whereabouts
• Even if you know the good’s location, recovery might be obstructed by rules of law
Equitable Relief:
1) There must be no other adequate remedy available at law to get into a court of equity
2) If you get equitable replevin judgment, can use the power of contempt for return of
item
3) Just because you can’t get item back doesn’t limit equity.
4) Have to prove special circumstances = inadequate remedy
5) In equity, court less bound by precedent, makes court look less legitimate when
exercising equitable powers.
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Duke of Somerset v. Cookson
24 Eng. Rep 1114 (Court of Chancery 1735)
Rule: The plaintiff will be able to bring a bill in equity when an item has stolen, risks being
defaced, and there is an importance in returning the item in its as in condition. An action in
equity is proper where a law is lacking, in that, it cannot compel a party to restore an object to its
rightful owner in original condition
Statement of Case: The duke, who is the claimant of personal property through treasure trove
brought this bill in equity against Cookson, a goldsmith, to compel delivery of an altarpiece in
specie; undefaced against current possessor.
Facts: The Duke of Somerset was entitled to an altarpiece made of silver with a Greek
inscription and dedication to Hercules. He became entitled to it under treasure trove within his
manner. The altarpiece was sold to the defendant, a goldsmith in Newcastle by whoever came
into the possession of it. It is not clear if this seller was aware of the Duke’s claim to the piece.
Procedure: The defendant demurres stating that this is an inappropriate action to be brought in
equity.
The defendant claims the plaintiff should of brought this action in a court of law under either
trover or detinue.
Issue: May a party bring an action in equity for redelivery of an item in the wrongful possession
of another when the item in question is one of a kind and would be very difficult, if not
impossible to replace, when other remedies at law exist?
Holding:
Narrow: Where the evidence shows the possession of the altarpiece to be worth more to
the plaintiff than merely its intrinsic value and that any defacing of the alter piece may result in
depreciation of its value supports that a bill in equity is an appropriate form of action to recover
the altar piece.
Broad: A bill of equity can be used to recover property that cannot otherwise be
compensated by any method of monetary substitution and the return of such property in the exact
form upon being taken is essential meaning no remedy of law would suffice.
Reasoning
Doctrinal: The interest of property owners to recover items of antiquity and those that
are irreplaceable should be represented by allowing them to recover equity.
 A law in equity is proper where a law is defective because it cannot compel a
party to restore a chattel to its rightful owner in its original condition.
o Replevin would not be proper in this case because there was no unlawful
taking,
o Detinue would allow the defendant to chose to either pay damages or
return the item; must prove lawful ownership
o Trover would only allow the payment of damages.
Policy: None of the above actions would allow for the property to be returned
undefaced, further, the property’s value is only in its entirety. Fairness only available if keep in
same condition.
 Defendant makes a floodgate argument: this case will bring all cases of detinue
into equity.
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 The judges must balance results: item unique, defendant is a goldsmith (melting
tendency)
Notes:
 Treasure trove: Doctrine stating that the finder has right over all by the true owner
o Plaintiff claims interest in the altarpiece—why is he the true owner?
 Court of Chancery: Courts in England with the power to supersede the common and
statutory laws. Have the power to enforce their remands.
 Mrs. Butler: Can she bring her action in equity too? Not unless she can show the ring to
be unique!
o A party with an inherent interest in a chattel whose intrinsic value will be
destroyed unless the chattel is preserved in specie shall have the legal right to
establish ownership of the chattel and if successful recover the chattel in its
original state.
 Bill in equity doesn’t apply to personal property but maybe for heirlooms
Case line – Duke v. Butler
Both items have sentimental value but Butler chose Replevin and duke chose equity – the
chance of defacement was higher in Duke then in Butler
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Butler v. The Frontier Telephone
186 N.Y. 486 (Court of Appeals New York 1906)
Rule: An ejectment will lie when the plaintiff shows he was formally in possession, he was
deprived of that possession and that he has a right to re-enter and take possession.
Statement of Case: This is an action for ejectment by the owner of property against the Frontier
Telephone Company for stringing wire on his land; the landowner is seeking damages and
recovery of space.
Facts: On January 1, 1903, without the consent of the plaintiff/landowner or lawful authority,
the Telephone Company entered the land and stretched a wire over and across the property until
January 10, 1903, when the defendant removed the wire. The wire was strung 30 ft from the
ground and on the eastern side and slanting to about 20ft on the western side and reached across
the entire width of the premises.
Procedure: The case was tried first as a bench trial; the court decided the plaintiff, as owner of
the premises in question, was entitled to judgment against the defendant, for 6 cent damages for
withholding said property, removal of the wire from the property, and for the costs of the action.
The defendant appealed, but the Appellate Court upheld the decision. The defendant brought
this last action.
Issue: Will ejectment lie when the soil of the plaintiff is not touched, but a part of the space
above the soil is occupied by an object of the defendant (telephone wire)?
Result of Appeal: Judgment affirmed and the removal of the wire after the suit did not defeat
the action.
Holding:
Narrow: An ejectment will lie even if the soil was not touched because Butler’s
property ownership includes not only the surface but also the space above and beneath his land.
Furthermore, the wire is an obstruction preventing Butler from his exclusive property rights.
Broad: An ejectment will lie because the plaintiff showed ownership of the property and
he was ousted by the use of his property, which includes the space above and below his land.
Reasoning
Doctrinal: The plaintiff showed he was formerly in possession, that he was ousted or
deprived of possession and that he has a right to recover and re-enter his land.
 The fact the wire was removed at the commencement of the action is
irrelevant because it existed upon the filing of the complaint.
Policy: Owner could not fully use his property; both the esthetic and practical uses were
impaired.
 Court must grant an ejectment, otherwise this would be a terminal suit of
trespass and the damages would become similar to rent.
o In this case the phone company would pay 6 cents rent for each
action
 Future implications regarding who owns airspace? How will this decision
be played out in the future as aviation expands?
Notes
• Would P prefer trespass, nuisance, or ejectment action?
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 Trespass: Invasion by another of one’s property
 Nuisance: Interference with the use or enjoyment of one’s property; creating an
aggravating environment for others.
 Ejectment: Must prove he is in rightful possession of the land, that he was ousted, and
that he has a right to regain possession; must show formal possession
o Plaintiff was dispossessed
o Plaintiff was formally in possession
o Plaintiff has a right to re-enter and re-take possession
o Sheriff can deliver the occupied space by removing structure.
o Damages: Repossession of the land, value of the land, court costs, lost profits.
 Smith v. new England Airline: A flight over one’s land at heights in excess of fixed law
are lawful as long as there is no harm to property owners or interference with any
valuable use of the land.
 U.S. v. Cusby: The common law doctrine of ownership of land extends to the atmosphere
has no place in the modern world; yet they still held that there must be some limitations
set on the altitudes of navigable airspace. Flights flying below the altitude set by the
Civil Aeronautics Authority were not within the navigable airspace of the public domain.
 Griggs v. County of Allegheny: The use of airspace over the petitioner’s property was a
taking of property by the county and the plaintiff is entitled to compensation. This was
airspace for take-off and landing.
Principle of: Cujus est solum, ejes est usqa ead coeluem et ad inferos: That whose is the soil, his
is also to the sky and the infernal depths
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Compensatory Damages
Measuring damages to arrive at compensation—goals:
Tort Give sum of money to person wronged which as nearly as possible will restore him to
position he would be in if wrong has not been committed. (McCormick p86)
Contract Award a sum equivalent to the performance of the bargain; place the plaintiff in
the same position if the contract was fulfilled.
When are damages rewarded?
 Proximate Cause: When the injury is not remote from the defendant’s breach of duty
 Foreseeability: The defendant could/should have foreseen the relationship between
the breach and the injury
 Causal Relationship: Defendant’s conduct and the harm must be related
 Wider range in tort than contract: reasonable within mind of the parties at time of K
formation
Prosser p89
Tort
Contract
Actions to protect interest in freedom from
Contract action created to protect interests of
various types of harms
a promise being performed
Duties of conduct which give rise to them
Obligation imposed by the parties in the
are imposed by law and based on social
agreement
policy; irrelevant of the intentions of the
parties
May be owed to all of society or range of
Owed to specific parties mentioned in the
people
agreement
Flow of the cases:
Cases start with classic foreseeability--> moves to causation--> then to extreme
causation (Polemis which held the defendant liable for the most improbable consequences of his
action)--> then the court begins to limit causation (Christianson held direct consequence with no
intervening actions)-->and finally the court moves back to foreseeability (Hill held a mix of
causation and foreseeability—Wagon Mound and Mouney held for a strict foreseeability).
Classic foreseeability  Causationextreme CausationCts limit foreseeabilityBack to
foreseeability
Contract:
 Responsible for…
o What flows from breach
o In contemplation (special contract)
o Self-imposed, agreed mutuality, so limited liability for breach
 Self-imposed, agreed mutually so limited liability for breach (Hadley)
 Award a sum equivalent to the performance of the bargain, place the plaintiff in the same
position if K was fulfilled
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 When damages are awarded –
o Proximate cause – when the injury is not remote from Defendant’s breach of duty
o Foreseeability – the defendant could/should have foreseen the relationship
between the breach and the injury
o Causal relationship – defendant’s conduct and the harm must be related
Tort:
 Two rules of Liability…
o Any damages foreseen (negligent)—all damages you are responsible for (limit
changes)
o If some damage foreseen, enough; don’t need to know exact damage (Polemis)
 Duty imposed by law…
o No choice, non-negotiable; cannot contract out of it. It’s a higher standard.
 Goal to give the sum of money to the person wronged which as nearly as possible will
restore him to the position he would have been in had the wrong not been committed
No Tort:
 No duty, no breach, no liability (Palsgraf)
 Even if duty and breach, liability will have limits.
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Hadley v. Baxendale
156 Eng. Rep. 145 (Court of Exchequer 1854)
Rule:
• Award of damages for those actions of negligence that arise naturally from a breach of
contract (in the usual course of events) or special circumstances communicated at the
making of the contract.
• “Where two parties have made a contract which one of them has broken, the damages
which the other party ought to receive in respect of such breach of contract should be
such as may fairly and responsibly be considered to have been in the contemplation of
both parties, at the time they made the contract, as the probable result of the breach of it.”
• Causation in fact!! Allows for damages when breach arises naturally from the
contract!!
Statement of Case: Miller/customer/consignor brought this action against a common carrier of
goods and chattels seeking damages for the delay in the delivery of a broken shaft to
manufacturer for repair, resulting in the loss of profit of 300 pounds due to the stoppage of the
mill.
Facts: Plaintiffs were millers in Glouster. Their mill stopped because of a broken crankshaft
and the plaintiff contracted with a company to make a new shaft for the plaintiff. However, they
needed the old shaft sent so the new one would fit the plaintiff’s engine. The defendant’s were
contracted as common carriers of goods and chattel for hire between these towns. Defendants
told the Plaintiffs that the could fix it and return it the following day
Servant told the clerk that a replacement was needed immediately, that the mill was not
operating and chose this carrier because they expected the shaft to be returned in only two days.
However, it took 5 days to return the new crankshaft and the consequence was that the workings
of the mill was delayed, profits were lost, and wages were paid to workers who could not work
When the plaintiff and defendant contracted, the defendants were never told that the mill
would be stopped from working until the new crankshaft was delivered. The only circumstances
here communicated by the plaintiffs to the defendants at the time of the contract was made was
that the article to be carried was the broken shaft of a mill, and that the plaintiff were the millers
of that mill
Procedure: Plaintiff sued under two counts: 1) the defendants failed to deliver the crank shaft
on the following day and instead delayed delivery until the 7th day; 2) defendants failed to use
due and proper care in carrying the or conveying or delivering the broken shaft within reasonable
time due to negligence, which resulted in loss of gains and profit for the plaintiff.
Defendants pleaded non asumpserunt to count one (no, I did not undertake to do this in
two days), and payment of 25 pounds to count 2. Meaning no such promise, but negligent in his
delay.
The Plaintiffs entered a nolle prosequi as to the first count (legal notice that the law suit
has been abandoned), and replied that the sum paid as to count 2 was not enough to satisfy the
Plaintiff’s claim.
The Judge left the jury general instructions and the Plaintiff was awarded damages of 25
pounds beyond that already paid, (equaling 50 pounds). The Defendant claimed instructions
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were too remote, and therefore they were not liable, via a rule nisi (plaintiff show cause why
should not get a new trial—they got a new trial based on misdirection given to the jury).
Issue: Should the rule nisi be absolute and the defendants be barred from a new trial?
Result of Appeal: Rule nisi has been granted and made absolute. Court orders a new trial with
new instructions to be delivered to the court, that they ought not to take into consideration at all
the loss of profits estimating the damages (unless new facts appear).
Holding:
Narrow: The plaintiffs were not entitled to recover lost profits as damages for breach of
contract where they failed to notify the common carrier that their mill was rendered inoperative
by a broken crankshaft, would remain inoperative until they received a repaired crankshaft, and
that a failure to deliver the crankshaft in two days would result in lost profits.
 Arguable limitation on the amount of recovery, an attempt to restrict the
promisor’s liability for breach of promise to those consequences of risk
which he knew about to must have taken to have known about when he
made the contact.
Broad: Damages for lost profits arising out of a breach of contract may not be recovered
where the damages do not arise naturally from the breach itself or in contemplation of the parties
at the time of contract formation.
Reasoning
Doctrinal: Award of damages for those circumstances that arise naturally from a breach
of contract (in the usual course of events) or special circumstances communicated at the
making of the contract.
 The special circumstances under which the contract was formed were not
communicated by the Plaintiff to the Defendant. In the multitude of cases
where millers send out broken shafts to be repaired the consequences
ordinarily are not the stoppage of the mill. Therefore, the loss of profits
cannot reasonably be considered such a consequence of the breach of
contract as could have been fairly and reasonably contemplated by both
parties when they made this contract.
Policy: Should have included a liquidated damages clause, bargain to create own
damage clauses. People should be allowed to bargaining for own deals, unlike in torts cases.
People best understand their own interest. Do not want to give undue burdens
 Court interpreting agreement might hurt the growing industry of this
country
 Protection of common carriers, essential to commerce in society
Notes:
Two counts:
1) Breach of contract for the delay
2) Negligence for breaking promise of due care and following through “with due and
proper care and diligence in and about the carrying and conveying the broken shaft.”
Is this a result of a special contract with the plaintiff or a concept of his negligence in
his duty as a carrier (blurry line).
How arrange the facts for your client…
1) “Arise naturally from perceiving what might occur.” Generally foreseeable;
Company loses profits and costs—arise in the usual course of dealings. Could the
shipping company’s bargain to pay 25 lbs be seen as an admission of guilt
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2) Recover damages as can be reasonably supposed though an agreement between the
parties—be specific in contracts.
What if this was framed in tort?
It might be possible for the plaintiff to recover the lost profits, for they were a foreseeable
result of defendant’s negligence; defendant will argue the plaintiff cannot recover from pure
economic loss and speculationn.
Purpose of Hadley Rule...
1) Notion of limited liability to protect common carriers
2) Provides predictability and order in commerce and courts.
3) Established special class of damages and certain circumstances.
4) Hadley is a tort case not a contract—not separated yet
Hadley limits scope of recovery
Always need a communication of special circumstances
Two prongs of Hadley Test:
1. In the normal course of events, this would not have happened
2. Special circumstance
Practical ways of enforcing damages
1. Judges bring evidentiary rules
2. Begin to create motion for new trial if damages were exceedingly excessive
3. Instruct jury, as a matter of law, what the damages were
Hadley Rule – Special damages cannot be recovered unless they can fairly and reasonably be
considered naturally from the breach
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KRAUSS V. GREENBARG
137 F. 2d 569 (3d Cir. 1943)
Rule – Breach must be the proximate and primary cause of the injury and the exact type of
liquidated damages clause with the government
Statement of Case:

Action brought by a webbing company, seller, seeking damages against an overall
company, buyer, for failure to make payment on their contract.

A counterclaim was filed for breach of contract by the buyer (overall) for delayed delivery
by the seller (webbing) which resulted in the webbing company violating a government
contract to deliver 698,084 pairs of leggings.
Facts:

The defendant was contracted to deliver the US government leggings at stated quantities
and at stated intervals. For any delay in these deliveries, the defendant was required to
provide a sum as liquidated damages calculated per each day of delay.

On the same day, the defendants placed an order with the plaintiff, a webbing company for
the webbing to be used in the making of the leggings. The order provided for certain
quantities of webbing to be delivered at given dates.
Procedure Below:

The webbing company sued the buyer, overall company, to recover $15,326.13 for the
webbing contracted and delivered to the overall company.

The buyers admitted nonpayment but filed a counterclaim for $22,740.99 for the liquidated
damages the overall company paid the government in breach of this second contract.

Buyer 22740-15326-2000. $2000 was a penalty unrelated to the seller’s delay.
Issue:

Can a party to a contract be held liable for damages for a breach of contract if the breach is
due to the actions of the other party in the contract?

Can a party be held liable if the other party didn’t mitigate the damages incurred by him,
and the breaching party could not foresee that mitigation would not occur?
Result of Appeal: Affirmed.
Holding:
Narrow During wartime when the seller was aware at the time he made the contact that
his breach would subject the buyer to the liquidated damages contained in the
government contract, and where the seller’s breach was the substantial fact and proximate
cause of those damages, the seller is liable for the damages claimed.
Broad: Where both parties are aware at the time of the contract’s formation that one
party’s breach will result in special damages to the other party, and the breach does cause
those damages, then the breaching party is liable for those damages. Reliance interest.
Reasoning:
Doctrinal: “Special damages for a breach of contract are not recoverable unless they can
fairly and reasonably be considered as arising naturally from the reach or as being within
the contemplation of the parties, at the time the contract was made, as the probable result
of the breach. Where the consequential damages claimed were within the contemplation
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

of the parties at the time of the contracting as the probable result of the breach, their
recovery has been allowed.” Hadley v. Baxendale
Penn law states that one is not required to go though the motions of attempting to avoid
damages when it is certain that they will prove of no avail. The right to measure damages
is governed by the law of the place of performance.
o Under the contract w Buyer 22740-15326-2000. $2000 was a penalty
unrelated to the seller’s delay. Trial judge instructed jury on 3 things: (1)
Did seller know that the buyer would have a forseeable injury if the seller
breaches. Forseeability: conflict of law, cover (mitigate damages by
buying goods elsewhere) here did the seller know the buyer couldn’t
cover; (2) causation: sole cause, substantial factor, primary cause (3) could
the buyer have asked for an extension from the govt. ith the government,
Greenbarg could have been granted an extension if it asked, but it did
not—therefore they did not mitigate the damages. However, their request
most certainly would have been denied.
Policy: The effect on the government contract causing the defendant to incur liquidated
damages was deemed foreseeable in terms of the current events of the day.
Government contracts held to a higher standard: lives at stake, WWII, war goods a
necessity.
NOTES ON KRAUSS:
 free market theory, wartime
 why didn’t legging company put in a penalty clause in contract with webbing company to
mitigate risks
 if you can protect yourself and you don’t, why should the court protect you?
 how do you protect yourself, what clauses should you draft
 Three jury instructions are on appeal:
o Was the seller aware of the buyer’s contract with the government
o How is causation determined?
o Should the buyer be forced to mitigate damages with the government and ask for
a time extension?
REMEMBER
Trial judge instructed jury on 3 things:
(1) Foreseeability: conflict of law, applicability, cover (mitigate damages by buying goods
elsewhere). Here did the seller know the buyer couldn’t cover. Did seller know that the buyer
would have a foreseeable injury if the seller breaches?
(2) Causation: sole cause, substantial factor, primary cause
(3) Extension: could the buyer have asked for an extension from the govt.?
Foreseeability:
1. Conflict of law
 This is a diversity case, but tried in the federal court of Penn. Diversity cases tried federally
to protect from partiality. Federal judges are appointed by the president instead of elected.
Assume federal judges can be removed from the bench only by being impeached, hopeful
less partial. ERIE doctrine.
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2. Applicability
 Federal procedural law and substantive Penn law. Place pf performance is the law we want
to use.
3. Cover
 seller didn’t know that the buyer had no way to mitigate because no other sellers? Seller says
can’t foresee. Waived this because he didn’t raise it in the district court. Seller continually
worried buyer to not worry. Buyer a bit naïve in not finding other sellers. Common
knowledge that buyer needed the stockings because of WWII, etc.
Causation:
1. Substantial factor: one of the many causes. “Should have been used.”
2. Sole cause: one cause. Not used.
3. Primary cause: only cause. Here, jury instructed that if seller the primary cause of the delay,
then would be liable.

(Favored webbing company, US appeals court said this was the wrong jury instruction)
Extension:
Would not have applied under Article 17. Under act of god, not recoverable. Buyer not required
to this if known they wouldn’t have prevailed.

why didn’t legging company not even try to get an extension? it would be an admittance of
incompetence even though due to subcontractor

why wouldn’t govt want to grant an extension? people might take advantage later on; also
the information would get around and weaken the govt’s threat; no extension is an incentive
to produce

what are the costs?
HADLEY:
1. “Arise naturally from perceiving what might occur.” Generally foreseeable; Company loses
profits and costs—arise in the usual course of dealings. Could the shipping company’s
bargain to pay 25 lbs be seen as an admission of guilt
2. Recover damages as can be reasonably supposed though an agreement between the parties—
be specific in contracts.
 should specific carrier know through experience that a certain % of people traveling on
business and they will lose business if delayed
 contemplation of damages while creating the contract
KRAUSS:
1. foreseeable
2. causation
3. extension
 damages may exist if Δ warned of consequences or through experience
17
VIRGINIA RAILWAY V. ARMENTROUT—
(US Court of Appeals 4th Circuit, 1946)
Rule: Negligence must have been the proximate cause of the injury in order to be liable for
damages.
Statement of Case:

Action by Charles Daniel Armentrout, an infant who sues by Daniel Richard Armentrout,
his next friend, against the Virginia Railway Company, for negligence causing injuries
sustained by plaintiff when struck by defendant’s train.
Facts:

Thirteen-month-old child was playing in the yard while various members of the family
were in a nearby field and in the house, which was located on a hill above the railroad track
by the side of a public road. The baby wandered down the hill and was in a crawling
position on the track at or near the crossing, where boards with composition paving
between had been placed—this is about 300 ft or 100 yards. Kid was walking and was
supposedly intelligent according to parents. In the past manifested fear at the sound of
whistles.

The train approached and the child did not remove himself from the crossing. Testimony
was given that no signal was given by the engineer to alert the infant of the danger—
normally signal at turning corner. Engineer was waiving at others, family and friends.
Engineer testified he saw an object on the tack at 220 feet, but did not recognize it as a baby
until 191 feet. Engineer was unable to stop the train until 40-50 feet beyond the infant.

No test was made to ascertain in what distance the engine could have been stopped when
going at various speeds (10-20mph). Kid was severely injured, lost legs and arms
Procedure:
Two issues of negligence were submitted to the jury:
1) That the engineer failed to give adequate warning of the approach of the engine and
2) That he failed to keep an adequate lookout and to save the child from injury after his
presence on the track was observed and there was still time to stop the engine.
1st trial—hung jury (no verdict for either side) unclear whether the driver blew the whistle, or if
there was contributory/comparative negligence
2nd trial—in favor of the infant for a lot of money. Jury trial awarded damages in the sum of
$100,000 to the plaintiff.
3rd trial - The Railway Company appealed, alleging that the judge erred in his instructions to the
jury and in his refusal to set aside the verdict as excessive, comes back with $160,000.
Defendant appeals of the grounds of misdirection of the jury instructions and excessive verdict
1) Was the failure to give warning signals the cause of the injuries? Railroad liable if
the child was of sufficient mental capacity to react to the signal.
2) Tests of the speed and ability to stop; lookout
a. Defendant wanted another instruction regarding emergency circumstance and
the reaction of freezing the decreased reaction time
3) Was the instruction for damages correct—forcing a larger verdict then what should
occur?
18
Issue:

Was the child in sufficient mental capacity to understand a warning if it had been given?

Was it fair for the court to assume no test was done as to the stopping distance because it
was negative to the defendant?

And did the court err in the instructions to the jury in deciding damages?
Result of Appeal: Reversed and remanded.
Holding:
Narrow:

A 13-month baby lacks the mental capacity to respond to any signal that might have
been hidden by the train, the engineer’s failure to sound any signal was not the
proximate cause of the infant’s injuries, and the railway should not be held liable
for the resulting damages based upon its failure to blow the whistle.

The court further erred by not incorporating the elements of emergency present and
a test after the accident to see if the train was capable of stopping would not
incorporate these elements of emergency.

The jury should also not infer negligence on the basis that the defendant failed to
conduct this test.
Broad:

One cannot be held liable for damages for injuries caused by a negligent act when
the negligent act was not the proximate cause of the injury.

Circumstantial evidence is necessary to determine if there was a last clear chance to
prevent the accident and the non-performance of a test of evidence cannot be
assumed as guilt.
Reasoning:
Doctrinal: One cannot be held liable for damages for injuries caused by a negligent act
when the negligent act was not the proximate cause of the injuries.

Situational factors essential in analysis of reaction
Policy: A 13-month child cannot be deemed mentally capable of responding—not proximate
cause of the accident.

