Contracts case briefs 130-196 enforcement PDF

Preview

Summary

these notes are for the purpose of reviewing contract enforcement and the applicability to a valid two party agreement...

Description

Case: Dickinson v Dodds, Delaware Court of Chancery (1876) Facts: John Dodds was trying to sell his land. On June 10 174 he wrote a memorandum to George Dickinson stating that Dickinson had until Friday, June 12 1874 by 9am to accept the offer at a price of $800. Dickinson was informed on Thursday morning that Dodds was offering to sell the land to Thomas Allan. Around 7pm Thursday evening Dickinson delivered a letter of acceptance to Mrs. Burgess; Dodd’s mother in law, to give to Dodds. Mrs. Burgess never gave this letter to Dodds. On Friday around 7am Dickinson’s attorney gave Dodds the duplicated letter of acceptance from Dickinson. But Dodds explained to the attorney that it was too late, and that he already sold the land to Allan. Dickinson told the same thing to Dickinson later that day, explaining to him that he sold the land to Allan Thursday morning. Dickinson alleges that Dodds breached their agreement. Issue: Was Dodds restrained from selling to another party based on the memorandum that was sent to Dickinson? Holding: The court says no Reasoning: He was aware that Dodds had changed his mind and was seeking to sell the land to other prospects. There was never the existence if the 2 parties being of the same mind; which is essential o making an agreement. Case: Ardente v Horan, Rhode Island Supreme Court (1976) Facts: The defendant Horan offered to sell a piece of property in Newport in August 1975. The plaintiff Ardente made a bid for the property at $250,000 the defendant’s attorney formed a purchase and sale agreement and gave it to the plaintiff. The plaintiff signed the agreement and returned it to the defendant w/ a check in the amount of $20,000 and a letter which stated they wanted several enumerated items remain within the property. the defendant after seeing this, refused to sell the property based on these term, and returned the deposit check to the plaintiff. The plaintiff asserts that the defendant breached their contract. Issue: Is the plaintiff’s letter a qualified acceptance or an absolute acceptance of the defendant’s offer? Holding: The court says that this was a qualified acceptance imposing conditions.

Reasoning: The letter that the plaintiff sent to the defendant was a counter-offer to the defendant’s original offer. An acceptance which is equivocal or upon condition or with limitation is a counteroffer and requires acceptance by the original offeror before a contractual relationship can exist. The general rule is that the offeree must communicate his acceptance to the offeror before any contractual obligation can come into being. And the same holds w/ counteroffers. The letter sent by the plaintiff was a rejection of the defendant’s original offer and therefore there was no contractual obligation. Additional Notes The seller extended an offer to the hopeful buyers. The discussion to sell did not come out of the blue; it was constructed by the seller’s attorney and sent to the buyers. If the side letter had not been sent, then there would have been a contractual agreement b/w the parties so long as the buyers signed the agreement as is. By adding conditions to the original offer, then the hopeful buys presented he seller wit a counteroffer. After receiving the side letter, the seller never signed the agreement. By asking for things that were not discussed in the original offer, the hopeful buys created a counteroffer. _________________________________________________________________________________________________________ Case Beall v Beall, Maryland Court of Appeals (1981) Facts: Calvin and Cecelia Beall purchased land from Calvin’s parents in 1956. In February 1968 Carlton Beall; the 2nd cousin of Calvin obtained a written 3-year option to purchase the land from the Beall’ for $28,000; with an option recited consideration of $100.00 In February 1971 the parties executed a new option for 5-years on the same terms as the first. Carlton never exercised either option. In 1975 an addition was added to extend the agreement 3 more years. In 1977 Calvin died, and in May of 1978 Carlton rote a letter to Cecelia that he was accepting the offer to sell and would be in a position to do so I 30 days. Cecelia responded that she was not willing to sell at $28,000; stating that the 1975 option was not a binding contract, but an offer. Carlton argues that of the extension agreement was an offer, then he accepted the offer before it was withdrawn.; therefore creating a contract. Issue: Was there a binding contract formed b/w the two parties? Holding: The court says no. Reasoning:

