Contracts 1

js5389's version from 2015-12-15 17:56


Question Answer
Ray v. Eurice FactsDefendant William G. Eurice & Bros., Inc., entered into a contract to build a house for Plaintiff Ray. After signing the contract, the parties disagreed as to which specifications were to be used.
Ray v. Eurice HoldingContract, cover.
Ray v. Eurice TakeawayUnilateral mistake, unlike mutual mistake, does not prevent the meeting of the minds required for contract formation.
Ray v. Eurice CodeInterpretation, unilateral mistake
Lonergan v. Scolnick FactsPlaintiff Lonergan, responded to an ad placed by Defendant, Scolnick for land the Defendant was interested in selling. Plaintiff corresponded with Defendant through a series of letters. Defendant sold the land to a third party.
Lonergan v. Scolnick HoldingDefendant did not make an offer. Unlike the trial court, this Court characterizes Defendant’s communication with Plaintiff as an invitation for offers. Defendant clearly indicates that there are other potential buyers and at no time agrees to hold the property for Plaintiff.
Lonergan v. Scolnick TakeawayAn enforceable contract requires an offer and acceptance.
Lonergan v. Scolnick CodeOffer
Izadi v. Machado FactsPlaintiff Izadi attempted to purchase a vehicle from Defendant Machado Ford, but ultimately did not when he was unable to take advantage of Defendant’s advertised trade-in allowance. The advertisement contained small print indicating it was only good towards two vehicle models and that the trade-in must be worth at least $3,000 to apply to other models.
Izadi v. Machado HoldingA misleading advertisement may operate as an offer based on the misunderstood meaning even if the party creating the advertisement does not subjectively intend for it to be an offer.
Izadi v. Machado TakeawayPlaintiff misunderstood Defendant’s offer. However, Plaintiff is able to proceed with the breach of contract claim because the offer may have been what he thought it to be when objectively considered and Defendant may have made the advertisement intentionally misleading.
Izadi v. Machado CodeAdvertisements, Interpretation, Offer
Normile v. Miller FactsPlaintiffs Normile and Segal both attempted to purchase a piece of real estate from Defendant Miller. Normile first submitted a bid, but Plaintiff responded with a counteroffer. Prior to Normile’s acceptance of Defendant’s counteroffer, Defendant sold the property to Segal.
Normile v. Miller HoldingNo enforceable contract.
Normile v. Miller TakeawayDefendant rejected Normile’s offer by submitting a counteroffer. Because the counteroffer operated as a rejection of Normile’s original offer, the terms of Normile’s original offer were not transferred to the counteroffer.
Normile v. Miller CodeAcceptance, Counteroffer, Options
Lucy v. ZhemerIf a party to the contract has a reasonable belief that the other party has the requisite intent to enter into the agreement when he does not, the contract is still enforceable.
Leonard v. PepsiCoAn advertisement, which a reasonable person would not take seriously and refers to other material, is not an offer.


Question Answer
Petterson v. Pattberg FactsPlaintiff, the executrix of Petterson’s estate, is seeking $780 in damages from Defendant, Pattberg. Petterson came to Defendant’s home, having met the other conditions, to pay off the remaining principal minus $780 pursuant to the Defendant’s offer. Defendant refused to accept the money and informed Petterson that the bond and mortgage had been sold to a third party.
Petterson v. Pattberg HoldingA unilateral contract may be revoked at any time prior to the performance of the requested action.
Petterson v. Pattberg TakeawayTt should be noted that the law applied in this case is not the current law as reflected in the Restatements of Contracts (Second).
Petterson v. Pattberg CodeUnilateral, Acceptance
Cook v. Coldwell Banker FactsCook was a real estate salesperson for Defendant Coldwell Banker at the time Defendant instituted a bonus program. After receiving the first part of her bonus, Plaintiff was informed that receiving the remaining portion of her bonus was contingent on continued employment. When Plaintiff left her job, Defendant refused to give her the remainder of her bonus.
Cook v. Coldwell Banker HoldingPlaintiff substantially performed under the unilateral contract by remaining employed and earning commissions sufficient to put her in the highest tier of the bonus program prior to Defendant’s attempt to revoke.
Cook v. Coldwell Banker TakeawayAn offer to enter into a unilateral contract may not be revoked once the offeree has made substantial performance.
Cook v. Coldwell Banker CodeUnilateral

