PART I: SELF HELP & RECOVERY IN KIND.

o Options for dealing with various legal and equitable remedies, and the concept of justicability

Butler v. Wolf Sussman, Inc. 221 Ind. 47 (Supreme Court of Indiana 1943) p36
Statutory construction how to read a case and how to read statutes

Rule: If the defendants behavior constitutes an affirmative attempt to establish title of disputed property, the defendant
waives his/her right for plaintiffs demand.

Statement of the Case: This is an action for replevin (2 separate counts) and conversion of a diamond ring by an
owner with superior possessory rights, against a licensed pawnbroker for a right that was taken and pawned by
claimants husband without consent.

Facts: The Appellant(Butler) inherited the right in 1920 from her mother. She afterwards married and lived with her
husband for 13 years; separating from him on January 8, 1940. They are not divorced, but the husbands location is
unknown.
After the separation she noticed the ring was missing and made a demand on her husband, with the threat of
suit, for the return of the ring. He presented a ticket to her disclosing that on November 18, 1938, he had pledged the
ring as his own to Wolf Sussman, a licensed pawnbroker, for a loan of $25, which was increased to $35. This was
without the prior knowledge of Mrs. Butler. Mr. Butler is missing.

Procedure Below: The complaint was on three counts: 2 for replevin and 1 conversion. The defendant answered a
general denial. The appellate waived her entitlement for a judgment on the pleadings by going to trial on the merits of
the allegations. In the bench trial the judge awarded judgment to the defendant and the plaintiff took nothing. Plaintiff
appeals.

Issue: Where the defendant claimed title to the ring in controversy over the asserted ownership of the commencement
of the action for replevin against the defendant?

Result of Appeal: Reversed with directions to sustain the appellants motion for a new trial and further proceedings.

Holding: The court erred in granting judgment to the defendant because when the defendant claimed title to the ring,
the defendant waived the necessity of a demand by the plaintiff. Further, the Act of Burns does not apply due to the
changes in common law allowing a woman to hold property as if she is unmarried (1881).
Narrow: If a pawnbroker claims ownership under the Act of Burns, the plaintiff does not need to make
demand for her possession, further is a woman can hold possessions of her own from the Married Womens act..
When a pawnbroker files a redelivery bond, contests the suit on its merits, and asserts a defense of ownership
under the Pawnbrokers Actthe requirement for a demand will be dropped.
Broad: When a statute is used contrary to the law a new trial will be granted.

Reasoning:
Doctrinal: A Demand is necessary to prevent unnecessary litigation, however, since the defendant claimed
possession, a demand is not needed because he would not have complied with the demand.

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 Defendant filed a replevy bond with an affidavit, he contested the suit on its merits, and he filed for
protection under the Pawnbrokers Act. Which of these is enough to waive demand? The replevy bond is
due to the fact that it makes the defendant appear to be claiming clear title. He also defended the suit on the
merits.
Exceptions to the Pawnbrokers Act are: larceny and prior lien by another statute
Can a husband commit larceny on his wife? At common law, he cannot due to Inter-spousal immunity.
Under 1881 Act a woman can hold property. The larceny question depends on the state and the couples
custom need further discovery (e.g.) did couple normally view possessions as joint or several?
Policy: The conflicting rights between the pawnbrokers statute and the 1881 statute force the court to choose
between these statutes using one of the statutes of construction as a means of interpretation.
Constitutionality of the Statue?
Courts normally like to avoid such claims. Statute only unconstitutional as applied to this case: conflict with
the 1881 statute. Courts usually dont like to rule on these types of issues because they are anti-democratic,
judges are appointed not elected.
2 ways to find a statute unconstitutional, 1, to say that it is unconstitutional on its face(which erases it) 2, it is
unconstitutional is it applies to a case and only to that case.

Notes from class discussion

Replevin: an action for the repossession of personal property wrongfully taken or detained by the defendant,
where the plaintiff hold the property until judgment is rendered on ownership. One must prove unlawful
taking, deprivation of possession, but not ownership. Gives the option to return item or pay its worth. Must
be the owner v. possessor.
3 Counts Of Replevin 3 Possibilities:
One for unlawful taking and one for unlawful detention
One for Replevin of first pawning and one for second pawning
One for recovery of ring and one for recovery of damages
Conversion: The act of changing something from one form to another, or the wrongful disposition or
possession of ones property as if it were his own.
Lien: Legal right or interest that a creditor has in anothers property until a debt is settled.
Redelivery Bond: Act for restitution, or the return of something.
Detinue: Appropriate action if the item was not wrongfully taken against ones will but if it was wrongfully
detained afterwards; you can get the item back if they have it, if not, get damages.
Did not use this theory because she wanted the ring and not money. The intrinsic value of the ring (possibly
due to the fact that it is a family heirloom) makes it worth more than the actual cash value (which could be
argued to be $35).
She could have possession of ring if she could show her husband to commit larceny of ring. But common law
says husband and wife are viewed as one and their possessions cannot be stolen. 1881 statute claims a
married woman may hold her own property but does not refer to pawnbrokers.
Unconstitutional on its face erase law permanently
Unconstitutional as applied just doesnt work on the facts of this particular case.
Lien- A relationship between two or more parties where one party has ownership and the other has an
possessory interest in it.

What are the mistakes made by counsel? (Butler v. Wolf Sussman, Inc)
1) Butler should have asked for summary judgment based on the defendants general denial in his answer.
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 a. Butler may have deliberately failed to ask for s/j to test the constitutionality of the 1881 statute
can alter your strategy to make a case seminal for policy considerations.
2) Butler should have made a demand prior to filing her complaint.
3) Sussman was in error by pleading a general denial
4) Sussman was in error for filing a redelivery bond, this waived the right of demand.
5) Sussman may have done this purposefully to avoid trial.
6) What is necessary for a demand requirement?

Situational Context of this case

1) Why suing the pawnbroker and not her husband directly? Judgment proof, cannot be found, does not have
possession of the ring now
2) Husband and wife scamming the pawnbroker
3) Pawnbroker could fence for the husband

Limits of Replevin
1) Even with a judgment. Might not get the ring back (per barbershop case)
2) Goods must be found to be returned
3) Defendant may refuse sheriffs help in finding goods and might conceal the goods whereabouts
4) Even if you know the goods location, recovery might be obstructed by rules of law

Equitable Relief:
1) There must be no other adequate remedy available at law to get into a court of equity
2) If you get equitable replevin judgment, can use the power of contempt for return of item
3) Just because you cant get item back doesnt limit equity.
4) Have to prove special circumstances = inadequate remedy
5) In equity, court less bound by precedent, makes court look less legitimate when exercising equitable
powers.

Problems:
Judges feel less likely to issue equitable relief because they feel it calls legitimacy of judicial institution into
question and they do violence. Courts must supervise execution of equitable decreeextra burden. Dont want to use
power unreasonably.

Never paraphrase a statute!!!

Statutory construction- see rules pg 41

The court reached a point of constitutionality, which is weird because courts do not rule on the constitutionality of a
case if they can rule it on a lesser point.

Two ways that judges think.

They hate to get reversed, and they like to clear their dockets.

Legal remedies-
-If the facts of your cause of action didnt fit in the common law sense, or there was no legal solution, then it would be
sent to the Court of Equity or Chancery
Equitable remedies- Court of equity, separate from the other court system,
IN 1930 in the US, Courts of law and equity were merged.
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Equity is used for restraining orders, injunctions, and in the 1960s, like in Brown v. Board of Education, made schools
un-segregated.
Equity is the big gun of the law, but it raises questions about how much power a court can have.

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Duke of Somerset v. Cookson 24 Eng. Rep. 1114 (Court of Chancery 1735)

Rule: The plaintiff will be able to bring a bill in equity (court) when an item has been stolen, risks being defaced, and
can there is importance in returning the item in as is condition. An action is equity is proper where a law is lacking, in
that, it cannot compel a party to restore an object to its rightful owner in original condition.

Statement of Case: The duke, who is the claimant of personal property through treasure trove brought this bill in
equity against Cookson, a goldsmith, to compel delivery of an altarpiece in specie; undefaced against current possessor.
Treasure Trove doctrine finder is owner against everyone but true owner
Demurrer even if everything you say is true, you dont have a cause of action; so what
To get into equity
1) No adequate remedy at law:
Detinue: unlawful detention; item or value
Trover: just $$
Replevin: taking was unlawful; Duke has to prove that he is the true owner; stay away from
replevin
2) Remedy violating equitable judgments can result in contempt
Civil Contempt no trial; you hold key to jailhouse door you talk, you can go
Criminal Contempt Trial

To go to equity, you have to prove that legal remedies are inaccurate.

In detinue, the D can either pay the value of the item and damages, or give the item back. The plaintiff
sometimes just wants the item back.

Facts: The Duke of Somerset, lord of the manor, was entitled to an altarpiece made of silver with a Greek inscription
and dedication to Hercules. He became entitled to it under treasure trove within his manor (whoever dug it up gets to
keep it, unless the true owner can be found). The object was taken out of the manor by an unknown individual and the
altarpiece was sold to the defendant, a goldsmith in Newcastle. The case states that the defendant had notice of the
dukes claim to the altar-piece.

Procedure: The plaintiff first brought this action in law, then it went to equity. The defendant demurrers stating that
this is an inappropriate action to be brought in equity.
The defendant claims the plaintiff should have brought this action in a court of law under either trover or detinue.

Issue: If there is adequate remedy at law ( claims there is one in detinue give back the thing itself or pay damages
OR Trover must pay damages for thing) can a bill in equity in brought? / May a party bring an action in equity for
redelivery of an item in the wrongful possession of another when the item in question is one of a kind and would be
very difficult, if not impossible to replace, when other remedies at law exist?

s Argument: 1) Yes, Duke has remedy at law in trover or detinue; equitable remedies do not apply to things merely
personal (personal or heir-looms) 2) Allowing the demurrer to be overturned would result in half the actions of trover
being turned into bills of chancery

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s Argument: 1) No, (a) as the altar piece was a matter of curiosity and antiquity equity would allow for recovery
of intrinsic and curiosity value; and (b) bill in equity would prevent defacing of object, thereby depreciating it (if thus
was brought in law, defacing = less $$ value, could deface and then pay lower value for the object)
Other issues: The floodgates argument: All of the horrible things that will happen if you rule this way, in Butler, the
pawnbroker could say, If you rule this was, all the pawnbrokers in the country will go down, in the case of CERN
people wanting to have an injunction from turning on the machine are saying the black holes that are created will
swallow up the earth.

Result of Demurrer: The demure was overruled and the cause of action was allowed to proceed.

Holding: Yes, there is not adequate remedy at law, a bill of equity can prevent the from altering the piece and
compel delivery of the unique piece.
Narrow: Where the evidence shows the possession of the altarpiece to be worth more to the plaintiff than
merely its intrinsic value and that any defacing of the altar piece may result in depreciation of its value supports that a
bill in equity is an appropriate form of action to recover the altar piece.
Broad: A bill of equity can be used to recover property that cannot otherwise be compensated by any method
of monetary substitution and the return of such property in the exact form upon being taken is essential meaning no
remedy of law would suffice.

Reasoning:
o If there is no adequate remedy at law a bill of equity will suffice in compelling delivery of the personal property
without alteration.
o In Equity the judge can create a remedy. If he doesnt comply, judge can hold him in contempt. Equity is for
real property or things attached.

Doctrinal: The interest of property owners to recover items of antiquity and those that are irreplaceable should be
represented by allowing them to recover equity.
A law in equity is proper where a law is defective because it cannot compel a party to restore a chattel to its
rightful owner in its original condition.
Replevin would not be proper in this case because there was no unlawful taking,
Detinue would allow the defendant to chose to either pay damages or return the item; must prove lawful
ownership
Trover would only allow the payment of damages.
Demur- even if everything u say is true you havent laid out a cause of action.a so what motion

Policy: None of the above actions would allow for the property to be returned undefaced, further, the propertys
value is only in its entirety. Fairness only available if keep in same condition.
Defendant makes a floodgate argument: this case will bring all cases of detinue into equity.
The judges must balance results: item unique, defendant is a goldsmith (melting tendency)

Would the Duke win in Replevin? Yes, knew all along it was wrongfully taken, however could put up a
bond and ask for more $.

Notes from class discussion:

The theory upon which a rule is decided is important,

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 Replevin? could have kept it, defaced it if he file redelivery bond; no guarantee that gets back the item in
specie, if at all;
Detinue? not returned to until he prevails, can deface, no guarantee that gets back item in specie, if at all
Balancing Test for inadequate remedy of law:
o (1) uniqueness/worth [value] of the item
o (2) occupation [goldsmith]
o (3) who owned the piece, the person who sold it to the

Treasure trove: Doctrine stating that the finder has right over all by the true owner
Plaintiff claims interest in the altarpiecewhy is he the true owner?

Court of Chancery: Arose in England in 1500 and common law was very specific. Courts in England with the
power to supercede the common and statutory laws. Have the power to enforce their remands.
Mrs. Butler: Can she bring her action in equity too? She can say that it has been passed dow, so it is a
heritage item. It can go both ways, different judges rule differently. They say that there is no human element
in judging stuff, but there is .

Party with an inherent interest in a chattel whose intrinsic value will be destroyed unless the chattel is
preserved in specie shall have the legal right to establish ownership of the chattel and if successful recover the
chattel in its original state.

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Syllogism- a way of reasoning. There is the IF term, the Then term, and the This term. The then term marks out the
legal consequences. The IF lists out the factual terms, and the this isTake a situation and put it in this form then put it
into a legal argument.

Butler v. The Frontier Telephone 186 N.Y. 486 (Court of Appeals New York 1906)

Statement of Case: This is an action for ejectment by the owner of property against the Frontier Telephone
Company for stringing wire on his land; the landowner is seeking damages and recovery of space.

Facts: On January 1, 1903, without the consent of the plaintiff/landowner or lawful authority, the Telephone
Company entered the land and stretched a wire over and across the property until January 10, 1903, when the
defendant removed the wire. The wire was strung 30 ft from the ground and on the eastern side and slanting to
about 20ft on the western side and reached across the entire width of the premises. The supports for the wires
were not on the plaintiffs grounds. Butler had continuous possession of the land, except the air space taken up
by the telephone wire.

Defendant argues that this should be a matter of trespass or to abate a nuisance rather than an ejectment.

Plaintiff argues that action for ejectment is appropriate because the wire dispossessed me of a portion of my
property.