Calvin and Cecelia Beall entered into the agreement w/ Carlton as a single unit, not as individuals. According t general rule: the death of an offeror revokes his offer or causes his offer to lapse. Death terminated the power of the deceased offeror to act. Therefore, the formation of that apparent state of mind of the parties which is embodied in an expression of mutual consent is rendered impossible. When Calvin died, Cecelia was unable to continue to sell without continued assent of the other (Calvin). When Carlton sent his letter, there was no viable offer for him to accept. Calvin’s death had effectively caused the offer to lapse. Additional Notes Once Mr. Beall died, it becomes an effective way to revoke the offer. The agreement was entered by 2 members, once on person leaves the offer table, then the offer between the 3 people lapses. _________________________________________________________________________________________________________ Case: Orlowski v Moore, Pennsylvania Superior Court (1962) Facts: Mary Moore and her husband Frank Moore, were the owners of a property known as 212-214 First Avenue in Apollo. They had been trying to sell the property for quite some time at the price of $5500. There were several people interested in the land, but not willing to pay the asking price. On September 1, 1959 the Moore’s leased the property to Orlowski for a period of 1 year at $35/month. The lease was established under the condition that the leasee had first priority to purchase the land if someone else made an offer for the land. Prior to the execution of the lease, Orlowski was made aware that the Moore’s intended to sell the property. In January 1960 the Apollo Trust Company advised the Moore’s that they were interested in purchasing the property. the Moore’s notified Orlowski that they had an offer for the property and that they would sell the land to Apollo Trust Company unless Orlowski exercised his right of first purchase. Orlowski had been late on 2 monthly payments for his lease of the property. In early February 1 Orlowski was notified again about the selling of the property unless Orlowski purchased the land first. Orlowski notified the Moore’s that he wanted to purchase the property but was having difficulty obtaining a financial loan. On February 10 1960, the Moore took the fact that Orlowski was late on monthly rent and could successfully get a loan as reason to continue with the sell of the property to the Apollo Trust Company. After the option was given to the Apollo company, but before the they conveyed the title, Orlowski notified the Moore’s that he had secured h money to but the land. Issue: Was there a reasonable amount of time given to Orlowski to purchase the land first? Holding: The court says yes, the offer was left open for a reasonable amount of time Reasoning:

Moore’s notified Orlowski on 3 separate occasions of their intention to sell the land, in addition to informing him of their intention to sell prior to him beginning his lease. Orlowski was given the chance to but the property more than a year prior to the execution of the land being given to Apollo Trust. It would be unfair to the Moores to prevent them from securing a purchase by waiting for a longer period of time for Orlowski. Additional Notes The Moore’s gave the leasee several opportunities to purchase the land. But they cannot be expected to wait forever for Orlowski to get his financial means in order. _________________________________________________________________________________________________________ Case: Pavel Enterprises Inc. v A.S. Johnson Co. Inc., Maryland Court of Appeals (1996) Facts: Pavel Enterprises Incorporated Inc. (PEI) was a general contractor who put up a bid for a construction project for National Institutes of Health (NIH). PEI needed a subcontractor and sought several subcontractors for the job. PEI solicited Johnson for the job. Johnson verbally submitted a quote of $898,000 for the HVAC competent of the construction job. PEI used Johnson’s sub-bid in computing its own bid of $1,585,000. PEI sent a notice to the subcontractors they received bids from, and told them to take out the cost for the POWERS supplied control work in their quotes, because they would be subcontracting with that company directly. The subcontractors then resubmitted their quotes. PEI then selected Johnson to be their mechanical subcontractor based off of their low quote. Johnson had realized that they made a miscalculation in their quote. However they didn’t fix it because they didn’t believe it was necessary. They didn’t think PEI would get the contracting deal. On September 2 1993 Johnson notified PEI their intention to withdrawal their bid. But PEI refused to accept the withdrawal. On September 28 NHI formally awarded PEI the contract. PEI found a subcontractor for the mechanical work at a price of $930,000, and sought to collect $32,000 from Johnson in the difference b/w Johnson’s bid and the cost to substitute the mechanical sub contractor. Procedural History: The trial court ruled in favor of Johnson. They found that PEI relied on Johnson’s sub-bid in making its bid for the entire project. PEI’s letter to all sub contractors indicated that there was no definite agreement b/w PEI and Johnson. The Court of Special Appeals Issue: Was there a contract b/w the two parties? Holding: The court says no. Reasoning:

