American Contract Law for a Global Age, 2017a

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explanation as to why a measure of damages ordinarily followed in cases sounding in tort should be used in contract cases. Nevertheless, it is of some significance that three out of four appellate courts have followed the diminution in value rule under circumstances where, as here, the cost of performance greatly exceeds the diminution in value. The explanation may be found in the fact that the situations presented are artificial ones. It is highly unlikely that the ordinary property owner would agree to pay $29,000 (or its equivalent) for the construction of “improvements” upon his property that would increase its value only about ($300) three hundred dollars. The result is that we are called upon to apply principles of law theoretically based upon reason and reality to a situation which is basically unreasonable and unrealistic. In Groves v. John Wunder Co., the Minnesota court apparently considered the contract involved to be analogous to a building and construction contract, and cited authority for the proposition that the cost of performance or completion of the building as contracted is ordinarily the measure of damages in actions for damages for the breach of such a contract. In an annotation following the Minnesota case beginning at 123 A.L.R. 515, the annotator places the three cases relied on by defendant (Sandy Valley, Bigham and Sweeney) under the classification of cases involving “grading and excavation contracts.” We do not think either analogy is strictly applicable to the case now before us. The primary purpose of the lease contract between plaintiffs and defendant was neither “building and construction” nor “grading and excavation.” It was merely to accomplish the economical recovery and marketing of coal from the premises, to the profit of all parties. The special provisions of the lease contract pertaining to remedial work were incidental to the main object involved. Even in the case of contracts that are unquestionably building and construction contracts, the authorities are not in agreement as to the factors to be considered in determining whether the cost of performance rule or the value rule should be applied. Restatement [First] of Contracts § 346(1)(a) submits the proposition that the cost of performance is the proper measure of damages “if this is possible and does not involve unreasonable economic waste”; and that the diminution in value caused by the breach is the proper measure “if construction and completion in accordance with the contract would involve unreasonable economic waste.” (Emphasis supplied.) In an explanatory comment immediately following the text, the Restatement makes it clear that the “economic waste” referred to consists of the destruction of a substantially completed building or other structure. Of course no such destruction is involved in the case now before us. On the other hand, in MCCORMICK, DAMAGES, § 168, it is said with regard to building and construction contracts that “in cases where the defect is one that can be ______________________________________________________________________________ 492 CHAPTER VIII: REMEDIES
epaired or cured without undue expense” the cost of performance is the proper measure of damages, but where “the defect in material or construction is one that cannot be remedied without an expenditure for reconstruction disproportionate to the end to be attained”(emphasis supplied) the value rule should be followed. In view of the unrealistic fact situation in the instant case, and certain Oklahoma statutes to be hereinafter noted, we are of the opinion that the “relative economic benefit” is a proper consideration here. This is in accord with the recent case of Mann v. Clowser, 190 Va. 887, 59 S.E.2d 78, where, in applying the cost rule, the Virginia court specifically noted that “the defects are remediable from a practical standpoint and the costs are not grossly disproportionate to the results to be obtained” (Emphasis supplied). 23 Okla. Stat. 1961 §§ 96 and 97 provide as follows: § 96. * * * Notwithstanding the provisions of this chapter, no person can recover a greater amount in damages for the breach of an obligation, than he would have gained by the full performance thereof on both sides * * *. § 97. * * * Damages must, in all cases, be reasonable, and where an obligation of any kind appears to create a right to unconscionable and grossly oppressive damages, contrary to substantial justice no more than reasonable damages can be recovered. Although it is true that the above sections of the statute are applied most often in tort cases, they are by their own terms, and the decisions of this court, also applicable in actions for damages for breach of contract. It would seem that they are peculiarly applicable here where, under the “cost of performance” rule, plaintiffs might recover an amount about nine times the total value of their farm. Such would seem to be “unconscionable and grossly oppressive damages, contrary to substantial justice” within the meaning of the statute. Also, it can hardly be denied that if plaintiffs here are permitted to recover under the “cost of performance” rule, they will receive a greater benefit from the breach than could be gained from full performance, contrary to the provisions of § 96. In spite of the agreement of the parties, §§ 96 and 97 limit the damages recoverable to a reasonable amount not “contrary to substantial justice”; they prevent plaintiffs from recovering a “greater amount in damages for the breach of an obligation” than they would have “gained by the full performance thereof.” We therefore hold that where, in a coal mining lease, lessee agrees to perform certain remedial work on the premises concerned at the end of the lease period, and thereafter the contract is fully performed by both parties except that the remedial work is not done, the measure of damages in an action by lessor against lessee for damages for breach of contract is ordinarily the reasonable cost of performance of the ______________________________________________________________________________ UNIT 23: THE EXPECTATION INTEREST 493
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Notices This is the first edition o
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About CALI eLangdell Press The Cent
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Unit 19: Conditions ...............
