Contracts Fall 2007 Professor Malin SYLLABUS Office: Room 843 Telephone: 312/906-5056 E-Mail: mmalin (firstname.lastname@example.org) Office Hours: No appointment is necessary. Simply come by anytime. I am usually there. Teaching Assistant: Christina Lutz, email@example.com Text: Required: Farnsworth, Young & Sanger, Contracts: Cases & Materials (Foundation Press, 6th edition) (hereinafter “Casebook”) Farnsworth & Young, Selections for Contracts (Foundation Press 2007) (hereinafter “Selections”) Recommended: Farnsworth, Contracts (Aspen, 4th edition) or Calimari and Perillo on Contracts (West, 5th edition). Grades: Final exam grade which may be raised or lowered based on class participation. The exam will be open book to the following extent: you may use the casebook, the Selections book, handouts from the course and any notes you personally prepare or prepare jointly with other members of the class, provided they are in hard copy, printed on regular 8½ by 11 inch paper. You may not share materials during the exam. Your Responsibilities: I do not take attendance in class but you are expected to attend regularly and on time and to come to class prepared. Late arrival disrupts the class and is grossly unfair to your classmates. Preparation is not limited to doing the required reading. It includes thinking about how the required reading relates to material we have already covered and considering the questions raised in this syllabus and in the casebook. Consistently poor attendance or poor preparation is considered poor class participation and can result in the lowering of your final grade. Please be considerate of your classmates. Using your laptop to surf the Internet or to play games during class can be distracting to your neighbors and disrupts the class. Use of your laptop during class must be confined to class-related matters, e.g. taking notes, looking up a case that comes up in discussion on Lexis or Westlaw and similar activity. If you use your laptop during class for other than class-related purposes, you will receive a warning. If it happens again, you will be barred from bringing your laptop to class. E-mail Discussions: From time-to-time, I may e-mail the class to supplement a matter we have discussed in class. I encourage you to “reply to all” to keep the electronic discussion going. If you e-mail me with a question or comment and I believe that the class would benefit from your e-mail, I will forward your e-mail and my response to the entire class. Feel free to reply to all to keep the electronic discussion going. If you do not want me to forward your e-mail to the entire class or if you want me to delete your name before forwarding the e-mail, please say so expressly. Note, this applies only to e-mails dealing with substantive matters in the course curriculum. I will not forward any e-mail from you that pertains to a personal matter, such as a request for an accommodation of some personal circumstance, an explanation of an absence or tardiness, questions about your schedule, future courses, the labor law program, etc. CALI Lessons: Chicago-Kent is a member of the Center for Computer Assisted Legal Instruction (CALI). There are numerous CALI lessons on contracts. At various points in the syllabus, I will indicate where I think a CALI lesson will provide a useful review. These are offered for your benefit, but you are not required to do them. To access CALI lessons, go to www2.cali.org. You will need the Chicago-Kent access code (which I will give you in class) to establish your own password. You may also access the CALI lessons that I have suggested from the class website. Introduction A “contract” is a promise that the law will enforce. Our course on the law of contracts thus focuses on the enforcement of promises. One fascinating aspect of the Contracts course is that each portion of the curriculum relates to every other portion. At one level, it does not matter very much where one begins and different professors begin the course in different ways. Some begin by focusing on remedies; some begin by focusing on the doctrine of consideration; some, including me, begin by focusing on contract formation. There is simply no way to just wade into contract law. One can only jump in off the deep end and start swimming. Consequently, if you feel overwhelmed or lost during the first month or so of class, do not panic. This is quite natural as it will take some time for the pieces of the Contracts puzzle to begin to fit together. Particularly at the beginning, we will be raising many questions without providing concrete answers. You may come to some tentative answers but those will be subject to reassessment as the course develops. 