Exercise: There exists, in the field of contract law, both contract and non-contract theories
of recovery. Depending upon the particular fact situation, a party might file a lawsuit for
breach of an express contract in fact or an implied contract in fact. Both are contract
theories. However, a party might choose to rely on a non-contract theory instead. The two
non-contract theories are quasi-contract (implied in law) and promissory estoppel. Briefly
distinguish between the two non-contract theories and cite an example of each. Indicate who
would prevail in the example that you cite.
A quasi-contract is the recovery or an obligation that is not formed by an actual agreement or
contract, but instead is accepted for “reasons of justice.” To be clear, there is no actual contract
negotiated by the parties. An example of a quasi-contract, or implied in law is the following:
A plumber walks by a home and fixes a burst pipe that was flooding the
basement while the homeowner was absent. The plumber may be able to recover
in quasi-contract, notwithstanding the absence of an actual agreement with the
owner to perform the service and receive compensation.
Promissory estoppel is measured as a “consideration substitute” as defined in contract law that
adjudicates certain promises otherwise missing consideration to be binding and more importantly,
enforceable. In promissory estoppel cases, the promisee’s reliance is viewed as an “independent
and sufficient” basis for enforcing the promise. Thus, promissory estoppel is a legal mechanism
that prohibits the promissor from denying the existence of a contract for lack of consideration. An
example of promissory estoppel is the following:
An example of promissory estoppel is where A promises B that he would not
enforce his legal rights and B acted and relied on it without giving any
consideration, equity would not allow A to renege on his promise to B.
Thus, if A did in fact renege on his promise to B. B would be allowed to sue A in court for nonperformance based on the theory of promissory estoppel, under which B would prevail.
Exercise: The Restatement 2d of Contracts, Uniform Commercial Code and stare decisis
are, generally speaking, the sources of law that judges resort to when presiding over
contract disputes. The facts of the particular case will determine which of the sources is the
one applied in a given lawsuit. It is the duty of the judge to decide what law to apply. The
judge will inform the jury of his or her choice. Briefly explain why and when a judge would
apply the Uniform Commercial Code instead of the Restatement 2d and vice versa. Give
examples of each.
The Uniform Commercial Code (UCC) governs an extensive variety of contracts, which include
sales of goods, leases, bill and notes, electronic funds transfers, secured transactions, bills of
lading, etc. The provisions found within the UCC theoretically create uniformity and certainty in
contract law from state to state. The UCC is codified law of the particular state. The Restatement
2d of Contracts is not codified by any state per say, but is written to reflect the general
approaches to issues within contract law. The Restatement is advantageous when there is a need
to supplement the codified law. For example, the Restatement 2d of Contracts may supplement a
guideline of the UCC where the code is not clear on a particular point and there is no stare decisis
on the issue.
The Court would apply the UCC if the contract was governed by the UCC or pertinent cases
mandated the use of the UCC. The Restatement would only apply to supplement or in a case
where the UCC did not apply at all. A good example of a case where common contract law would
apply would be a personal services contract, such as for a movie or a sports star. Restatement
principles could supplement common law or case law in any given state.