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Facts: P built a residence for D. Work ended in June and D began to occupy the dwelling and no complaint until March. Specification in contract provided for all piping to be “Reading” pipe and it was found that some pipe was other than Reading. The plumbing was already in the walls and changing pipes would come at a great expense with demolition. P still owed $3,483 but filed this suit.
Holding: In the circumstances of this case, we think the measure of the allowance is not the cost of replacement, but the difference in value, which would be either nominal or nothing. Normally the cost of replacement is the measure unless the cost of completion is grossly and unfairly out of proportion to the good to be attained and then the measure is the difference in value. [Substantial Performance Doctrine]
Objective Intent - When the promisee reasonably understands the promisor’s intent from their words or conduct. A reasonable observer from the promisee's point of view would reasonably believe that the other party has made a promise.
Subjective Intent - What the promisor wants to convey when he is making a promise. It is not necessarily displayed to the promisee. Fairness and justice to the other party overrides subjective intent.
The Reasonable Person – Most parts of contract law use the reasonable person standard, meaning that “A reasonable person in light of all the surrounding facts and circumstances would understand that...”
Property law (trusts/stiffs and wills/gifts)
2. Offeror makes offer knowing it will induce action on offeree
3. Offeree cannot rely on offer before acceptance
i. extinguishes or rejects power of original offer. Rejection is affirmative manifestation to not accept offer.
ii. offeree substituted bargain to offeror differing from that proposed by the original offer.
offeror- power of revocation
offeree- power of acceptance, but no K when power of acceptance terminated(sec. 36)
Sec. 20-Mutual Misunderstanding, because both parties did not know the meaning of the other party.
There was no effective mutual assent.
Mirror Image Rule- mirror actual terms of offer.(exception- acceptance with collateral terms).
Offeree didn't accept offer but maybe opened doors to negotiations.
Acceptance given by offeror even when offeror doesn't feel the acceptance was proper.
Sec. 63- Acceptance is out into effect when offeree accepts and gives manifestation of mutual assent- doesn't matter if doesn't reach offeror
Sec. 40 Time when counteroffer or rejection terminates power of acceptance
Duty to read- implied in almost all Ks; not an actual duty; part of process of manifesting assent
Blanket Assent- when a party assents to both the salient and nonsalient terms of an agreement
1. Services- Employment
2. Fixtures- Real property
3. Loans or mortgages
4. Insurance agreements
6. Intellectual property7. Software
Last shot is when one party performs following the last message or last expression. The one who sent the last message or last expression before performance is the one who has defined the terms.
a. Performance objectively manifests assent to the terms of the offer as long as the performance mirrors the terms of offer.
1. Only duty’s breached are executory obligations, or obligations not yet performed.
offer seeks acceptance only by completion of the performance requested
Problem: offerree won't mirror terms of offer; no acceptance until performance done
a. Process of inferring meaning from language or from factual evidence of the context in which the language was used.
Empro Mfg. Co., v. Ball-Co Mfg. Inc. ("Letter of Intent")
Preoffer reliance on K- still in the midst of negotiations and stated Empro could leave K at anytime.
The court determined that the college showed consideration when they assumed the duty to perpetuate the name of the founder of the memorial. Binding without proof that a promise induced a detriment. Promise to make a gift becomes binding only upon delivery of the promised gift
1. Contract is an enforceable promise(§ 1, § 2)
2. With some exceptions (§ 17(2)- promise enforceable by addition of consideration), to be enforceable a promise must be supported by consideration
3. A promise is supported by consideration if it is “bargained for” (§ 71(1))
4. A promise is bargained for “if it is sought by promisor in exchange for his promise and given by promise in exchange for that promise” (§ 71(2))
Benefit/Detriment Theory of Consideration
K must be either to the benefit of the promisor or to the detriment of the promisee to constitute consideration
Bargain Theory of Consideration
Was there a legal detriment and consideration ("quid pro quo"- induce action or forbearance by promises exchanged)
i. Subjective intent holds; prevents a K from forming, because need assent from both parties
1. plaintiff merely allege a debt due and promise to repay by D
Bloomgarden v. Coyer ("Advised and then asked to be compensated")
Volunteered the information and can't recover as officious intermeddler- never expressed being paid for his actions.