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hired Corleone family thugs 4 or an
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described herein, and agrees to fre
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6. MARY BETH WHITEHEAD, Surrogate,
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Surrogate and WILLIAM STERN, Natura
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10. Consider paragraph 5. Should th
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The two court opinions that follow
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Venue Venue is a concept of place
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Their first child, Ryan, was born o
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Subsequent to entering into the sur
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The sixth and final argument sugges
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It is argued by amicus that the $ 1
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no stated public policy on surrogac
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IN RE BABY M Supreme Court of New J
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adoption; the sole purpose of the c
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The surrogacy contract violates the
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Problems Donald Donor is a single,
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An Introduction to CONTRACT FORMATI
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particular obligation? In Europe, i
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The evidence is undisputed that pla
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After some negotiation a price of $
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The answer of A.H. Zehmer admitted
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no, that is beer and liquor talking
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on the Zehmers as well as on himsel
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offer and of the reward and its sub
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your professor. You will come acros
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car title you’re holding there. I
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In the modern world, the question o
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pair of sunglasses. The drumroll th
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This letter was apparently sent onw
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Because these cases generally invol
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teenager’s schoolmates gape in ad
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Review Question 3. Note how Judge W
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cash in ten days,” it must be dee
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“Before a contract can be complet
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for the purpose of doing the work a
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accidentally being bound to unwante
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Here, we have a counter-offer. The
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parties.” Metropolitan Sports Fac
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court. See Minn. R. Civ. App. P. 10
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Thus, it clearly appears that the d
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with distribution. The parties ulti
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all essential terms. See, e.g., Sit
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Enclosed, we beg to hand you contra
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to call for an acceptance particula
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than identify himself, Dealer says,
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offer.” More often, they nod, sha
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The next attack will be my end, I a
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from all the facts and circumstance
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Notice to the agent, within the sco
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2. Written approval by United State
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contrary in the offer, the acceptan
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HOBBS v. MASSASOIT WHIP CO. Supreme
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stranger may impose a duty upon ano
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contract in this case come into exi
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An Introduction to CONSIDERATION Th
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and you are free to change your min
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Ridge Runner that she lacked the pr
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We conclude that the territory enco
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He further answered, that it was gi
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This action was brought upon an all
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consideration does in fact benefit
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Review Question 5. The promisors in
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The distinction between such a cond
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Vincent refuses. Fritz eventually s
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enefit was money received, the subs
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they stopped work in a body, and de
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supervise this building. Under the
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The day before trial the plaintiffs
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General rules of law established fo
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For the foregoing reasons we are al
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WEBB v. McGOWIN Court of Appeals of
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100 P. 631 (Kan. 1909); Edson v. Po
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McGowin’s adult child, would that
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efuses, saying, “We had a deal.
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Giles had no right to use it. But t
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BLICESTER: That’s crazy. JUDGE: N
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A. She took the piece of paper and
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According to the undisputed proof,
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We recognize that upon different fa
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was discussed with compensation to
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CONRAD v. FIELDS Court of Appeals o
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her job at Qwest and enroll in law
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Seth Wyman’s estranged son Levi i
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An Introduction to ALTERNATIVE REGI
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consistency. Some provisions have p
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TOUSLEY-BIXLER CONSTRUCTION CO. v.
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of goods within this Article whethe
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differently from other contracts? F
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nine units was delivered and paid f
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think they have struck a deal.” Q
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more sense for contract formation t
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COMMERCIAL CODE § 2-206:12 (3D ED.
