Contracts Cases Flashcards
Home Building v. Blaisdell : Housing Crisis Blues Deja Vu
BLL: In an attempt to “safeguard the vital interests of its people” a state could adopt legislation which had the effect of “modifying or abrogating contracts already in effect.”
FACTS: In 1933, Minnesota enacted the Mortgage Moratorium Law in an effort to combat the economic emergency posed by the Great Depression. The law extended the time period in which borrowers could pay back their debts on property to lenders. The state argued that this was a legitimate use of its police powers since Minnesota faced massive economic difficulties.
St. Ansgar Mills, Inc. v. Streit : Give me reasonableness, or give me corn
BLL: UCC 2-204
(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
FACTS: Duane Streit (D) has never refused delivery of grain he purchased by telephone prior to the incident which gave rise to this case.
D claims that the delivery of the written confirmation (August 10, 1996) of the previously made oral contract (July 10) did not satisfy the statute of frauds because; (1) he was not a merchant and (2) the confirmation was not received within a reasonable time after the alleged oral agreement.
Radke v. Brenon : Talk’s cheap…so’s your land now.
BLL: Under Minnesota law, memoranda regarding the sale of land are sufficient under the Statute of Frauds when the memoranda express the consideration are inscribed by the party by whom the sale is to be made or by his lawful agent authorized in writing and state expressly or by necessary implication the parties to the contract, the lands involved, and the general terms and conditions upon which the sale will be made.
FACTS: Radke (P) sued Brenon (D) for specific performance for the sale of land, claiming that under the circumstances, a letter written by Brenon (D) to Radke (P) offering the land was a memorandum sufficient to satisfy the Statute of Frauds.
Cloud Corp. v. Hasbro, Inc. : Speak now or forever be fucked
BLL: Informal writings acknowledging a proposed modification of a contract for the sale of goods for more than $500 satisfy the requirement of a writing under U.C.C. 2-201 and 2-209. The offeree’s silence is not interpreted as rejection in this situation because transaction costs would be high if the offeror had to quiz the offeree on whether every term in the offer not mentioned in the acceptance was acceptable to the offeree. Cloud, the offeree, knew that Hasbro wanted the modification provision and if this was unacceptable it should have said so.
FACTS: Hasbro, Inc. (D) refused to accept products manufactured by Cloud Corp. (P). Cloud Corp. (P) sued, alleging that Hasbro, Inc. (D) was contractually obligated to pay for the products.
Capital One Bank USA NA v. Gregorich : Florida, where choice of law will kill you.
BLL: Choice of Law provision in the “Customer Agreement” says that any suit would be governed by Federal and Virginia law. “A choice of law provision applies only to substantive law, not procedural law. Florida courts will apply the substantive law of the state set forth in a choice of law provision and Florida’s procedural law.”
FACTS: Capital One files a “Motion for Summary Disposition” (Summ. Judgment?); Gregorich files a response seeking dismissal alleging that the action is barred by the SoL. Capital One asserts that Florida SoL applies; Gregorich asserts that Virginia SoL applies.
BMC Industries Inc. v. Barth Industries, Inc. : Barth’s PMS.
BLL:
I. Predominate Purpose Test
The court determines whether the predominate purpose of the transaction is to sell the goods or to provide the service, and so whether or not to apply the UCC. To determine the predominate purpose, courts look at the predominate component in the transaction:
the language of the contract,
the objective of the parties in entering the contract,
whether there are “movable goods” involved in the transaction,
the ratio of the price of the goods to the whole price of the contract,
the nature of the business of the supplier, and
the intrinsic value of the goods without the service.
II. Merchant Modification
UCC 2-107: The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
a. The offer expressly limits acceptance to the terms of the offer;
b. They materially alter it; OR
c. Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
III. Sufficient Waiver (without detrimental reliance)
UCC 2-109: Waiver NEED NOT be accompanied by detrimental reliance
FACTS: BMC asked Barth to manufacture automated machines to manufacture eye-glass lenses. Contract’s last written amendment set the deadline in October 1987. May 1989, Barth notified BMC that it had completed production and that it would ship. BMC and Barth had been in contact all throughout the process. BMC refused delivery and filed the lawsuit in June of 1989.