Procedure: The case was tried first as a bench trial; the court decided the plaintiff, as owner of the premises in
question, was entitled to judgment against the defendant, for 6 cent damages for withholding said property, removal of
the wire from the property, and for the costs of the action. The defendant appealed, but the Appellate Court upheld the
decision. The defendant brought this last action to the New York Court of Appeals (highest court).

Issue: Will ejectment lie when the soil of the plaintiff is not touched, but a part of the space above the soil is occupied
by an object of the defendant (telephone wire)?

Result of Appeal: Judgment affirmed and the removal of the wire after the suit did not defeat the action.
(The facts of the case are relevant as of the day of the action).

Holding:
Narrow: An ejectment will lie even if the soil was not touched because Butlers property ownership includes
not only the surface but also the space above and beneath his land. Furthermore, the wire is an obstruction preventing
Butler from his exclusive property rights.
Broad: An ejectment will lie because the plaintiff showed ownership of the property and he was ousted by the
use of his property, which includes the space above and below his land.

Reasoning
Doctrinal: The plaintiff showed he was formerly in possession, that he was ousted or deprived of possession
and that he has a right to recover and re-enter his land.
The fact the wire was removed at the commencement of the action is irrelevant because it existed upon the
filing of the complaint.

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 Policy: Owner could not fully use his property; both the esthetic and practical uses were impaired.
Court must grant an ejectment, otherwise this would be a terminal suit of trespass and the damages would
become similar to rent.
In this case the phone company would pay 6 cents rent for each action - due process for property owners who
are in essence being deprived of their full use and enjoyment of their property
Future implications regarding who owns airspace? How will this decision be played out in the future as
aviation expands.

Notes
This case is important because it set property rights.

Trespass: Invasion of exclusive interest by another of ones property inadvertently spilled water only get
damages. Trespasses dont give rise to ejectment actions. You also have to keep filing trespass actions.
Nuisance: Interference with the use or enjoyment of ones property; creating an aggravating environment
for others. Ex. Spout that shot water on land. Doesnt arise until ur use and damage is harmed
Ejectment: 1- Must prove he is in rightful possession of the land, 2- that he was ousted, and 3- that he has a
right to regain possession; must show formal possession - can get damages as well. The damages that you get
are from the lost profits from the use of the land, or the profit made from the use of your land.
Plaintiff was dispossessed
Plaintiff was formally in possession
Plaintiff has a right to re-enter and re-take possession
Sheriff can deliver the occupied space by removing structure (Delivery can, and does, mean the removal of
the occupying structure to deliver the use of that portion of the property).
Damages: Repossession of the land, value of the land, court costs, lost profits.
Smith v. new England Airline: A flight over ones land at heights in excess of fixed law are lawful as long as
there is no harm to property owners or interference with any valuable use of the land.
U.S. v. Cusby: The common law doctrine of ownership of land extends to the atmosphere has no place in the
modern world; yet they still held that there must be some limitations set on the altitudes of navigable
airspace. Flights flying below the altitude set by the Civil Aeronautics Authority were not within the
navigable airspace of the public domain.
Griggs v. County of Allegheny: The use of airspace over the petitioners property was a taking of property by
the county and the plaintiff is entitled to compensation. This was airspace for take-off and landing.

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 PART II: COMPENSATORY DAMAGES

The history of damages started in the mid 18 hundreds. The common law in England and America had remedial
compensations. The rules started changing during the industrial revolution due to the fact that business economics
were changing, and that at the time, trial by jury had no rules in the awarding of damages, and in some cases the
damages awarded were extreme. Hadley v. Baxendale was the start of limiting damages to plaintiffs. This case set
the rule for awarding damages. The Hadley formula is based on Sedgwicks translation of French civil code.

The opinion (rule) given by Holmes on (105) has not been accepted he drew the line at the awarding of lost
profits.

Measuring damages to arrive at compensationgoals:

Tort Give sum of money to person wronged which as nearly as possible will restore him to position he would be
in if wrong has not been committed. (McCormick p86)

Contract Award a sum equivalent to the performance of the bargain; place the plaintiff in the same position if the
contract was fulfilled.

Can you get punitive damages from tort actions? yes

Can you get punitive damages from breach of contract?-not usually, but in cases of willful breach, you may.

When are damages rewarded?

Proximate Cause: When the injury is not remote from the defendants breach of duty
Foreseeability: The defendant could/should have foreseen the relationship between the breach and the
injury
Causal Relationship: Defendants conduct and the harm must be related
Wider range in tort than contract: reasonable within mind of the parties at time of K formation

Prosser p89
1. Tort 2. Contract
Actions to protect interest in freedom from various Contract action created to protect interests of a promise
types of harms being performed
Duties of conduct which give rise to them are imposed Obligation imposed by the parties in the agreement
by law and based on social policy; irrelevant of the
intentions of the parties
May be owed to all of society or range of people Owed to specific parties mentioned in the agreement

Flow of the cases:

Cases start with classic foreseeability--> moves to causation--> then to extreme causation (Polemis which held
the defendant liable for the most improbable consequences of his action)--> then the court begins to limit causation
(Christianson held direct consequence with no intervening actions)-->and finally the court moves back to foreseeability
(Hill held a mix of causation and foreseeabilityWagon Mound and Mouney held for a strict foreseeability).

Contract:
Responsible for
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 o What flows from breach
o In contemplation (special contract)
Self-imposed, agreed mutually so limited liability for breach (Hadley)
Tort:
Two rules of Liability
o Any damages foreseen (negligent)all damages you are responsible for (limit changes)
o If some damage foreseen, enough; dont need to know exact damage (Polemis)
Duty imposed by law
o No choice, non-negotiable; cannot contract out of it. Its a higher standard.
No Tort:
No duty, no breach, no liability (Palsgraf)
Even if duty and breach, liability will have limits.

Hadley v. Baxendale156 Eng Rep 145 (Court of Exchequer 1854)

Award of damages for those actions of negligence that arise naturally from a breach of contract (in the usual
course of events) or special circumstances communicated at the making of the contract.

Where two parties have made a contract which one of them has broken, the damages which the other party
ought to receive in respect of such breach of contract should be such as may fairly and reasonably be
considered to have been in the contemplation of both parties, at the time they made the contract, as the
probable result of the breach of it.
Causation in fact!! Allows for damages when breach arises naturally from the contract!!

Statement of Case: Mill owner/customer/consignor brought this action against a common carrier (such as
UPS, FedEx will carry almost anything) of goods and chattels seeking damages for the delay in the delivery
of a broken shaft to manufacturer for repair, resulting in the loss of profit of 300 pounds due to the stoppage of
the mill.
Consignor- someone who ships goods to someone else.

Facts: Plaintiffs were millers in Glouster. Their mill stopped because of a broken crankshaft and the plaintiff
contracted with a company to make a new shaft for the plaintiff. However, they needed the old shaft sent so the new
one would fit the plaintiffs engine. The defendants were contracted as common carriers of goods and chattel for hire
between these towns. Defendants told the Plaintiffs that the could fix it and return it the following day
Servant told the clerk that a replacement was needed immediately, that the mill was not operating and choice
this carrier because they expected the shaft to be returned in only two days. However, it took 5 days to return the new
crankshaft and the consequence was that the workings of the mill was delayed, profits were lost, and wages were paid to
workers who could not work
When the plaintiff and defendant contracted, the defendants were never told that the mill would be stopped
from working until the new crankshaft was delivered. The only circumstances here communicated by the plaintiffs to
the defendants at the time of the contract was made was that the article to be carried was the broken shaft of a mill, and
that the plaintiff were the millers of that mill. Side note: The industrial revolution was just beginning at this time.

Procedure: Plaintiff sued under two counts: 1) the defendants failed to deliver the crank shaft on the following day
and instead delayed delivery until the 7th day; 2) defendants failed to use due and proper care in carrying the or
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conveying or delivering the broken shaft within reasonable time due to negligence, which resulted in loss of gains and
profit for the plaintiff.
Defendants pleaded non asumpserunt to count one (no, I did not undertake to do this in two days), and payment
of 25 pounds to count 2. Meaning no such promise, but negligent in his delay.
The Plaintiffs entered a nolle prosequi as to the first count (legal notice that the law suit has been abandoned),
and replied that the sum paid as to count 2 was not enough to satisfy the Plaintiffs claim.
The Judge left the jury general instructions and the Plaintiff was awarded damages of 25 pounds beyond that
already paid, (equaling 50 pounds). The Defendant claimed instructions were too remote, and therefore they were not
liable, via a rule nisi (plaintiff show cause why should not get a new trialthey got a new trial based on misdirection
given to the jury).

Rule Nisi- a show cause order. What does the other side have to do to not have a new trial? They have to show cause, if
they do, then they get a new trial.

Issue: Should the rule nisi be absolute and the defendants be barred from a new trial?

Result of Appeal: Rule nisi has been granted and made absolute. Court orders a new trial with new instructions to be
delivered to the court, that they ought not to take into consideration at all the loss of profits estimating the damages
(unless new facts appear).

Holding:
Narrow: The plaintiffs were not entitled to recover lost profits as damages for breach of contract where they
failed to notify the common carrier that their mill was rendered inoperative by a broken crankshaft, would remain
inoperative until they received a repaired crankshaft, and that a failure to deliver the crankshaft in two days would result
in lost profits.
Arguable limitation on the amount of recovery, an attempt to restrict the promisors liability for breach of
promise to those consequences of risk which he knew about to must have taken to have known about when he
made the contact.
Broad: Damages for lost profits arising out of a breach of contract may not be recovered where the damages
do not arise naturally from the breach itself or in contemplation of the parties at the time of contract formation.

Reasoning
Doctrinal: Award of damages for those circumstances that arise naturally from a breach of contract (in the
usual course of events) or special circumstances communicated at the making of the contract.
The special circumstances under which the contract was formed were not communicated by the Plaintiff to
the Defendant. In the multitude of cases where millers send out broken shafts to be repaired the
consequences ordinarily are not the stoppage of the mill. Therefore, the loss of profits cannot reasonably be
considered such a consequence of the breach of contract as could have been fairly and reasonably
contemplated by both parties when they made this contract.
Policy: Should have included a liquidated damages clause, bargain to create own damage clauses. People
should be allowed to bargaining for own deals, unlike in torts cases. People best understand their own interest. Do not
want to give undue burdens
Court interpreting agreement might hurt the growing industry of this country
Protection of common carriers, essential to commerce in society

Notes:

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Difference in torts and contracts, - in contracts you can impose the terms , in torts the state imposes the law
Instruction to the jury-

The only facts that are known to the court are that the plaintiff has a broken shaft and that the defendants are millers.

Facts as proposed by the reporter-

The different facts of each side to the case dont really matter, you have to put each sides individual facts through each
sides normative lenses.

Look at this case in two ways, apply the facts of the court and see who wins. Then take the rule of the D and the facts
of the P and see what happens.

When you take an exam and figure out how to apply the rules, you have to look at the consequences.

When rule absolute is said, the trial goes back down for new trial

Compensation if far greater than the original shipping cost.

Consideration is the payment of the contract and the delivery of the crankshaft.

Two counts:
1) Breach of contract for the delay past two days
2) Negligence for breaking promise of due care and following through with due and proper care and diligence
in and about the carrying and conveying the broken shaft. Is this a result of a special contract with the
plaintiff or a concept of his negligence in his duty as a carrier (blurry line).
How arrange the facts for your client
1) Arise naturally from perceiving what might occur. Generally foreseeable; Company loses profits and
costsarise in the usual course of dealings. Could the shipping companys bargain to pay 25 lbs be seen as
an admission of guilt
2) Recover damages as can be reasonably supposed though an agreement between the partiesbe specific in
contracts.

What if this was framed in tort?

It might be possible for the plaintiff to recover the lost profits, for they were a foreseeable result of defendants
negligence; defendant will argue the plaintiff cannot recover from pure economic loss and speculation.

Purpose of Hadley Rule...

1) Notion of limited liability to protect common carriers
2) Provides predictability and order in commerce and courts.
3) Established special class of damages and certain circumstances.
4) Hadley is a tort case not a contractnot separated yet
5) Also to limit the amount of recovery

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Kraus (webbing) v. Greenbarg (overalls) 137 F. 2d 569 (3d Cir. 1943)
Contract; defendant (buyer)

Seller of webbing is suing the buyer of webbing for nonpayment. Buyer of webbing is countersuing seller for breach of
contract.
Breach must be the proximate and primary cause of the injury and the exact type of liquidated damages clause with the
government.

Statement of Case: Action by sellers of webbing against buyer of webbing/overall company for BOK to recover
special damages incurred by the buyer for the BOK with the government.
Action brought by a webbing company, seller/, seeking damages against an overall company, buyer/, for
failure to make payment on their contract for the webbing sold and delivered--$15,326.13.
A counterclaim was filed for breach of contract by the buyer/ (overall) for delayed delivery by the seller
(webbing) which resulted in a breach of the s K with the government contract to deliver 698,084 pairs of
overallstherefore causing a per diem monetary penalty of $22,740.99.

Facts:
The defendant was contracted to deliver the US government overalls at stated quantities and at stated intervals.
For any delay in these deliveries, the defendant was required to provide a sum as liquidated damages calculated
per each day of delay (governments way of protecting itself.)
On the same day, the defendants placed an order with the plaintiff, a webbing company for the webbing to be
used in the making of the leggings. The order provided for certain quantities of webbing to be delivered at
given dates.
The webbing company admitted that it failed to deliver the webbing as per schedule, but denies liability on its
part for special damages sought.
Since the webbing company failed to maintain schedule, the leggings manufacturer/buyer could not maintain on
schedule either, and incurred the per diem penalty.
Note: The did not mitigate damages (look for other makers; secure a back-up supplier), which would have
lessened the risk of BOK with the government.

Procedure:

14
 The webbing company sued the buyer, overall company, to recover $15,326.13 for the webbing sold and
delivered to the overall company pursuant to the latters order. The buyers admitted nonpayment but filed a
counterclaim for $22,740.99 for the liquidated damages the overall company paid the government in breach of
this second contract.
The jury returned a verdict in favor of the for the counterclaim and judgment was entered for the difference
less $2,000 (counsel for the overall company agreed to remit $2,000 of the verdict for that portion of the penalty
attributable to defective merchandise and late delivery during the two months period following the last delivery
of webbing, allowing a reasonable time for using the webbing delivered). The plaintiff/webbing company files
this appeal.
o Rule 13 Counterclaims:
Compulsory arises out of the same transaction; must be brought up at this trial
Permissive does not arise out of the same transaction; can be brought at any time
o Conflict of Laws
PA & NY; we are in Federal Court because of diversity jurisdiction; we are in federal court so
we apply substantive PA law
Diversity jurisdiction exists to prevent against bias
PA applies Hadley (would this happen in the usual course of events?)

