Paper instructions:
Read the knowledge first and follow it to answer the
case question. total 6 cases thank you
NATURE OF CONTRACTS:
A contract is a legally enforceable agreement. The
modern contract action can be traced back to the
dawn of British common law. The law acknowledged
that remedy was due for injuries resulting from the
defendant’s failure to perform a professional duty. Early
actions were taken in “assumpsit” for nonfeasance
(failure to perform a promise). In assumpsit actions,
however, judges refused to order specific performance
(doing what was promised) if they thought that
consideration was inadequate. (Consideration is what is
given up in exchange for the other party’s promise.)
The standard was “equivalent value.” This made the
enforceability of contracts uncertain because judges
could invalidate agreements that had been voluntarily
created by the parties simply because those bargains
seemed unfair to them.
By 1850, American courts accepted the notion that
contracts should be based exclusively on the reciprocal
promises of the parties rather than on a subjective
notion of fairness. A promise, in turn, is simply a
statement of intent to be bound. Therefore, intent
became the underlying principle of contracts. Intent is
the conscious desire to produce a consequence. The
state of mind of the contracting parties, therefore,
became the deciding factor in determining whether or
not a contract existed.
In order to establish an enforceable contract, the
following elements must be present:
1.There must be an agreement, which usually
consists of matching promises (offer and acceptance).
2.The parties must be competent; i.e., capable of
formulating intent.
3.There must be genuine assent; i.e., voluntary
compliance.
4.There must be consideration although the specific
magnitude is left to the parties.
5.The promises must be lawful in their performance;
i.e., can’t be crimes or torts.
6.The contract must be in writing in certain limited
circumstances. (Needless to say, many oral and even
implied contracts are enforceable. The promises
constitute the contract, not the document.)
Typical contracts include insurance policies,
mortgages and purchases via credit cards.
Most principles of contract law exist in court
decisions (common law) although states have passed
statutes affecting certain types of contracts, notably
those involving employment and insurance.
CASE QUIZ:
A, Mr. Lacy and Mr. Zimmerman were talking in a
restaurant. After a couple of drinks, Lacy asked
Zimmerman if he had sold the Ferguson farm.
Zimmerman replied that he hadn’t and didn’t want to.
Lacy offered to buy the farm for $50,000. After some
bantering back and forth, Zimmerman wrote on the
back of a pad, “I agree to sell the Ferguson place to
W.O. Lacy for $50,000 cash.” Lacy said, “All right,
get your wife to sign it.” Zimmerman subsequently
went to his wife who was sitting in the restaurant and
said, “Do you want to put your name on this?” She
said, “No.” But then Zimmerman said, in an undertone,
“It is nothing but a joke.” She signed it. At that time,
Zimmerman wasn’t too drunk to make a valid contract.
The Zimmerman’s refused to convey title and Lacy
sued for specific performance.
1.What is meant by the term “specific performance”?
2.What defense would the Zimmermans use?
3.What legal reasoning would be followed in
determining whether or not a contract actually existed
(whether there had been an offer and an acceptance)?
4.Who should win?
B, Grayson singed a roofing contract with Clay Tile,
as agent for Sure-Seal Roofing Company, to have a
new roof put on his house. The agreement stated that
the contract was subject to Sure-Seal’s approval and
that the agreement would become binding upon written
notice of acceptance or commencement of work. Nine
days later, Clay Tile loaded up his truck and drove to
Grayson’s house only to find someone else was already
doing the job. Sure-Seal wishes to sue for damages.
1.In the context of this case, what is meant by the
term “damages”?
2.What is meant by the term “revoke an offer”?
3.Was Grayson’s offer to Sure-Seal revoked before
it was accepted?
4.Specifically, what is the evidence showing that
acceptance did or did not occur?
5.Who should win?
C,Please read Carter v. Matthews (find the case
online..)
