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Oedels Contracts_ Fall 2008 - Mercer University School of Law

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Oedels Contracts_ Fall 2008 - Mercer University School of Law Powered By Docstoc
					                                  Contracts

                  Fall 2008 -- Professor David G. Oedel

                Course Rules, Syllabus and Assignments


Meeting Days: Monday, Tuesday, Wednesday and Thursday at 2:20 in Classroom E

Materials:

      Required: Murphy, Speidel & Ayres, Studies in Contract Law (7th ed. 2008)
      (ACasebook@)

      Also required: Restatement (Second) of Contracts (supplied as handout)


Ground Rules:

      Attendance, preparation and appropriate participation expected. Please have
      prepared three cases ahead in the syllabus on any given day. We may or may not
      reach three cases each day, but you will not be responsible for more than three
      cases on a given day. Unprepared slips are accepted and count as absences. Five
      absences/unprepared=s okay without notice or explanation. After five absences
      and/or unprepared=s, please deliver a written, typed note (not e-mail) to the
      professor within 24 hours of any absence explaining the reason for the absence.
      Grading will be based primarily on (1) successful completion of all occasional
      writing assignments (each of which will be graded only informally) and (2) a four-
      hour final exam (open book, open notes, no commercial outlines) at 2 pm on
      Monday, December 15, 2008. Final grading adjustments may be made at the
      professor=s discretion in light of class participation and attendance. Questions to
      the professor are always welcome. Written questions via e-mail may be directed
      to oedel_dg@mercer.edu. Oral questions may be posed after class or at other
      times in the professor=s office. The professor=s office phone is (478) 301-2629,
      home phone is (478) 471-7721, and cell phone is (478) 973-1947. The professor=s
      office is always open to you.




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Week One: An Introductory Survey of What Makes Some Promises Legally Enforceable
and Others Unenforceable (and What Enforcement Means): The Bargained Exchange of
Promises for Promises and Promises for Value

      Note: for first class, please read pages 1-18 in the casebook (through Bailey v. West).

      How do you brief a case for this class?

         1.   Procedure and Facts
         2.   Main Issue or Issues Identified by the Court
         3.   Rule or Rules That Apply to the Issue(s), and the Source of the Rule(s)
         4.   Holding: How and Why the Rule Resolves the Issue in this Context
         5.   Perspective: Understanding the Case from a Broader Perspective, e.g.:
                  What is the best argument for an alternative holding? (Consider
                       alternative characterizations of facts, issue, rule, or application.)
                       Stated another way: Do you agree or disagree with the result?
                       (Consider these possible objections: Facts wrong, issue wrong, rule
                       wrong, application of rule to facts wrong?)
                  What does this case add to this course, and how might it be incorporated
                       in an outline?
                  What are the practical implications of the case? For instance, is the rule
                       a default and hence avoidable by creative drafting, or is it
                       immutable? (See Casebook, 10-13)

      Introductory Survey, pages 1-12. What is a contract? What is a promise? Why
      enforce promises?

      Bailey v. West, page 12 (horse care). What is the difference between a contract
      implied in fact and a quasi-contract implied at law B and why was neither shown
      here?

      Bolin Farms, page 18 (cotton futures). Are mere promises enforceable before any
      other exchange occurs?

      Some Theories of Promissory Enforcement (ages 21-27): Formalism versus
      Realism. Will (nobody forced you to promise), Reliance (poor thing for having
      believed the breacher’s promise), Efficiency (it makes economic sense), Fairness
      (it makes moral sense), Process (who is the court to substitute its views for the
      real deals of the parties, so long as a deal was properly made?). Contract as a
      social rule.

      Kirksey v. Kirksey, page 31 (widow relocates after brother-in-law=s promise).
      Are gratuitous promises enforceable?


                                            2
      Hamer v. Sidway, page 33 (the rewards of abstinence). What is sufficient
      consideration to support promissory enforcement?

      Langer, page 36 (promise of a pension). What detriment might qualify as
      consideration?

      Jara v. Suprema Meats, page 39 (son’s promise not to increase his own
      compensation without father’s approval). What makes this promise
      unenforceable, the familial setting -- or something else?

      Problem: The Case of the Lessee=s Well. Page 45.


Week Two: Why Enforce Promises? Promise Plus Bargain Consideration as Support for
both Original Promises and Modification Promises.

      Thomas, page 46 (house for a pound). Was nominal consideration enough to
      support a promise made for mixed motives? Follow-up question: Would the
      same result issue today under the rules of the Restatement (Second) of
      Contracts?