Parents’ have a duty of care and probably would have taken a portion of the damages
rewarded.
Notes:

Statute: A bell or whistle shall be sounded by an engineer or fireman on a train at a
distance of at least 60 rods from a railway crossing.
o Using a statute to prove negligence:
 Is the purpose of the statute to prevent this type of harm?
 Is the person who seeks to use the statue a member of a class of persons
to be protected? Foreseeability.
 Does the law provide a standard of care that equates to negligence?
 Is violation of the statute conclusive proof of negligence?
o In this case, but not using the statute we are allowing the railroad to be more
negligent against children than adults.
o HYPO: Statute at play that says anyone going over 55mph is guilty of a
misdemeanor. X going 85mph and smashes into someone else? Yes because the
someone is the person the statute was trying to protect.
19




•
•
Damage Question: Problem because we do not know a baby’s future earning potential;
earning capacity of a disabled child; parents might also take all of the money; only measure
are physical injuries Court asks for fairness.
Connection:
o Expands Hadley
o Rules prevent proving legal causation chain, i.e., inadequacy of infants. In this
case, child was not capable of responding.
Suppose judge gives jury test that the rr company wanted of the emergency test, would the
court still have reversed?
If the D failed to give the warning signal and the lookout was inappropriate then the judge
said that the jury should find D liable.
o higher standard of care for someone who can’t protect themselves
o but here, the West Virginia Code, says that a bell should be rung of at least 60 rods, 3
football fields away; however the case said that the whistle shouldn’t be required for a
child (because couldn’t react) but required for an adult
Shouldn’t burden be on the parents?
Should the D be criminally liable under a statute to blow his whistle?
o Yes if it establishes a standard of care, which is breached, and injures
someone(foreseeable plaintiff) the legislation was intending to protect under the type
pf harm the legislation was trying to prevent
o How does the Armentrout Court seek the statute to be used?
 child is not in the class of people the statute intended to protect
Connection to previous cases:
 Expands Hadley
 Rules prevent proving legal causation chain, i.e. inadequacy of infants. In this case,
child was not capable of responding
20
IN RE POLEMIS AND FORNESS, WITHY & CO.
(Court of Appeal 1921)
Rule:

If an act would or might probably cause damage, the fact that the damage if in fact causes is
not the exact kind of damage one would expect is immaterial, so long as the damage is in
fact directly traceable to the negligent act, and not due to the operation of independent
causes having no connection with the negligent act, except that they could not avoid its
results.
*Once an act is negligent, the fact that its exact operation was not foreseen is immaterial.
Statement of Case:
 This is an action brought by the owners of a steamship against the charters or their steamship
for damages due to the destruction of the steamship by fire caused by the negligence of
workers employed by the charters.]
 Facts:

Polemis chartered the steamship, Thrasyvoulous, to defendant for the period of the war with
an option of an additional six months afterwards. A clause in the contract provided that the
ship was to be returned in the same good order with ware and tear expected. In the
contract, Clause 21 stated, “The acts of God, the King’s enemies, loss or damage from fire
on board in hulk or craft, or on shore, arrest and/or restraint of princes, rulers, and people,
collision, any act, negligent, or default whatsoever…mutually expected.”

Three arbitrators found that the ship was lost by fire and that this fire arose from a spark
igniting petrol vapor in the hold.
o The spark was caused by a falling board coming into contract with a substance in the
hold of the ship. The fall of the board was caused by the negligence of the Arabs
engaged in the work of unloading the ship.
 The Arabs were employed by the charterers on their agents the Cie.
Transatlantique on behalf of the charterers and where servants of the charterers.
 The causing of the spark could not reasonably have been anticipated from the
falling of the board, though some damage to the ship might reasonably have
been anticipated. The Arabs were not known to be negligent.

Lastly, the damages to the vessel amounted to 196,651 pounds. ($315,000 back then, now
$2million today)
Procedure:
 There is a contract clause for arbitration of disputes and each side picks an arbitrator, then
they choose mutually number 3. This is normally binding and hard to overrule such finding
of fact.
 The arbitrators stated, that subject to the opinion of the Court on any question of law arising
the arbitrators awarded that the owners were entitled to recover from the charters the before
mentioned sum.
 If the Court decided the award was wrong—get nothing. The arbiters awarded the owners the
amount/value of the ship and the court affirmed this award.
The charters appealed this decision based on two claims:
21
1) It could not have been reasonably anticipated that the negligent act of dropping the
plank would have caused a spark and the damage was not the natural or probable
cause of the act
2) Clause 21 of contract stating, “fire always mutually excepted” relieved the charters
of liability
Issue:
 Was the court justified in awarding the plaintiff based on the findings of fact by the arbiters?
 Was it foreseeable for this damage to occur?
Charters argue: damages should be limited in that they could only be applied to what were the
foreseeable consequences of the breach of duty (LIMITS DAMAGES)
Owner argues: Once the damage was determined to be the result of negligent act, the actor is
liable for all damages directly resulting from the negligent act. (In this case, no one would ever
leave their house).
Result of Appeal: Affirmed the judgment for the owners with the money granted by the
arbitrators.
Holding
Narrow: Because the act by the Arabs was determined to be negligent, the question of
whether or not the damages were foreseeable is immaterial, because the fire was a direct
result of the spillage by the Arabs, who were employed by the contractor.
Broad: As long as the damage is directly traceable to the negligent act the exact kind of
damage one would expect is immaterial, as long as not due to the operation of
independent causes having no connection with negligent act, except that they could not
avoid its results.
Reasoning
Doctrinal: To determine whether an act is negligent, it is relevant to determine whether any
reasonable person would foresee that the act would damage; if he would not, the act is not
negligent. But if the act would or might probably cause damage, the fact that the damage it is
fact causes is not the exact kind of damage one would expect is immaterial, so long as the
damage is in fact directly traceable to the negligent act, and not due to the operation of
independent causes having no connection with the negligent act, except that they could not
avoid its results.
 Once the act is negligent, the fact that is exact operation was not foreseen is
immaterial.
Policy: Negligence has a lesser standard then tort.
Notes on Polemis:

How has this changed since Hadley? Compare:
o Contract v. tort case: Look at the greater value in determining which to use!!
 Contract: Foreseeability speaks to the breach and then to the
consequences of the act. Consequence is bringing party to same place as
if breach did not occur.
 Tort: Negligence, Foreseeable harm somebody and then negligent to the
harm that ensues, without foreseeability. Consequence is to punish and
allow injured to recover.

Our new limit of liability is: abnormal and unforeseeable

What if this was a case in contract?
22
•
•
•
•
o The defendant chartered the ship as a contract; contract held for the return of the
ship
o Harder to recover because no special circumstances stated (rule of Hadley)
o McNair, The Polemis Business (145) “If the ship owners could only have sued the
charters for breach of contract, the finding would have been fatal and would have
prevented them from recovering the value of the ship.”
 Only some damage would be reasonably expected from dropping a plank;
it could not be said that the destruction of the ship arose “naturally” from
the from the breach
 Damages in contract are governed by, “compensation as may be
reasonably supposed or actually be proved to have been in the minds of
the contracting parties at the time of contracting as the consequence of
non-performance.
 In tort damages are simply causation. Strange that here recovery is less
than contracts.
 Connection:
o Tort case regarding causation
o If defendant can foresee some harm, then liable. Doesn’t have to foresee exact
damage
o If had been brought in contract, would have definitely won because the contract
did not exempt them from negligence and damaging the boat.
WHEN DO WE CUT OFF LIABILITY? Look at temporal relationship. Under Polemis
foreseeability isn’t important.
o Hypo 2: brushing against a hemophiliac
o Hypo 3: malpractice by doctor when someone is sick
o Hypo 4: x hits y, exchange insurance info when z comes by and hits y.
o Hypo 5: x hits y, exchange info, y gets to hotel 15 min late, wakes up 15 min late and
is hit by z the next day.
o If x didn’t run into y, then y wouldn’t have been hit by z.
What it is the calculus that judges use when cutting off liability? Depends on the facts of the
case. Decide and then use the facts, or vice-versa?
o Judges have a normative approach, they have a varying hierarchy and they try to look
at all the standpoints. May not be right for everyone in every context, because it
changes. Need tolerance for ambivalence and ambiguity.
Answers depend on the assumptions. Hard to get your hands on the truth. Marshalling the
cases.
Hadley v. Polemis.
o Tort
 Hadley: duty for common carrier to deliver within a reasonable period of time.
Carrier should know that lost profits would rise by not delivering on time.
 Polemis as a tort: value of ship, money damages for loss.
o Contract: communicated facts that might lead to the result and foreseeability
 Polemis: nothing communicated at the time the charter contract except that
they needed to deliver except wear and tear to the owners.
 Hadley as a contract: mill wouldn’t have shut down for 5 more days
23
•
o When Hadley and Polemis came up, tort and contracts were not different areas,
damages the same
o For a layperson unimaginable, lawyer convenient that just by labeling you could have
different recoveries under contract or torts
o Regardless, what about the idea of punishing someone for any harmful act:
 deter that person and other people form doing that act
 protect the integrity of the victim
 rehabilitation
Cannibalism for survival: people held for murder. Why punish? Deal with an overriding
burden.
24
Christianson v. Chicago, St Paul, Minneapolis, and Omaha Railroad
(Minnesota 1896)
Rules:

If the act itself is negligent, then the person guilty of it is equally liable for all its natural
and proximate consequences, whether he could have foreseen them or not.

The law is that if the act is one which the party ought, in the exercise of ordinary care, to
have anticipated was liable to result in injury to others, then the is liable for any injury
proximately resulting from it, although he could not have anticipated the particular injury
which did happen.

Consequences which follow in unbroken sequence, without an intervening efficient cause,
from the original negligent act, are natural and proximate.
Statement of Case: Action by an employee against the employer of railroad company for
personal injuries, seeking damages for the injury caused by the negligence of the Railway’s
servants. Action of tort.
Facts:
Plaintiff was employed as a second hand. He and two others started easterly on a handcar, while
at the same time, another handcar approached from the east. Rules of the company was to keep
the handcars 540 feet apart. When the two cars came within a short distance, P’s car stopped and
changed direction, now being followed by the other car. The cars were moving at 20 miles per
hour. The trailing car was faster and did not handle as well. At this rate of speed, the cars
needed 100 feet to stop. The cars became within 60 feet of each other. The P became dizzy and
fainted, falling off the car and onto the tracks. The trailing handcar could not stop in time and
ran him over, causing severe injuries.
Procedure Below: District court found for the plaintiff and the defendant appealed.
Issue: If a negligent act is committed, is the actor liable for all the natural and proximate
consequences, foreseeable and not?
Defendant Argues—The plaintiff’s injuries were not the proximate result of the defendant’s
negligence; it is not enough to entitle plaintiff to recover that his injuries were the natural
consequence of this negligence and those in the rear car could not have reasonably anticipated
that the plaintiff would fall from the car. Tries to equate contract and tort damages. Not only
need to perceive damages, need to foresee specific damages that would be the cause of the
action. To do this, would have to use Hadley test. Also supports Polemis. Here they use
proximate cause.
Plaintiff Argues—Foreseeability is irrelevant in determining liability; if the negligent act is the
proximate cause of the injury, then liability is applied.
Result on Appeal: Affirmed. Motion for a new trial denied.
Holding:
Narrow: An employeer is liable for the employee’s injuries, where agents of the
employeer acted negligently by following the employee too closely in a hand car
stipulated by company regulations, and the employer’s agent was the proximate cause of
the employee’s injuries.
Broad: A negligent party is responsible for all natural and proximate consequences of
his negligent act, whether foreseen or not.
25
Reasoning
Doctrinal: If the act itself is negligent, the person guilty of it is equally liable for all its
natural and proximate consequences, whether he could have foreseen them or not.

“Consequences, which follow in an unbroken sequence, without an intervening
efficient cause, from the original negligent act, are natural and proximate; and for
such consequences, the original wrongdoer is responsible, even though he could not
have foreseen the particular results which did follow.”

If an act is one where a party exercising ordinary care ought to have anticipated a
possibility for damage, than he is liable.

It is not necessary to foresee a particular type of harm.
Policy: The arguments of the defendant would create a rule that mixed negligence in tort
with a breach of contract—in that contracts must have a foreseeability to be considered a
breach (Hadley)

No difference from this injury then from the injury caused if the cars would have
collided
Notes: Hadley rule is not applicable because this is not a contract case. Contract recovery more
difficult because this type of damage is not forseeable.
Connection: Rejects foreseeability
26
HILL V. WINSOR
(MA 1875)
Rule:
 If the act constitutes negligence, “it is not necessary that the injury in the precise form in
which it in fact resulted should have been foreseen. It is enough that it now appears to have
been a natural and probable consequence.
Statement of Case:
 This is an action by a worker on the fender of the Warren Bridge against the owners of the a
steam-tug Argus to recover damages for negligence when the ship struck the Warren Bridge
and caused the plaintiff injuries.
Fact:
 The plaintiff was working on the fender of the Warren Bridge when the ship Argus struck the
bridge. The plaintiff suffered injuries.
Procedure:
 The judge gave the jury an instruction stating, “the law gives no remedy to a man who suffers
an injury by pure accident; and there are many injuries which we are called upon to suffer for
which we have no remedy. But when others, by their negligence, injure a person either in his
estate or in his person, the law gives remedy…. Did the plaintiff suffer an injury? Was that
injury caused by the negligence, the want of ordinary care of the defendants?
 The jury decided for the plaintiff
Issue:
 Did the instructions given to the jury cause a reversible error by defining liability in
negligence to occur when “others, by their negligence, injury a person in his estate or his
person”?
Result of Appeal: Exceptions overruled and the decision affirmed in favor of the plaintiff.
Holding: For the defendant to be found negligent, it is not necessary that the injury was
foreseeable; it is enough that it was a natural and probable consequence of the defendant’s
actions.
Narrow: If a steam-tug violently strikes a bridge, the owners of the steam-tug will be
liable for the injuries of an employee on the bridge, if such an injury was a natural and
probable consequence of the negligent handling of the steam-tug.
Broad: If a negligent act occurs, the negligent party will be liable for the injuries arising
out of the natural and probable consequences of the negligent action.
Reasoning
Doctrinal: Don’t need to foresee the precise injury for it to be a natural and proximate
cause of negligence.
o Is not necessary that injury in its precise form is foreseen.
Policy: Injuries resulting from negligent acts should be compensated.
o The plaintiff was found to have exercised due care in attempting to escape the
peril and therefore, his injuries were solely due to the defendant’s negligence.
Notes:
 If somebody commits an act that could cause harm—breach of contract might cause harm
and violence. Can an action for breach of contract fix these types of harms?
27


This was an action of TORT:
Restatement Second of Torts § 435
1) If the actor’s conduct is a substantial factor in bringing about harm to another, the fact
that the actor neither foresaw nor should have foreseen the extent of the harm or the
manner in which it occurred does not prevent him from being liable.
2) The actor’s conduct may be held not to be a legal cause of harm to another where
after the event and looking back from the harm to the actor’s negligence conduct, it
appears to the court highly extraordinary that is should have brought the harm.
This makes the case easier to decide because the test is substancial factor, a lower standard and
different terminology then foreseeability in contract decisions.
Connection: Retrospective test of looking after the fact (inconsistent with Polemis, Wagons)
o After the fact is a natural and probably cause of actions
o Zone test of Palsgraf by Andrews
28
PALSGRAF V. LONG ISLAND RAILROAD
(NY 1928)
Rule: Negligence is not actionable unless it involves the invasion of a legally protected interest,
the violation of a right. “Proof of negligence is in the air, so to speak, will not do.” There must
be a duty to the individual complaining, the observance of which would have averted or avoided
the injury.
Statement of Case:
 Plaintiff sues railroad for injuries received by a package dropped by another passenger
during an attempt to board a train with the assistance of railroad employees.
Facts:
 Plaintiff was standing on a platform of the defendant’s railroad. A train was leaving and
two men ran to catch it. One man got on the train without mishap. However, the other
man, who was carrying a small package wrapped in newspaper, began to jump on board
but seemed unsteady as if about to fall. A guard on the car, who had held the door open,
reached forward to help him in and another guard on the platform pushed him from
behind. In this act, the package was dislodged, and fell upon the rails.
 The package contained fireworks that exploded upon falling; the shock of the explosion
threw down some scales at the other end of the platform, many feet away. These scales
injured the plaintiff.
Procedure Below: District and Appellate courts ruled in favor of the plaintiff.
Issue:
 Can the defendant railroad be negligent for the injuries of an unrelated party injured by
an act of the defendant’s negligence another person?
Result of Appeal: Cardozo reversed this decision and dismissed the complaint with costs in all
courts.
Holding: A plaintiff cannot sue as a vicarious beneficiary of a breach of a duty owed to
someone else, and not her.
Narrow: Where the railroad’s employees were acting in their professional capacity, with
no knowledge of the hazardous fireworks in the passenger’s package, they owed no duty
of care to the bystander and were not liable for her injuries—the defendant is not liable
for vicarious liability; no duty of care to the bystander.
Broad: Negligence is not actionable unless it involves the invasion of a legally protected
interest (violation of a right). Where the defendant’s negligence was not the proximate
cause of the plaintiff’s injuries, the defendant is not liable for those injuries as the
plaintiff was not a foreseeable plaintiff.
Reasoning:
Doctrinal: Negligence is a matter of relationship between parties and not actionable unless
it involved the invasion of a legally protected interest by the negligent actor upon the injured.
 Not a case of proximate cause because the plaintiff was not in the danger zone of the
negligent act of the defendant.
Policy: “The reasonable risk perceived defines the duty to be obeyed.”
 Cardozo opinion.
 There is no negligence in the air
29

Plaintiff was not in the zone of danger created by the negligent act of the defendant
Notes: This is a case creating a limit on the range of damages in torts
 Dissent by Andrews:
o Facts added: intending passenger—does this change the level of care?
o Polemis: “The act being wrongful the doer was liable for its proximate results.”
o “Everyone owes a duty to the world at large the duty of refraining from those acts
that may unreasonably threaten the safety of others.”
o Must go beyond the natural plaintiff and allow recovery for all those harmed by
the act.
 Connection:
o Provides a zone of risk test and therefore, limits the plaintiff’s for whom liability
can be found
 In Hill, defendant could not have seen the plaintiff would be injured, but it
was foreseeable somebody around could; would arguably pass this test
 Here, the plaintiff is not one whom the defendant could have foreseen the
harm to, not liable. The negligence in this instance is directed.
See if you can create a rule, using all the cases we’ve talked about in torts and Ls section and see
if you can state each case separately and get their narrowest holdings and then see how it fits or
doesn’t fit into the broad holdings
30
OVERSEAS TANKSHIP (UK) LTD. V. MORTS DOCK AND ENGINEERING CO
(1961)
Rule: Only liable for those injuries where it is foreseeable that the defendant’s negligence caused
the plaintiff’s injuries. Foreseeability is determined by whether the reasonable man would have
foreseen the damage.
Statement of Case:
 Action by the owner of a wharf, Morts Dock & Engineering Co. against the charters of
the Wagon mound I, an Overseas Tankship Ltd, for damages incurred by the negligence
of the ship’s servants for discharging oil into the water and then causing the oil to ignite a
fire spreading to the wharf, Sheerlegs Wharf, and damaging the wharf and equipment.
Facts:
 The plaintiffs were in the business of shipbuilding, ship-repairinng, and general
engineering at Morts Bay. They owned and used their business the Sheerlegs Whard,
which was a timber wharf.
 In October and November, 1951, a vessel known as the Corrimel was moored alongside
the whard and was being refitted by the plaintiff. The Wagon Mound was a ship owned
by Overseas Tankships Ltd., which was docked 600 ft away from the wharf. The ship
negligently discharged furnace oil that spread upon the water and washed into the wharf.
They did not clean it up and set sail shortly after.
 Wharf owner instructed his workmen to stop working. After being told that it was safe,
he allowed his workers to continue, but to use precaution. Cotton floating on the oil was
ignited by molten metal dropped by the workmen on the wharf who were welding and
using oxy acetylene. The fire seriously damaged the wharf and the equipment upon it.
Further, the Corrinal caught fire as well.
Procedure:
 The trial court found, “the defendant did not know and could not reasonably be
expected to have known that it was capable of being set afire when spread on
water.”
 Morts, the plaintiff, was awarded judgment based on the Polemis holding that regardless
of foreseeability, a negligent actor is responsible for all proximate consequences of a
negligent act. The ship owners appealed to the Privy Council.
o According to Polemis – test for damages was the same for tort and Ks
o Did not use Hadley test because it was too broad of a test
Issue:
 Should a negligent actor be liable for all damages resulting directly from his negligent
act, even if the consequences are unforeseeable?
Result of Appeal:
 Reversed. The plaintiff’s action for damages is dismissed with costs and the action as
related to damage caused by nuisance is remitted to the Full court.
Holding:
 An actor should not be held liable for all the consequences of his negligent act if they are
not foreseeable, simple because they can be said to be direct. One should only be
31
responsible for the probable consequences of his negligent act (This overruled Polemis;
agrees with Palsgraf).
Narrow: The defendant charter is not liable for the damage sustained by the plaintiff wharf
owner. The defendant negligently spilled oil beneath the plaintiff’s dock and the plaintiff’s
welding ignited the oil, however, this damage was unforeseeable and it was an unlikely chain
of events in which such negligence caused such damage.
Broad: A defendant is not liable for a plaintiff’s injuries when it is unforeseeable and an
unlikely chain of events that such negligence would cause such damage. (A person is only
responsible for damages caused by his action when the damage is such that a reasonable
person should have foreseen them.)
Reasoning
Doctrinal: “Foreseeability is the effective test.” The essential factor in determining
liability is whether the damage is of such a kind as the reasonable man should have
foreseen.
 Substituting “direct” for “foreseeable” as to liability for consequences in Polemis,
leads to an illogical and unjust result. To demand more of one than liability for the
probable consequence of his act is too harsh, to demand less of him is to ignore the
requirement of a minimum standard of behavior.
 Double foreseeability test:
• Is the risk foreseeable and therefore negligent?
• If so, where the damages foreseeable?
Policy: The problem with the Polemis rule is it forces Judges to be philosophers
determining the true chain of causality
Notes: Polemis is wrong and is old law and even though it does not apply in the instant case it
should be overruled.
 Applying the Polemis test the court could have come up with the same result because they
could have argued that there was an independent, intervening cause that caused the injury
(the dropping of the cotton debris by the wharf owner into the water, ect)
 The test of contract and torts should be the same: Hadley
 The next case the facts are the same and the result different….
 Connection:
 The damage was not foreseeable and therefore, not liable.
 Rejection of Polemis foreseeability becomes the effective test
 If the lawyer did use foreseeability, might be able to prove contributory negligence
Depends on how you read the test, what kind of factual assumptions you make, and what words
are to be used
What determines how you read the words – perception of how judge depicts certain words
• Trial court confused about how to apply Hadley and if it is a contract or tort. Is Polemis still
good law? see page 155.
• Negligent but have to foresee to be liable.
32
WAGONMOUND 2:
OVERSEAS TANKSHIP LTD. V. MILLER STEAMSHIP CO
1967
Rule: Liability for a risk that a reasonable man would have realized or foreseen and prevented
the risk, then it must follow that the appellant is liable in damages.
Statement of Case:
 This is an action by the owner of a ship at the wharf destroyed by the defendant’s
negligence and nuisance caused by the fire.
Facts: same as above…
Procedure:
 The trial court found the plaintiff could not recover based on negligence, but could
recover for nuisance. The plaintiff is appealing for negligence and the defendant against
the charge of nuisance.
Issue:
Result of Appeal: Decided for Plaintiff; the oil burning ship could have prevented the damage
through the exercise of reasonable care, then the damage was foreseeable and recoverable no
matter how remote.
Holding
Narrow: The defendant is liable for the injuries sustained by the plaintiff where the
defendant negligently spilled oil around the plaintiff’s boat, a fire ignited the oil and
destroyed the boat, and the injury was the foreseeable result of the defendant’s negligence as
he could have avoided it by taking simple, inexpensive measures.
 There was a foreseeable risk that the discharge of furnace oil would ignite on the water,
an engineer should have avoided this risk. The failure to prevent such a foreseeable risk
confers liability for damages resulting. Therefore, he is liable for damages for not doing
so.
Broad: The defendants are liable for injuries by their negligence where the resulting harm is
a reasonably foreseeable result of their negligence, even if it is remote or unusual.
Reasoning
Doctrinal: A defendant is liable when a reasonable man would foresee or prevent a risk that
instead causes damages
 If a reasonable man in the position of the defendant would have realized the risk posed by
his negligence and the risk could have been prevented by the exercise of reasonable care,
then the plaintiff’s property damage is foreseeable and recoverable even if remote.
 No application of the double foreseeability test
Policy: The boat was merely in the harbor; no chance of contributory negligence.
Notes: Differences in these cases
 In the first one, the plaintiff was the operator owner of the wharf. If they argued that the
tank ship should have foreseen the oil could be ignited, then it should have also been
foreseeable to their own engineers and therefore they should not have resumed the
welding. In Wagon Mound #2, there is not this problem, because the plaintiff is another
ship owner in the wharf that did not cause the ignition of the cotton.
33

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


No contributory negligence in the II case and therefore the plaintiff can argue
foreseeability
Foreseeable and risk as the test in II. Burden on chief engineer. Same as Hadley in the
sense that the carrier should have known that mill have one crank shaft and that their
delay would be significant.
Maybe the first Wagon Mound test was no applicable in this case
Not reasonably foreseeable in the 2nd case because there are different plaintiffs because
the defendants in both cases could not have foreseen this
Connection:
o Liability if damage is foreseeable as a real risk occurring in the mind of a
reasonable man
o Lawyer was able to use foreseeability so plaintiff was able to recover.
o Double foreseeability test: damages foreseeable, but not to the extreme
o Engineer should have foreseen the fire, he works with the furnace oil…
o What are the values of the test in this case? See the broader picture.
34
MAUNEY V. GULF REFINING CO
(MS 1942)
Rule: If the defendant could not reasonably foresee that his negligence would cause the
plaintiff’s injuries then he is not liable for them. Defendant is not liable for those injuries that
are too remote, unusual, improabable, extraordinary (unforeseeable or unreasonable).
Statement of Case:
 Action brought for personal injury damages by the owner of a café against a wholesale
distributor of gasoline and the agent in charge of the tank motor car, for their negligent
spreading of a fire. This created panic and resulted in the plaintiff falling over a
misplaced chair and suffering a miscarriage.
Facts:
 Tapp, the agent in charge of a tank motor car, was delivering gasoline to a filling station
located across the street from a café. During the delivery, a fire ignited and spread to the
tank car. Everyone near the scene began to run away, shouting that the tank were about
to blow up, along the whole town. Mauney was in a café across the street. When she
heard the shouts, she went to the front of the store and then hurriedly turned to pick up
her child and run away. She fell over a chair and as a result, suffered a miscarriage.
Procedure: Chancery court found for the defendants. Plaintiff appeals.
Issue:
 Is the defendant liable for injuries reasonably foreseeable as a result of negligence and
also for unusual, improbable, or extraordinary occurrences also resulting from the same
act of negligence (even though it is possible)?
Result of Appeal: On motion to strike, sustained in part and overruled in part. Affirmed on
merits.
Holding:
Narrow: The defendant, who was delivering fuel to a gas station when the fire started,
could not reasonably foresee that a pregnant woman would trip over a misplaced chair
thereby suffering a miscarriage in her effort to exit her café due to fear from the panic
created in the street from the defendant’s negligence ignition of fire, and therefore, the
defendant cannot be held liable.
Broad: A defendant cannot be held liable for injuries that are not a direct cause of the
negligent act and are instead the result of another extraordinary, improbable set of
occurrences, though related to the original negligence.
Reasoning:
Doctrinal: “In order for a person who does a particular act which results in injury to another
shall be liable, the act must be of such character, and done in such a situation that the person
doing it should reasonably have anticipated that some injury to another will probably result
therefrom.”
 The actor is not bound to a prevision or anticipation including “an unusual, improbably,
or extraordinary occurrence, although such happening is within the range of
possibilities.”
35

