Contract  Law
Lawrence  Siry

This  Class
•   Remedies,  aka  Damages
–   Expecta2on  Damages
–   Reliance  Damages
–   Res2tu2on  Damages

Hawkins  v.  McGee  (NH  1929)
•   Hawkins,(P)  had  scarred  hands  from   electrocuEon.
•   McGee  (D)  was  a  doctor  who  promised  a
100%  good  hand.
•   D  used  skin  graK  from  chest  and  D  grew  hair   on  his  palms.
•   P  sued  D.

Hawkins  v.  McGee  (NH  1929)
•   Writ  of  Assumupsit-­‐    way  of  geOng  into  court-­‐     this  sounds  more  like  a  tort  case  then  a   contract  case.
•   Why  is  this  not  a  tort  case-­‐    usually  these   cases  are  not  contract  cases-­‐    why  is  this  one   different??
•   Carbolic

Hawkins  v.  McGee  (NH  1929)
•   “….the  difference  between  a  the  value  to  him   of  a  perfect  hand…  and  the  value  of  his  hand   in  its  current  condiEon.”
•
.
•   Pain  not  included  as  that  was  expected  under   in  any  surgery.

EXPACTATION  DAMAGES
•   Louise  Caroline  Nursing  Home  v.  Dix  ConstrucEon
(MA  1972)
-­‐D  contracted  to  build  a  nursing  home  for  P.
-­‐D  breached.
-­‐P  sued,    but  it  cost  less  to  finish  the  construcEon   than  did  the  contract  (P  saved  Money)
How  should  a  court  assess  damages??

EXPACTATION  DAMAGES
•   CompensaEon  is  the  value  of  the  performance  of   the  contract-­‐    what  the  plainEff  would  have  made   had  the  contract  been  performed.
•   Reasonable  costs  for  compleEng  the  contract.    In   this  case  Nothing!
•   Service  contracts  cannot  put  the  plainEff  in  a   be#er   posi*on  than  if  the  K  had  not  been  entered  into.

EXPACTATION  DAMAGES
•   Peevyhouse  v  Garland  Coal  (OK  1963)  (not  part  of   reading)
•   Garland  D  contracted  to  do  strip  mining  on
Peevyhouse’s  property  for  five  years.    Under  the
Contract,    D  was  to  return  the  property  to  its  original   condiEon  aKer  the  mining.-­‐    they  did  not.
•   Lower  court  awarded  damages  equal  to  the  amount   that  the  value  of  the  un-­‐restored  property  had   diminished.
•   Peevyhouse  wanted  the  cost  of  restoraEon.

EXPACTATION  DAMAGES
•   Peevyhouse  v  Garland  Coal  (OK  1963)
•   The  Court  looked  at  the  primary  purpose  of  the
Contract  and  decided  that  it  was  for  the  mining-­‐    the   restoraEon  was   incidental.
•   Therefore-­‐    it  would  amount  to  economic   waste  to  give   damages  for  the  restoraEon.
•   Yet  the  court  stated  that  if  the  contract  provision  was   central,    then  the  cost  of  performance   would      be  the   appropriate  damages-­‐
•   Correct?

MiEgaEon  of  Damages
•   PlainEff  has  a  duty  to  miEgate-­‐    or  make  less  damages.
•   §350.  AVOIDABILITY  AS  A  LIMITATION  ON  DAMAGES
•   ( 1)  Except  as  stated  in  Subsec2on  (2),  damages  are   not  recoverable  for  loss  that  the  injured  party  could   have  avoided  without  undue  risk,  burden,  or   humilia2on.
•   (2)  The  injured  party  is  not  precluded  from  recovery   by  the  rule  stated  in  Subsec2on  (1)  to  the  extent  that   he  has  made  reasonable  but  unsuccessful  efforts  to   avoid  loss.

MiEgaEon  of  Damages
•   Rockingham  County  v.  Luten  Bridge  (NC  1929)
•   D  had  contracted  with  P  to  build  a  bridge.
•   AKer  P  began  D  cancelled  the  contract.
•   P  conEnued  work  and  sued  for  the  damages.
•   Court:    P  is  enEtled  to  damages  limited  to  the   amount  of  damages  that  he  would  have  been   able  to  recover  as  of  the  Eme  noEce  of   cancellaEon  was  given.
•   What  if  the  noEce  was  equivocal?
•   Why  is  this  good  or  bad?    Clear  or  Unclear?

