Académique Documents
Professionnel Documents
Culture Documents
10/14/08 2
What is a “Contract”?
10/14/08 3
The Purpose of a Contract
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Sources of Contract Law
No Yes
No
Classified by Formation
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Quasi Contracts
Definition: an obligation which is not based
on contract but is imposed to avoid injustice
Classified by Acceptance
10/14/08 10
Carlill v. Carbolic Smoke Ball
ISSUE: Must the offeree of a public offer for a
unilateral contract notify the offeror of
acceptance prior to performance of the
condition sought?
HOLDING: No
10/14/08 11
Carlill v. Carbolic Smoke Ball
RATIONALE:
- Generally speaking, a person who makes an offer for
a unilateral contract should not expect notice of
acceptance apart from the performance of the
condition.
- I believe that in cases of where an offer is held out to
the public for performance, there is an exception to
the rule that notification must precede performance.
- I reject the Company's contention that there is no
binding contract because the offer was made to no
one in particular.
10/14/08 12
Carlill v. Carbolic Smoke Ball
- Offers of this kind, are offers to anybody who
performs the conditions of the offer, and anybody
who does perform the conditions accepts the offer.
- The Company's argument that no contract existed for
want of consideration is without merit.
- Clearly the Company received a benefit.
- A use of their product by the public in a manner to
get the public to have confidence in their product,
leading to further sales of the product.
- Furthermore, there is a distinct inconvenience to the
purchaser in using the product three times a day.
Appeal dismissed.
10/14/08 13
Types of Contracts
Valid, Void, Voidable, and Unenforceable:
- Valid Contract – one that meets all of the
requirements of a binding contract
- Void Contract – no contract at all; without legal
effect
- Voidable Contract – a contract capable of being
made void
- Unenforceable Contract – An unenforceable
contract is one otherwise valid but for which
some defense exists extraneous to formation
(e.g., the Statute of Frauds).
10/14/08 14
Elements of a Contract
Mutual Assent: the parties to a contract
must manifest by words or conduct that they
have agreed to enter into a contract.
No Defenses to Formation
- Legality: The contract must be for a lawful
purpose.
- Capacity: The parties must be adults of sound
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mind. 15
Is there an Enforceable Contract?
Statute of Frauds
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Mutual Assent
Offer & Acceptance
In General
For an agreement to be enforced as a contract,
there must be mutual assent.
- In other words, one party must accept the other’s
offer.
- Mutual assent is sometimes referred as “Meeting of
the minds.”
10/14/08 19
Essentials of an Offer
Intent: determined by an objective standard of
what a reasonable offeree would have
believed.
10/14/08 20
Intent
These are not offers:
- Offers made in anger, jest, or undue
excitement
- Expressions of opinion
- Statements of Intention
- Preliminary negotiations
- Advertisements, Catalogues, Price Lists, and
Circular
They are treated as Invitations to negotiate
10/14/08 21
Definiteness of Terms
Terms (Expressed or Implied)
- Identification of the parties
- Consideration to be paid
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- Time of payment, Delivery, or Performance 22
Definiteness of Terms
UCC and Open Terms: The UCC has
provisions for supplying some missing
contract terms.
- Open Price
The UCC establishes a price, based on market
value or valuation by a neutral party.
- Output and Requirements Provisions
An output contract obligates a seller to sell all of
his output to one buyer, who agrees to buy it.
A requirements contract obligates a buyer to
obtain all of his needed goods from the seller.
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Definiteness of Terms
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Preliminary Negotiation
It may be terminated by
- (i) an act of either party or
- (ii) operation of law.