Issue:
Can a party to a contract be held liable for damages for a breach of contract if the breach is due to the actions of
the other party in the contract? Can a party be held liable if the other party didnt mitigate the damages incurred
by him, and the breaching party could not foresee that mitigation would not occur?
OR
Whether the district court erred in denying vendors motion for new trial based on submission of questions to
and instruction of the jury to award special damages incurred by the purchaser as a result of liquidates damages
assessed by the U.S. government for BOK?
o Did the vendor have knowledge that delay would result in per diem penalty?
The facts do not indicate what exactly was communicated, but the jury determines that the
webbing company (should have) known. The issue of mitigation of damages by seeking out
other markets is not addressed here because it was not brought up below. This was a huge error
on the part of the s lawyer because failure to mitigate could have been an independent,
intervening act (3).
o Was the delay the primary cause of the damages?
o Could the damages have been avoided?
The government K included a provision under Article 17 which would have allowed the
legging company to avoid the special per diem penalty. This could be construed as an
independent, intervening act (they had the opportunity to reverse the effects of the BOK by the
webbing company but chose not to.)
Diversity jurisdiction- plaintiff wanted to use Penn. Court, and Hadley rule.

Result of Appeal: Affirmed.

Holding:

15
 Narrow During wartime when the seller was aware at the time he made the contact that his breach would
subject the buyer to the liquidated damages contained in the government contract, and where the sellers breach was the
substantial fact and proximate cause of those damages, the seller is liable for the damages claimed since they were
reasonably foreseeable.
Broad: Where both parties are aware at the time of the contracts formation that one partys breach will result
in special damages to the other party, and the breach does cause those damages, then the breaching party is liable for
those damages.

* Which state law to use is important. D wanted NY P wanted PA. Court decided the Pennsylvania law of
damages would apply.

*Case got into the federal court on diversity jurisdiction

Reasoning: When there is a K and a breach thereof, the breaching party will only be responsible for damages that were
foreseeable in the usual course of events or under special circumstances, but they are not liable for damages caused by
the injured partys failure to mitigate.
Doctrinal: [Hadley Rule]

Special damages for a breach of contract are not recoverable unless they can fairly and reasonably be
considered as arising naturally from the breach or as being within the contemplation of the parties, at the time
the contract was made, as the probable result of the breach. Where the consequential damages claimed were
within the contemplation of the parties at the time of the contracting as the probable result of the breach, their
recovery has been allowed. Hadley v. Baxendale
Pennsylvania law states that one is not required to go though the motions of attempting to avoid damages
when it is certain that they will prove of no avail. The right to measure damages is governed by the law of
the place of performance.
Under the contract with the government, Greenbarg could have been granted an extension if it asked, but it
did nottherefore they did not mitigate the damages. However, their request most certainly would have
been denied.
Policy: The effect on the government contract causing the defendant to incur liquidated damages was deemed
foreseeable in terms of the current events of the day (wartime).
Wartime Government contracts held to a higher standard: lives at stake, WWII, war goods a necessity.
They were important to obtain necessary supplies for soldiers.

Notes:

Three jury instructions are on appeal:

Was the seller, Webbers, aware of the buyers contract with the government?
How is causation determined? How can it be determined if the seller caused the breach on the secondary
contract?
Should the buyer be forced to mitigate damages with the government and ask for a time extension?
Damages: The measure of damages is governed by the law of the place of performance. In this case it is PN.
We do not know what exactly has to be communicated to hold one liable for a breach of contract.
Causation:
SoleOne action causes the damages
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 PrimaryOther actions may surround an event, however, one action is attributable for the damage
Substantialone party causes a greater damage in an action by a group.
5. Connection
Breach of contract case
Federal court because diversity (parties are from different states)
Holdings:
Plaintiffs act must be predominating, substantial (real, main, primary, chief) cause of harm
Mere complication is not enough
No obligation to ask for extension will not get it
Special damages for breach of contract not recoverable unless they can fairly and reasonably be considered
as arising naturally from the breach or as being within the contemplation of the parties at the time the
contract was made as probably results of the breach (Hadley rule).
Different from Hadley because it was decided on theory of substantial factor as the cause of the plaintiffs
damages; test as to the extent. (Hadley + substantial factor test).

Compulsory counterclaim-(rule13 Fed. Rul. Civ.Pro.)

* Damages: Was the rule in Hadley similar or different than Krauss? D knew failure to deliver the webbing on
time would lead to failure of Krauss to deliver their product to the govt on time, but the court sais he was aware
of the situation.

-Did Webber know about it because of common knowledge or newspaper?

-Prior Experience?
-Told by P?
- Would it matter HOW he came to know of the circumstances?

Hadley Rule Responsible for damages that would be considered to reasonably occur in the natural course of
things or special communication of the circumstances.
- Put P in a position that he would have been in without breach of contract.
- Stotsky: Hadley rule doesnt really tell you whether communication must be made

Do we want to charge parties with more knowledge than is discussed between them? (Policy)

Should they be liable before breach to know the exact amount they would be responsible for?
- At the time the contract was made, should the party who wants to have goods deliver communicate the
exact amount of the potential damages.

Ex: Suppose A contracts with B to deliver some paper to the mill. In the paper there are some diseases, which
he knew or should have known about. Workers use the paper to wipe their handsetc. Workers got sick.
Should the company that supplied the paper w the germs on it be responsible? Was at the time of the contract,
was it communicated that if a disease came in the paper the mill would shut down for x amount of days costing y
amount of dollars?

Burdensome to put all possible occurrences in a contract. You cannot protect yourself from being negligentif
your negligent you are responsible. Need to be careful when writing a contract.

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Ex: Suppose hes flying from NY to Miami. Carriage fails. Stotsky stuck in Orlando, has to get a hotel room,
meal, another flight, stuck there for days. Finally gets to Miami. Missed a business opportunity with Bill Gates.
Bill Gates wouldnt meet any other way than in person. Can prove that the missed meeting lost him his business
which equaled $10,000,000.

Should we put the burden on the party to tell them the exact consequences, and should they be seen as accepting
the liability for those consequences just because of communication. Krauss doesnt answer

What do we need to communicate? What burden should we put on the defendant business? If they are involved in the
business, should we say they SHOULD have known and they didnt. Is it enough to warn them that extensive injury
would result in a breach. Should we tell them the circumstances that would lead to the injury and what the amount of
the injury would be?

In the usual course of events, failure to deliver someone via airplane on time may lead to loss of profits.
Is it specific or is it general?

Need to distinguish what is reasonable to be communicated and what isnt.

Foreseeability Issue (D Argument): Webbing Company failed to raise another issue of foreseeability. Could have said
the plaintiff failed to mitigate damages by searching for another supplier. Webbing company did not tell the judge to
put it in an instruction. Often, if you fail to mention something in trial you waive it. Second reason Ds issue of
foreseeability was not valid, was because the D made a false promise saying they would get the goods to them. Maybe
if D did not make a false promise, P would have looked elsewhere.

The burden to have a secondary plan is on the party getting the goods.

Causation Issue (D Argument): D asked for an instruction below the mention that they were not the sole cause of the
plaintiffs injury. Legal cause needs to be the sole cause of harm, the primary cause of the harm, or a substantial factor
cause of the harm. Plus the proximate cause of the harm.
Sole cause = person who hit the person and killed him. (Best test for webbing) (Stricter)
Primary Cause = the people who hit you hard first (Court said they would apply this)
Substantial Cause = everyone who hit person at all

*Appellate court said webbing company only deserved a substantial factor test but trial court gave them a more
beneficial (in this case stricter) test, primary cause.
*Court sais that based on precedent, the article 17 argument does not provide an extension for legging company based
on breakdown of subcontractors subcontractor.
If the legging company is required to mitigate damages, should they be required to at least try to get an extension?
Based on the fact that the article 17 says including but not restricted to.

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 Virginia Railway v. Armentrout158 F.2d 358 (US Court of Appeals 4th Circuit, 1946)

Statement of Case: Action in negligence by Charles Daniel Armentrout, an infant who sues by Daniel Richard
Armentrout, his next friend (parents), against the Virginia Railway Company, for injuries sustained by plaintiff when
struck by defendants train.

Facts: Thirteen-month-old child was playing in the yard while various members of the family were in a nearby field
and in the house, which was located on a hill above the railroad track by the side of a public road. The baby wandered
down the hill and was in a crawling position on the track at or near the crossing, where boards with composition paving
between had been placedthis is about 300 ft or 100 yards. Kid was walking and was supposedly intelligent according
to parents. In the past would run upon hearing the train whistle (said to be unsubstantial by appellate judge)
The train approached and the child did not remove himself from the crossing. Testimony was given that no
signal was given by the engineer to alert the infant of the dangernormally signal at turning corner. Engineer was
waiving at others, family and friends. Engineer testified he saw an object on the tack at 220 feet, but did not recognize
it as a baby until 191 feet. Engineer was unable to stop the train until 40-50 feet beyond the infant.
No test was made to ascertain in what distance the engine could have been stopped when going at various
speeds (10-20mph). Kid was severely injured, lost legs and arms

Procedure: Two issues of negligence were submitted to the jury:

1) That the engineer failed to give adequate warning of the approach of the engine and
2) That he failed to keep an adequate lookout and to save the child from injury after his presence on the track
was observed and there was still time to stop the engine.
1st trialhung jury (no verdict for either side)
2nd trialin favor of the infant for a lot of money
Jury trial awarded damages in the sum of $100,000 to the plaintiff
The Railway Company appealed, alleging that the judge erred in his instructions to the jury and in his refusal to set
aside the verdict as excessive.
(2 Issues of Negligence: 1- Warning Signal 2-Lookout)
Defendant appeals of the grounds of misdirection of the jury instructions and excessive verdict
1) Was the failure to give warning signals the cause of the injuries?
2) Tests of the speed and ability to stop
D Arg a. Defendant wanted another instruction regarding emergency circumstance and the reaction of
freezing the decreased reaction time
3) Was the instruction for damages correctforcing a larger verdict then what should occur?
a. Instructions were such that they would persuade the jury to award more than they should

Jury: Issue 1: The failure to blow whistle would hold D liable IF it is found that the child is of the mental capacity to
understand the signal.
Issue 2: Engineer was waiving to family members, and when even closer to people on the embankment.

Jury came back with a general verdict D is guilty of negligence. We dont know on which issue they said
the D was negligent.

Judge since the baby cant be contributorily negligent, then you cant say the baby was smart enough to get
out of the way. (Trial judge said cant be contributory; appellate judge said then cant be smart enough to get out of the
way).

19
Issue: Was the child in sufficient mental capacity to understand a warning if it had been given? Was it fair for the
court to assume no test was done as to the stopping distance because it was negative to the defendant? And did the
court err in the instructions to the jury in deciding damages?

Result of Appeal: Reversed and remanded.

Holding:
Narrow: A 13-month baby lacks the mental capacity to respond to any signal that might have been hidden by
the train, the engineers failure to sound any signal was not the proximate cause of the infants injuries, and the railway
should not be held liable for the resulting damages based upon its failure to blow the whistle. The court further erred by
not incorporating the elements of emergency present and a test after the accident to see if the train was capable of
stopping would not incorporate these elements of emergency. The jury should also not infer negligence on the basis
that the defendant failed to conduct this test.
Broad: One cannot be held liable for damages for injuries caused by a negligent act when the negligent act was
not the proximate cause of the injury. Circumstantial evidence is necessary to determine if there was a last clear chance
to prevent the accident and the non-performance of a test of evidence cannot be assumed as guilt.

Reasoning:
Doctrinal: One cannot be held liable for damages for injuries caused by a negligent act when the negligent act
was not the proximate cause of the injuries.
Situational factors essential in analysis of reaction (law is applied to LIFE SITUATIONS AT HAND!!)
Policy: A 13-month child cannot be deemed mentally capable of respondingnot proximate cause of the
accident.
Parents have a duty of care and probably would have taken a portion of the damages rewarded (would
almost be a windfall as a direct result of their negligence in supervision of their child). .

Judge - Damages: Should be reduced for 1. Earnings of minor are property of parents
2. Probable earning power of the child handicapped as it was 3. Earning power of the amount of money
awarded by the jury.

Notes:
Baby cant sue because hes incompetent under the law to file suit (minor).
Statute: A bell or whistle shall be sounded by an engineer or fireman on a train at a distance of at least 60
rods from a railway crossing.
o Using a statute to prove negligence:
Is the purpose of the statute to prevent this type of harm?
Is the person who seeks to use the statue a member of a class of persons to be protected?
Foreseeability.
Does the law provide a standard of care that equates to negligence?
Is violation of the statute conclusive proof of negligence?
o In this case, but not using the statute we are allowing the railroad to be more negligent against children
than adults.
Damage Question: Problem because we do not know a babys future earning potential; parents might also
take all of the money; only measure are physical injuries Court asks for fairness.

20
 Connection:
o Expands Hadley
o Rules prevent proving legal causation chain, i.e., inadequacy of infants. In this case, child was not
capable of responding.

Hypo: Suppose a statute said anyone driving over 60mph on a highway is liable in a civil action to anyone
injured. Injured driver is driving in right lane going speed limit doing anything wrong. Is that evidence of
negligence?

Statute is admissible because it establishes a right.

Who is the status intended to protect. Other drivers would be a foreseeable plaintiff.
Does the statute establish a standard of care by which we could say the violation of it
establishes negligence? Probably does

Say someone is driving 85mph. Someone who is skydiving lands right in front of the car and is hit by the car. In a
wrongful death action, can the mans estate sue and use this statute to establish negligence by saying he was a
foreseeable plaintiff and violated the standard of care.

Skydiver is not the class of persons the statute is intended to protect. (not a foreseeable
plaintiff)
Statute would not be admissible.

Same guy is still going at 85mph, and B is in the right lane driving 55mph at about th speed limit. B looks at the car
going by and has a stroke because he was scared by the fast car / noise. Can estate of B use this statute to sue the driver
as proof of negligence?

The person that the kind of harm the statute was intended to protect was different than this
type of harm.

