1.Hawkins v. McGee, 84 N.H.

114 (1929)

Facts

● Hawkins, the plaintiff, underwent surgery on his hand, which had been scarred due to
a burn.
● Dr. McGee, the defendant, persuaded Hawkins to undergo the surgery, allegedly
guaranteeing that the procedure would result in a "100% perfect hand."
● The surgery involved grafting skin from Hawkins' chest onto his hand, but the
outcome was poor, leaving Hawkins with a worse hand, characterized by hair growth
and additional scarring.
● Hawkins sued Dr. McGee for breach of contract, claiming that the doctor had
guaranteed the results of the surgery.

Issues

1. Did Dr. McGee's statement about a "100% perfect hand" constitute an enforceable
contractual promise or merely a medical opinion or expression of intent?
2. What measure of damages applies in a breach-of-contract case for a failed medical
procedure?

Rules

1. Contract Formation: Statements of guarantee can form an enforceable contract if

they are sufficiently definite and relied upon by the other party.
2. Expectation Damages: In a breach-of-contract case, damages are measured by the
difference between the promised performance and the actual performance, plus
incidental damages.

Court’s Analysis

● Promise vs. Opinion: The court determined that Dr. McGee’s statement about a
"100% perfect hand" was more than an opinion. It was a specific promise that
Hawkins relied on when consenting to the surgery.
● Nature of the Claim: The case was not about medical negligence but about breach of
contract. The court emphasized that Hawkins was entitled to damages based on the
difference between what was promised and what was delivered, not the physical or
emotional pain caused by the surgery.
● Damages Calculation: The court ruled that the proper measure of damages was the
difference between the value of a "100% perfect hand" (as promised) and the value of
Hawkins’ hand after the surgery. Pain and suffering were excluded because they were
inherent to the procedure and not part of the breach.
Holding

The court held that Hawkins was entitled to expectation damages for the breach of contract,
reflecting the difference between the promised result and the actual outcome of the surgery.

Key Takeaway

● Expectation Damages in Contracts: This case illustrates the principle of expectation

damages, which aim to place the injured party in the position they would have been in
if the contract had been performed as promised.
● Promises in Professional Settings: Professionals can be held to contractual promises
if their statements constitute clear guarantees, even in medical contexts.
● Distinction from Tort Law: This case highlights the difference between breach of
contract (focused on unfulfilled promises) and negligence (focused on substandard
performance or harm caused).

2. Hamer v. Sidway, 124 N.Y. 538 (1891)

Facts

● William Story Sr. promised his nephew, William E. Story II, that he would pay him
$5,000 if he refrained from drinking, smoking, swearing, and gambling until he turned
21.
● The nephew complied, and upon turning 21, he wrote to his uncle requesting the
payment.
● The uncle acknowledged the agreement but suggested holding the money until the
nephew was "capable of taking care of it."
● The uncle later died, and the executor of the estate (Sidway) refused to pay, arguing
there was no enforceable contract because the nephew had not provided consideration.
● The nephew assigned the claim to Hamer, who sued to enforce the contract.

Issues

1. Did the nephew provide valid consideration for the uncle’s promise to pay $5,000?
2. Was there a legally binding contract between the uncle and nephew?

Rules
 1. Consideration in Contract Law: Consideration exists when one party provides
something of legal value, which can include refraining from a legal right, in exchange
for a promise.
2. Enforceability of Promises: For a promise to be enforceable as a contract, it must be
supported by valid consideration.

Court’s Analysis

● Consideration Defined: The court emphasized that consideration can take the form
of forbearance from a legal right. By refraining from drinking, smoking, swearing,
and gambling—activities he had a legal right to engage in—the nephew provided
valid consideration.
● Value of Consideration: It was immaterial whether the uncle benefited from the
nephew’s abstinence. The focus was on the nephew’s relinquishment of his legal
rights, which was sufficient to support the uncle’s promise.
● Binding Agreement: The court found that the promise was not merely gratuitous but
part of a valid contract supported by consideration.

Holding

The court ruled in favor of Hamer, holding that the uncle’s promise was supported by valid
consideration and thus enforceable. The $5,000 was owed to the nephew’s assignee.

Key Takeaway

● Forbearance as Consideration: A promise is enforceable if one party gives up a

legal right in exchange for it, even if the promisor does not directly benefit.
● Broad Definition of Consideration: Consideration does not need to be monetary or
tangible; it is enough if one party restricts their lawful freedom of action.
● Binding Promises: This case reinforces the principle that legally supported promises
are enforceable, even within personal or familial contexts.

3. Kirksey v. Kirksey, 8 Ala. 131 (1845)

Facts

● The plaintiff, Mrs. Kirksey, was a widow whose husband had died.
● The defendant, her brother-in-law, wrote her a letter inviting her to leave her
residence and move onto his land, offering her a place to stay and farmland to support
her.
 ● Relying on this invitation, Mrs. Kirksey moved with her children to the defendant's
land, incurring significant inconvenience.
● After two years, the defendant asked her to leave, forcing her to find alternative
arrangements.
● Mrs. Kirksey sued, arguing that the promise to provide her with a place to stay and
land was binding.