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Termination by Act of Parties
Termination by Offeror
- Revocation
Termination of Offeree
- Rejection or
- Lapse of Time
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Termination by Operation of Law
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Termination of Offer
Revocation by Rejection by Termination by
Offeror Offeree Operation of Law
Offer Effective
Communicated Intent
Definite and certain
OFFER
No Offer No Offer
OPEN
Offer Terminated
Lapse of time Death
Revocation Incompetency
Rejection Destruction of subject matter
Counteroffer Subsequent illegality
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Acceptance of Offer
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The Acceptance
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Who May Accept
The person to whom the offer was addressed
has the power of acceptance, as does a
member of the class to whom the offer was
addressed.
10/14/08 34
Acceptance Must Be Unequivocal
Common Law
- Acceptance must mirror the offeror’s terms,
neither omitting nor adding terms.
10/14/08 35
Acceptance Must Be Unequivocal
UCC Rules
- In contracts involving the sale of goods, an acceptance need not
mirror the offer’s terms (i.e., an acceptance that deviates from the
offer is not necessarily a rejection and counteroffer).
- Whether the offer terms or the acceptance terms govern depends
on the status of the parties.
Nonmerchants - Terms of Offer Govern
If one of the parties is not a merchant, the terms of the offer
control.
The new or different terms are considered mere proposals.
Merchants - Acceptance Terms Usually Included
In transactions between merchants (i.e., both parties are
merchants), the new or different terms proposed in the acceptance
become a part of the contract unless they materially alter the
agreement, the offer expressly limits acceptance to the terms of
the offer, or the offeror has already objected to the new or
different terms.
Additional terms that materially alter the agreement do not prevent
10/14/08 contract formation, but become part of the contract only if the 36
Generally Acceptance Must Be
Communicated
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“Mailbox Rule”
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Promissory Estoppel
Definition: a doctrine enforcing some noncontractual
promises.
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Consideration
INTRODUCTION
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ELEMENTS OF CONSIDERATION
1. Bargained-for Exchange
2. Legal Value Element
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Bargained-for Exchange
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Bargained-for Exchange
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Bargained-for Exchange
Past or Moral Consideration: A promise given
in exchange for something already done does
not satisfy the bargain requirement.
- Exceptions: Where a past obligation is unenforceable
because of a technical defense (e.g., statute of
limitations), that obligation will be enforceable if a
new promise is made in writing or is partially
performed.
- Also, under the modern trend, if a past act was
performed by the promisee at the promisor’s
request, a new promise to pay for that act will be
enforceable.
10/14/08 45
Legal Value Element
Adequacy of Consideration
- In general, courts do not inquire into the adequacy
or fairness of consideration.
- However, if something is entirely devoid of value
(token consideration), it is insufficient.
- Sham consideration (recited in the contract, but not
actually paid) may also be insufficient
- Where there is a possibility of value in the thing
bargained for, consideration will be found even if the
value never comes into existence.
10/14/08 46
Legal Value Element
10/14/08 47
Preexisting Obligations
Preexisting Public Obligations: public duties
such as those imposed by tort or criminal law
are neither a legal detriment nor a legal benefit.
10/14/08 49
Dougherty v. Salt
FACTS:
- An eight year old boy received from his Aunt a promissory
note for $3,000 payable at or before her death.
- The promissory note was made out by use of a preprinted
form.
- The boy's guardian testified at trial as to how the note came to
be given.
The Aunt was visiting her nephew and remarked what a nice boy
he was.
The guardian replied that he certainly was a nice boy and
proceeded to tell the Aunt how well the boy was doing in school.
The Aunt replied that she would like to take care of the little boy .
10/14/08 50
Dougherty v. Salt
- The guardian expressed some doubt, apparently because other
relatives had also expressed a desire to take care of the boy but
had taken it out in talk. [all talk and no action]
- The Aunt stressed that she really wanted to do something for the
boy and asked the guardian why she couldn't make out a note to
the boy.
- The guardian replied that he did not think anything would be
wrong with making out a note and the Aunt asked him to make
one out for her right then.
- The guardian produced a blank, preprinted promissory note form
that contained the words "value received."
- The form was filled out and signed.
- The Aunt then handed the note to her nephew and told him that
because he had always done for her, she had made the note out
for him.
