American Contract Law for a Global Age, 2017a

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Problems Problem 27.1 Hank and Hilda have borrowed $250,000 from Bank for the purpose (stated in the loan agreement) of building the couple’s dream home. Hank and Hilda, in turn, contracted with Fly-by-Night Builders to build the house, authorizing the builders to draw down $100,000 of the loan proceeds (which are on deposit at Bank) to get the project started. Builders then purchased $30,000 worth of lumber on credit from Lumber Sellers, Inc. for the express purpose—stated in the credit agreement—of being used for construction of Hank and Hilda’s house. Three months later, after it becomes apparent that Fly-by-Night Builders has mismanaged the project and squandered the first $100,000 draw, it goes out of business, leaving no assets, but many debts, including unpaid $30,000 debt owed to Lumber Sellers. Builders got the materials from Lumber Sellers, but used it for other projects and did not use any on Hank and Hilda’s job. Lumber Sellers has now sued Hank, Hilda, and Bank. The theory of the lawsuit is that Lumber Sellers is a third-party beneficiary of (1) the loan agreement between Hank, Hilda, and the Bank; (2) the construction contract between Hank, Hilda, and Builders, or (3) both. What result and why? Problem 27.2 You have just passed the Bar Exam for the state of Catatonic and are in the process of joining a small firm that has hired you to develop a practice in the area of wills and estate planning. Unlike Oregon and Texas, Catatonic has never addressed the precise issue of whether the beneficiary of an estate plan can bring a third-party breach of contract claim against the attorney who drafted the will. The Catatonic Supreme Court has, in another factual setting, however, adopted section 302 of the Restatement (Second) of Contracts. Draft a clause to include in your standard contract between “Lawyer” and “Client” that (hopefully) will prevent beneficiaries from being able to sue your firm for breach of contract. Remember that this clause is one that prospective clients will read and you might have to defend in person on the witness stand when you are sued by disappointed beneficiaries. In other words, seek to avoid potential liability but don’t do so in a manner that would run off clients or offend a future jury. (If this seems like a grim request, keep in mind that a key task of transactional lawyers is to imagine worst case scenarios and come up with ways to prevent them from happening.) ______________________________________________________________________________ 586 CHAPTER IX: CONTRACT NONPARTIES
Problem 27.3 Brandon Starr was signed by Tantamount Pictures to appear as the action hero lead in its upcoming high-budget film, Raiders of the Lost Jurassic Park. The contract between Starr and Tantamount requires Starr to procure and maintain a $2 million life and disability insurance policy payable to Tantamount in the event that Starr is unable to fulfil his obligations to appear in the movie. Starr did indeed take out the required policy with Casualty Insurance Company and made the premium payments for the first four months, but he then missed the following two months. Casualty Insurance sent numerous notices to Starr informing him that if he failed to make a premium payment for a total of 90 days, the policy would, per its express terms, be cancelled and not subject to reinstatement. On the 93rd day since Starr’s first missed payment, he was tragically killed when his automobile careened off the side of a coastal cliff. (a) Tantamount Pictures promptly sent a notice of claim to Casualty Insurance, which denied coverage based on the lapse of the policy. Tantamount argued that its rights were established by its contract with Starr and were unaffected by Starr’s separate failure to make premium payments. What result and why? (b) Same facts as part (a), except the insurance policy in question is subject to a state insurance statute that requires insurers to reinstate policies up to 120 days since the original missed payment, provided that the policyholder makes the premium payments current. What result if Tantamount Pictures tenders payment within the 120 day period? Be sure that you consider Restatement (Second) of Contracts section 309 in connection with this problem. Problem 27.4 Think back to the In re Baby M case at the beginning of the course (Units 1 and 2). In the Unit 2 materials, the New Jersey Supreme Court ultimately held that the surrogacy agreement between Mary Beth Whitehead (the surrogate mother) and William Stern was unenforceable on public policy grounds. Imagine instead that the contract actually was enforceable, just like the trial court decided at the beginning of Unit 2. In that situation, would William Stern’s wife, Elizabeth Stern—who was not a party to the surrogacy contract—qualify as a third-party beneficiary? Why or why not? _____________________ ______________________________________________________________________________ UNIT 27: THIRD-PARTY BENEFICIARIES 587
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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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venue. Under Paradine v. Jane, this
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At trial, the court allowed IH’s
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In order for a supervening event to
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The court interpreted this passage
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economic circumstances sufficiently
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A cancellation order given by her o
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e entitled to judgment. They certai
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performance is excused when unfores
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caused to communications and transp
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Following the closing of the above-
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performance. 407 East 61st Garage,
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Canal, across the Mediterranean thr
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An Introduction to REMEDIES We now
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multiplication and (very rarely) di
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It was also erroneous and misleadin
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and we turn to the question of whet
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testified that the total gas, oil,
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BRANDEIS MACHINERY & SUPPLY CO., LL
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PEEVYHOUSE v. GARLAND COAL & MINING
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explanation as to why a measure of
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work; however, where the contract p
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clear and unambiguous and the parti
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pool contractor to finish the pool
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Nevertheless, the English courts he
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perform the work. As Lee failed to
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UNITED STATES ex rel. COASTAL STEEL
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emanded for those findings. When th
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the substance is that the plaintiff
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the agreement would continue on a m
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Review Question 7. Note the paralle
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product that would be fully functio
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car to the Country Music Museum for
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Restatement (Second) of Contracts s
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Harrahs brings the instant action a
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contest payment for same if constru
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This is in accord with the earlier
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Defendant’s sole defense to this
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particular. Certainly, none of the
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sustained where, from the nature of
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Page 548 and 549: Problem 25.2 Mina is a second-year
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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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Page 562 and 563: fence plaintiff erected to discoura
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Page 566 and 567: cannot use that method of self-help
Page 568 and 569: contract price of $533,000) that La
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Page 572 and 573: eaching its lease with Perez by the
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Page 576 and 577: An Introduction to CONTRACT NONPART
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Page 580 and 581: fraud, mistake, and illegality. If
Page 582 and 583: may be the diversity of opinion els
Page 584 and 585: given him by the will for a particu
Page 586 and 587: since Lawrence v. Fox in a desire t
Page 588 and 589: workers’ compensation benefits),
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Page 592 and 593: Review Question 9. Lawyers do many
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Page 598 and 599: interested in jumping into such a b
Page 600 and 601: limitations barred the claims. She
Page 602 and 603: assigned their claim to recover the
Page 604 and 605: application to this contract as it
Page 606 and 607: A breach of contract has been defin
Page 608 and 609: moved to Arizona and had no further
Page 610 and 611: It is evident from the express lang
Page 612 and 613: contracted to assume, and the assig
Page 614: March 1 for the conveyance of Purpl
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American Contract Law for a Global Age, 2017a

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