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Recovery – Detinue
Butler v. Wolf Sussman
221 Ind. 47 (Supreme Court of Indiana 1943) p36
RULE: If the defendant’s behavior constitutes an affirmative attempt to establish title of disputed
property, the defendant waives his/her right for plaintiff’s demand.
STATEMENT OF This is an action for replevin and conversion of a diamond ring by an owner with superior
CASE: possessory rights, against a licensed pawnbroker for a right that was taken and pawned by
claimant’s husband without consent
FACTS:
 The Appellant inherited the ring 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.
 The complaint was on three counts: 2 for replevin [an action to recover personal
PROCEDURE:
property unlawfully taken] and 1 conversion [wrongdoer converts the goods to his or
her own use and excludes the owner from use and enjoyment of them] (2 acts for
replevin (1 may actually be for detinue [form of action which exists for the recovery
of personal property]) and one for conversion). [could be 1 replevin, 1 detinue, per the
statute in the footnote; or, could be two actions of replevin against the pawnbroker]
These stem from re-possession of ring and for the damages for its detention. These
may have been to protect her in case of whether she could only prove (1) the taking
was unlawful OR (2) the detention was unlawful.
 The defendant answered with (1) a general denial [specifically admit, deny or w/o
info to the facts for each count] and contested the merits of the suit (he denied
everything). He then (2) filed a redelivery bond [to secure it (if she proves she should
get it, and it’s sold, there’s an amt given to her] and (3) claimed protection under the
Pawnbroker’s Act.
 The appellant waived her entitlement for a judgment on the pleadings (because he
failed to answer the pleadings separately), by going to trial on the merits of the
allegations. [Facts of the pleading had been proven against her?]
 In the bench trial [Judge decides law] the judge awarded judgment to the defendant
and the plaintiff took nothing. Plaintiff filed a motion for a new trial by asking court
to reconsider the judgment.
 Motion was denied, so plaintiff appealed denial of this motion.
ISSUE: Where the defendant claimed title to the ring in controversy over the asserted ownership of the
(P) did the trial court err in ruling that a demand by the (P) was necessary prior to the
commencement of the action for replevin against the defendant where the (D) waived necessity
for a demand by filing a redelivery bond, by contesting the suit on its merits and by claiming
protection under Pawnbrokers Act of 1935, and given that a married woman is authorized to
hold personal property as if she were unmarried?
(Whether trial court erred in denying motion for new trial)
RESULT OF The Supreme Court of Indiana reversed with directions to sustain the appellant’s motion for a
APPEAL: new trial and further proceedings
HOLDING: Broad: The court erred in granting judgment to the defendant because when the defendant
claimed title to the ring, the defendant waived the necessity of a demand by the plaintiff.
Further, the Act of Burns does not apply due to the changes in common law allowing a woman
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to hold property as if she is unmarried (1881). When a statute is used contrary to the law a new
trial will be granted because a statute, which is inconsistent with common law supersedes
common law.
Narrow: If a pawnbroker claims ownership under the Act of Burns, the plaintiff does not need
to make demand for her possession, further is a woman can hold possessions of her own.
When a pawnbroker files a redelivery bond, contests the suit on its merits, and asserts a
defense of ownership under the Pawnbroker’s Act—the requirement for a demand will
be dropped.
REASONING: Doctrinal: A Demand is necessary to prevent unnecessary litigation, however, since the
defendant claimed possession, a demand is not needed because he would not have complied
with the demand.
 Defendant filed a replevy bond with an affidavit, he contested the suit on its merits, and
he filed for protection under the Pawnbroker’s Act. Which of these is enough to waive
demand?
Exceptions to the Pawnbrokers Act are: larceny and prior lien by another statute
 Can a husband commit larceny on his wife? Under 1881 Act a woman can hold
property. The larceny question depends on the state and the couple’s custom need
further discovery. If state is under common law, husband and wife are considered as
one person and one spouse could not commit larceny of the goods of the other. This
prevents wife from suing husband, unless 1881 Act is interpreted otherwise. This Act
could or could not allow for her to sue him, but she can sue others as an unmarried
woman. She may not want to sue b/c they are in on the whole thing together.
 The court relied on Hays v. Burns, stating that it held no demand was necessary where,
prior to the commencement of the action, the party in possession assumes a position
disclosing that if a demand had been made it would have been unavailing.
 The court also relied on Jordan v. Jordan, holding that a waiver may result from the
character of the defense made to the action as well as from the statements and conduct
of the defendant prior thereto.
Policy: The conflicting rights between the pawnbroker’s statute and the 1881 statute force the
court to choose between these statutes using one of the statutes of construction as a means of
interpretation.
 Constitutionality of the Statue?
o Courts normally like to avoid such claims. Statute only unconstitutional as
applied to this case: conflict with the 1881 statute.
o Common law considers husband and wife as one person so one cannot
commit larceny of the goods of the other. However, Indiana enacted the
Married Woman’s Act in 1881- allows a married woman to hold property
as if she were unmarried
o Statutes: Written thru legislative history; Problem now is that lobbyists
draft intents for statutes for Congress; intent of statute not always specified;
never paraphrase a statute

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
compiled with a demand)
o
A spouse cannot claim or dispose of an item w/o the permission of the other
spouse if the other is the rightful owner
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Duke of Somerset v. Cookson
RULE: The plaintiff will be able to bring a bill in equity when an item has been stolen, risks being
defaced, and there is importance in returning the item in “as is” 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.
Recovery – equity;
24 Eng. Rep. 1114 (Court of Chancery 1735)
STATEMENT OF The duke, who is the claimant of personal property through treasure trove brought this bill in
CASE: equity against Cookson, a goldsmith, to compel delivery of an altarpiece made of silver and
remarkable for a Greek inscription and dedicated to Hercules 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 manor. 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 demurred stating that this is an inappropriate action to be brought in equity. The
plaintiff asks that the demurrer be dismissed. The defendant claims the plaintiff should have
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? Should the demure be overruled? Is the legal
remedy inadequate (the bill of equity)?
RESULT OF The demure was overruled and the cause of action was allowed to proceed
APPEAL:
Narrow: Where the evidence shows the possession of the altarpiece to be worth more
HOLDING:
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.
 Laws in equity originated in 15th century in England. Chancellor created
remedies the courts could not make resulting in a separate jurisprudence
creating equity courts.
o Replevin would not be proper in this case because there was no
unlawful taking. (D) would not bring this up as an alternative remedy
b/c he would be admitting he took the item unlawfully.
o Detinue you have to prove unlawful detention or you have a greater
interest in the property and this would allow the defendant to choose to
either pay damages or return the item; must prove lawful ownership
o Trover you would have to prove it was taken and it would only allow
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the payment of damages.
Policy: None of the above actions would allow for the property to be returned un-defaced,
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.
 The judges must balance results: item unique, defendant is a goldsmith
(melting tendency)
Butler v. Frontier Telephone Co.
Recovery - ejectment
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 This is an action for ejectment by the owner of property against the Frontier Telephone
CASE: Company for stringing wire on his land; the landowner is seeking damages and recovery of
space. (Case attempted to determine who owns air 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 (no
structure there though) until January 10, 1903, when the defendant removed the wire because
the case was filed against them. 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. An action of EJECTMENT is an action to recover the immediate possession of real
property.
PROCEDURE: The case was tried first as a bench trial (trial by judges, no jury); the court decided the plaintiff,
as owner of the premises in question, was entitled to judgment against the defendant, for 6 cents
in 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
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this last action.
ISSUE: Will ejectment lie when the soil of the plaintiff’s property is not touched, but a part of the space
above the soil is occupied by an object of the defendant (telephone wire)?
RESULT OF Judgment affirmed and the removal of the wire after the suit did not defeat the action.
APPEAL:
HOLDING: 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.
(similar to the pipes below the fence in Stotzky’s story).
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: 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. (Pg 69)
 The fact the wire was removed at the commencement of the action is
irrelevant because it existed upon the filing of the complaint. And
because the company could just continue to remove it whenever an
action is filed.
Policy: Owner could not fully use his property; both the aesthetic 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.
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Hadley v. Baxendale
156 Eng Rep 145 (Court of Exchequer 1854)
RULE: Hadley, two prongs:
 At the time of the contract was made it would be foreseeable that usual events could
occur, “such as may fairly and reasonably be considered either arising naturally, i.e.,
according to the usual course of things, from such breach of K itself,” OR
 Unusual events: “Such as may be reasonably be supposed to have been in the
contemplation of both parties, at the time they made the K.”