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face of which appears the notation,
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Problem 10.3 On June 1, the sales d
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except for personal use. If, howeve
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[T]he plain reading of the statute
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not lubricated in any way. Without
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we also note that Best Bolt’s vic
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(c) are fit for the ordinary purpos
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This purchase order represents the
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provision would cause no “surpris
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FLENDER CORPORATION v. TIPPINS INTE
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well that the reservations each par
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The alternate approach, recognized
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(a) Is Ivy League University a “m
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and ratified a treaty called the Un
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(2) The fact that the parties have
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e. Manufacturer in Texas contracts
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an authorized distributor of Defend
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undisputed that each of these alleg
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Treaty Text Note. Read Articles 18,
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*4 (S.D. Ohio Mar. 26, 2009); see a
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perform a substantial part of his o
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shall be settled by binding arbitra
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An Introduction to CONTRACT DEFENSE
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which extended even to being able t
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Dickerson, 72 Ala. 318 (1882). In t
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loss from the transaction, includin
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this definition. Whether other area
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ORTELERE v. TEACHERS’ RETIREMENT
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medicine, this physician “judged
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The avoidance of duties under an ag
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7. What is my total service credit?
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Review Question 5. In McGovern v. C
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will pay the full listed price of $
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endeavoured to be upheld by Perjury
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Y Contracts that cannot be performe
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you think the consideration doctrin
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NICKELS, J., dissenting. I disagree
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contracts. What is the real purpose
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At the ensuing trial, defendant den
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There may be cases in which it woul
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professional. Things were really ge
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GUENTHER v. AMER-TEX CONSTRUCTION C
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(b) Subsection (a) of this section
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Problem 14.3 Van der Rohe USA, Inc.
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sold, the terms of the sale, the na
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the judgment of a vulnerable party.
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The first issue is whether the labe
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some point or on some occasion it w
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As a matter of law, based on the fa
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or, more particularly, in cases suc
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“deprived Loral of its free will.
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As to mistake, the amended complain
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In Weger v. Rocha, 32 P.2d 417 (Cal
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I had brought back the topaz, and h
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May 5, 1886, plaintiff went out to
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arren cow is substantially a differ
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prior to the sale was Buyer aware t
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Against Public Policy. In many situ
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HANKS v. POWDER RIDGE RESTAURANT CO
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interest adversely, and identified
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illogical, in these circumstances,
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_____________________ Review Questi
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construed against the employer). Th
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acquired by virtue of effort and ex
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_____________________ Review Questi
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Mere inadequacy of consideration wi
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District of Columbia Court of Appea
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In determining reasonableness or fa
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Problems Problem 16.1 The Californi
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position to all of his patients (or
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An Introduction to TERMS AND INTERP
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contract itself. Thus written docum
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consideration of the simultaneous a
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the contract on the basis of which
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The subject-matter of the written c
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understandings or agreements.” 3
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little time to compose it . . . . A
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expressed in the writing. KN Energy
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Article 8 UNITED NATIONS CONVENTION
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contracts or that parol evidence re
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percent (50%) protein, as tested on
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get the deal they intended, and the
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Cases and Materials W.W.W. ASSOCIAT
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do so because of some identified am
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The truth is that whatever virtue a
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Absent strong public policy conside
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FRIGALIMENT IMPORTING CO. v. B.N.S.
