Intro to Contracts: Contract Enforcement I

Prof. Merges

Jan. 10, 2011

Agenda

• Logistics

• Overview of course: structure and approach

• Intro to K enforcement

Logistics

• Office Hours: Thursdays at 2 pm – 438 North Addition

• Slides: bclt course website

• Meeting times, break days, etc.: see syllabus

Course Overview

• Overall approach: high-level concepts, doctrines, tools

• With an eye toward practical application

– This is the foundational private law course

E. Allan Farnsworth

Contracts and enforcement

• What does it mean for a contract to be enforceable?

• Enforceable by whom?

• How does a party enforce a contract?

Restatement 2d § 1

• A K is –

“a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law recognizes as a duty . . .”

“Private law”

• Contrast with “public law”

• Who makes private law?

Rest sec. 1

• “Promise for which law gives a remedy” –

• What can you infer from this?

Rest sec 1 (cont’d)

• OR performance recognized as a duty

What can you infer from this?

What does it mean to enforce a contract?

• Hawkins v. McGee

• Bayliner Marine v. Crow

Hawkins v. McGee

Hawkins v. McGee

•What is the contract?

Hawkins

• Who are the parties to the contract?

Hawkins

• When was the contract written down?

Rest sec 1

• “A promise for the breach of which the law gives a remedy . . .”

• Was there a promise here?

Doctor’s statements

• “Three or four days, not over four, then the boy can go home, and [in a few days he] can go to work with a good hand.”

• Legal status?

Dr.’s statements

• “Clearly [these statements] would not justify a finding that the doctor contracted . . . .”

• “[T]he fact that these estimates were exceeded would impose no contractual liability upon the defendant.”

What if?

• The Doctor had said “I promise the boy will be in the hospital three or four days and then can go home and soon get to work”?

• “Expressions of opinion or predictions”

• Still true if he promised?

What did the Dr. say that implicated a K?

What did the Dr. say that implicated a K?

“I will guarantee to make the hand a hundred percent perfect hand or a hundred percent good hand.”

Were these words alone enough to create a K?

Were these words alone enough to create a K?

• Can one person’s statement, without more, create a contractual obligation?

• What about the other party here?

What was the holding here?

What was the holding here?

“The question of the making of the alleged contract was properly submitted to the jury.”

Language and context

Rest. 2d § 2. Promise; Promisor; Promisee; Beneficiary

(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

Rest. 2d § 2. Promise; Promisor; Promisee; Beneficiary

(2) The person manifesting the intention is the promisor.

(3) The person to whom the manifestation is addressed is the promisee.

R2 § 4. How A Promise May Be Made

A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.

Illustrations:

1. A telephones to his grocer, “Send me a ten-pound bag of flour.” The grocer sends it. A has thereby promised to pay the grocer's current price therefor.

2. A, on passing a market, where he has an account, sees a box of apples marked “25 cts. each.” A picks up an apple, holds it up so that a clerk of the establishment sees the act. The clerk nods, and A passes on. A has promised to pay twenty-five cents for the apple.

Anglin v. Kleeman, 140 N.H. 257, 665 A.2d 747 (Sup Ct N.H.,1995)

Action arising out of unsuccessful knee surgery

Cites Hawkins v. McGee

665 A.2d 747, 750

In this case, the plaintiff testified he was told that the “operation could give me a knee that was stronger than ... before,” and that following surgery “if [he] was committed, [he] would be able to play ball again.” The language quoted by the plaintiff does not rise to the level required by Hawkins to allow a finding of a contract or warranty to cure by a physician.

Hawkins distinguished

“Additionally, unlike the doctor in Hawkins, Dr. Kleeman did not solicit or request that he be allowed to perform the plaintiff's surgery. In fact, the plaintiff testified that Dr. Kleeman had informed him that he could have another surgeon perform the surgery, and the plaintiff did consult another surgeon prior to agreeing to surgery.” – 665 A.2d 747, 750

Other causes of action?

• Anglin v. Kleeman, 140 N.H. 257, 665 A.2d 747 (Sup Ct N.H.,1995)

Other causes of action?

• Anglin v. Kleeman

• Negligence (tort)

• “The spongy knee” case

Bayliner Marine v. Crow

• Parties and procedural history

• Primary issue in the case

Bayliner

Facts

• Crow and Atherton

Atherton

• Who was he exactly?

• What did he say?

Bayliner documents

YEAR MODEL ENGINE OPTIONDRIVE RATIO HIGH ALTITUDE GEAR RATIO PROP SIZE PART N0. WIDE OPEN

THROTTLE RPM1989 160 CB OB 100 hp 2.07:1 13 X 19 55001989 160 BR 3.0L 130hp Merc 1.98:1 13.75 X 21 46001989 160 BR OB 100 hp 2.07:1 13 X 19 55001989 Laguna 17 100hp Merc OB 2.07:1 13.75 X 17 5500

1989 Laguna 17 135hp Merc OB 2.00:1 17 Mirage 5500

1989 180 BR OB 135 hp Merc 2.00:1 17 Mirage SS 5500

Prop matrix disclaimer

• “This data is intended for comparative purposes only, and is available without reference to weather conditions or other variables. All testing was done at or near sea level, with full fuel and water tanks, and approx. 600 lbs. passenger gear and weight.” – p. 4

Bayliner brochure

• “The 3486 delivers the kind of performance you need to get to the prime offshore fishing grounds.”

Other facts: Crow

Other facts: Crow

• Lots of extra equipment – nav system, radar, icemaker, autopilot, AC/heating unit, etc.

• No test drive prior to delivery

The sad truth

• This boat was a dog!

• Topped out at 17 mph

• And it could not be much improved

The lawsuit

• Who sued whom, and for what?

Parties

• Crow v. Tidewater, Bayliner, and Brunswick (engine manufacturer)

• Why all 3?

Causes of action

• Breach of express warranty

• Breach of implied warranties of merchantability and fitness for a particular purpose

Trial proceedings

• Who heard the facts?

Why a bench trial?

• Think about the strategy on each side

Who won at trial?

Who won at trial?

• Crow

• All 3 warranty counts of the complaint, held in Crow’s favor

Appeal standard

• View of the evidence

• Standard of review on issues of law?

Express warranty provision

• What is the source of this provision? Who enacted it, where did it come from?

Why does the UCC apply here?

Why does the UCC apply here?

There is at least one “merchant”

This is a transaction involving “goods”

-- UCC § 2-104(1), 2-105(2)

UCC § 2-313

“Express warranties by the seller are created as follows:

(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

UCC § 2-313

“Express warranties by the seller are created as follows:

(b) Any description of the goods which is made a part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

Prior case law

• Daughtrey v. Ashe

• Diamond appraisal case

– Holding?

Prop matrix statements

• Were they binding?

Prop matrix statements

• NO!!

• They “did not relate to the particular boat bought by Crow”

Brochure statement?

Brochure statement?

• “A statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.”

Was there a contract?

Was there a contract?

• Yes

• But – it did NOT include a warranty as to the speed of the boat