 [Special circumstances under which the K is being made must be communicated by the
(P) to the (D), and then if known by the (D) that these damages would result from
breach of such K, which they would have reasonably contemplated, would be the
amount of injury which would ordinarily follow from a breach of K under these special
circumstances so known and communicated.]
STATEMENT OF Miller/customer/consignor-(someone who has goods shipped) brought this action against a
CASE: common carrier (common refers to the fact they will carry almost anything, like FedEx today)
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 mill owners in Gloucester. 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 (as a fitting model) 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 they 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.
Took 7 days to deliver the crankshaft. 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. Overall company did not try to mitigate damages.
(Common carrier will carry anything, not just specific goods)
Consignment is where you give goods to someone and they’re supposed to take them
somewhere, or sell them.
PROCEDURE:




(P) sued under two counts:
1) the (D) failed to deliver the crank shaft on the following day and instead delayed
delivery until the 7th day; (breach in failing to deliver)
2) (D) failed to use due and proper care in carrying the shaft or conveying or
delivering the broken shaft within reasonable time due to negligence, which resulted in
loss of gains and profit for the (P).
(D) pleaded non asumpserunt to count one (count is no longer good, no, I did not
undertake to do this in two days), and payment of 25 pounds in satisfaction of 2nd count
2. Meaning no such promise, but negligent in his delay. [Reasonable time on both
counts was considered to be 2 days, so, in effect, the (D) denied that 2 days was K’d in
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



the 1st count, but admitted to it by paying 25 pounds on the 2nd count.]
The (P) entered a nolle prosequi as to the first count (legal notice that the first law suit
has been abandoned- so the contract part of the case is gone – only tort case for
negligence is left), and replied that the sum paid as to count 2 was not enough to satisfy
the (P)’s claim. [This, we now see, establishes the suit as a tort suit for negligence as
the first count was dismissed.]
The Judge left the case generally to the jury, which means they were not instructed
specifically to the jury, and a judgment was entered by the jury and the (P) was
awarded damages of 25 pounds beyond that already paid, (equaling 50 pounds).
The (D) claimed instructions were too remote, and therefore they were not liable, via a
rule nisi [rule to show cause] ((P) show cause why should not get a new trial—they got
a new trial based on misdirection given to the jury).
Rule nisi is made absolute – the rule stands!
ISSUE: Should the rule nisi (rule to show cause) on the grounds of misdirection for failure of the judge
to instruct the jury not to take lost profits into consideration be considered absolute and the
defendants be barred from a new trial?
RESULT OF Rule nisi has been granted and made absolute. Court orders a new trial with new instructions to
APPEAL: 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
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Kraus (webbing) v. Greenbarg (overalls
Contract; (Hadley + substantial factor test).
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/ the legal test to be met in order for something to be a
legal cause is that it shall have been a substantial factor in bring about harm.
STATEMENT OF Action brought by a webbing company, seller, seeking damages against an overall company,
CASE: buyer, for non- payment of goods as per 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 overall company (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.
 The webbing company sued the buyer, overall company, to recover $15,326.13 for the
PROCEDURE:
webbing sold and delivered to the overall company pursuant to the latter’s order.

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 [webbing company’s failure to deliver the webbing as per schedule].
 The jury returned a verdict in favor of the overall company for the counterclaim and
judgment was entered for the difference less, $2,000 [for defective/late merchandise].
 The plaintiff/webbing company files this appeal.
ISSUE: [Whether at the time of making the K, the party who broke his promise (webbing) knew that his
breach would probably result in the kind of special damages claimed and thus could be said to
have foreseen them.] AND [whether the webbing company could be held liable if the overall
company could have avoided the penalties through mitigating the damages (getting extension)
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?
Affirmed.
RESULT OF
APPEAL:
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 factor and proximate cause (or sole and
primary 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 causes those damages,
then the breaching party is liable for those damages.
REASONING: Doctrinal: “Special damages for a breach of contract are not recoverable unless they can fairly
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and reasonably be considered as arising naturally from the breach 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 of the parties
at the time of the contracting as the probable result of the breach, their recovery has been
allowed.” Hadley v. Baxendale
 PN law states that one is not required to go through 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 with 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.
---CAUSATION:
The overall company’s delay was primarily caused by the webbing company’s
failure to deliver on time, which was the sole cause of the damage claimed (despite
the webbing company’s arguments of contributing causes on the overall company’s
behalf)
Virginia Railway v. Armentrout
Tort; defendant (railroad)
158 F.2d 358 (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 Action by Charles Daniel Armentrout, an infant who sues by Daniel Richard Armentrout, his
CASE: next friend (guardian, probably parent), against (a railroad company), the Virginia Railway
Company, for injuries sustained by plaintiff when struck by defendant’s train.(Judgment found
for P, D appeals)
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 unnoticed 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. Infant was walking and was supposedly intelligent
according to parents, especially in regard to reacting to train whistles in an appropriate manner.
The train approached and the engineer was waiving at others, family and friends and
blowing his whistle. Evidence is conflicting as to whether he blew the whistle as he approached
where the child was, but his testimony stated he saw an object on the track, but didn’t recognize
it was a baby until about 191 feet away. The child did not remove himself from the crossing.
Engineer tried but was unable to stop the train [he tried using sand] until 40-50 feet beyond the
infant, thus running over the infant and causing him to lose his left arm above the elbow and
right arm above the wrist. (awkward wording)
Testimony was given that no signal was given by the engineer to alert the infant of the
danger and No test was made to ascertain in what distance the engine could have been stopped
when going at various speeds (10-20mph). Testimony was given that train traveling at 10-15
miles an hour could stop in 35-75 ft, and going 18-20 mph could stop in 75-95 ft; and that the
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engineer’s attention was diverted and that there was no sand found on the track.
PROCEDURE: Judgment for P for $100,00; D appeals on the grounds that the judge erred in his instruction and
his refusal to set the verdict as excessive.
Two issues of negligence were submitted to the jury on the part of the railroad: (That the
engineer was liable if the jury found)
1) That he failed to give adequate warning (bell or whistle as required by West
Virginia Code) of the approach of the engine, thus causing the accident, and that
the child of mental capacity to understand the meaning of such adequate warning
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.
(This argument later disappeared.)
 Nobody could find a judgment for the first trial, so they retried (found for D)
Defendant appeals of the grounds of misdirection of the jury instructions and excessive verdict
- Was the failure to give warning signals the cause of the injuries? Could this be
applied to a 13 month infant; did he have the mental capacity?
- Because no test was made to determine where the train could be stopped, and the
judges refusal to grant one.
- Defendant wanted another instruction regarding whether reasonable and ordinary
care was taken in light of the circumstances [asking to consider how people
respond]--- judge denied.
- Tests of the speed and ability to stop
a. Defendant wanted another instruction regarding emergency circumstance
and the reaction of freezing the decreased reaction time
Was the instruction for damages correct—forcing a larger verdict then what should occur with
instructions too broad allowing jury too much freedom to grant a large sum? [This lump sum is
excessive as interest and investment can be earned in addition to the sum awarded.]
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 Reversed on errors in instructions to jury and remanded. Trial ct erred in refusing to set aside
APPEAL: the verdict as excessive and grant a new trial.
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. A child of that age is incapable of extricating himself from
peril. According to the court, if he could not be contributorily negligent, he could not care for
his own safety. So, blowing a whistle would not have saved the infant.
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
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damages rewarded
In re Polemis & Forness, Withy & Co.
Tort; plaintiff
3 K.B. 560 (Court of Appeal 1921)
RULE: If an act would or might probably cause damage, the fact that the damage it 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 This is an action brought by the owners of a steamship against the charterers of their steamship
CASE: for damages due to the destruction of the steamship by fire caused by the negligence of workers
employed by the charterers.
Steamship owner (Polemis) chartered his ship to charterers [defendant (Furness, Withy and
FACTS:
Co)] for cargo service during the duration of the war with an option of an additional six
months afterwards.
A clause in the contract said the owners were to provide and pay for all the provisions and
wages of the employees, insurance of the vessel, war risks excepted and engine room
stores. (Clause 3)
Another clause provided that the ship was to be returned in the same good order with wear
and tear expected. (Clause 5)
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.”
Clause states in case of anything, three arbitrators hired by both sides
Ship went from Lisbon, Portugal, to Casablanca, Morocco, where Arab workers discharged
the cargo. When reloading to head to Safi, Morocco, Arab workers placed boards as a
platform for transferring cases of benzene or petrol.