      Problem: Mixed Motives and Agreed Exchange (page 53).

      Browning v. Johnson, page 54 (doctor’s promise to give up a worthless contract).
      The meaning of “sufficient” consideration.

      Apfel, page 57 (sale of a technique for booking securities). Must consideration in
      the form of an idea be an idea novel to all, or is it enough that the idea be valuable
      to the particular counterparty in the marketplace?

      Jones v. Star Credit (high-priced freezer) (page 61). When will substantive
      unconscionability disqualify the appearance of valid consideration? In other
      words, when might the courts inquire into adequacy of consideration?

      Comment on Adequacy of Consideration (page 65): Does the law always adhere
      to the rule that adequacy of consideration is of no legal significance?

      In re Greene, page 66 (support for a mistress). Is $1 Aplus other good and
      valuable consideration@ sufficient to justify enforcement of a promise?

      Fiege, page 69 (promise to support a bastard child). Why enforce a man=s
      promise to pay for a child mistakenly thought to be his after the truth about non-
      paternity is discovered?

      Levine, page 78 (promise to cut the price on a lease). Do contractual

                                            3
      modifications require new consideration?

      Alaska Packers, page 81 (fishermen=s raise). When is a bargain not a bargain?
      The pre-existing duty rule.

      Angel, page 85 (escalating price for trash removal). When might a modification
      be upheld even when the promisee offers no new consideration?

      Writing Assignment: Cases of the Dissatisfied Entertainer (91) and the Sub=s
      Added Inducement (91). Test your understanding of the operation of the
      preexisting duty rule. Write for 30 minutes maximum on each problem, and
      submit the double-spaced typed answers in exam-style format.


Week 3: More on Consideration (Mutuality, Illusory Promise) and the Introduction of
the Notion of Consideration Substitutes (AMoral Obligation@ and Past Consideration)

      Rehm-Zeiher, page 93 (whiskey spigot runs dry). Must a seller stick by its
      promise to sell at set prices?

      McMichael, p. 96 (sand supplier wants to quit). Is a seller bound after the buyer
      promises to buy an indefinite quantity?

      Wood v. Lady Duff-Gordon, page 99 (exclusive marketing agent for a fashion-
      endorser sues that principal for dealing with other agents). Can one be bound to
      an implied promise to use best efforts?

      Omni Group, page 102 (effect of land buyer's condition to be satisfied with
      feasibility study). Can one be bound to an implied promise to be satisfied in good
      faith on objectively reasonable grounds?)

      Problem: Case of the Illusory Bonus (page 107). Any binding promise here?

      Mills v. Wyman, page 113 (care for a sick son). Was moral consideration
      sufficient consideration to justify enforcement of a promise to repay for past
      service?

      Manwill v. Oyler, page 116 (promise to repay financial rescuer). When might
      moral consideration justify enforcement of a promise to repay for past financial
      rescue?

      Webb v. McGowin, page 120 (promise to pay for past rescue from falling block).

      Harrington v. Taylor, page 123 (promise to pay for past rescue from would-be ax
      murderer). Does moral consideration justify enforcement of a promise to repay

                                           4
      life-saver?

      Restatement (Second), Section 86 (page 125). What is the current state of the law
      of moral obligation as consideration?

      Writing Assignment: Case of the Brokerage Renewal (page 126), Case of the
      Kindly Neighbor (127), Case of the Grateful Merchant (page 128). How does one
      apply the law in cases involving new promises to repay for past value received?
      30 minute maximum for each; exam-style format as before.

Week 4: One Possible Substitute for Consideration -- Promissory Estoppel (Promise
Plus Unbargained-for Reliance as a Substitute for Consideration Justifying Promise-
Enforcement) B And the Added Requirement in Some Cases of a Writing (the Statute of
Frauds)

      Ricketts v. Scothorn, page 129 (grandfather=s promise to Katie). Are all promises
      without consideration unenforceable?

      Allegheny College, page 133 (pledge to fund scholarship). Why might a funding
      pledge be enforceable?

      Skip Congregation K, p. 139 (if you’re interested, because the case strays from
      the plain language of R2 section 90(2) and may have been swayed by separate
      principles such as the statute of frauds and estate law)

      Blinn, page 141 (assurances in context of competing offer of employment to
      hospital director). Why would an assurance be insufficient for contract purposes
      but sufficient for promissory estoppel?

      Cohen v. Cowles Media, page 150 (news source revealed). Is one liable in
      promissory estoppel for promises outside the traditional marketplace?