10/14/08 51
Dougherty v. Salt
- She further cautioned the boy not to lose the note, as one day it
would be valuable.
- The boy or his guardian apparently tried to collect the note from
Salt, the Aunt's heir (or executor), after the Aunt's death.
- At trial, the judge submitted the question whether there was
consideration for the promised payment.
- The jury found that there was, but the judge set aside the
verdict for the boy and dismissed the complaint on the ground
that there was no consideration for the note.
- On appeal, a divided appellate court reversed on the ground
that the form of the note was sufficient evidence of
consideration.
- An appeal was taken to the New York Court of Appeals.
10/14/08 52
Dougherty v. Salt
10/14/08 53
Dougherty v. Salt
RATIONALE:
- The statement in the note raises an inference that there was
sufficient consideration given for the note.
- However, the facts of this case as related by the boy's own
guardian are sufficient to overcome and rebut the inference of
consideration.
- As can be seen from the testimony from the plaintiff's own
witness [the guardian], there was no consideration given for the
note.
- The note was simply a voluntary and unenforceable promise of
an executory gift, despite the note's form language of being for
"value received."
- The boy was not a creditor, nor was the Aunt repaying a debt or
other obligation.
- In light of the surrounding facts, the form of the preprinted blank
note is not enough to imply consideration.
10/14/08 54
Hamer v. Sidway
FACTS:
- William Story promised his nephew that if he would
refrain from drinking, using tobacco, swearing, and
playing cards or billiards for money until he was 21
years old, he would pay him $5,000.
- The nephew agreed, and fully performed the
conditions inducing the promise.
- When the nephew turned 21, he wrote to his uncle,
informing him that he had performed his part of the
agreement , and was entitled to the $5,000.
- Story wrote back, agreeing that his nephew was
entitled to the sum, but he offered to keep the money,
plus interest, so as to prevent unwise spending on the
nephew's part.
10/14/08 55
Hamer v. Sidway
- The nephew agreed to this, and Story kept the money
for him until his death twelve years later.
- At the time of his death, Story had not paid over to his
nephew any portion of the $5,000 and interest.
- Hamer presented a claim to the executor of Story's
estate for the amount due plus interest.
- She had acquired the interest through several mesne
assignments from Story's nephew.
- The claim was rejected by the executor and Hamer
filed suit.
10/14/08 56
Hamer v. Sidway
ISSUE: Must the promisor be benefited in order
for consideration to be valid?
HOLDING: No
10/14/08 57
Hamer v. Sidway
RATIONALE:
- In general, a waiver of any legal right at the request of another
party is a sufficient consideration for a promise.
- Any damage, or suspension, or forbearance of a right will be
sufficient to sustain a promise.
- Consideration means not so much that one party is profiting
as that the other abandons some legal right in the present, or
limits his legal freedom of action in the future, as an
inducement for the promise of the first.
- Now, applying this rule to the facts before us, the promisee
used tobacco, occasionally drank liquor, and he had a legal
right to do so.
- That right he abandoned for a period of years upon the
strength of the promise of the testator that for such
forbearance he would give him $5,000.
10/14/08 58
Hamer v. Sidway
10/14/08 59
Hamer v. Sidway
Terminology
- EXECUTOR: A person appointed by a testator to carry out the
directions and requests in his will, and to dispose of the property
according to his testamentary provisions after her decease.
- MESNE ASSIGNMENT: If A grants to B, and B assigns his
interest to C, and C in turn assigns his interest to D, the
assignments made by B and C would be termed mesne
assignments; that is, they are assignments intervening between
A's original grant and the vesting of D's interest under the last
assignment. (MESNE=MEAN)
- TESTATOR: One who makes or has made a will.
10/14/08 60
Wood v. Lucy
FACTS:
- Lucy, Lady Duff-Gordon was a famous fashion designer.
- In order to profit from her fame, Lucy employed Wood.