Liability is imposed within a circle of reasonable foreseeability using the original point at
which the negligent act was committed and looking at what injuries could reasonably
have been foreseen to occur.
Policy: The plaintiff admits to being in control of herself, if she could not have foreseen the
chair how could the defendant?
Notes: Contributory negligence of the plaintiff?
 Argue the causal chain broken by the intervening act of the chair and her own negligence;
not a cause in fact.
o Decision would not have changed under Polemis because intervening act of chair
o Hadley: Not a natural occurrence of the negligence.
 Mauney in control of herself but in a hurry when she heard of the fire. Emergency
situation.
 What is so unusual to believe that if you have a truck bring gas to a gas station, there is
an explosion, that people wouldn’t run? And also get hurt in the process? Wasn’t this
generally foreseeable? Holding like Wagon Mound 1.
 Don’t want to limit human activity by imposing too much liability on people’s actions.
 Even using Polemis as a test, the ruling would be the same, even though foreseeable
some harm would occur, there was an intervening cause(limiting liability): the chair and
Mauney saying she was in control.
 Connection:
o Damages must be reasonably anticipated.
o Some damages are too remote from wrong. If Mauney can’t foresee tripping how
can gas co foresee injury across the street
o Limitation on liability—some kinds of harms are just not foreseeable.
36
Section III: INDEFINITENESS IN NYC
A series of cases in the same court over a period of time. Evolving series of cases.
What did the attorney do?
How are courts going to use the argument in this case to make arguments in other cases?
What is the underlying life situation?
What is the interaction of institution and person? For example, Cardozo, great case
judge. Hid his light under a bushel. Style of his opinion, used precedent really well.
Brennan put in certain paragraphs to get other judges’ opinions/support/votes.
 How to structure an argument in the best way to stand for what you want. Art of
asserting a case to support your propositions.
 Be able to state the doctrine of indefiniteness at any point for client to win.
 Interaction of case law and statute.
 For briefing: what does this case add to preceding one? State(find holding) each case in
narrow, medium, broad way.
 The trial court in NYS is the Supreme Court. Any recovery, almost any amount.
Appellate term of the Supreme Coutr : hear appeals from civil courts and alocal countries
and then the Appellate Judicial Court: habeas corpus. Highest court is the Court of
Appeals. No right directly to the Court of Appeals, accept cases based on the interests of
the public.
 Goal of the series is to predict what the court will do on a set of facts. What moves them,
doctrine or policy? How do they use prior cases?
 What argument could have made the loser the winner? What would convince the court,
even if you don’t agree?
1) Impact of the lawyers’ argument of on the Court, the lawyer, the client, and general
society over time.
2) Social context in which the Courts is dealing. What it is a part of the underlying
situational sense and how does the court perceive and respond to this social situation.
a. What was the judges perception of the equities of a particular case and belief of
what would be justice specifically.
b. How does the Court interpret past opinions, manipulate case for new client
3) Interaction of Institution and Judge. Each Court has its own traditions and each new
Judge is affected by the Court and may effect the Court as well. Change and get changed
by joining the institution.
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



In these cases, the court is asking:
1) When is there no agreement between the parties?
2) When has a court no workable and decent way to put teeth into an agreement?
3) When should a court refuse to use its powers, even though there has been an argument?
4) Who should determine whether there has been an agreement?
37
WAKEMAN V. WHEELER & WILSON MANUFACTURING CO.
101 N.Y. 205 (Court of Appeals New York 1886)
Rule: One who violates his contract with another is liable for all direct and proximate damages
which result from the violation.
• The damages must not be merely speculative, possible, and imaginary, but they must be
reasonably certain, and such only as actually may follow from the breach of the contract.
o When it is certain that damages have been caused by a breach of contract, and the
only uncertainty is as to their amount, damages must be awarded.
Indefiniteness: Territory, Price, Duration,
Chain:
 Court can imply a promise from a contract to reflect the true intent of the parties to enter
into a binding contract. (Wood v. Lady Duff).
 A court can look at industry custom to define the indefiniteness terms of a contract and
preserve the intent to be bound. (Rubber Trading).
Statement of Case:
 Action for a breach of contract, brought by a distributor of sewing machines against a
manufacturer to recover damages for the breach of an agreement, whereby the
manufacturer agreed to provide the distributor with sewing machines, but refused to fill
the order and repudiated the contract.
Facts:
 Original agreement stated, “That if the plaintiff shall succeed in placing, that is to say,
selling, fifty of the defendant’s sewing machines to one form or party in Mexico during
the next trip of their agent, the plaintiff for every fifty machines so sold shall have the
sole agency for the sale of the defendant’s sewing machines in that locality and its
vicinity in the Republic. The manufacturer should furnish to the distributor machines at
the lowest net gold prices.”
o This was a parole agreement. The distributor entered performance of the
agreement, purchased a sample machine from the manufacturer, instructed an
agent in the machine’s mechanism and management and then sent the agent to
Mexico.
o In Mexico, the distributor’s agent sold 50 machines on his promise to be the
general agent of manufacturer for that locality and its vicinity.
 The order was sent and filled by the manufacturer and those machines forwarded to
Mexico and paid for.
o Shortly thereafter, the distributor’s agent made another sale of fifty machines for
another locality of Mexico and an order for those machines was sent to the
manufacturer.
o The manufacturer absolutely refused to fill this second order and all future orders
from the distributor.
o The manufacturer then repudiated its agreement, and started selling machines
down there by himself(probably because he thought he could make more money
doing it himself).
38
Procedure: The jury trial ruled in favor of the plaintiff.
 However, the trial judge instructed the jury as a matter of law that the plaintiff could
recover damages only for the refusal of the defendant to fill the orders actually given for
the 51 machines and not for future profits of the contract.
 P wanted the expert to testify as to the value of the contract, how many machines they
would have been able to sell.
o The expert testimony necessary to determine future profits is not hard fact, but
questionable opinions. Nobody knows what will happen in this market, new
market with a huge risk to both sides. We cannot use experts to testify of
speculation.
 Only could recover damages for the refusal of money lost for the machines ordered.
Which boils down to $4 a machine x 51 machines = $204 machines. The General Term
of the Court of Common Pleas affirmed the judgment in favor of the plaintiffs and denied
a motion for a new trial from the plaintiff.
 The plaintiff appealed the Supreme Court to recover from this breach of contract.
Issue:
 Under the facts of the case, did the lower court err in using expert testimony be allowed
to determine recovery from a breach of contract to recover lost profits, etc., etc.?
 Should recovery be extended for the plaintiff beyond the 51 machine and extend for
future profits lost from the breach?
 Did they properly deny P to use other evidence be allowed to prove the worth of the
contract?
Result of Appeal: Reversed. The trial court erred in not allowing parole evidence to determine
the value of the contract.
Holding
Narrow: Damages for a breach of contract will be granted when a manufacturer
breaches a contract with a distributor, even when the terms of the contract are uncertain
but relied upon nonetheless by both parties. The distributor can submit parole facts
regarding the future value of the contract, but not expert testimony as to the worth,
because such testimony concerning a test market is deemed speculative.
Broad: When it is certain damages were caused by the breach of a contract, and the only
uncertainty is as to their amount, there can rarely be good reasoning for refusing, on
account of such uncertainty, any damages extending from the breach. The injured party
can submit to the jury the particular facts that transpired and to show the whole of the
situation is the foundation of the claim and the expectation of profits so far as any detail
offered has a legal tendency to support such claims.
 Expert testimony is not allowed, because based on speculation, possible and imaginary,
but other evidence to prove the value of the contract is allowed.
Reasoning
Doctrinal: Parole evidence is admissible as long as it is based on fact and not
speculation
o One who violates his contract with another is liable for all direct and proximate
damages which result from the violation.
o The damages must not be merely speculative, possible and imaginary, but they
must be reasonably certain, and such only as actually follow from the breach of
contract
39
Policy: Good faith in contractual relationships and limit excessive jury verdict
o Both parties can find opinion evidence from experts
o Uphold the freedom to contract and the importance of fulfilling contractual
obligations
Notes:
Indefiniteness:
 Time, duration, scope, price, territory, client
 Parties showed intent to agree through action and performance of first round of the
contract
Evidence allowed:
 The established agencies already in Mexico and relative profit
 The number of machines sold through other such agencies
Evidence not allowed:
 Options of witnesses as to the value of the agreement
 The profit which it, or any other agency established in pursuance could produce
 Damages to the plaintiff
 Number of machines might have sold
Plaintiff’s argument : P entitled to recover damages for the entire value of the contract…
Defendant’s argument: (Formalistic)
 Faulty: Mistakes the statute of frauds (always quote statutes verbatim);
 Violates climax and cumulation, too many pleaded points and not well done
 Should have: Agreement was unenforceable (no consideration); No recovery based on
prospective damages; executory contract (only binding to point of performance);
 characterize it as a loose arrangement, if decide to fill order then there is a contract and if
not no contract
 no meeting of the minds if there was a contract and thus can’t be responsible for lost
profits
 further details of the arrangements wait agreement
 there is a privilege that P gets a certain amount of machines, depends on performance
 case is radical because so many things open
 if you challenge liability then say that the lower court was wrong
o if you want to back up the lower court: the jury having found a contract, we admit
failure to meet…where further details of the arrangement need to be worked on
can’t assess further damages because terms need to be worked on…other
evidence too vague too indefinite
 what relationship does court have with D, P? get court to see that P was
taking advantage of D
 indefiniteness makes a contract void
Comparison to Hadley: Court hold future profits to be within the contemplation of the parties at
the time of contract (recover in breach of contract for damages within the contemplation of the
parties)
Statute of Frauds: Contracts over a year must be written(ARLES 100 SOUS), this contract was
a parole agreement
 created so that all contract terms on a document, so that people are not relying on oral
information and prevents injustices from the disagreement if what other said,
40

