FINAL_Ricks_ContractLawFormation_Vol_I_July_2019_3.pdf -...

Unformatted text preview: The Story of Contract Law: Formation Third Edition by Val Ricks Professor of Law South Texas College of Law Houston CALI eLangdell® Press 2019 About the Author Val Ricks has taught Contracts since 1996. His scholarship on contract law appears in the Georgetown LJ, Indiana LJ, BYU LR, George Mason LR, Baylor LR, Florida St U LR, and U. Kan. LR. He claims the original discovery that Isaac Kirksey actually made a bargain with Antillico. Professor Ricks also teaches, and writes about, business associations and other intersections of law and business. Before teaching, he clerked for Judge Charles Wiggins of the 9th Circuit and practiced transactional and appellate law in Salt Lake City. Professor Ricks received a B.A. summa cum laude in Philosophy and a J.D. summa cum laude, both from BYU. He and his bride are the parents of seven beautiful children. i Notices This is the third edition of this casebook, revised and updated July 2019. Visit for the latest version and for revision history. This work by Val Ricks is licensed and published by CALI eLangdell Press under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0). CALI and CALI eLangdell Press reserve under copyright all rights not expressly granted by this Creative Commons license. CALI and CALI eLangdell Press do not assert copyright in US Government works or other public domain material included herein. Permissions beyond the scope of this license may be available through [email protected] In brief, the terms of that license are that you may copy, distribute, and display this work, or make derivative works, so long as • you give CALI eLangdell Press and the author credit; • you do not use this work for commercial purposes; and • you distribute any works derived from this one under the same licensing terms as this. Suggested attribution format for original work: Val Ricks, The Story of Contract Law: Formation, Third Edition, Published by CALI eLangdell Press. Available under a Creative Commons BY-NC-SA 4.0 License. CALI® and eLangdell® are United States federally registered trademarks owned by the Center for Computer-Assisted Legal Instruction. The cover art design is a copyrighted work of CALI, all rights reserved. The CALI graphical logo is a trademark and may not be used without permission. Should you create derivative works based on the text of this book or other Creative Commons materials therein, you may use this book’s cover art and the aforementioned logos, as long as your use does not imply endorsement by CALI. For all other uses beyond the scope of this license, please request written permission from CALI. The author and CALI acknowledge permission from the following authors to use their limericks and haikus in this book: Jim Woodward, Stacey Severovich, Amy Hebert Craft, and George Kelley. ii This material does not contain nor is intended to be legal advice. Users seeking legal advice should consult with a licensed attorney in their jurisdiction. The editors have endeavored to provide complete and accurate information in this book. However, CALI does not warrant that the information provided is complete and accurate. CALI disclaims all liability to any person for any loss caused by errors or omissions in this collection of information. iii About CALI eLangdell Press The Center for Computer-Assisted Legal Instruction (CALI) is: a nonprofit organization with over 200 member US law schools, and innovative force pushing legal education toward change for the better. There are benefits to CALI membership for your school, firm, or organization. ELangdell® is our electronic press with a mission to publish more open books for legal education. How do we define "open?" • Compatibility with devices like smartphones, tablets, and e-readers; as well as print. • The right for educators to remix the materials through more lenient copyright policies. • The ability for educators and students to adopt the materials for free. Find available and upcoming eLangdell titles at elangdell.cali.org. Show support for CALI by following us on Facebook and Twitter, and by telling your friends and colleagues where you received your free book. iv Table of Contents ABOUT THE AUTHOR ........................................................................................ I NOTICES.............................................................................................................. II ABOUT CALI ELANGDELL PRESS .............................................................. IV PREFACE ......................................................................................................... XIII INTRODUCTION............................................................................................ XIV SOURCES OF CONTRACT LAW ............................................................................ XIV HOW THIS BOOK IS ORGANIZED ......................................................................... XV CONTRACT LAW THEORIES .............................................................................. XVII BYRNES v. MANN’S ESTATE ............................................................... xix CHAPTER 1. CONSIDERATION: CONTRACT & BARGAIN ..................... 1 A. INTRODUCTION ................................................................................................ 1 1. Medieval Law of Promise Enforcement ....................................................... 2 2. Changes in the Renaissance ........................................................................ 4 B. CONSIDERATION THEORY AND POLICY ............................................................ 7 Christopher St. German, DOCTOR AND STUDENT ................................ 7 SHARINGTON v. STROTTON .................................................................. 8 C. BARGAIN ......................................................................................................... 9 HUNT v. BATE ............................................................................................ 9 Joseph VIAN v. Mariah CAREY ................................................................11 PROBLEM 1. ......................................................................................... 13 PROBLEM 2. ......................................................................................... 13 Hildegard Lee BORELLI v. Grace G. BRUSSEAU.................................. 14 PROBLEM 3 .......................................................................................... 24 Restatement (Second) of Contracts § 71(1)-(2) & cmt. b................... 24 D. PROPER FORM ............................................................................................... 