      All-Tech Telecom v. Amway, page 156 (research warranty breached). When
      should promissory estoppel (or tort law) provide an alternative to contract
      remedies?

      Problem: Case of the Independent Cab Driver, page 163. How does one apply the
      doctrine of promissory estoppel?

      Note on the Statute of Frauds (163): What is the Statute of Frauds, and when is a
      writing necessary for enforcement?

      Pro Bull Riders, page 168 (rodeo sponsorship). Is a two-year deal subject to
      termination after the first season within the statute’s one-year rule?


                                          5
         Problems: The Case of Jane Fonda's Attorney, page 174. Within the statute’s one-
         year rule?

         Comment on the U.C.C.'s approach to the Statute of Frauds, page 174. What is
         "within the statute" under Article 2? Page 174.

         Sullivan v. Porter, page 178 (realty and the part-performance exception). Must
         all realty deals be in writing?

         Crabtree, page 183 (unpaid raise). Assuming a promise is within the statute,
         what writings may collectively satisfy the statute?

         Skip DF Activities, page 191 (because it’s an aberrant holding giving unusual
         weight to the Statute of Frauds by narrowly construing the judicial admission
         exception on extrinsic procedural grounds of summary judgment practice).

         Review Problem, page 197: The Case of the Lake Wobegon Lot Purchase. Test
         your understanding of the statute’s writing requirement and the estoppel
         exception by writing a proposed exam answer to this three-part problem; spend
         no more than a half-hour on this simple exercise.

Week 5: An Introduction to Contract Remedies, and a Closer Inspection of the Bargain
Relationship

         Sullivan v. O=Connor, page 200 (value of a broken nose promise). The three
         main measures of breach.

         Curtice Brothers v. Catts, page 207 (specific tomatoes). The alternative remedy
         of specific performance.

         Hadley v. Baxendale, page 213 (shipment of broken part). What are the outer
         limits of contract damages – specifically, when do they include consequential
         damages?

         Glendale Federal Bank, page 218 (fired whistle-blower=s anguish). An example
         of how differences between the basic contract damages theories become
         pronounced when the dollar values are high.

         Skip problem on 222 (as it is based on applying the U.C.C. as to damage
         remedies – you’ll get these embellishments next semester).

Unpacking the Bargain Relationship: How Do the Parties Achieve a Binding Bargain?
Assent, Offer and Acceptance

Assent

                                             6
        Embry, page 227 (extension of employment contract). What happens when the
        parties meant different things?

        Lucy, page 229 (booze, jokes and the family farm). By what standard do we check
        whether the parties assented?

        Problem: The Case of the Hole in One (page 237). Application of the objective
        test.

        Cohen v. Cowles Media, page 237 (news source revealed). What effect does
        context have on assent?

        Wrench v. Taco Bell, page 241 (implied-in-fact contract). When does conduct
        mean assent?



Weeks Six Through Ten


Offer

        Lonergan, page 250 (California/Joshua Tree property for sale, but no offer and
        acceptance). At what point does an offer exist?

        Lefkowitz, page 253($1 furs; first come, first served). Which ads are offers, which
        are mere solicitations (or "invitations to treat")?

        Problems: Case of the Statue of Liberty Commemorative Coins (page 257; The
        Case of the His and Hers Mercedes (257). Test your appreciation of the
        offer/solicitation distinction.

        Leonard v. Pepsico, page 257 (Harrier jet for millions of Pepsi points?). What
        makes for a joke?

        Problem: When is a Price Solicitation an Offer? Page 268.

        Southworth v. Oliver, page 269 (grazing land for sale). When is an offer
        complete?

        Bretz v. Portland GE, page 275 (coal company for sale). When is an offer
        incomplete?

        Equitable Life, page 279 (interrupted auction of ranch land). When is an auction

                                             7
      conducted with reserve, and why is it the default rule?


Acceptance and the Ripening of Contract

      LaSalle National Bank, page 284 (Mel's land for sale). Can a contract ripen
      before final veto power has been exhausted?

      Hendricks v. Behee, page 286 (home buyer's remorse and retraction). When and
      how may one revoke an offer? When and how may one issue a valid acceptance?

      Ever-Tite Roofing, page 288 (roofer's dilemma). What constitutes acceptance?

      Skip Corinthian Pharmaceuticals, page 291 (because this case about vaccine
      price increase and part shipment rests on the U.C.C. concept of accommodation
      which will be addressed next semester).