Contract Formation, Certainty

Question Answer
Walker v. Keith FactsPlaintiff lessee, entered into a 10 year lease agreement with the Defendant lessor. The lease agreement included an option to renew the lease for an additional ten years, but did not set the rent amount for the additional ten years.
Walker v. Keith HoldingThe option is unenforceable because the provision for setting the rent is indefinite and ambiguous.
Walker v. Keith TakeawayUnder the traditional approach, there must be substantial certainty as to the material terms for an agreement to be enforceable. Courts using the traditional approach will not enforce an agreement if a material term is indefinite or ambiguous.
Walker v. Keith CodeCertainty, Interpretation, Agreement to Agree
Quake Construction, Inc. v. American Airlines, Inc FactsTo aid the Plaintiff in securing subcontractors, Jones sent the Plaintiff a letter of intent. The letter of intent indicated that a written contract would be prepared and that Jones could cancel the letter of intent if the parties failed to agree on a fully executed subcontract agreement.
Quake Construction, Inc. v. American Airlines, Inc HoldingLetters of intent may be enforceable if the parties intend them to be binding. If a writing is not ambiguous, the court may only look at the writing. However, if the writing is ambiguous, parol evidence may be introduced to show the intent of the parties.
Quake Construction, Inc. v. American Airlines, Inc TakeawayParol evidence of intent may be introduced to show intent when a writing is ambiguous.
Quake Construction, Inc. v. American Airlines, Inc CodeParol Evidence, Interpretation, Letter of Intent, Contract Formation
Pennzoil/Texaco FactsCompany 1 sought to initiate a takeover of company 2. The two companies entered into a tentative written agreement, specifying certain terms of the takeover. After all relevant parties signed the tentative written agreement, company 3 sought to takeover company 2.
Pennzoil/Texaco TakeawayThis case demonstrates how agreements can be consummated in a variety of ways – oral, written, partially oral and partially written – and that a case-by-case analysis is the only way to determine whether an agreement was made.
Pennzoil/Texaco CodeContract Formation


Question Answer
Hamer v. Sidway FactsP sued D for beach of contract and D contended that the promise was not supported by consideration.
Hamer v. Sidway HoldingThere was consideration.
Hamer v. Sidway TakeawayValuable consideration may consist either in some right, interest, profit, or benefit accruing to one of the parties or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other party.
Hamer v. Sidway CodeConsideration
Pennsy FactsPennsy Supply, Inc. had received without charge, a hazardous material from American Ash Recycling Corp. of Pennsylvania (American Ash) (D). Pennsy’s Supply (P) argument is that, disposing of this hazardous material gives enough grounds to result in consideration which is necessary to support various breach of contract, warranty and merchantability claims
Pennsy HoldingThe trial court erred in its dismissal because if the alleged facts are proven, it would show consideration because the promise induced the detriment of incurring disposal costs and the detriment of those disposal costs induced the promise from the defendant.
Pennsy TakeawayIf the complaint is true that the defendant “actively promotes the use of AggRite as a building material” to be used for purposes the plaintiff was engaging in, then by the defendant providing the materials free of charge, they are seeking others to dispose of the material in order to avoid incurring the disposal costs itself. The material provided by the defendant saved the defendant thousands of dollars in disposal costs it otherwise would have incurred.
The Superior Court also examined whether consideration is lacking because the plaintiff did not allege (or understand) the defendant’s avoidance of disposal costs during the bargaining process between the parties. The court did not believe this was necessary because for consideration to exist “the promise and the consideration be in “the relation of reciprocal conventional inducement, each for the other”” (O. Holmes).
Pennsy CodeGifts, Warranties, Consideration
Dougherty v. Salt FactsPlaintiff Dougherty, at eight years old received a promissory note from his aunt for $3,000 payable at her death. Defendant Salt is representing Aunt’s estate.
Dougherty v. Salt HoldingThe promissory note is not enforceable because there is no consideration. Although the form indicated that the note was for value, the Court determined that no value had in fact been given.
Dougherty v. Salt TakeawayAlthough a note states that value has been received, if value has not in fact been received, the note is unenforceable as a contract for lack of consideration.
Dougherty v. Salt CodeConsideration
Batsakis v. Demotsis FactsPlaintiff, Batsakis, loaned Defendant, Demotsis, 500,000 drachmae. In exchange for the loan, Defendant signed an instrument promising to pay Plaintiff $2,000 in U.S. currency. The 500,000 drachmae were worth approximately $25.00 at the time.
Batsakis v. Demotsis HoldingInadequacy of consideration alone will not void a contract.
Batsakis v. Demotsis TakeawayWithout evidence of fraud, duress, or misrepresentation, the Court is unwilling to void the contract merely because there may be insufficient consideration.
Batsakis v. Demotsis CodeConsideration
Plowman v. Indian Refining FactsPlaintiffs, Plowman and seventeen others similarly situated or their estates, worked for Defendant Indian Refining Co., for many years. Defendant offered to pay Plaintiffs one-half of the wages currently being earned. Plaintiffs remained on the payroll, receiving the offered money, but did not render any services other than coming to the office for their remittance
Plowman v. Indian Refining TakeawayPast consideration or past performance is not consideration.
Plowman v. Indian Refining CodeConsideration, Restitution, Agency