Negligence per se (Use of a statute to prove negligence)

1. Statute must create a standard of care

2. The person who is injured must be a foreseeable plaintiff in violation of the statute
3. The type of harm that occurred must be the type of harm the statute was intended to protect against

In order to use the statute, it must create a standard of care. The person who is injured must be a foreseeable plaintiff.
The type of harm that occurred must be the type of harm the statute was intended to protect against.

Why doesnt a licensing statute establish a standard of care? Most licensing statutes have nothing to do with being a
competent person in the field for which you obtained the license.

Why would there be an issue of fairness (why would be unfair) to use a statute that is a misdemeanor to prove
negligence? If someone doesnt know that they will be held as liable for negligence when only admitting a small offense
(such as a misdemeanor)

21
In re Polemis and Forness, Withy & Co. 3 K.B. 560 (Court of Appeal 1921)
Same case as from torts book

If an act would or might probably cause damage, the fact that the damage if in fact causes is not the exact kind of
damage one would expect is immaterial, so long as the damage is in fact directly traceable to the negligent act, and not
due to the operation of independent causes having no connection with the negligent act, except that they could not avoid
its results.
*Once an act is negligent, the fact that its exact operation was not foreseen is immaterial.

What D might reasonably anticipate is only material in determining whether he is guilty or not. Once it is determined
the D is guilty of negligence, he is responsible for all damages directly caused by his negligent act.

Statement of Case: This is an action in tort negligence brought by the owners of a steamship against the charters or
their steamship for damages due to the destruction of the steamship by fire caused by the negligence of workers
employed by the charters. Shipowner sues a charterer to obtain damages for the total loss of the ship due to the
negligence of the defendants employees.

Facts: Polemis chartered the steamship to defendant for the period of the war with an option of an additional six
months afterwards. A clause in the contract provided that the ship was to be returned in the same good order with wear
and tear expected. In the contract, Clause 21 stated, The acts of God, the Kings enemies, loss or damage from fire on
board in hulk or craft, or on shore, arrest and/or restraint of princes, rulers, and people, collision, any act, neglect, or
default whatsoevermutually excepted.
Three arbitrators found that the ship was lost by fire and that this fire arose from a spark igniting petrol vapor in
the hold. The spark was caused by a falling board coming into contract with a substance in the hold of the ship. The
fall of the board was caused by the negligence of the Arabs engaged in the work of unloading the ship. The Arabs were
employed by the charterers on their agents the Cie. Transatlantique on behalf of the charterers and where servants of the
charterers. The causing of the spark could not reasonably have been anticipated from the falling of the board, though
some damage to the ship might reasonably have been anticipated. The Arabs were not known to be negligent. Lastly,
the damages to the vessel amounted to 196,165l.

Procedure: There is a contract clause for arbitration of disputes and each side picks an arbitrator, then they choose
number 3. This is normally binding and hard to overrule such finding of fact. The arbitrators stated, that subject to the
opinion of the Court on any question of law arising the arbitrators awarded that the owners were entitled to recover from
the charters the before mentioned sum. If the Court decided the award was wrongget nothing. The arbiters awarded
the owners the amount/value of the ship and the court affirmed this award.
The charters appealed this decision based on two claims:
1) It could not have been reasonably anticipated that the negligent act of dropping the plank would have
caused a spark and the damage was not the natural or probable cause of the act
2) Clause 21 of contract stating, fire always mutually excepted relieved the charters of liability

Issue: Was the court justified in awarding the plaintiff based on the findings of fact by the arbitrators?
Was it foreseeable for this damage to occur?
Charters argue: damages should be limited in that they could only be applied to what were the foreseeable
consequences of the breach of duty
Owner argues: Once the damage was determined to be the result of negligent act, the actor is liable for all damages
directly resulting from the negligent act.

22
Result of Appeal: Affirmed the judgment for the owners with the money granted by the arbitrators.

Holding
Narrow: Because the act by the Arabs was determined to be negligent, the question of whether or not the
damages were foreseeable is immaterial, because the fire was a direct result of the spillage by the Arabs, who were
employed by the contractor.
Broad: As long as the damage is directly traceable to the negligent act the exact kind of damage one would
expect is immaterial, as long as not due to the operation of independent causes having no connection with negligent act,
except that they could not avoid its results (expands liability, rejects forseeability issues from previous rulings). .

Reasoning
Doctrinal: To determine whether an act is negligent, it is relevant to determine whether any reasonable person
would foresee that the act would damage; if he would not, the act is not negligent. But if the act would or might
probably cause damage, the fact that the damage it is fact causes is not the exact kind of damage one would expect is
immaterial, so long as the damage is in fact directly traceable to the negligent act, and not due to the operation of
independent causes having no connection with the negligent act, except that they could not avoid its results.
Once the act is negligent, the fact that is exact operation was not foreseen is immaterial.
Policy: Negligence has a lesser standard then tort
Notes:
How has this changed since Hadley? Compare:
o Contract v. tort case: Look at the greater value in determining which to use!!
Contract: Forseeability speaks to the breach and then to the consequences of the act.
Consequence is bringing party to same place as if breach did not occur.
Tort: Negligence, Foreseeably harm somebody and then negligent to the harm that ensues,
without foreseeability. Consequence is to punish and allow injured to recover.
Our new limit of liability is: abnormal and unforeseeable
What if this was a case in contract?
o The defendant chartered the ship as a contract; contract held for the return of the ship
o Harder to recover because no special circumstances stated (rule of Hadley)
o McNair, The Polemis Business (145) If the ship owners could only have sued the charters for breach
of contract, the finding would have been fatal and would have prevented them from recovering the
value of the ship.
Only some damage would be reasonably expected from dropping a plank; it could not be said
that the destruction of the ship arose naturally from the from the breach
Damages in contract are governed by, compensation as may be reasonably supposed or
actually be proved to have been in the minds of the contracting parties at the time of contracting
as the consequence of non-performance.
In tort damages are simply causation.
Connection:
o Tort case regarding causation
o If defendant can foresee some harm, then liable. Doesnt have to foresee exact damage
o If had been brought in contract, would have definitely won because the contract did not exempt them
from negligence and damaging the boat.

Arbitrators here are finders of fact Since it is a contract, the ship owner decided to protect themselves by adding an
arbitration clause in the contract.
23
Contract was breached because of the negligent act of the worker who was an agent of the defendant

This could be a contract case Breach of contract was a result of the negligent act of the Ds agent.
It is in the torts casebook because the main argument is if the defendants act was the proximate cause of the injury.
However, unclear whether this should really be a contract or a torts case

Dropping the plan Foreseeable to harm the ship or cargo; not foreseeable to cause a spark and cause a major fire.
But since the dropping of the plank was negligent and could have caused damage, any damage that resulted the
defendant was liable for.

Arbitrations are binding usually cannot dispute items of fact, only rules of law form an arbitration.

P Once someone is negligent, D can recover everything that directly results from the negligent act.

The idea that liability attaches when it is directly caused is inconsistent with the notion that your not responsible if there
is an independent act.

An intervening force is one that comes into operation producing a result after the negligence of the defendant. The D
will not be relieved liability by an intervening force that could have reasonably foreseen or one that occurs in the normal
wake of the negligence

D here argues that damages for negligence should be the same for a breach of contract. Meaning the damage must be
anticipated or foreseeable or specially communicated
- Argues that if you could foresee the fire, and the extent was unforeseeable you would be responsible,
but since the type of harm was not foreseeable D should not be held liable (Court disagrees)

Comparing Hadley & In re Polemis = If Hadley is a contract action and this is a tort action, maybe we should say there
should be diff types of damages. If both are contract, then we have diff damages. If both are tort than different damage
rules.

Contracts Putting P in the position they would have been in without the breach of the contract

Tort Compensate the P for their injury

What are we trying to protect and why are we trying to do it?

Why choose to make a case based on contract legal theory vs. tort legal theory?

Compare Hadley v. Polemis

Hadley damages were not foreseeable
Polemis some injury was foreseeable but not the type/extent

Tort = usually higher damages than contract

Want to argue depending on whom you represent.

Argument that damages should be same (in tort & contracts) Protect the same interest

24
Argument that they should be different Protect different interests

Negligence required a foreseeability test in Polemis. If it was foreseeable you would cause some harm, you would be
responsible for any harm that resulted. X being hit by Y having a 15 minute delay, going back to the hotel to sleep
leaving 15 minutes late, and then getting hit by Z. Z is judgment proof so X sues Y. This would not be the proximate
cause liability must be cut off at some point.

Hadley may even require damages in Polemis.

Hadley responsible when the damage is the direct physical result of the negligence. Failure to deliver the
shaft in time was the breach of contract and direct result of loss of profits. In contract, we are responsible for
circumstances communicated or if D is aware.

Polemis The failure to recognize that dropping the plank into a fume filled part of the ship could possibly
cause a fire is the breach under Hadley.

Hadley v. Polemis The argument of the ship owners carried weight. The charterers (D) argued theres a double
foreseeability test. You have to foresee the type of harm in order to be responsible (Court rejected). Would Polemis
turn out differently if they used the Hadley Test? If Polemis was a contract case, at the time the contract was created, it
did not cover negligence. There are 2 aspects of Hadley At the time the contract was drafted it was not foreseeable or
circumstances communicated that the plank would fall and cause a spark that would result in the burning of the ship in
the burning of the ship. There werent any facts that were communicated unless you argue that a person in the position
of the charter should know that a dropping of a plank in a gas filled hole would result in the conflagration of the ship.
In the argument that under contract, the charters would be liable. If this is a contract action, the charterers agreed to
return the ship in the same condition except for normal wear and tear. If not returned in that condition, its a breach of
contract. The negligent act of the defendant dropping the board caused the breach of contract.

Was Hadley actually a tort case? Assuming the negligence in Hadley was a tort action, using the argument in Polemis
(if its foreseeable your act is going to cause harm, your responsible for all harm that results unless there is a superseding
cause) is it foreseeable the at the carriers failure to deliver on time would result in the shutdown of the mill and loss of
profits? For all the carrier knew, there would be another shaft available and the mill would not be shutdown
necessarily. If it were communicated to the carrier that the mill would be stopped and must be sent immediately and a
special order should be made if it will hasten the delivery. Then, the carrier would be liable for breach of contract due
to negligence. The court may not award full damages due to the disparity between what the carrier received for pmt and
would have to pay out in the event of a mill shutdown.

The contract/tort approach depends on for what reason your giving damages.

If Hadley was a tort case should there be damages? If contract?

- Same for Polemis.

Would the loss of the ship be contemplated as the possible result of the charter party to treat the vessel with reasonable
care?

What is the test of causation in Hadley, Polemis, and other cases in this line

25
26
Christianson v. Chicago, St Paul, Minneapolis, and Omaha Railroad; 67 Minn. 94 (Supreme Court of Minnesota 1896)

If the act itself is negligent, then the person guilty of it is equally liable for all its natural and proximate
consequences, whether he could have foreseen them or not.

The law is that if the act is one which the party ought, in the exercise of ordinary care, to have anticipated was liable
to result in injury to others, then the is liable for any injury proximately resulting from it, although he could not
have anticipated the particular injury which did happen.

Consequences which follow in unbroken sequence, without an intervening efficient cause, from the original
negligent act, are natural and proximate.

Statement of Case: Action of tort by an employee of the defendant railroad company for
personal injuries, seeking damages for the injury caused by the negligence of the Railways
servants. Action of tort.

Facts: Plaintiff was employed as a second hand. He and two others started easterly on a handcar, while at the same
time, another handcar approached from the east. When the two cars came within a short distance, Ps car stopped and
changed direction, now being followed by the other car. The cars were moving at 20 miles per hour. The trailing car
was faster and did not handle as well. At this rate of speed, the cars needed 100 feet to stop. The cars became within 60
feet of each other. The P became dizzy and fainted, falling off the car and onto the tracks. The trailing handcar could
not stop in time and ran him over, causing severe injuries.

Procedure Below: District court found for the plaintiff and the defendant appealed.

Issue: If a negligent act is committed, is the actor liable for all the natural and proximate consequences, foreseeable and
not?
Defendant ArguesThe plaintiffs injuries were not the proximate result of the defendants negligence; it is
not enough to entitle plaintiff to recover that his injuries were the natural consequence of this negligence and those in
the rear car could not have reasonably anticipated that the plaintiff would fall from the car.
Plaintiff ArguesForeseeability is irrelevant in determining liability; if the negligent act is the proximate cause
of the injury, then liability is applied.

Result on Appeal: Affirmed. Motion for a new trial denied.

Holding:
Narrow: An employer is liable for the employees injuries, where agents of the employer acted negligently by
following the employee too closely in a hand car stipulated by company regulations, and the employers agent was the
proximate cause of the employees injuries.
Broad: A negligent party is responsible for all natural and proximate consequences of his negligent act,
whether foreseen or not.

Reasoning
Doctrinal: If the act itself is negligent, the person guilty of it is equally liable for all its natural and proximate
consequences, whether he could have foreseen them or not.

27
 Consequences, which follow in an unbroken sequence, without an intervening efficient cause, from the
original negligent act, are natural and proximate; and for such consequences, the original wrongdoer is
responsible, even though he could not have foreseen the particular results which did follow.
If an act is one where a party exercising ordinary care ought to have anticipated a possibility for damage,
than he is liable.
It is not necessary to foresee a particular type of harm. (Similar ruling to Polemis). These cases argue chain
of causation as being of utmost importance as opposed to forseeability. Puts nearly limitless liability for
negligence as long as the result is the proximate result of D negligence.

Policy: The arguments of the defendant would create a rule that mixed negligence in tort with a breach of contractin
that contracts must have a foreseeability to be considered a breach (Hadley)
No difference from this injury then from the injury caused if the cars would have collided

Notes: Hadley rule is not applicable because this is not a contract case. Contract recovery more difficult because this
type of damage is not foreseeable.
Connection: Rejects foreseeability

Defendant argues that there is a double foreseeability rule. It has to be foreseeable that
your negligent action would cause this particular harm. It was only foreseeable that the
cart could collide and cause damage that way, not that someone would fall off and get
run over.

Court sais that the jury must find that some kind of harm was foreseeable. Then the jury must find that the
negligence was the proximate cause of the injury.

Similar to Polemis Case As long as some harm was foreseeable, any harm that resulted you are responsible
for.

Can you argue that the plaintiffs actions were negligent in looking backward and getting dizzy?

