Contract Law

1
Contract LawIntro.

• Why contract law is so fundamental
• Cases in contract law, like other areas of law,
  often show you how NOT to do thingslawsuits
  represent failures
• Some classifications of contracts
• Bilateral vs. Unilateral contracts
• Most contracts are bilateral, but unilateral
  contracts are important in a number of situations
  (Note presumption of bilateral
• Also, understanding the distinction helps you
  understand how and when contracts come into
  existence

2
Unilateral-bilateral, cont.

• Precision Concepts v. General Empl., p. 268
• Facts
• What was the offer and what was the acceptance?
• Why was this a unilateral contract, and what
  difference does it make?
• Note the 3 different contracts in this caseonly
  one of them is at issue

3
Unilateral-bilateral, cont.

• Judd Realty v. Tedesco, Sup. Ct. of Rhode Island,
  1979
• Frank Tedesco wanted to sell a residential lot he
  owned. He listed the property with Judd
  Realtythe listing agreement provided that Judd
  would have the exclusive right for a 6-month
  period to find a buyer at a price of 25K. If
  Judd found a purchaser within that 6 months,
  the agreement stated that he would receive as a
  commission 8 of the 25K, to be paid by the
  seller. (The realtor thus was a broker for
  bringing together sellers buyers, did not
  have authority to actually execute a contract of
  salethis is typical brokerage.)
• The realtor found a buyer who was willing to pay
  25K for the propertythe realtor checked to make
  sure the buyer could pay, i.e., had either cash
  in escrow or had a financing commitment from a
  financial institution. The buyer gave the
  realtor a 1,000 check as a deposit.
• The seller discovered that he could get more
  for the property, and refused to make a sale
  contract with this buyer. The realtor sued for
  its 8 commission. Does the seller have to pay
  the commission?

4
Unilateral-bilateral, cont.

• Other examples
• Your dog Saddam gets lost. You advertise a
  reward of 250 to anyone who finds Saddam and
  brings him to you. Rumsfeld sees or hears your
  offer, finds Saddam, and returns him to you.
  Contract? Do you have to pay?
• What if Rumsfeld sees or hears your reward offer
  and promises you that he will find Saddam and
  return him to you? Is there a contract that
  obligates either of you to do anything?
• What if Rumsfeld sees or hears your offer, finds
  Saddam on the side of the road dead, and brings
  you the body?
• What if Rumsfeld sees or hears your offer, sees
  Saddam, cant catch him, runs him down with his
  Hummer, and brings the body to you?

5
Express vs. Implied contracts

• Difference? Is it marked by a clear, bright
  line?
• Like bilateral-unilateral, this is another
  distinction based on the way in which the parties
  form an agreement

6
Express vs. Implied, cont.

• Carroll v. Lee, p. 271
• Facts?
• What is the nature of the contract that the court
  inferred from all of the evidence?
• In saying that there was an implied contract,
  exactly WHAT are we saying?
• In 14 states (including Texas) that recognize
  common-law marriages, these facts would have
  been analyzed somewhat differently

7
Express vs. Implied, cont.

• I go to a place that gives pedicures to make my
  toes prettier. I sit down in the chair tell
  the pedicurist what I want. She gives me a
  wonderful looking set of toenails. Nothing was
  ever said about price. Am I obligated to pay
  her? If so, how much?
• I go to an auto repair shop. My 1997 Corvette
  isnt running well and needs some work. I
  explain the problems to the service
  representative. We agree that the mechanics will
  run a diagnostic check on the engine and I tell
  them to fix whatever they find wrong. We dont
  talk about price. They find that the spark plugs
  plug wires need replacing, and the fuel
  injection needs cleaning. They fix the problems.
  When I come to pick up my car, the bill is
  2,000. Am I required to pay them? If so, how
  much? What if they had also done a brake job?
  Do I have to pay for that? There are endless
  ways you can manipulate these facts and come to
  various conclusions.

8
Express vs. Implied, cont.

• You own a restaurant, and want to remodel the
  interior and add an additional room for dining
  space. I own a business that does residential
  and commercial remodeling. You tell me what you
  want done. I draw up some rough plans and
  specifications. You say they look ok. I give
  you an estimate of 200K to 225K to complete the
  work. My employees and I start work. During the
  several months that we work on the project, you
  and I are continually in communication, and you
  frequently give me additional instructions about
  how large to make the new area, the type of
  windows you want, and so on. You make a number
  of changes in the plans as we go along. You
  change your mind about the type of flooring, and
  about some of the new kitchen equipment. And so
  on and on. I finally finish the job to your
  satisfaction, and I send you a bill for 300K.
  You refuse to pay it, saying that you should have
  to pay no more than 225K. Are you required to
  pay? If so, how much?

9
Quasi Contracts

• Sometimes called unjust enrichment
• Term quasi contract is a misnomer
• When theory applies, courts require one who
  receives services, goods, money, etc. to
  compensate the other for the reasonable value of
  the benefit received.
• Courts typically apply the theory in either of 2
  situations
• Needed to promote important public policy goals,
  such as . . .
• Providing services, goods, money, etc. was done
  under an honestly mistaken belief that . . .

10
Quasi Contracts, cont.

• Deskovic v. Porzio, p. 272
• Facts
• Why was there no implied contract?
• What was it that created a quasi contract
  obligation?
• Why do you think the brothers assert the claim
  against the estate, when they probably were
  heirs?
• Why do you think the executor of the fathers
  estate contested the brothers claim?

11
Quasi Contracts, cont.

• Stratton v. County of Liberty, Tex.Civ.App., 1979
• A county grand jury investigating possible
  criminal activity in a school for problem
  children decided it needed the services of a
  private investigator. The Grand Jury was
  informed that approval of the County
  Commissioner's Court was needed, and that body
  authorized the hiring of Stratton at 50/day,
  not to exceed 20 days. Stratton's services were
  very useful in cracking the case, and with
  approval of the grand jury foreman, he stayed on
  the job for 30 days. The Commissioner's Court
  refused to pay him for the extra 10 days.
  Stratton sued the County on the theory of
  quasi-contract.
• Courts conclusion rationale?

12
Adhesion Contracts

• Hartland Computers v. The Insurance Man, p. 274
• Facts
• What was the nature of this contract?
• Was this just one of the many types of
  arrangements for financing a purchase of
  equipment for a company?
• Was the contract legally enforceable?
• Why did the insurance agency lose its claim
  against Hartland?
• Have YOU ever been a party to a contract of
  adhesion? Were you obligated by it?