normally when a promised made by one party cannot be fully performed within one year,
the contract is not performable. Contract could have been performed within one year,
Style: Many cases are cited. In this case the profits are speculative but so are the terms of the
contract. In other cases that were cited, only the profits speculative.
Contracts: Court concludes that loss of profits can be allowed for breach of contract.
 When a contract is repudiated then the aggrieved party can recover the value of the
contract.
Court: Opinion of this court is radical, previously it had to do with the meeting of the minds.
 Cites Masterson v. Mayor: lost profits can be allowed for a breach of contract.
 Argues that P should be able to recover the value of the contract. But it is indefinite
the length, price, delivery terms of the contract. P asserts that should recover for a
certain length, terms…
 Assume there is a binding contract, how can you assess the terms?
Judge: Judge who writes the opinion is all over the place, style is the grand style: terms are all
open but still finds a binding contract
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
Bagley vs. Smith: remedy and social consequences, when damages are not allowed,
there is no penalty for breach.
Taylor v. Bradley: profits but for Ds default are recoverable. Wakeman examines the
uncertainty of the existence of damages, and the uncertainty of these damages
Schell v. Plumb: uncertainty of duration of life, uncertainty of life
o see expert testimony
o Maxwell
o Simpson: no evidence needed for PO to show will make profit at the
Jacques v. Millar: cite specific performance
Howe v. Machine. Bryson ruling could have helped. Judgment wrong,
Notes:
-∏ might be going to Mexico to maybe learn more about the Mexican market, what they like,
etc.
-on its face, ∏ had no obligation to the K (didn’t HAVE to sell even one machine; no
consideration)
-might be cheaper to sell to factories
-can we make a lot of money in this market? did ∆ send ∏ to test the market, so that they didn’t
have to send their own person, and then once they knew of the market, they could cut the middle
man out
-do we know anything about gold prices? sewing machines? what does it mean to be the sole
agent for sewing machines?
-did they properly instruct the jury on the damages?
-did they properly say that expert opinion is not allowed?
-relationship between agent and seller – how does it characterize what a K might mean?
consideration is necessary; mutual promises in which people are to get certain things
-1. no K at all, on its face
-2. only a K when one decides to supply the goods order
-need to know what’s the duration of the K
41
-how do we cut if off? what should the lower court do, when it gets the case on remand,
to determine
the length of K?
-would Hadley help in determining foreseeability in determining type of K?
-how did they determine the damages in Hadley
-limits placed by Hadley?
-what does it mean to sell sewing machines?
-ie. hand run sewing machines  electrical in the US, but Mexican mkt doesn’t want
electrical, then
what does the distributor do?
-must the manufacturer (and does he) help us in telling us what the terms of the K are
-maybe people operated, at this time, in these vague ways?
-maybe both sides wanted the terms to be open
-maybe there was no K here then
-assuming there was a K, how do we determine its terms
-determine where/how the profits should be given
-territory, duration, amount, price, delivery = terms of K
-how do we limit damages, for instance, of a runaway jury?
-why limit? future damages may be too speculative
-how are we to say that one jury is right and one is wrong?
-jury has to look at:
-how long does the K extend?
-what’re the price terms?
-what’re the territorial limits of the K?
-what’re the delivery terms?
-what’re the payment terms?
-nobody knows, so much indefiniteness; yet court finds a binding K in this case, and they send it
back for new trial with instructions of what the ∏ can do now to prove his case
-how would you determine the facts and reconcile them to a K?
-can’t have experts to help because expert opinion is inadmissible
-structure of court’s argument:
-what cases did they cite?
-why did they cite these?
-look at notes and questions for this case
-which doctrinal or policy reason is involved?
-jury’s perception of the relationship between the parties
-why does the jury think there may exist a K
-why let it get to a jury in a first place
-how much do we allow the jury to speculate
-jury thinks manufacturer took advantage of the distributor; when he was doing well, he
then stabbed
him in the back and put their own people in there
-policy is not to let that happen
-whether or not the arguments used here can be used in the future
-for the ∆ or the ∏’s advantage, regardless of who won
-this was the grand style
42
-talking about broad vision of modern K law
-court’s opinion:
-loss of profits can be allowed for breach of K
-when the K is repudiated, the party complaining of the repudiation can… (pg. 300)
-accepted Wakeman’s argument to say lost profits can be allowed for breach
-Williams cites Masterson (pg. 300)  he is not necessarily the best legal tool
-court uses the proposition that Masterson uses in the opposite way
-nobody who practices K law should mistake the statute of frauds in the way the ∆ makes the
argument
-then use a case Bagley v. Smith; K in this agreement has no mentioned terms
-remedy and social consequence
- Statute of Frauds: Contracts over a year must be written, this contract was a parole
agreement
-∏ is entitled to a fair value of K title
-if no better method of arriving at amount of damage, ∏ must submit to them the value of the K
plus the profits asking for profits
-only remedy for certain breaches of K
-Williams is NOT a good lawyer
1. K was purely void
2. (same argument as 1, however he tries to make a distinction)
-gets the statute of frauds mistaken and does not use it correctly
-misstateement of it and incorrect conclusion as to how it applies
-statute never brought up below  right to bring it up on appeal might be barred
-can’t say he’s a bad argument and that the pleadings points are bad; confusing to read his
argument because he contradicts himself a lot
-what would he say about this generally?
-below, they said he was only allowed to recover for the 51 machines to be sold, since that was
what the K was for
-no consideration was made for anything else?
-might say there are other things that are so unclear here (ie. further details of the arrangements
were only made based on if delivery of first order was completed, and more were ordered)
-∆ is saying that ∏ is in the wrong because they were disorganized and were not experts
and we can
send our own people down there
-any damages greater than $204 would be grossly speculative since the terms were so
open
-privilege of selling the machines is not enforceable since there was no mutual agreement
on K in
terms of future actions on this “K”  informal arrangement with indefinite elements
-if you allow jury to determine damages with all these terms open, the floodgates will open
-facts you can use as evidence to prove your case (if you were wakeman)?
-use sales figures  20 machines sold in 6 months at $125 retail ($4 profits)
-might want to know the population of the city
-what did the ∏ do to sell the machines?
-made arrangements with agents
43
-established sub-agencies with people who were familiar with the Mexican market
-one of the agents had other contacts and was going to make other sales
-∏ sold 51 machines in a certain period in a city with a particular population
-jury found some of these objective facts
-can we impose some of this information on other parts of Mexico?
-can subpoena the manufacturer to see how much he is making on this?
-how can the judge instruct the jury to give a fair verdict but without too much of his own bias in
the instruction?
-judgment notwithstanding the verdict = too much money and jury disagrees with amount
(ie)
-would the ∆ have a winning argument in a retrial?
-statute of frauds can be traced back to Europe (British Parliament enacted it in the 1770s)
 statute of arels: written document necessary
-common law rule forbade an interested party in testifying, even if they were more
knowledgeable than other witnesses who were allowed to testify
-oral Ks are dangerous in that:
-people misinterpret what the other party wants
-change their mind everyday
-written documents protect both sides
-statute of frauds: certain types of documents are only enforceable when written after a
certain period of time; applicable with respect to:
1. time of the making of K
2. when performance is to be completed
-there is no specific duration of the K in this case
-there are many times when Ks don’t have a set duration of time
-do all of the Ks have to be in writing?
-when a promise cannot be completed w/in a year it should be written (ie if a performance is for
an indefinite amount of time, you should write it down)
“…and was not, by its terms, to be performed w/in one year from the making thereof, and was,
therefore void” – WILLIAMS MISTATEMENT OF THE STATUTE OF FRAUDS
-should cite it verbatim
“…by its terms is not to be performed w/in one year from the date of the making thereof”- REAL
STATUTE OF FRAUDS
-UCC  Llewellyn thought statute of frauds was so long ago that it should always carry
precedent
-why can’t we use expert testimony?
-what’s wrong with that in such an open and uncertain case; so indefinite….why not use
experts??
44
MAYER V. MCCREERY
(Court of Appeals New York 1890)
Rule: All terms of a contract must be negotiated upon for the contract to be enforceable.
Otherwise it is merely an agreement to agree.
Indefiniteness: The alterations to be made in the building.
Chain:
Statement of Case: Action brought from a potential lessee for specific performance from lessor
of an alleged contract to lease certain premises in the city of New York, owned by the defendant.
The plaintiff alleges the defendant agreed to lease to the plaintiff, upon certain terms mentioned
in the contract, property in NYC at a set price and for a set period of time.
Facts: The only evidence is three letters:
1. Plaintiff sent defendant a letter stating:
“I will take your building… on a 21 year lease…, to be altered by you similar to the
one… is now altering, and floors, etc., arranged as spoken about….”
2. Defendant responded with another letter on the same day stating:
“I hereby accept you offer.”
3. Three days later, the defendant wrote the plaintiff another letter stating:
“…There are difficulties which will prevent making of a lease as proposed. You will,
therefore, understand that the proposed lease cannot and will not be made.” The
defendant then sold this property.
Procedure:
 At trial before a single judge it was found that the agreement as alleged by the plaintiff
was made, that the defendant failed to execute the lease agreement, and the defendant had
sold the premises in the meantime. The court found the plaintiff was entitled to recover
from the defendant the damages sustained by him from the defendant’s negligent refusal
to carry out the agreement. The court ordered a reference to ascertain and assess the
damages and to report to the court.
 Interlocutory judgment rendered at Special term in favor of the plaintiff. This was
reversed upon appeal by the General Term of the Supreme Court. And the plaintiff
appealed.
Issue:
 Did the letter constitute a complete agreement, forming in substance a lease of the
premises referred to therein?
Result of Appeal: Affirmed against the plaintiff with costs. All concur.
Holding: A meeting of the minds must occur for a contract to become valid.
Narrow: Where the lessor and lessee enter into a lease agreement which is conditioned
upon reaching an agreement on building alterations for their mutual benefit, and they fail
to reach such agreement, there is only an agreement to agree which is not a binding
agreement and specific performance cannot be ordered.
Broad: Where two parties enter into an agreement to agree, either party may refuse to
agree for any agreement and such an agreement is not binding.
Reasoning
45
Doctrinal: This is a contract stipulating that the parties will come together to enter into an
agreement at a future point: an agreement to agree.
 The terms of the agreement are conditional
 In this case, the existence of a lease was conditional upon whether the building was
altered according to the plaintiff’s stipulations—not specific as to what these are and at
an option to deny the contract until these are specifically agreed upon.
Policy: It is not the duty of the Courts to interpret agreements and parties must have a
meeting of the minds to determine the terms of a contract. Court is not the proper
mechanism to define the rules of business.
 No bad-faith by the lessor, exercising his option not to agree
Notes:
 Who leases for a set price for 21 years???
 How did they find a binding K in Wakeman but not here?
 The court doesn’t cite any cases. But P and D string cite tons! Ipsi Dixit. Didn’t cite
Wakeman because W much more indefinite (which would be assumed to be a leading
authority in the state, 4 yrs apart)
o distinction between types of contracts maybe
o In W one co takes advantage of the other
o courts can change quickly within a short period of time
 Wakeman written formalistically with all case cites, but theory of case is Grand Style
 Last paragraph on 331, why didn’t they dismiss the contract outright?
 Condition for the alteration, for P’s benefit but also D wants to maintain the value too
 waived right to alteration
 Coudert muffed his arguments, need to make diff arguments in this court as you would in
Wakeman
 Motive shouldn’t play a role
“To be altered by you similar to one Hume & Co. is now altering and floors…”
46
UNITED PRESS V. NEW YORK PRESS CO
(NY 1900)
Rule: For a contract to be enforceable, the contract must be in writing and contain mutually
agreed upon terms that are not indefinite and render the parties calculable damages for breach; a
contract must be certain and explicit in its terms. This is an executory contract.
Indefiniteness: Price term is indefinite and therefore, could not determine the price to be paid
for breach.
Chain: Only a question of damages, not if there was a contract like Mayer.
 Court will not handle ambiguities like Wakeman and price cannot be supplied by oral
evidence
Statement of Case:
 Deliverer of news reports brought an action against a publisher/distributor of newspapers
for damages from a breach of a contract in writing entered into by the parties. The
contract held for the news-vending agency was to receive a sum not exceeding $300 per
week to deliver news reports to the press company for publication. UP wants damages
beginning at breach until the end of the contract term.
Facts:
 UPI agreed “to deliver to the defendant the nightly news report of the United Press for
publication every morning in the city of NY and the defendant agreed to receive the new
report and pay a sum not exceeding three hundred dollars during each and every week the
news report was received until the first day of January 1900, it being understood and
agreed that said news report continue to be fully equal in quality and quantity to its
present average standard.”
 It was further provided that the defendant shall have the right to receive the news report
without interruption from and after the first day of January and the plaintiff shall continue
to deliver the same if required by the second party at a price which shall be fair and
equitable to both of the parties hereto, provided that such price is not more then the
competition.
 The plaintiff furnished news reports and the defendant paid the sum of $300 per week.
However, the defendant notified manager to cease sending the report. Discussion of
lowering prices ensued, but no agreement occurred. The plaintiff brought this action
claiming the amount per week until the agreement runs out. The seek damages from the
date of breach to the end of 1900.
Procedure:
 The plaintiff brought suit against demanding judgment in damages for upwards of
$93,000 based on its right to $300 per week until January 1900.
 The trial judge denied a motion to dismiss the claim and at the close of the plaintiff’s
case, a verdict was directed for the plaintiff in the sum of six cents, nominal damages.
 There was a technical breach of the agreement; the terms of the breach were too
indefinite to agree as to what the terms will be.
47
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Defendant asked for a directed verdict(for six cents), but directs for the plaintiff for
nominal damages, too indefinite to figure out the damages…substantive question of
damages.
The appellate court affirmed the judgment.
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Issue:
 Was the contract so indefinite, by its failure to state the price to be paid by the defendant
as to preclude a recovery of substantial damages for its breach? Question of damages…
Result of Appeal: Affirmed with costs for the defendant because the damages nominal.
Holding
Narrow: When the parties entered into an executory contract for the sale of news reports
for a price not to exceed what other press companies paid, and where the defendant paid
the plaintiff $300 per week during the first 1 ½ years of the contract and the defendant
discontinued payment before the end of the contract’s term, there was an unenforceable,
executory contact between the parties because the price was indefinite; thus the penalty
for its breach was merely nominal damages.
Broad: Where there is an agreement to agree, and no basis for determining damages of
an executory contract because there is no exact price, the contract is vague, indefinite,
and has no binding force so only nominal damages will be awarded for the breach.
Reasoning
Doctrinal: Where a contract is of an executory character and requires performance over a
future period of time and is silent as to the price which is to be paid to the plaintiff during its
term, the contract does not have a binding character.
 For a contract to be enforceable the terms must be certain and specific, nor can the court
ascertain what the damages will be.
 Specific contract terms necessary for a court to render damages, parole evidence will not
be binding.
 Parties state terms to a reasonable degree of certainty.
 Prior dealings do not establish a binding price because the price was said not to exceed an
outside standard
Policy: It is not the role of the court to interfere with commerce.
 Anti-commercialism: discourages long-term contracts, court trying to channel
behavior into a formalized writing. Formalized way of looking at contracts.
Demands specificity.
Notes:
 Quantum Meruit: To recover under QM the plaintiff must perform valuable services for or
furnished materials to the person to be charged and that person must have accepted such
services or goods under circumstances giving notice that the plaintiff expected to be paid
(contract implied in law)
 Quantum Valebant: Same, but for goods sold and delivered—defendant to pay plaintiff
what the goods are reasonably worth.
 The opinion is void of any situational sense of the nature of the business world and the
typical construction of such contracts in the newspaper biz.
o Anti-commercial case
o Judicial Formalism at its finest!
 Did the court find the contract invalid?
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How could news vending agency prove their harm?
If there is a need for a contract with open terms, this case is a harsh decision.
P may have asked for too much of the pie, and just asked for service rendered, may have
gotten more money
Intent for the 8yr contract would likely have been to have a long-term contract, prevent
against long-term fluctuations by having the price not go over $300.
What would have made P win????????????????
o Jury should get the case because P relied on the contract for 6 years where it was
only fulfilled for 2 yrs.
o Both parties agreed to be bound, and liable for damages if there was a breach.
Quantum meruit/valebat to prevent unjust enrichment. Recovery for services/goods
rendered. Is it dicta or does it have to do with something in the case.
Need in market place to determine damages but jury didn’t allow it here.
 -after 1900, ∆ shall have the right to receive reports at a price which will be fair and
equitable to both but not more than any other newspaper in NY is willing to pay
 -∆ only paid about 1.5 years until Jan 1, 1894
 -continued to pay the absolute amount of $300 until the breach
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-only know the maximum price and not the min.
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-why would anybody enter into an 8 year K with only a max. price?
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-maybe no choice but to buy these reports
 -this is not a case whether the issue is if the K is valid or not
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-only about the scope of damages and how the terms of the K relate to the
damages
 -any K that is breached is executed or executory in nature
 -every long term K we have, if you breach it before the end of it if we know what the
extent of it is, we know what the consequences are
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-why long term K?
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-be secure
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-have source of supply
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-other side to have a source of income
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-certainty is very important in life
 -merely a case of scope of damages when there is an indefinite amount of damages
 -difference between executed and executory K
 -seems like ∆ is arguing that there is no K here, which is stupid
 -court says in some places there isn’t a K, and in other places, due to technical difficulty,
there isn’t.
 -∆’s lawyers were claiming that agreement was too indefinite so no action for a breach of
it occurred
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-hard to argue that there is on K, due to past performance
 -in a long-term arrangement, prices will change over period of time, so there cannot be a
fixed specified amount paid for newspapers
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-may have been a business need for an open price term because of the uncertainty;
here they might
have thought that to limit this they placed a maximum price term
on the agreement
 -who determines the quality of the newspapers?
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-must meet the “average daily standards”  bring in experts
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-can experts testify here?
-attempt by news publishing business to negotiate a lower price
-the news-vending agency thought they were entitled to the $300 / week until time ended
-thought that because the $300/ week thus far, meant that it should continue
-comes to $93,000
-K should be construed to recover the “reasonable value of the services” for the term,
which would be $93,000.
-court seems to be offended that ∏ thinks that since they were paid that much before,
they should continue to be paid that
-cannot offer parol proof to a K’s written words
-how to reconstruct this argument?
-instead of asking for specific $300/week, ask for something a bit more equitable
to both sides  find
out what the reasonable value should be based on experts
-wakeman was even more uncertain, let the amount issue go to the jury
-news-vending agency should not only set terms of maximum price if the other party can
breach whenever they so choose
-court is saying that a specific price is necessary to establish a K
-labor costs, supplies, material costs, communications, rent, etc.  how do you figure in
all the costs in order to specifically figure out what the price is?
-executory  terms to be played out in the future
-executed  terms have been completed
-court says you will get paid if the K is not executed, because services/goods have
been delivered
-implied promise under QM or QV  to make sure one party doesn’t take advantage of
the other
-in this case, it’s partly executed and partly executory
-your client (∏) is going to say he needs long-term Ks, which are inevitably going to be
executory
-definite period, notion of quantity, quality = fair standard of newspaper, just don’t have
price
-different in Wakeman, all terms are indefinite
-this case is going to be a roadblock
-formal style because of their theory of Ks, which is the “mind melt” in which both
parties must agree to the terms of the K
-two types of dicta: regular and overted (?) dicta (far away from what the court held) –
bramble bush
-court states the broad proposition: instrument lacks support in its essential element
which is specific price
-court concludes it cannot allow the ∏ to claim the price due to parol proof
-none of the lawyers, the case, the court, nobody cited Wakeman
50
MACINTOSH V. THOMPSON
(1901)
Rule of Indefiniteness: Where an employee relies upon an oral promise that his compensation
will be enlarged, but the increase is indefinite as to amount, term, and type, the promise is
unenforceable for indefiniteness despite being a part of a fully executed contract. Says should
have tried QM…
Indefiniteness: Price/Salary to be paid.
Chain: Many misuses of United Press
 Contract was too vague and indefinite to be enforced because the intent of the parties
cannot be determined with reasonable certainty
 An executed contract (UP was executory); this is a case of existence of contract (UP
damages);
 UP allowed for recovery under quantum meruit for executed contracts.
Statement of Case:
 Action by an employee/architect against his employer/architect for a breach of contract
and quantum meruit, seeking in addition to his salary, the reasonably value of his services
and time spent upon two buildings he helped to design while employed at the firm-$12,356.20
Facts:
 The plaintiff testified he was an architect and architectural designer, and considered
himself thoroughly competent as an expert designer and draftsman in the architectural
line; he was employed by the defendants in 1893, and in 1895, told them he intended to
leave their employ unless his pay was increased. The defendants informed in no increase
could be given but he should be paid more if work came in.
 On or about March 11, 1896, the plaintiff entered into a contract with the defendant in
which the plaintiff agreed to remain in their employ at the same salary, which he was
then receiving, during the completion by the defendant of two buildings. In addition to
his salary of $36 per week, he was to be paid reasonable value of this services and the
time spent on the buildings while under their employment. When explained this deal the
plaintiff asked, “How am I to know what I will get?” and the defendant responded, “You
can rely on me; I will see that it is all right. You don’t know what I have in view.”
 Plaintiff remained with the firm for two more years, however, he was not given an
interest in the buildings upon the completion. The plaintiff claims the reasonable value
of his services above his salary to be $12,356.20. Plaintiff identified various drawings
and designs he made and testified he worked 5,122 hours and estimated his work at $3 an
hour, or $15,366, of which $4,656 had been paid; he trusted something would be done to
give him an interest in the profits.
 No consideration for P to stay on and do the work.
 Directed examination, only can ask questions in the scope of the crossexaminations
 Didn’t testify to staying on.
 Problem in the pleadings, opening statement, and the testimony
51
Procedure:
Plaintiff asked to add to the complaint a claim “for the reasonable interest in the two buildings if
he should stay until they were completed.” This amendment was denied, for plaintiff mentioned
nothing of it in his pleadings. The defendant’s at the close of trial, made a motion to dismiss,
which was granted. A motion made by the plaintiff to go to the jury as to the value of the
plaintiff’s services was denied. The plaintiff appealed the judgment dismissing the case.
 Dismissed because no meeting of the minds for the increased salary and 2???
 If we were to follow UP, P should be compensated for services rendered, but can only can
get compensated if there is another formal contract above the salary
• This is not accurate for quantum meruit, which doesn’t require a certain price/formal
contract
Issue: Did the trial court err in dismissing the plaintiff’s complaint as too indefinite to be
enforceable?
Result of Appeal: The trial court’s dismissal of the complaint is affirmed with costs.
Holding: A contract is not enforceable if the minds of the parties do not meet upon any binding
agreement and if the consideration for an alleged promise to pay an increased salary does not
stipulate that promisee was under obligation to remain with the promisor for any fixed period of
time.
Narrow: Where an architect is promised by his employer that the architect can rely on
his compensation (amount, term, and type) being enlarged and the architect relies upon
his employer’s promise, the employer’s promise is too indefinite (regarding amount,
term, and type) to be enforceable despite being a part of a fully executed employment
contract.
Broad: A promise to enlarge compensation is unenforceable due to indefiniteness where
the promise fails to show with reasonable certainty that the minds of the parties met upon
some settled terms, even if the contract is fully executed and the court will not imply
definite terms.
Reasoning
Doctrinal: If a promise for increased compensations is not sufficiently definite to determine
the intent of the parties, it is not enforceable.
 If a contract’s terms are not definite it is not enforceable; To be enforced, executed or
executory contracts must be sufficiently definite and certain in terms that can be seen that
the minds of the parties have met upon the settled terms.
 “To be enforced, whether executory or executed, contract must be sufficiently definite
and certain in terms that it can be seen that the minds of the parties have met upon some
settled terms.
• Undoubtedly, where one person requests another to render him services and they
are rendered, the law will raise an implied agreement to pay the reasonable value
of such services
 Here the plaintiff was working at a stated weekly salary and therefore
received a form of compensation for his work—what he wants now is
more money!
Policy: The plaintiff was compensated in the form of his salary; the second agreement
for an increase was indefinite.
Notes:
 Court sites United Press but misreads the decision:
52
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o This contract is executed and not executory!
o UPI was a scope of damages case, this is a determination of the existence of a
contract
o UPI said that an offeree could recover under quantum meruit if the contract was
executed.
Plaintiff seems to be making up a story, impossible to work that many hours
Why Quantum Merit will not work in this case:
In this case formal contract theory is confused with quantum meruit theory
Plaintiff mistakenly based his claims upon breach of contract when he really wanted to
recover the reasonably value of his services. Plaintiff is trying to argue for reasonable
value of his services on an expressed contract and quantum meruit clause.
Uncertainty in the lack of mutuality of obligations
Res Judicata: Same cause of action may not be litigated against; prior adjudication is
conclusive on all things decided by the court. But got to relitigate this case, different
causes of action!!
53
Mackintosh v. Kimball
101 App. Div. 494 (Appellate Division of the Supreme Court of New York)
Rule: There can be no recovery when an arrangement is so indefinite as to provide the court
with no basis for determining the parties’ intent.
Indefiniteness: Term “satisfactory amount”
Chain: Similarities to UP
 “For the validity of a contract, the promise or agreement of the parties to it must be
certain and explicit, and that their full intention may be ascertained to a reasonable degree
of certainty. Neither vague nor indefinite.” (Quoting UP).
 Distinguished from UP: look above, same!
Statement of Case: This is the second action of the above case; this time the cause of action is
based solely on quantum meruit.
Facts: New Facts:
1. π wanted to leave → ∆’s said if work came up, they’d pay π more
2. π said if could use ∆’s office to start his own business → he’d stay at same salary.
3. important work came up for ∆’s and π was to write up the plans
4. π reminded ∆’s about promise to increase salary.
5. π threatens to leave again if ∆’s don’t give him a raise
6. ∆ tells π that π can count on ∆ to get a satisfactory amt. for agreeing to stay on
7. π stays on and completes work, receiving regular salary but not more.
Procedure: The first action was dismissed and affirmed by the Appellate division of the court.
Here a jury found in favor of the plaintiff and the defendant is appealing the decision and an
order denying their motion for a new trial.
Issue: Was the TC correct in ruling that the ∆’s promise to give π an increase in salary that is
satisfactory to π constitutes an enforceable K? Did TC err in allowing testimony about the ∆
about a promise made after the dissolution of the 2 ∆’s partnership?
Result of Appeal: Reversed with costs to the appellant to abide the event.
Holding
Narrow: When an architect’s employee relies upon an indefinite promise that he will
receive a satisfactory increase in compensation from his employer, and he is already
being paid a salary, the promise 1) is too indefinite too support a claim under QM, and 2)
not recoverable as the employee was already being paid for his services.
Broad: When a promise or agreement between parties is not certain and explicit so that
their full intentions can be ascertained to a reasonable degree of certainty, the agreement
will not be enforceable. Reliance on an indefinite promise and prior acceptance of
compensation will bar recovery.
Reasoning
Doctrinal: The validity of a contract is based on the definiteness of its terms.
 Once a partnership has dissolved neither former partner has decision making power
that can bind the other party. He may bind himself of his admission, but as to his
former partners, his agency, except for special purposes, is terminated by the
dissolution, and his admissions are like those of a stranger.
54
Policy: A promise/proposal for future arrangement of profits does not entitled an
employee to receive pay or quantum meruit if the proposal is indefinite.
 Court cannot create employment contracts.
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What about this letter from the Highest Court—not really legal.
Differences between Mack I and Mack II:
o π adds that ∆’s promise was to be satisfactory to π.
o π adds that he asked to use ∆’s office for personal business in exchange to stay at
same salary
o π added that he made suggestions to ∆ on how to do business (implying copartnership duties)
Can Macintosh really remember more stuff after the fact?
Cites United Press: executory v. executed contracts, add compensation will only prevail if
he can find a definite contract
Partners get shares of profits, but hurts his own argument that he would stay on the same
salary
o if he is a partner, how much is MacKintosh entitled to? Satisfactory may mean
more to M than to Kimball
Court of Appeals judge wrote private letter to Macintosh (unethical), court castigates not
the judge but the lawyer printing it in his brief
QM not applicable if you are already being paid a salary; need an express contract for it
o court suggests you can be underpaid, cite UP for the proposition
Court treats QM as formal contract theory citing UP, but actually UP says that you can be
compensated even if indefinite; and also doesn’t give any damages because M on salary
What would have court done if no salary? Well court confused, and uses dicta of UP as
holding.
Illegal for judge to submit a letter to one-side and not the other
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BLUEMNER V. GARVIN
120 App. Div 29 (Appellate Division of the Supreme Court of New York 1907)
Rule: A promise to pay a fair share of commissions is too vague and indefinite to be enforced
under formal contract theory, but with appropriate factual evidence, can be enforced under QM.
Indefiniteness: share of commission
Chain: Uses UP to show that an executed contract (that is indefinite and unenforceable) where
the employee has not been paid, can entitle an employee to the reasonable value of services
under QM
 Overrules MacII because it would allow recovery for QM where the terms are too
indefinite to support an express contract (also no salary here)
 Overrules Mac I because it allows for recovery under QM for an executed contract
o Must bring expert testimony to understand service payment
Statement of Case:
 Action brought by an architect/employee against his employer to recover the value of a
contract in which he was to be paid a fair share of commissions ($20,000) and a second
cause of action in quantum meruit for the reasonable value of services rendered
($10,000). (Good lawyering by covering all bases).
 D tried three times to get the first cause of action dismissed. Could have asked for
specific performance to be named as the designer. But very hard to win a specific
performance argument.
Facts:
 Prior of August 13th, the defendant was employed by the city of New York as an architect
to design and draw plans for a public building to be known as the Bronx Borough Court
House, however, the municipal art commission rejected his designs.
 Garvin then entered into an agreement and 1. recognized as the designer of the plans, 2.
fair share of commissions (1/2) whereby in consideration of the designing, forming, and
preparing by the plaintiff of plans for the said court house building such as would meet
with the approval of the said art commission thereby ratifying, confirming, and securing
to the defendant the contract of employment as architects with the city of New York,
“defendant agreed to associate plaintiff with him in aid undertaking as associate architect,
would recognize plaintiff as the author and designer of the plans prepared by plaintiff and
would fairly share with plaintiff the commission received by defendant on account of the
said contract with the said city of NY for his services as architect of the said Court House
Building.”
 The plaintiff’s plans were approved and his claims to have complied with the agreement.
 However, in July 1904, the defendant terminated the contract and has refused to associate
plaintiff as associate architect of the building or to recognize him as the author and
designer of the plans, or pay him ½ of the commissions.
 Under the second cause of action, it is alleged that between August 13, 1903 and July 6,
1904, the plaintiff rendered services to the defendant at his request as an architect in
making plans for the erection of a public building.
Procedure:
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Before testimony, the defendant moved to dismiss the first cause of action, and at the
close of the plaintiff’s case renewed the motion. Both of these motions to dismiss were
denied. At the close of testimony, the defendant moved to dismiss the complaint on the
first cause of action, which being denied, the defendant asked the court to direct the
plaintiff to elect upon which cause of action set out in the complaint he intended to go to
the jury, which motion was also denied.
The court charged the jury upon the first cause of action. The Supreme Court ruled in
favor of the plaintiff (Bluemner and awarded Bluemner $9,800 but this judgment was
thrown out for a lack of basis). The court denied the defendant’s motion for a new trial.
Defendant appeals
Issue:
 Did the trial court err in not granting the defendant’s motion to dismiss the plaintiff claim
based on the indefiniteness of the contract in failing to provide specific terms as to the
commissions being divided?
 Is a contract binding based on the theory of QM, where the only evidence to support a
finding in the plaintiff’s own testimony?
Result of Appeal:
 The judgment and order appealed from are reversed and a new trial is ordered, with costs
to the appellant to abide the event.
Holding: By treating this case an action at law for the recovery of damages upon a breach of
contract the contract alleged cannot sustain the action, it is too vague and indefinite to constitute
a valid contract. As for a cause of action of QM, need more evidence then just the plaintiff’s
testimony (too biased and one sided).
Narrow: When an employer promised an architect a fair share of the commissions if the
architect drew up satisfactory plans that were approved, the promise is too indefinite to
support an enforceable contract because it was not possible to determine the parties’
intent but, with sufficient factual evidence, there could be a good cause of action under
QM.
Broad: If nothing in K fixes an amount of commissions to be divided, nothing to
stipulate what constitutes fair, and if there was nothing to stipulate whether the
commissions to be fairly divided should be the gross or net commissions as profits after
deducting the necessary expenses, then the agreement is too indefinite and too vague to
constitute a valid K.
Reasoning:
Doctrinal: When an agreement is so uncertain that the court cannot enforce it, then no
obligation exists and no contract exists either.
Policy: Interpretation not the business of the courts
Notes:
 First cause of action was for the value of the buildings and the second for value of
services rendered.
 What did counsel learn from previous cases? He separated his case into two types of
actions.
 Quantum Meruit: Valid cause of action, but cannot be sustained in this case because:
o Never charged the jury under this theory
o Only evidence was the plaintiff’s own testimony
o Cannot get QM because the defendant made the plaintiff’s attorney pick an action
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In new trial: bring this under QM theory and get the witnesses and testimony to prove
case
 Different from Macintosh, not receiving salary
o he didn’t get anything: like fair share
 Court confused again: seeking 10,000-200 on second cause of action but awarded this for
the first cause of action.
 Court never the sent the 2nd coa to the jury. Why did the judge do this? No cause of
action unless P promised something more clear.
 Wakeman wouldn’t allow expert testimony of how well Bluemner contributed.
o Expert testimonies vary and can diagree with themeslves.
o This case calls for expert testimony
 Good lawyering because you can’t figure out exactly what you are supposed to do given
the way Mac I and II interpreted certain
 Defendant in this case did not submit a very good plan because it was rejected so he went
to another architect to try to get him to help him out
Is Bleumner a better case for recovery then MacI and Mac II
o Distinguishing facts – Mac received his salary, and Bleumener got nothing
58
MORAN V. STANDARD OIL CO.
1st Cardozo opinion!! 1914
211 N.Y. 187 (Court of Appeal New York, 1914)
Rule of Indefiniteness: Mutuality of obligation can be implied where the parties enter into an
“agreement.” Where a plaintiff and a defendant entered into an agency contract, which
stipulated “an agreement to pay commissions on sales made for 5 years,” the contract also
implied a duty to employ the plaintiff for 5 years—supplying the requisite mutuality of
obligation.
 Contracts must be construed in the most favorable light to the party who did not write it
(this argument was supplied by Moran’s counsel and was picked up by Cardozo)
Indefiniteness: Duration of employment (court interprets it to be 5 years)
Chain: Judge Cardozo
 Moves away from United Press(looked at specific terms) and begins to look at the intent
of the parties
 Recovery even with indefiniteness.
Statement of Case:
 Paint salesman initiated an action against paint manufacturer (employer), seeking
commissions he earned as the defendant’s salesman from April 1903, to September 1903.
 The 2nd cause of action is for damages for breach of contract under which he was
employed, to recover damages from September 1903, to April, 1908.
o How do you calculate the amount of damages for the breach of employment K
which was for the future?
o The lower court held that there was a K to entitle commissions on the first cause
of action but did not have a K on the 2nd cause of action. Is inconsistent, have a K
and can recover commissions but you don’t have K and you can’t recover
damages.
Facts:
 The plaintiff is a paint supplies salesman. The defendant is a paint manufacturer. The
defendant sought to get into the general market through the medium of the plaintiff. The
plaintiff was to buy his paint exclusively from the defendant.
 The plaintiff purchased $125,000 worth of paint from the defendant from May, 1901, to
April, 1903, and agreed to handle the defendant’s entire output. (output K) Many
customers complained about the quality of the paint the plaintiff supplied to them from
the defendant’s factory, and he carried these complaints to the defendant’s superintendent
who told the plaintiff that if he would keep track of the bad goods the defendant would
repay him for any losses.
o However, the superintendent denies this agreement.
 Dealings between the parties continued for two years, at which point there was a balance
due from the plaintiff for $27,650.79. The plaintiff stopped buying paint from the
defendant, and became its agent under a contract to serve it for a commission. (K-pg 369)
No mention of what commissions are and said to be adjustable every 90 days according
to an index. The plaintiff claims the debt was wiped out except for $5,200.
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o The plaintiff claims to have told the superintendent about his losses--$23,000, to
which the super did not reply (Highly unusual.) P took this silence as acceptance.
Silence does not amount to acceptance.
 Further, the defendant alleges that the plaintiff was informed before the contract was
entered into that any commissions due to him would be held back and applied in
reduction of his indebtedness. The plaintiff denies this agreement and brought suit
against the defendant.
Procedure:
 Court ruled in favor of the plaintiff as to the first cause of action, commission base from
April – September 1903; the court dismissed the 2nd cause of action, damages for breach
of contract.
 The Supreme Court of NY affirmed both parties’ cross-appeals of these rulings.
Issue: Did the trial court err in affirming the plaintiff’s first cause of action for the commissions
he earned as the defendant’s salesman (specifically in admitting the schedules P submitted to
show losses incurred) and further err in affirming the dismissal of the second cause of action for
breach of contract?
Result of Appeal: The judgment should be reversed upon both appeals and a new trial granted
without costs to either party.
Holding:
Narrow: Where the plaintiff and the defendant entered into an agency contract, which
stipulated an “agreement to pay commissions on sales made for 5 years,” the contract
also implied a duty on the part of the defendant to employ the plaintiff for 5 years,
supplying the requisite mutuality of obligation. (look at pg 373-374 for discussion)
Broad: Where two parties enter into an “agreement,” the mutuality of obligation can be
implied.
Reasoning
Doctrinal: An agreement is not merely a promise made by one party to the other, but it was
an agreement made by both and binding on both by every principle of law and morality
applicable to the construction of contracts.
 “The whole contract may be instinct with obligation imperfectly expressed.”
Policy: There are times when parties enter into agreement in which the words are the same
but intentions and interpretations are different. We therefore can imply obligation.
Notes:
 Cardozo attempts to clarify UP: all of these NY courts keep getting the decision wrong
o The contract is drafted by the manufacturer and there is mutuality of obligation
because the word agreement is used. The manufacturer constructs the contract, if
it is indefinite it has to be interpreted against him and has to be looked in the light
of how a reasonable person would have seen the contract.
 Canons of Cardozo Construction (helps people understand K):
o Agreement implies mutuality of obligation (if one is bound so is the other)
o An intention to make so one-sided an agreement cannot be readily inferred
o Construe language of a contract most favorably to the party that did not write it
o Give the words the meaning which the writer should reasonably have expected to
give them
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
Reverses decisions on both appeals, because failed to satisfy the requirement of proving
with reasonable certainty that the vendor agreed to indemnify the P against those losses
he allege. (See pg 372).
o Imposes the burden of proof on the P and also asserts that the schedule that was
submitted as evidence was incompetent and without this evidence, there would
have been no proof for the jury to see the extent of P’s losses.
o So the incompetent evidence was inadmissible and without it there is not enough
evidence to support the claim of commissions.
o He should have showed the circumstances surrounding his losses. Show that the
paint was crappy. Call up the customers with the complaint and use their
testimony. Cardozo want to hear it from the customers and not from P. Let the
jury decide. Reversed.
Under what K theory did the lower court award commissions?
Not under formal K theory because there was no K. The lower court did not know what they
were doing. Confused QM.