28
 (1) Hill v. Winsor 118 Mass. 251 (Supreme Judicial Court of Mass 1875)
Tort Issue

If the act constitutes negligence, it is not necessary that the injury in the precise form
in which it in fact resulted should have been foreseen. It is enough that it now appears
to have been a natural and probable consequence. Continues Polemis logic.

Statement of Case: This is an action in tort by a worker on the fender of the Warren Bridge against the owners of a
steam-tug Argus to recover damages for negligence when the ship struck the Warren Bridge and caused the plaintiff
injuries.

Fact: The plaintiff was working on the fender of the Warren Bridge when the ship Argus struck the bridge. The
plaintiff suffered injuries. The jury was instructed to consider whether there was a lack of care and if the injuries were
caused by the collision.

Procedure: The judge gave the jury an instruction stating, the law gives no remedy to a man who suffers an injury by
pure accident; and there are many injuries which we are called upon to suffer for which we have no remedy. But when
others, by their negligence, injure a person either in his estate or in his person, the law gives remedy. Did the plaintiff
suffer an injury? Was that injury caused by the negligence, the want of ordinary care of the defendants?
The jury decided for the plaintiff

Issue: Did the instructions given to the jury cause a reversible error by defining liability in negligence to occur when
others, by their negligence, injury a person in his estate or his person? / Did the trial court err in instructing the jury on
the grounds of negligence, when the jury was told (1) only to consider causation and duty and (2) not instructed to
consider whether the injury was foreseeable?

Result of Appeal: Exceptions overruled and the decision affirmed in favor of the plaintiff.

Holding: For the defendant to be found negligent, it is not necessary that the injury was foreseeable; it is enough that it
was a natural and probable consequence of the defendants actions.
Narrow: If a steam-tug violently strikes a bridge, the owners of the steam-tug will be liable for the injuries of
an employee on the bridge, if such an injury was a natural and probable consequence of the negligent handling of the
steam-tug. / The is liable for s injuries when the negligently operated the tug, and the tug struck the bridge that
the was repairing, and the s negligence was the direct and proximate cause of the s injuries.
Broad: If a negligent act occurs, the negligent party will be liable for the injuries arising out of the natural and
probable consequences of the negligent action.

Reasoning: Where there is a duty and a breach thereof, the breaching party will be responsible for all damages
proximately caused by the breach, but is not responsible for damages caused by intervening or superseding
causes.

Doctrinal:
Dont need to foresee the precise injury for it to be a natural and proximate cause of negligence.
Is not necessary that injury in its precise form is foreseen.
Policy:
Injuries resulting from negligent acts should be compensated.
29
 The plaintiff was found to have exercised due care in attempting to escape the peril and therefore, his
injuries were solely due to the defendants negligence.
Notes:
Double Foreseeable standardnot allowed in this case. The fear that contract and tort damages would be the
same and that people would not be able to recover.
If somebody commits an act that could cause harmbreach of contract might cause harm and violence. Can
an action for breach of contract fix these types of harms?
Negligent act was the natural and proximate cause of the accident, so there was no need to look to
foreseeability

This was an action of TORT:

Restatement Second of Torts 435 (p.146)

1) If the actors conduct is a substantial factor in bringing about harm to another, the fact that the actor
neither foresaw nor should have foreseen the extent of the harm or the manner in which it occurred
does not prevent him from being liable.

2) The actors conduct may be held not to be a legal cause of harm to another where after the event and
looking back from the harm to the actors negligence conduct, it appears to the court highly
extraordinary that is should have brought the harm.

3) Hindsight is 20/20

4) They are trying to have some sort of limit to what you can recover

5) If the conduct is found to be highly extraordinary, then the conduct may be held to not be a legal cause
of harm.

This makes the case easier to decide because the test is substantial factor, a lower standard and different terminology
then foreseeability in contract decisions.

Chain Narrowed Polemis it is not necessary that injury in the precise form in which it resulted should
have been forseen, rather it is enough that it appears to have been a natural and probable consequence of s
negligence
Palsgraff limits tort damages by applying duty of care
Connection: Retrospective test of looking after the fact (inconsistent with Polemis, Wagons)
o After the fact is a natural and probably cause of actions
o Zone test of Palsgraf by Andrews

Direct Causation Whatever causes the act, without a superseding event.

Foreseeability is determined at the time the contract was made if a contract, and at the time the negligent act occurs if a
tort. Consequences of the xtract are not communicated at the time of the contract, yet there is some burden on the party
breaking the xtract or who is negligent to know these things. Almost implying expertise on a common carrier or
charterer That person should know of the consequences.

30
Review: Notes & Questions (Polemis, Hill, Christianson):

1. Was the action in Polemis based in tort or K? Tort

If the shipowners had sued under BOK only, the the finding of fact that the falling board could not have
reasonably anticipated the causing of the spark, but it could have anticipated some damage, would have
prevented them from recovering for the value of the ship.

In a BOK case, the measure of damages is limited to that which the parties anticipated or
contemplated to result from the breach. In tort, the test is simply causation.

2. This formulation clarified the difference b/w tort and contract damage theory, but under Polemis would
only have been decided differently if the court found that the s conduct was highly extraordinary in
bringing about the harm that was done. But still, this is the test for damages from a breach of K and
Polemis was a tort action.

3. According to Polemis and Christianson, a negligent act or omission is the proximate cause of an injury
when the injuries that result from that negligent act are probable and proximate consequence of the act
and follow it in an unbroken sequence. It doesnt really change anything if the person promises not be
negligent, because the promise doesnt mean it wont happen.

Seems too risky to hold people liable because it will effect the way in which the world operates (Hadley Carrier
during the industrial revolution).

Palsgraf

31
**** Palsgraf v. Long Island Railroadtort; defendant; Cardozo opinion. 284 N.Y. 339 (NY 1928)

Negligence is not actionable unless it involves the invasion of a legally protected interest, the violation of a right.
Proof of negligence is in the air, so to speak, will not do. There must be a duty owed to the individual complaining,
the observance of which would have averted or avoided the injury. The plaintiff must be a foreseeable plaintiff.
There was nothing to suggest the newspaper/package contained explosives and it was not at all foreseeable that
the act of helping a passenger on board a train could result in anything other than injury to that passenger or
damage to the package if it fell.

The line where the chain of liability stops is always shifting and depends on how the facts of each case
persuades the judge in either direction. (Their judgment of the life situation).

Statement of Case: Plaintiff sues railroad for injuries received by a package dropped by
another passenger during an attempt to board a train with the assistance of railroad employees.

Facts: Plaintiff was standing on a platform of the defendants railroad. A train was leaving and two men ran to catch it.
One man got on the train without mishap. However, the other man, who was carrying a small package wrapped in
newspaper, began to jump on board but seemed unsteady as if about to fall. A guard on the car, who had held the door
open, reached forward to help him in and another guard on the platform pushed him from behind. In this act, the
package was dislodged, and fell upon the rails.
The package contained fireworks that exploded upon falling; the shock of the explosion threw down some
scales at the other end of the platform, many feet away. These scales injured the plaintiff.

Procedure Below: District and Appellate courts ruled in favor of the plaintiff.

Issue: Can the defendant railroad be negligent for the injuries of an unrelated party injured by an act of the defendants
negligence another person?

Result of Appeal: Cardozo reversed this decision and dismissed the complaint with costs in all courts.

Holding: A plaintiff cannot sue as a vicarious beneficiary of a breach of a duty owed to someone else, and not her.
Narrow: Where the railroads employees were acting in their professional capacity, with no knowledge of the
hazardous fireworks in the passengers package, they owed no duty of care to the bystander and were not liable for her
injuriesthe defendant is not liable for vicarious liability; no duty of care to the bystander.
Broad: Negligence is not actionable unless it involves the invasion of a legally protected interest (violation of a
right). Where the defendants negligence was not the proximate cause of the plaintiffs injuries, the defendant is not
liable for those injuries as the plaintiff was not a foreseeable plaintiff.

Reasoning:
Doctrinal: Negligence is a matter of relationship between parties and not actionable unless it involved the
invasion of a legally protected interest by the negligent actor upon the injured.

Not a case of proximate cause because the plaintiff was not in the danger zone of the negligent act of the
defendant.
Policy: The reasonable risk perceived defines the duty to be obeyed.
There is no negligence in the air
Plaintiff was not in the zone of danger created by the negligent act of the defendant
32

Notes: This is a case creating a limit on the range of damages in torts
Dissent by Andrews:
o Facts added: intending passengerdoes this change the level of care?
Since the defendant would be liable to an injury to someone and it was foreseeable, then you
should be liable to anyone.

o Polemis: The act being wrongful the doer was liable for its proximate results.

o Everyone owes a duty to the world at large the duty of refraining from those acts that may
unreasonably threaten the safety of others.

o Must go beyond the natural plaintiff and allow recovery for all those harmed by the act.

Connection:
o Provides a zone of risk test and therefore, limits the plaintiffs for whom liability can be found
In Hill, defendant could not have seen the plaintiff would be injured, but it was foreseeable
somebody around could; would arguably pass this test
Here, the plaintiff is not one whom the defendant could have foreseen the harm to, not liable.
The negligence in this instance is directed.
An unforeseeable intervening act must be abnormal (similarly to RST or Mauney)

This case rejects the Polemis logic and proceeds more to a stop-gap liability regime wherein D must reasonably forsee
Ps accident as a possibility and P must be in the Zone of Danger of the negligence purported by D.

33
Overseas Tankship (UK) Ltd. v. Morts Dock and Engineering Co tort; ship not liable WAGON MOUND I from
torts. A.C. 388 (1961) p.149

Tort ship not liable

Only liable for those injuries where it is foreseeable that the defendants negligence caused the plaintiffs injuries.
Foreseeability is determined by whether the reasonable man would have foreseen the damage.

Statement of Case: Action by the owner of a wharf, Morts Dock & Engineering Co. against the charters of the Wagon
I, an Overseas Tankship Ltd, for damages incurred by the negligence of the ships servants for discharging oil into the
water and then causing the oil to ignite a fire spreading to the wharf, Sheerlegs Wharf, and damaging the wharf and
equipment.

Facts: The plaintiffs were in the business of ship-building, ship-repairing, and general engineering at Morts Bay. They
owned and used their business the Sheerlegs Whard, which was a timber wharf.
In October and November, 1951, a vessel known as the Corrinal was moored alongside the warf and was being
refitted by the plaintiff. The Wagon Mound was a ship owned by Overseas Tankships Ltd., which was docked 600 ft
away from the wharf. The ship negligently discharged furnace oil that spread upon the water and washed into the
wharf. They did not clean it up and set sail shortly after.
The wharf owner instructed his workmen to stop working. After being told that it was safe, he allowed his
workers to continue, but to use caution. Cotton floating on the oil was ignited by molten metal used in some of the
torches and was dropped by the workmen on the wharf. The fire seriously damaged the wharf and the equipment upon
it. Further, the Corrinal caught fire as well.

Important fact found by trial The nature of oil is that it will burn, but the D did not know and could
not reasonably be expected to have known that it was capable of being set afire when spread on the water.

Polemis If any damage could be foreseeably caused, you are responsible for any damage
that results
It was foreseeable that the oil that spilt would cause some damage (would congeal and cause
damage to the wood) but not hta tit would start a fire and burn the wharf.

Under Polemis the D would be responsible for the damage unless there was an independent intervening act. If it was
foreseeable by the D if he did not dilute the oil, a fire would start, it should have been foreseeable by the ship builder (P)
who has equal knowledge. Contributory Negligence

Procedure: The trial court found, the defendant did not know and could not reasonably be expected to have known
that it was capable of being set afire when spread on water. Morts, the plaintiff, was awarded judgment based on the
Polemis holding that regardless of foreseeability, a negligent actor is responsible for all proximate consequences of a
negligent act. The ship owners appealed to the Privy Council.

Issue: Should a negligent actor be liable for all damages resulting directly from his negligent act, even if the
consequences are unforeseeable?

Result of Appeal: Reversed. The plaintiffs action for damages is dismissed with costs and the action as related to
damage caused by nuisance is remitted to the Full court.

34
Holding: An actor should not be held liable for all the consequences of his negligent act if they are not foreseeable,
simple because they can be said to be direct. One should only be responsible for the probable consequences of his
negligent act (This overruled Polemis; agrees with Palsgraf).
Narrow: The defendant charter is not liable for the damage sustained by the plaintiff wharf owner. The
defendant negligently spilled oil beneath the plaintiffs dock and the plaintiffs welding ignited the oil, however, this
damage was unforeseeable and it was an unlikely chain of events in which such negligence caused such damage.
Broad: A defendant is not liable for a plaintiffs injuries when it is unforeseeable and an unlikely chain of
events that such negligence would cause such damage. (A person is only responsible for damages caused by his action
when the damage is such that a reasonable person should have foreseen them.)

Reasoning
Doctrinal: Foreseeability is the effective test. The essential factor in determining liability is whether the
damage is of such a kind as the reasonable man should have foreseen.
Substituting direct for foreseeable as to liability for consequences in Polemis, leads to an illogical and
unjust result. To demand more of one than liability for the probable
consequence of his act is too harsh, to demand less of him is to ignore the requirement of a minimum
standard of behavior.

Double foreseeability test:

Is the risk foreseeable and therefore negligent?
If so, where the damages foreseeable?

Policy: The problem with the Polemis rule is it forces Judges to be philosophers determining the true chain of
causality

Notes: Polemis is wrong and is old law and even though it does not apply does not quite overrule Polemis, but severely
shakes it.
Applying the Polemis test the court could have come up with the same result because they could have argued
that there was an independent, intervening cause that caused the injury (the dropping of the cotton debris by
the wharf owner into the water, ect)

There was an independent, intervening act by the s welders on the wharf that broke the chain of causation.
This therefore does not male them liable for spilling the oil.

The test of contract and torts should be the same: Hadley

The next case the facts are the same and the result different.
Connection:
o The damage was not foreseeable and therefore, not liable.
o Rejection of Polemis, foreseeability becomes the effective test
o If the lawyer did use foreseeability, might be able to prove contributory negligence

Court found that they should use Polemis but that its difficult to apply the case. \

35
Hadley if a breach of contract was the type of case, then the D could not be liable based on the unforeseeable events.

Torts If any damage was foreseeable, then D is responsible for any damage that occurs (Polemis)

Court sais Polemis does not apply to the facts of this case.
Court sais you need the double foreseeability rule!