The spark was caused by a falling board coming into contract with a substance in the hold
of the ship, believe it was petrol vapour.
P (steamship owner) argued that the charterers were liable as the fire caused by negligence
was not an excepted peril and it was lost by negligence of those they hired; D
(charterers) argued that the fire was an excepted peril, and that letting a board fall
could do no harm, so the danger/damage was too remote (i.e. it wasn’t foreseeable).
Three arbitrators hired by both sides found that the ship was lost by fire and that this fire
arose from a spark igniting petrol vapor in the hold, caused by the negligence of the
Arabs and other winchman working.
--The fall of the board was caused by the negligence of the Arabs engaged in the work
of unloading the ship. The Arabs (because they were referred to as “Arabs”, there
appears to be some bias against them by the British) were employed by the charterers
or their agents the Cie. Transatlantique on behalf of the charterers and were 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 196,165 L (pounds). 1 s (shilling). 11d
(pence—based on French word denier, Roman penny)
PROCEDURE: There is a contract clause for arbitration of disputes and each side picks one arbitrator, then they
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both choose the third. This is normally binding, especially when written into K, and hard to
overrule finding of fact, but can overrule the decision. 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 aforementioned sum. If the Court decided the
award was wrong, then they get nothing. The arbitrators awarded the owners the amount/value
of the ship and the court affirmed this award.
The charterers appealed this decision based on two claims:
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 arbitrators?
AND
Was it foreseeable for this damage to occur?
Charterers argue: damages should be limited in that they could only be applied to what were
the foreseeable consequences of the breach of duty
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.
RESULT OF Affirmed the judgment for the owners with the money granted by the arbitrators.
APPEAL:
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
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 its exact operation was not foreseen is
immaterial.
Policy: Negligence has a lesser standard than tort
Christianson v. Chicago, St. Paul, Minneapolis, & Omaha RR
67 Minn. 94 (Supreme Court of Minnesota 1896)
RULE: *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. (Same as Polemis)
*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 he is liable for any injury proximately
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STATEMENT OF
CASE:
FACTS:
PROCEDURE:
ISSUE:
resulting from it, although he could not have anticipated the particular injury which did happen.
*Consequences that follow in unbroken sequence, without an intervening efficient cause, from
the original negligent act, are natural and proximate.
Action by an employee of the defendant railroad company for personal injuries, seeking
damages for the injury caused by the negligence of the Railway’s servants. Action of tort.
Plaintiff was employed as a second hand. He and two others started easterly on a handcar,
while at the same time, another handcar headed Westerly. 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 due to the nature of the gearing. At this rate of speed, the cars needed 100
feet to stop. The cars became within 60 feet of each other. Upon P seeing the other car so
close, he 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.
District court found for the plaintiff and the defendant appealed
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 such
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.
Plaintiff Argues—Foreseeability is irrelevant in determining liability; if the negligent
act is the proximate cause of the injury, then liability is applied.
Found that the rear car was the proximate cause of the plaintiff’s injuries.
RESULT OF Affirmed. Motion for a new trial denied.
APPEAL:
HOLDING: Narrow: A [Railway] employer is liable for the employee’s injuries, where agents of the
employer 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.
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, then he is liable. If front car had stopped suddenly & the rear car
had crashed into him, then he would be liable. This should be no different.
 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
Hadley rule is not applicable because this is not a contract case. Contract recovery is more difficult because this type of
damage is not foreseeable
 Connection: Rejects foreseeability
Hill v. Winsor
118 Mass. 251 (Supreme Judicial Ct of Mass 1875)
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RULE:
STATEMENT OF
CASE:
FACTS:
PROCEDURE:
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, not caused by an intervening act. (Same as Polemis)
This is an action by a worker on the fender of the Warren Bridge against the owners of a steamtug Argus to recover damages for negligence when the ship struck the Warren Bridge and
caused the plaintiff injuries.
The plaintiff was working on the fender of the Warren Bridge when the operators of the steamtug Argus ‘caused’ it to strike the bridge (alleged negligence). The plaintiff suffered injuries.
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, injure a person in his estate or his person”?
RESULT OF Exceptions overruled and the decision affirmed in favor of the plaintiff.
APPEAL:
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.
 Is not necessary that injury in its precise form is foreseen.
Policy: Injuries resulting from negligent acts should be compensated.
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
Palsgraf v. Long Island RR
Cardozo opinion.
284 N.Y. 339 (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
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plaintiff.
PROCEDURE: 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 Cardozo reversed this decision and dismissed the complaint with costs in all courts.
APPEAL:
HOLDING: A plaintiff cannot sue as a vicarious beneficiary of a breach of a duty owed to someone else
(man with package), 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.”
 There is no negligence in the air
Plaintiff was not in the zone of danger created by the negligent act of the defendant
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Overseas Tankship (UK) Ltd. v. Morts Dock &Engineering Co. (Wagon Mound I)
Tort; ship not liable A.C. 388 (1961) Contributory
Negligence
RULE: Double Foreseeability Test: Only liable for those injuries that (1) are foreseeable and for (2)
damages that the defendant’s negligence would foreseeably cause.
Foreseeability is determined by whether the reasonable man would have foreseen the damage.
STATEMENT OF Action by the owner of a wharf, Morts Dock & Engineering Co. against the charters of the
CASE: Wagmon 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.
 The plaintiffs were in the business of shipbuilding, ship-repairing, and general
FACTS:
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 wharf 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.
 The 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.
 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.
ISSUE: Should a negligent actor be liable for all damages resulting directly from his negligent act, even
if the consequences are unforeseeable?
RESULT OF Reversed. The plaintiff’s action for damages is dismissed with costs and the action as related to
APPEAL: 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, simply because they can be said to be direct. One should only be 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
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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, were the damages foreseeable?

Policy: The problem with the Polemis rule is it forces Judges to be philosophers determining
the true chain of causality
RULE:
STATEMENT OF
CASE:
FACTS:
Overseas Tankship (UK) Ltd. v. Miller Steamship Co. (Wagon Mound II)
Tort; Plaintiff (boat owner) 1 A.C. 617 [1967]
Foreseeability Test: 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.
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.
Same as Above
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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 Decided for Plaintiff; the oil burning ship could have prevented the damage through the
APPEAL: 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
Mauney v. Gulf Refining
Tort; defendant; Objective Theory of K
193 Miss. 421 (Supreme Court of Mississippi 1942)
RULE: Two Part Test:
(1) If the defendant could not reasonably foresee that his negligence would cause the plaintiff’s
injuries then he is not liable for them.
(2) Defendant is not liable for those injuries that are too remote, unusual, improbable,
extraordinary (unforeseeable or unreasonable).
STATEMENT OF Action brought for personal injury damages by owner of a café against a wholesale distributor
CASE: 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 was about to blow
up.
 Mauney was in a café across the street.
 When she heard the shouts, she turned to pick up her child and run away.
 She fell over a misplaced chair and as a result, suffered a miscarriage.
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Chancery court found for the defendants. Plaintiff appealed
PROCEDURE:
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 On motion to strike, sustained in part and overruled in part. Affirmed on merits.
APPEAL:
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 negligent 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 to
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 provision or anticipation including “an unusual, improbable,
or extraordinary occurrence, although such happening is within the range of
possibilities.”
 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?
Sanford v. Boston Edison Co
316 Mass. 631 (Supreme Judicial Court of Massachusetts, 1944)- Injunction granted
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.” (361)
 The difficulty in making an accurate evaluation of the subject matter involved, is
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
SOC: The union brought an action in equity against employer for the specific performance of the
company’s promise to recognize an assignments between the parties and for execution for the
amount due
To check off agreement (employer deducts your union dues and then sends it to 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.
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“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.
 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 due 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. (122 assignments)
 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 has designated the union as their exclusive collective
bargaining representative.
 The bill also contains provisions of wages, hours, tenure, and dispute settlement.
o
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.
o Court recognized that bill did state cause of action for SP
 Demurrer based on the defendant’s contention that there is no cause of action because there is
an 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 be made.
 Want money they did not collect.
 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?
 (court should not be allowed to substitute for the check off which it promised as a choice of
either continuous litigation or delay in receipt of sums due)
RESULT REVERSED
ON APPEAL:
NARROW Where a party to a contract refuses to recognize and carry out its duty to the other party, and there
HOLDING: 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. (Baur v.
Int’l)
 K is affirmative promise to recognize assignments (5/7)
BROAD Specific performance should be granted to the plaintiff because this is the only remedy available
HOLDING: to allow the plaintiff the full benefit of contract.