The difference between the UP and Moran, the focus now is on the intent of the parties
and not on the specificity of terms. Cardozo is coming up with methods in interpreting
the intent of the K.
o In UP the issue was not the existence of the K but a theory for determining
damages. This case is distinguished in that the issue here is whether there is a K
at all.
o In this case they can determine damages through the use of the index that was to
be used in calculating commissions.
o In UP you can also calculate it based on market price but the court did not
consider this. The shield of United Press is starting to weaken. UP is no longer
an obstacle. We need to make predictions as to what we need to do to make a
binding K. Cardozo makes a fresh start with old material. (He uses insurance
cases, etc. as examples of where the two parties are not equal. )
2 sets of facts in each case: 1) taken as a situation type, agreement, etc. 2) facts as related to the
two parties.) Who is suing whom for what? This is important because these canons of
construction may not hold up in time. This is an action between a little guy (Moran) versus huge
corporation (Standard Oil). David v Goliath setting probably moved Cardozo. Wanted to level
the playing field.
How do you calculate the amount of damages for breach of employment K which was for the
future?
61
VARNEY V. DITMARS
Cardozo dissents and Chase writes majority. 1916
217 N.Y. 223 (Court of Appeals NY 1916)
Rule: A promise to give a “fair share of profits” and where there is not a reasonable method for
calculating the share is unenforceable because it is too indefinite to determine the reasonable
intent of the parties.
Cardozo dissents alone:
 Saying these terms may be implied; limits UP as a case without intent to be bound, in this
case there is an intent to be bound.
 He sees the contract failing due to lack of evidence for damages and not because of form.
Fair share can be interpreted by looking at the industry.
Indefiniteness: Fair share of profits.
Chain: Restates Mac, Bluemener, Mayer. If damages are too indefinite, the contract is
unenforceable (step back from Moran).
 Uses United Press and clarifies that it did not stand for the proposition that a contract of
sale is unenforceable unless the price is expressly mentioned and determined; agreement
not vague or indefinite.
Statement of Case:
 Action for wrongful discharge brought by an architect draftsman against his employer, an
architect employing engineers, draftsmen, and other assistance, the plaintiff is seeking to
recover for services render via contract for services between 11/7/11 to 12/31/11 at $40 a
week, totaling $1680 (1st claim) and a fair and reasonable percentage of the net profits of
the defendant’s business from 2/1/11 until 1/1/12 (2nd claim). (2 causes of action)
Facts:
 In October 1910, the plaintiff applied to the defendant for employment, he was granted
this employment at the salary of $35 per week. A short time after the plaintiff informed
the defendant that he had another job offer, the defendant said that if he would remain
with him and help him through the work in his office he thought he could offer him a
better future than anybody else.
 On 2/1/11 the plaintiff and another designer in the office spoke to the defendant about
work in the office. The defendant responded by saying, “I am going to give you $5 more
a week; if you boys will go on and continue the way you have been and get me out of this
trouble and get these jobs started there were in the office three years, on the first of next
January I will close my books and give you a fair share of my profits.”
 Thereafter, the plaintiff was paid $40 per week and worked overtime to help the
defendant. On November 6, 1911, the night before the general election in this state, the
defendant requested that all of his employees that could do so should work on Election
Day. At 4 on the day of the election the plaintiff was taken ill and remained at his house.
 On Saturday, November 11, the defendant delivered a letter to the plaintiff stating, that
the plaintiff is fired for not reporting to work on the Election Day (Pg 379). After the
plaintiff recovered from the illness he returned to the defendant’s office to work. The
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defendant denied that he had any agreement with the plaintiff and refused to allow him to
continue his service. Plaintiff was paid $50 for special work.
Procedure:
 The trial court ruled in favor of defendant and entered a dismissal of the complaint. P was
the only witness at the trial. The Appellate Division of the Supreme Court affirmed the
judgment in favor of the defendant. The case is now appealed by the plaintiff to the
Supreme Court.
Issue:
 Did the lower courts err by dismissing the case, and not allowing the jury to decide
whether the plaintiff was entitled to recovery for work until January 1st based upon a lack
of evidence on which damages for lost profits could be computed?
Result of Appeal: Affirmed with costs. 4 to 3 decision.
Holding
Narrow: Where an employer promises an employee a salary increase and a “fair share
of profits” if he continued working until January, the employee receives the salary
increase, becomes ill and does not work through January, the promise is unenforceable
because it was too indefinite and uncertain to determine the intent of the parties (how
commission would be computed).
Broad: Where the terms of contract to give the plaintiff a fair share of profit are vague,
indefinite, and uncertain, and the amount cannot be computed from any evidence
presented, the court did not err in dismissing the case before letting it go to jury.
Reasoning
Doctrinal: There is no contract and damages for loss of profits may not be recovered where
a contract, as it relates to a promise, is vague, indefinite, uncertain because the amount of
profits cannot be computed on the evidence.
 Plaintiff can recover on quantum meruit on a proper complaint—this would be small,
worked from December to Jan and was paid $50.
Policy: Such an executory contract must rest for performance upon the honor and good faith
of the parties making it.
 The court cannot aid parties in such a case when they are unable or unwilling to agree
upon terms of their own proposed contract.
 “Fair and Reasonable” do not have meaning in business
Notes:
• 1st case where the NY Court of Appeals considers the “fair share” of profits issue.
o Pg 380 “ The question whether the words “fair” and “reasonable” have a definite
and enforceable meaning when used in business transactions is dependent upon
the intention of the parties in the use if such words and upon the subject matter to
which they refer.”
• The court asserts that the opinion in UP was not intended to assert that a contract of sale
is unenforceable unless the price is expressly mentioned and determined.
• (pg 381) In the case of a K for the sale of goods or for hire without a fixed price or
consideration being named it will be presumed that a reasonable price or consideration is
intended and the person who enters into such a K for goods or service is liable therefore
as an implied K.
• For market value/reasonable value, you can bring in expert testimony.
63
United Press (clarified): Even in open price terms we can find that there can be a K
(depends on the circumstances).
o There is still a problem here because it is difficult to assess the value of the
service. Fair share in these circumstances could mean X %age.
o In this case it is not enforceable because it is very difficult to measure what is fair
and reasonable (is vague and indefinite).
• Pg 384 The court implies that the P can make a claim for QM if the P can show that his
work was worth more than $40 per week.
o The court says that you may not be able to recover fair share of profits because it
is too indefinite but can be recoverable through QM. This is inconsistent and
untenable.
 Key to QM is the reliance upon the terms. QM does not work when
compensation is not being paid. A promise to pay more is a formal
promise and not an implied promise. This demonstrates that the court is
still a bit confused.
• The court denies recovery for period between Nov 1 to Dec 31. Should he get covered?
Cardozo says he should get paid because they had an agreement.
• Cardozo has moved the court from the rigidity of UP to its fluidity. There is a business
need to have some flexibility in the terms of contracts
• Plaintiff did not present evidence on how the amount for the work from Dec to Jan would
be calculated, when he returned to work after the election/sickness.
• Restatement of Mackintosh, Bluemer, and Mayer
o Macintosh: The court held that the arrangement was too indefinite for
form the
o “The opinion of the Court in UP…was not intended to assert that a
contract of sale is unenforceable unless the price is expressly mentioned
and determined.
 Dissent by Cardozo (Pg 385 to 386):
 Didn’t cite Wakeman (all terms indefinite), cited UP
o didn’t use Wakeman because doesn’t want all terms to be open and have the jury
decide.
 A promise to pay a fair share of the profits is not always indefinite
 Look at the industry, custom,
 Not consistent with United Press: held that the parties intended to reserve the price for
future adjustment; if instead of reserving the price they had manifested an intent on the
one hand to pay and on the other to accept a fair price, the case is far from holding that a
jury could not determine what such a price would be and assess the damages accordingly
 Intent can be inferred from the contract
 Find fair price by asking an expert who knows from experience
 Dissent in conclusion that he failed to make a case for salary; even if this amount is small
he is still entitled to it.
 Maybe get compensated on a quantum meruit above your salary? No QM but you
can get an express contract.
 Cardozo says you don’t always need market price etc, to determine fair share.
What you need is the agreement to be bound either through an express statement
or reasonable implication which wasn’t the case here.
•
64
RUBBER TRADING CO. V. MANHATTAN RUBBER MANUFACTURING CO.—
Defendant/Buyer wins; Cardozo opinion! 1917
221 N.Y. 120 (Court of Appeals New York 1917)
Rule: A contract remains in effect even where the party repudiates it if the other party refuses to
acknowledge the breach. Where the buyer repudiates the contract by imposing a new condition
which alters the contract, yet the seller does not abandon the contract but imposes a new
unilateral condition in good faith, the seller has failed to keep his conduct free from blame and
therefore, cannot recover.
Indefiniteness:
 Where the acceptance takes place; a breached contract; defendant changed location for
inspection.
Chain:
 Cardozo looks at the practice of rubber traders to fill in the blanks of this contract. He
wanted to bring in trade practice for Varney to determine fair share of profits.
Statement of Case:
 Action by an importer/seller of rubber against a manufacturer/buyer of rubber for an
anticipatory(when you sue before the breach) breach of a where the manufacturer refused
to receive shipments and wrongfully repudiated the contract (because they wanted
inspection to occur at different places).
Facts:
 The defendant agreed to buy 15 tons of prime thin discs Manicoba rubber at $1 per
pound; delivery was made at the rate of about five tons a month in September, October,
and November 1912. Delivery orders were to be sent to the buyer when the rubber was
ready. Goods were to be billed on a credit of ten days.
 The first delivery under this contract was made in August and paid for in September. At
the time of payment, inspection had not been made and defects were later discovered—
7,900 lbs were returned with the plaintiff’s consent. This is a huge return 79% of the
goods were deemed defective. Seller replaced the defective goods. (Sept 1 the market
price for rubber drops and buyer starting complaining about the quality and quantity of
the goods. Inspect for patent defects at the dock and latent at the factory)
 A second shipment arrives in October. The defendant’s president refused to inspect the
rubber at the warehouse or dock and said there would be no acceptance until the rubber
reached the defendant’s factory and tested them there. He also told the plaintiff he
would only accept round discs but a few days later said the shape did not matter—
retracted this statement.
 The plaintiff, though unhappy about this change in terms continued the contract and sent
another shipment stating, the delivery orders would not be furnished until notice was
received that the rubber was satisfactory. Neither side would yield his position. Both
claimed a breach of contract. Each notified the other that the contract had been broken.
The plaintiff sold the rubber at a reduced price and retained the rest. The P sold the at a
reduced price because the market price dropped—price he paid was a lot higher then
what he could have paid on the open market. Brought suit for profits lost.
65
o Defendant/buyer was at fault first, renounced performance and insisted right to
withhold payments if defects were discovered at the factory, not warehouse as agreed.
o The seller did not give the defendant notice that the contract was abandoned
o The plaintiff made an untenable tender, the reject of which he counted on as the sole
evidence of the breach
o The plaintiff rescinded the contract for the defendant’s rejection of a tender, which
imposed an unauthorized condition all parties at fault!!
o The seller switched cause of action but for anticipatory breach but for a tender that
was improper. Cardozo very liberal in construing the custom between the parties.
Cardozo is very particular.
Procedure:
 The trial court ruled in favor of the plaintiff. The plaintiff amended their complaint.
New action is that “the defendant wrongfully repudiated the said contract and definitely
notified the plaintiff that it would not thereafter perform the same.”
 This was an anticipatory breach that made tender meaningless the two acts are 1) the
defendant’s announcement that withdrawal of the goods from the warehouse must be
without prejudice to their rejection thereafter and 2) the round shaping of discs (which
was withdrawn).
 The trial court ruled for the plaintiff and the Appellate Division of the Supreme Court
affirmed the denial of a motion for a new trial.
Issue:
 Did the trial court err in allowing the plaintiff to recover damages for lost profits where
the defendant/buyer repudiated the contract by imposing a new condition, and the
plaintiff/seller des not abandon the contract but imposes a new condition unilaterally?
Result of Appeal:
 The award of damages to the plaintiff is reversed and a new trial is granted with costs to
abide (tolerate, perform, execute) the event.
Holding
Narrow: Where the defendant committed an anticipatory breach of the contract by
refusing to pay for the delivery of the rubber until the rubber passed an inspection at his
warehouse, the plaintiff breached the contract by insisting upon acceptance of the rubber
upon its withdrawal from the warehouse (new tender), and the plaintiff continued to
attempt to perform the contract without notifying the defendant that it considered the
contract abandoned, the plaintiff was not entitled to damages for breach.
Broad: Where there is a failure to agree on a term of the contract, & that term later
become the subject of disagreement, it does not invalidate the contract, but where both
parties accept & act upon new terms, damages are awarded.
Reasoning
Doctrinal: A contract remains alive if after a breach both parties continue to act upon
the new terms of the contract.
Policy: The plaintiff cannot collect if he does not keep his own conduct free from blame.
o Important to allow business to conduct itself—custom is better then courts to
decide ways of the business world.
Notes:
 P could have won if D breached. Instead P used the antic breach theory of case.
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
Tender an unconditional offer of money or performance to satisfy a debt or an
obligation
 Anticipatory breach a breach of contract caused by a party’s anticipatory repudiation of
the contract; gives the non-breaching party three remedies: Contract survives until the
plaintiff does SOMETHING giving notice of breach.
o Await performance by the repudiating party
o Resort to any remedy for breach
o Suspends own performance of the contract
 Indefiniteness: In the terms of inspection!! Cardozo implies a reasonable inspection
term
 The contract does not say anything about inspection but looks at the world/custom to
understand how this occurred. This is a change in the policy of the court, becoming
involved in interpretation.
 If this is done poorly could throw havoc into the market place. However, by changing
custom we could throw the market into disarray as well.
 Why Cardozo is the man—he got the entire court onto his side!! Formalism is dead!
 He is both technical and broad. WHY???
 Defendant’s error: The defendant’s refusal to inspect at the dock/warehouse was a
breach of contract—however, the plaintiff continued to send the rubber and also allowed
him to perform this inspection
 UCC 2-610 (1978) Anticipatory Repudiation: When either party repudiates the
contract with respect to a performance not yet due the loss of which will substantially
impair the value of the contract to the other, the aggrieved party may:
a. Await performance by the repudiators
b. Resort to any remedy for breach, even though he has notified the repudiators that
he would await performance
c. In either case, suspend his own performance or proceed in accordance with the
provisions of this Article on the seller’s right to identify goods to the contract
notwithstanding breach or to salvage unfinished goods.
 UCC 2-611 (1978): Retraction of Anticipatory Repudiation
1) Until the repudiating party’s next performance is due he can retract this repudiation
unless the aggrieved party has cancelled or changed his position or indicated he considers
the repudiation final
2) Retraction may be by any method proving performance
3) Retraction reinstates the repudiating party’s rights under the contact with due excuse and
allows to the aggrieved party for any delay occasioned.
67
WOOD V. LUCY, LADY DUFF GORDON Cardozo opinion.
222 N.Y. 88 (Court of Appeals New York)
Rule: A contract in which mutuality of obligation is not expressly stated, can still be
enforceable if obligation is implied by the actions of the parties in fulfilling the contractual
obligations.
Indefiniteness: mutuality of obligation; consideration
Chain:
 Moves further away from formalities; looks at how people “should” act and interprets the
contract accordingly
o “A promise may be lacking, and yet the whole writing may be ‘instinct with an
obligation,’ imperfectly expressed.” (Moran). But disregards Moran regarding the
drafting of a contract.
Statement of the Case:
 Clothing agent/salesman is suing a clothing endorser/designer for damages for breach of an
exclusive dealings contract, alleging that she placed her endorsement on fabrics, dresses, and
millinery without his knowledge and withheld profits.
Facts:
 D, a fashin designer, employed the plaintiff to help her turn this “vogue into money.” He
was to have the exclusive right, subject to her approval, to place her endorsements on the
designed of others. He was also to have the exclusive right to place designs on sale, or
license others to market them.
 In return, she was to have one-half of the “all profits and revenues” derived from any
contract he might make. The exclusive right was to last at least one year from April 1, 1915,
and thereafter year to year terminated by notice of 90 days.
 The plaintiff says that he kept the contract on his part but the defendant broke hers by placing
her endorsements without his knowledge and withholding profits.
Procedure:
The lower court denied the defendant’s motion for judgment in her favor upon the pleadings, she
demurred—12(b)(6) motion. The Appellate Court reversed this order in favor of the defendant.
The plaintiff is appealing.
Issue:
 Did the Appellate court err in granting the defendant’s demure that no valid contract existed
between these parties?
Result of Appeal: Judgment is reversed with costs in the Appellate Division and this court
demure is denied.
Holding
Narrow: Where the plaintiff and the defendant entered into an exclusive agency
contract, the plaintiff’s obligation to use his best efforts to sell the defendant’s dresses
was implied from his contractual duties, especially his duty to remit half the resulting
profits to the defendant, and the contract did not fail for lack of mutuality of obligation.
Broad: Where mutuality of obligation is not expressly stated in a contract it may be
implied through the actions of the parties.
Reasoning
68
Doctrinal: A promise may be lacking and yet the whole writing may be “instinct with an
obligation,” imperfectly expressed and if so, there is a contract
o An exclusive privilege is an implied assumption of duties
Policy: “The law has outgrown its primitive stage of formalism when the precise word
was the sovereign talisman, and every slip was fatal
Notes:
 On the face of the contract the seller doesn’t have any consideration. Lucy breaches because
she thinks Wood isn’t using his best efforts to sell the goods. Think of Wakeman.
 Indefiniteness in the obligation/consideration: The plaintiff is under no obligation to fulfill
his side of the agreement
 If defendant was angered by his performance—she had rights to sue based upon his failure to
conform to good faith and/or the implied terms of the agreement for his to fulfill his
obligation to sell her goods.
 Vote is 4 to 3. Cardozo finds a binding contract based on the instinct with obligation
 D cites Moran, canon of construction that you interpret the contract more favorable to the
non-drafting party, interpret how this party would have; duty of drafter to be clear
• Formalism dead, understand intention of parties and not the binding terms of
the contract
• Was Wood smart to not make the contract clear, was Lady Duff as ditzy as
she seemed?
• Other Canons of Construction from Moran not even addressed: who drafted
the terms, etc. in Moran D had obligation, here P suggests that D had no
obligation
• Why didn’t use Wakeman?
 Pre-Code Common law was generally reluctant to impose a duty of good faith into
contracts based upon the belief in “pure freedom of contract” private volition and
responsibility
o UCC § 1-203: Every contract or duty within this Act imposes an obligation of good
faith in its performance or enforcement.
 Griswold v. Heat: There was a binding contract since the agreement ‘obligated Griswold
to render some services to Heat and imposed on him the duty to exercise good faith in the
determination of the amount.”
69
OSCAR SCHLEGEL MANUFACTURING CO. V. PETER COOPER’S GLUE FACTORY
Appellate Division of the Supreme Court of NY 1919)
Rule: If a manufacturer and a jobber enter into a requirements contract and the manufacturer
breaches the contract by failing to fill the jobber’s orders, then the contract is enforceable and the
jobber is entitled to damages resulting from the breach despite the vague quantity terms.
 If a party contracts for goods upon a rising market he is ordinarily entitled to such profits as
may accrue to him by reason of a prudent or favorable contract. Speculation.
Indefiniteness: Quantity terms in agreement; is there a cap?
Chain: Lower court decision (requirements contract creates a mutuality of obligation).
Statement of Case:
 This is an action by a jobber/buyer for damages pursuant to the Glue Factory/seller’s breach
of a contract in writing to provide glue to the plaintiff to sell in the market.
 The defendant failed to deliver the glue requirements made by the jobber (79,891 lbs).
Facts:
 On Dec 9, 1915, the defendant drafted a contract to plaintiff stating, “to enter your contract
for your requirements of “Special BB’ glue for the year 1916, price to be 9c. per lb., terms
2% 20th to 30th month following purchase. Deliveries to be made to you as per your orders
during the year and quality same as heretofore. Glue to be packed in 500 lb. Or 350lb barrels
and 100lb kegs, and your special Label to be carefully pasted on top, bottom and side of each
barrel or keg.
 This agreement was accepted in writing by the plaintiff and concededly constitutes the
contract between them. The parties entered upon performance and deliveries were made
form time-to-time amounting in the aggregate to 169,800 lbs or 340 barrels. In December
1916, the plaintiff ordered delivery pursuant to the contract of 79,891 lbs of glue, which
plaintiff needed to meet its requirements and the defendant did not deliver. The plaintiff in
anticipation of performance sold 42,000 lbs of glue and it could no longer be bought in the
open market, it lost profits on these sales.
 The contract in question is similar in general terms to the contract between the parties for the
year 1915, which also was for the plaintiff’s requirements of special bookbinders’ glue. This
contract was also for a fixed price quoted. No question arose as to this contract’s
enforceability, nor did a conflict arise in 1916 until the price of glue rose. This change in
price provided a great loss for the defendant and a gain for the plaintiff.
 In this environment the plaintiff sought to reap a legitimate advantage from its contract and
by soliciting the trade received orders that aggregated to 126,000 lbs. Plaintiff repeatedly
demanded performance of the contract and defendant’s representative with whom the
original contract was made promised repeatedly as late as the month of December 1916, to
ship glue to over the requisitions and said the glue was underway.
 Instead of repudiating the contract, the defendant placed an arbitrary limit saying it would
give the plaintiff as a jobber ten per cent more than it had purchased during 1915. However,
the defendant never alerted the defendant to stop taking orders from customers for delivery
for this glue, nor did the defendant notify the plaintiff while the orders in question were being
taken that it would not live up to its contract.
70

This was the course of operation for several years between these parties. Plaintiff is a jobber
and sent out agents to sell the defendant’s glue. In the year in question, there is a huge
deviation from the normal amounts of requirements asked by the plaintiff (only brought up in
the dissent).
Procedure: The trial court without a jury ruled in favor of the plaintiff and the Appellate Court
upheld.
Issue:
 Did the trial court err in allowing the plaintiff to recover damages for the defendant’s failure
to supply the goods ordered by the plaintiff under a requirements contract?
Result of Appeal: Judgment affirmed with costs.
Holding
Narrow: When a buyer and a seller enter into a requirements contract for the sale of
glue with an uncertain quantity term and both parties are aware of the other’s practices,
there is a mutuality of obligation to perform with good faith and create an enforceable
contract.
Broad: When a contract is made in good faith and with the sound judgment of both
parties the contract is enforceable and if a party plans on defaulting on the terms of the
agreement, that party is liable for the costs incurred by the other party for misinformation
regarding this breach; a contract that is indefinite as to the amount of goods to be
furnished does not mean that it does not contain a mutual obligation on both parties, and
is therefore, invalid.
Reasoning
Doctrinal: If two parties enter into an agreement the terms may be implied if both
parties enter into this agreement understanding the conditions that may arise and are
contracting in good faith.
Policy: Contracts made in good faith and made with terms understood by both parties
are enforceable.
o A rising market could have been guarded against by the defendant by inserting in
the contract a clause fixing the maximum amount which under the plaintiff might
be entitled to receive, instead the defendant mad an absolute contract at a fixed
price for the entire year to deliver as much as the plaintiff could sell to its
customers.
o Breaching party should not profit from the breach
Notes:
 In terms of practicality—remember it is WWI
 The appellate division refuses to view the marketplace in Cardozian terms—it looks at
the conduct of the breaching party only.
 Mutuality and Requirements contract are governed under UCC 2-306; output contracts
 Dissent: The alleged agreement lacked mutuality of obligation and was indefinite and
uncertain as to the intentions of the parties to be held as binding. There is not
consideration!
71
OSCAR SCHLEGEL MANUFACTURING CO. V. PETER COOPERS GLUE FACTORY
231 N.Y. 459 (Court of Appeals NY 1921)
Rule:
 A requirements contract which imposes no duty upon the purchaser is unenforceable due
to lack of mutuality; if the parties are not bound so that either may sue for breach, then
neither is bound.
Chain:
 Distinguished from Lucy as there is no agency being paid half the profits which forced
the plaintiff to act in good faith and buy, but here there was nothing to imply mutuality.
No Cardozo.
Facts: same as above!
Procedure:
 At the trial, a jury was waived and the trial proceeded before the trial justice. At its
conclusion he rendered a decision awarding the plaintiff a substantial amount. Judgment
was entered upon the decision, from which an appeal was taken to the Appellate
Division, first department, where the same was affirmed, two of the judges dissenting.
The appeal to this court followed.
Issue: Is the contract between these parties binding?
Result of Appeal: Reversed and remanded.
Holding:
Narrow: Where the plaintiff and the defendant entered into a requirements contract for
the purchase of glue in which the plaintiff was not bound to use the defendant as his
exclusive supplier and was not bound to sell a minimum quantity of glue, the contract is
unenforceable due to a lack of mutuality of obligation/consideration.
Broad: Where a requirement contract exists with an indefinate quantiy term and the
buyer was not required to buy a minimum quantity of the good, a mutual promise cannot
be inferred because there is no standard by which the quantity can be accurately declared.
The contract was invalid since consideration was lacking and mutual promises or
obligations of parties to a contract, either expressed or necessarily implied, may furnish
the requisite consideration.
Reasoning
Doctrinal: For a contract to be enforceable it must have mutual promises or obligations
of parties to a contract, either express or necessarily implied to furnish the requisite
consideration.
Policy: No obligation for the plaintiff to do ANYTHING!
72
Notes:
 Did the K lack mutuality?
o P says they had an obligation. Buy any glue that they had orders from. D could
have put a clause in the K put a max amount to sell to P.
o D says that P had no obligation to them. They did not have to buy from them.
They could have bought glue someone else. They did not push their products.
 K should have included a max price or max quantity in case the market went haywire in
order to protect themselves. Requirements K are good things for one side.
o What is the advantage to buyer and seller in this type of agreement? One could
put so many clauses in the K to diminish the strength of the requirements.
o We do know that people want to get into these types of agreements otherwise they
wouldn’t enter them.
Questions:
What do reasonable requirements mean?
What is incidental to P’s business?
What is bad faith?
 Pushing the customers to buy for next year? Or is it buying a substantial quantity higher
than previous years.
Should D have kept promising goods and arbitrarily capping it?
73
UNITED STATES RUBBER CO. V. SILVERSTEIN Cardozo opinion
229 N.Y. 168 (Court of Appeals of New York 1920)
Rule: If the defendant makes an uncertain promise, he will be held liable for the meaning that
the defendant had reason to supposed it to be understood by the plaintiff.
Indefiniteness: “they,” which son? Intent of defendant in letter.
Chain:
 Different from UP: says that if words have more than one meaning, the contract is
indefinite—only concerned here with who the guaranty covers and not with scope of
damages/where there is a binding contract.
 Follows Moran indefinite term against the writer of the contract.
Statement of Case:
 Creditor/merchant is suing a guarantor/merchant for the money due for default payment,
alleging that the merchant breached a contract guaranteeing he would be responsible for
his son’s accounts.
Facts:
 The defendant is a merchant in Rome, NY and has two sons who are merchants in Oneida
and Little Falls respectively. The former began business in April, 1914; the latter in July.
A salesman in the plaintiff’s service visited the defendant in May of the same year. The
defendant then started that he would be good for any sales that the plaintiff might make to
Louis. Moses, not being yet in business was not included in the promise.
 The plaintiff made sales to Louis, charging them on the defendant. It made sales later to
Moses, charging them to him directly. In October, 1914, the defendant, dissatisfied with
the form of the accounts wrote a letter stating that, “enclosed were three checks for the
above bills, that he does not want his statements sent with his son’s statements, and that
they do business for themselves, and therefore send them separate statements, but I am
good for what they buy.” Signed B. Silverstein.
Procedure:
 The trial judge found the contract ambiguous and left its meaning to a jury. The jury
found for the plaintiff. The Appellate Court reversed and dismissed the complaint. The
plaintiff appeals.
Issue:
 Did the Appellate division err in reversing a judgment in favor of the plaintiff and
directing a dismissal of the compliant, where the promisor claims his letter of guarantee
was misunderstood to include the son who defaulted on his debt?
Result of Appeal:
 Reversed for a judgment in favor of the plaintiff. The Debtor’s letter using the word they
can be reasonably interpreted to mean the son.
Holding
Narrow: Where the guarantor/father makes an ambiguous guaranty that the plaintiff
reasonably understood to cover the purchases of his two sons and the seller relied on the
guaranty to extend credit to one of the sons, and that son defaulted, the father will be held
liable for the meaning that he had reason to suppose that the plaintiff would reasonably
attach to the guaranty.
74
Broad: Where the guarantor makes an ambiguous promise, he will be held to the
meaning that he had reason to believe that the plaintiff would reasonably attach to the
promise.
Reasoning
Doctrinal: An uncertain promise is to be taken in the sense “in which the promisor had
reason to suppose it was understood by the promisee.” (Canon of Moran).
 If the defendant makes an uncertain promise, he will be held liable for the meaning that
the defendant had reason to suppose it was going to be understood by the plaintiff.
 Indefiniteness/intent is deemed as a question of fact and not law
Policy: The circumstances of family life and the family enterprise made this
reading/inference a fair.
Notes:
 When terms unclear, courts have a hard time finding a contract. Usually matter of law
than fact.
• Should K law be in the business of protecting those who are more literate than the
illerate?
• Silverstein created expectations created by the promise and induced by it. The
consideration is the guaranty/extension of credit for the Rubber Co. and for Silverstein it
is
• Cardozo thinks we should make a claim against the person who drafted the letter
• Problems might stem from the fact that the fact that the promise did not understand what
the promisor want
• Does it overrule UP  not sure but puts a crimp in it
• Rule has to be so general that they should extend the damages
75
HEYMAN COHEN & SONS, INC. V. M. LURIE WOOLEN CO.— Cardozo
232 N.Y. 122 (Court of Appeals of New York 1921)
Rule: An option to order more is a part of the consideration of an original contract with a stated
minimum. “The privilege to order more is coupled with a promise and obligation to accept a
stated minimum.”
Indefiniteness: Quantity requirement (mutuality of option to purchase more), price, time
Chain: Total Rejection of Formalism for Realism (look at the market);
 Interpreted as a matter of law and not fact (opposed to US Rubber)
 Options are not revocable (Schlegel II)
 Court reads into “Quantity” (fixed by the buyer); “Price” (reasonable); “Time”
(reasonable)
Statement of Case:
 Buyer of cloth is suing a seller of tricotine cloth for breach of a contract, by which the
seller was required to procure to the Buyer all the cloth it could procure, for the damages
of the five hundred pieces withheld from the plaintiff. (option requirement K)
Facts:
 In a written contract, dated April 10, 1919, the plaintiff agrees to buy and the defendant
to sell two hundred pieces of tricotine at $3.02 ½ per yard, delivery to be completed by
June 1, 1919.
o The plaintiff is given the “privilege to confirm to more of the above if M. Lurie
Woolen Company [the defendant] can get more.” The two hundred pieces were
delivered and paid for.
 The plaintiff, exercising its option, demanded as much more of the cloth as the defendant
could procure. The defendant confirmed the exercise of the option, and delivered sixteen
additional pieces with the statement that it could procure no more.
o In fact, it had procured five hundred pieces, which it withheld.
o Possible reason for the demand of more tricotine: higher price in the market.
Procedure:
 The initial pleadings were defective, making the case subject to a demurrer. The Special
Term denied the defendant’s motion for judgment on the pleadings. The Appellate
Division reversed and granted the defendant’s motion on the pleadings. Plaintiff appeals.
Issue:
 Was the defendant obligated to sell all of the cloth it could procure to the plaintiff and
does this contract contain adequate consideration?
Result of Appeal: Reversed; motion for judgment on the pleadings is denied and the plaintiff
wins.
Holding
Narrow: When two parties enter into a contract that includes a stated minimum, an
option to buy more is considered to be a part of the original contract for sale and
therefore, is a valid part of the contract with full consideration.
Broad: Where two parties enter into a contract and that contract has an option which is
consideration for the original, there is mutuality of obligation to make the option
enforceable.
76
Reasoning
Doctrinal: When an option is supported by consideration of the sale it is enforceable.
o A contract in which the terms of price, quantity, and time were uncertain the court
implied the reasonable terms based on the intent of the parties
o Contract interpreted as a matter of law (Different from Silverstein)
Policy: Since merchants drew the contract they must be able to determine what they
mean by the contracts terms.
o Looked at the good faith of the parties and intent
Notes:
 Limits Schlegel: “There the option stood alone; it was voluntary and revocable. Here the
option is supported by the consideration of the sale (of first 200 pcs).”
o In this case consideration is supported by the sale; mutuality and contract!!
o Seller may have been trying to create articial demand for the cloth.
o Schlegel controls, here not void for lack of mutuality because it was only an
option and no requirement to buy more cloth
 Issues: Max quantity, price, duration of the option (P was not bound to buy any more
tricotine. He could have bought tricotine from someone else.)
 Could argue that in Schlegel, the option was supported by their previous dealings the last
5 years. Here its like a one time deal.
o Here the Cardozo is involved while in Schlegel he wasn’t there. What Cardozo
seems to say to the court is that they made a mistake in Schlegel. That is why he
limits Schlegel. He seems to say that there are circumstances where requirement
K’s are ok. They need to redo the K to be more specific in regards to quantity and
price.
 Cardozo states that indefiniteness must reach the point where construction becomes
futile. Uncertainties, thought to be impenetrable, are suggested in respect of subject
matter, time and price. He implies price, time, and amount.
o The policy behind here is that these two were merchants and they intended to be
bound. Merchants must know what this mean. (industry custom).
o The court thinks that the implication is plain that the buyer is to fix the quantity,
subject only to the proviso that quantity shall be limited by the ability to supply.
o This case suggests that more evidence should be introduced to support industry
custom. This will help determine what these kind of K mean. Judges don’t know
what they mean in writing up these K. The ones entering into the K have a better
idea of what they would need to write up a K. Cardozo seems to be shying away
from his active judicial interpretation of K.
 Seems to be a good place to cite Wakeman v Wheeler. This case was indefinite to price,
quantity, and duration of time. Could have used Wakeman that even though there are all
these open terms the court still found a K. Broad reading of contracts.
 Apex of Cardozo’s attempt to read into commercial documents. Nothing regarding price
and amount. Seems to be the complete opposite of United Press.
 Intent to be bound (implication of K) is discovered through certain terms, past history,
industry practices.
 Courts cite other cases in order to support their propositions. Could have cited Wakeman
as pushing the proposition of a broad reading of K. This holding is less formal because
the court allows for a lot of interpretation.
77