The act must be foreseeable to case harm and also this kind of harm. Liken the rule to Hadley rather than Polemis
for torts and contracts. All the cases can be harmonized except for Polemis.

Overseas Tankship Ltd. v. Miller Steamship Co--> WAGON MOUND II from tortstort; Plaintiff (boat owner) 1
A.C. 617 [1967]

Liability for a risk that a reasonable man would have realized or foreseen and prevented the risk, then it must follow that
the appellant is liable in damages.

Statement of Case: This is an action by the owner of a ship at the wharf destroyed by the defendants negligence and
nuisance caused by the fire.

Facts: same as above

Procedure: The trial court found the plaintiff could not recover based on negligence, but could recover for nuisance.
The plaintiff is appealing for negligence and the defendant against the charge of nuisance.

Issue: If s lack of reasonable care exists and prevention could have mitigated the risk presented to P, is remote
damage foreseeable and therefore a recoverable tort? / Was the trial judge wrong in holding that damage from fire
was not reasonably foreseeable?

Result of Appeal: Decided for Plaintiff; the oil burning ship could have prevented the damage through the exercise of
reasonable care, then the damage was foreseeable and recoverable no matter how remote.

36
Holding: If it is clear that a reasonable man would have realized or foreseen and prevented a risk, then it must
follow that the s are liable in damages.
Narrow: The defendant is liable for the injuries sustained by the plaintiff where the defendant negligently
spilled oil around the plaintiffs boat, a fire ignited the oil and destroyed the boat, and the injury was the foreseeable
result of the defendants negligence as he could have avoided it by taking simple, inexpensive measures.
There was a foreseeable risk that the discharge of furnace oil would ignite on the water, an engineer should
have avoided this risk. The failure to prevent such a foreseeable risk confers liability for damages resulting.
Therefore, he is liable for damages for not doing so.
Broad: The defendants are liable for injuries by their negligence where the resulting harm is a reasonably
foreseeable result of their negligence, even if it is remote or unusual.

Reasoning: It was the ships engineers duty and in his best interest to stop the discharge of oil immediately into
the harbor. The discharge of oil would have taken a long time and a vigilant ship engineer would have noticed it.
Doctrinal: A defendant is liable when a reasonable man would foresee or prevent a risk that instead causes
damages
If a reasonable man in the position of the defendant would have realized the risk posed by his negligence and
the risk could have been prevented by the exercise of reasonable care, then the plaintiffs property damage is
foreseeable and recoverable even if remote.
No application of the double foreseeability test
Policy: The boat was merely in the harbor; no chance of contributory negligence.

Notes: Differences in these cases

In the first one, the plaintiff was the operator owner of the wharf. If they argued that the tank ship should
have foreseen the oil could be ignited, then it should have also been foreseeable to their own engineers and
therefore they should not have resumed the welding. In Wagon Mound #2, there is not this problem, because
the plaintiff is another ship owner in the wharf that did not cause the ignition of the cotton.

In the Wagon Mound 1, the court wasnt concerned with the degrees of foreseeability, because the finding
was that the fire wasnt foreseeable at all. In this one, the court found that some risk of fire would have been
present in the mind of the ships engineer. (Foreseeability test changed).

A real risk is one which would occur to the mind of a reasonable man in the position of the s servant and if
the criteria is to be what the reasonable man would have done in the circumstances, then surely he would not
neglect such a risk if action to eliminate it presented no difficulty, involved no disadvantage, and required no
expense.

Contributory Negligence absolute defense if the contributes at all to the damage, he cant recover
anything
Comparative Negligence can recover the portion that he is not negligent for
No contributory negligence in the II case and therefore the plaintiff can argue foreseeability
Foreseeable risk as the test in II
On one EXTREME is the very board Polemis test Middle Wagon Mound 2 test On the other EXTREME
Wagon Mound 1 2 prong test
Connection:
o Liability if damage is foreseeable as a real risk occurring in the mind of a reasonable man

37
 o Lawyer was able to use foreseeability so plaintiff was able to recover.

Courts get confusedlaw is amorphous.

The ability of someone when they contract to come up with terms/conditions/possibilities; Torts- state comes up
with and imposes liability to make sure people arent harmed. The power of the state enforces the remedies for
both contracts and torts

Wagon Mound 1 Opinion that disapproved of the Polemis test. Seemed to impose a double foreseeability test
(Must foresee a harm and the harm that was caused) a limitation on the Polemis rule. Could argue that the
Polemis case would turn out differently if using the Wagon Mound 1 rule because they could not foresee the
explosion of the lower deck just by dropping the plank. Could argue in the Wagon Mound case that the independent
intervening act was the negligence of the plaintiff for dropping the cotton into the oil and causing a fire

Independent Intervening Act Must be abnormal and unforeseeable. A negligent act that occurs after the
defendants negligent act that was unforeseeable and a more direct cause of the injury. If it was foreseeable to the
plaintiff, it would be contributory negligence.

Its reasonable to assume the charterers would have greater expertise regarding the bunkering oil than the
workers. The expertise on part of the Cal Tech people was greater than the expertise of the shipbuilders. Plaintiff (ship
builders) could argue for the issue of expertise and say that their act was not an independent intervening act.

Wagon Mound 2 Same wharf was covered in oil (same as before) but this time the P is a steamship company and
had a bunch of ships in the harbor. The fire destroyed all the ships. WM1 the P lost on negligence. On this case, the
plaintiff wins on negligence.

In WM1 if the P had argued that it was foreseeable that the oil could set a fire then the judge would say it was
foreseeable for them also and it would be contributory negligence. We could argue that the wharf had greater expertise
and that it wasnt contributory negligence.

Court sais in WM2 that there is a different assumption of facts than in WM1. There wasnt any fault for P in the wagon
mound case but if he took it further he would be considered cont. neg. If I follow wagon mound 1 then I have to follow
the double foreseeable test. Is it foreseeable my act will cause harm, is it foreseeable that this harm is the harm my act
would cause? Court did not want a double foreseeable standard in WM2. Do you think the court would agree with
Polemis in the sense of a direct causation test?

This court wants to rule in the center of Polemis and WM1. In WM1 they dont put the burden on the expert.
In WM2 they put the burden on a person on the ship that should have known due to their expertise. Because they saw it
was the fault of the ship that dumped the oil in the harbor, they said an expert on the ship should have known that
dumping the oil into the harbor could potentially cause a fire. The purpose of oil is to burn, therefore it should have
been foreseeable.

You may find that when you have an expert on the stand, they are not really an expert. Sometimes they dont
know anymore than you do, sometimes less. On the other you can have great experts. Evaluate your experts. *
Stotzky Explosive Expert Witness Story

38
 Polemis Broad View (Foresee some kind of harm, responsible for any harm that does occur)
WM1 Double Foreseeability
WM2 Limitation between broad view and double foreseeability test by imposing liability on the
person they think is an expert

Who is suing whom for what on what theory? - Is the outcome different in WM2 because these people own the dock
and work there as opposed to WM1 where people were just working on the ship? Outcomes are often altered by how
the court feels about the circumstances and how they should come out.

Have to use the rules and the facts to determine how the outcome could turn out. Also know that the
consequences also play a role in decisions. Must be able to play with facts, the rules, the reasons of the rules, and the
consequences in the context of the certain issue. Decision may differ even with the same reasoning in different
jurisdiction. Values change with different judges based on how they perceive the life experience at hand. Depends on
their readings and past experiences as well as how the lawyer presents it. What changes the decision is the way you
present it to the judge.

Mauney v. Gulf Refining Co.193 Miss. 421 (Supreme Court of Mississippi 1942)

If the defendant could not reasonably foresee that his negligence would cause the plaintiffs injuries then he is
not liable for them. Defendant is not liable for those injuries that are too remote, unusual, improbable, or
extraordinary (unforeseeable or unreasonable).

Statement of Case: Action brought for personal injury damages (miscarriage) by the owner of a caf against a
wholesale distributor of gasoline and the agent in charge of the tank motor car, for their negligent spreading of a fire.
This created panic and resulted in the plaintiff falling over a misplaced chair and suffering a miscarriage.

Facts: Tapp, the agent in charge of a tank motor car, was delivering gasoline to a filling station located across the street
from a caf. During the delivery, a fire ignited and spread to the tank car. Everyone near the scene began to run away,
shouting that the tank was about to blow up. Mauney was in a caf across the street. When she heard the shouts, she
ran to pick up her 2 year old child, fell over a chair and as a result suffered a miscarriage.

Procedure: Chancery court found for the defendants. Plaintiff appeals.

Issue: Is the defendant liable for injuries reasonably foreseeable as a result of negligence and also for unusual,
improbable, or extraordinary occurrences also resulting from the same act of negligence (even though it is possible)?

Result of Appeal: On motion to strike, sustained in part and overruled in part. Affirmed on merits.

Holding:
Narrow: The defendant, who was delivering fuel to a gas station when the fire started, could not reasonably
foresee that a pregnant woman would trip over a misplaced chair thereby suffering a miscarriage in her effort to exit her
caf due to fear from the panic created in the street from the defendants negligence ignition of fire, and therefore, the
defendant cannot be held liable.
Broad: A defendant cannot be held liable for injuries that are not a direct cause of the negligent act and are
instead the result of another extraordinary, improbable set of occurrences, though related to the original negligence.

39
Reasoning:
Doctrinal: In order for a person who does a particular act which results in injury to another to be liable, the
act must be of such character, and done in such a situation that the person doing it should reasonably have anticipated
that some injury to another will probably result there from.
The actor is not bound to a prevision or anticipation including an unusual, improbably, or extraordinary
occurrence, although such happening is within the range of possibilities.
Liability is imposed within a circle of reasonable foreseeability using the original point at which the negligent
act was committed and looking at what injuries could reasonably have been foreseen to occur.
Policy: The plaintiff admits to being in control of herself but was in a hurry If she could not have foreseen the
chair how could the defendant?

Notes: Contributory negligence of the plaintiff?

Argue the causal chain broken by the intervening act of the chair and her own negligence; not a cause in fact.
o Decision would not have changed under Polemis because intervening act of chair
o Hadley: Not a natural occurrence of the negligence.

Connection:
o Damages must be reasonably anticipated
o Some damages are too remote from wrong (the negligent act). If Mauney cant foresee tripping how
can gas co foresee injury across the street
o Limitation on liabilitysome kinds of harms are just not foreseeable.
o How do the judges perceive the life situation at hand and apply the rules to it.
o The court is saying that no D should be liable for effects that cannot be reasonably expected from their
conduct.
Can we create one rule that can encompass these cases? It cant be too broad and it cant be too narrow.

Failure on the lawyers part for not bringing up the issue of panic. The P mentioned she was in control to avoid being
negligent, but it worked against her because panic was foreseeable on part of the gasoline company. Court ruled she
was contributory negligence because she tripped over a chair while in control in her own restaurant. If this case went to
a jury, she most likely would have received a huge verdict. Jury would think gas company has deep pocket, woman lost
her child in while trying to avoid an explosionetc

Assuming theirs an explosion and the front door is locked, the only way she can get out is to climb over rubble and gets
hurt. Would person who caused explosion be liable? Not an improbable and extraordinary event because shes in a
panic.

It was not foreseeable that a woman in control would trip over a chair in her own place of business.
Limiting liability by created a double foreseeability standard (More like WM1 Test)

If Mauney Test speaks only to the consequences, is it foreseeable that someone would run into the street foreseeable?
Isnt the manner in which she runs into the street irrelevant in terms of finding the D liable? (Trips on a pothole or falls
because shes exhausted depends if she should have been in control of herself).

2 Values (In these stream of Cases: Hadley / Polemis / WM1 / WM2 / Mauney)
-Dont want parties to act negligently toward each other
40
 - We want freedom of action without fear

How do you balance these activities to come to a good result?

Could you argue that under Polemis it would come out the same way? Did Mrs. Mauneys injuries result from an
independent and unforeseeable act? Could argue that it is unusual that a woman in control in the setting of her own shop
would trip over a chair. The independent intervening cause test becomes crucial when P brings this up. If this is
abnormal and unusual so are a lot of other things

If you wanted to you could use the Polemis test and come to the same result
If you wanted to you could use the Mauney test and hold the workers liable in Polemis for the entire test.
*E* This is what he wants us to do within a line of cases

*** Q8 Page 173 Work W/ Groups State each case as narrowly as possible. Try to draft a rule that tries to
cover all the cases. Then re-draft the cases that fits under the rule you made.

Usually Torts will have bigger damages than contracts. Depends on the case though

INDEFINITENESS

What do you need to prove you to have a case in torts or in contracts. (might be an exam question)
1. Foreseeability? specific injury
2. Usual course of events- specific fact course of events
3. There has to be a cause
4.
You can make a general enough rule to fit the facts of several cases, and you can change your rule around the facts of
your case.

Go back and try to restate the cases through a different rule or set of criteria.

41
 PART III: Indefiniteness

We have to focus on different aspects of each of these cases. Indefiniteness of Contracts

** This line of cases is based on the same jurisdiction and changes over time Each case rests on the precedence that
came before.

1) Impact of the lawyers argument of on the Court, the lawyer, the client, and general society over time.
2) Social context in which the Courts is dealing. What it is a part of the underlying situational sense and how does
the court perceive and respond to this social situation.
a. What was the judges perception of the equities of a particular case and belief of what would be justice
specifically.
b. How does the Court interpret past opinions, manipulate case for new client
3) Interaction of Institution and Judge. Each Court has its own traditions and each new Judge is effected by the
Court and may effect the Court as well. Change and get changed by joining the institution.

In these cases, the court is asking:

1) When is there no agreement between the parties?
2) When has a court no workable and decent way to put teeth into an agreement?
3) When should a court refuse to use its powers, even though there has been an argument?
4) Who should determine whether there has been an agreement?