25 1. Benefit ........................................................................................................ 26 GAME v. HARVIE .................................................................................... 26 RICHES v. BRIDGES ............................................................................... 27 REYNOLDS v. PINHOWE ....................................................................... 29 PROBLEM 4 .......................................................................................... 30 ASSOCIATED BUILDERS, INC. v. William M. COGGINS et al. .......... 30 —A long aside: Moral Obligation ................................................................. 32 EDMONDS CASE..................................................................................... 32 Ex parte: Iris ODEM .................................................................................. 33 PROBLEM 5 .......................................................................................... 35 11 U.S.C. §524. Effect of discharge ................................................... 35 HUNT v. BATE .......................................................................................... 37 WEBB v. McGOWIN ................................................................................ 38 WEBB v. McGOWIN ................................................................................ 42 v HARRINGTON v. TAYLOR ..................................................................... 43 2. Detriment ................................................................................................... 44 WEBBS CASE........................................................................................... 44 Christopher St. German, DOCTOR AND STUDENT .............................. 45 STORER’S CASE ..................................................................................... 45 KEYME v. GOULSTON ........................................................................... 46 Settlement Cases ............................................................................................ 46 Jinsoo KIM v. Stephen SON ...................................................................... 47 Dale Warren DYER v. NATIONAL BY-PRODUCTS, INC ..................... 50 Uniform Commercial Code § 1-308. Performance of Acceptance Under Reservation of Rights, and cmt. 3............................................ 55 Uniform Commercial Code § 3-104. Negotiable Instrument. ............ 55 Uniform Commercial Code § 3-311. Accord and Satisfaction by Use of Instrument....................................................................................... 55 Steven D. HAVARD and Judy A. Havard v. KEMPER NATIONAL INSURANCE COMPANIES et al. ............................................................ 56 3. Mutual Promises ........................................................................................ 60 WEST v. STOWELL ................................................................................. 60 STRANGBOROUGH v. WARNER .......................................................... 61 NICHOLAS v. RAYNBRED ..................................................................... 61 PROBLEM 6 .......................................................................................... 62 RIDGE RUNNER FORESTRY v. VENEMAN ........................................ 64 PROBLEM 7 .......................................................................................... 66 PROBLEM 8 .......................................................................................... 67 PROBLEM 9 .......................................................................................... 67 PROBLEM 10 ........................................................................................ 68 PROBLEM 11 ........................................................................................ 68 Uniform Commercial Code § 2-306. Output, Requirements and Exclusive Dealings, and cmt. 2. ......................................................... 68 Uniform Commercial Code § 1-304. Obligation of Good Faith. ....... 68 Uniform Commercial Code § 1-201(20). General Definitions........... 68 Uniform Commercial Code § 2-102. Scope * * *. ............................. 69 PROBLEM 12 ........................................................................................ 69 FORRESTER’S CASE (1661) .................................................................. 70 Note on Assent .................................................................................... 71 Note on Remedies in Contract Actions............................................... 73 PROBLEM 13 ........................................................................................ 74 CHAPTER 2. ASSENT-BASED NICHES OF PROMISE ENFORCEMENT: MODIFICATION AND WAIVER ..................................................................... 75 A. MODIFICATION............................................................................................... 75 1. Modification of Judgment Liabilities......................................................... 75 John Weston FOAKES v. Julia BEER ....................................................... 75 SUGARHOUSE FINANCE COMPANY v. Eugene L. ANDERSON and Colleen W. Anderson ................................................................................. 78 2. Modification of Contractual Liabilities ..................................................... 82 ALASKA PACKERS’ ASS’N v. DOMENICO ......................................... 82 vi SCHWARTZREICH v. BAUMAN-BASCH, INC. ................................... 85 Alfred L. ANGEL v. John E. MURRAY, Jr. .............................................. 91 Uniform Commercial Code § 2-209. Modification, Rescission and Waiver, and cmts. 1 and 2. .................................................................. 96 Uniform Commercial Code § 2-104(1). Definitions: “Merchant” * * * . ........................................................................................................ 96 GROSS VALENTINO PRINTING COMPANY v. Frederick S. CLARKE, .................................................................................................................... 97 Uniform Commercial Code § 2-105. Definitions: * * * “Goods” * * * . .......................................................................................................... 100 Uniform Commercial Code § 1-201(20). General Definitions: * * * “Good faith” * * * . .......................................................................... 100 Uniform Commercial Code § 1-304. Obligation of Good Faith. ..... 