National Historic Shrines v. Dali : Surreal Service.
BLL: An agreement for rendition of services during an appearance before the cameras with resultant contribution of the painting then made and subsequent hope of sale thereof by P to the public is not viewed as a sale of goods within the terms of the SoF.
FACTS: Dali was to go on a show, produce a painting on live television, and have the painting be auctioned off to the public. Dali moves for summary judgment asserting, inter alia, that the SoF requires written confirmation for the SALE OF GOODS which are over $500.
D.G. Porter, Inc. v. Fridley : TGIFridley’s
BLL: The UCC sales provision applies to the sale of an ongoing business only if the essential element or nature of the K is for the transfer of movable goods, and the transfer of items other than movable goods, such a goodwill or realty, and the performance of other acts, such as the assignment of a lease or transfer of a license, are merely incidental or secondary elements under the K.
FACTS: Written agreement for the sale of a bar-cabaret-restaurant business. The Court holds that the transaction was not for “sale of goods” and therefore not governed by the UCC.
iLan Systems, Inc. Netscout Service level Corp. : Technically not for technical stuff.
BLL:
(1) The purchase of software might seem like an ordinary K for the sale of goods, but in fact the purchaser merely obtains a license to use the software; never is there a “passing of title from seller to the buyer for a price.”
(2) However, when there is no other body of law in existence, the court will use the UCC when it best fulfills the parties’ expectations.
FACTS: i.Lan (P) claims that they have a right to the perpetual upgrades of NextPoint’s(D) software and unlimited support (specific performance). D defends that based on the “clickwrap” language limits their liability to the price paid for the software ($85,231.42).
Saxton v. Pets Warehouse, Inc. : Monty Python’s “Dead Dog” sketch.
BLL: A dog falls within the definition of “goods” as set forth in UCC 2-105 and D was a “merchant” within the meaning of UCC 2-104 (1).
FACTS: Plaintiff purchased a dog from defendant. The dog died soon after plaintiff purchased it and plaintiff sued defendant to recover damages. The trial court found that the dog was unfit for purchase and awarded plaintiff the purchase price of the dog. Defendant appealed.
Slodov v. Animal Protective League : SPCA ain’t UCC
BLL: A writing governing the total obligations which result from the parties’ agreement = K. A dog is considered a ‘good’ as defined by UCC s. 2-105(1). A sale occurs when there is a passing of title from seller to the buyer for a price.
Because the Animal Protective League (APL) is not a “merchant” and does not have “sales” the UCC does not apply. APL is non-profit adoption organization. Adopted Animals = no sale = no UCC. UCC warranties of merchantability and fitness does not apply because the Humane Society is not in the business of selling dogs and therefore falls outside of the UCC’s definition of a “good.”
FACTS: The individual adopted a puppy from the shelter and paid a fee. The individual signed an adoption agreement that provided that the shelter would treat the dog at no cost to the individual for two weeks after the adoption. The agreement specifically provided that the shelter would not be responsible for the treatment of the animal outside the shelter clinic. On two occasions after the adoption, the individual brought to dog to an independent veterinarian for medical services.
Travelers Prop. Gas Co. v. Saint-Gabin Technical Fabrics Canada : BLAME CANADA
BLL: The CISG applies to contracts of sale of goods between parties whose places of business are in different States when the States are Contracting States. CISG Art. 1(1). The parties may exclude the application of this Convention. CISG Art. 6. Since both Canada and the US have ratified the CISG, it applies in this case unless the parties have excluded its application. A majority of courts interpreting choice of law provisions conclude that a reference to a particular state’s law does not constitute an opt out of the CISG; instead, the parties must expressly state that the CISG does not apply.