ConsequenEal  Damages:  Foreseeability
•   ValenEne  v.  General  American
–   D  fired  sued  for  mental  distress
–   Loss  of  security
•   Issue:    Are  mental  distress  damages  awardable   under  contract  law?
•   All  contract  breaches  are  annoying-­‐  get  over  it.
•   What  about  discriminaEon  claims?

ConsequenEal  Damages:  Foreseeability
•   So…..  What  damages  are  recoverable….

Specific  Performance
•   Equity….
•   What  might  be  awarded  and  why?

Specific  Performance
•   London  Bucket  v  Stewart  (KY  1951)
•   Contract  to  install  heaEng
•   D  breached,  P  sued.
•   Court  ordered  Specific  Performance.
•   Appeals  Court-­‐    where  ordinary  damages  suffice-­‐     use  them.
•   WHY?

Specific  Performance
•   Where  is  Specific  performance  preferable?

Reasons  not  to  enforce  a  contract
•   Indefiniteness
•   Mistake
•   MisrepresentaEon
–    Non-­‐disclosure.
–    Undue  influence
–    Duress
•   Unconscionability
•   Lack  of  wriEng  (Statute  of  Fraud)
•   Lack  of  Capacity
•   Illegality

Reasons  not  to  enforce  a  contract
Indefiniteness
–   ParEes  or  Court  do  not  understand  the  term
–   Yet,  Court  may  read  in  terms  of  reasonableness
–   Eg:    Land,  Paint,  Build
–   Employment  Contracts
–   Policy  determinaEons:  Gap  Fillers,  Performance

Reasons  not  to  enforce  a  contract
Indefiniteness
–   DeterminaEon  of  Price
–   Delivery
–   Custom
–   Agreements  to  Agree
–   But,   illusory  or  one  sided  agreements

Reasons  not  to  enforce  a  contract
Indefiniteness
•   Doctrine  of  Duty  to  NegoEate  in  Good  Faith

Reasons  not  to  enforce  a  contract
Mistake
–   Mutual
•   Basic  assumpEon
•   Materially  effects  the  agreement
•   Risk  not  assumed
–   Unilateral
•   Unconscionable
•   No  hardship  for  the  non  mistaken  party
–   MistranscripEon

Reasons  not  to  enforce  a  contract
Mistake
–   Mutual
•   Basic  assumpEon
•   Materially  effects  the  agreement
•   Risk  not  assumed
•   Sherwood  v.  Walker  (Cow)  (1887)
•   Race  Horse  (voidable)
•   Rock  Band

Reasons  not  to  enforce  a  contract
Mistake
–   Mutual
•   But  one  party  can  bear  the  risk
•   Mistake  in  judgment

Reasons  not  to  enforce  a  contract
Mistake
–   Mutual
–   Unilateral
•   A  mechanical  mistake,  computaEon,  percepEon
–   Awareness  of  palpable  mistake
–   Unconscionable
–   No  hardship  for  the  non  mistaken  party
–   Eg.:  Contract  bid
–   Errors  in  Judgment?

Reasons  not  to  enforce  a  contract
Mistake
–   Mutual
–   Unilateral
–   MistranscripEon

Reasons  not  to  enforce  a  contract
•   MisrepresentaEon ,  (not  in  accord  with  the  facts)
–   Fraudulent
•   IntenEon/knowledge
–   Full  knowledge
–   Presents  guess  as  truth
–   Basis  for  asserEon
•   would  induce  a  reasonable  person
•   Eg  shoes
–    Material
•   Non-­‐disclosure
•   Undue  influence
•   Duress

Reasons  not  to  enforce  a  contract
•   MisrepresentaEon ,
–   Material  MisrepresentaEon
•   without  fraud
•   Would  induce  a  reasonable  person  to  agree  OR  THIS   parEcular  person  agree

Reasons  not  to  enforce  a  contract
•   MisrepresentaEon
•   Non-­‐disclosure
–   When  does  non  disclosure  =  voidable
–   Eg  house  contract
•   Undue  influence
•   Duress

Reasons  not  to  enforce  a  contract
•   MisrepresentaEon
•   Non-­‐disclosure
•   Undue  influence
–   Eg  Uncle  Bunky
•   Duress

Reasons  not  to  enforce  a  contract
•   MisrepresentaEon
•   Non-­‐disclosure
•   Undue  influence
•   Duress
–   Threats
–   Economic  example