Battle of the Forms

Question Answer
Princess Cruises, Inc. v. General Electric Co FactsPlaintiff, Princess Cruises, Inc., entered into a contract with the Defendant General Electric Co. for Defendant to perform inspection and repair services on one of Plaintiff’s ships. Plaintiff’s purchase order and Defendant’s price quotations contain different terms and conditions. Defendant’s terms and conditions limit Defendant’s liability and the type of damages that can be recovered from Defendant.
Princess Cruises, Inc. v. General Electric Co HoldingPlaintiff accepted Defendant’s terms and conditions by accepting Defendant’s counteroffer.
Princess Cruises, Inc. v. General Electric Co TakeawayA counteroffer acts as a rejection of the original offer. If the counteroffer is accepted, the terms and conditions of the counteroffer apply.
Princess Cruises, Inc. v. General Electric Co CodeBattle of the Forms, Counteroffer, Predominance Test, Last Shot Rule
Brown Machine, Inc. v. Hercules FactsPlaintiff, Brown Machine, Inc. sold a trim press to Defendant, Hercules, Inc. An indemnity provision was included in Plaintiff’s acknowledgement of order form, but not in Defendant’s purchase order. Plaintiff is bringing the present cause of action to enforce the indemnity provision.
Brown Machine, Inc. v. Hercules TakeawayUnder the UCC, additional terms become part of a contract between merchants unless the offer expressly limits acceptance to the terms included in the offer, the additional terms materially alter the contract, or notification of objection to the additional terms has been given or is given within a reasonable time.
Brown Machine, Inc. v. Hercules CodeBlue Box, Battle of the Forms, Counteroffer


Question Answer
Hines v, Inc. Factsa class action was purportedly brought against, Inc. (Overstock) (D) for charging a restocking fee by Hines (P), a consumer, contending that the fee had never been disclosed. But Overstock affirmed that arbitration of all issues, including the transfer to a different forum was backed by the contract governing the transaction. Hines (P) alleged that the terms were unenforceable on the ground that she had no notice of the terms and conditions and that any reasonable user would have seen the seen the terms if it had been on the website.
Hines v, Inc. HoldingA user is not bound to the terms and conditions of an online contract he/she had not been notified of and this also includes a reasonable user of the website who had not seen the terms and conditions.
Hines v, Inc. Takeawaythis case clearly shows the principles of contracts are not fundamentally changed by the making of contracts over the internet but are in fact applicable to online contracts as well. The “clickwrap” (or “click-through”) agreement are the primary means of forming a contract now on the internet in which the website users click on an “I agree” box after they have been presented with the terms and conditions of use, including the “browsewrap” agreement which was at issue in this case, where website posts terms and conditions typically as a hyperlink at the bottom of the screen. Traditional contract principles such as “meeting of the minds” and “manifestation of mutual assent” have been used by the court as the starting point for determining whether such contracts formed online are enforceable.
Hines v, Inc. CodeInternet, Browse Wrap