      Carlill v. Carbolic Smoke Ball, page 296 (smoke ball). Can a public ad be an offer
      for acceptance by performance without notifying offeror?

      Glover, page 302 (reward for info leading to conviction of murderer). Does
      performance without knowledge of an offer for a unilateral contract amount to
      acceptance?

      Industrial America, page 305 (attempted brush-off of double-dipping business-
      broker). So long as offeree knows of offer, does it matter whether the offeree
      means to accept by performing?

      Problem: The Case of the Little League Sponsors (page 309). Some tricky issues
      in acceptance by performance.

      Comment, page 309: Acceptance by Performance Under the Restatements (good
      hypos).

Acceptance By Conduct or Silence

      Skip Scoular Company, page 311 (a U.C.C. case on “firm offers,” a subject for
      exploration next semester).

      Russell v. Texas, page 316 (continued use of land as acceptance). When does
      continuation of a course of conduct imply acceptance?

      Ammons v. Wilson & Co., page 321 (43,916 pounds of shortening). Can silence
      imply acceptance?


                                           8
      Adams v. Lindsell, page 325 (mailbox rule). What is the mailbox rule, and why is
      it the rule?

      Problem: Acceptance of Resignation by Mail, page 330

Counter-Offer, Battle of the Forms, Shrinkwrapped and Clickwrapped Terms

      Minneapolis and St. Louis Railway Co., page 330 (iron rail counteroffer). How
      does the mirror-image rule resolve this confusing exchange of correspondence?

      Skip DTE Energy Technologies, page 334, and Textile Unlimited, page 348 (both
      battle-of-the-forms cases decided under U.C.C. 2-207, which you’ll explore next
      semester).

      Hill v. Gateway, page 349 (computer sale with shrinkwrapped arbitration term).
      When will shrinkwrap terms bind the buyer?

      Klocek v. Gateway, page 352 (computer sale with shrinkwrapped arbitration
      term). When will shrinkwrap terms bind the buyer?

      Specht v. Netscape, page 356 (software download with arbitration terms
      following). When will clickwrapped terms bind the clicker?

Revocation

      Hendricks v. Behee, page 366 (reprise from page 286)

      Dickinson v. Dodds, page 366 (written offer to sell land at Croft, England, 1874).
      May an offer end before the promised duration of the offer?

      Problem: The Case of the Rejection, Revocation and Acceptance Race (page 372).
      Test your understanding here.

      Problem, page 372: The Case of the Dead Guarantor. Should the classical rule
      prevail (i.e., death of an offeror ends the offer, regardless of offeree's knowledge
      or reliance)?

      Humble Oil, page 376 (modified land option). Is an option contract destroyed by
      counteroffer and/or revocable by offeror?

      Problems: Effect of First Refusal and Creation of Reliance Options, page 382.

      Marchiondo, page 382 (attempted revocation of offer to sell property). Will part
      performance keep an offer open?


                                            9
      Problem: The Case of Professor Fuzzy's Well (page 386). Test your appreciation
      of the time at which offers for unilateral contracts may no longer be revoked.

      James Baird, page 388 (sub's error, old rule). Does general's reliance on a sub's
      error make the sub's offer irrevocable?

      Drennan, page 392 (sub's error, new rule). Does general's reliance on a sub's
      error make the sub's offer irrevocable?

      SKB v. Insite, page 389 (sub=s sub=s error and subsequent agreement). Option k
      or PE B or does it matter when we reprise the rolling contract notion?


Insufficient Agreement

      Raffles v. Wichelhaus, page 402 (Peerless peers at the pier). When does mutual
      confusion about the subject matter void any apparent contract?

      Konic, page 406 (fifty-six twenty surge protector). When does mutual confusion
      about the price void any apparent contract?

      Varney, page 409 (architect's employment deal). When is a deal too vague to be
      enforceable?

      Lefkowitz, page 413, reprise from page 253.

      Griffith v. Clear Lakes Trout Co., Inc., page 415 (market-sized fish). How vague
      can a material term be and still be sufficiently definite?

      MGM, page 407 (TV series deal). When is a deal sufficiently clear to be
      enforceable?

      Joseph Martin Deli, page 421 (deal to renew lease at unspecified price). When is
      an agreement to agree later upon a price unenforceable?

      Oglebay, page 425 (shipper of iron ore). When is an agreement to agree on price
      enforceable?

      168th and Dodge, page 438 (movie theater project). What is the legal effect of this
      letter of intent?