Reasons  not  to  enforce  a  contract
•   Indefiniteness
•   Mistake
•   MisrepresentaEon
•   Unconscionability
•   Lack  of  wriEng  (Statute  of  Fraud)
•   Lack  of  Capacity
•   Illegality

Reasons  not  to  enforce  a  contract
•   Unconscionability
•   So  beyond  the  bounds  (at  the  Eme  made)  that   the  court  may  void  the  contract  or  term
–   Procedura l  v.    SubstanEve
–   Bargaining  power
–   Adhesion  terms  (unfiar  surprise)
–   Life  insureance,  phones?
–   Protect  the  weak
–   SubstanEve
•   Encyclopedias

Reasons  not  to  enforce  a  contract
•   Indefiniteness
•   Mistake
•   MisrepresentaEon
–    Non-­‐disclosure.
–    Undue  influence
–    Duress
•   Unconscionability
•   Lack  of  wriEng  (Statute  of  Fraud)
•   Lack  of  Capacity
•   Illegality

•   Certain  contracts  MUST  be  reduced  to  wriEng.
•   Marriage.
•   Land.
•   Contracts  that  take  longer  than  a  year.
•   Executor
•   Surety
•   IT  IS  RAISED  AS  A  DEFENSE

Reasons  not  to  enforce  a  contract
•   Indefiniteness
•   Mistake
•   MisrepresentaEon
–    Non-­‐disclosure.
–    Undue  influence
–    Duress
•   Unconscionability
•   Lack  of  wriEng  (Statute  of  Fraud)
•   Lack  of  Capacity
•   Illegality

Reasons  not  to  enforce  a  contract
•   Lack  of  Capacity
–   Minority
–   Mental  impairment

Reasons  not  to  enforce  a  contract
•   Lack  of  Capacity
–   Minority
–   minors  can  void  or  enforce  contracts,  and  even   past  the  age  of  majority.
–   ResEtuEon
–   Neccessaries
–   Mental  impairment

Reasons  not  to  enforce  a  contract
•   Lack  of  Capacity
–   Minority
–   Mental  impairment
•   If  mental  defect  is  at  the  Eme  of  the  making  of  the   contract,    then  voidable  if  the  impairment  prevented   him  from
–   Understanding  the  nature  and  consequences  of  the   transacEon,  or
–   Unable  to  act  in  a  reasonable  manner  and  the  other  party   knows  this
–   Yet,  if  fair  terms  or  performed  or  equity  requires  the  the  court   may  enforce  the  contract

Reasons  not  to  enforce  a  contract
•   Illegality
–   At  Eme  of  accord
–   Subsequent  illegality
–   Aid  to  illegal  act
–   Contract  is  void-­‐  no  aid  to  either  party
–   Locus  penitenEae
–   Football  announcer/  Usurious  contract

Reasons  not  to  enforce  a  contract
•   Indefiniteness
•   Mistake
•   MisrepresentaEon
–    Non-­‐disclosure.
–    Undue  influence
–    Duress
•   Unconscionability
•   Lack  of  wriEng  (Statute  of  Fraud)
•   Lack  of  Capacity
•   Illegality

Reasons  not  to  enforce  a  contract
•   Indefiniteness
•   Mistake
•   MisrepresentaEon
–    Non-­‐disclosure.
–    Undue  influence
–    Duress
•   Unconscionability
•   Lack  of  wriEng  (Statute  of  Fraud)
•   Lack  of  Capacity
•   Illegality

WHAT  IS  A  CONTRACT
An  Agreement  between  two  or   more  parEes  which  creates  rights   and  obligaEons  between  the   parEes,  with  the  intenEon  of  the   parEes  to  create  legally  binding   responsibiliEes.
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Recipe  for  Contract
•   Offer
•   Acceptance
•   ConsideraEon
•   ParEes  wish  to  be  bound

Recipe  for  Contract
•   Offer
–   Offer  v.  InvitaEon  To  Treat
•   Acceptance
–   UncondiEonal  v.  Counter  Offer
•   ConsideraEon
–   Real,  detriment,  future  rather  than  Past
•   ParEes  wish  to  be  bound
–   MeeEng  of  the  minds

Requirements  of  Contract
•   When  must  the  document  be  in  wriEng?
•   What  precision  is  needed?
•   Also….  InterpretaEon  of  the  contract.
•   Parole  Evidence
•   Historical  development  of  Contract  law.

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