Contracts Cases

5 Written Questions

1. Termites were treated but not sufficiently.
   No visible signs when S sold to O. (Latent)
   O found out later from exterminator that he had already treated.
   Misrepresentation because they should have told.
   Misrepresentation by omission, as opposed to fradulent.
   Damages = diminution in value of home because of termites; 3.9K.
   Rule: When there are concealed defects dangerous to property, health, or life of the tenant, it is the landlord's duty to disclose them to the tenant before leasing. IF he doesn't it is misrepresentation.
2. Wagenseller was recruited by Kay to work at the hospital.
   She did her work well, but she refused to participate in "Moon" river.
   So, Kay decided to give her a bad report, and the hospital fired her without consulting the handbook.
   Rule: In the absence of contractual provision an employee may be fired for good cause or for no cause, but not for bad cause.
   Bad cause = violating public policy and not following own procedures (Implied in fact). Also, violating duty of good faith (implied in law) = bad cause.
3. Husband was a cocaine addict.
   Created contract that she would resume marital relationship if he promised to refrain from using cocaine.
   He broke the promise, and she filed for divorce and for enforcement of the contract.
   Public policy = don't look at faults in divorce cases.
   Rule = Contracts are invalid if the sole consideration of a bargain is to refrain from committing a crime or a tort, or from deceiving or wrongfully injuring the promisee or a third person.
4. Plaintiff was married to defendant's brother, and the brother died.
   He offered to give her a place to raise her 7 kids if she traveled 60-70 miles to where he lived.
   She did, and then he later kicked her out,
   Court found that there was no valid consideration; although, not all of them agreed.
5. Ricketts' grandfather promised to pay her 2,000, so that she wouldn't have to work.
   She quit her job, but he never made good on his promise.
   She went back to work while he was still alive.
   Then he died, and the estate didn't want to fulfil the promise with the liquidated property.
   There was no contract, but there was a promise.
   Rule: Having intentionally influenced the plaintiff to alter her position for the worse on the faith of the note being paid when due, it would be grossly inequitable to permit the maker, or his executor, to resist payment on the ground that the promise was given without consideration.

5 Matching Questions

1. Peevyhouse v. Garland Coal
2. Jones v. Star Credit
3. McCutcheon v. MacBrayne
4. ProCD v. Zeidenberg
5. Carroll v. Beardon

1. a Madam sold property to Madam in Lee's hometown.
   Down payment 8,000.
   Contract price = 50,000.
   Payments for Mortgage in line with "Peak" season.
   Carroll foreclosed because Beardon unable to pay.
   Rule: The bare knowledge of the purpose for which the property is sold is not enough to raise the valid defense of illegality.The defendant must also actively participate in the illegal action.
2. b Jones payed 4 times the price of the fridge because salesperson came and pitched it to him.
   Monthly installment that Jones couldn't meet.
   Price of freezer was unconscionable. (Interest was higher than the actual price of freezer)
   Rule: If Under UCC 2-302, Unc. term intimately touches on the contract, then the contract is void
   Also unconscionable because of socio-economic situation of Jones.
3. c Contract included clause to restore land. GC did not restore land. Court said it was OK because diminution in value was so small compared to cost to restore.
   *Rule: Where the contract provision breached was merely incidental to the main purpose, and where the economic benefit by full performance is grossly disproportionate to the cost of performance, the damages are limited to the diminution in value.
4. d M asked brother-in-law to ship his car.
   Car was shipped, but no form was signed.
   Terms were on the wall of the store.
   Brother-in-law had signed waivers before, but not every time.
   Signing form contracts is important, both for buyer and for seller.
   Devlin: artificial line, but fairly drawn.
5. e ProCD compiled 3,000 telephone directories.
   Zeidenberg found out that directories are not copyrighted.
   So, he decided to put the cd online.
   ProCD sued because there were terms and conditions, and Zeidenberg bought the non-commercial version of the cd.
   Bubble-wrap waiver.
   Easterbrook: terms are part of product. BUT 2-207 says that additional terms are proposals and only treated as terms if accepted.
   Rule: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.