2 As a general approach when analyzing a contracts problem you should keep in mind that the law of contracts is the law of enforcing promises. Therefore, the first questions to ask in reading a case are what is the alleged promise and who is seeking to enforce it against whom. That will lead you to analyze the particular issues involved in the enforcement of the alleged promise. A brief introduction to some terminology may be helpful. If we add the suffix “or” to a verb, we denote the party who took the action depicted by the verb. If we add the suffix “ee”to a verb, we denote the party who was the object of the action. For example, the “promisor” is the party who made the promise and the “promisee” is the party to whom the promise was made. The “offeror” is the party who made the offer and the “offeree” is the party to whom the offer was made. You will see frequent references to the Uniform Commercial Code (UCC). The UCC was the result of a joint effort of the American Law Institute (ALI) and the National Conference of Commissioners on Uniform State Laws (NCCUSL). The UCC has been enacted as a statute in every state except for Louisiana. We will be concerned primarily with Article 2 of the UCC which governs contracts for the sale of goods. In 2004, ALI and NCCUSL adopted a revised Article 2. As of the start of this semester, no state legislature has enacted Revised Article 2. Therefore, we will concentrate primarily on original Article 2 but will comment on Revised Article 2 where it makes significant changes. When you encounter references to the UCC, you should read the referenced provisions in Selections. For further background on the UCC, see Selections, pp. 1 - 2. You will also see frequent references to the Restatement and Restatement 2d. These were projects of ALI, with the Restatement 2d being a revision of the original Restatement. They are not binding on any court (unlike the UCC). However, courts frequently cite to the Restatement and Restatement 2d where they find the approach of these treatises persuasive. When you encounter references to the Restatements, you should read the referenced provisions in Selections. For further background on the Restatements, see Selections, pp. 251-254. Two other classic treatises on contract law were written by Professors Williston and Corbin. Courts often cite to Williston on Contracts and Corbin on Contracts, where they find the treatment of an issue in those treatises persuasive. Like the Restatements, these treatises and all other secondary works are not binding on a court. Introduction to the Course August 27: Read Casebook pp. v - viii and consider the following problem: Your client is Ernest N. Nyeve (Ernie). Here is his tale of woe. Ernie first met Bertram D. Seaver (Bert) when they were in college. Ernie related that Bert played a major role in Ernie’s life. Bert helped Ernie come to grips with his sexuality and his sexual orientation. By senior year of college, Bert and Ernie were sharing an apartment and sharing a bed. 3 Ernie was an accounting major and Bert was an education major. After graduation, Ernie went to work for a major accounting firm and Bert took a job teaching third grade. After two years they were both very depressed. Bert was depressed because he ran into a great deal of hostility toward gays, particularly from parents of children in his class. He felt that his fellow teachers and the school administration were not supportive. He also felt the pressure of paying off his student loans, and still having money to live on, on a grade school teacher’s salary. He decided he wanted to go to law school. Ernie was depressed because he felt that his work on behalf of his employer’s large corporate clients was not having a positive impact on society. Although he was earning twice as much as Bert, he wanted to work for a non-profit organization where he could have a positive impact on society. He didn’t care how much or how little money he would make. Ernie related that Bert was much more depressed than he was. One particularly gloomy night, Ernie told Bert to quit his job and go to law school. Ernie told Bert that he (Ernie) would continue working for the accounting firm, that the firm offered domestic partner benefits so Bert would have health insurance, and that he (Ernie) would pay all of the household expenses while Bert was in law school. Bert responded, “But Ernie you hate your job,” to which Ernie responded, “Yes, but I love you and I hate seeing you so depressed even more than I hate my job.” Bert replied that he would go to law school and that after he graduated and found a high paying job, Ernie could quit the accounting firm and work in the non-profit sector and it would not matter whether Ernie had any income at all because Bert would take care of him as long as Ernie so desired. Bert quit his job and for the next three years, Ernie had Bert covered under his employer- provided health insurance and paid the premiums for both of them. Ernie also paid all of their household expenses. When they would take a short vacation trip, Ernie would pay for everything. Ernie also paid for all of their entertainment expenses, including restaurant meals and movies. Ernie also paid part of Bert’s law school tuition, although Bert covered most of it with a scholarship and part-time and summer employment. During this period, however, Bert felt the stresses of law school and Bert and Ernie frequently bickered. Bert graduated at the top of his class and accepted a job with Hot Shot Law Firm paying $150,000 per year. The stresses and bickering continued while Bert studied for the bar exam. After the bar exam, Ernie asked Bert to go out to celebrate. Bert reluctantly agreed and they went to their favorite restaurant. Ernie ordered a bottle of champagne and proposed a toast to the end of the long road, the end of the sources of stress and to