Wood was granted the exclusive right to endorse products using
Lucy's famous name for one year.
In return, Wood agreed to split the profits with Lucy .
- Wood sued for breach of contract after he discovered that Lucy
had endorsed products without his knowledge and without splitting
the profits.
- Lucy demurred on the ground that a valid contract never existed
between the parties.
- In granting the demurrer and dismissing the complaint, the
Appellate division found that the contract lacked mutuality, as
Wood never promised to do anything.
- Wood appeals.
10/14/08 61
Wood v. Lucy
ISSUE: May a court imply a promise to make
reasonable efforts in an exclusive-dealing
arrangement?
DECISION AND RATIONALE: Cardozo, J. Yes
10/14/08 62
Wood v. Lucy
RATIONALE:
- A court may imply a promise to make reasonable efforts in an
exclusive-dealing arrangement.
- Indeed, Wood never expressly promised to use reasonable
efforts to endorse Lucy's products or to market her designs.
- However, such a promise may be fairly implied by the court.
- Lucy gave an exclusive privilege to Wood, and his acceptance
of the exclusive agency was an assumption of its duties.
- To hold otherwise would be to undermine the purpose of the
agreement.
10/14/08 63
Wood v. Lucy
- Lucy's sole compensation for the grant of exclusive
agency was to receive one-half of all profits.
- He agreed to account monthly for all moneys
received, and to take out the necessary patents,
copyrights, and trademarks.
- Unless Wood gave some reasonable effort, Lucy
could never get anything.
- In line with the intention of the parties, we determine
that Wood made an implied promise, and thus that
the contract was not lacking in mutuality of obligation.
- Reversed.
10/14/08 64
Wood v. Lucy
Terminology
- EXCLUSIVE DEALING ARRANGEMENT: An
agreement whereby a distributor expressly or
implicitly contracts to supply all of a seller's goods,
using the distributor's best efforts.
- UCC 2-306: Exclusive dealing contracts are valid
and, unless otherwise agreed, impose an obligation
on the seller to use his best efforts to supply the
goods.
10/14/08 65
Webb v. McGowin
FACTS:
- Webb's work required him to clear the upper floor of a lumber
mill by dropping heavy pine blocks from the upper floor of the
mill to the ground below.
- During one such occasion, on August 3, 1925, while Webb was
working within the scope of his employment, Webb diverted a
75-pound block, that he was clearing, from dropping on Greeley
McGowin below, by falling with the block to the floor below.
- Webb was successful in preventing any injuries to McGowin .
- However, Webb received serious bodily injuries, resulting in his
right leg being broken, the heel of his right foot torn off and his
right arm broken.
10/14/08 66
Webb v. McGowin
- He was badly crippled for life and rendered unable to
do physical or mental labor.
- On September 1, 1925, McGowin agreed to pay
Webb $15 every two weeks from the time he
sustained his injuries to and during the remainder of
Webb's life.
- It was agreed that McGowin would pay this amount
to Webb for Webb's maintenance.
- McGowin paid the sum so agreed up until McGowin's
death on January 1, 1934, at which time they were
discontinued.
- Webb sued McGowin's estate for the balance of the
payments due.
10/14/08 67
Webb v. McGowin
ISSUE: Are past acts of saving a party from
death or serious boldly injury sufficient
consideration to support a subsequently induced
promise?
HOLDING: Yes
10/14/08 68
Webb v. McGowin
RATIONALE:
- Any holding that saving a man from death or grievous bodily
harm is not a material benefit sufficient to uphold a subsequent
promise to pay for the service, necessarily rests on the
assumption that saving life and preservation of the body from
harm have only sentimental value.
- Had McGowin been accidentally poisoned and a physician,
without his knowledge or request, had administered an antidote,
a subsequent promise by McGowin to pay the physician would
have been valid.
- Likewise, McGowin's agreement to compensate Webb for
saving him from death or grievous bodily injury is valid and
enforceable.