FACTS: Plaintiffs, an insurer and a company which provided design-related services for construction of an arena, sued defendant supplier, alleging that mesh it provided was defective and caused delamination. The 12 claims for relief included, inter alia, (1) common law indemnification, (2) contribution under Colorado statute, and (3) contribution under Minnesota statute.
Prime Start, LTD. V. Maher Forest Product, LTD : Non-conforming Wood
BLL: Art. 1(1)(a) of the CISG provides that the CISG governs disputes between international parties of Contracting States. Because P’s company is in the British Virgin Islands (which is not a signatory to the CISG), Art 1(1)(a) does not provide basis for application of the CISG.
FACTS: Plaintiff supplier entered into a contract with defendants wood product manufacturer and inspector for approximately $ 1 million of cedar siding. The supplier’s complaint alleged that both the manufacturer breached the contract by supplying nonconforming goods while the inspector breached by allowing delivery of nonconforming goods to the job site in Russia.
Weisser v PNC Bank, NA : You shall not PASS, PUNK!
BLL: Mandatory vs. Permissive
▫ Mandatory – Litigation “must” or “shall” be brought in the selected forum
▫ Permissive – Litigation “may” be brought in the selected forum
The general rule is that a FSC will be considered permissive where it LACKS words of exclusivity.
FACTS: P got a loan saying litigation was in Kansas and a rate agreement saying litigation was in Missouri.
Carnival Cruise Lines v. Shute : Carnival Forum Slip’n’Slide
BLL: Forum selection clauses are binding even if they are not bargained for
FACTS: Woman slipped on a west-cost cruise, tries to sue in WA. Ticket has a forum selection clause for FL.
Buckeye Check Cashing v. Cardegna : Buckeyed Arbitration
BLL: Challenges to the entire contact will NOT void an arbitration clause. The court will not sever the agreement; BUT a challenge to the validity of an arbitration clause will be heard in a court. If you are challenging the arbitration clause itself, the Court can decide. You cannot challenge the contract as a whole in court if there is an arbitration agreement in the Contract.
FACTS: Clause in the contract being called usurious said that all disagreements went to an arbitrator. When the contract is being challenged as usurious, can the single clause for arbitration still be binding?
Rent-a-Center v. Jackson : Rent-a-Djudication
BLL: Two types of Arbitration validity challenged: (1) Challenges specifically the validity of the “agreement to arbitrate” (ex: Whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy). (2) Challenges the K as a whole, either on a ground that directly affects the entire agreement, or on the ground that the illegality of one of the K’s provisions renders the whole K invalid.
ONLY THE FIRST TYPE OF CHALLENGE IS RELEVANT TO A COURT’S DETERMINATION ON WHETHER THE ARBITRATION AGREEMENT AT ISSUE IS ENFORCEABLE.
FACTS: The employee had signed an arbitration agreement that provided for arbitration of disputes arising out of his employment, including discrimination claims. The agreement also provided that the arbitrator, and not a court, had exclusive authority to resolve any dispute relating to the enforceability of the arbitration agreement.
Thompson v. Libbey : Parol Log
BLL: Parol evidence can NEVER be used to contradict a contract term. Parol evidence cannot be used to add a term to a contract when there is no mention of it in the contract.
FACTS: P sells logs to D that went bad at a time with no Implied Warrant of Merchantability. D sues on a warranty that wasn’t in the contract by bringing in parol evidence.
Masterson v. Sine : Half Full, Half Part
BLL: Even where a writing appears complete on its face, evidence to prove the existence of a collateral agreement may be offered if the collateral agreement is such that it might naturally be made as a separate agreement by parties similarly situated.
COLLATERAL AGREEMENT –– An agreement that is made prior to or contemporaneous with a written agreement, which is admissible in evidence as long as it is consistent with the written document.
FACTS: Masterson (P) conveyed a property to Sine (D), reserving an option to purchase for ten years; Masterson (P) was later adjudged bankrupt, and his trustee brought an action to enforce the option to purchase.