      Problem, The Case of the Don King/Buster Douglas Legal Bout (page 450). Was
      this deal too indefinite as to price to be enforceable?

      Comment on Pennzoil v. Texaco, page 451 (biggest civil judgment ever). When

                                          10
      does a big deal become firm?

      Hoffman, page 454 (franchisee strung along). When might pre-contractual
      negotiations be binding?

Weeks Eleven Through Fourteen: Defenses to, or Avoidance of, Contract

Capacity

      Bowling, page 465 ("infant" returns broken car). What are the contractual rights
      of minors and their counter-parties?

Mistake

      Boise Junior College District, page 490 (unilaterally mistaken bid). When may
      mistake permit equitable rescission of a contract?

      Problem, Case of the Four Million Labels, page 497.

      Beachcomber Coins, page 498 (counterfeit coin). What is the effect of a mutual
      mistake about a possible but not-contemplated risk of counterfeit?

      Sherwood v. Walker, page 482 (cow unexpectedly found to be with calf after
      deal). Rescindable mistake?

      Lenawee, page 503 (lot too small for septic system). What is the effect of a
      mutual mistake about the quality or value of the subject matter?

      Problems: Three Unknowns . . . Page 510.

      One Beacon, page 512 (leasing company’s vehicle insurance). When is
      reformation appropriate?

      Ayer v. Western Union, page 519 (telegraph company=s mistake). Does a third
      party transmitter bind the sender to the third party=s mistake?


Misrepresentation and the Duty to Disclose

      Laidlaw, page 522 (suppression of market-sensitive news about peace breaking
      out?). Might silence be fraudulent?

      Vokes v. Arthur Murray, page 526 (lots of dance lessons). May a
      misrepresentation of opinion warrant rescission?


                                          11
       Hill v. Jones, page 533 (undisclosed termites). Will silence warrant rescission
       despite an integration clause? What is one's duty to disclose trouble to counter-
       parties?

       Problems, pages 543-5.

Duress

       Rubenstein v. Rubenstein, page 550 (arsenic and lace). Threats creating duress?

       Austin Instrument, page 550 (enforceability of agreement to modify). When will
       economic duress be found?

       Machinery Hauling, page 557 (threat to quit dealing). Economic duress?

Unconscionability

       Williams v. Walker-Thomas Furniture, page 564, on appeal, page 565 (cross-
       collateral security clause). When are sharp clauses not enforceable?

       Jones v. Star Credit, page 61 B revisited. Substantive unconscionability.

       Fleet v. U.S. Consumer Council, page 578 (fee for referral to a lawyer).
       Unconscionable?

       Ferguson v. Countrywide Credit, page 553 (arbitration agreement).
       Unconscionable?

Public Policy/Illegality

       Sinnar v. Le Roy, page 604 (payment for help in securing a beer license).
       Illegality.

Performance and the Parol Evidence Rule

       Mitchill v. Lath, page 656 (icehouse removal). Reintroducing the parol evidence
       rule.

       Masterson v. Sine, page 660 (option to repurchase ranch). Which written
       agreements result in the possible exclusion of parol evidence?

Performance and Interpretive Ambiguity

       Pacific Gas, page 679 (liability for accident during performance). What evidence
       should be admissible to explain ambiguities in the writing?

                                            12
       ConFold Pacific v. Polaris, page 682 (containers). The significance of plain
       meaning for implied-in-fact contracts as well as for quasi-contracts.

       Frigaliment, page 690 (“chicken”). How may interpretive ambiguities be
       resolved?

       In re Katrina, page 699 (insurance for floods). A recent interpretation case.

       Omni Berkshire, page 710 (“all risk” insurance). Is terrorism in the “all risk”
       category?

Allocation of Risk: Warranties and Conditions

       Henningsen v. Bloomfield Motors, page 787 (defective car). Will a disclaimer of
       warranty be effective?

       Dove, page 793 (law student's absence from summer job). What is the effect of a
       failure to comply with a condition?

       Jacob & Youngs v. Kent, page 839 (Cohoes vs. Reading pipe). What are the
       remedies for failure to comply with explicit provisions of a contract?

Impracticability

       Taylor v. Caldwell, page 868 (music hall burns). Supervening impracticability.

       Paradine v. Jane, page 897 (Prince Rupert=s Avisit@). Frustration of purpose.

       Krell v. Henry, page 898 (postponed coronation). Frustration of purpose.

In Conclusion . . .

       Completion of Material Not Yet Addressed

       An Overview and Review of the Course

       Discussion of the Final Exam

       Course Evaluations




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