There needs to be a clear and definite promise b/w the 2 parties, where the promisor has a reasonable expectation that the offer will induce action on the part of the promisee. Maryland courts are to apply the test of Restatement 2: 1. A clear and definite promise 2. Where the promisor has a reasonable expectation that the offer will induce action on the part of the promise 3. Which does induce actual and reasonable action of the promisee 4. Causes a detriment which can only be avoided by the enforcement of the promise. PEI was not relying on the Johnson bid. There was no detrimental reliance from PEI on Johnson. Additional Notes Pavel claims that Johnson’s bid was a binding contract b/w the two, so long as PEI accepted them as a sub contractor. The court tries to decide the legal status of sub contractor’s bids. In Gimbel, it held that the sub contractor’s bids were revocable (not binding; remained open until accepted or withdrawn. In Star Paving, the court held that the sub contractor’s bids were irrevocable (binding). In this case, the court held that through the Restatement dealing w/ irrevocability: Section 87.2  If someone makes an offer that someone will rely on in a significant way, then the offer will become option (irrevocability). The bid made by Johnson, that it was relied on in a significant way by PEI, then the offer will become irrevocable. But in the evidence presented, PEI was unable to adequately show that it was significantly reliant on the quote provided by Johnson. Therefore Section 87.2 does not apply in this case.

Section 2-205 An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable or lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no recent may such period of irrevocability exceed three months, but any such term of assurance on a form supplied by offeree must be separately signed by the offerer. (ensures that there are no hidden clauses, and that the offeror is well aware of the terms as well)  Applies to offers made by merchants Merchant means a person who deals in goods of the kind or otherwise by its occupation holds himself out as having knowledge or skill peculiar to the practices of goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds out as having such knowledge or skill What we need to constitute a firm offer:  Needs to be in writing  Needs to be singed (includes using any symbol executed or adopted with present intention to adopt or accept a writing—not limited to a signature (e.g. if a merchants



makes an offer that it will e held open, and that it is on the merchant’s letter head may be sufficient of a signed form b/c it indicates that it came from the merchant’s office) Needs to have a time limit, and if not it cannot exceed a reasonable time limit (not exceeding 3 months)

*According to the CSIG: if you state a time in which the offer will be held open, it is irrevocable for that period of time. Case: Dahl v Hem Pharmaceutical Corp, US Court of Appeals (1999) Facts: Plaintiff Dahl and 17 others suffered from chronic fatigue syndrome. They enrolled in an experimental program to test a new medicine, Ampligen, which was made by the defendant. Some of the patients in the experimental project received the medicine and others received a placebo. All patients signed a consent form concerning possible side effects. The volunteers were free to withdraw at any time. But if any of the patients remained in the experiment for the entire time, then they would receive a full year supply of Ampligen. The plaintiff, Dahl remained in the experiment during the entire time. The FDA concluded that the drug was not proven to be sufficient for widespread use but that clinical testing could continue. HEM then refused to provide the patients who had completed the testing with free Ampligen for a full year. They claimed that there was no contract because the patients took part in the testing voluntarily; and therefore there was no binding contract between the parties. Issue: Was there a contract b/w HEM and patients entitling them to the full years’ worth of the Ampligen? Holding: The court says yes. Reasoning: However the deal was, “if you submit to our experiment, we will give you a year’s supply of Ampligen at no charge”. HEM did not bargain for or seek a promise by the patients to submit to the testing. It only sought their actual performance. Upon completion of the testing then there was a binding contract between the parties. _________________________________________________________________________________________________________ Case: Petterson v Patberg, New York Court of Appeals (1928) Facts: The plaintiff, Petterson was the owner of a parcel of real estate in Brooklyn NY. The defendant Patberg was the owner of a bond executed by plaintiff (had a mortgage on the plaintiff’s home). On April 4 1924 there was an unpaid amount on the parcel totaling $5,450. This