their enduring relationship. Ernie said he couldn’t wait to quit his job with the accounting firm. He said he had hated it more each year but seeing Bert through law school and the bar exam was worth it. Ernie started to tell Bert about the various nonprofit organizations he had applied to. None of the jobs paid more than $25,000 per year. Bert interrupted Ernie and told Ernie that he was moving out of their apartment. Bert told Ernie that their relationship was over. He told Ernie that he was sick and tired of their bickering and that the only reason he had tolerated it the past three years was that he had no other choice if 4 he wanted to complete law school. Ernie was shocked. He said to Bert, “What about our life together and our plans? You were going to make lots of money and support me so I could pursue my dream in the nonprofit sector. You mean you stayed with me and let me support you financially knowing that when you finished law school and got the big bucks job you would leave. How could you do that?” Bert responded, “Ernie you are such a naive pushover.” Bert left the restaurant, went to the apartment, packed his things and moved out. Now, Ernie wants to know if he has a claim against Bert for breach of contract. What do you think? I. Is the promise prima facie enforceable? August 29: Consider the following scenario. Several years ago, my undergraduate alma mater, Michigan State University, asked me to pledge a substantial sum of money to be paid over five years. The pledge card stated in large bold type, “This pledge is not legally binding.” Why would MSU have provided explicitly that my pledge (or that of any other donor) would not be legally enforceable? Why did MSU want me, and any other donor, to be able to walk away from our pledges with no legal consequences? What downside risks did MSU face? Your consideration of the MSU pledge card should have you thinking of reasons we might not want to enforce a promise. Indeed, the very definition of a contract, a promise that the law will enforce, suggests that there are promises that the law will not enforce. We will now begin the course by exploring what types of promises the law generally will enforce. A. Was there an intent to be legally bound? Consider the following problem. Jack and Jill were students in the same Contracts class. Jack found Jill very attractive, both physically and because Jill impressed Jack as being smarter than brilliant. Jack invited Jill to his apartment for an evening of dinner and studying Contracts. At first Jill was reluctant but Jack persisted. The following conversation took place: Jack: “I am a great cook, especially Thai food.” Jill: “I love Thai food. I also love chocolate desserts.” Jack: “I’m not very good at making desserts, but if you bring a dessert and your Contracts notes, I promise you a Thai feast that you will never forget.” Jill: “That’s a deal I can’t refuse. How about Saturday at 7 p.m.?” Jack: “Saturday at 7 p.m. at my place. I promise to have my Contracts notes and a fabulous dinner waiting for you. Do you promise to come with your Contracts notes and a fabulous chocolate dessert?” Jill: “I promise.” On Friday morning, Jill saw George in the library. George was in Jill’s Legal Writing 5 class but not in her Contracts class. George said to Jill, “Jill! Guess What! I just won two tickets to the Green Day concert tomorrow night at the United Center. Want to go?” Jill thought about her date with Jack and decided that this concert was an opportunity that would not likely come again soon whereas she could have dinner with Jack anytime. She told George she’d love to go. She then I.M.ed Jack telling him that she would not be able to make it Saturday night and asked if they could reschedule for the following Saturday. Jack replied, “But I was counting on it and I’ve already bought the food and the wine and the food won’t keep and you promised.” Being a law student -- the most litigious animal on the face of the Earth -- Jack wants to sue Jill. Should a court enforce Jill’s promise? Read Casebook pp. 119-130. As you read Lucy v. Zehmer, ask yourself: What was the promise? Who was the promisor? Who was the promisee? What was the promisor’s defense? Why did the court enforce the promise? Would it have mattered if the day following the promise Lucy told a friend, “You should have seen Zehmer. I knew he was jiving me but I’m going to hold him to the deal.”? What remedy did the court award Lucy? Were there alternative remedies that the court should have considered? Be prepared to discuss Note 2 on page 124 and the problem on page 127. B. Was There a Bargained-for Exchange: Offer, Acceptance and Consideration August 30: The Offer Read Casebook pp 131-141 and consider “Transmission Problems,” at pp.150-151 The Acceptance Read Casebook pp. 151-156. As you read International Filter Co. v. Conroe Gin, Ice & Light Co., it is very important to write down the chronology of communications. Which communication is the offer? Which is the purported acceptance? What does the court say about the purported acceptance and the question of notification of the offeror? September 3: Happy Labor Day! September 5: Read Casebook pp. 156-172. Be sure to do the problem on page 165. As you read White v. Corlies & Tift, and Ever-tite Roofing