DOC Specific performance shall be granted, “Where damages are an inadequate remedy and the nature
REASONING: 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.
 Growing tendency to give the promisee the actual performance which he bargained for if he
prefers it
 The bill states a cause of action. Only by ordering specific performance can the court secure
to the plaintiff the benefit of the contract.
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 Damages not adequate compensation if P will have to be involved in multiple
litigations
Cases involving SPClark v. Flint, Leach v. Fobes, Somerby v. Buntin, etc.
POLICY The obligation of equity is to secure for the plaintiff the benefit of the contract.
REASONING: 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
- should we allow people to breach if they can pay off? Efficient breach- SP may make it more
difficult for people to enter K’s
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
Equity will lie when a trespass is continuous—multiplicity of suit
SOC: Landowner is suing the licensee/trespasser for a bill in equity to compel trespasser to remove
rocks.
FACTS:
 The defendant, who was 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.
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 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:
1. 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?
2. Could he had sued at law for trespass?  Doesn’t seem fair because all that P would
get is the rental cost of the land, so the D may pay those damages and continue to
trespass if it’s worth it for him to keep paying (such multiplicity of suits should be
avoided) (Murdoch case)
RESULT Judgment affirmed.
ON APPEAL:
NARROW The granting of specific performance was appropriate due to the continuing trespass of the
HOLDING: defendant making a remedy at law inadequate, the damages occurred to the plaintiff daily.
 Original permission given did not justify D actions
Court realized that P could not get rid of the rocks on his own- where would he have put them?
BROAD Where a license to use land is revoked, and the user does not oblige, he becomes a trespasser
HOLDING: and a court is entitled to grant an injunction when no other adequate remedy at law will cure the
injury
DOC A court in equity will act in such cases only after the plaintiff’s rights have been established at
REASONING: law, with the exceptions being when the facts are in doubt and the decision makes the rule less
important.
 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.
Avery v. NY D required to remove fence
o
a continuing trespass the remedy for which at law would be inadequate and involve
repeated actions by the injured party for daily occurring. [This case allows us to support
the judgment the court here reached]
POLICY The plaintiff can sue daily until removed, no end in site to the litigation.
REASONING: Although the P had a remedy at law, it would prove too burdensome on the P ( P would have
to redress the wrong done to him) and create a multiplicity of actions.
o
Granting equitable relief is a cost shifting mechanism.
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Campbell v. Seaman
63 N.Y. 568 (Court of Appeals New York 1876)
Rule: Use your own property as not to injure or disrupt 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 the owner to leave it
Statement of Case: The landowners brought an action in nuisance (the use of land that harms neighboring property
unreasonably) against the brick manufacturers to recover damages for injuries sustained by to the landowner’s property,
where the movement of southerly winds escaped the kiln and entered their land, and, to restrain the continuance thereof.
if not, like Butler v. Telephone where there could be terminal trespass
Facts:
 P owns 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. (1849)
 Built and landscaped (1857- 59)
 The trees serve as a protection against winds and also to ornament this property saved many of these pines.
 The plaintiffs also removed many of these forest trees 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 defendant, whose land adjoins the said lands of the plaintiff, manufactures brick on his own land.
o Bricks burned from 1834-40; not burned until 1853. Burned from 1853- 1857 and not again till
1867
o Before suit P had objected to the brick burning
o P built a home between 1857-1859.
 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 antracite coal dust.
 The object is heated and takes fire the burning of the kiln causes sulphurous 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 sulphurous acid to pine and Norway spruce trees.
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 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 anthractie coal and coal dust was used and employed.
 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 it reduce the value of the
defendant’s property as a brick-yard; that as a brick-yard
 Harm not continuously…only on last two days of the process
 Defendants used as a brick yard between various periods in time, using the land for various purposes….depends on
the industry and time period.
o No complaint when originally moved into the area
o There is alternative to the making of the brick but is more expensive
o Estimated damages for P- 500
 (Other important fact is that there’s another process to make bricks that uses another wood; but it puts the D
at a disadvantage because it’s too expensive)
Procedure:
 The appointed referee found the plaintiff entitled to recover the damage proved to have been sustained, and
ordered an injunction restraining defendant from burning brick at the manufacturing location, adjoined by the
plaintiff’s land
 The general term of the supreme court affirmed judgment
 The defendant appeals.
Issue: Did the lower court err in entering judgment for the plaintiff?
Result of Appeal: The General Term on Appeal is 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 is 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: D’s use of his property constituted a nuisance because the use produced tangible and irreparable injury
to P’s property.
Court below properly granted a writ for 6 reasons
1. remedy inadequate
2. shrubs could not be replaced because value not clear
3. when announced equities the damages insubstantial
4. harm to defendant to restrain 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 breathe in it
 Immaterial that the nuisance was not continuous and the injury was occasional.
 The cost of moving business was not too high
Restate the Duke case for the Manufacturer:
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A bill in equity, such as granting an injunction, should lie only when a legal remedy is inadequate, and where the item
of dispute must be returned or preserved in specie, where in this case, a legal remedy would be adequate since damages
would suffice and land could never be restored to its original condition.
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…
SOC: Developer filed suit against an operator, seeking to permanently enjoin his operations for being
a public 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:
ISSUE: 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 Injunction upheld, but plaintiff must indemnify the defendant for a reasonable amount to the
ON APPEAL: cost of moving or shutting down.
NARROW
HOLDING:
DOC
 This was both a private and public nuisance
 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 indemnify the defendant for his losses.
 Section 36- 601 (public nuisances dangerous to public health (condition or place which
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REASONING:
becomes a breeding area for mosquitos…
POLICY Protect the public, but the defendant was there first and the plaintiff does not get free reign to
REASONING: destroy the business of another.
 Court is trying to protect the legitimate interest of the community, while simultaneously
protecting the operator
 Had the developer been the only person affected by the nuisance (then would have been
private), would have constituted a “coming to the nuisance” and would not have been
entitled to an enjoinment
Occurs when person knowing of the industry on the land, decides to enter and
remain anyways
Private nuisance- affects one or only a small group of people
 Public- affects the rights of citizens as a part of the public (signif. # of people)
Boomer v. Atlantic Cement Co.
26 N.Y. 2d 219 (1970)
RULE: A nuisance will be enjoined although market disparity is shown in economic consequences
between the effect of the injunction and the effect of the nuisance.
SOC: Property owner sought specific relief from a plant operation, seeking injunction and damages
for the alleged nuisance.
FACTS:
 D operated a large cement plant near Albany
 Neighbors are upset about a the emits smoke, dirt…from the plant
 The total amount of damages found to P’s property was 185,000
PROCEDURE: A nuisance as filed in trial and temporary damages was allowed, but an injunction was denied.
ISSUE: Should the court resolve the litigation between the parties and order an injunction to channel
broad public objectives?
RESULT Reversed
ON APPEAL:
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.
So, injunction, unless payment of permanent damages
DOC An injunction should be granted unless the defendants pay the plaintiff permanent damages to
REASONING: be determined by the court.
The rule in NY has been that such a nuisance will be enjoined although marked disparity be
shown in economic consequences between the effect of the injunction and the effect of the
nuisance
POLICY Air pollution is a public concern
REASONING:
Dissent- Jasen (very concerned with the pollution- wants injunction)
 Agree with reversal, but not with newly accepted doctrine of assessment of permanent damages, b/c substantial
 Counterintuitive to allow them to continue polluting as long as they pay
 Should not promote substantial continuing damages
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 NOT constitutionally permissible to impose servitude on the land without consent to the owner
o better and more effective dust control devices could be developed within the time allowed to abate the
pollution
Wakeman v. Wheeler & Wilson Manufacturing Co.
(Court of Appeals New York 1886)- grand style all concurred (they didn’t consider the
barring of the statute of frauds)  need reasonable adequate measures of damages  Price,
location, quantity, time frame is unclear
RULE: One who violates his contract 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. 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.
 Parole evidence rule regulates extrinsic evidence which
contradicts/changes/supplements the writing that was stipulated by the agreement
 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).
SOC:
This is an 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 for exclusive rights of distribution.
 Want to see if they have market there- and the distributor may say that they have the
expertise there
 Can be agent against a principle
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.
o p selling machines in Mexico as agents of D
 The defendant should furnish the plaintiff machines at the lowest net gold prices.
o This was a parol agreement.
 The plaintiff entered performance of the agreement, purchased a sample machine from the
defendant, instructed an agent in the machine’s mechanism and management and then
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




sent the agent to Mexico.