5 Multiple Choice Questions

1. Girl skier died.
   Waiver on paper that said Application.
   Middle paragraph.
   No extra signature.
   Waiver inconspicuous and ambiguous.
   Rule: Signer should be aware of the nature and significance of the waiver.
   1. Yauger v. Skiing
   2. Boud v. Sdnco
   3. Hamer v. Sidway
   4. Marvin v. Marvin
2. MS wanted funding from GE.
   Paragraph 38: MS could get funding for anything over 250K, and if negotiations broke down, then it could opt to buy for much less than the market value.
   MS never told GE about the paragraph.
   MS "tried" to negotiate with general partner, but never really did.
   Then it tried to invoke paragraph 38.
   Rule: Good Faith is not fiduciary duty or duty of Candor,
   It is a duty to the contract, and deliberate advantage taking of the other party during performance is breach of GF.
   Breach of good faith because of sharp dealing.
   1. Hawkins v. McGee
   2. Kirksey v. Kirksey
   3. Mehren v. Dargan
   4. Market Street v. Frey
3. Plaintiffs (pharmacies) were doing business with Wallgreen as franchisees.
   Under WFDL, a franchisor can only terminate the agreement for good cause.
   Walgreen wanted to get rid of franchisees and put in corporation-owned stores.
   The court had to decide whether business decisions constituted good cause.
   Rule: The WFDL does not have a section that allows for business decisions, so no good cause.
   1. Oliver v. Campbell
   2. Hawkins v. McGee
   3. Colonial Dodge v. Miller
   4. Collins Drugs v. Wallgreen
4. Restaurant didn't want to give past wages to illegal.
   Rule: Where an illegal contract is outweighed by public policy, then it should be enforced.
   Public policy of giving wages for earnings outweighs policy of keeping illegals from contracting.
   Kansas Wage Payment Act.
   Not paying migrant workers could incentivize employers to hire them and not pay.
   1. Carroll v. Beardon
   2. Hamer v. Sidway
   3. Coma Corp. v. KDOL
   4. Yauger v. Skiing
5. LA breached by delaying delivery of 4 refiners. AR made preparations for the refiners. Court awarded reliance damages for those preparations.
   *Rule: A promisee can recover his preparation expenses minus the amount the promisee would have lost if the contract had been fulfilled.
   1. L. Albert v. Armstrong Rubber
   2. Lake River v. Carborundum
   3. Yauger v. Skiing
   4. De Leon v. Andrete

5 True/False Questions

1. Selmer v. Blakeslee → Mill handle broke. Shipped to get it fixed. Shipment was delayed. Hadley sued carrier. Carrier not liable for consequential damages because they did not know the circumstances.
   *Rule: The damages to be received by the non-breaching party should be either damages that arise naturally from the breach, or those that the parties are able to foresee at the time the contract is made.

   True        False

2. Hawkins v. McGee → Hairy Hand. 100% guarantee - not an opinion.
   Awarded difference between perfect hand and H's hand.
   *Rule: Uses warranty analysis under 2-714(2). The measure of the vendee's damages is the differences between the value of the goods as they would have been if the warranty as to quality had been true, and the actual value at the time of the sale, including gains prevented and losses sustained, and such other damages as could be reasonably anticipated by the parties as likely to be caused by the vendor's failure to keep his agreement, and could not by reasonable care on the part of the vendee have been avoided.

   True        False

3. Hill v. Gateway → Hills bought a computer over the phone.
   It came with terms and conditions inside the box, but it wasn't bubble wrap license because there was no indication of terms and conditions on the box.
   Terms allowed for refund if sought within 30 days, and said that if there was a complaint then the complainant would have to use arbitration.
   Easterbrook: Not feasible to read the terms over the phone, and the Hills had access to such things online.
   Rule: An agreement to arbitrate must be enforced "save upon such grounds as exist at law or in equity for the revocation of any contract."

   True        False

4. Mitchell v. C.C. Sanitation → Husband was a cocaine addict.
   Created contract that she would resume marital relationship if he promised to refrain from using cocaine.
   He broke the promise, and she filed for divorce and for enforcement of the contract.
   Public policy = don't look at faults in divorce cases.
   Rule = Contracts are invalid if the sole consideration of a bargain is to refrain from committing a crime or a tort, or from deceiving or wrongfully injuring the promisee or a third person.

   True        False

5. Boud v. Sdnco → Boud bought a yacht that later had mechanical problems.
   Claims that he relied on representations from a brochure that said that it offered superb handling, and it was best in class.
   Court held that express waivers are not opinions.
   Rule:Affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion does not create an express warrant. To qualify as a statement of fact, a statement must be able to be proved true.
   The statements on the brochure were not.

   True        False