Issues

1. Did the defendant's promise create an enforceable contract?

2. Was there sufficient consideration to support the defendant’s promise?

Rules

1. Consideration Requirement: For a promise to be enforceable, it must be supported

by consideration—something of value given or a legal detriment incurred in exchange
for the promise.
2. Gratuitous Promises: Promises made as gifts or without sufficient consideration are
not legally enforceable.

Court’s Analysis

● Lack of Consideration: The court held that the brother-in-law’s promise was a
gratuitous one, as it was not supported by consideration. Mrs. Kirksey’s move and the
associated inconvenience were seen as conditions of the promise rather than
consideration.
● Moral Obligation vs. Legal Obligation: The court acknowledged the hardship Mrs.
Kirksey faced but emphasized that moral obligations do not translate into enforceable
legal obligations in the absence of consideration.
● Nature of the Promise: The defendant’s promise was more akin to an offer of
hospitality or a gift, not a contractual obligation.

Holding

The court ruled in favor of the defendant, holding that the promise was not enforceable
because it lacked sufficient consideration.

Key Takeaway
 ● Consideration is Crucial: A promise, no matter how generous or morally
compelling, is not enforceable without consideration—a reciprocal exchange of value
or detriment.
● Distinction Between Gratitude and Contract: Acts done in reliance on a gratuitous
promise (e.g., moving to a new location) do not automatically transform the promise
into a binding contract unless they constitute consideration.

4. Feinberg v. Pfeiffer Co., 322 S.W.2d 163 (Mo. Ct. App. 1959)

Facts

● Feinberg worked for Pfeiffer Co. for nearly 40 years and was highly regarded by the
company.
● In 1947, Pfeiffer Co.'s board of directors voted to give her a retirement benefit of
$200 per month for life when she chose to retire, citing her loyal service.
● Relying on this promise, Feinberg retired in 1949.
● The company paid her the retirement benefit until 1956, when new management
decided to discontinue payments.
● Feinberg sued to enforce the promise of lifetime retirement benefits.

Issues

1. Was Pfeiffer Co.’s promise of retirement benefits enforceable despite a lack of

traditional consideration?
2. Could Feinberg rely on the doctrine of promissory estoppel to enforce the promise?

Rules

1. Consideration in Contract Law: A promise is enforceable if supported by

consideration, which requires a bargained-for exchange.
2. Promissory Estoppel: A promise is enforceable if:
○ The promisor makes a promise expecting it to induce reliance.
○ The promisee reasonably relies on the promise.
○ Injustice can only be avoided by enforcing the promise.

Court’s Analysis

● Lack of Consideration: The retirement benefits were not supported by consideration

because the promise was not given in exchange for Feinberg’s continued work or any
new obligations on her part.
● Promissory Estoppel Applies:
 ○ Feinberg relied on the promise when she retired, foregoing future earnings and
opportunities for employment.
○ The company made the promise knowing Feinberg would rely on it.
○ Breaking the promise would cause significant injustice because Feinberg
retired based on the assurance of lifetime payments.
● Outcome: The court found that the elements of promissory estoppel were satisfied,
making the promise enforceable.

Holding

The court ruled in favor of Feinberg, holding that Pfeiffer Co.’s promise of retirement
benefits was enforceable under the doctrine of promissory estoppel.

Key Takeaway

● Promissory Estoppel as a Substitute for Consideration: Even when a promise

lacks traditional consideration, it can still be enforced if the promisee reasonably and
detrimentally relied on it.
● Reliance is Key: The reliance must be foreseeable, reasonable, and significant
enough that enforcement of the promise is necessary to avoid injustice.

5. Wood v. Lucy, Lady Duff-Gordon, 222 N.Y. 88 (1917)

Facts

● Lady Duff-Gordon, a fashion designer, entered into an exclusive contract with Wood,
giving him the exclusive right to market and license her endorsements and designs.
● Wood agreed to share profits equally with Lady Duff-Gordon from the endorsements
and licensing.
● Lady Duff-Gordon breached the contract by endorsing products and entering into
agreements independently, without Wood's involvement.
● Wood sued for breach of contract, and Lady Duff-Gordon argued the contract lacked
mutuality and consideration, making it unenforceable.

Issues

1. Did the contract between Wood and Lady Duff-Gordon contain sufficient mutuality
and consideration to be enforceable?
2. Was there an implied obligation on Wood’s part to use reasonable efforts to market
Lady Duff-Gordon’s designs?
Rules

1. Implied Obligations in Contracts: A promise may be enforceable if there is an

implied obligation for one party to perform certain duties that provide consideration.
2. Consideration: For a contract to be enforceable, there must be mutual obligations or
promises exchanged by both parties.