Jenkins v. Eckerd : The missing puzzle piece
BLL: A contract which is clear, complete and unambiguous does NOT require judicial construction. Only when a fully integrated contract’s terms are ambiguous will a court use parol evidence to interpret. A merge clause is highly persuasive that a contract is fully integrated.
RST 204: When parties to a bargain sufficiently defined to be a contract have not agreed w/respect to term which is essential, term which is reasonable in circumstances is supplied by the court.
FACTS: A drug store wants Delchamps (grocery store) as an anchor tenant. They go broke and are replaced with a new grocery store. Was the clause for a grocery store or for delchamps specifically?
Wisconsin Knife Works v. National Metal crafters : Ginsu Waiver
BLL: UCC 2-209 implicitly requires that for a non-modification agreement to be waived, the challenging party must have relied on the waiver to its detriment––but it really should be in writing.
FLORIDA (and WIDEN): Waiver if (1) Reliance OR (2) Evidence that the waiver was clear and unequivocal.
FACTS: Metal crafters was making drill bits. WKW refuses to keep accepting late shipments. NMC says the non-modification agreement was waived by WKW’s actions
Payne v. Cave : Payneful Cavein at Auction
BLL: RST 24: An auctioneer’s request for bids is only a solicitation of offers. A bid (which is an offer) can be revoked anytime before the hammer falls.
FACTS: Auction for a worm tub in which the bidder (D) was the highest bidder, bidding 40 pounds for the tub. But before the auctioneer’s (P) hammer came down, bidder revoked his bid. The next day another auction is held and the defendant buys the tub for 30 pounds.
Dickinson v. Dodds : D’n’D Mirror Mind
BLL: RST 43: There is no requirement that an express or actual withdrawal of the offer is mandated. To constitute a K, the two minds were at one, at the same moment in time, there was an offer continuing up to the time of acceptance. If there was no such continuing offer, then the acceptance comes to nothing.
FACTS: On the10th of June Dodds (D) signed and delivered a memorandum to Dickinson (P). Said memo contained language, agree to sell; for the sum; and a description of real property. It also contained specific date, time of acceptance. P discovered D was eliciting the sale elsewhere and submitted a letter of acceptance to D’s mother-in-law at 7:30 p.m. prior to the evening of the deadline. D never received the letter. A duplicate was delivered to D the next morning, but D refused to accept it. D had sold the property the previous day.
Adams v. Lindsell : END OF FUCKING CONVERSATON
BLL: RST 35, 36, 41: Ordinarily, an offer made by one to another in a face-to-face conversation is deemed to continue only to the close of the conversation and cannot be accepted thereafter.
FACTS: J. B. Sedberry’s (D) president had not responded to an offer of resignation by Akers (P), an employee under contract, during the conversation in which it took place, but she later sent him a telegram attempting to accept his offer.
Morrison v. Thoelke : More Mail, More Problems Tho’
BLL: RST 63 (a): Unless the offer provides otherwise, an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror.
FACTS: On November 26, 1957, appellants, as purchasers, executed a contract for the sale and purchase of the subject property and mailed the contract to appellees who were in Texas; and that on November 27, 1957, appellees executed the contract and placed it in the mails addressed to appellants’ attorney in Florida. It is also undisputed that after mailing said contract, but prior to its receipt in Florida, appellees called appellants’ attorney and cancelled and repudiated the execution and contract. Nonetheless, appellants, upon receipt of the contract caused the same to be recorded.
Beaumount v. Prieto : Common Counter Cockup
BLL: RST 39: Under Common Law, an offer is destroyed by a counter-offer being made, and the offeree cannot turn around later and try to accept the original offer.
FACTS: A counter-offer was made for the sale of land, but then the original offer was attempted to be accepted.
Carlill v. Carbolic Smoke Ball : Ads up in smoke!
BLL: RST 26; RST 29; RST 32: Advertisements of goods are not ordinarily intended or understood as offers to sell. It is possible to make an offer by advertisement directed to the general public, but there must ordinarily be some language of commitment or some invitation to take action without further communication. An offer may create separate powers of acceptance in an unlimited number of persons, and the exercise of the power by one person my or my not extinguish the power of another.