100 LUMBER ENTERPRISES, INC. v. Duane F. HANSEN and Peggy Hansen .................................................................................................................. 100 Note on Modification of Consumer Transactions............................. 102 Note on the Relationship Between Duress and Good Faith for a Modification ..................................................................................... 104 Jane PITTSLEY v. Donald HOUSER ...................................................... 105 B. WAIVER ....................................................................................................... 107 R. CONRAD MOORE & ASSOCS., INC. v. LERMA ........................... 107 Note: Retraction of Waivers ..............................................................112 PROBLEM 14 .......................................................................................113 PROBLEM 15 .......................................................................................113 CHAPTER 3. ALTERNATE THEORIES OF RECOVERY: PROMISSORY ESTOPPEL & UNJUST ENRICHMENT .......................................................114 A. PROMISSORY ESTOPPEL ................................................................................114 KIRKSEY v. KIRKSEY ...........................................................................114 PROBLEM 16 .......................................................................................116 RICKETTS v. SCOTHORN .....................................................................117 Restatement (Second) of Contracts § 90 .......................................... 121 John GROUSE v. GROUP HEALTH PLAN, INC. ................................. 122 Frank LEONARDI v. CITY OF HOLLYWOOD .................................... 124 B. UNJUST ENRICHMENT .................................................................................. 128 WHORWOOD v. GYBBONS ................................................................. 128 IRELAND v. HIGGINS ........................................................................... 128 EDMUNDS v. BARRE ............................................................................ 129 Note on the Ancient History of Unjust Enrichment ......................... 129 GIKAS v. NICHOLIS .............................................................................. 131 LOWE v. QUINN .................................................................................... 132 HESS v. JOHNSTON .............................................................................. 134 PROBLEM 17 ...................................................................................... 135 COTNAM v. WISDOM ET AL. .............................................................. 135 CHAPTER 4. LIMITS ON BARGAINS: DEFENSES ................................. 139 A. INTRODUCTION: LIMITS ON BARGAINS? ...................................................... 139 vii HAMER v. SIDWAY ............................................................................... 139 PROBLEM 18 ...................................................................................... 142 BATSAKIS v. DEMOTSIS ...................................................................... 142 PROBLEM 19 ...................................................................................... 145 B. DURESS ........................................................................................................ 145 Restatement (Second) of Contracts § 175. When Duress by Threat Makes a Contract Voidable ............................................................... 145 Restatement (Second) of Contracts § 176. When a Threat is Improper .......................................................................................................... 145 PROBLEMS 20-26 .............................................................................. 145 ALLIED BRUCE TERMINIX CO., INC. v. GUILLORY ...................... 147 PROBLEM 27 ...................................................................................... 148 In re the MARRIAGE OF John W. MILLER and Debra K. Miller ........ 148 Nataliya HOLLER v. William HOLLER ................................................. 150 BETHLEHEM STEEL CORPORATION, Plaintiff v. Sheldon H. SOLOW, etc., et al., ................................................................................................. 155 C. MUTUAL MISTAKE ....................................................................................... 157 CHANDELOR v. LOPUS ....................................................................... 157 SHERWOOD v. WALKER ...................................................................... 158 D. UNILATERAL MISTAKE................................................................................. 165 Thomas E. HALL and Deborah R. Hall v. The UNITED STATES ......... 165 FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING COMPANY et al......................................................... 168 E. MISREPRESENTATION ................................................................................... 173 C. Willard HENDRICK and Hazel E. Hendrick v. Catherine A. LYNN . 174 Jeffrey M. STAMBOVSKY v. Helen V. ACKLEY ................................. 176 F. UNCONSCIONABILITY ................................................................................... 181 PROBLEM 28 ...................................................................................... 181 Uniform Commercial Code § 2-302. Unconscionable Contract or Clause, and cmts. 1, 2, and 3. ........................................................... 183 NEW MEXICO ex rel. KING v. B&B INVESTMENT GROUP, INC. .. 185 Federal Trade Commission Regulation—Door to Door Sales, especially §§ 429.1 and 429.2 .......................................................... 199 CHAPTER 5. THE PUSH TOWARD ASSENT ............................................. 200 A. A SEAL OR WRITING .................................................................................... 200 PILLANS v. VAN MIEROP .................................................................... 200 Seals and Statutes ........................................................................................ 203 Tex. Code Ann. § 121.015. Private Seal or Scroll Not Required ..... 203 WRIGHT v. ROBERT & ST. JOHN MOTOR CO. ................................. 203 John W. TAYLOR v. FRED CLARK FELT COMPANY ........................ 203 Iowa Code § 537A.1. Seals abolished .............................................. 204 Iowa Code § 537A.2. Consideration implied ................................... 204 ...
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