Court’s Analysis

● Implied Promise: The court, led by Justice Cardozo, found that there was an implied
promise by Wood to use reasonable efforts to market and license Lady Duff-Gordon’s
endorsements and designs. This implied obligation constituted valid consideration.
● Intent of the Parties: The intent of the agreement was clear: Lady Duff-Gordon
granted Wood exclusivity in exchange for his active promotion and profit-sharing.
Without Wood’s efforts, the agreement would have no purpose.
● Practical Business Reality: The court reasoned that business contracts often depend
on implied terms for functionality. Here, Wood’s implied duty to perform made the
contract binding.

Holding

The court ruled in favor of Wood, holding that the contract was enforceable due to the
implied obligation for Wood to use reasonable efforts to promote Lady Duff-Gordon’s
designs.

Key Takeaway

● Implied Obligations Can Satisfy Consideration: Courts may infer obligations in a

contract based on the parties’ intent and the practical need to make the agreement
effective.
● Business Context Matters: Contracts involving exclusivity or profit-sharing often
carry implicit duties to act in good faith and use reasonable efforts, even if not
expressly stated.

6. Lucy v. Zehmer, 196 Va. 493 (1954)

Facts
 ● Lucy, a farmer, and Zehmer, a landowner, were drinking together when Lucy
expressed interest in purchasing Zehmer's farm.
● Zehmer wrote a document agreeing to sell the farm for $50,000, which both he and
his wife signed. Lucy believed it was a valid contract.
● Later, Zehmer claimed the agreement was made in jest and that he never intended to
sell the farm, arguing that the contract was not enforceable because he was joking.
● Lucy sued to enforce the agreement.

Issues

1. Did the written agreement between Lucy and Zehmer constitute a binding contract,
despite Zehmer’s claim that it was made in jest?
2. Should the court consider Zehmer's undisclosed intention not to sell the farm?

Rules

1. Objective Theory of Contracts: The formation of a contract is judged by the

outward expressions and conduct of the parties, not their undisclosed intentions.
2. Mutual Assent: A valid contract requires mutual agreement, determined by what a
reasonable person in the position of the other party would have understood.

Court’s Analysis

● Objective Intent: The court focused on Zehmer's outward conduct and actions, which
demonstrated seriousness. The written agreement was detailed, signed by both
Zehmer and his wife, and discussed over 40 minutes. A reasonable person would view
this as an intent to form a binding agreement.
● Zehmer’s Claim of Jest: Zehmer’s unexpressed intent to treat the matter as a joke
was irrelevant. His actions and words created the appearance of a genuine offer.
● Capacity to Contract: Although alcohol was involved, the court found that both
parties were sober enough to understand their actions.

Holding

The court ruled in favor of Lucy, holding that the agreement was a binding contract. Zehmer
was ordered to convey the farm to Lucy for $50,000.

Key Takeaway
 ● Contracts Are Based on Objective Intent: The enforceability of a contract depends
on what a reasonable person would believe from the actions and words of the parties,
not on one party’s undisclosed intentions.
● Jest or Humor Doesn’t Excuse a Formal Agreement: If actions and words suggest
seriousness, a party cannot later escape liability by claiming the agreement was a
joke.

7. Raffles v. Wichelhaus, 159 Eng. Rep. 375 (1864)

Facts

● Raffles (the seller) agreed to sell a shipment of cotton to Wichelhaus (the buyer).
● The contract specified the cotton would arrive on a ship named "Peerless" sailing
from Bombay.
● Unbeknownst to both parties, two ships named "Peerless" were scheduled to sail from
Bombay—one in October and the other in December.
● Raffles intended the shipment to be on the December Peerless, while Wichelhaus
believed it would arrive on the October Peerless.
● When the cotton arrived on the December Peerless, Wichelhaus refused to accept
delivery or pay, arguing that the contract referred to the October Peerless.

Issues

1. Was there a valid and enforceable contract when both parties referred to different
ships named "Peerless" without realizing the ambiguity?
2. Does mutual misunderstanding about a material term void a contract?

Rules

1. Mutual Assent: For a contract to be valid, the parties must agree on the same terms
and subject matter.
2. Ambiguity: If a term in a contract is ambiguous and neither party is at fault or aware
of the misunderstanding, there may be no binding agreement.

Court’s Analysis

● Ambiguity of "Peerless": The term "Peerless" referred to two distinct ships, creating
an inherent ambiguity in the contract.
● No Meeting of the Minds: The court held that there was no mutual understanding
between the parties about a key term (which ship named "Peerless" would carry the
cotton). Without this, the contract lacked mutual assent.
 ● Good Faith Misunderstanding: Both parties acted in good faith, and neither could
be blamed for the misunderstanding. This further supported the finding that no valid
contract existed.

