Contracts Law In Action

20contractssyllabus28

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1. I am having a difficult time differentiating equitable estoppel and promissory estoppel – First, equitable estoppel refers to statements of fact and promissory estoppel to promises. Both involve reliance. Once you are justified in relying on someone else’s statement of fact, they are estopped from denying the truth of the matter they admitted. It is a general priciple of law that has application in this course, but also in many others. Promissory estoppel is a contract doctrine. It makes a promise enforceable – it creates a contractual obligation. It is part of what I call Finger 1.

20contractssyllabus26(2)

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1.I was confused because you said the facts have to exist at the time of making the K. So in the case of the cow, it was not known that she was fertile and she turned out to be. What if something happened and she wasn’t fertile and became fertile after the K was made? — All Finger 2 refers to the contract formation. You would not be able to use the mistake doctrine for changes that occurred after the formation of the contract. Those are covered in Finger 4.

20contractssyllabus 26(1)

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1. What does it mean for something to be the “basis of the bargain?” Is the “basis of the bargain” the same as materiality? Something that affects whether the deal would have gone through in the first place? — Neither impose the “but for” requirement (of tort causation). Notice the R2 does not speak of “the basis of the bargain,” as you do, but “a basis of the bargain.” A bargain has multiple bases. The Comment says a basis of a bargain “must have a material effect on the agreed exchange.” In R2 162 something is “material if it would likely induce a reasonable person” to agree to the contract. “Likely to induce” is a much lower standard than “but-for.” Normally “basis of the bargain” is not a problem. The problem is in regards to who bears the risk of the mistake. If we decide that the mistaken party relied on the absence of the mistake, then we are close to saying that the absence of the mistake was a basis of the bargain and if he doesn’t bear the risk of the mistake, then the reliance is justifiable. N.B. – reliance is not part of the language of this defense. I am only using it to explain it.

Syllabus Section 26 suggests that you go to CALI to do their lesson on Mistake. Including CALI in my syllabus was intended to introduce you to a different form of legal instruction that might work for some of you. People do learn in different ways. My problem with CALI is that the answer always is “It depends.” But, you might like to try it out.  The podcast on Mistake on the website can be heard once you log into CALI. I will be doing a powerpoint that derives from the reading in the course handout.

20contractssyllabus 25(1)

20contracts25(2)

20Contractssyllabus 23(2)

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1.In the case of incapacity, what happens if both parties are incapacitated? Let’s say both were drunk when entered into a contact? There is no contract then, right? — No. These are all defenses. If both parties agree there is no contract, then there is no case. If one party alleges and proves incapacity, the contract that the other party wanted to enforce is unenforceable. In my language, whether there ise a contract or not is a Finger 1 question. Capacity is Finger 2.
2.When talking about mental illness as cause of action to void a contract, you ask us whether we are trying to do a “favor” to the mentally challenged. I think “favor” is to be read in the context of “protection.” — As you may remember from your teenage years, affording another protection also limits them. The doctrine of incapacity (esp. when restitution is not an option) limits a party from entering into contracts.
3. Regarding your “shopaholic” bumper sticker scenario. My gut-reaction was that the buyer would not be able to return the expensive suit a year later because he lacked capacity. But in reading the traditional rule for capacity, it seems like he would be able to return the suit. I understand that the traditional rule is: the one who lacked capacity only had to return so much of what they still had from the contract in order to receive back all that they gave under the contract. Therefore, the shopaholic would be able to return the suit. But if this is the case, wouldn’t that be a slippery slope? Where do we draw the line of what is conserved lack of capacity to enter into a contract? — You state the law correctly (but maybe restitution can come to the rescue). Don’t give up on your gut. The law is not always just. Your question of where should the law draw the line is the correct one. Fortunately, shopaholism is not (yet) recognized as a mental illness or defect. Maybe it should be and may be it shouldn’t. How far do we expand the periphery and in what directions?
4.After reading Mitchell, and learning the general rule of duress that if the party has a legal right to what it threatened, then it’s not duress. — No. This is a rule that some courts use. The majority doesn’t use it and neither does the Restatement. Remember, not all cases are correctly decided or state a rule that all other courts use.

20Contractssyllabus 23(1)

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(1)The core and periphery analysis: is this to be done for each case where a defense is brought up? Or is this just a way of thinking about these cases? It is a way of thinking. Most of the cases where your services will be needed are on the periphery. You should know that you are there as you argue for your client.
(2) I was curious as to what the standard of “active participation” is. In Carroll v. Beardon, Carroll knew what Beardon’s intentions were with the property in question, and knew it was illegal. I know the court here decided that Carroll, upon selling the property to Beardon, did not have a hand in any events that took place afterwards. However, I have come to understand that a lack of action may be seen as an action. — Excellent. Although in this case, the seller actively participated by receiving much more than the property would be worth (were it not a house of prostitution). I like dirty hands as a standard rather than “active participation” partly because of your question. and we know, hands can be dirty both by actions and by inactions (Please wash your hands).