FACTS: D advertised that if you tried the product and still got the flu, they’ll pay you $100; P did this & got the flu
Leonard v. Pepsico : That fucking Pepsi JET ad.
BLL: RST 26, cmt. b; UCC 2-201: Advertisements of goods are not ordinarily intended or understood as offers to sell. It is possible to make an offer by advertisement directed to the general public, but there must ordinarily be some language of commitment or some invitation to take action without further communication. Also, the value of the alleged contract meant that it fell under the provisions of the statute of frauds, but the Statute’s requirement for writing between the parties was not fulfilled, so a contract had not been formed.
FACTS: Smart-ass kid gets 7,000,000 pepsi points and tries to claim a Harrier Jet. They refused so he sued.
Lucy v. Zehmer : Lucy Steals Deal (LSD)
BLL: RST 17-20; RST 201; RST 110: If a person’s words and acts, judged by a reasonable standard, manifest a certain intent, it is immaterial what may be the real but unexpressed state of that person’s mind.
FACTS: Zehmer (D) claimed his offer to sell his farm to Lucy (P) was made in jest.
Embry v. Hargadine : Secret Intentions
BLL: RST 53; RST 201: The secret feelings, intentions, or beliefs of a party will not affect the formation of a contract if their words and acts indicate that they intend to enter into a binding agreement.
FACTS: Embry (P) was allegedly rehired by Hargadine, McKittrick (D) after his employment contract had expired. Hargadine, McKittrick (D) denied the rehiring.
Oswald v. Allen : Swiss Coin Conspiracy
BLL: RST 20; UCC 2-201: When any term in an agreement is ambivalent and the parties understand it in different ways, there cannot be a contract––unless one of them should have been aware of the other’s understanding. Also, for UCC, quantity is the most important term.
FACTS: Oswald thought he was buying all Swiss coins; Allen thought she was selling only the “Swiss Coin Collection.”
Akers v. Sedberry : What fAkers Sed?
BLL: RST 35, 36, 41: An offer may be terminated by rejection or by not being accepted within a fixed time, or in a reasonable time. Generally, when face to face negotiations are taking place an offer expires at the end of the conversation unless the parties indicate otherwise (same for a telephone conversation).
FACTS: After a meeting, Akers offered to resign at a meeting with Sedberry. Sedberry either refused or didn’t say anything, but it never came up again in the conversation. Next day she tried to accept the offer.
Hill v. Gateway : Gate-a-Way with Anything
BLL: UCC 2-204, 2-206: A buyer accepts goods when, after an opportunity to inspect, he fails to make an effective rejection. A vendor, as master of the offer, may invite acceptance by conduct, and may propose limitations on the kind of conduct that constitutes acceptance. One of these terms was an arbitration clause. 30 day accept-or-return offers are valid, even if not read or bargained for.
FACTS: Hill orders computer on the phone and gives Gateway credit card number a box arrives with terms said to govern unless the comp is returned in 30 days. Customers don’t have to read shrinkwrap license where terms arrive with the computer including the arbitration agreement in dispute.
Roto-Lith v. Bartlett : Bizzaro Quick Draw Bartlett
BLL: UCC 2-207: “Last shot rule”: Gives a structural advantage to the person who sends the last piece of paper.
FACTS: D makes the adhesive for P’s vegetable bags. D responds to an order with forms that said no warranties. P accepted the product that D sent.
Northrop v. Litronic : Altered Materials
BLL: UCC 2-207: “Material Alteration” creates a counter offer. “A response which states a condition materially altering the obligation solely to the disadvantage of the offeror is an acceptance expressly conditional on assent to the additional terms…so because Roto-Lith (buyer) accepted the goods with knowledge of the conditions specified in the acknowledgment it thereby became bound. In other words…the D’s (seller’s) acceptance was conditional on assent, by the buyer, to the new terms and, therefore, constituted a counteroffer rather than an acceptance. When the buyer accepted the goods with knowledge of the seller’s conditions, it accepted the counteroffer and the seller’s terms governed the K.”