Holding

The court ruled in favor of Wichelhaus, finding the contract unenforceable due to the lack of
mutual assent caused by the ambiguous reference to "Peerless."

Key Takeaway

● Ambiguity Can Void Contracts: If a material term in a contract is ambiguous and

the parties attach different, reasonable interpretations to it, there may be no
enforceable contract.
● Mutual Assent Is Crucial: A contract requires that both parties agree to the same
thing. Ambiguities that prevent a meeting of the minds can nullify the agreement.

8. Lefkowitz v. Great Minneapolis Surplus Store, Inc., 86 N.W.2d 689 (Minn. 1957)

Facts

● The Great Minneapolis Surplus Store advertised a sale offering "fur coats worth
$100" for $1 each, with the condition "first come, first served." The ad specified that
only women could purchase the coats.
● Lefkowitz, a man, arrived at the store first and attempted to purchase one of the coats.
He was informed by the store that the offer was only available to women.
● Lefkowitz sued the store for breach of contract, claiming the advertisement
constituted an offer, which he accepted by arriving first to buy the coat.

Issues

1. Was the advertisement made by the Great Minneapolis Surplus Store a valid offer, or
merely an invitation to negotiate?
2. Did Lefkowitz form a contract with the store by accepting the terms of the
advertisement?

Rules

1. Advertisement as an Offer: An advertisement can constitute an offer if it is clear,

definite, and leaves nothing open for negotiation, i.e., it is not merely an invitation to
make an offer.
 2. Objective Theory of Contracts: A contract is formed when one party makes an offer
that is accepted by the other party, provided that there is mutual assent and
consideration.

Court’s Analysis

● Clarity of the Advertisement: The court found that the advertisement was clear and
definite. It stated the product ("fur coats worth $100"), the price ($1), and the
condition ("first come, first served"). These terms were not ambiguous, leaving no
room for negotiation.
● The Advertisement as an Offer: The court held that the ad constituted a unilateral
offer, which Lefkowitz accepted by arriving first at the store.
● Exclusion of Women: The store's defense, based on the condition that only women
could buy the coats, was deemed irrelevant because the advertisement itself was not
restricted in that way.
● Enforceability: The court ruled that Lefkowitz had accepted the store’s offer by
showing up first and attempting to make the purchase, and thus, a binding contract
existed.

Holding

The court ruled in favor of Lefkowitz, holding that the advertisement constituted an
enforceable offer and that a valid contract had been formed when Lefkowitz attempted to
purchase the fur coat.

Key Takeaway

● Advertisements as Offers: An advertisement may be an offer if it is clear, specific,

and leaves no room for negotiation. In this case, the ad was sufficiently definite to
constitute a binding offer.
● Unilateral Contracts: A unilateral contract (where the offeror promises to do
something in return for an act) can be formed when the terms of the offer are met,
even if the offeror had no subjective intention of entering a contract.

9. Ever-Tite Roofing Corp. v. Green (1955)

Facts:

● The Greens (defendants) signed a contract with Ever-Tite Roofing Corp. (plaintiff) on
June 10, 1953, for the re-roofing of their home.
● The contract stipulated that acceptance could occur either through written approval by
Ever-Tite or by commencing performance of the work.
● The contract also included terms such as installment payments, attorney’s fees in case
of a breach, and that the agreement was "not subject to cancellation."
 ● Ever-Tite needed to approve the contract and check the defendants’ credit. After this
process was completed, on June 18 or 19, Ever-Tite loaded materials and sent workers
to the Greens' home to start the job.
● Upon arrival, Ever-Tite’s workers found other roofers doing the work, as the Greens
had contracted another company two days prior without notifying Ever-Tite.

Issue:

● The Greens argued that no contract was formed because Ever-Tite had not formally
accepted it, and they had the right to withdraw their offer before work began.
● The trial court ruled in favor of the Greens, deciding that their notice to Ever-Tite’s
workers was sufficient to withdraw from the agreement.

Court's Holding:

● The appellate court disagreed with the trial court’s decision, ruling that Ever-Tite had
accepted the contract by beginning performance when they loaded materials and sent
workers to the defendants' home.
● Since the contract did not specify an exact time for acceptance, the court held that
Ever-Tite had acted within a reasonable time.
● The Greens breached the contract by hiring another company without notifying Ever-
Tite. The court awarded Ever-Tite $311.37 in damages (the cost of preparing and
transporting materials and anticipated profit).

Key Points:

● Acceptance of a contract can be through action, such as beginning performance, rather

than just a formal written approval.
● The Greens’ failure to notify Ever-Tite before hiring a different roofer constituted a
breach of contract.
● The court reversed the trial court’s decision and ruled in favor of Ever-Tite, awarding
damages but denying attorney’s fees since this was not an action to collect under the
contract.