1. Fraud is an intentional act of deception. There is
no evidence, however, that Matthews said anything at
all about the propensity of the land to flood or not to
flood nor is there any evidence that he knew it might be
prone to frequent flooding. Upon what legal logic
could Carter have based her allegation (charge) of
fraud? (That is, what could have been the legal basis
for her argument?)
2. Matthews cross-appealed arguing that restitution
and rescission were improper remedies for “mutual
mistake.” Our text, however, confirms that they are
proper remedies. Upon what legal logic could he have
based his claim?
CONSIDERATION:
Consideration is that which is bargained for and
given in exchange for another’s promise. It must be
“legally sufficient,” meaning that it must be either a
detriment to the promisee or a benefit to the promisor.
Benefit in the legal sense means the receipt by the
promisor of some legal right that the person had not
previously been entitled to. Legal detriment is the taking
on of a legal obligation or the doing of something or
giving up of a legal right by the promisee.
A court will not concern itself with the terms of a
contract as long as the parties have capacity and there
has been genuine assent to the terms. Whether there
has been a fair exchange, is for the parties to decide.
D,Workers agreed to work aboard a canning ship
during the salmon canning season. The contract, signed
by each worker, was to last for the length of time it
took to sail from San Francisco, California, to Pyramid
Harbor, Alaska, and back. Each worker was to
receive a stated compensation. They arrived in Alaska
at the height of the fishing and canning season.
Knowing that every day’s delay would be financially
disastrous and that it would be impossible to find
workers to replace them, the workers refused to work
unless they were given substantial wage increases. The
owner of the canning ship acceded to their demand
(i.e., he accepted their offer and agreed to pay the
higher wage). When the ship returned to San
Francisco, the owner paid them in accordance with the
original agreement. The workers now bring suit to
recover the additional amounts due under the second
agreement.
1. Please cite two defenses that the ship’s owner
could adopt.
2. Would the court enforce the second agreement?
Why or why not?
CAPACITY:
Capacity refers to each party’s ability to make
promises. It hinges specifically on the ability to
formulate intent (conscious desire to bring about
consequences). Needless to say, people who are
unable to appraise the consequences of a decision
aren’t legally able to formulate intent. Their contracts
are voidable; i.e., not automatically void but avoidable
by the impaired party at his/her election.
Those under 18 years of age are defined as lacking
capacity based on their presumed immaturity and lack
of experience. However, minors can be held for the fair
value of necessities such as food, lodging, education or
medical services. As a general rule, minors must return
whatever consideration was given to them but, even if it
has been destroyed, may nevertheless disaffirm and
recover the consideration they gave. This effectively
discourages adults from marketing aggressively to
minors.
Generally, minors who lie about their age in order to
secure a contract can, nevertheless, disaffirm.
However, minors are liable for their torts and can be
sued for fraud in such situations.
Contracts made by those who are intoxicated or
temporarily insane are also voidable. The standard
employed by the courts is whether a reasonable person
would have known that the plaintiff was impaired.
ILLEGALITY and PUBLIC POLICY:
The courts will generally not permit a person to sue
for performance of an illegal contract; i.e., one in which
the performance itself is criminal, tortious or a violation
of public policy. The court will simply “leave the parties
where it finds them.” Generally, if one party has
performed, that party cannot recover property
transferred to the other. There are certain limited
exceptions to that rule, however.
E, R.D. Simpson owned Bavarian Motors, an
automobile dealership in Ft. Worth, Texas. One day
Lee Lewis discussed purchasing a BMW M-1 from
Simpson for $125,000. Simpson suggested a double-
or-nothing coin flip. If Simpson won the coin-flip,
Lewis would have to pay him $250,000 for the car; if
Lewis won the flip, he would get the car for free! The
coin was flipped and Lewis won. Simpson said, “It’s
yours.” He handed Lewis the keys and title. Lewis
drove away in the BMW. Simpson subsequently sued
to recover the car.
1. Who should win and why?
2. How would the case have turned out if Simpson
had refused to turn over the keys and title after Lewis
had won the coin-flip? Who would get the car?