Crane dissents. Why? Maybe he thinks Cardozo is moving towards a dangerous reading
of K.
78
ST REGIS PAPER CO. V. HUBBS & HASTINGS PAPER CO Written by Pound, but Cardozo
concurs
235 N.Y. 30 (Court of Appeals New York 1923)
Rule: If two parties enter into an executory contract, which expressly reserves the right to
terminate the contract upon failure to agree on an essential term, then good faith does not require
the parties to do more than contract and the court will not impose an agreement upon them.
Indefiniteness: Price (could not agree to new terms)
Chain: Court defines the relationship in the manner suiting its purpose (not brokerage but
vendor to vendee)
 Goes back to United Press and Varney by supporting that an agreement to agree is not
enforceable and a contract with this provision is void.
Statement of Case:
 Seller of paper is suing a buyer of paper for an unpaid balance on the sale of paper,
alleging breach of contract.
 Buyer counter-claims, alleging that the seller, who is a manufacturer of paper such as
newspapers are printed on, repudiated the agreement to deliver paper to the buyer, a
broker, who had secured contracts with publishers for their supply of newspaper, and
refused to pay the buyer the commissions to which it would have been entitled.
Facts:
 The defendant as Buyer and the plaintiff as Seller entered into a contract for the sale of
paper, 4,500 tons a year for two years from January 1, 1919, price for the first three
months ending March 31, 1919, $3.77 per hundred pounds, “price for the balance of the
year to be fixed by mutual consent. In the event that the parties to this agreement shall
fail to arrange a price for any quarter before the expiration of the preceding three months,
this contract, in so far as it pertains to delivery over the unexpired period shall terminate.”
(agreement to agree-does that mean this is not valid?) If at any time during the life of the
contract, both parties can agree on a fixed price for the balance of the contract, that
agreement shall take the place of the three months price agreement. The contract under
the caption “Remarks” contains the usual provisions relieving either party from liability
for failure to take or supply such paper in consequence of strikes and other causes beyond
their control. It also provides that the provisions last referred to shall run through to “an
original contract” between defendant and the Rochester Printing Company for whose use
the contract is placed, and that the publisher and plaintiff are the contracting parties as to
“said conditions,” as to strikes.
 On the same date, Rochester Printing Company as buyer and defendant as seller entered
into a contract of sale in the same terms as the foregoing, excepting only that the price
was fixed at $4.10 per hundred pounds, which reflected a 2% commission.
 The other two sets of contracts differ only as to name of publisher, price, amount of paper
and period covered. In the last quarter of 1919 plaintiff refused to agree with defendant
on a price for the first quarter of 1920, and finally quoted a price so high that the
publishers could not agree on it with defendant.
Procedure:
79


The trial court submitted to the jury the question whether the defendant was a broker in
the transaction and whether plaintiff acted in good faith in trying to fix the price of paper.
The jury found for the defendant.
o The trial judge set the verdict aside and granted a new trial saying that, assuming
the defendant acted as broker, its commissions must be limited to 2 per cent paper
to be delivered during the three months of the contract, as the only enforceable
contract between the parties was for the first months’ delivery and beyond that
nothing but a possibility of future agreement remained.
o The jury was instructed that if they found that D was a broker, they need to
consider whether the seller acted in good faith in negotiating the price of the
paper.
The Appellate division held that the contract was between the broker and principal and
that it implied good faith and required the exercise of an honest attempt to agree on the
price of future deliveries; reversed and reinstated the verdict for the plaintiff. The jury
verdict allowed the defendant counterclaim in the sum of $22,050 deducted from this the
plaintiff’s award of $46,424.20. The plaintiff/seller appeals.
Issue:
 Did the appellate court err in holding that the K was between broker and principal and
required the exercise of an honest attempt to agree on the price of future deliveries? Did
seller act in good faith in fixing the price of paper.
Result of Appeal: Reversed in favor of the plaintiff. Judgment reversed and judgment granted
in favor of the plaintiff against the defendant for $44,426.03 with interest from January 15, 1920,
with court costs.
Holding
Narrow: Where two parties enter into an executory contract which expressly states that
it can be terminated if the parties fail to reach an agreement on the price per a 3 month
negotiation clause, either party is free to terminate the contract by refusing to agree on
price.
Broad: Where two parties enter into an executory contract which expressly reserves the
right to cancel the contract if the parties fail to agree to an essential term, either party may
terminate the contract by refusing to agree to that essential term, then good faith does not
require the parties to do more than contract and the court will not impose an agreement
upon them.
Reasoning
Doctrinal: An agreement to agree is not enforceable (UP, Varney)
o Prices were not fixed by mutual agreement and if the parties did not agree, the
contracts were to terminate.
Policy: Good faith only requires that the parties act under the terms they are bound under
by the agreement.
Notes:
 Why is the broker distinction important? Decided vendor to vendee.
o If he is a broker the seller must act (duty) in good faith because he is an agent or
an employee; did not act in good faith because quoted really, really high prices
o If he is a broker, seller has an obligation to mutially agree on a price. Buyer
would have won the case, good faith obkikgation for seller to negotiate fairly..
80

Where a contract is complete and unambiguous the court has no right to interpret/alter the
words of the contract—the parties used the contract to express their intentions.
o Even though the jury finds a verdict in favor of the broker they are still saying that the K
is unenforceable
o Apparently the buyer wasn’t paying for the goods – assumption was that the buyer did
not negotiate in good faith
o Main issue here – was the defendant a broker or a purchaser? If he was a broker, the
seller would have had a fiduciary duty to bargain the goods sold
o Clause in the contract saying that this contract is void if the parties do not agree to terms
81
SUN PRINTING & PUBLISHING ASSOCIATION V. REMINGTON PAPER & POWER
CO.—; Cardozo
235 N.Y. 338 (Court of Appeals of NY 1923)
Rule: If two parties enter into an agreement to agree, then either party may also exercise the
right not to agree and the court will not impose an agreement upon them.
Indefiniteness: The price term after Dec. 1919 and the length of time this term was to govern
Chain: Cardozo changes sides, he no longer feels like telling parties how to write contracts
 The defendant drafted the contract—does not stop him from siding with the defendant
against Moran
 Distinguishes from Cohen v. Lurie based on a month to month option to alter the
contract; where there was an option to buy more
 “Agreement to agree” (St Regis paper. The right is not effected by our appraisal of the
motive (Mayer).
 But Cardozo gets his own medicine in the dissent!! Crane throws this at Cardozo’s face.
Show’s how far his reasoning can go.
Statement of Case:
 Buyer, a printing and publishing company, is suing the seller of newsprint paper for the
damages suffered by the plaintiff for the defendant’s month-to-month price fluctuations.
Facts:
 An agreement was entered into for the defendant to sell to the plaintiff 1,000 tons of
paper per month during the months of September 1919, to December 1920 inclusive;
adding up to 16,000 tons of paper in all. Size and quality of the paper were adequately
described in the contract. Payment was to be made on the 20th of each month for all
paper shipped the pervious month. The price for shipment is September 1919, was $3.73
¾ per 100 pounds, and for shipment in October, November, and December 1919, $4 per
100lbs.
 “For the balance of the period of this agreement the price of the paper and length of the
terms for which such price shall apply shall be agreed upon by and between the parties
hereto 15 days prior to the expiration of each period for which the price and said price in
no event to be higher than the contract price for newsprint charged by the Canadian
Export Paper Company to the large consumers, the seller to receive the benefit of any
differentials in freight rates.”
 Between September, 1919 and December of that year, inclusive, shipments were made
and paid for as required by the contract. The time then arrived when there was to be an
agreement upon a new price and upon the term of its duration. The defendant in advance
of that time gave notice that the contract was imperfect, and disclaimed for the future an
obligation to deliver. The plaintiff took the ground that the price was to be determined by
an established standard. It made demand that during each month of 1920, the defendant
deliver 1,000 tons of paper at the contract price for newsprint charged by the Canadian
Export Paper Company to the large consumers, the defendant to receive the benefit of
any differentials in freight rates. The demand was renewed month to month until the end
of the year.
82

This action is for the ensuing damages. First 4 months there is a contract and then the
seller says I will not meet his demand. The buyer then makes a demand every month for
the paper at the Canadian price—the defendant continues to refuse delivery of the paper.
This price is probably less then the defendant could get in the market.
Procedure:
 The defendant demurs and the Special Term denied a motion by the plaintiff for
judgment on the pleadings; the Appellate Court reversed the order.
Issue: Is there a contract upon which the plaintiff’s cause of action of a breach can be tried?
Result of Appeal:
 Reversed and the order of the Special Term affirmed with costs to the plaintiff. The
question certified in the negative. There is no cause of action.
Holding
Narrow: Where two parties enter into an executory contract that leaves the price term to
future agreement and there is a standard set by which only price can be determined, the
contract will fail for indefiniteness.
Broad: Where an executory contract lacks certainty with respect to the length of time to
govern a new fixed price period, the contract is incomplete and the defendant is not
bound.
Reasoning
Doctrinal: When an agreement is not reached between the parties to complete a contract
the parties are not bound.
Policy: The court is not at liberty to revise while professing to construe; also the court
must preserve the sanctity of contracts.
Notes:
 How could the plaintiff have won? Prior to the action, the plaintiff demanded delivery
each month at the Canadian Export Price, thus he was deciding his own terms of the
contract. He should have negotiated and let the defendant make his own terms of the
contract (Rubber Trading Co). Then upon failure to deliver as to their own terms, there
would have been a breach.
 Why doesn’t the court hold the P to a reasonable time? The court states that would mean
that they were remaking the K.
o The interpretation is revision and the court cannot go that far. The court does not
want to rewrite the K but to interpret and imply terms (but not too broadly).
o Gordon
 Cardozo says indefiniteness of price and term, his argument doesn’t distingusih
much…while courts can interpret, they can’t revise
o Says P made a bad tender, cite Rubber Trading
o Does the opposite of what he did in other cases, and cites cases in order to show
that there wasn’t a valid cause of action.
 In Cohen, Cardozo implies a reasonable time. Now that the case is
dismissed, what can the P do? Try to include in the K, include price of
Canadian Export and what the length of the term will be. Need to posit
support for his contentions. The sticking point is that there is no term for
the price. Big C calls this an agreement to agree. P demanded D to sell
the paper at the Canadian price is an insufficient tender.
83


