Contracts Outline (Taylor)

Contracts Outline (Taylor) - CONTRACTS OUTLINE SPRING 2007...

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C ONTRACTS  O UTLINE S PRING  2007 P ROFESSOR  T AYLOR 1. Relational Contracts a. Based on a relationship, no specific moment when parties confirm a meeting of the minds b. Schumacher : deal with tenant to rent store for $500, rising to $650 over 5 years, with an option to renew. Landlord raised the rent to $900 and tenant sued for specific performance to rent at the assessed value of $545. SC reaffirmed the DC holding that there was a lack of enforceability due to indefiniteness. The dissent argued that this was a relational contract and that there was intent to agree. The tenants will have to forfeit their goodwill, business advantage and location because the contract has been breached for lack of agreement on rental rate. 2. Policing Contracts a. (Freedom of contract v. judicial intervention) + policy concerns b. Duress i. Contract law should refuse to enforce a contract because the promisor did not make the promise of her own free will 1. Factors: a. Payment is voluntary b. Market price (not excessive) c. Can get goods elsewhere d. Not treated differently from any other customers e. Freedom to contract means freedom not to contract (can cease doing business) 2. Should genuineness of assent be the focal point? If someone threatens you, you assent genuinely to his or her request. Should we focus on what would make a person assent to something and the party making the threat? ii. Standard Box Co v. Mutual Biscuit Co : D purchased boxes from P; P offered D an option to continue to buy at the 1905 price, but before D accepted, there was a major earthquake limiting the supply of boxes. D accepted, but P refused to sell at the same price, and instead sold at market price. P knew that D could go out of business without the boxes. D accepted but cancelled and refused to pay. P claimed duress. No duress because a threat to refuse performance cannot predicate legal duress, P did no more than require D to pay market value 1. Threats to stop doing business with another company are not economic duress because you do not have a legal right to continue doing business. 2. Kudra: Overturned the objective test for economic duress (that it must be of such severity as to overcome the will of a person 1
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of ordinary firmness) and the rule that it is not available if there is a remedy at law. Duress exists when P is constrained to do what he otherwise would not have done. P was forced to pay to recover his own property and avoid injury to his goodwill. What is threatened was a tort; conversion, the wrongful ownership of the property of another, parallel to blackmail. c. Threats (Restatement §176) i. Improper if: 1. crime or tort 2. criminal prosecution 3. civil process in bad faith 4. breach of good faith and fair dealing under the contract ii. Improper if the resulting exchange is not on fair terms and: 1. harm to recipient, no significant benefit to the maker of the threat 2. the effectiveness of the threat is increased prior to the unfair dealing 3. a use of power for illegitimate ends d. Fraudulent and other misrepresentation, fraudulent concealment,
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