What are the technical legal arguments of these cases. (In notes in book and in class Qs)
1. What did the lawyer do right? Wrong? Was it a sound argument? How could have they improved it?
What impact did the courts decision have on the lawyers future behavior, and the lawyers arguments, on the
life situation of the client and everybody around.
2. Courts perception of the life situation, how it reacts, how it perceives and reacts to the particular equities of the
cases and how it makes its decision based on those two things.
3. Interactions of institution and person. Here, it is also possible to see how a great judge has the potential to
change the institutions both in substantive law and its ideology. Cardozo has a major influence on the court.
Analysis / Comparison of the style of the opinion, how they were written, and their structure. Can get into this
material and see exactly how these guys think. Must do this when you work in a particular jurisdiction and
figure out how to persuade the judge based on how they think. These cases show what the opinion writer
values.
4. Learn how to size up a court, and learn how to state cases to support propositions that you are trying to explain.
Make and structure a technically perfect argument to see what moves the court to rule in your favor. Must be
able to use cases, state propositions that youre asserting. Construe these in a broad / narrow fashion to convey
your point. Must be able to state the doctrine of the cases to make your argument, but must also use the facts
and doctrine within the context of the broader life situation and the particular inequities in the case. Two sets of
facts: Broader societal facts and the particular facts of the case before the court.
5. At the end of the sequences, we are given the provisions of the UCC interact with the decisions of these cases.
Difference between common law and legislative statutes. Get to see how case law and legislation often
interact.
6. Want to learn how to be able to predict what the courts going to do. Have to look at the personnel of the court
and who is the person you need to convince so that theyll convince the rest of the court.

42
 7. Be sensitive to the way judges use prior cases. Judge X in case #1 the judge said this (The court held in case
#1)
8. To know what moves the court, you have to be familiar with whether its the doctrine or the policy (or both)
that moves the court. Style makes a difference as a technique in determining what moves the court at any given
time. The way you write an opinion, in the sense of how you use the materials, does not necessarily mean that
the holding is merely doctrinal.
a. Wakeman is written as if purely doctrinal, but has an underlining policy notion that lies within contract
law.
9. As you read these cases, you want to know what kind of arguments would have made the loser a winner.
Whether prior cases were to the advantage of one or the other. It is not important what convinces me in the
case, it is only important what convinces the court to rule in your favor based on your arguments. Must figure
out what moves the decision maker.

We are supposed to brief these cases in a slightly different way. They have to be briefed fully, to understand them, and
see how they change throughout the sequence. We have to see what the goals are of the changes that occur

Indefiniteness Cases
(Supreme Court = NY Trial Court)
(Supreme Court Appellate Division = Court of Appeals)
(Court of Appeals = Highest Court)

Lawyers Argument
Policy Reasoning
Hero Judge (Cardozo)
How does a judge fit within his institution, fit within a set of doctrines his colleagues drew up, and his vision
of what the law should be and if it has any impact on the court changing its views.
Always be sure within the jurisdiction you are trying your case, who is the decision maker?

Must be able to state the doctrine at any time within the case
Rules, Procedure, Facts, Equities of the Case
See how case law and legislation interact
Learn to predict what kinds of arguments will move the court, and which will not
How you use cases to support your proposition
Style makes a difference (Not literary style) Whats important is what moves the court at any particular
time, not what moves you
Courts perception of the case in regard to the particular life situation and how it should come out given the
particular equities of the case.

Each case must be briefed thoroughly

What does each new case add to the last case?

43
 Wakeman v. Wheeler & Wilson Manufacturing Co.Contract enforced; plaintiff 101 N.Y. 205 (Court of
Appeals New York 1886) p.301

Rule: One who violates his contract with another is liable for all direct and proximate damages which result from the
violation.
The damages must not be merely speculative, possible, and imaginary, but they must be reasonably certain, and such
only as actually may follow from the breach of the contract. When it is certain that damages have been caused by a
breach of contract, and the only uncertainty is as to their amount, damages must be awarded.

Indefiniteness: Territory (how widespread the locality is), Price (@ what price will they sell them the machines),
Duration (how long will they provide machines)

Chain: Court can imply a promise from a contract to reflect the true intent of the parties to enter into a binding
contract. (Wood v. Lady Duff). A court can look at industry custom to define the indefiniteness terms of a contract and
preserve the intent to be bound. (Rubber Trading).

Statement of Case: This is an action for a breach of contract, brought by a distributor of sewing machines
against a manufacturer to recover damages for the breach of an agreement, whereby the manufacturer agreed to
provide the distributor with sewing machines, but refused to fill the order and repudiated the contract.

Relationship: Principal/manufacturer and an agent/distributer.

Facts: Original agreement stated, That if the plaintiff shall succeed in placing, that is to say, selling, fifty of the
defendants sewing machines to one form or party in Mexico during the next trip of their agent, the plaintiff for every
fifty machines so sold shall have the sole agency for the sale of the defendants sewing machines in that locality (how
big is this locality) and its vicinity (how big) in the Republic. The defendant should furnish to the plaintiff machines at
the lowest net gold prices (how much is this). This was a parole agreement (parole = oral). The plaintiff entered
performance of the agreement, purchased a sample machine from the defendant, instructed an agent in the machines
mechanism and management and then sent the agent to Mexico. In Mexico, the plaintiffs agent sold 50 machines on
his promise to be the general agent of defendant for that locality and its vicinity.
The order was sent and filled by the defendant and those machines forwarded to Mexico and paid for. Shortly
thereafter, the plaintiffs agent made another sale of fifty machines for another locality of Mexico and an order for those
machines was sent to the defendant. The defendant absolutely refused to fill this second order and all future orders from
the plaintiff. The defendant then repudiated its agreement. The manufacturer then went down to Mexico to try to
distribute themselves. D (Manufacturer) could have had the idea all along wanting to just use the distributer (P) to test
the market)

Procedure: The jury found that there was an agreement. The jury trial ruled in favor of the plaintiff. Plaintiff tired to
prove the value of the contract with an expert opinion. However, the trial judge instructed the jury as a matter of law
that the plaintiff could recover damages only for the refusal of the defendant to fill the orders actually given and not for
future profits of the contract. Tried to show with expert testimony that the other agencies that the manufacturer set up
were evidence of lost profits. Used the expert opinion to prove damages via potential earnings. The factual evidence
regarding future profits that were hypothetically lost were excluded from testimony. The expert testimony necessary to
determine future profits is not hard fact, but questionable (Speculative) opinions. Nobody knows what will happen in
this market, new market with a huge risk to both sides. We cannot use experts to testify of speculation.
Only could recover damages for the refusal of money lost for the machines ordered (50 + 1 machines). Which
boils down to $4 a machine for $204 machines. The plaintiff filed a motion for a new trial, appealed to the General

44
Term of the Court of Common Pleas affirmed the judgment in favor of the plaintiffs and denied an order for a new trial.
The plaintiff appealed the Supreme Court to recover from this breach of contract. The case is now in the NY Court of
Appeals (Highest Court). Plaintiff appealed for recovery of lost future profits.

Expert opinion: Is allowed to clarify a subject

Issue: Should expert testimony be allowed to determine recovery from a breach of contract? Should recovery be
extended for the plaintiff beyond the 51 machine and extend for future profits lost from the breach? Should other
evidence be allowed to prove the worth of the contract? Should the plaintiff be allowed to recover for future damages
due to a breach of contract?

Result of Appeal: Reversed. The trial court erred in not allowing a new trial and not allowing parole (oral)
evidence to determine the value of the contract (Including lost future earnings).

Holding
Narrow: Damages for a breach of contract will be granted when a manufacturer breaches a contract with a
distributor, even when the terms of the contract are uncertain but relied upon nonetheless by both parties. The
distributor can submit parole facts regarding the future value of the contract, but not expert testimony as to the worth,
because such testimony concerning a test market is deemed speculative.
Broad: When it is certain damages were caused by the breach of a contract, and the only uncertainty is as to
their amount, there can rarely be good reasoning for refusing, on account of such uncertainty, any damages extending
from the breach. The injured party can submit to the jury the particular facts that transpired and to show the whole of
the situation is the foundation of the claim and the expectation of profits so far as any detail offered has a legal tendency
to support such claims.
The contract obviously had consideration and validity, and a breach of the contract should allow the plaintiff to recover
for lost earnings.

Expert testimony is not allowed but other evidence to prove the value of the contract is allowed.

Reasoning
Doctrinal: Parole evidence is admissible as long as it is based on fact and not speculation
One who violates his contract with another is liable for all direct and proximate damages which result from
the violation.
The damages must not be merely speculative, possible and imaginary, but they must be reasonably certain,
and such only as actually follow from the breach of contract

Policy: Good faith in contractual relationships and limit excessive jury verdict
Both parties can find opinion evidence from experts
Uphold the freedom to contract and the importance of fulfilling contractual obligations

Notes:

What obligations does the distributer impose on himself? If none, then there is no consideration at the beginning of the
contract. Was the distributor not obligated to do anything. The P is not obligated to sell any m achiness at the outset or
after 50 were sold.

45
If there is no consideration, there is no contract. However, the court sais they have to remand it for further
consideration.

2 Ways of looking at the Manuf / Dist relationship.

1. No contract at the outset because of no consideration
2. A contract existed, because dist sold 50 orders, but then the contract ended at that time.

Was there consideration after the 50 were sold for the Mexican market?
-
Would the Hadley test help us determine damages? What is foreseeable here? P.302

Court allows this to be a binding contract, but most of the facts are abstract (indefinite)
- How long to the contract terms run?
- What is the relative price term?
- What is the quantity with which we have to deal?
- What are the territorial limits? (Locality)
- What are the delivery terms? How much profit are they supposed to make on the delivery?

Courts perception of the life situation is that the manufacturer duped the distributer and the distributer is entitled to
recovery. May think this is not a proper way of doing business. If so, then the case turns on their sense of justice and
how the world actually works or should work.

Woodman, J: The general rule is that all damages resulting necessarily and immediately and directly from the breach
are recoverable, and not those that are contingent and uncertain. The latter description embraces, I think, such only as
are not the certain result of the breach, and does not embrace such as are the certain result, but uncertain in amount; that
the plaintiff will be fully compensated by recovering the value of his bargain. Should not be precluded from recovery
because of uncertainty in the amount of potential earnings.

Difference between this case and the ones cited in the opinion:
Different form the cases it uses because profits are uncertain and the contract terms are uncertain.
Important because contract terms determine what is or what is not expected.

Point Wakeman Makes: Loss of profits can be taken into consideration for damages for breach of contract.
Stretches Hadley because loss of profits is not specifically known.
Hadley is used to include lost profits
When a contract is repudiated, the plaintiff party can get lost profits (Value of Contract)

Masteron v. Mayor Used to support the Hadley rule application

Used by the defense (p.300) D uses this case however that only damages are actual damages for
sales made by plaintiff. However, the attorney probably mis-read the case, the court uses it for a broad
proposition that is opposed to Mr. Williams position and is used in support of Wakeman.

Bagley vs. Smith Contract for a specific term of years (differs). Wakeman court emphasizes the relationship
between remedy and social consequences. If damages are not allowed for breach of contract, then there really isnt any
penalty for a breach and people can run around and breach all over the place.

46
 Taylor v. Bradley Contract for a specific term of year (Differs). Value of contract is emphasized by court.
Uncertainty of damages should not be a factor in damages; Wakeman court accepts the line of argument by Mr.
Wakeman (P). Accepted as you should get the value of the contract

Schell v. Plumb A contract to support another during their life. Life is uncertain, we have no idea how long
someone will live. This case is used to show that the fixed time period disappears. Used to show that terms need not
necessarily be definite to prove damages.

Dennis v. Maxfield Wakeman court begins to move toward looser factual situations. In this case, not even
certain the damage would occur, but the Dennis court holds that the plaintiff is entitled to recovery. Seems to suggest
that Mr. Wakeman should get profits for before and after the breach of the contract.

Simpson v. London A carrier fails to deliver certain objects on the date specified. Nothing was mentioned
about what would happen in the event of a failure. The P could not show the items that he purchased and the Simpson
court found that damages for failure to deliver the goods includes time and earnings and that the loss of profits was a
natural and probably consequences of that breach and no proof is necessary to show profits; it may be presumed that the
manufacturer should have known that profits would be lost if they didnt supply the goods.

Jacque vs. Miller Loss of profits for 15 weeks are allowed and plaintiff was found to be entitled to the
specific performance of the lease of the Ds premises.

Howe Machine Co. v. Bryson (Iowa) Most similar to Wakeman In contra with the other cases cited.
Iowa jurisdiction is not seen as the same significance of other courts (less). The meassur eof damage aws the value of
the time lost as the result of the breach, without the reference to the profits which might have been realized if the
contract had been performed. Two of the 5 judges dissent, wakeman court agrees with them on the dissent.
The Iowa court is not authoritative, and hardly persuasive
If the Wakeman court wanted to go with an opinion opposite of what they held, they would cite
Bryson.

Civil Damages Act (Cited) When damages have been incurred by the wrongful act of another, even if the
damages are uncertain, they must be left up to the jury to be proved. Wakeman court is claiming there is even
legislative support for the notion that damages do not need to be definite in order to recover.
By the time the Wakeman court reaches the evidentiary question, it has already decided
those points.

^ These arguments / citations speak to the evidence

Wakeman court decides that the trial court erred in excluding the evidence that would have aided the
jury in the loss of profits.
Plaintiffs efforts in establishing an agency in mexico and potential profits
Plaintiffs own abilities

What should the plaintiff say in court now to win the case (On re-trial) (After cases / statutes were cited)?
1. Plaintiff can prove the amount of damages by showing that during x period of time, within this location, the
manufacturer sold y amount of machines for z profit.

47
 2. Plaintiff wants to show how good his sales people were. What he would have potentially done if the breach of
contract did not occur. He had certain agents, and would have also appointed other agents if he had been given
the chance. P will try to show the quality of his work as well as what the defendant did in that period of time. He
will try to show that his quality / efficiency was the same or better than the D in order to try to recover the
damages as compared to what the manufacturer made once the contract was breached.
Expert testimony might be used to show elements of the industry in Mexico. Problem with expert
testimony on this; No set of facts that an expert can make a factual judgment on (Amount / Price / Size
of Territory / Quality of Agents) Therefore, the expert testimony is too speculative. An expert
testimony must be based on a hypothetical set of facts.

Understand the relationship of the structure of the courts argument, the cases it uses, and the conclusion it reaches.
Key to determining what effect counsels argument had on the decision
Helps predict how one would argue / or restructure the argument for the losers, to give a better opportunity
to win.

Manufacturer has the most power in this relationship. However, the dist has some power via his expertise in the
Mexican market.

How to determine the future profits? What is the market in Mexico. What is the amount of goods that might be sold?
Price of the goods? Delivery terms? Duration of xtract?..etc (INDEFINITENESS)

Perception of the court: Looks like som1 has been taken advantage of need to formulate rule to enforce justice
and compensation.

Only case that was relevant in regard to the facts was the case in IOWA (persuasive).
The real issue on appeal was what evidence was admissible. What must the plaintiff prove on retrial to receive
damages?