In Mexico, the plaintiff’s agent sold 50 machines on his promise to be the general agent
of defendant for that locality and its vicinity.
The order was sent and filled by the defendant and those machines forwarded to Mexico
and paid for.
Shortly thereafter, the plaintiff’s agent made another sale of fifty machines for another
locality of Mexico and an order for those machines was sent to the defendant.
The defendant absolutely refused to fill this second order and all future orders from the
plaintiff.
The defendant then repudiated its agreement.
o Is the D paying the P?
o The low net gold price is not defined
o When he repudiated he sent his own people b/c found they had a market there
PROCEDURE:
 The jury trial ruled in favor of the plaintiff.- there was a binding K
 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 and
not for future profits of the contract.
o Which were actually sold
 P showed that the D had done and the amount of money he had made
 The expert testimony necessary to determine future profits is not hard fact, but
questionable opinions.
o Nobody knows what will happen in this market, new market with a huge risk to
both sides.
o Cannot use experts to testify of speculation.
 Only could recover damages for the refusal of money lost for the machines ordered.
 Boils down to $4 a machine for 51 machines ($204). The General Term of the Court of
Common Pleas affirmed the judgment in favor of the plaintiffs and denied an order for a
new trial.
 The plaintiff appealed the Supreme Court to recover from this breach of contract.
ISSUE:
 Should expert testimony be allowed to determine recovery from a breach of contract?
 Should recovery be extended for the plaintiff beyond the 51 machine and extend for
future profits lost from the breach?
 Should other evidence be allowed to prove the worth of the contract?
RESULT Reversed. The trial court erred in not allowing parole evidence to determine the value of the
ON APPEAL: contract. New trial is ordered.
NARROW
HOLDING:
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.
 Evidence of number of machines sold through the agent should have been
received
 Opinions of witnesses properly excluded
 EXCLUDE OPINIONS AND RECEIVE THE FACTS
BROAD When it is certain damages were caused by the breach of a contract, and the only uncertainty is
HOLDING: 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
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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 but other evidence to prove the value of the
contract is allowed.
DOC Parole evidence is admissible as long as it is based on fact and not speculation
REASONING:
 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 follow from the
breach of contract
POLICY Good faith in contractual relationships and limit excessive jury verdict
REASONING:
 Both parties can find opinion evidence from experts
 Uphold the freedom to contract and the importance of fulfilling contractual
obligations
 Their relationship could not be broken up at will, without some default
Mayer (P) v. McCreery (D)
Agreed to lease to P upon certain terms)
RULE: All terms of a contract must be negotiated upon for the contract to be enforceable. Otherwise
merely an agreement to agree.
INDEFINITE: Alterations to be made in the building
SOC:
Prospective lessee/ tenant brought an action for specific performance of an alleged contract to
lease certain premises in the city of New York, owned by the defendant/ lessor/ landowner. 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.
(SP can be both a legal and equitable remedy)
FACTS: The only evidence is three letters:
o 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, ect.,
arranged as spoken about….”
o Yearly rent 5,250
o Building to be altered by you similar to Humes & Co
o Made in May 1885
o Defendant responded with another letter on the same day stating: …“I hereby accept
you offer.
o And that must be read by 1885
o Three days later, the defendant wrote the plaintiff another letter stating…
o 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
o
The defendant then sold this property.
 Probably thinks he will gain economically
 Court says that immaterial why the D declined the least
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PROCEDURE:
 At trial  (single judge) 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 for 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.
 Not for SP
 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 lower cour err in holding that the letter constituted a complete agreement, forming in
substance a lease of the premises referred to?
RESULT Affirmed the judgment against the plaintiff with costs. All concur. (Conditions were not meant)
A meeting of the minds must occur for a contract to become valid. No agreement except an
agreement to give lease provided the parties shall agree upon the plans for alterations thereafter
to be made.  Court says that P can’t waive condition (maybe if separate K)
 Here, the condition itself was not agreed upon
o Condition K- agreement that is only enforceable if a prerequisite is
satisfied
 Never waiver of P’s right to claim the alterations
o Months rent was only a tender
Where
the
lessor
and lessee enter into a lease agreement which is conditioned upon reaching an
NARROW
HOLDING: 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
HOLDING: reason and such an agreement is not binding.
DOC This is a contract stipulating that the parties will come together to enter into an agreement at a
REASONING: future point: an agreement to agree.
 The terms of the agreement are conditional
o Agreement if alterations made by the D
o 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
REASONING:
 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
 Statements of motive are immaterial
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United Press (P) v. New York Press Co. (D)
FORMALCASES)  but should have had policy
Plaintiff wins nominal damages then D prevailing party b/c P recovered less than 50, became
entitled to the costs of the action
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 for breach; a contract must
be certain and explicit in its terms. Executory contract (performance not complete)
INDEFINITE: term is indefinite and therefore, could not determine the price to be paid for breach (also
duration)
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
o Very different
- Difference b/c of type of contracts
SOC:
Deliverer of news reports brought an action against a distributor/buyer of newspapers for
damages for a breach of a contract (in writing). 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.”
 D right to receive the news report without interruption after the first day of January and
the plaintiff shall continue to deliver the same if required by the second party at a price
that is not more then the competition.
 K made in July1892 and continued till Jan 1894 for the delivery and payment of the 300
 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 (1892) to the end of 1900.
o Came out to be 93,000 (KP – cost of performance)
o P said that practical construction of the instrument
**court says that if K terms simply ambiguous may be able to explain the damages by
evidence of the acts
PROCEDURE:
 The trial judge denied a motion to dismiss the claim of the plaintiff’s case, a verdict was
directed for the plaintiff in the sum of six cents, nominal damages. (token sum)
 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.
 Defendant asked for a directed verdict, but directs for the plaintiff for nominal damages,
too indefinite to figure out the damages…substantive question of damages
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 The appellate division affirmed the judgment.
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…
Whether the K of the parties was of that legally complete character as would bind either to
continue
RESULT Affirmed (with costs for the defendant because the damages nominal)
ON APPEAL:
NARROW When parties entered into an executory contract for the sale of news reports for a price not to
HOLDING: exceed what other press companies paid, and where the defendant paid the plaintiff $300 per
week there was an unenforceable, executory contract 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
HOLDING: 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
DOC Where a contract is of an executory character and requires performance over a future period of
REASONING: 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  for material terms
 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
o The D was not bound by any specific price
 Statute of frauds all essential terms need to be evidence by writing, so
Price can’t be supplied by oral evidence  could not be performed within a
year?
 Civil procedure denies the P costs unless he recovers sum of 50 or more
 Court may award further sum
It is not the role of the court to interfere with commerce.
2POLICY
REASONING:
 Anti-commercialism: discourages long-term contracts, court trying to channel
behavior into a formalized writing. Formalized way of looking at contracts.
Demands specificity.
Mackintosh v. Thompson
Appellate Division of the Supreme Court of New York 1901)
Formal**
RULE: 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…
INDEFINITE: 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
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 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.
SOC: This is an action by an architect against his employer/architect for a breach of contract (share of
the profits) and quantum meruit, seeking in addition to his salary, the reasonable value of his
services and time spent upon two buildings he helped to design while employed at the
firm$12,356.20
- He gets causes of action mixed up
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;
 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 no increase could be given but he should be paid more if work
came in.
 March 11, 1896  the plaintiff entered into a contract with the defendant in which the
plaintiff agreed to remain as their employee at the same salary, which he was then
receiving, during the completion by the defendant of two buildings.
 In addition to salary of $36 per week, he was to be paid reasonable value of his 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.
PROCEDURE: The is an appeal for the D from the SC
 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 defendants 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
ISSUE: Did the trial court err in dismissing the plaintiff’s complaint as too indefinite to be enforceable?
RESULT The trial court’s dismissal of the complaint is affirmed with costs.
ON APPEAL:
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
HOLDING: (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.
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BROAD A promise to enlarge compensation is unenforceable due to indefiniteness where the promise
HOLDING: 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.
DOC If a promise for increased compensations is not sufficiently definite to determine the intent of
REASONING: the parties, it is not enforceable
 “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
REASONING: was indefinite.
Mackintosh v. Kimball
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
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INDEFINITE: 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).
SOC: This is the second action of the above case; this time the cause of action is based solely on
quantum meruit. (Reasonable value of services) / Same cause of action?
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
 Is this new consideration?
 Hurts client
 If he was going to quit why offer to stay just to use facilities?