10. Hoffman v. Red Owl Stores, Inc., 26 Wis. 2d 683, 133 N.W.2d 267 (1965)

Facts

● Hoffman was negotiating with Red Owl Stores to open a supermarket. The company
had made promises about the terms of the store's location and investment, but no
formal contract had been executed.
● Hoffman was led to believe by Red Owl that if he followed through with certain steps,
such as selling his existing business, moving to a new location, and providing
additional investments, he would receive a franchise for a Red Owl store.
● Hoffman took several actions based on these promises, including selling his business
and incurring expenses, but Red Owl eventually informed him that they were not
willing to proceed with the agreement.
● Hoffman sued Red Owl for breach of contract, claiming that the company had made a
promise that induced him to take action, and he had suffered financial loss as a result.
Issues

1. Was a binding contract formed between Hoffman and Red Owl, even though the
terms of the agreement were not completely settled and no formal contract was
executed?
2. Can Hoffman recover damages for reliance on Red Owl's promises, despite the lack
of a formal contract?

Rules

1. Promissory Estoppel: Even if there is no formal contract, a party may still be held
liable if they make a promise upon which another party reasonably relies to their
detriment, causing harm.
2. Formation of a Contract: A contract requires mutual agreement on the terms. If the
terms are uncertain or not finalized, there may not be a binding contract, but reliance
on those promises can give rise to a claim for damages.

Court’s Analysis

● No Final Agreement: The court acknowledged that no final agreement or contract

had been formed between Hoffman and Red Owl. The negotiations had not reached a
definite agreement on key terms like the price, location, and exact terms of the
franchise.
● Promissory Estoppel: Despite the lack of a formal contract, the court ruled that Red
Owl’s representations constituted a promise that Hoffman reasonably relied upon.
Hoffman had taken significant steps (selling his business, moving, and incurring
costs) based on these promises, which led to financial losses.
● Reasonable Reliance: The court held that Hoffman’s actions were a direct result of
Red Owl’s promises and that the company should be liable for the damages incurred
by Hoffman due to his reliance on the promise.
● Detrimental Reliance: The court found that Hoffman suffered financial harm as a
result of his reliance on the promises made by Red Owl, and therefore, he was entitled
to recover damages under the doctrine of promissory estoppel.

Holding

The court ruled in favor of Hoffman, finding that he was entitled to damages based on
promissory estoppel, even though no formal contract had been formed.

Key Takeaway
 ● Promissory Estoppel: A party can be held liable for damages even in the absence of
a formal contract if their promises induce reliance by the other party, and that reliance
results in financial harm.
● Reliance and Detriment: When one party relies on another’s promise to their
detriment, even in the absence of an agreement on all terms, the relying party may
have a claim for damages, and the promisor can be held accountable for the harm
caused.

11. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996)

Facts

● ProCD, Inc. sold software that was accompanied by a license agreement. The
software was sold at a relatively low price in a box, and the terms of the software
license were included inside the box on a shrinkwrap agreement (i.e., an agreement
that becomes binding when the product is unsealed).
● Zeidenberg purchased the software, installed it, and then violated the terms of the
license by using it in a way that was prohibited under the agreement, including
redistributing the software at a higher price.
● ProCD sued Zeidenberg for breaching the shrinkwrap license and sought to enforce
the terms of the license agreement.

Issues

1. Can the shrinkwrap license, which was only visible after the software was purchased
and opened, be enforceable under contract law?
2. Is the license agreement enforceable even though it was not agreed to explicitly
before the transaction took place?

Rules

1. Shrinkwrap Licenses: A shrinkwrap license, which is a contract that becomes

binding when the purchaser opens the package, can be enforceable if the terms are
reasonable and the purchaser had the opportunity to reject the terms.
2. Objective Theory of Contracts: Under contract law, a party may be bound by terms
to which they implicitly agree by performing certain actions, such as using a product
after receiving notice of the terms.

Court’s Analysis

● Enforceability of Shrinkwrap Agreements: The court acknowledged that

shrinkwrap licenses are not per se unenforceable. The court emphasized that the
 essential issue was whether Zeidenberg had a chance to review the terms of the
license and whether those terms were clearly communicated.
● Notice and Opportunity to Reject: The court held that the terms of the software
license were clearly presented on the packaging and inside the software box. Upon
purchase and opening the package, Zeidenberg had the opportunity to read the license
agreement, and by using the software, he had implicitly agreed to the terms.
● Implied Acceptance: The court found that Zeidenberg’s use of the software after
opening the package amounted to an acceptance of the license terms. The fact that the
terms were not explicitly agreed to before the purchase did not invalidate the
agreement, as the act of using the software constituted consent to those terms.

Holding

The court ruled in favor of ProCD, holding that the shrinkwrap license was enforceable, and
Zeidenberg was bound by its terms, including the restrictions on redistribution, despite the
fact that he had not explicitly agreed to the license before purchasing the software.