FACTS: Litronic sent an offer form with a 90 day warranty. Northrop accepted with a form that said all warranties were unlimited. Northrop returns motherboards six months later.
Ionics v. Elmwood Sensors : Elmwood sez Knock You Out
BLL: UCC 2-207(3): “Knock Out Rule”: Where the terms in two forms are contradictory, each party is assumed to object to the other party’s conflicting clause.
FACTS: Ionics (P) sued Elmwood (D) to recover costs incurred as the result of fires allegedly caused by defective thermostats it purchased from Elmwood (D).
Pinnel’s Case : Pay Early
BLL: A lesser sum cannot be accepted in satisfaction of a greater sum, without some additional consideration––LIKE PAYING EARLY.
FACTS: Creditors trying to repay debts with a lesser sum being accepted for a greater sum.
Foakes v. Beer : Most expensive Foaking Beer
BLL: Though the agreement did not contemplate the interest owed, it could still be implied given an enforceable agreement. However, the promise to pay a debt was deemed not to be sufficient consideration as there was no additional benefit moving from Foakes to Beer that was not already owed to her.
FACTS: Foakes owed Beer a sum of £2,090 19s. Beer agreed that she would not take any action against Foakes for the amount owed if he would sign an agreement promising to pay an initial sum of £500 and pay £150 twice yearly until the whole amount was paid back. Beer waived any interest on the amount owed. Foakes made the payments as agreed without any interest. Beer sues Foakes for the interest.
Mills v. Wyman : Cat’s in the cradle and your kid is dead
BLL: A moral obligation is insufficient as consideration for a promise.The general statement is that it is not sufficient consideration for the express promise. The difficulties and differences of opinion involved in the determination of what is a moral obligation are probably much greater than those involved in determining the existence of a legal obligation.
FACTS: Mills (P) took care of Wyman’s (D) son without being requested to do so and for so doing was promised compensation for expenses arising out of the rendered care by Wyman (D). Wyman (D) later refused to compensate Mills (P).
Webb v. McGowin : Webb of Debts
BLL: RST 86: A moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit. ALSO, if you start to pay on a promise, you can’t just stop.
FACTS: Webb (P) saved the now deceased J. McGowin from grave bodily injury or death by placing himself in grave danger and subsequently suffering grave bodily harm. J. McGowin, in return, expressly promised Webb (P) compensation. McGowin’s executors (D) now refuse to pay the promised compensation.
Alaska Packers’ Ass’n v. Domenico : Alaska Pack’s Domenico over a barrel
BLL: If you refuse to perform a contract, and coerce a higher price, that higher price is NOT based on any consideration, and thus is not enforceable. Thus, promises to pay a man for that which he is already under contract for do NOT have consideration.
▪ *When is it possible to re-negotiate?
▫ When there is good faith??
FACTS: Fisherman go to Alaska to fish having signed a contract. Once there, they find the nets to be bust. They say the won’t work unless their salary is doubled. Boss has no choice.
Watkins v. Carrig : Wat? I don’t carrig you said dig. That’s rock!
BLL: A mutual agreement to modify an executory contract, if freely consented to by both parties, is valid and enforceable. Changes to meet changes in circumstances and conditions should be valid if the law is carry out its function and service by rules conformable with reasonable practices and understandings in matters of business and commerce. Rescission in full or in modification being intended, it should be effective although the result benefits only one party and places a burden only on the other.
FACTS: Parties entered an agreement to excavate the basement. When there was granite, he stopped work and asked for more. P granted contract, then sued.
Schnell v. Nell
BLL: A K will be vitiated for lack of consideration where the consideration is only nomial and is intended to be so.
FACTS: Out of cosideration for his deceased wife, Schnell (D) agreed to pay Nell (P) $200 in return for P’s payment of one cent and agreement to forbear all claims against his wifes estate.