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.
7. π stays on and completes work, receiving regular salary but not more.
 Were witnesses that D promised P extra compensation
 P adds that have D suggestion as to how to do business but D said do it your own
way
 No doesn’t strengthen P
*FOUR YEARS AFTER ORIGINAL CASE
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.
 D appealed
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 reversed with costs to the appellant to abide the event.
ON APPEAL:
NARROW When an architect’s employee relies upon an indefinite promise that he will receive a
HOLDING: 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
HOLDING: 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.
DOC The validity of a contract is based on the definiteness of its terms.
REASONING:
 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
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stranger.
POLICY A promise/proposal for future arrangement of profits does not entitle an employee to receive
REASONING: pay or quantum meruit if the proposal is indefinite.
 Court cannot create employment contracts.
Notes: minds may have met, but still indefinite
 Architects should get terms on paper (lesson of the case)
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 partnership duties)
Courts mistake on thinking about quantum meruit
 the reasonable value of services in quasi contractual relation
 How did court misinterpret it?
o They use the analysis of indefiniteness to show why QM wouldn’t work
o But for there to be a quasi K, the purpose is there does not need to actually be an express, definite K
Mac II:
Bad Lawyering:
Mackintosh’s lawyer tried to admit a private letter from a judge from the Court of Appeal refusing an
application for an appeal from a judgment; the court called attention to this in the opinion to show their
disapproval of this attempt by the lawyer.
 Testimony by one partner against another partner after the dissolution of a partnership is admissible only as
statements made by a stranger, and the court, nor the other party to the suit is bound by them.
 The new info for P didn’t help him show that there was a definite agreement
Bluemner v. Garvin good lawyer!!
Would have been able to recover in QM
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
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formal contract theory, but with appropriate factual evidence, can be enforced under QM.
INDEFINITE: share of commission, what is fair share?  P says half
-maybe look at custom, amount of the work,
CHAIN: Uses UPI 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 Mac II 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
SOC: 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) [40,000 for the total project]
and a second cause of action in quantum meruit for the reasonable value of services rendered
($10,000).
- lawyer is giving the court a choice between the two
First cause20,000 for his performance BREACH OF K
Second 10,000 for his making of plans to remove public building  THE VALUE OF HIS
SERVICES
FACTS:
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PROCEDURE:
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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 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.
o No evidence that D assisted
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.
o P worked for about 10 weeks
o All D offered was 40 $
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.
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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 is in the plaintiff’s own testimony?
RESULT Reversed and a new trial is ordered, with costs to the appellant to abide the event.
ON APPEAL:
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
HOLDING: 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
HOLDING: 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.
DOC When an agreement is so uncertain that the court cannot enforce it, then no obligation exists
REASONING: and no contract exists either.
POLICY Interpretation is not the business of the courts- should not create employment K’s
REASONING:
Note: 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.
 United Press: Prevented recovery in this case for fair share of profits
 UP prevents Bleumer to get his fair share of commissions- that was executory, this is executed
 Better basis for recovery than Mac I and II, b/c there he was receiving a salary and here is not getting anything b/c
the other party was unjustly enriched
 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, between 6-8,000
 Insufficient for a jury verdict of 9,800
o Cannot get QM because the defendant made the plaintiff’s attorney pick an action
 In new trial: bring this under QM theory and get the witnesses and testimony to prove case
o Get experts to talk about the market and what was a reasonable value for a NY architect
 Different from Macintosh, not receiving salary
 In Wakeman, used parole rule to exclude opinions, here it would be facts on the customs of mark
Moran v. Standard Oil Co
FIRST CARDOZO OPINION (Gets all the votes) / Question of FAILURE OF PROOF
* turns the NY law upside down
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211 N.Y. 187 (Court of Appeals New York, 1914) Cardozo opinion output K
(agreement= implied mutual obligation)
RULE: 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)
INDEFINITE: Duration of employment (court interprets it to be 5 years)
CHAIN: Moves away from United Press (looked at specific terms) and begins to look at the intent of the
parties
 Recovery even with indefiniteness.
SOC: 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 employment contract, under which he was employed, to
recover damages from September 1903, to April, 1908.
FACTS:
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PROCEDURE:
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.
However, the superintended 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.
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.
o Silence does not amount to acceptance, except when it does
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.
 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. (never found a formal binding K)
 Lower court could not rule on QM b/c no evidence of reasonable value of service
 The Supreme Court of NY affirmed both parties’ cross-appeals of these rulings.
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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 The judgment should be reversed upon both appeals and a new trial granted without costs to
ON APPEAL: either party.
NARROW Where the plaintiff and the defendant entered into an agency contract, which stipulated an
HOLDING: “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.
HOLDING:
DOC An agreement is not merely a promise made by one party to the other, but it was an agreement
REASONING: 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
REASONING: intentions and interpretations are different. We therefore can imply obligation.
“Cardozo hid his light under a bushel” so subtle, can’t see what he was doing till later
**D says P would need to show volume of business, reason for termination, and sales
Notes:
 Cardozo attempts to clarify UPI: 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.
o Could say that UP never decided that issue so it is not binding precedent
**words only one way- question of law
Canons of Cardozo Construction (helps people understand K):
o Agreement implies mutuality of obligation (if one is bound so is the other)
 Used agreement as a term of art
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
 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. 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. In this case they can determine damages through the use of the index that was to be
used in calculating commissions. In UP you can also calculate it based on market price but the court did not
consider this.
 We can look at these circumstances in various ways:
 What does it mean to have a binding K?
 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.
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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.
K Theory:
 Under what K theory did the lower court award commissions? Not under formal K theory because there was no
binding K. Cardozo said the lower court did not know what they were doing. They granted judgment for QM, but
they confused QM b/c there was no evidence to determine reasonable value of services.
 Difference b/w UP & Moran: The focus now is on the intent of the parties and not on the specificity of terms. At
least Moran was based on 5 years on schedule of commission, but United Press could have been 1 cent up to $300
a week.
 Cardozo is coming up with methods in interpreting the intent of the K.
 In UP, the issue was not the existence of the K but a theory for determining damages.
 UP would not enforce this commission based on market prices every 90 days as they would only enforce a K with
a definite amount specified.
 This case is distinguished in that the issue here is whether there is a K at all. In this case they can determine
damages through the use of the index that was to be used in calculating commissions. In UP you can also
calculate it based on market price but the court did not consider this.
 We can look at these circumstances in various ways:
 What does it mean to have a binding K?
 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.
 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 – owned by
Rockefellers). David v Goliath setting probably moved Cardozo. Wanted to level the playing field.
Varney v. Ditmars
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
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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.
INDEFINITE: 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.
 P lost on fair share and the 6 wks
 Reinterpreted UP, some K for purchase of goods, where faire share would be a market
price
 Look at intent (reasonable implications) and the subject matter of the K
SOC: This is an action for wrongful discharge brought by an architect draftsman against his
employer, an architect employing engineers, draftsmen, and other assistance, seeking to
recover for services rendered via contract for services between 11/7/1911 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 that 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. The plaintiff told the Defendant that he wanted to stay home to attend an
election in his village.
 At 4 on the day of the election the plaintiff was taken ill and remained at his house (it’s
unsure for how long).
 On Saturday, November 11, the defendant delivered a letter to the plaintiff stating that
the plaintiff was 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 (again, date is unknown).
 The 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.
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 The Appellate Division of the Supreme Court affirmed the judgment in favor of the
defendant.
 The case is now appealed by the plaintiff to NY’s Supreme Court.
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ISSUE: Did the lower courts err by dismissing the case (cause of action for the breach), 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 Affirmed with costs. 4 to 3 decision.
ON APPEAL:
NARROW Where an employer promises an employee a salary increase and a “fair share of profits” if he
HOLDING: 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
HOLDING: 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.
DOC There is no contract, and, damages for loss of profits may not be recovered where a contract,
REASONING: as it relates to a promise, is vague, indefinite, and 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
REASONING: 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
Dissent by Cardozo
o A promise to pay a fair share of the profits is not always indefinite as to not be enforced
 Look at the industry, custom
 Here he failed because he did not the evidence
o 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
o Intent can be inferred from the contract
o Dissent in conclusion that he failed to make a case for salary; even if this amount is small he is
still entitled to it.
o 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
o Intent may be created through reasonable implications
 Thinks that he should not have gotten profits, but should have gotten salary
Notes:
This is the first case where the NY Court of Appeals considers the “fair share” of profits issue. 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
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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
services is liable therefore as an implied K.