Key Takeaway

● Shrinkwrap Licenses: Shrinkwrap licenses can be enforceable under contract law as

long as the terms are clearly presented and the purchaser has the opportunity to review
and reject them. By using the software, the buyer may be deemed to have accepted the
terms, even if those terms are not agreed to in a traditional manner before the
transaction.
● Implied Consent: A party’s actions can imply consent to contract terms. In this case,
by using the software after purchasing it, Zeidenberg was deemed to have accepted
the terms of the shrinkwrap license, even though he did not sign it explicitly.

12. Henningsen v. Bloomfield Motors, Inc. (1960)

Facts
Claus H. Henningsen purchased a Plymouth automobile from Bloomfield Motors, Inc.,
manufactured by Chrysler Corporation, intending it as a gift for his wife, Helen Henningsen.
While driving, Helen lost control of the vehicle due to a mechanical issue, which caused an
accident and resulted in injuries to her. The Henningsens sued both the manufacturer and
dealer, claiming damages for breach of express and implied warranties and negligence. The
trial court dismissed the negligence claims, submitting only the implied warranty of
merchantability claims to the jury, which ruled in favor of the plaintiffs. The defendants
appealed.

Issues
 1. Was there a breach of the implied warranty of merchantability by the
manufacturer and dealer?
2. Can a consumer be bound by disclaimers or limitations of liability printed in
unreadable, fine print on a purchase contract?

Rules

1. Implied Warranty of Merchantability: Under UCC principles, an implied warranty

of merchantability holds that a product should be fit for its ordinary intended use.
2. Consumer Rights and Disclaimers: For disclaimers or limitations of liability to be
enforceable, they must be reasonably noticeable and understandable to the average
consumer.

Analysis and Decision

The court found the disclaimer language in the contract ineffective because it was hidden in
fine print, making it difficult for the average consumer to notice or understand. This obscured
language led the court to conclude that the defendants could not shield themselves from
liability for the implied warranty of merchantability. The court also held that the implied
warranty applied, as the car failed to meet the basic standard of merchantability, evidenced by
the accident occurring without apparent misuse or extraordinary conditions.

Key Takeaway
In consumer contracts, especially those involving implied warranties of merchantability,
courts may refuse to enforce disclaimers that are inconspicuous or difficult to understand.
Manufacturers and dealers can be held liable for defects under implied warranties if a product
is not fit for its ordinary purpose, regardless of attempts to disclaim liability in a manner that
is not clearly communicated to the buyer.

13. Alaska Packers Association v. Domenico, 117 F. 99 (9th Cir. 1902)

Facts

● The Alaska Packers Association (APA) contracted with Domenico and other workers
to work in Alaska during the fishing season. The workers were promised a set wage
for their labor over a specific period of time.
● Once the workers arrived in Alaska, they demanded a higher wage than what was
originally agreed upon in the contract. The APA agreed to the higher wages under
duress, hoping to avoid a strike or work stoppage that would harm their business.
● After the workers completed their work, APA refused to pay the increased wage,
arguing that the contract terms had not changed and that the original agreement
should govern the amount owed.
● Domenico and the other workers sued APA for the increased wages they had
demanded and the APA had reluctantly agreed to.
Issues

1. Is an agreement to pay a higher wage during the course of a contract enforceable if the
higher wage was agreed upon under duress?
2. Can the original contract terms be modified if the change was made under duress?

Rules

1. Duress and Contract Modification: A contract modification made under duress is

generally not enforceable. Duress undermines the voluntariness of consent, which is
necessary for a valid contract.
2. Pre-existing Duty Rule: Under contract law, a party's promise to do something they
are already obligated to do under an existing contract (such as performing work for
the agreed-upon wage) cannot serve as valid consideration for a modification of that
contract.
3. Consideration: A contract modification typically requires new consideration
(something of value) in exchange for the modified terms. In this case, the workers did
not provide any new consideration for the increased wage.

Court’s Analysis

● Duress: The court found that the workers’ demand for a higher wage and the threat of
a work stoppage amounted to economic duress. The APA, under pressure, agreed to
the increased wages to ensure the workers would continue their labor.
● Lack of New Consideration: The court held that the promise to pay the workers a
higher wage lacked valid consideration. The workers were already obligated to
perform the same work under the original contract, so agreeing to the higher wage did
not involve any new consideration. The workers were not offering anything new in
exchange for the increase.
● Enforceability of the Modification: Because the modification was made under
duress and lacked new consideration, the court ruled that it was not enforceable. The
APA was not required to pay the increased wages, and the original contract terms
governed.

Holding

The court ruled in favor of Alaska Packers Association, holding that the agreement to
increase the workers’ wages was not enforceable. The workers’ demand for a higher wage,
made under duress, did not constitute a valid modification of the original contract.

