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Professor Lacy's contracts notes. The notes cover all of the cases he covers and additional points he covers in his lectures....

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Walker v. Keith Kentucky Court of Appeals 1964 Facts: In July 1951, the lessors, leased a small lot to appellee, the lessee, for a ten year term at a rent of $100/month. There was a renewal option in the lease to extend contract for another ten years under the same terms and conditions except the rental price. The option stated that the rent would be fixed at a time agreed upon by the two parties at a later date based upon rental values of the time and comparative business conditions of the two periods. The lessee gave proper notice to renew but could not agree on a rental price. An advisory jury fixed the new rent at $125/month. Arguments: The plaintiff argues that the rent was not set to the standards of what the two parties agreed to originally through the contract. Keith argued that since there was an option the court was correct to settle a rent for the two parties. Procedural History: The two parties met in preliminary court proceedings that were not solved. At the trial court, the court ruled in favor of the defendant, the lessee, arguing that the option of his contract was holdable. The plaintiff appeals that decision. Issue: Was the contract option to renew the lease enforceable without the terms of the agreement being settled? Judgment: The decision was reversed. Holding: If essential elements of a contract are missing then the contract is void and unenforceable. In the case of Walker v. Keith the dispute over rent was an important and essential element. The lack of methodology to use to calculate rent also left ambiguity in how the rent would be determined. Also an agreement to agree in the future in not an enforceable decision.

Quake Construction, Inc. V. American Airlines, Inc. Supreme Court of Illinois 1990 Facts: In February 1985, American hired Jones to prepare bid specifications, accept bids, and award contracts for the expansion of American’s facilities at O’Hare International Airport. Quake received an invitation and submitted a bid to Jones. Jones orally notified Quake that Quake was awarded the project. Jones sent Quake a contract informing Quake that they would need to enter into agreements with their subcontractors and sent them to Jones. On April 18, a letter was sent to Quake outlining the project and their roles. The project would take 60 days and should start within five days time. The contract also included a clause that Jones reserves the right to cancel this letter of intent if the parties cannot agree ona fully exeuted subcontract agreement. Jones and Quake agreed orally to several changed but never signed the document and a few days later Jones advised Quake that they were the general contractors. The same day American sent them a letter telling them that Quakes involvement with the project was terminated. Arguments: Quake argues that they had a legal binding agreement and are entitled to damages from breach of said contract. Jones contends that they had a right to terminate the agreement that was agreed to by both parties and that supersedes any other agreement between parties. Procedural History: The circuit court dismissed Quakes’ complaint based on the right to cancel in the contract. Quake appealed the decision and the appellate court ruled that the letter was ambiguous and ruled in favor of Quake’s construction. American Airlines appealed that decision based on the evidence they provided. Issue: Was the letter of intent from Jones to Quake an enforceable contract that a cause of action may be brought? Was the letter of intent too ambiguous for Jones to use to dismiss the contract? Judgment: The Court rules in favor of Quake construction and affirms and remands the appellate court decision. Allows for jury to decide case based on ambiguity of letter and on evidence provided. Holding: Time perimeters can lead one to determine that there was intent for the contract to be binding. The existence of a cancellation clause itself means that the two parties agreed that the contract was indeed binding. The true intent behind a contract is the controlling feature and follows precedent in other states.

Hamer v. Sidway

New York Court of Appeals 1891 Facts: on the 20th of March, 1869, the plaintiffs uncle promised him in front of his family that if he did not smoke. Swear, or gamble until he became 21 then his uncle would give him $5,000. When the nephew turned 21 he wrote to his uncle asking for the money because he had upheld his part of the deal and his uncle responded that he had the money but his nephew should wait to get it until he was older and more mature. The uncle agreed in writing that the money was his and it was intended for him. The nephew waited and on 1/29/1887 his uncle passed away without giving his nephew the money. The nephew asked for the money from the executor of the will and he would not turn it over to him. Arguments: The plaintiff contends that they had a legal contract and therefore the money should be his. The defendant contends there was no consideration therefore the contract was not binding. Also, they argue that the statue of limitation has expired so the plaintiff cannot collect. Procedural History: The trial court entered a ruling in favor of the plaintiff. The defendant appealed and won. The plaintiff appealed that decision and it reached the Supreme Court for a final ruling. Issue: The issue is whether or not the uncle became indebted to the nephew on his twenty-first birthday through the contract. Judgment: The decision was reversed and awarded to plaintiff. Holding: The court ruled that abstaining from doing a task in this case, not using tobacco, gambling, or swearing was a consideration. By refraining from those tasks the defendant was detrimental to himself therefore constitutes the consideration, and there is no legal proof that the uncle did not benefit in some way from it. Rule:

Pennsy Supply, Inc. v. American Ash. Pennsylvania Superior Court 2006 Facts: Pennsy was subcontracted to pave the driveway and parking lot for a construction project. The specifications of the contract stated that Pennsy could use AggRite. AggRite was free from American Ash. Pennsy contacted them and stated they would need 11,000 tons and American Ash agreed and gave it to them. Pennsy completed the work in December 2001. The payment started cracking in February 2002. Pennsy was noticed to remedy the work and Pennsy did remedy the work in summer of 2003 at no cost. The cost required to dispose of the AggRite led Pennsy to seek remedy from American Ash but they declined to do so. Arguments: Pennsy argues that the defendants breached a contract, breached a warranty, breached an express of warranty, breach of warrant of fitness for a particular purpose, and promissory estoppel. The defendants claim they did not breach a contract because there was no agreement that they would cover the costs. Procedural History: Pennsy files suit against American Ash. American Ash requests a demurrer and is granted it by the trial court. Pennsy files an appeal of demurrer. Issue: Was the AggRite conditional gift or a contract? Judgment: The trial court reverses the decision for the demurrer and remands the trial back to the trial court for further proceedings. Holding: American Ash created a consideration to supply Pennsy with the material for free by trying to eliminate the disposal costs. This created a detriment to Pennsy and a benefit to American Ash. If the allegations are true then a consideration was formed and so was a contract.

Batsakis v Demotsis Texas Court of Civil Appeals 1969 Facts: The defendant asked for to borrow 500,000 drachmae in exchange for $2,000 American at an eight percent interest rate. The 500,000 drachmae amounted to 25 dollars American. The plaintiff sued for the 2,000 dollars. Arguments: The plaintiff argues that the defendant failed to pay her the money they agreed to in their contract. The defendant argues that there was a lack of consideration on her part therefore no contract Procedural History: Plaintiff sued defendant in trail court for recovery sum of 2,000 dollars. The trial court ruled in favor of plaintiff for $750. Plaintiff appealed for rest of sum. Issue: Was there a legal contract with consideration? 1) Holding: The two parties agreed to a contract, despite the large numerical discrepancy. The defendant got exactly hat she was promised in the contract and she agreed to pay the defendant the 2,000. There was no indication of a lack of consideration in the evidence. Judgment: Reformed and affirmed to the plaintiff for $2,000. Rule:

Plowman v. Indian Refing Co. United States District Court 1937 Facts: Employees were called into manager’s office and told they would be paid for the rest of their life if they retired and took half of their salary. The company would still be participating in the insurance and be retained on payroll. One year later the payments stopped and the office said they would not longer be paying them. The defendant doesn’t testify the facts other than they never agreed to pay them for life. The plaintiffs filed a suit against the company Arguments: The plaintiffs argue that the defendant breached a contract they had reached. The defendants argue that they had no authority to make a deal. Also, the defendants argue there was no consideration. Procedural History: The plaintiffs filed suit against the defendants for breach of contract. Issues: 1) Did the manager have the authority to make the contract? a: The company bylaws stated that the defendants could not create such an agreement on their own. 2) Was there consideration? a. Holding: There was no consideration for the contract. The past actions of one cannot count as consideration for a contract in front of them. Also, there was no detriment to the employees. Collecting their paycheck from the office was routine and posed no detriment to them. Moral obligation, which the company should feel, does not create a legal duty to the employees to continue to pay them. Judgment: The court rules in favor of the defendant.