The court clarifies United Press. Even in open price terms we can find that there can be a K (depends on the
circumstances). There is still a problem here because it is difficult to assess the value of the service. In this case it is not
enforceable because it is very difficult to measure what is fair and reasonable
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. 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. The 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.
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.
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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.
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Restatement of Mackintosh, Bluemer, and Mayer
o Macintosh: The court held that the arrangement was too indefinite to form the basis of any
obligation on the part of the defendant.
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How did the Court deal with UP?
o UP was not intended to assert that a contract of sale is unenforceable unless price is expressly
mentioned
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.
Rubber Trading Co. v. Manhattan Rubber Manufacturing Co.
TECHNICAL YET INFORMAL
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.
INDEFINITE: Technical interpretation of contract terms
CHAIN: Cardozo looks at the practice of rubber traders to fill in the blanks of this contract
SOC:
This is an action by an importer/seller of rubber against a manufacturer/buyer of rubber for an
anticipatory breach, where the manufacturer refused to receive shipments and wrongfully
repudiated the contract (because they wanted inspection to occur at different places).
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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.
 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. 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. 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.
 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.
 The seller did not give the defendant notice that the contract was abandoned
 The plaintiff made an untenable tender, the reject of which he counted on as the sole
evidence of the breach
 The plaintiff rescinded the contract for the defendant’s rejection of a tender, which
imposed an unauthorized condition all parties at fault!!
PROCEDURE:  The trial court ruled in favor of the plaintiff.
 The plaintiff amended their complaint.
 New action is that “the defendant wrongfully repudiated the contract and definitely notified
the plaintiff that it would not thereafter perform the same.”
 His 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
did not abandon the contract but imposes a new condition unilaterally?
RESULT The award of damages to the plaintiff is reversed and a new trial is granted with costs to abide
ON APPEAL: (tolerate, perform, execute) the event.
NARROW Where the defendant committed an anticipatory breach of the contract by refusing to pay for
HOLDING: 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
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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
HOLDING: subject of disagreement, it does not invalidate the contract, but where both parties accept &
act upon new terms, damages are awarded.
DOC A contract remains alive if after a breach both parties continue to act upon the new terms of
REASONING: the contract.
POLICY The plaintiff cannot collect if he does not keep his own conduct free from blame.
 Important to allow business to conduct itself—custom is better then courts to decide
REASONING:
ways of the business world.
Buyer took him to his factory to inspect patent defects and then accept, seller/ was scared that would lie about all
defects that weren’t really there
What could have the P done here once the D repudiated the K, just could have told the D of his election to sue
(recission didn’t count, because he waited too long)
 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
 Plaintiff’s Error:
 Cardozo says plaintiff at fault b/c rescission of K was not due to anticipatory breach by buyer, it was b/c of
buyer’s refusal to inspect at warehouse.
 His response that taking the goods out of warehouse meant acceptance was not the correct response by the
seller according to Cardozo.
 Because seller decided to continue K, any intervening acts after that time could be used as a defense by buyer.
 Plaintiff/seller did not give proper notice that he was suing and rescinding the K.
Notes:
 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
o 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.
o 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!
 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
o Construction and intent of the parties
 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
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
1)
2)
3)
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
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
Retraction may be by any method proving performance
Retraction reinstates the repudiating party’s rights under the contact with due excuse and allows to the aggrieved
party for any delay occasioned.
Wood v. Lucy, Lady Duff Gordon
Cardozo didn’t use their canons of construction? / formalism is DEAD
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.
INDEFINITE: mutuality of obligation; consideration
CHAIN: Moves further away from formalities; looks at how people “should” act and interprets the
contract accordingly
 “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.
SOC: 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
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millinery without his knowledge and withheld profits.
FACTS:  The defendant is a creator of fashion whose taste is valuable.
 She 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
 Designer put her name on other things that the P did not do (maybe to make more money)
 P MOST likely drafted the K, and he didn’t include any of his obligations (no consideration)why didn’t he draft anything?- maybe b/c this is how his business operated/ maybe he had a
lot of clients and waited to see what the market did to determine what designer to push
PROCEDURE: The lower court denied the defendant’s motion for judgment in her favor upon the pleadings,
she demurred—it is a so what or a 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 Judgment is reversed and the demure is allowed go to trial
ON APPEAL:
NARROW Where the plaintiff and the defendant entered into an exclusive agency contract, the plaintiff’s
HOLDING: 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
HOLDING: actions of the parties.
DOC A promise may be lacking and yet the whole writing may be “instinct with an obligation,”
REASONING: imperfectly expressed and if so, there is a contract
 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
REASONING: sovereign talisman, and every slip was fatal
Cardozo implies the promise/obligation
How is the whole writing instinct with obligation
- there promise has value
- looking at the market
(Moran says contracts must be construed in the most favorable light to the party who did not write it… is that the case
here?)
Canons of Cardozo Construction (helps people understand K):
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o
o
o
o
Agreement implies mutuality of obligation (if one is bound so is the other)
 Used agreement as a term of art
An intention to make so one-sided an agreement cannot be readily inferred
Construe language of a contract most favorably to the party that did not write it
Give the words the meaning which the writer should reasonably have expected to give them
FOCUS FROM Moran was on intent… now it’s on implied promises? *Mutuality of obligation
MORAN argued D had an obligation.
Notes:
Nudum pactum informal agreements that is not legally enforceable
 Plaintiff’s Argument: Implies mutual obligation that he would use reasonable efforts to push her line. Ct allows
and agrees with this. They actually push the implication to allow the P to recover.
 Defendant’s argument: P had no duty to push her products; he could push whoever he wanted, depending on the
market. Said P could only profit from agreement but could not lose as there was no risk involved. She could
counter his argument saying he did not use his best efforts.
 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.
 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.”
Oscar Schlegel Manufacturing Co. v. Peter Cooper’s Glue Factory (1919
Jobber= middle man
189 App. Div.843 (Appellate Division of the Supreme Court of NY 1919)
Requirement seller supplies all the goods a buyer needs
RULE: If a manufacturer and a jobber enter into a requirement 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.
INDEFINITE: Quantity terms in agreement; is there a cap?/ the amount to be furnished
CHAIN: Lower court decision (requirements contract creates a mutuality of obligation).
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SOC: 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 from 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 plaintiff 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.
 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: 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?  no
RESULT Judgment affirmed with costs.
ON APPEAL:
NARROW When a buyer and a seller enter into a requirements contract for the sale of glue with an
HOLDING: 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
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HOLDING: 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.
DOC If two parties enter into an agreement the terms may be implied if both parties enter into this
REASONING: 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.
 A rising market could have been guarded against by the defendant by inserting in the
REASONING:
contract a clause fixing the maximum amount which under the plaintiff might be
entitled to receive, instead the defendant made an absolute contract at a fixed price for
the entire year to deliver as much as the plaintiff could sell to its customers.
 Breaching party should not profit from the breach
Dissent
 Lacked mutuality and obligation
 No consideration offered in the letter
 Not agreements on the part of the P to do anything
 No reciprocal obligation on behalf of the plaintiff
 Need to look for the reasonable intentions of the parties, not intended to give the P such an unconscionable advantage
 There should be an approximately accurate forecast
 P did not act in
Notes:
 In terms of practicality—remember it is WWI
 It is not until this time that the courts begin to accept these arrangements as binding Ks representing one of the
earliest instances in which commercial needs and pressures forced a change in the position of the 19th Century
Consideration Theory
 Earlier cases argued these “arrangements” were not binding Ks b/c buyer’s promise to buy requirements was
illusory and did not constitute the necessary consideration for the seller’s promise to sell
 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!
Oscar Schlegel Manufacturing Co. v. Peter Cooper’s Glue Factory (1919
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. Decided
without 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.
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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 Reversed and remanded no breach was shown (the P never agreed to sell anything)
ON APPEAL:
NARROW Where the plaintiff and the defendant entered into a requirements contract for the purchase of
HOLDING: 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 indefinite quantity term and the buyer was not
HOLDING: 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.
DOC For a contract to be enforceable it must have mutual promises or obligations of parties to a
REASONING: contract, either express or necessarily implied to furnish the requisite consideration.
POLICY No obligation for the plaintiff to do ANYTHING!, there was no express consideration
REASONING:
Jobber (incidental)
Resale value
Look at what he ordered previous year that would be fair and equitable to both parties
Notes:
 Did the K lack mutuality?
 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.
 D says that P had no obligation to them. They did not have to buy from them. They could have bought
glue somewhere else. They did not push their products.