20contractsyllabus22

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(1)If the party against whom enforcement is sought admits there was a K, the K is enforceable despite the SOF, so then why would the party against whom enforcement is sought admit there was a K? — Not everyone lies, not everyone is well advised, there may be other reasons to admit, but then one will be denied non-enforceability on grounds of SOF.
(2) All construction k’s are assumed to be outside it, as Ktor can hire a million people and build it quick. Although this is certainly possible, it does not seem reasonable to ever expect someone to do that. — absolutely correct. The rule reflects judicial hostility to SOF.
(3)Does the “one-year rule” requirement of service for the statute of frauds (SoF) also apply to the sale of goods? — The issue is whether UCC2-201 “displaces” the common law rules (UCC 1-103). Most courts, I believe, have said “Yes.” Yo are to proceed on that assumption, as it is one reason why answering the mixed goods/services question is important.
(4)§139 says “is enforceable notwithstanding the Statue of Frauds” compared to the language of §90 which says “is binding,” does that change how they are applied? — 90 makes the promise enforceable. 139 rejects the SOF as an argument against an otherwise enforceable contract.
(5)I think the definition of injustice is very mechanical and does not adequately address the nature of justice. — Yes. I hope you can make more arguments for your clients about why an injustice is being done to them. But note, injustice and justice are (IMHO) two distinct concepts. Injustice is not the absence of justice. To use Holmes, a dog knows nothing about justice.
(6) What if B promised to pay C a sum of money every year for 5 years, does that then fall within the Statute of Frauds? Or would a definite time frame in this example still not matter because theoretically, C could die in less than a year? I added “fully” to the 1 year rule in the text to help answer this question. A lifetime employment contract would be fully performed if the person dies before the end of the year. A 5 year contract cannot be fully performed in less than a year even if the person dies.
(7) What are the purposes of the SoF? — The purposes of the SoF are the standard purposes for imposing any formal requirement: Cautionary and evidentiary. (Channeling is omitted as contracts provide the channel). If the court is satisfied that the parties were cautious about entering into the contract (not a very high standard) and that there is evidence of the contract, then despite the SoF, the court can enforce the contract without undermining the purposes of the SoF.

A lack of an Oxford comma cost dairy $5 million

By Lindsay Benson
February 9, 2018

(CNN)A group of Maine dairy delivery drivers will receive $5 million in a proposed settlement for unpaid overtime, according to court records filed on Thursday.
A judge ruled in the drivers’ favor last March, and it was all thanks to the lack of an Oxford comma in a Maine labor law.
An Oxford comma is the comma used after the second-to-last item in a list of three or more things, “item A, item B, and item C.” It’s not often used in journalism.
The drivers’ employer had claimed they were exempt from overtime pay, according to Maine’s labor laws.
Part of the law exempts certain tasks from receiving overtime compensation. This is what the law’s guidelines originally stated about exempted tasks:
The canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of:
(1) Agricultural produce;
(2) Meat and fish products; and
(3) Perishable foods.
Without the Oxford comma, the line “packing for shipment or distribution,” could be referring to packing and shipping as a single act, or as two separate tasks.
The drivers argued that it reads as a single act, and since they didn’t actually do any packing, they shouldn’t have been exempt from overtime pay.
“Specifically, if that [list of exemptions] used a serial comma to mark off the last of the activities that it lists, then the exemption would clearly encompass an activity that the drivers perform,” the circuit judge wrote.
According to court documents, the dairy, while denying any wrongdoing, believed further litigation would be protracted and expensive. The proposed settlement will be considered by a federal judge.
To prevent anymore Oxford comma drama, the Maine Legislature has since edited this exemption, replacing the punctuation with semicolons.

For those interested in the court decision referenced in the article, it is O’Connor v. Oakhurst Dairy, 851 F.3d 69 (1st Cir. 2017). For other cases decided in part based on the presence or absence of a comma, see United States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (1989) (interpreting the Bankruptcy Code); American Int’l Group, Inc. v. Bank of Am., 712 F.3d 775 (2d Cir. 2013) (interpreting a statute); Shelby County State Bank v. Van Diest Supply Co., 303 F.3d 832 (7th Cir. 2002) (interpreting a security agreement); Berkshire Aircraft, Inc. v. AEC Leasing Co., 84 P.3d 608 (Kan. Ct. App. 2002) (interpreting a contract); Judson v. Associated Meats & Seafoods, 651 P.2d 222 (Wash. App. 1982) (interpreting a statute that had been amended to remove a comma); Reeves v. American Sec. & Trust Co., 115 F.2d 145, 146 (D.C. App. 1940) (interpreting a will). But cf. Overhauser v. United States, 45 F.3d 1085, 1087 (7th Cir. 1995) (expressing skepticism about the grammatical expertise of the drafters of legal documents, and therefore of the relevance of grammatical arguments).