Key Takeaway
 ● Duress Invalidates Contract Modifications: A contract modification made under
duress is generally unenforceable, as it does not involve the voluntary consent of the
parties.
● Pre-existing Duty Rule: An agreement to pay more for performance of an existing
duty (such as a worker's original obligation to perform work) cannot serve as valid
consideration for modifying the contract.
● Consideration is Required for Modifications: To modify a contract, new
consideration (something of value) must be exchanged. If no new consideration is
provided, the modification is likely unenforceable.

14. Rockingham County v. Luten Bridge Co.

Facts

● The Rockingham County Board of Supervisors contracted with Luten Bridge

Company to build a bridge for $82,000. The contract specified that the bridge was to
be completed within a certain time frame.
● Before the bridge was completed, the County Board decided to cancel the contract
and stop the work, but did not formally notify Luten Bridge of the cancellation.
● Despite the cancellation, Luten Bridge continued working on the bridge for a period,
ultimately completing the bridge after receiving no further instructions from the
County.
● The County refused to pay for the work done after the cancellation, arguing that they
were not liable for the extra work since they had canceled the contract.

Issues

1. Can a party who breaches a contract by discontinuing work be liable for the costs of
performance that continue after the breach, especially if the other party continues
working despite the cancellation?
2. Is the party entitled to damages for the performance of work that was not agreed upon
after a contract was effectively canceled?

Rules

1. Duty to Mitigate: A party who breaches a contract is generally liable for damages,
but the other party has a duty to mitigate damages by not continuing to perform the
contract after it has been breached.
2. Breach and Continued Performance: If one party breaches a contract and the other
party continues to perform despite the breach, they cannot recover damages for work
performed after the breach unless they had a legal duty to continue the work or were
unaware of the breach.
Court’s Analysis

● The court ruled that the County’s decision to cancel the contract made the contract
voidable and that the Luten Bridge Company, despite the breach, continued to work
without the County’s consent or formal approval.
● Since Luten Bridge continued work after being notified of the cancellation (or at least
after the County stopped performing its part), they were deemed to have voluntarily
continued and could not recover the additional costs incurred after the breach.
● The court emphasized that a party must act to mitigate their damages and that
continuing work after knowing of the breach was not justified in this case.

Holding

The court ruled in favor of the County, holding that Luten Bridge was not entitled to recover
the costs incurred after the County's cancellation. Since Luten Bridge continued to work after
the cancellation without any legal obligation to do so, they were not entitled to the extra
damages.

Key Takeaway

● Mitigation of Damages: A party who is notified of a contract breach must take

reasonable steps to mitigate their damages. If the party continues to perform after the
breach, they may not recover costs for that continued performance unless there is a
legal basis for doing so.

15. Hadley v. Baxendale

Facts

● Hadley, a mill owner, contracted with Baxendale, a carrier, to deliver a broken mill
shaft to a manufacturer for repairs. Baxendale, the carrier, was aware that the mill was
inoperable and would not function without the repaired shaft.
● Due to Baxendale's delay in delivery, the mill was shut down for several days. Hadley
sued for damages resulting from the delay, including loss of profits from the
downtime.
● Baxendale argued that they were not responsible for the lost profits, as they had not
been made aware of the specific nature of the delay's impact on the mill’s operations.

Issues

1. Can a party be liable for consequential damages (e.g., loss of profits) for a breach of
contract if they were unaware of the specific consequences of the breach?
2. What types of damages are recoverable in a contract breach?
Rules

1. Expectation Damages: The purpose of awarding damages in a breach of contract is

to place the non-breaching party in the position they would have been in if the
contract had been performed.
2. Consequential Damages: Consequential damages, such as loss of profits, can be
recovered if they are the natural and probable consequence of the breach and were
reasonably foreseeable by both parties at the time of contract formation.
3. Foreseeability of Damages: For consequential damages to be recoverable, they must
be foreseeable by both parties when the contract was formed.

Court’s Analysis

● The court ruled that Baxendale could not be held liable for the loss of profits because
the damages were not foreseeable to them at the time the contract was made.
Baxendale was not informed that the delay would result in a shutdown of the mill and
loss of profits.
● The court established that for consequential damages to be recoverable, the breaching
party must have had knowledge, or it must have been reasonably foreseeable, that the
breach would result in such damages.
● Since Baxendale was not made aware of the critical nature of the timely delivery, the
loss of profits was not a foreseeable consequence, and therefore, Hadley could not
recover these damages.

Holding

The court ruled in favor of Baxendale, holding that they were not liable for the loss of profits.
The damages were not considered foreseeable to the carrier at the time of the contract, and
thus could not be recovered.

Key Takeaway

● Foreseeability of Damages: A party is only liable for consequential damages (such as

lost profits) that were foreseeable at the time of contract formation. If the breaching
party was unaware of the specific consequences, they cannot be held liable for those
damages.