Marshall Durbin Food Cop. V. Baker Mississippi Court of Appeals 2005 1) Facts a) Mr. Baker began working for Marshall Durbin food Corp. in 1965 b) After a troubled time in the company Mr. Baker became nervous about his future employment c) Mr. Baker and Mr. Durbin entered into an agreement that gave Mr. Baker the right to retire with benefits if he remained with the company until then d) The contract stated that Mr. Baker would receive monthly salary for five years after the initiation of contract from one of the clauses e) When Mr. Durbin became sick and was rendered incompetent by a doctor, Mr. Bakers contract began f) A few days after notifying the new president of the company about the contract, the company contacted him to announce they were terminating the agreement and his employment g) Mr. Baker filed a suit against the company for specific performance of the contract 2) Procedural History a) Parties i) Mr. Baker (1) Plaintiff ii) Marshal Durbin Food Corp. (1) Defendant b) Claims i) Breach of contract by the defendants ii) No contract due to lack of consideration by plaintiff c) History i) Bill Baker filed suit against M.D.F ii) The trial court ruled in favor of plaintiff iii) M.D.F appealed iv) Court of Appeals affirm in part and reverse/render in part 3) Issues a) Was there an error on the part of trial court to rule for consideration as matter of law i) Holding: When a sum of money is paid to the agency for consideration, the act will stand as consideration b) Were the promises made by Mr. Baker and company mutually illusory i) Holding: The act was not illusory because by Mr. Baker continuing to act in the manner stated with the contract then he was assigning consideration by act. ii) The promise was contingent not illusory. c) No consideration or forbearance on the part of Mr. baker. i) Holding: When a person elects to not seek a more advantageous position but continue working for a suffering company that constitutes a consideration. Company benefits from having good workers while Mr. Baker worked at a failing company that had no guarantee of succeeding. 4) Judgment: Affirm the trial court decision and reverse the start date of the contract to one month earlier.

Alaska Packers’ Association v. Domenico United States Court of Appeals 1902 1) Facts: a) The libellants agreed to work for the appellant corporation on the 26th day of march 1900 b) All were signed to a deal of $50 for the season and 2 cents for every salmon caught c) On April 15th another set of workers were signed for $60 dollars for the season and 2 cents per salmon d) On the eve of leaving for the trip the libellants demanded that they corporation pay them $100 for the season because the nets were defective e) The superintendent stated he did not have the authority to do that f) They striked and the superintendent was forced to redraw contracts to sign the workers g) When they returned from sea and demanded their money the corporation offered only what they agreed to before on the 26th and the 15th h) The libellants brought a suit against the corporation for a breach of contract 2) History a) Parties i) Libellants (1) Plaintiffs ii) Corporation (1) Defendant b) Claims i) Plaintiffs argued that they legally negotiated their contracts and there was consideration therefore they were owed the money ii) Defense claims that the superintendent could not change contracts and the fisherman had no right to renegotiate their deals c) Procedural History i) Plaintiffs bring suit to trial court ii) The trial court ruled in favor iii) Supreme Court rules in favor of defendant 3) Issues a) Was the modification to the contract legal? i) Holding: One cannot renegotiate a contract they have already agreed to at the detriment of the other party if there is no other bargaining being made ii) Rule: Lingenfelder v. Brewing Co. iii) Application: The sailors had no right to ask for more money for the same work they had agreed to at already for a lower price. It violates the good faith of contracts.

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Totem Marine Tug v. Alyeska Pipeline Service Co. Supreme Court of Alaska 1978 Facts: a) Totem was hired by Alyeska Pipeline to carry pipeline construction materials b) Totem charterd a barge and an ocean-going tug boat c) To complete the job, Totem took out loans from Stair and Pacific Inc. d) Totem had numerous issues to completing their task on time e) The materials they were transporting were arranged incorrectly f) It took thirty days to load than three which was suspected g) There was more weight than was supposed to load as well h) Due to the extra weight the barges moved slower and fell behind i) Totem had to hire another barge to complete task on time j) After stopping at the Panama Canal, Alyeska affirmed they would pay for extra barge k) When they reached California, Aleyeska terminated the contract l) Totem invoiced them for $260,000 to $300,000 m) Alyeska said it would take up to 6-8 months to pay n) Totem needed money now so they settled for $97,500 History: a) Parties i) Totem Marine Tug (1) Plaintiff (2) Appellants ii) Alyeska Pipeline Co. (1) Defendant (2) Appellee b) Claims i) Plaintiffs claim they were forced to sign under duress and therefore they should receive the rest of their money ii) Defendants claim they signed a waiver releasing all rights to sue them therefore they have no claim c) History i) Plaintiffs bring contract action suit against Defendant ii) Defendants moved for a summary judgment iii) Superior court granted a summary judgment iv) Plaintiffs appeal summary judgment decision Issues: a) Did Totem sign their contract under duress and undue influence i) Holding: When one is under serious financial threat that could further cause irrevocable damages to their business then if one is forced to sign a document, it could be considered under duress ii) Rule: Williston, Contracts, Section 1617 at 704 iii) Application: Totem was forced to take a lesser sum of money due to creditors arguing they would foreclose on him which would have destroyed his business and credit that would have prevent him from operating anymore Judgment: Judgment is reversed and remanded to superior court.