o Lawyers didn’t inform the court that the price does fluctuate
o Telling counsel to shape up and need to inform the court about how to interpret
the case
 He says there was an option in Cohen, but was there?
o How could have case been disposed of?
o How does UCC deal with the problems of indefiniteness?
 Goal of mercantile reading of contracts: contracting parties want to be
bound, source of supply and funding
 Good faith and performance in every transaction
Every single case is about collective control and individual economy
o Strive to maximize individual liberty but you depend on others
Neither side cites the same cases. Crane cites all these case ruled by Cardozo. Throws it
in his face. Saying that they are going too far in their interpretation of K. Because the
terms are ambiguous and they interpret they seems to be diminishing mutuality of
obligation. Stresses certainty of terms as paramount in writing K.
Dissent: by Crane: the anti-Cardozo
 Cites: Wakeman, first time in entire line of cases, also Lady Duff, Moran, Rubber
Trading
 We can imply a specific term from the Canadian Export Price
o We can imply the length term to govern the price (reasonable time) (cited from
Cohen Case)
o Crane seems to be acting like Cardozo here. Dissented in Moran and Lucy Lady
Duff
 Judge Crane states all the ideas that Cardozo has in the past
Conclusion: Ask your self:
* How did the facts cut?, *How did the court/lawyers use precedent?, *What is the rule of
indefiniteness?
*How did the situational facts effect the outcome of the case?
How does the UCC fit into these cases and help avoid these problems? P 519
Primarily for merchants, based on assumptions of how to practically enter into and use
contracts effectively and efficiently.
84
Section 3: INJUNCTIONS
SANFORD V. BOSTON EDISON CO—Injunction granted!
316 Mass. 631 (MA 1944)
Rule: General rule of when specific performance will be granted, “where damages are an
inadequate remedy and the nature of the contract is such that specific enforcement of it will not
involve too great practical difficulties, equity will grant a decree of specific performance.”
 The difficulty in making an accurate valuation of the subject matter involved, in
determining the effect of the breach and the plaintiff’s harm
 The existence of sentimental value; cannot be measured in money
 The difficulty of obtaining a substantial equivalent of the profit from money damages
 Probability that damages could be awarded and not collected
 The probability that full compensation cannot be had without multiple litigation
Statement of case:
 The United Brotherhood of Edison Workers (union) brought an action in equity against
Boston Edison Company regarding the specific performance of the company’s promise to
recognize an agreement between the parties and for execution for the amount due the
union.
Facts:
 On May 24, 1940, the union and the defendant entered into a written contract attached to
the bill. Article 5, § 7, of the contract states. “The Company will not by general rule or
otherwise refuse to recognize or otherwise refuse to recognize assignments of wages
when made in accordance with the provisions of Chapter 96 of the Mass Acts of 1933.”
 A large number of union members have executed written assignments of a portion of
their wages to be deducted each month for the payment of their dues to the union. This
method is an efficient way to get payments to the union. In agreement, the company has
deducted these amounts of wages and forwarded these deductions to the union.
However, around August 31, 1943, the defendant notified the union it would not
recognize these assignments of wages for dues payments of approximately 120 union
members. These members gave written requests for the deduction of their union dues
from the wages of the respective assignors and it would not deduct the amounts so
assigned from said members’ checks and forward the aggregate of such amounts to the
union. The defendant refused to forward these amounts.
 The contract between the plaintiff and the defendant states that the union has been
organized by employees of the defendant; that all employees are eligible for membership;
and that a majority of employees are members and have designated the union as their
exclusive collective bargaining representative. The bill also contains provisions of
wages, hours, tenure, and dispute settlement.
Procedure:
 The defendant demurred on the ground that the plaintiff did not state a cause of action
and that the plaintiffs have a plain, adequate, and complete remedy at law. Demurrer
based on the defendant’s contention that there is no cause of action because there is an
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adequate remedy at law to pay damages. The prayers of this bill are that the employer be
joined for the specific performance of this contract and the execution of dues as made.
They want money that they did not collect (was refused by the company). The demurrer
was sustained and the plaintiff appeals.
Issue:
 Does the plaintiff have an adequate remedy at law or can the plaintiff file in equity for
specific performance of a contract by the defendant?
Result of appeal:
 The demurrer was overruled by an interlocutory decree. Trial court erred in entering a
demurrer to this bill in equity.
Holding:
Narrow: Where a party to a contract refuses to recognize and carry out its duty to the
other party, and there is no other adequate remedy at law for the non-breaching party,
specific performance may be granted. An arbitration clause does not oust a contract if
not related to the question.
Broad: Specific performance should be granted to the plaintiff because this is the only
remedy available to allow the plaintiff the full benefit of contract.
Reasoning:
Doctrinal: Specific performance shall be granted, “where damages are an inadequate
remedy and the nature of the contract is such that specific enforcement of it will not
involve too great practical difficulties, equity will grant a decree of specific
performance.” --Wiliston.
o The bill states a cause of action. Only by ordering specific performance can the
court secure to the plaintiff the benefit of the contract.
Policy: The obligation of equity is to secure for the plaintiff the benefit of the contract.
o Terms of arbitration in the contract in dispute do not apply to this cause of action
because this is not a controversy applicable under the contract
Notes:
 Was the legal remedy adequate? Mgmt argues that it is b/c they can sue for damages for
breach of K. But the contract action could be inadequate b/c it would not solve the
problem of the unpaid dues. The only way to get an adequate legal remedy is to bring a
multiplicity of suits on a weekly of monthly basis. Grossly inefficient. Would be better
for the company. It looks like it would provide an incentive to the company to not follow
through on their agreement.
 2nd claim by Company: before they can file an injunction, they must meet all the
provisions of the Anti-injunction statute (See pg 181) Requires a hearing to show what
needs to be proved. The statute was passed to protect the unions from having managers
filing injunctions to prevent unions from forming. Before the statute, managers used
injunctions as a good way to break up and deter union formation and strikes. Now
management is trying to use the anti-injunction statute to support their position.
INJUNCTIONS
 Duty enforced to frobear INJUNCTION, duty of affirmative action is SPECIFIC
PERFORMANCE, but courts use these terms inconsistently:
 An injunction may command an affirmative performance and be a mandatory injunction;
specific performance may require forbearance
 Injunctions are reparative vs. mandatory not preventative vs. affirmative
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Specific performance is to get a contract enforced, don’t do the balancicng as you do in
injunctions
Costs of not issuing this injunction would be extraordinary
Corbin: “The purpose of a decree of specific performance is to attain, as fully as possible,
the realization of the justifiable expectation of the promise.
Anti-Injunction Act’s purpose was to protect the union from managers getting injunctions
to stop them from forming. Section 9A refers to preventive injunctions, and here relief is
affirmative.
The Drafting clause was in the negative, thus, it would require the union to seek
preventive/injunctive relief if the managers were to breach the contract. To get an
injunction, the union would have to go through a series of other procedures.
The Company will not by General Rule or otherwise refuse to recognize assignments of
wages when made in accordance…”
o This language is to company’s advantage. Because it is termed in the negative, it
almost sounds like an injunction.
o Here, the court says injunctive relief mans to prevent someone from doing something.
And in this case, the plaintiff needs defendant to do something specific
performance is good!
o Basically sets ups a road-block or an obstacle to the union in making the company
follow the agreement. Stalling measure.
CHECK-OFF PROVISION
 Why would management allow for a check-off provision?
 Ensure that there was no strike, no closed shops, etc. This was during WWII.
 This action is to compel the enforcement of the check-off provision. In order to compel
them and sustain this bill in equity, there has to be no adequate legal remedy.
What if the union can’t win this case? They could call a strike, which is illegal during this time.
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WHEELOCK V. NOONAN—Trespass; specific relief granted.
108 N.Y. 179 (Court of Appeals New York 1888)
Rule: A court of equity will act in such cases only after the plaintiff’s right had been established
at law, but that rule has exceptions (discretionary rule)
 Repeated trespass—for which there is no adequate remedy at law
o Equity will lie when a trespass is continuous—multiplicity of suit
Statement of Case:
 Plaintiff (property owner) is suing the defendant (rock owner), who by permission (license)
was allowed to use the plaintiff’s land to place rocks for a short period of time, made definite
by the defendant’s promise to remove by spring, for specific performance and the removal of
the stupid rocks.
Facts:
 The defendant, a stranger to the plaintiff, obtained from the latter a license to place a few
rocks for a short period of time on the unoccupied land of the plaintiff. The defendant
assured the plaintiff the rocks would be removed by springtime. Nothing was paid or asked
for this permission and it was not a contract in any just sense of the term, it was a mere
license, of which the terms expired in the spring.
 During the winter, and without the knowledge of the plaintiff the defendant covered six of
the lots of the plaintiff with “huge quantities of rock” some of them 10-15 ft long and piled to
14-18 ft. The conduct was a clear abuse of the license and in excess of its terms, and so
much so that if permission were sought it would be declined.
 In the spring, the plaintiff, discovering the abuse of his permission, complained bitterly of
defendant’s conduct and ordered him to remove the rocks to some other locality. The
defendant promised to do so but did not, and in the fact of repeated demands has neglected to
remove the rocks from the land.
Procedure:
 Special Term ruled in favor of the plaintiff, finding that once permission was revoked the
defendant was a continuing trespasser, entitling the plaintiff to equitable relief. The Superior
Court affirmed. This is an appeal from a judgment of the Supreme Court.
Issue:
 Was the relief granted within the power of the court, and the contention of the defendant is
based upon the proposition that equitable relief was improper since there was an adequate
remedy at law.
Result of Appeal: Judgment affirmed.
Holding:
Narrow: The granting of specific performance was appropriate due to the continuing
trespass of the defendant making a remedy at law inadequate, the damages occurred to
the plaintiff daily.
Broad: Where a license to use land is revoked, and the user does not oblige, he becomes
a trespasser and a court is entitled to grant an injunction when no other adequate remedy
at law will cure the injury.
Reasoning:
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Doctrinal: A court in equity will act in such cases only after the plaintiff’s rights have been
established at law, with the exceptions being when the facts are in doubt and the decision
makes the rule less important.
o One who acts under a license is restricted to the terms the license allows. Once
the license is expired chattel’s presence is a trespass. Until chattel is removed, it
is a continuous trespass.
Policy: The plaintiff can sue daily until removed, no end in site to the litigation. Shift
the burden of the problem on the defendant
Notes:
 Equitable case relate to the specific facts, judges can issue decrees. Need to look at the
balance.
 Why injunction and not legal remedy for trespass? The rocks are still on the land.
o Why wouldn’t D want to remove the rocks? Could be expensive. Could not have
any other place to put it. Could be cheaper just to pay damages.
o What are P’s options? He could sue. Since the rocks are on his land and stays there,
he could just sue continuously for continuous trespass. He could try and remove the
rocks himself and try and get $ for the expenses he incurred.
 Balancing the harms by issuing the injunction: public interest, irrepararble injury to P?
 Why would P allow D to put those ginormous rocks on his land? What was the consideration
on D’s part?
 Granting equitable relief in this case would be a cost shifting mechanism; defendant must
comply with the court order or else risk a contempt citation. It may cost the defendant
money to remove the rock, or he may offer the plaintiff less money to rent the land.
o Injunction puts bargaining power in the hands of the landowner.
 There is a legal remedy, one can sue for trespass but one would have sue continuously. He
could also sue for nuisance (interference with enjoyment of land). Ejectment wouldn’t work
because the title is already established.
o If legal remedy is inadequate, why would equitable remedy better? Still need to find
resources to move the rock. What if the D is judgment proof? What if he doesn’t
move $ to move the rocks? There is a dilemma here. How do you give the power to
the landlord and get the rocks moved?
Equity cases are mostly individual equities in terms of justice, but what is also considered is also
the effect on society as a whole (public interest).
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Section 4: PREVENTION OF LEGAL WRONGS (more injunctions)
Posner, Economic Analysis of Law:
 Property rights are never exclusive, of only because exclusive property rights would too often
be incompatible.
 The initial assignment of legal rights does not determine which use will ultimately prevail
in the end the efficient value-maximizing accommodation of the conflict will be adopted
 Property law deals with the recognition of rights who
 Tort law is based on imposing liability on the other party—particularly related to accidents
that cause personal injury. These cases involve uncertainty and damage calculation not
ordinarily involved in the interferences discussed in this chapter…
CAMPBELL V. SEAMAN
63 N.Y. 568 (Court of Appeals New York 1876)
Rule: Use your own property as not to injure your neighbor’s
 One cannot erect on his land something that the law would regard as a nuisance if it is
adjoined by another’s vacant lot, thereby compelling owner to leave it
Statement of Case:
 A landowner is suing a brick manufacturer for damages for a nuisance and for an injunction
to stop it.
Facts:
 Plaintiffs own 30 to 40 acres of land adjoining the village of Castleton; there are native
yellow and white pines on the land, which grew in the forest. The plaintiff as a protection
against winds and also to ornament this property saved many of these pines. Plaintiffs also
removed many of these forest tress and have ornamented and improved the grounds by
making gravel roads and walks and by planting Norway spruce and other ornamental and
shade trees. The plaintiffs also erected a dwelling house with barns and an outhouse and
have laid out large sums of money for gardening.
 The defendant, whose land adjoins the said lands of the plaintiff, manufactures brick on his
own land. To manufacture this brick, the defendant mixes anthracite coal dust with the clay
and sand in molding his brick and in construing his kiln a portion of the brick is left out and
the space is filled with the anthracite coal dust. This process is done in the outer portions of
the kiln. The object is heated and takes fire the burning of the kiln causes sulfurous acid gas
to escape from the burning. This gas is very poisonous to persons and injurious to persons
who inhale it and also destructive to vegetation.
 The evidence shows that this gas has killed foliage on the plaintiff’s white and yellow pines
and other valuable foliage of the plaintiff’s. The evidence is also conclusive as to the
destructive qualities of sulfurous acid to pine and Norway spruce trees.
 The defendant used this brickyard for 25 years and at the time the plaintiff improved and
beautified their property and knew that the property of the defendant had been previously
applied to such use, and that in such use and manufacture of bricks anthracite coal and coal
dust was used and employed. Near the premise of the plaintiff, Smith also has a brickyard
and has employed the same in the manufacture of brick by anthracite coal in the same
manner as the defendant has one for the proof of five years. Also, the Hudson River Railroad
Company, whose road runs in front of the plaintiff’s premises, trains run through daily
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burning and using the same type of coal as the D. Also, the burning of bricks on the
premises of the defendant by the use of anthracite coal dust does not affect the premises of
the plaintiff except when there is a southerly wind at the time of the burning.
 The anthracite coal, in the manner used by the defendant has been employed in England for
more than half a century, for nearly the same period in the US, and now is generally used in
NY. If the use of this coal is prohibited in the manufacture of brick upon his premises is of
great damage to the defendant, and substantially destroys the value of the defendant’s
property as a brick-yard; that as a brick-yard, employed in the manufacture of brick by the
common and ordinary process with the use of mineral coals, it is very valuable and capable
of producing a lot of brick and at a high profit for the defendant.
Three most relevant facts:
1) What the property was being used for prior to the harming by the brick making
2) Cost of moving the manufacturing plant
3) If there is another process that does not have this byproduct—costly
4) Harm not continuously…only on last two days of the process
 Bought the house in 1849
 Defendants used as a brick yard between various periods in time, using the land for various
purposes….depends on the industry and time period.
 No complaint when originally moved into the area
 Brickyard is to the south of plaintiff home
Procedure:
 The referee found the plaintiff entitled to recover the damage proved to have been sustained,
and to an injunction restraining defendant from burning brick. The defendant appeals.
Issue: Did the lower court properly uphold the referee’s decisions regarding damages?
Result of Appeal: Affirmed
Holding:
Narrow: Where one’s conduct constitutes a nuisance, and there are no other adequate
remedies at law, an injunction is proper. Factors to be considered are the burdens to the
respective parties; if the damage to the one complaint is small and the damage to the one
causing great, the courts will deny the injunction.
Broad: An injunction can be ordered in the case of a recurring nuisance affecting the
value of another’s land.
Reasoning:
Doctrinal: Court below properly granted a writ for 6 reasons (1) inadequate remedy; 2)
shrubs could not be replaced because value not clear; 3) when announced equities the
damages insubstantial, 4) harm to plaintiff restraining him is not serious; 5) no latches,
even though plaintiff may sleep on his rights; 6) no adverse possession and no
prescriptive right
Policy: Ability to enjoy own property and be able to breathe on your property
o Immaterial that the nuisance was not continuous and the injury was occasional.
Notes:
 How would you create a scenario to figure out what you need in order to get an injunction?
 The court makes the assumption that moving the brick burning business would not be very
expensive. There are other processes to be used. The court is trying to set up a calculus that
sets up all the facts that make them look differently.
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
Everything looks different depending on perspective. Our job is to see what those
perspectives are. We can do this through a series of assumptions.
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SPUR INDUSTRIES, INC. V. DEL E. WEBB DEVELOPMENT CO.
108 Ariz. 178 (1972)
Rule: The rule of nuisance will be applied where it is fair and reasonable under all
circumstances.
 Danger to public health…
Statement of Case:
 Del Webb Development Corporation filed suit against Spur feeing operation for being a
public nuisance; the plaintiff asked for an injunction against Spur and damages for the
nuisance.
Facts:
 Spur is a feeding operation. At the time of suit, Spur was feeding between 20,000 to 30,000
cattle and the facts also support the finding that the feed pens had become a nuisance to the
nearby southern part of the Del Webb development.
 The cattle in a commercial feedlot produce between 35 to 40 lbs of wet manure daily and
despite good housekeeping by Spur, the resulting odor and flies produced an annoying and
unhealthy situation. There is no doubt that some of the citizens of Sun City were unable to
enjoy outdoors living, which Del Webb advertised. Also, Del Webb was faced with
resistance from perspective purchasers and complaints of those who had already purchased
homes.
Procedure:
 The lower court entered a judgment enjoining the defendant, Spur Industries, from operating
a cattle feedlot near the plaintiff’s community. Spur appeals and Webb cross-appeals. This
court answered two issues:
Issues:
1) When a lawful operation becomes a nuisance by reason of a nearby residential area may the
feedlot be enjoined by the developer?
2) Assuming the nuisance may be enjoined, may the developer be required to indemnify the
operator of the feedlot who must move or cease operation because of the presence of the
residential area created by developer?
Result of Appeal:
 Injunction upheld and the plaintiff must indemnify the defendant for a reasonable amount to
the cost of moving or shutting down.
Holding:
 An injunction to cease a public nuisance may be found, however, if the moving party has
created a situation calling for the defendant’s injunction and the cease of the defendant’s
business, the plaintiff must also indemnify the defendant for his losses.
Reasoning:
Doctrinal: A public nuisance that is dangerous to public health must be moved; having
brought people to the determent of Spur, the plaintiff must indemnify.
Policy: Protect the public, but the defendant was there first and the plaintiff does not get
free reign to destroy the business of another.
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BOOMER V. ATLANTIC CEMENT CO.
26 N.Y. 2d 219 (1970)
Rule:
 A nuisance will be enjoined although market disparity are shown in economic consequences
between the effect of the injunction and the effect of the nuisance.
Statement of Case:
 Landowners filed this action for injunction and damages against a large, neighboring cement
plant. They are alleging injury to property from dirt, smoke, and vibration from the plant.
Facts: Neighbors are upset about a cement plant that emits smoke, dirt…
Procedure:
 A nuisance as filed in trial and temporary damages were allowed, but an injunction was
denied.
Issue: Should the court resolve the litigation between the parties and order an injunction?
Result of Appeal: Reversed.
Holding:
 The Court granted an injunction, conditioned with the payment of permanent damages to the
plaintiffs which would compensate them for the economic loss to their property caused by
the defendant’s operation.
Reasoning
Doctrinal: An injunction should be granted unless the defendant pay the plaintiff
permanent damages to be determined by the court.
Policy: Air pollution is a public concern
Dissent: “In permitting the injunction to become inoperative upon the payment of permanent
danages, the majority is licensing a continuing wrong.”
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Elements: Philosophers:
Stotsky on Elements—The Introduction to the Course:
Functions of Law within our system:
1) Channeling Function—law channels to keep individuals within the mores of the society,
promote a smooth functioning system
2) Decision-Making Function—Allocation of roles in the decision-making process, separate
powers
3) Dispute Settlement Function— Offers parties with distinct and different interests an
opportunity to assert their distinct and different interests and resolve disputes without
violence.
Precedent: Crux of legal reasoning—finding similarities and differences between past and
present cases and using the past cases to arrive at a decision in the present case. Reason by
example
1) Guide against inconsistency—stare decisis--precedence
2) Judges enough flexibility to do justice in a particular case
*The lawyer’s most important tool is the ability to predict what will happen in a dispute.
*Law is an interaction with life—it teaches and changes behavior; mirrors the conflicts within
our society and reevaluates itself to meet the inevitability of new factual situations.
*Legal education must teach craft and technique
CARDOZO: As a judge, he looked at how he wanted to see a case resolved, and the fashioned
his opinion to reflect and achieve that result. He had a strong understanding of the “situational
sense,” especially in the area of commercial law. He liked to see contract that were binding on
both parties (Lady Duff), thus implying terms in the contract where he felt he could. He looked
toward intent of the parties, knowing that sometimes those not trained in the law do not know
how to write correct contracts. He began to re-write contracts for parties. He also looked to the
customs of the market place to determine the intent of the parties (Rubber Trading). He
construed arguments to mean a mutual obligation on both parties, thus indicating an enforceable
contract. Later, however, Cardozo became tired of re-writing contracts for the parties.
(general judicial philosophy)
A. looked at more than just the parties’ words in assessing contracts)
one of the most famous appellate justices to sit in NY State and one of the greatest case lawyers because of
his use of precedent
considered to write his decisions in a movement towards realism (looked at how he wanted the case to turn
out in the big picture and then wrote the opinion accordingly)
was very conscientious of how the market place worked
liked to see a binding contract and would interpret it accordingly by:
- use the contract to find the intent of the parties
- the word agreement means mutual obligation
- a contract can always be “instinct with obligation” although imperfectly
expressed
- if the contract was drawn up by lawyers
looked to the intent of the parties (as opposed to Holmes who looked at the writing); looked to see if the
intent was indefinite and not if the words were
looked at industry custom as an indication for intent rather than the technicalities of the contract
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if the parties’ intentions could not be proved than the court would not go so far as to imply them without
proof (when construction of intentions would be futile then the contract is unenforceable)
considered good faith in considering whether to enforce a contract (watched out for the “little guy”)
ambiguous contracts should be interpreted in the manner most favorable to the party who did not write it
(contract should be given the meaning that the writer expected or should have expected the reader
would take from it)
when determining intent, looked at the ideal situation (what would happen in the best of circumstances)
theory of damages was to protect the expectation interest
CANONS OF CONSTRUCTION:
- agreement implies mutuality of obligation
- an intention to make a one-sided agreement cannot be readily inferred (it
must be explicit)
- a contract should be construed most favorably to the party who did not write
it and against the author
- a contract should be construed to have the meaning that the writer would
have or should have reasonably expected a reader to interpret it as
Cases: Sun Printing, Varney, Moran, Cohen, Lady Duff Gordon
Cannons of Construction:
1) Agreement implies mutuality of obligation (Moran)
2) An ambiguous contract should be construed in a light most favorable to the nonauthor (Moran)
3) A contract should be construed to have the meaning its author should reasonably
except the reader to give it (Moran/Silverstein)
4) If the terms are missing in the contract; the court may imply reasonable terms
consistent with industry standards
5) Indefiniteness must reach a point where construction becomes futile (Lurie)
6) A promise may be lacking, and yet the whole writing may be instinct with an
obligation imperfectly expressed.
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Llewllyn, Cannons on Statutes: page 40
When it comes to presenting a proposed statutory construction in court, there is an accepted
conventional vocabulary—there are two opposing cannons on every point: “Thrust v. Parry”
o Thrust: General rule of construction that were general words follow an enumeration
they are to be held as applying to only the persons and things of the same general
kind or class specifically mentioned (ejesdem generic) (If language is plain and
ambiguous it must be given effect)
o Perry: General words must operate on something. Further, ejesdem generic is only
an aid at getting at the meaning and does not warrant confining the operations of a
statute within the narrower limits than were attended. (Not when literal interpretation
would lead to absurd or mischievous consequences or thwart manifest purpose.
Statutory interpretation speaks a diplomatic tongue; technical framework for maneuvering
(for ever point there is a counter-point).
o In order to get the court to move in your client’s favor construction must be sold by
use of the other cannon
o As a lawyer look at how the broad and narrow interpretaion of the staute best suits
your client’s case. In convincing a court to view a statute in a way that is favorable to
your case, it helps to point to words of “legal compulsion” in the statute, so to compel
the court in its judgment to take your “lead” as opposed to your opponent’s.
Judges must make decisions based on the true facts but they are human with different levels
of knowledge and prejudice
Legislative history is useful, should not be overlooked, but it is merely evidence of what was
“left out of the bill” Intent is a false guide as statutes age
Supreme Court has own view:
o Will not use judicial review if can determine the law in another way—not like to
second-guess or undermine the legislature.
o Look to see if there is a possibility the statute may be constructed to avoid looking at
the Constitution.
o Principles of avoidance have limitations: may risk not only indefensible statutory
interpretation, but also irresponsible constitutional
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B. The Study of Laws As a Liberal Art—by Karl Llewellyn (272)
Law is a liberal art: the most effective work of a lawyer depends on vision, range, depth,
balance, and rich humanity
A legal education must contain:
o Neat, clean, effective technical proficiency, which we may think of as the
mechanical or physical underpinning of the practice of liberal art
 Must be able to do what is needed.
o The intellectual aspect, making clear the meaning of the art for neighbor and for
nation, for practitioner, the artist, as a man, and for mankind at large
o Spiritual, drive and quest for art, and within the art, for beauty and for service
To achieve the values of policy discussions in a modern context, the student needs
enough information about the particular role under inquiry
“If one-tenth of the energy and skill which in the past ten years has gone into the
production of case-books had instead gone into the production of reading lists and critical
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syllabi to guide, we would already have available a machinery for moving legal education
all over the country, into its rightful status as the study of liberal art:
o Truly intensive work in class, extensive work outside.
o Narrower and deeper class coverage with the ability to go outside and learn
Llewllyn, The Common Law Tradition: The Leeways of Precedent:
 Following Precedent
o Illustrating Some Conscious Controlling or Even Constricting Effects of Standing or
Following
 This section discusses the reasoning behind the Court’s decision to follow
precedent. Usually, a court will find the rule “too firmly established to
disturb” or the change, even when there are certain doubts about the rule or
there is disapproval over the policy. In cases that may be distinguished, the
broad statement of the rule will be applied. Also, the compilation of prior
decisions will freeze the broad statement of the rule will be applied. The
principles followed in deciding a case will come from prior decisions meaning
of the rule. The principles followed in deciding a case will come from prior
decisions (statis), and the court will make sure that its present decision will
not alter the existing precedent.
o Illustrating the Range of Choice Open via Simple “Standing” On or by “Things
Decided”
 The court will follow a rule exactly as it is phrased and held, without changing
it. On the other hand, a court may create a new holding based upon the
language of a previous court or the explicit reason or theory behind a prior
decision; it may also follow the procedure used by the previous court. The
court will not fill a hole in a previous decision (will not create a rule where
precedence does not exist).
o Illustrating a Variety of the Simpler Types of Creation, Mostly Conscious, While
Following Authority
 Even though a case may be distinguishable, the prior holding is applied based
on its reasoning; or vice versa, it may not be applied because the reasoning
does not fit. In some cases, a prior holding may be re-examined, and the
approved and applied. The dicta from a case may be taken as a rule and
applied as well. In addition, court may extend a prior rule to a new fact
situation, or they may take or they may fill a hole of a previous decision by
creating a rule of a decision where no precedent was set. The court may use
its president decision to lay a foundation for ruling later, and a future court
may take that foundation and establish such a rule
o Illustrating Importantly Expansive or Redirected Use of the Precedent-Material
 A court may apply an unnecessarily broad holding to its outermost edge.
Likewise, an unnecessary ruling will be taken as a rule and applied as such. A
court may also follow the tendencies of past decision to formulate its ruling.
For example, a court will extract unphased principles from other decision and
apply them to their own case to be sued as an authoritative rule.
 Avoiding the Decided
o Avoidance Without Accepting Responsibility to the Future: Legitimate Techniques
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
A court may have a case that is distinguishable or has been dealt with on its
facts.
o Avoidance Without Acceptance of Responsibility: Illegitimate Techniques
 A court may not treat a distinct case the same as another, despite its
distinction. Nor may a court apply a new rule to a case because its facts differ
slightly from that of an older case with significantly similar facts. Also, a
court may not purposefully forget to mention an older case or misrepresent the
facts in the pending case so as to evade the application of an older case and its
rule.
o Limiting or Narrowing, Explicitly
 Limit previous rulings by destroying dicta, by distinguishing on the facts of a
case, or by distinguishing in reliance of authorities in older cases. A court
kills precedent by relying solely on the facts, or by overruling a case (“can no
longer be regarded as authority”).
o Killing the Precedent
 Some Correct But Less Usual Use of material or Techniques, Especially for Expansion,
Redirection, or Fresh Start
o Fresh State from Old Materials
 A court may create new rules form old statutes or bodies of law, or it may
come up with new legal concepts of methods of construing the facts.
o Enlarging the Standard Sources or Techniques
 The court may use different sources to apply its decisions. Such sources
include lower courts, administrative agencies, unpublished notes from prior
cases and other literature, or mere common sense and public policy.
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Llewllyn, 7 ABC’s of Appellate Argument
Don’t just rely on “the law”—Judgment will turn on something more than legal
correctness. The other side has an equally perfect technical case to make.
Trickiness of Classification—The facts need to cleanly fit under the rule you are
contending for
Necessity of a Sound Case “in law”—Have to have a technically perfect case on the law
Twofold Sense and Reason—Ruling in your favor of your client needs to seem obvious
(from a legal and fairness point of view); Ruling for client shows that it’s the duty of the
law and the duty of justice; facts speak for themselves, they point to where the decision
should be made
Heart of the argument is in the Statement of Facts—Frame the legal issue to lead to the
conclusion that there is only one sound outcome
Simplicity—facts must be stated in a simple pattern so that the court needs little effort to
follow the material.
Principle Concentration of Fire—Need a single, simple line of attack; concentrate power
on 2 or 3 points, or ideally a single point with some sub-points
Obligation to Argue Orally—need to catch attention, focus issues into a single question,
make the audience believe that the facts lead to a conviction of what is the right decision
and fit it into legal frame; stir up members of the court
Proffered, Phrased, Opinion-Kernel—Crystallize your analysis (relate the facts of the
case to law/rule) at the end. Helps to solidify the argument by having the facts with the
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law together. Makes it so good the judges will want to use your language in their
opinion.
10) Situational Sense—Be careful using this as an argument. With a sentimental or
passionate situation type, the court may resist against your side because they do not want
to make there decision on passion or sentiment.
11) Established Rule Against You: Confession and Avoidance—Tactic: Put the whole seta
against a different background so that it has a completely different meaning, change the
lighting. Escape by emphasizing the purpose of the rule of concept and shoe that it does
not apply to the case at bar.
12) Undeterminable Selection of Judges—If have a situation that lies outside the typical
daily-life experience, should look for a judge with understanding of this. If can
determine how a judge might decide, try to get jurisdiction in that bench. However,
never write to a single judge, you brief will be passed around.
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The Elements of Legal Controversy: An introduction to the Study of Adjective Law—by
Jerome Michael (263)
 Final purpose of a legal education ought to be the good artist in the law, the good
practitioner of law as an instrumentality of government or the good scientist in law
o Artist—possess the theoretical bases of the arts of law; law as a political
instrumentality and a science; master of the principle and rules; possess
intellectual habits which will confer upon him an aptness for good work, good
habits of learning and knowing, of thinking and communicating, and of doing
o Legal education must be intellectual, moral, and practical
 Procedural law deals with rules of operation, the purpose of which is to guide the lawyer
in performance of his artistic task. Procedural law regulates the intellectual affair we call
controversies
o Theoretical issues: issues about matters of facts
o Practical issues: the issues about what ought to be done
o Practical Consequences: the award or denial of a legal remedy
 These legal controversies are governed by
o Formulation
o Trial and decision of issues
o Determination of consequences and their resolution
 Substantive law contains few rules to guide the lawyer as counselor. Substantive law is
designed to regulate political, social, and economic affairs, and their regulation should