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persuasive if sustained by the reco
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and there is force in defendant’s
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RANDOM HOUSE, INC. v. ROSETTA BOOKS
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language of the grant was broad, en
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F.3d at 1095, would conclude that t
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When Hurricane Rubin strikes the lo
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the business. The contract was sile
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party argues ambiguity), the loan f
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accordance with the terms of this c
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of the advance payments, or the num
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imbibe alcoholic beverages and stil
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significant satisfied requirement o
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TOWN OF FAIRFIELD v. D’ADDARIO Su
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damages. The notice of Kant’s act
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who had turned down lucrative offer
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were to suggest some express provis
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notice of ninety days. The plaintif
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Review Question 2. What was Judge C
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exercising discretion under the con
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NANAKULI PAVING AND ROCK CO. v. SHE
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§ 490:1-102(2)(b). The drafters of
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trade existed in Hawaii in 1969 and
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1978) (unpublished opinion) (holdin
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Plaintiff does not contest its stat
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product. The concept of “merchant
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discovery by defendant of the defec
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Unfortunately, Plumber’s work doe
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An Introduction to PERFORMANCE AND
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doctrine, so that close-enough perf
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the number of joists used in all th
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JACOB & YOUNGS, INC. v. KENT Court
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transgressor must accept the penalt
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was for requiring this kind of pipe
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The evidence is undisputed that the
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eing a new roof. We are not prepare
Page 450 and 451: This case is simple if the perfect
Page 452 and 453: yacht remained located at SIYS’ f
Page 454 and 455: happens by mere operation of law; s
Page 456 and 457: Problems Problem 21.1 Actor is a ve
Page 458 and 459: processor for the same price as the
Page 460 and 461: venue. Under Paradine v. Jane, this
Page 462 and 463: At trial, the court allowed IH’s
Page 464 and 465: In order for a supervening event to
Page 466 and 467: The court interpreted this passage
Page 468 and 469: economic circumstances sufficiently
Page 470 and 471: A cancellation order given by her o
Page 472 and 473: e entitled to judgment. They certai
Page 474 and 475: performance is excused when unfores
Page 476 and 477: caused to communications and transp
Page 478 and 479: Following the closing of the above-
Page 480 and 481: performance. 407 East 61st Garage,
Page 482 and 483: Canal, across the Mediterranean thr
Page 484 and 485: An Introduction to REMEDIES We now
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Page 488 and 489: multiplication and (very rarely) di
Page 490 and 491: It was also erroneous and misleadin
Page 492 and 493: and we turn to the question of whet
Page 494 and 495: testified that the total gas, oil,
Page 496 and 497: BRANDEIS MACHINERY & SUPPLY CO., LL
Page 498 and 499: PEEVYHOUSE v. GARLAND COAL & MINING
Page 502 and 503: work; however, where the contract p
Page 504 and 505: clear and unambiguous and the parti
Page 506 and 507: pool contractor to finish the pool
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Page 510 and 511: Nevertheless, the English courts he
Page 512 and 513: perform the work. As Lee failed to
Page 514 and 515: UNITED STATES ex rel. COASTAL STEEL
Page 516 and 517: emanded for those findings. When th
Page 518 and 519: the substance is that the plaintiff
Page 520 and 521: the agreement would continue on a m
Page 522 and 523: Review Question 7. Note the paralle
Page 524 and 525: product that would be fully functio
Page 526 and 527: car to the Country Music Museum for
Page 528 and 529: ___________________________________
Page 530 and 531: Restatement (Second) of Contracts s
Page 532 and 533: Harrahs brings the instant action a
Page 534 and 535: contest payment for same if constru
Page 536 and 537: This is in accord with the earlier
Page 538 and 539: Defendant’s sole defense to this
Page 540 and 541: particular. Certainly, none of the
Page 542 and 543: sustained where, from the nature of
Page 544 and 545: ut will be happy to try to help in
Page 546 and 547: the full $7,500 price of admission
Page 548 and 549: Problem 25.2 Mina is a second-year
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other types of specific performance
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imposed as the remedy for breach of
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certainty, then S&M should be compe
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There is simply no requirement in t
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“other proper circumstances” th
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fence plaintiff erected to discoura
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y no means certain, at the time of
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cannot use that method of self-help
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contract price of $533,000) that La
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teacher resigned at the beginning,
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eaching its lease with Perez by the
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An Introduction to CONTRACT NONPART
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fraud, mistake, and illegality. If
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may be the diversity of opinion els
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given him by the will for a particu
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since Lawrence v. Fox in a desire t
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workers’ compensation benefits),
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to divide a lawyer’s loyalty betw
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Review Question 9. Lawyers do many
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Problems Problem 27.1 Hank and Hild
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interested in jumping into such a b
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limitations barred the claims. She
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assigned their claim to recover the
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application to this contract as it
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A breach of contract has been defin
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moved to Arizona and had no further
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It is evident from the express lang
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contracted to assume, and the assig
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March 1 for the conveyance of Purpl
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