 What do reasonable requirements mean?
 What is incidental to P’s business?
 What is bad faith?
 Is it 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?
 Should have included a max price or max quantity in case the market went haywire in order to protect themselves.
Only sued because they were taking advantage of the low price in the K; is this bad faith?
 Requirements K are good things for one side.
 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. We do know that people want to get into these types of agreements
otherwise they wouldn’t enter them.
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United States Rubber Co. v. Silverstein
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
INDEFINITE: “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
SOC: 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
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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 stated 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 Reversed for a judgment in favor of the plaintiff. The Debtor’s letter using the word they can
ON APPEAL: be reasonably interpreted to mean the son.
NARROW Where the guarantor/father makes an ambiguous guaranty that the plaintiff reasonably
HOLDING: 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.
BROAD Where the guarantor makes an ambiguous promise, he will be held to the meaning that he had
HOLDING: reason to believe that the plaintiff would reasonably attach to the promise.
DOC An uncertain promise is to be taken in the sense “in which the promisor had reason to suppose it
REASONING: 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 a question of fact and not law
POLICY Circumstances of family life and the family enterprise made this reading/inference a fair.
REASONING:
 Cardozo: Says could have had different meanings. Let it go to jury. He believe D is lying, so he agrees
w/ jury’s decision for P.
 What’s wrong with interpreting K against drafter? What if semi-literate? What about inequality of
parties? What if have a good lawyer?
 Cardozo’s argument leans toward injured party’s reliance on promise or agreement.
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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.”
INDEFINITE: 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) HERE THE OPTION WAS SUPPORTED BY
CONSIDERATION OF THE SALE
 Court reads into “Quantity” (fixed by the buyer); “Price” (reasonable); “Time” (reasonable)
SOC: Buyer of cloth is suing a seller of 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
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withheld from the plaintiff. (option/ requirement K)
FACTS:  The pleadings show a written contract, dated April 10, 1919, by the which 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.
 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.
 In fact, it had procured five hundred pieces, which it withheld. Possible reason for the demand of
more tricotine: higher price in the market.
 When the D ratified and confirmed he waived his right to recission
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 Reversed; motion for judgment on the pleadings denied and the plaintiff wins.
ON APPEAL:  the privilege to order more is coupled with the promise and obligation to accept a stated min.
NARROW When two parties enter into a contract that includes a stated minimum, an option to buy more is
HOLDING: 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
HOLDING: original sale, there is mutuality of obligation to make the option enforceable.
DOC When an option is supported by consideration of the sale it is enforceable.
 A contract in which the terms of price, quantity, and time were uncertain the court implied the
REASONING:
reasonable terms based on the intent of the parties
 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
REASONING: terms.
 Looked at the good faith of the parties and intent
Notes:
P lawyer no res judicata
D lawyer prior judgment is a bar to action
 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 Cardozo turned the court all to his side, except for Crane who often dissents Cardozo’s opinions
Issues:
Max quantity, price, duration of the option.
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P was not bound to buy any more tricotine. He could have bought tricotine from someone else.
o One could make the argument that in Schlegel, the option was supported by their previous dealings the
last 5 years. Here it’s like a one time deal. Here Cardozo is involved while in Schlegel he wasn’t there.
o 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.
o 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). 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. 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.
o The ones entering into the K have a better idea of what they would need to write up a K.
o Cardozo seems to be shying away from his active judicial interpretation of K.
 He says “reasonable time”
o 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.
Looking at the UCC how do the merchants actually work in the real world?
St Regis Paper Co. v. Hubbs & Hastings Paper Co
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.
INDEFINITE: 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.
SOC:
Seller of paper is suing a buyer of paper for an unpaid balance on the sale of paper, alleging breach of
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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.”
 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.
 The other two sets of contracts differ only as to name of publisher, price, and 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:  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.
 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.
 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?
RESULT Reversed in favor of the plaintiff against the defendant for $44,426.03 with interest from January 15,
ON APPEAL: 1920, with court costs.
NARROW Where two parties enter into an executory contract which expressly states that it can be terminated if the
HOLDING: parties fail to reach an agreement on the price per a 3 month negotiation clause, either party is free to
terminate the contract be refusing to agree on price
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BROAD Where two parties enter into an executory contract which expressly reserves the right to cancel the
HOLDING: 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.
DOC An agreement to agree is not enforceable (UP, Varney)
 Prices were not fixed by mutual agreement and if the parties did not agree, the contracts were to
REASONING:
terminate.
 Now the court thinks that UP is good for business
 By the UP holding is limited how?  here, maybe without saying that “they may terminate”
would have come out differently
POLICY Good faith only requires that the parties act under the terms they are bound under by the agreement.
REASONING:
Notes: (everyone concurs here)
Court said that the remarks section was not part of the K
Court is trying to be an interpreter of the K
 The court may have been wrong
 By making the arg. Questions of law instead of allowing it to go to the jury channeling behavior
 Why is the broker distinction important? Decided vendor to vendee.
o If he is a broker the seller must act in good faith because he is an agent or an employee; did not act in
good faith because quoted really high prices.
 Was is the obligation of the seller if he was a broker negotiate a good faith price in regards to
the contract (not quote really high)
 Why does this matter if he’s a broker:
 Seller would have to negotiate fairly in good faith
 If not a broker he doesn’t have any obligation, he could quote any number
 What is there that shows that there is a buyer seller K
o Court says it will not look to parole evidence b/c no ambiguity
 As to commissions profits
 Agentcan mean just someone you do business with
 Not broker- principal obligation
o The word agent does not necessarily mean principal- agent relationship
 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 intention
 Lurie Woolen Co.: No set price in K; Ct implied a price saying open price term “imports a privilege to confirm at
the price of the intial quantity.” Why did ct not impose a price here?
 United Press/ Varney: Ct agreed with these cases that an agreement to agree is not enforceable
Sun Printing & Publishing Association v. Remington Paper & Power Co.
change for Cardozo
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
INDEFINITE: 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 affected by our appraisal of the
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motive (Mayer).
SOC: 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 in 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.
 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 demurrers and the Special Term denied a motion by the plaintiff for judgment on
the pleadings- denied Appellate Court reversed the order.
ISSUE: Is there a contract terms sufficient upon which the plaintiff’s cause of action of a breach can be
tried?
RESULT NO. Reversed and the order of the Special Term affirmed with costs to the plaintiff. The
ON APPEAL: question certified in the negative. There is no cause of action, b/c the condition is untenable
NARROW Where two parties enter into an executory contract that leaves the price term to future
HOLDING: agreement and there is a standard set by which only price can be determined, the contract will
fail for indefiniteness. (THERE WAS JUST AGREEMENT TO AGREE)
BROAD Where an executory contract lacks certainty with respect to the length of time to govern a new
HOLDING: fixed price period, the contract is incomplete and the defendant is not bound.
DOC When an agreement is not reached between the parties to complete a contract the parties are not
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REASONING: bound.
POLICY
REASONING:
The court is not at liberty to revise while professing to construe; also the court must
preserve the sanctity of contracts.
P lawyer should have said that the Canadian price was constant throughout the year
Notes:
 Why is Cardozo so formal in his demand?
o Why didn’t he argue that no fluctuation- well, it wasn’t plead
o How about implying a reasonable term- said that there was no intent to do so
o He’s limiting the case to here- not trying to make a broad rule
o Is he concerned with the business world as a whole?
 Always two sets of facts (may have affect on how he sees things)
 What did the buyer do something wrong that could be linked with another case in the sequence?
 Rubber trading- bad tender trading, he should have…
 The party needs to provide the court with evidence for the court to interpret it
 HE CHANGED THE VIEWS OF K LAW
 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). He should have negotiated and left the
defendant to make the terms, then upon failure to deliver as to their own terms, there would have been a breach.
 Dissent: by Crane: the anti-Cardozo
o Cites: Wakeman, first time in entire line of cases, also Lady Duff, Moran, Rubber Trading
 Court should be reluctant to avoid its K
o We can imply a specific term from the Canadian Export Price
 They used the term (KP), not just price
o We can imply the length term to govern the price
o He even uses Cardozo test (against person who drafts it)
 Cardozo and Crane did not cite any of the same cases!
 Maybe there having a misunderstanding or really dislike each other
Interpretation and revising is different for Cardozo
What does the UCC do?
1. Mercantile reading of commercial docs
2. Practical construction in the real business world
3. Idea in Wakeman- that K’ing parties want to be bound and safe
4. Price is not as important in long term as supply
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