amount was payable in installment of $250 on April 23 1924 and every 3 months- allowing a discount if the plaintiff paid the unpaid amount before May 31st. On April 4 1924 the defendant wrote Petterson saying that he agrees to accept cash for the mortgage and that he will allow the plaintiff $780 providing the mortgage is paid on or before May 31 1924 On April 25 the plaintiff paid the defendant the installment. Later in May of 1024 the plaintiff arrived at the defendant’s home and told him after knocking, I am here to pay off the mortgage. The Defendant told the plaintiff that he had sold the mortgage. Petterson then asked to speak to the defendant again and the defendant again this time presenting him with the money. The defendant refused to accept the cash. Prior to their conversation, the plaintiff had signed a contract to sell the land to a 3rd party. When the defendant sold it to another person, the plaintiff brought action against him, seeking a total of $780, the sum which the defendant agreed to allow upon the bond and mortgage. Issue: Did Peterson complete performance of the unilateral contract prior to Patberg’s revoke? Holding: The court says no. Reasoning: The offeror after extending an offer can revoke it at any time prior to the offeree accepts. The offeree in this case could have only accepted the offer when they submitted the final payment for the mortgage. Prior to this tender the offer was not accepted. Prior to receiving the payment, the defendant at the door stated, I have sold the mortgage to a 3rd party. This constituted a revocation of the offer prior to acceptance. The offer of the defendant was withdrawn before it became a binding promise and therefore no contract was ever made for the breach of which the plaintiff is seeking a claim of damages. Dissenting (Lehman) The defendant’s letter constituted a promise on his part to accept payment at a discount rate of the mortgage; provide4d that the plaintiff made the payment on or before May 31 1924. It is a principle of fundamental justice that if a promisor is himself the cause of the failure of the performance, he cannot take advantage of the failure. The act requested by the defendant, as consideration for his promise to accept payment, included performance by the defendant himself of the very promise for which the act was to be consideration. If the defendant intended to induce payment by the plaintiff and yet reserve the right to refuse payment, when offered, he should have used a phrase better calculated to express his meaning

other than the words, “I agree to accept”. A promise to accept payment, by its very term, must necessarily become binding; not later when a present offer to pay is made. Additional Notes This holding has received mixed views. It is thought that: we should not determine completion of performance by what the other party has done. as long as Peterson’s payment was delivered to Patberg and he was not notified of the revoke prior, this should be sufficient to completion of performance. Case: Simmons v United States, US Court of Appeals 4th Circuit (1962) Facts: The American Brewery Inc. hosted a competition where they put rock fish into the Chesapeake Bay with identification tags on them. Diamond Jim III was put into the water with millions of other species and had a distinct tag on it. Whoever caught Diamond Jim III would receive a cash prize of $25,000. On August 6, 1958, plaintiff, William Simmons was out on the water fishing. He knew about the competition prior to his fishing ventures. He didn’t realize at first that he had caught the grand prize fish, but soon after it came to his attention and he notified the coordinators. While in front of televised media, Simmons received the cash prize. Soon after the District Director of the IRS came forward and stated that the cash prize was includable in Simmons’ gross income and assessed a tax deduction of $5,230. Simmons paid the money, an d then filed a claim in District Court asserting that the cash prize should not be included in gross income; because the prize falls within the exclusion of IRS section 102 pertaining to gifts. Procedural History: The district court ruled in favor of the US Government. Simmons then appealed to the US Court of Appeals 4th Circuit. Issue: Was the $25,000 a gift or a contractual agreement to the plaintiff? Holding: The court says that it was not a gift. Reasoning: There was no personal relationship b/w Simmons and he brewery to prompt it to render a financial assistance. The company was not impelled by charitable impulses toward the community at large. For the prize was to be paid to whoever caught Diamond Jim III regardless of financial affluence. The company was legally obligated to award the prize to Simmons. Since the sponsor of the contest was legally obligated to award prize in accordance with his offer, the payment mad was not a gift to the recipient.

Additional Notes This offer was open to everyone; there were no limits to the competition and no need to check in/register prior to the event. The plaintiffs knew of the competition but didn’t go out into the lake with the sole intention of find the grand prize fish. However, this i...