16. Peevyhouse v. Garland Coal and Mining Co.

Facts
 ● The Peevyhouse family owned land in Oklahoma and leased it to Garland Coal and
Mining Company for mining purposes.
● The lease agreement contained a provision requiring Garland to restore the land to its
original condition after completing the mining operations, including filling in pits and
removing equipment.
● Garland completed the mining but did not restore the land as required by the lease.
The cost to restore the land was estimated at $29,000.
● However, the actual value of the land, even without restoration, was much less than
the restoration cost, and the Peevyhouse family did not intend to use the land for
agricultural purposes again.
● The Peevyhouse family sued for breach of contract, seeking damages for Garland's
failure to restore the land.

Issues

1. What measure of damages is appropriate when there is a breach of contract for failure
to perform a provision that does not affect the actual value of the land?
2. Should the court award damages based on the cost of performance (i.e., restoring the
land) or the difference in value caused by the breach?

Rules

1. Expectation Damages: The purpose of awarding damages for breach of contract is to

put the injured party in the position they would have been in had the contract been
fully performed.
2. Cost of Performance vs. Diminution in Value: Courts generally award the cost of
performance as damages unless the cost of performance is disproportionate to the
actual harm caused by the breach. If the cost to perform the contract is unreasonably
high compared to the benefit or the actual loss, the court may instead award damages
based on the diminution in value of the property.

Court’s Analysis

● The court recognized that the cost of restoration was $29,000, which was far greater
than the increase in value the land would have had if it had been restored (which was
minimal given the intended use of the land).
● The Peevyhouse family had no plans to use the land for agriculture and the restoration
had no significant effect on the land’s actual value.
● The court concluded that awarding the full $29,000 for restoration was
disproportionate to the harm caused by the breach. The breach did not cause the
Peevyhouses any substantial loss in the land’s value.
● Instead, the court awarded damages based on the difference in value of the land,
rather than the cost of restoration. The damages were reduced to reflect the actual loss
in value caused by Garland’s failure to restore the land.
Holding

The court ruled in favor of the Peevyhouse family but reduced the damages to reflect the
difference in the value of the land rather than the full $29,000 cost of restoration. The court
held that the appropriate measure of damages was the diminution in value of the land caused
by Garland’s failure to restore it, not the cost of performance.

Key Takeaway

● Disproportionate Damages: When the cost of performing a contract (such as

restoring land) is much higher than the actual harm or loss caused by the breach,
courts may award damages based on the diminution in value rather than the full cost
of performance.
● Expectation Damages: While the general rule for damages is to put the injured party
in the position they would have been in had the contract been performed, the remedy
can be adjusted if the cost of performance is grossly disproportionate to the actual
benefit gained by the breach.

17. Britton v. Turner (1834)

Facts

● Britton (the plaintiff) entered into a contract with Turner (the defendant) to work for
one year as a laborer, for which Turner promised to pay Britton $120.
● Britton worked for Turner from March 9, 1831, to December 27, 1831, but left before
completing the full year.
● Turner argued that Britton had breached the contract by leaving early and refused to
pay him for the work he had done.
● Britton sued for the value of the labor he had already provided under a "quantum
meruit" claim, meaning he sought compensation for the work done, based on its
reasonable value.

Issues

1. Can Britton recover compensation for the labor he performed, even though he did not
complete the entire term of the contract?
2. If so, what measure of damages is appropriate for the work completed when the
contract was not fully performed?

Rules
 1. Quantum Meruit: This is a legal principle that allows a party to recover the
reasonable value of services performed, even if there was no formal contract, or the
contract was not fully performed.
2. Partial Performance: When one party partially performs under a contract and the
other party benefits from that performance, the party who performed may be entitled
to compensation for the value of the work, even if the contract was not fully executed.
3. Breach of Contract: The party who does not fully perform a contract may be liable
for damages, but the other party may still recover for the value of what was
performed.

Court’s Analysis

● The court acknowledged that Britton did not complete the full term of the contract, so
he could not recover under the contract itself for the full $120.
● However, the court also recognized that Britton had worked for nearly 9 months, and
Turner had received the benefit of that work. The court noted that a strict rule denying
compensation for partial performance could be unjust, especially when the other party
had already benefitted from the services.
● The court determined that Britton could recover under a quantum meruit claim,
meaning he could be paid for the reasonable value of the work he performed.
● The court ruled that Britton should receive $95, which was a proportionate amount
reflecting the value of the labor he performed during his time working for Turner.

Holding

The court held that Britton could recover compensation for the work he had performed under
the principle of quantum meruit, despite his early departure from the contract. The court
awarded Britton $95, which was the reasonable value of the work he completed.

Key Takeaway

● Quantum Meruit can be used to recover the value of partially performed contracts
when one party benefits from the work done, even if the contract was not fully
completed.
● Partial Performance: The ruling reflects the idea that it is unfair to allow the
breaching party (in this case, Turner) to retain the benefits of the work done without
compensating the other party (Britton) for the labor performed.
● Proportional Recovery: The court found a middle ground by awarding a pro-rated
amount for the work completed, rather than requiring strict adherence to the contract’s
terms.