Buffaloe v. Hart North Carolina Court of Appeals 1994 1) Facts: a) Plaintiff in 1988 and 1989 rented five barns from tem for use b) After agreeing with a handshake, the plaintiff contemplated buying them c) He offered 20,000 dollars for the five barns over the course of 4 years with a yearly payment of 5,000 d) The defendants agreed to deal e) After the plaintiffs loan fell through to buy them outright he listed them for sale in the paper f) The defendant called and asked what was going on and the plaintiff responded he would sell the barns and she said that was ok g) Defendant delivered the first check for 5,000 and defendant accepted h) The next night she called the plaintiff and told him they were not for sale and she had sold them to another party i) The defendant mailed his check back ripped into a ton of pieces. 2) Procedural History a) Parties i) Homer Buffaloe (1) Plaintiff ii) Patricia Hart and Lowell Hart (1) Defendant b) Claims i) Plaintiff argues that defendant breached contract ii) Defendant claims that there was not sufficient consideration under statute of frauds c) Procedural History i) Plaintiff files suit against defendants ii) Defendants file for a directed verdict which was denied iii) Trial court finds for plaintiff iv) Defendants filed a JNOV which was denied 3) Issues a) Is a personal check signed by plaintiff enough to constitute writing under statute of frauds i) Holding: A check needs to meet certain criteria to pass under the statute of frauds ii) Rule: UCC 25-2-105 iii) Application: Because the check lacked the criteria needed, mainly the lack of endorsement from the defendants, it is not legally enforceable under the statue of frauds b) Was their substantial evidence that plaintiff accepted and defendants accepted plaintiffs check there by passing statute of frauds? i) Holding: The actions by the plaintiff must be overt and demonstrate a contract was met ii) Application: Plaintiff went around selling the barns and had them listed in ads and auctions around town indicating he did believe they reached a contract 4) Judgment: The court did not err in denying defendants motions for directed verdict and JNOV

Jannusch v. Naffziger Illinois Appellate court 2008 1) Facts: a) Plaintiffs operated a business Festival good which serviced festivals through Illinois and Indiana during April to October each year b) Defendants were interested in purchasing the business and met with them several times c) Plaintiffs testify that on august 13, 2005 they sold the company to the defendants for 150,000 dollars. d) Defendants paid 10,000 immediately and the balance to be paid through a loan from the bank e) Defendants operated the company for the rest of the 2005 year f) Defendants argue that no specific agreement was reached and 10,000 was for specific right to keep trying to purchase company g) Defendant admitted taking possession of company and operated six events h) Defendants argue that Gene asked for the company back because he needed money i) The trial court found in favor of defendants 2) History a) Parties i) Gene Jannusch (1) Plaintiff ii) Lindsey Naffziger (1) Defendant b) Claims i) Defendants argue that there was no enforceable contract ii) Plaintiffs argue that there was c) Procedural History i) Trial court found in favor of Defendants ii) Plaintiffs appeal 3) Issue a) Does the UCC apply to a business sale? i) Holding: When the sale of the business is mainly the sale of goods/tangible assets then it can fall within the scope of the UCC ii) The company was mainly a servicing trailer, truck, and various equipment to go along with the sale of the food. b) Did the oral agreement violate the statute of frauds? i) Holding: IF multiple essential items are missing from a contract and that contract exceeds $500 then it is unenforceable ii) There were no essential items missing from this contract. The price was agreed and the items were ready for transfer, all that was needed was the specific performance of action 4) Judgment: Decision reversed and remanded.

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