10/14/08 69
Webb v. McGowin
- In the business of life insurance, the value of a man's
life is measured in dollars and cents according to his
expectancy, soundness of his body, and his ability to
pay premiums.
- In the act of saving McGowin from death or grievous
bodily harm, Webb was crippled for life.
- This was part of the consideration of the contract
McGowin made with Webb.
- Benefit to the promisor or injury to the promisee is a
sufficient legal consideration for the promisor's
agreement to pay.
- The court below erred in sustaining the demurrer, and
for this error the case is reversed and remanded.
10/14/08 70
Webb v. McGowin
CONCURRENCE: (Sanford)
- “This case is about achieving justice.” “I do not think
that law ought to be separated from justice, where it
is at most doubtful.”- Chief Justice Marshall in
Hoffman v. Porter, Fed Cas. 6,5777; 2 Brock, 156,
159.
CONCURRENCE: (Foster)
- McGowin benefited substantially from the
performance by Webb, and when this is considered
with the injuries to Webb, this constituted sufficient
consideration to support McGowin's subsequent
promise to pay Webb.
10/14/08 71
BREACH &
REMEDIES
10/14/08 72
WHEN DOES BREACH OCCUR?
If
- (i) the promisor is under an absolute duty of
performance and
- (ii) this duty has not been discharged
10/14/08 73
Contract Remedies protect three interests
Expectation interest
- Remedies that protect this interest seek to put a promisee in the
position she would have been in if the breaching promisor had
performed.
- Using this approach gives the injured promisee the benefit of her
bargain.
Reliance interest
- Contract remedies sometimes seek to put the promisee in the
position she would have been in if she had not entered into the
contract.
- Contract law protects the promisee’s reliance interest by
reimbursing the promisee for loss caused by relying on the
contract.
Restitution interest
- Contract law sometimes tries to protect the promisee’s restitution
10/14/08
interest by requiring the breaching promisor to return to the 74
promisee any benefit received by the breaching promisor.
Substitutional relief is typical and specific
relief is extraordinary
Definitions:
- Relief is substitutional when it is intended to give the promisee something
in substitution for the promised performance.
- Relief is specific when it is intended to give the promisee the very
performance that was promised.
10/14/08 75
Hawkins v. McGee
FACTS:
- Hawkins and his father went to a surgeon to have a
considerable amount of scar tissue removed from
the palm of his hand, and the grafting of skin taken
from his chest in place thereof.
- The scar tissue was the result of a severe burn
which Hawkins had received nine years earlier.
- Hawkins claims that Dr. McGee promised him a
perfect hand after the operation; and that he said, "I
will guarantee to make the hand a hundred per cent
perfect hand" or "a hundred per cent good hand."
10/14/08 76
Hawkins v. McGee
10/14/08 77
Hawkins v. McGee
ISSUE: Is the true measure of the plaintiff's
damage the difference between the value to him
of a perfect hand, and the value of his hand in
its current condition, including any incidental
consequences fairly within the contemplation of
the parties when they made their contract?
HOLDING: Yes.
10/14/08 78
Hawkins v. McGee
RATIONALE:
- The only substantial basis for Hawkins' claim is the
testimony that McGee also said before the operation
was decided upon, "I will guarantee to make the hand
a hundred per cent perfect hand" or "a hundred per
cent good hand."
- Hawkins was present when these words were alleged
to have been spoken, and, if they are to be taken at
their face value, it seems obvious that proof of their
utterance would establish the giving of a warranty in
accordance with his contention.
10/14/08 79
Hawkins v. McGee
10/14/08 80
Hawkins v. McGee
10/14/08 81
Hawkins v. McGee
10/14/08 82
Hawkins v. McGee
10/14/08 83
Hawkins v. McGee
Terminology
- ASSUMPSIT: A common law form of action
which lies for the recovery of damages for
the non-performance of a contract.