Corp. v. Green, consider how the two cases differ. Why was there a contract in one but not in the other? September 6: Death of an Offer Read Casebook pp. 172-194. September 10 : Read Casebook pp. 194-223; be sure to read UCC 2-207 and 6 Revised UCC 2-206 & 2-207, and compare them. Recognize that under the common law, an acceptance had to mirror the offer; if it differed from the offer, it was considered a counteroffer which was a rejection (which killed the original offer) and a new offer. UCC 2-207 changes that. Remember that Article 2 of the UCC only applies to contracts for the sale of goods. With respect to such contracts, section 2-207(1) expressly rejects the mirror image rule under most circumstances. Section 2-207(2) tell us what to do with additional terms in the “acceptance” (which at common law would have been a counteroffer but under 2-207(1) is an acceptance). Section 2-207(3) tells us what to do if the writings exchanged by the parties turn out not to be offer and acceptance - i.e. they do not create a contract, but the parties go ahead and perform anyway. You may also find helpful the CALI Lesson, “Battle of the Forms: UCC 2-207.” The requirement of consideration September 12: Read Casebook pp. 22 - 52. As you do, consider some of the rationales that have been put forth for the requirement of consideration: • Consideration grew out of the common law claims of debt and assumpsit. • Consideration serves as a substitute for the seal (evidentiary and cautionary functions) • The presence of consideration represents that the parties have determined that the bargained for exchange has made them better off and courts should respect that private ordering and enforce it. What problem arises where the purported consideration has already been provided at the time of the promise? Under what circumstances should a moral obligation arising out of the receipt of the consideration and the giving of the promise make the promise enforceable? Consider Feingberg, Mills, and Webb in light of the different rationales for the requirement of consideration. September 13: Rosh Hashana September 17: Read Casebook, pp.327-342. (No - this is not a typo. We are taking this portion of the casebook out of order.) Be sure to also read Restatement 2d § 89 and UCC 2-209. September 19: Read Casebook, pp. 68-70; 53-66 Note that we are taking these cases out of order. Trust me - there is a method to my madness. Why was Strong’s promise not consideration for Sheffield’s promise to pay her husband’s past due debt? How does this problem relate to the employment cases where employment is “at will,” i.e., the employee may quit at any time without reason and the employer may fire at any time without reason? September 20: Read Casebook pp. 71-86 7 Consider Mattei, Eastern and Wood as variants of the problem of illusory promises illustrated by Strong v. Sheffield. At this point, you should consider doing the CALI lesson entitled, “Consideration: The Basics of Consideration and the Bargain Theory,” as a useful review of the material we have just covered. C. Do Any Alternatives to Consideration Apply? September 21: Read Casebook pp. 86-102 Make-up Class - 12:30 - 2:05 in room C-502 Consider the following. Jane worked for Old Established Law Firm(OELF) as a paralegal. Although her employment relationship was terminable at will, she worked for fourteen years, receiving superior performance evaluations, significant annual raises and year end bonuses. During the spring, New Aggressive Law Firm (NALF) made a major effort to recruit Jane to work for it. On July 1, NALF offered Jane a job with a salary $25,000 above her salary at OELF and comparable benefits. Jane told NALF’s managing partner about the offer. A week later the managing partner told Jane that the firm would offer Jane a $10,000 raise but could not match the NALF offer. The managing partner also asked Jane in the event she decided to leave if she would stay on at OELF until the closing of the deal on which she was working. The closing was scheduled for September 1. Jane approached NALF and advised that she wanted to accept the NALF offer but also wanted to stay on at OELF until September 1 and then take two weeks off before starting her new job. NALF agreed that Jane would start work on September 15. Jane then told OELF that she had accepted the NALF job but would stay at OELF through the closing on September 1. On August 29, NALF told Jane that the job had been eliminated that there was no other job for her and that she should not report on September 15. Jane immediately spoke to the managing partner at OELF who told her that unfortunately OELF had already hired another paralegal to replace her and therefore her employment would terminate as scheduled on September 1. Does Jane have any claim against NALF? Would your answer change if Jane began work at NALF on September 15 and was fired after one day? After one week? After one month? After six months? After one year? September 24: Read Casebook pp. 103-113 September 26: Read Casebook pp. 223-251 September 27: Class Cancelled October 1: Read Casebook, pp. 251-262 At this point, you should consider doing the CALI lesson entitled, “Contract Formation I and II,” as a useful review of the material we have just covered. 8
"Contracts 5Th Edition - PDF"