serve the end of the justice in the state.
 Legal education should consist of the development of an appreciation of the systematic
criticism of legal rules for one’s moral education. A prudent man, before acting, seeks
the knowledge that is relevant to his actions. Every rule of law represents a choice that
was made, and one should always question whether it was a prudent one. But to do so,
one needs to develop one’s own sense of prudence. Similarly, the justness of laws can be
judged by the same criticism. One then, must also develop own sense of justice.
 Major objectives in the process of good advocacy:
o To give up an understanding of the character of legal controversy as both
adversary and intellectual;
 Of procedural law as a body of conventions which regulate the issueforming, issue-trying and issue-deciding process involved in legal
controversy and which are designed in part to make it a rational affair and
in part to serve tangential ends;
 Of subordination of procedural law to substantive law
 Of the functions of the lawyer, the jury and the judge in the conduct and
resolution of a legal controversy
o To impart some of the knowledge which constitutes the theoretical basis of the
arts of advocacy and to cooperate with other courses in assisting you to become
more prudent and more just men and to develop good habits of knowing, thinking,
and communicating
o To exhibit the nature of issues of law and proof fact and to make you see the
formation of legal issues is logically prior to their trial and resolution, and that the
process of pleading is therefore only a preliminary to the process of proof
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The Path of the Law—by Oliver Wendell Holmes (524)
“The life of the law has not been logic: it has been experience. The felt necessities of the time,
the prevalent moral and political theories, institutions of public policy, avowed or unconscious,
even the prejudices which judges share with their fellow-men, have had a good deal more to do
than the syllogism in determining the rules by which men should be governed.
(General judicial philosophy)
- legislative judgment is that which rules (even if he disagreed with it)
did not believe in reform movements
believed in letting everyone have their say and he had an open mind but he had no time for the foolish
law does not equal logic – it equals experience by:
- prevalent moral and legal theories
- necessities of time
- intuitions of public policy
- prejudices of judges
- weighing social advantages
the study of law should yield prediction and the goal should be to make things more precise
law is a witness to and an external deposit of ethical life (development of law parallels development of
morality)
law is a tool of society:
- society uses it to enforce a value system
- to reflect social needs
- created by weighing social advantages
moral rights = legal rights
law is limited by morality as the legislature would not make rules that society would find morally abhorrent
even though it could do so
law isn’t to be adhered to just because it’s old as rules change as society’s needs change
intellect, thought, and power of ideals are the true source of power and happiness
“The black-letter man be the man of the present, but the man of the future is the man of the future is the
man of statistics and the master of economics.”
 The law does not equal logic, it equals experience
o The necessities of time, the prevalent moral and political theories, institutions of
public policy, and prejudices of individual judges govern men.
 The object of the study of law is prediction—the means are reports, treatises, and statutes. A
distinction must be made between the morality and the law. One who is unethical/immoral,
still cases about the law in that he does not want to be subject to the consequences of a
breach.
 The law is limited by morality, for some statutes can be empty words, not because it is
wrong, but because it could not be enforced, even if the legislature has the authority to act.
o Morality is the actual internal state of the individual’s mind, what he actually intends
o Holmes suggests that both good and bad people want to avoid conflict with the law
 Confusion between law and morality exists because of the bad mad
o To him there is no difference between being fined for committing an unlawful act, or
being taxed; consequences are the same either way.
o Good people follow the law for other reasons
 There is a fallacy that the only force of law is logic
o In its broadest sense this notion would be true, you can give any conclusion a logical
form
o However, we do not realize how much of our law is open to reconsideration
o Holmes feels that judges have failed to adequately recognize their duty of weighing
considerations of social advantage
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 Would not have supported Cardozo
o “All contracts are formal, that the making of a contract depends not on the agreement
of two minds in one intention, but on the agreement of two sets of external signs,--on
one of the parties’ having meant the same thing but on their having said the same
thing.
o “I often doubt whether it would not be a gain if every word of moral significance
could be banished from the law altogether, and other words adopted which should
convey legal ideas uncolored by anything outside of the law.”
 Lawyers must look at the history and evolution of the law, because without it, they cannot
know the precise scope of the rules. If we want to know why the law has taken a particular
shape look to tradition
o History must be a part of the study of law because it is the first step toward a delierate
reconsideration of the worth of a rule at law. However, it the groups upon which the
rule were made have since vanished then the rule is only formed from a gradual
historical development and ahs not been reshaped as a while, keeping in mid the end
that is wought.
o “Getting the dragon out of the cave is only the first step. The next is either to kill him
of make him a useful animal.”
o Weighing considerations of social advantages accomplishes this. Theory is the most
important part of the dogma of law—it will master the material no matter how it is
taught.
 Theory is getting to the bottom of the subject.
o The study of law should lead to predictions and the goal should be to make things
more precise
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Ethical Problems in the Performance of the Judicial Function—by Charles D. Breitel
(p406)
Concerned with the judge’s influence on his cases and decisions
 There is an inescapable interrelationship between one’s personal judicial philosophy and
one’s general legal philosophy.
o The most important decision a judge makes for himself is whether he will play an
affirmative or quiescent role in the performance of his functions
 The more active a judge is the more important his responsibility be pure and the more
mechanical the application of rule to case, the less danger there is of distortive
contamination.
o The goal is detachment but not lack of concern. The application by the judge to his
function should be neutral but not neutralistic.
 The problem with judicial restraint is not merely an analytical one but it is an ethical one, and
there are no simply derived rules to be applied. There are value judgments to be made. And
they include the question whether it is ever right to pursue the end even if the means are
traditionally unavailable.
 Judges are not only making the law for the community outside the court, but are also creating
internal judicial traditions for themselves, their colleagues, and their successors.
o The concern is where the active role for the good men today will not become the
pernicious tool in the hands of bad men tomorrow.
 The individual judge faced with a particular situation might not be able to distinguish
between the subjectivism of his own judgment and the reasonable rule which may be surer in
achieving the justice in the case as well as justice in cases of like kind.
 Another type of bias is from the relationships with the parties and the lawyers in litigation—
disqualification can get complicated
o Judges should not disqualify themselves too easily because litigants or their lawyers,
sometimes with chicane, may manipulate matters to get a disqualification. Should not
be easily subject to disqualification, but should disqualify self for good reasons
independent of either side’s wishes.
 It is bad for judges to confer on a case
o A good modern judge should have contact with the community
 The bench is both feared and respected: Some of the fear may be derived from the respect;
more often it stems from an aftermath of prejudice will be created for future matters to be
brought before him.
 “The most effective way to see that judges perform their functions as we would have them
performed, in this way and other ways, is for the lawyers firmly and properly to present their
opposition to conduct of which they disapprove. This has its danger and may invoke pain.
Any realist knows this well. Nevertheless, there is o honest choice.”
 “The over-all goal is the judge who is neutral but not neutralistic, impartial but not
unconcerned, dispassionate but not uncommitted, disinterested but not indifferent. The
ultimate is, as the Greeks have said, the highest good. And what is that here except the judge
do right?”
*Would not have liked Cardozo’s manipulative techniques, too much prejudice in decisions and
in his ability to manipulate the law around his conclusions.
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Excerpt from Due Process Methodology and Prisoner Exchange Treaties: Confronting An
Uncertain Calculus, “The Discipline of Judicial Balancing.” By Irwin Stotzky and Alan
Swan
 There is a continuing problem in our legal system: humane and dynamic qualities—-A
quality of culture and moral perceptiveness—but also that it is reasonably predictable, protect
against personal caprice, and capable of drawing to its judgments the authority of established
ways and traditional values…
o Concern for consequences: inquiry into the who and what would gain and who and
what would suffer if the specified outcome were actually applied, and for how many
and how long the perceived consequences would persist.
o Values: the ethical factors derived from our whole culture and especially our
history—that fix the normative weight or urgency of assuring or avoiding the
perceived consequences of a specific outcome
o Principle: is a statement that identified the judicial outcome to be asserted with a
specified set of facts. They have a normative and dimension derived from values.
 A judge must start from established principles embodied in authoritative materials. He is
constrained to move from that point to his case according to the traditional and oft-explored
process of analogical reasoning that is the common law method.
 A judge should provide an adequate rationalization or explanation for his results; works as a
constraint upon the rational process of the decision making, especially since it is used in
evaluating his work
o This is the point where vision and good sense must work. But it is also the point
where vision and good sense are largely judged by the persuasiveness of the stated
reasons for the choice.
 There are also internal constraints emanating from the separation of powers doctrine
o The judge must ascertain the apparent distance from the case from a body of exact
legal principles and also consider the complex social, political, economic realities that
determine the consequences of any decision, political or judicial.
 “In the end, subjectivity is not the issue. The strength of our system lies in its insistence
upon subjective qualities that are the wherewithal of bias: ethical and cultural perceptiveness,
humaneness, a willingness to innovate, to assure a dynamic quality to our law, and, in the
reasoned used of principles, a capacity to discern the whole sense of what has gone before.
In sum, the problems lies not with judicial exercise of subjective bias but with a refusal to
call upon bias only when and as the constraints of the system permit.”
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Bramble Bush KARL LLEWELLYN:
THE BRAMBLE BUSH
*Study of law
study of how the law operates
law is about resolving actual and potential disputes (try to make peace)
concerned with the manner in which disputes are settled
offers insight into how the courts behave
*Legal Rules
alone they are worthless
have value in that they can help predict what judges will do or can even help get the judges to do something
(manipulation)
dissenting opinion helps predict what the court may say/ do in the future
*Lawyer’s Role
lawyer is the point of contact between the people and the legal officials
lawyers filter facts for the judge and jury by keeping in mind both legal relevance and the desire to win
essentially can determine whether justice will be done
needs to be a good technician in framing issues in light of the facts (know what action to file based on the
facts)
*Judges
must compare what they say and what they do
their actions and the means of influencing their actions are what make up the law
*Law’s Function
the outcome of the case is the function of the rule, but the rule laid down is a function of the outcome of the
case
judge’s will strain to reach what they see as the just outcome
precedent determines application of rule in future cases
must go outside the rule to understand the opinion (impact on people’s behavior, impact on real events
outside, also facts within the opinion may be distorted)
precedent can help inexperienced/ ignorant judges draw from experience and knowledge of predecessors
Chapter I What the Law is About:
 The doing of something about disputes, this doing of it reasonably is the business of the
law. And the people, who have the doing in charge, whether they are judges or sheriffs
or clerks or jailers or layers, are officer of the law. And what these officials do about
disputes is the law itself.
o Law does not make order—it maintains order.
 Rules are the heart of the law, and the arrangement of rules in orderly coherent system is
the business of the legal scholar, and argument in terms of rules, drawing of a neat
solution from a rule to fit the case in hand—that is the business of the judge and of the
advocate.
o Rules alone are meaningless
 Rules are important in predicting what judges will do or so far as they help
you get judges to do something.
 Breaking the law down
o Substantive law: What ought to be (whether a contact should be enforced and
how to form a corporation and issue its stock)
o Adjective law: Regulation of the work of the courts (business procedure)
o Public Law: Dealing with the state (crime and government)
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o Private Law: legal relations between individuals (contracts, torts, property, and
associations in which individuals come together to accomplish a common
purpose)
 If most people did to stand behind the officials, however passively, there would be little
law to talk about. That if most people did not most of the time when they looked at a rule
look to its purpose as well as to its exact and narrow form, and fit their conduct roughly
to that purpose, then the officials would have a burden on their hands they could not bear.
 The role of the lawyer: A lawyer must attempt to know not only the rules of law, but the
rules of law in terms of predicting what the courts will do, the working situation of the
client, and the law with reference to which he is called upon to shape it
Chapter 2 The Case System: What Lies Behind the Case
 Civil Procedure Review
o Two types of courts trial and courts of review
o A court must have power over the type of case, power of the defendant,
o Pleadings: court is informed what the dispute is about
 Complaint, declaration, petition, bill the facts, cause of action, prayer
for relief
 Answer: for the defendant to admit or deny the above allegations
o Juries: A lay body, not lawyers, and begin the trail with ignorance but decides
facts
 Governed by rules set by the judge: before they render a verdict it is the
Judges duty to charge them, to instruct them on the law, and conform the
rules of law into instructions
• There is an etiquette to instructions to make them appeal proof
 Cases are simplified: two parties and single set of issues
o Judge: Decides on points of law
o Trial: Who can prove what he claims?
 Plaintiff bases case on documents and witnesses; must work within the
rules (straining process of the raw events);
• Burden of proof—plaintiff must make the case against the
defendant, the defendant has not legal need to make a case
• Appearance is vital—for lawyer, witnesses, and clients (hats too)
 Defendant combines his main case with rebuttals
 Closing arguments to the jury are a presentation (defendant then plaintiff)
stressing the points that speak most—persuasion
 Precedent:
o We do not
 Appeal: Ask, “What particular lapse is complained of?”
o There is an opinion that a group of judges sitting together will more likely come
to a better conclusion then one judge sitting alone
o Sometimes similar facts are decided differently—why we have a common
supreme court
o Losing counsel submits a brief with authority for his legal question; the appelle’s
response is similar; the court gives a ruling and the opinion is the justification of
the court’s decision
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
Creation of a rule of law or several rules to be followed by the lower
courts.
Chapter 3 The Case System: What To Do With The Cases
 Learn to read, use a dictionary, but remember “the life of words in is using them.”
 Four assumptions all cases are based upon:
o The court must decide the dispute that is before it. It cannot refuse because the
job is hard, dubious, or dangerous
o The court can decide only the particular dispute, which is before it. What it
announces toward the question it is the creation of new law otherwise, any other
question is it mere verbiage (dicta or really off point obiter dicta). This might be
useful in the future, to understand the reasoning of the court in relation to future
decisions, but no binding force.
o The court can decide the particular dispute only according to a general rule
which covers a while class of like disputes. Our legal theory does not allow for
single decisions standing alone. In our practice of case-law: it pays to be careful
of broad, general rules—it pays to go slow before feeling certainty that such a rule
exists or will be followed.
o Everything, everything, everything, big or small, a judge may say in an opinion is
to be read with primary reference to the particular dispute, the particular
question before him. Must look at the case at hand and learn to interpret all that is
said as merely a reason for decided that case in that way.
 When looking at future cases, it is the aspects in which their facts are similar which give you
your first guidance as to what classes of fact will be found legally relevant (will be found to
operate alike or to operate at all upon the court). Then look at what differences in facts
distinguish the cases. It is all a matching game of cases!!
 Briefing cases: What this case adds to what I already know about this subject
o Ratio decideni: This is what the court tells you is the rule of the case and no rule can
be the ratio decideni from which the actual judgment does not follow. Basically the
holding, how the court applies the facts to the rule.
Chapter 4The Case System: Precedent:
 Legal education is a building process, all the material must be understood as a whole
 Types of cases
o Those predestined to be litigated—they are so exceptional that the normal ways of
society have afforded no solid basis for deciding them, or even because the ordinary
machinery of adjusting cases in society had no teeth which fasten on them
o Cases in which the rules hit close to home and the norms of living; upon these rules
men can orient their action
 Levels of decision: The difference between the rule of law laid down on a set of facts
assumed and the way the court interpreted the facts before it. But in life—the rule may be in
reverse. The rule and decision may dictate the interpretation of the facts.
 If a later court does not like the result achieved by an earlier court, the it may reach a
contrary decision by either rejecting the rule laid down (rare) or by citing the prior case as
distinguishable authority and interpret the evidence before it differently stating the facts do
not apply to the same rule.
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 Dissenting opinions
o A fight has been had and settled and the majority will most likely stay put on the
issue
o Exception is if the dissent becomes to new “voice of the day.”
 Attitudes of the Courts in adhering to precedent: There is one doctrine for getting rid of
precedents deemed troublesome and one for making use of those deemed helpful. There is
little prediction of a court’s decision using words/rules alone.
o Orthodox Doctrine/Strict view: Confining a case its terms, analyzing closely to find
distinctions; get rid of president deemed troublesome
o Loose View: Making use of precedents deemed helpful and expanding holdings;
results in argument from the language of past opinions
Chapter 5Ships and Shoes And Sealing Wax
 Ought as the basis of the legal system of logic: Precedent becomes statements of how the
court has held and how in future ought to hold
o How to attack this logic: Challenging your logic, rule fails to cover cases or
incorrectly covers them, or the judge does not agree with your reasoning (two
ways of distinguishing precedent).
 A Judge does not have free reign on his decision making process: A Judge can throw his
decision in either direction—but not freely.
o Needs to be able to defend self and decisions—no arbitrariness allowed.
 “Law must embrace in its very heart and core what the officials do, and that rules take on
meaning in life only as they aid one either to predict what officials will do, or to get them to
do something.”
 What did a court actually decide in a given case and what ratio decidendi did the court
announce? These are the facts of observation
o What was the rule of the case, as derived form its comparison with a number of
other cases
 Reasonably safe Maximum Rule—narrow holding
 Reasonably certain Minimum rule—broad holding
 As against both of these is the question of the manner, attitude and accuracy of the court’s
interpretation or transformation of the raw evidence. Judgment factor enter. Purpose facts
as they result from this interpretation and how they are applied and transformed to the rule
above.
 Question of the probable precedent value of the case, in a given court or in general. This is
the level of prediction of what the court will do—Ought.
 Question of estimating what consequences the case (and its effect on other cases) will have
on laymen: the relation between the ways of the court and the ways of those effected by the
court.
 Question of evaluating the court’s action in the case—concluding how desirable it is.
Presupposes the other levels
o There is the evaluation off the court’s decision or ratio from the angle of doctrine.
A premise is assumed and the court’s action is tested.
 Statutes v. Judges:
110
o A Judge makes his rule in and around a specific case and the case shapes the rule;
case-law is flexible around the edges. Innovation is confined within narrow limits
(keeping the new decision within the old law)
o Statutes are made relatively in the large context making sweeping generalizations and
forward looking concepts. Applicable to events occurring after they come into force
and a recognized machinery for readjustment in the law; represent a class of disputes
o “The very basis of this statute is in its generality.” Statues are made without a case in
mind the interpretation of the words is through future case law.
 Presents to the court the problem of interpretation. There is no pleasant repetition
of the same thought in different forms, each word stands there with no dictum
 What is the Legal Right and the Right way of the law? Justice.
o Social Justice—Justice in the whole set-up of society (critique of the law entirely
and the institutions of society)
o Legal Justice—Justice possible within the framework which society sets
(critique of the courts)
o Idealist v. the cynic:
 Idealists see primary rights—my right and secondary rights—remedy; the
secondary right is not essential to the existence of the primary right.
 Cynic sees rights best measured by effects in life and the absence of a
remedy and is the absence of any right at all.
• Llewellyn’s point.
o Hofeld’s analysis of rights: “Legal usage of technical words has sinned, and
does still, in two respects; it is involved in ambiguity of two kinds: multiple
senses of the same term, and terms too broad to be precise in application to the
details of single disputes.” The words used in the legal system lead to confusion
because there are multiple definitions for the same term and the terms are too
broad.
 The right is only in regard to another person (A has a right that B shall do
something); then, B has a duty for somebody to have a right, someone
else must have a duty.
 Furthermore, he distinguished a right from a privilege: One has a
privilege if when one acts, he or she is free from the courts. At the other
end of a privilege is no-right. Power is when A can in some significant
way change one B’s legal relations. The person whose legal relationship
may be affected is said to be under a liability.
Chapter 6 And Law School Offers What?
 The chance a student will use the law studied in the curriculum is slight, instead, it
is a vehicle of study—the information has little value in itself, instead, value is
derived from the process.
o Method
o Statutes
o Fields of law
 After the first year: Find what you want, when you know what it is and to know what it
will be. The other job is filling in the information you need—specializing. This is after
the fundamental tools of the first year have been provided and dealt with appropriately.
111
 Dealing with the first year:
o Teaches the handling of cases—argument from cases, moot court, writing—
drafting the words to get your client what he/she wants
o Classes/curriculum
 Procedure: the most essential, is the wherewithal to work out the
procedural aspects of all other courses.
 Contracts: general theory of the law of agreement (sales, insurance,
mortages…)
 Torts: Cleaning up of the ground outside of the fiel of transactions, a
cleaning up of it early so that the transaction side of law may not wholly
obscure the picure in the future.
o Exam taking: Argument beginning with conclusion, be explicit with
uncertainties and the various methods of resolution. Essays are built to test your
skill at: analysis, judgment, and argument.
II. The Other Side
Chapter 7 Law and Civilization
 Civilization is conceived as based upon and containing a wide core of established order and
a much smaller field of relatively free play. Here and there, man will attempt to break
through this order—and in this realm of free-play disputes develop and the law comes in to
guarantee the continuance of this order.
o Law is intended to make sure “the clashes of interest within that sphere run-off without
disturbing the great core of order, and in cases where the ordinary processes of bargain,
competition, wearing down, economic and special pressure, fail to produce a workable
result or offer machinery to settle particular disputes and give us all a new foundation for
getting on.
 ??Criminal law in: Without law there is a A B and then B’s family kills A
o Machinery in the war
o Continuance of the feud
o Composition—buying vengeance at a price
 Civil law: this is the law of transactions, the law of business—this is built around the
accomplishment of one’s purposes.
 Law is the result of an achievement in slow invention; it is dependent upon accident.
However, order can exist in society without law, but law is the maintenance of the order in
society. Law makes order express by setting limits and maintaining the order “as it is”
within the play of change.
o Disputes arise when differences are perceived and when these disputes arise, differences
are perceived. To deal with things alike, we must generalize about these similarities and
differences.
Chapter 8 Beyond Bread and Butter
 What the law will offer you depends upon what you want out of life
o Those devoted to money and financial gains: they perceive money to be the meaning
of success. These people should be careful for their children, for many times they are
“married to their work” and hard handed, and single hearted (these people find their
children grew up without them—make time for your family!)
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o Don’t loose yourself in the trees. You need money to survive but it should not be
your only goal for it is not easily achieved.
o The law may lead to “burnout” for some; and their money will be their only source of
happiness or perhaps, a source of discomfort.
 Read the law now and read it actively for one day you may become a good counselor
Chapter 9 The Second Year
 It is a question of what the new first year class can expect from you; and it is your job to
make those expectations real.
o What you set about making clear to another man you will know vastly better yourself.
 The first semester of the second year is a slough of despond and a swamp of disaster.
 Of all professions I am sure there is none of which responsibility is more strikingly
characteristic than it is of the law.
 There are things that every lawyer is sure to need but that case study does not offer
o Training in the group-spirit, the group work, the group-discussion, about law, about
law school, about review problems, about class problems, which ar the essence of the
law review.
 Interchange of ideas, fertilization of ideas, self-clarification by an attempt to
make clear to another, training by have a point and fighting it—set up your
own machine and get together with the law and your peers.
o Research on one’s own, diagnosis of a problem, sizing it up, to locate relevant
materials, analyze it, reject the worse of what he finds in favor of the better (and that
is hard, that scrapping of hard labor)—and then put it together again; criticize and
rebuild.
o Learn to write—and your must write clearly and briefly
 Argumentative exposition is the most useful of the lawyer’s arts. The
statement of a case, the arrangement of fact, the stress in presentation, which
argues without argument, the desired conclusion.
 Drafting is rarely done at all in schools
 “IF VEGITATE YOU MUST, BE AN ASPIRING VEGITABLE. BE A BEAN, AND
CLIMB.”
Chapter 10  Before Sunrise
 Lawyers have never been liked.
o Laymen don’t get the intricacy of the art
 This creates suspicion
o 50% of cases are lost
 Law and the conditions/values mirror society
o Privileged have an unfair advantage (society gives to those who have property)
o Law is a zero-sum game; winner take all
 The law is society’s organ of woe when order is not working—haves can hire better lawyers
Afterword:
 If the lectures were redone, their focus would shift materially off “the law” as lawyers
understand it and onto what the institutions of law-and-government is for, and what our own
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version of that institution is for, which the various major crafts of law and the men of law
play as their part in that institution
 The law of leeways in our precedent is this, “that an appellate court is free, without hesitation
and without apology, to make any shift in content and direction of authorities which can be
worked by the semi-automatic process by which authorities just take on new light, color,
shape—and working—as they are reviewed against fresh circumstances; but that conscious
reshaping must so move as to hold the degree of movement down to the degree to which
need truly presses.
 Period Styles of the law-crafts: Grand Tradition of the Common Law is our rightful heritage
and needs complete and conscious recapture.
o Grand Style: Precedents are welcome and very persuasive, but a precedent must be
tested against 3 types of reason before it is accepted: the reputation of the opinion
writing judge, the principle is consulted to check upon the precedent (principle means
a broad generalization which must yield patent sense as well as order; and policy, in
terms of prospective consequences of the rule under consideration.
 This style is an on-going renovation of doctrine; this is the best style.
o The Formal Style: The rules of law are to decide the cases; policy is for the
legislature; no situation sense.
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Gorgias, by Plato
SOCRATES: Better to suffer then to do wrong. Philosophy is knowledge to serve good, justice
v. rhetoric is the desire to persuade. At what point does the audience control you and dominate
your attempt to persuade? Oration is not an art, but instead a knack gained by experience and a
form of pandering. Further, an orator must understand right from wrong. The object of
punishment rightfully inflicted should be to either improve or benefit the subject or else to make
him an example to others, who will be deterred by the sight of his suffering and reform their own
conduct. The most terrible thing is to do wrong and not be punished for it. Supreme goal is the
reality of goodness—not appearance.
- It’s better to suffer evil than to do evil.
- To search for the truth through discourse is inherently more moral than to engage in the
art of oratory (pandering to others so as to convince them of your positions).
III. GORGIAS: Traveling teacher of oratory, teach people to persuade. Claims to be
knowledgeable in all subjects. Would have to teach morality to an immoral student so as to
use this skill properly.
(A contemporary of Socrates and a well respected figure. Thus Socrates treats him with some
respect.)
- Claimed he could train people to persuade a jury even in the face of an expert.
- Concedes to Socrates that he can’t teach his students to be moral.
IV. POLUS: States better to be a dictator and get what want then to be the one who suffers
at the hands of the dictator. Socrates thinks the opposite and is harsh to Polus, who is
young and naïve.
(A disciple of Gorgias. Socrates is a bit rude with Polus. Basically calls him a phony.)
- Talks about being a dictator and says that this would be good thing.
- Socrates tells him that being a dictator would be terrible because then you would never be
punished for the wrong that you do and thus your punishment would come in the afterlife.
V. CALLICLES: Challenges Socrates saying that philosophy does not give one power or
protection will be struck down by society (see morality as getting what you want).
Philosophy is good while you are young, but will rot your mind and waste your life if it
continues. Will never help others, nor help self. Cannot save self by using philosophy.
Sees Socrates as an outcast to society
(A rich young guy from the upper class who happens to be watching.)
- Makes the argument that Socrates is going back and forth between nature and physics. In
nature, might makes right.
- Morality means the most powerful doing what they want. The most powerful are thus
inherently good.
- Doesn’t respect Gorgias or Polus because they are only teachers. They don’t actually
“do.”
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-
Philosophy is a plaything for children. It doesn’t compare with the tools of adults such as
money and respect. Tells Socrates that he couldn’t defend himself with “philosophy” if
push came to shove. Socrates responds saying that he wouldn’t defend himself anyway
because it would be better to suffer than to pander.
NOTES: Rhetoric is the art of discovering all available means of persuasion. Basis of
Democracy and law is that truth will prevail; therefore both sides are required to present their
best attempts at argument and oratory. It is civil procedure that controls this playing ground to
allow an even playing field to the correct solution and therefore justice.
 Chief skill of a lawyer is the ability to persuade
 Lawyers need intellect, knowledge, persistence, passion, skill, and (whatever it is that
makes a lawyer moral—compassion, empathy, good judgment)
 3 major tasks of a lawyer: Ability to analyze and put knowledge together
o Judges (listen to the facts and make decisions to enhance society)
o Counselors (listen to information, present opportunities, and assist in decision
making)
o Advocates (Advocate a position for client)
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An Introduction to Legal Reasoning, by Edward Levi:
can use legislative intent; don’t have to be bound by the law that’s there)
legal rules are never clear because if that was a pre-requisite then no law would ever be able to be imposed
(ambiguities are what allow the law to evolve)
basic pattern in legal reasoning is reasoning by example:
see the similarity between the cases
announce the rule of law from the first case
apply the rule of law to the second case
when reading a statute can look at the legislative intent behind the law and interpret the words’ meanings
(don’t have to fix a meaning to each word)
courts have more freedom in deciding legislation (use intent) than in case law but you can always say that
the previous court ignored the legislation
even the Constitution is ambiguous and allows for change (no authoritative interpretation there)
the area of doubt within the law is what allows it to function so well→ allows for the expansion or
contraction within the system
use less of the old material and decisions and get a fresh start (as opposed to Cardozo who gets a fresh start
from old materials)
 Law is an expression of our changing society
 Rules are not clear; they must be ambiguous to be applied to “permit the infusion of new
ideas.” If the rules had to be clear, there would be no change in society.
 Reasoning by example
o Similarity is identified between the cases
o The rule of law inherent in the first case is announced
o That rule of law is applied to the second case
 The functions of each judge are the determination of similarity or difference between cases
and apply the law accordingly. Therefore, this process changes rapidly. When a diverse set
of facts appear before the court and challenge the principles labored over before hand.
Judges determine what is dicta and what is legally significant in prior cases.
 Uses products liability cases to demonstrate how the law changes through reasoning by
example (breakdown of the inherently dangerous rule); what was once an exception to the
law, now has the certainty the rule once had. The exception became a general principle of
liability
o Creation of the legal concept which is built up as cases are compared
o Concept is more of less fixed, although reasoning by example continues to
classify different elements
o Breakdown of the concept, as reasoning by example becomes more established.
 Rules change and precedent does not bind a judge; she must only draw from it what appears
important and what expresses the ideas of the community and the time.
 Cannot be said that the legal process is an application of known rules to diverse facts; the
rules themselves are not known but are in a constant flux as courts by analogy weed out
similarities from one case and differences others.
 Rules come from application to other rules; inherent in this is the problem of treating
different sets of facts as if they were alike
 Three areas to interpret law:
o Case Law: Often dicta; judge determines which is controlling similarities to
apply between two cases
o Statutes: Judges interpret intentions of Congress
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
Courts must look at the intent of the legislture; sometimes the words of the
statute are insufficient. Where legislative interpretation is concerned, it
appears that legal reasoning attempts to fix the meaning of the word.
When this is done, subsequent cases must be decided upon the basis that
the meaning remains. The Mann Act/White Slave Traffic Act is a good
example
o Constitution: Presents conflicting ideals; allows courts to be inconsistent by
“searching for the intentions of the framers or as a proper understanding of a
living instrument.”
 The Constitution is an ambiguous document that gives freedom to the
court. Thus, Constitutional interpretation cannot be as consistent as caselaw development or the application of statutes.
 The course of legal reasoning in case-law, statutory, and Constituitional interpretation are
similar. The growth of inherently dangerous things fields of law is a reflection of period
where governmental controls and responsibility for the safety of the individual were
thought to be proper.
 The view of society changed, and the law has followed it lead. The law responds to
community concerns with an emphasis of the process of legal reasoning. The law is
based on a system where people disagree, thus, the system must be able to expand and
contract with these viewpoints.