10/14/08 84
Peevyhouse v. Garland Coal
FACTS:
- Peevyhouse owned a farm containing coal deposits, which it
leased to Garland Coal for a period of five years for coal
mining purposes.
- A "strip-mining" operation was contemplated in which the coal
would be taken from pits on the surface of the ground, instead
of from underground mine shafts.
- In addition to the usual covenants found in a coal mining
lease, Garland Coal specifically agreed to perform certain
restorative and remedial work at the end of the lease period.
- This work involved the moving of many thousands of cubic
yards of dirt, at a cost estimated by expert witnesses at about
$29,000; however, Peevyhouse sued for only $25,000.
10/14/08 85
Peevyhouse v. Garland Coal
- During the trial, it was stipulated that all covenants and
agreements in the lease contract had been fully carried out by
both parties, except for the remedial work; Garland Coal
conceded that this work had not been done.
- Peevyhouse introduced expert testimony as to the amount and
nature of the work to be done, and its estimated cost.
- Over objections, Garland Coal thereafter introduced expert
testimony as to the diminution in value of the farm resulting from
the failure of Garland Coal to perform as agreed in the contract
that is, the difference between the present value of the farm,
and what its value would have been if Garland Coal had done
what it agreed to do.
10/14/08 86
Peevyhouse v. Garland Coal
- At the conclusion of the trial, the court instructed the
jury that it must return a verdict for Peevyhouse, and
left the amount of damages for jury determination.
- On the measure of damages, the court instructed the
jury that it might consider the cost of performance of
the work Garland Coal agreed to do, together with all
of the evidence offered on behalf of either party.
- The jury returned a verdict for Peevyhouse for $5,000
only a fraction of the cost of performance, but more
than the total value of the farm even after the
remedial work is done.
10/14/08 87
Peevyhouse v. Garland Coal
ISSUE: Did the trial court err in instructing the
jury that it might consider the cost of
performance of the work the defendant agreed
to do, together with all of the evidence offered
on behalf of either party, in determining the
amount of damages?
HOLDING: Yes.
10/14/08 88
Peevyhouse v. Garland Coal
RATIONALE:
- It may be observed that there has been only one
case which has come to our attention in which the
cost of performance rule has been followed under
circumstances where the cost of performance
greatly exceeded the diminution in value resulting
from the breach of contract. Groves v. John
Wunder Co.
Incidentally, it appears that this case was decided by a
plurality rather than a majority of the members of the court.
10/14/08 89
Peevyhouse v. Garland Coal
- It is of some significance that three out of four
appellate courts have followed the diminution in
value rule under circumstances where, as here, the
cost of performance greatly exceeds the diminution
in value.
- It is highly unlikely that the ordinary property owner
would agree to pay $29,000 (or its equivalent) for the
construction of improvements upon his property that
would increase its value only about $300.
10/14/08 90
Peevyhouse v. Garland Coal
10/14/08 91
Peevyhouse v. Garland Coal
- The primary purpose of the lease contract was merely to
accomplish the economical recovery and marketing of coal from
the premises, to the profit of all parties.
- The special provisions of the lease contract pertaining to
remedial work were incidental to the main object involved.
- We therefore hold that where, in a coal mining lease, the lessee
agrees to perform certain remedial work on the premises
concerned at the end of the lease period, and thereafter the
contract is fully performed by both parties except that the
remedial work is not done, the measure of damages in an action
by the lessor against the lessee for damages for breach of
contract is ordinarily the reasonable cost of performance of the
work.
10/14/08 92
Peevyhouse v. Garland Coal
However, where the contract provision breached was merely
incidental to the main purpose in view, and where the economic
benefit which would result to the lessor by full performance of the
work is grossly disproportionate to the cost of performance, the
damages which the lessor may recover are limited to the
diminution in value resulting to the premises because of the
nonperformance.
Under the most liberal view of the evidence herein, the diminution in
value resulting to the premises because of nonperformance of the
remedial work was $300.
