American Contract Law for a Global Age, 2017a

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Nevertheless, the English courts held early on that, in such a situation, the stable owner would be liable to “disgorge”—a polite term for the act of spewing something up and out of one’s stomach—the profits they had made. Thus, the horse owner who had suffered monetary damage would be awarded damages not for his own loss, but for the profit wrongfully made by the other commandeering his property. A natural step from “you’re using my property” is “you’re using the property (money) that you were supposed to have paid me.” Restitution thus came to be an alternative remedy for breach of contract. In this unit, we will focus on restitution’s specific application in contract law, but keep in mind that the restitution principle of disgorging “unjust enrichment” extends far beyond contract. The principle is so broad, in fact, that the American Law Institute has an entire Restatement on the subject. The Restatement (Third) of Restitution and Unjust Enrichment was published in 2011. This enormous and fertile topic takes up much of the course in Remedies, a course you should strongly consider taking later in law school. Reliance: “But I Trusted You!” The expectation and restitution remedies go back far into the early history of the English common law, and they arrived in America along with the first English colonists. The third major category of damages is much more recent. Even as a conceptual matter, it dates only back to the 1930s, although some cases seem to have applied it occasionally before that. In an influential 1936 law review article, The Reliance Interest in Contract Law, Professor Lon Fuller and his then-student, William Perdue, contended not only that reliance was an appropriate alternative remedy for breach of contract, but that it might even be the most appropriate and important remedy in many circumstances. The idea of a “reliance interest” rests on a simple parallel. Contracts depend upon promises. So, in many cases, does the tort of fraud. Consider the car thief who purports to be the car’s owner and sells it to you for $5,000. You relied on the thief’s statements and you are out $5,000 when the true owner reclaims her car. Change up the facts a bit, and suppose you had paid the $5,000 to the car’s true owner, but the owner has taken your money and refused to deliver the car. You relied on the owner’s promise, and you are out $5,000. Assuming you cannot get the car, what can you recover in each case? For fraud, the usual remedy (as you may have learned in torts) is restitution. But in contract, using the expectancy measure would result in the fair market value of the car. Fuller and Perdue argued that because both situations involved reliance, using what they called “the reliance interest” as a measure of damages would be appropriate in either situation. While there was a period of time in the last century where it appeared that the reliance interest might swallow up the expectancy interest, that turned out not to be the case. Expectation damages remain the most common award in breach of contract cases. As a practical matter, getting what you expected under a contract is often better than simply getting back what you spent, but as you will see from the cases below, that is not always the case. ______________________________________________________________________________ 502 CHAPTER VIII: REMEDIES
All three measures of damages—expectancy, restitution, and reliance—are part of the contract litigator’s toolkit. A contract plaintiff can get only one of the three measures, but at the time a lawsuit begins, it may not be clear which one will most benefit the client, and it may not be clear which one a jury (or a reviewing judge) will conclude is supported by the evidence. A lawyer should therefore understand each of them. _____________________ A. Restitution Cases and Materials LEE v. FOOTE District of Columbia Court of Appeals 481 A.2d 484 (D.C. 1984) PER CURIAM Appellant appeals the trial court’s denial of compensatory damages upon its finding that appellee breached an oral contract for the exchange of services. The trial court awarded appellant only nominal damages of one dollar, ruling that, as a matter of law, he could not recover for the value of services he performed for appellee. We reverse and remand. The trial court, sitting without a jury, found that Lee and Foote entered into an oral contract for the exchange of services. Lee agreed to perform rough and finished carpentry work on Foote’s house at 1926 Eleventh Street, N.W., and Foote agreed to perform plumbing work on Lee’s house at 467 M Street, N.W. Lee did rough carpentry work on Foote’s house for approximately 30 days, but did not complete his performance by doing finished carpentry work. Foote, however, never commenced the plumbing work at Lee’s house, claiming that Lee prevented him from performing by hiring other plumbers to do the work without giving Foote a reasonable time in which to start the work. The trial court found that the evidence did not support Foote’s assertion, and that Foote breached the contract without any legal justification. Lee sued to recover as damages the reasonable market value of his carpentry services to Foote. In his complaint, Lee sought $15,000 for the “reasonable market value” of his work and $5,000 in damages for Foote’s failure to perform timely, which Lee claimed caused him “to fall behind in his job completion time table,” and costs. In his answer to the complaint, Foote denied “the reasonable market value to the work ‘performed’ by Plaintiff.” The trial court denied Lee the damages he sought on the ground that since the contract terms called for a mutual exchange of services, the proper measure of Lee’s damages was the cost to him of hiring other plumbers to ______________________________________________________________________________ UNIT 24: RESTITUTION AND RELIANCE 503
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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
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This case is simple if the perfect
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yacht remained located at SIYS’ f
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happens by mere operation of law; s
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Problems Problem 21.1 Actor is a ve
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processor for the same price as the
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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
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Page 470 and 471: A cancellation order given by her o
Page 472 and 473: e entitled to judgment. They certai
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Page 478 and 479: Following the closing of the above-
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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
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Page 502 and 503: work; however, where the contract p
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Page 508 and 509: ___________________________________
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
Page 550 and 551: ___________________________________
Page 552 and 553: other types of specific performance
Page 554 and 555: imposed as the remedy for breach of
Page 556 and 557: certainty, then S&M should be compe
Page 558 and 559: 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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