1. Promise(§2): manifestation of intention that is understood by promise
2. Promisor reasonably expected promise to induce action by promise
3. Promisee reasonably and detrimentally relied on promise that a commitment has been made
4. Promise enforceable to extent necessary to prevent injustice
5. Remedy limited as justice requires
i. Present existing fact
ii. Recipitor should expect reliance by recipient
iii. Recipient reasonably relies
iv. Prevents recipitor from ascerting an inconsistent legal position
Allegheny wants all the money from donor.
-Charitable funds has 1) consideration with the exchange of money for a memorial. 2) promissory estoppel applies in charitable funds
Unilateral K- they performed as she asked, so she needs to fulfill her promise.
Traynor 2-step: 1) Reasonably susceptible to the a)additional terms or b)the suggested meaning.
2) Written memorialization then the court must permit the parties to submit the extrinsic evidence of the fact finder to attempt to prove their terms or their meaning.Court allowed extrinsic evidence.
Hierarchy of Sources
1. Subjective intent of parties at time of King
i. Express terms of the K ii. Writing is special/oral terms are ok (common law)
iii. Course of Performance- good evidence of intentions after K made; manifestation of how parties interpret own K
iv. Course of Negotiations- before enter K; changing concepts through negotiating
v. Course of Dealings- parties to prior K; past performance of 2 parties on similar K
vi. Usage of trade irrelevant (common law)- common usage of terms in that trade; both parties must know these terms
2. Public Policy
3. Physical Duress (sec. 174)
4. Fraud in execution (switch document that was signed with another document)
5. Lack of mutual assent
2. Statute of Frauds- some or all of K cannot be enforced
1. wrongful and improper threat
2. involuntary assent by one party
3. no reasonable alternative
7 part test for undue influence:
1) Discussion at inappropriate time,
2) consummation in an inappropriate place,
3) Insistent demand to enter the contract at once
4) Emphasis on untoward consequences of delay
5) Use of multiple persuaders against a single vulnerable person,
6) Absence of third party advisors,
7) statements that there is no time to consult such advisors.
i. Mistake relates to a material feature of the K
ii. Consequences would be unconscionable
a. Substantive- believed and was willing to pay for a 4 season home and got a 3 season home, the disparity in value is substantial.
iii. Reasonable due care was exercised
iv. The other party could be placed in status quo
1. Frustrated purpose is principal purpose of that party in making the K
2. Frustration must be substantial- major reason person accepted the K
3. Nonoccurrence of frustrating event must have been basic assumption on which K was made
1. Contingency- something unexpected must have occurred
2. Risk of unexpected occurrence must not have been allocated either by agreement or by custom3. Occurrence of contingency must have rendered performance commercially impracticable
Hawkins v. McGee ("Hairy Hand Case")
a. Breaching party could reasonably foresee the claimed breach damages at the time the K was formed
b. Injured party took reasonable efforts to mitigate any post-breach increase in the amount of claimed damages relating to breach
c. Injured party must be able to prove amount of damages with reasonable certainty
out of Pocket expenses
a. Hadley I- always or per se foreseeability because flow naturally and in the ordinary course of events from a breach(damages on the K)
b. Hadley II- only recovered provided they are foreseeable because they do not flow from the ordinary course of events(special or consequential damages)
a. Injured party has to stop performance once knows other party breach is coming
b. Injured party has positive duty to make reasonable efforts to redeploy resources devoted to K to other productive uses to mitigate losses from breach
Certainty limitation(§352)- permits the injured party to recover only for damages that can be proven with reasonable certainty.
Adams v. City & Co. of Denver ("Noisy Airport")
1. At the time K was formed the liquidated damages are a reasonable estimate of expected damages(T1)
2. The actual damages will be difficult to ascertain(T1)
3. Damages still difficult to ascertain in T2
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