We are of the opinion that the judgment of the trial court for
Peevyhouse should be, and it is hereby, modified and reduced to
the sum of $300, and as so modified it is affirmed.
10/14/08 93
Peevyhouse v. Garland Coal
DISSENT: Irwin, J.
- In the instant action, Garland Coal has made no attempt to
even substantially perform.
- The contract in question is not immoral, is not tainted with
fraud, and was not entered into through mistake or accident
and is not contrary to public policy.
- It is clear and unambiguous and the parties understood the
terms thereof, and the approximate cost of fulfilling the
obligations could have been properly ascertained.
- There are no conditions existing now which could not have
been reasonably anticipated when the contract was negotiated
and executed.
- Garland Coal could have performed the contract if it desired.
- It has accepted and reaped the benefits of its contract and now
urges that Peevyhouse's benefits under the contract be denied.
10/14/08 94
Peevyhouse v. Garland Coal
10/14/08 96
Shirley McLaine v. 20C-Fox
- Prior to the beginning of the contract period,
Twentieth Century-Fox decided not to produce the
picture, and notified MacLaine in writing of that
decision and that it would not comply with its
obligations to her under the written contract.
- In the same letter, Twentieth Century-Fox instead
offered to employ MacLaine as the leading actress in
another film tentatively entitled "Big Country, Big
Man," so as to avoid any damages to her.
10/14/08 97
Shirley McLaine v. 20C-Fox
- The compensation offered was identical, as were 31
of the 34 numbered provisions or articles of the
original contract.
- However, the format of the new movie was a drama
filmed in Australia, while the original film was to be a
musical filmed in California.
- MacLaine was given one week within which to accept;
she did not and the offer lapsed.
- MacLaine then commenced this action seeking
recovery of the agreed guaranteed compensation.
10/14/08 98
Shirley McLaine v. 20C-Fox
ISSUE: Did the court err in awarding the plaintiff
the salary due her under the repudiated
contract?
HOLDING: No.
10/14/08 99
Shirley McLaine v. 20C-Fox
RATIONALE:
- MacLaine's complaint sets forth two causes of
action.
The first is for money due under the contract;
the second, based upon the same allegations as the first,
is for damages resulting from Twentieth Century-Fox's
breach of contract.
- Twentieth Century-Fox in its answer admits the
existence and validity of the contract, that MacLaine
complied with all the conditions, covenants and
promises and stood ready to complete the
performance, and that Twentieth Century-Fox
breached and "anticipatorily repudiated" the
contract.
10/14/08 100
Shirley McLaine v. 20C-Fox
- It denies, however, that any money is due to MacLaine
either under the contract or as a result of its breach,
and pleads as an affirmative defense to both causes
of action MacLaine's allegedly deliberate failure to
mitigate damages, asserting that she unreasonably
refused to accept its offer of the leading role in "Big
Country.“
- The general rule is that the measure of recovery by a
wrongfully discharged employee is the amount of
salary agreed upon for the period of service, less the
amount which the employer affirmatively proves the
employee has earned or with reasonable effort might
have earned from other employment.
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- However, before projected earnings from other
employment opportunities not sought or accepted by
the discharged employee can be applied in mitigation,
the employer must show that the other employment
was comparable, or substantially similar, to that of
which the employee has been deprived.
- The employee's rejection of, or failure to seek, other
available employment of a different or inferior kind
may not be resorted to in order to mitigate damages.
- The substitute "Big Country" offer was significantly
different from, and inferior to, the original employment
offer.
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DISSENT:
- I believe that the approach taken by the majority (a
superficial listing of differences with no attempt to
assess their significance) may subvert a valuable legal
doctrine.
- The inquiry in cases such as this should not be
whether differences between the two jobs exist (there
will always be differences) but whether the differences
which are present are substantial enough to constitute
differences in the kind of employment or, alternatively,
whether they render the substitute work employment
of an inferior kind.
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