Assume: The P has an intelligent agent in Mexico, he knows the market, he has negotiated w/ other agents in
Mexico to sell the sewing machines and is in the middle of trying to find other people.
What if we determined the population in various locations in Mexico, and we determined how many
machines the P sold in those areas. Then we find out that the manufacturer sent their own agents to Mexico and sold a
certain amount of machines over a certain period of time. Lets say the profits per machihne were $4. Delivery costs
were $30, machine cost $16 to make. P already made 101 sales, claims he was going to make more. 20 machines sold,
pop of 75,000, over 6 months. Would assume that you would sell twice as many machines with twice the
population. Dont know if the demand differs over different areas. Any judgment, even on specific terms, is
speculative because the market will likely differ in different localities within Mexico.

How is the jury going to make a determination on how much he should get?

The jury is forced to make a judgment based on a couple of factors that are not completely comparative (Submitted via
Ps evidence).

A manufacturer can protect himself by drawing up a contract that limits the time period or something that only
imposes an obligation on them for a certain period of time, leaving them the decision to continue or discontinue the
agreement upon the expiration of the contract.

48
Lawyers Arguments
Authors dont think Williams is a good lawyer.

If you were the lawyer for the defendant in this case, how would you change your argument?

Wakemans Argument: 2 Points

1. Taylor v. Bradley Plaintiffs are entitled to recover damages as the value of their contract; that is, what
such a privilege as was conferred by their contract, under all circumstances, was fairly worth.

2. If there is no more certain method at arriving at the amount, the P is permitted to show to the jury an
expectation of profit, so far as any detail offered has a legal tendancy to support such claims.

- Let the jury determine on the facts that we have (which are unclear) what the damages are.

- Claiming that what the D was unjust and P should be entitled to damages that he would have received.
- What happens in the world, and what is going on between these two parties

Williams Argument (D) (Terrible):

1. The argument is purely oral (parole) and was not meant to be executed with one year, so its void.
- Misstatement of the statute of frauds.
- Terrible argument attorney looks either desperate or incompetent.

2. Plaintiff has failed to make necessary allegations in his pleading.

- Did not allege loss of custom
- Did not allege failure of conditions.
- Did not allege special damages
- Probable sales were too remote (difficult to determine) to be a basis for damages.

Violated the 2 principles of Argument: Cumulation & Climax

Climax: Argument that determines your side of the case. Ex: If the argument that the contract was not void
because it was oral, then that would be the climax of the argument.

Cumulation: If the oral, therefore void argument is not solid, then it is dangerous to prejudice your case by
calling attention at the very outset to the fact that you are either incompetent or desperate. Need to build up with solid
arguments.

What D should Argue

Defendant might want to say it is not a contract, but rather a formal arrangement. If so, then breach was
in failing to fill the 51 orders and thats when the arrangement ends. Only damages should be $204 ($4
profit x 51) for failure to deliver the machines. Any other damages would be purely speculative. [Special
Arrangement]. Price/Delivery/Duration/Quantityet were terms to be decided later. Could characterize it as
an arrangement, the terms of which were to be determined later.
49
 Executory Contract: Only binding to point of performance.

The contract is not enforceable because it were oral, but even if it were, the contract is void because there is no
meeting of the minds (Mutuality).
o If a formalistic notion of contract, there is no contract here because there is no terms
No meeting of the minds no mutuality
o If a more relaxed approach (modern approach), there may be a contract.
Wheeler is a very modern approach.

How would you now draft an argument to make Mr. Williams (attorney) the winner.
- If you want to say there is no contract because of no mutality, why did you give him any machines at all (the
st
1 50).
-Would you say there is no contract because of mutality or would you say that even if there is a contract, theres
only damages for the first 50, not the speculative future damages (lower jury award)
Might look at the cases cited, and say those cases were cases of speculative profits. This case is not only about
speculative profits, but the evidence that can be submitted to prove (as much as possible) what the future profits
would be.

What Stotsky would do: Go back and re-draft the argument for Williams and see how you could create a better
argument for him given what the court sais now. This opinion is essentially telling you what is arguable and how you
might want to argue future cases. What advice attorneys can give their client. Caviat: Lawywer needs to understand
how the business operates. Manufacturer Is not going to be happy if the lawyer doesnt understand why he did what he
did. Talk to other agents and see what contract they have. Lawyer might tell the manufacturer that he needs to change
his way of doing business or he will incur a lot of lawsuits and may be shut down.

Statute of Frauds

Traced back to 17th Century Europe

Defendant did not mention statute of frauds in trial court so it was not allowed to be admitted on appeal.
The litigation process was in a state of transition. Courts had almost no power to adjust damages awarded by the
jury. Jury was still allowed to decide an issue from its own knowledge of the facts; they were at the time selected
because they had knowledge of the kind of case.
o There was a common law rule that forbid anyone involved in a case to testify
Requires that certain kinds of transactions be provable only through a certain type of evidence known as a writing.
5 kinds of contracts for which no case could be brought
A writing was required in this kind of provision (Wheeler)
The 1 year provision, unlike the other 4,
Two key times
o Time of the making of the contract
o Time performance is to be completed.
Not to be performed within 1 year of the making
Had the agency contract in Wakeman been scheduled to begin at once and last for 9 months. Would
it require a writing? It is not within the statute of frauds because it does not overlap one year.
Contract in Wakeman is not clear nothing to tell us how long it should last

50
 o Probably created problem in the court on remand for determining damages (if
remanded).
o Also created an issue in the trial court on whether the contract was valid not in
writing (but not brought up below)

If the contract is indefinite like in Wakeman, if the contract is possible to be completed within a
year, it does not need a writing.
If performance is possible in a year, even if not possible, the court could find that the contract does
not need a writing (does not fall within the statute of frauds).
Even if the court finds that the xtract was to continue indefinitely, the court might find that
it COULD be terminated within a year, therefore does not fall within the statute of frauds.
UCC only term that must be written is the quantity term. Can be written on a napkin or
anything, as long as the quantity is written somewhere.

How does Williams statement of the statute of frauds differ from what it actually is? (Bad argument by Wheelers
attorney).
Statute of Frauds: by its terms it is not to be performed within one year from the date of the making thereof

Williams: the alleged contract was not, by its terms, to be performed within one year from the making thereof,
and was, therefore, void.
A contract is void if it doesnt, by its terms, say it is to be performed within one year.
- Misstatement of the statute the contract does nto need to specify it must be performed within
one year. As long as it is POSSIBLE to be performed within one year (absent any specific terms in the
contract), it falls outside the statute of frauds (Not under the statute of frauds).

Courts have often said that if at the time of the making of the contract, there must not be the slightest possibility that
it can be performed within one year to be covered under the statute of frauds.
o Ex: Im going to support you during your life
Could be within 1 year not within the statute of frauds.

Statute of Frauds requires that many agreements be in writing (If impossible to be performed within 1 yr)
*NEVER PARAPHRASE A STATUTE

One problem here fraud prevention / allowing promises to be breached without consequence

Another Problem when a contract is delayed (the action), people forget things over time and the facts of the case may
be skewed or a witness may die or become unable to testify.

Statute of Frauds

Look At:
Time of Performance
Time contract was made

51
 Delayed contracts: applied narrowly only if at the time of its agreement, by its terms, there must not be the
slightest possibility it can be performed in one year. (If the terms CAN be performed within one year, the statute of
frauds will not be upheld the xtract does not need to be in writing)

Ex: Oral contract to raise someone until they are adult (or to pay for their life foreveretc) is without the statute
because it is possible that the child could pass away within one year. Therefore, the statute of frauds is not upheld.

Williams bad argument: The alleged contract was not by its terms to be performed within one year (saying its void).
Suggesting that if the xtract fails to say it is to be performed within one year, than its void since its oral
(Saying it must state within the contract). (Incorrect interpretation)

Correct statement bars any oral contract that sais it should be greater than 2 years, then it must be in writing.

Look at Hypotheticals in the book to see if the statute would apply (Page 314) Talk about with study groups.
Indefiniteness:
Time, duration, scope, price, delivery terms, obligation of agent, size of locality
Parties showed intent to agree through action and performance of first round of the contract
Is there a contract for future sales? How long should it last? How should the court decide on remand?
How do you assess damages with such a vague contract?

Evidence allowed:
The established agencies already in Mexico and relative profit
The number of machines sold through other such agencies

Evidence not allowed:

Opinions of witnesses as to the value of the agreement
The profit which it, or any other agency established in pursuance could produce
Damages to the plaintiff
Number of machines might have sold

Plaintiffs argument
Plaintiff is entitled to recover damages for the entire value of the contract
Hes asking for the value of the contract including future profits

Defendants argument:
o Faulty: Mistakes the statute of frauds (always quote statutes verbatim);
o Should have: Agreement was unenforceable (no consideration); No recovery based on prospective
damages; executory contract (only binding to point of performance);

Comparison to Hadley: Court hold future profits to be within the contemplation of the parties at the time of
contract (recover in breach of contract for damages within the contemplation of the parties)

Statute of Frauds: Contracts over a year must be written, this contract was a parole agreement

Always write statutes exactly how they are written.

52

Manufacturer was potentially hiring Wakeman to test the market and never intended to follow up on his
promise to let him sell in that locality.

If you do not bring up arguments at the trial level, then you cant bring them up at the appellate levels.

SOF- can be traced back to 1250ad, called statute of arms. Parliament brought about the statute of frauds in
the 17th century. Used to cut down on false claims and perjurous statements.

53
Mayer v. McCreery 119 N.Y. 434 (Court of Appeals New York 1890) p.325

Rule: All terms of a contract must be negotiated upon for the contract to be enforceable. Otherwise it is merely an
agreement to agree.

Indefiniteness: The alterations to be made in the building.

Chain:

Statement of Case: Lessee taking action against a property owner for specific performance of an alleged
contract to lease certain premises in the city of New York, owned by the defendant for 21 years. The plaintiff
alleges the defendant agreed to lease to the plaintiff, upon certain terms mentioned in the contract, property in
NYC at a set price and for a set period of time. The defendants contract said that the plans..etc are to be
mutually agreed upon as part of the offer.

Facts: The only evidence is three letters:

Plaintiff sent defendant a letter stating:
I will take your building on a 21 year lease, to be altered by you similar to the one is now altering, and
floors, ect., arranged as spoken about.
Defendant responded with another letter on the same day stating:
I hereby accept you offer.
Three days later, the defendant wrote the plaintiff another letter stating:
There are difficulties which will prevent making of a lease as proposed. You will, therefore, understand that
the proposed lease cannot and will not be made. The defendant then sold this property.

Procedure: At trial before a single judge it was found that there was an agreement (as alleged by the plaintiff)(finding
of fact), that the defendant failed to execute the lease agreement, and the defendant had sold the premises in the
meantime. The court found the plaintiff was entitled to recover from the defendant the damages sustained by him from
the defendants negligent refusal to carry out the agreement. The court ordered a reference to ascertain and assess the
damages and to report to the court.
Reference someone to determine what the damages would be.
Interlocutory judgment rendered at Special term in favor of the plaintiff.
This was reversed upon appeal by the General Term (Appellate Division) of the Supreme Court. And the
plaintiff appealed. New trial is granted.
In a breach of contract, the plaintiff must try to mitigate the damages.

Issue: Did the letter constitute a complete agreement, forming in substance a lease of the premises referred to therein?

Result of Appeal: The contract is not valid because it was conditional. It was merely an agreement to agree on the
renovations.

Holding: No, a meeting of the minds must occur for a contract to become valid.
Narrow: Where the lessor and lessee enter into a lease agreement which is conditional upon reaching an
agreement on building alterations for their mutual benefit, and they fail to reach such agreement, there is only an
agreement to agree which is not a binding agreement and specific performance cannot be ordered.

54
 Broad: Where two parties enter into an agreement to agree, either party may refuse to agree for any agreement
and such an agreement is not binding.

Reasoning
Doctrinal: This is a contract stipulating that the parties will come together to enter into an agreement at a
future point: an agreement to agree.
The terms of the agreement are conditional
In this case, the existence of a lease was conditional upon whether the building was altered according to the
plaintiffs stipulationsnot specific as to what these are and at an option to deny the contract until these are
specifically agreed upon.
Policy: It is not the duty of the Courts to interpret agreements and parties must have a meeting of the minds to
determine the terms of a contract. Court is not the proper mechanism to define the rules of business.
No bad-faith by the lessor, exercising his option not to agree
Notes:
No cites in the entire opinion
Indefiniteness:
o To be altered by you similar to one Hume & Co. is now altering and floors

Notes

Offer was made 1/29, Acceptance was made 1/29, rescind was sent 2/2. Buyer must have thought he was getting a
great deal or really wanted the property.
Laywer probably told McCreary that it was not a good business decision. McCreary was locked into leasing the
property for 21 years at a rate of 5250 would not increase over time.
Can see this as 2 contracts. One to lease for 21 years. One to agree on the renovations.
Owner is hesitant to allow tenants to customize the building in their favor because of resale value and issues with
future tenants. (Value of the building over time & The fact that he wants it to look a certain way).
Plaintiff does not have the ability to forgo the conditional agreement to agree on the reparations because they are
not solely for the plaintiffs benefit. (Could also waive if it is permitted in the contract).
o Also not enough for P to agree to reasonable alterations without seeing them. Minds of the parties
must meet.
Contract: Meeting of the minds must agree on every aspect of the contract. (formalistic aspect of
contract law). Not human nature cannot possibly agree on every single thing.
o Say a plaintiff submits a subjectively acceptable standard that the changes he wants to make are
satisfactory and defendant does not like them. Defendant will say that satisfactory is a subjective term.
Plaintiff will argue it is an objective term.
No case cited in the opinion very rare.
Compared to the wakeman case cited tons of cases
o Grand Style talking about policy, why conclusions can be reached
o Formalistic style rules determine results, contracts are meant to be understood by their terms by each
party in the same way.
The style here is completely different than wakeman. This case is the formalistic style.
o Would wakeman have won if he argued in front of this court?
55
 No, theory in Wakeman is a more open (grand) system about thinking about the values of contract
law (Sewing machines in Mexico).
Here, the style they wrote it in is less cumberson, but more in line with the formalistic theory of
contract law.
Cases are only 4 years apart what about this case gets the court to think about it this way?
Wakeman business man getting screwed over. Here plaintiff (buyer) is not really
getting screwed over, terms of the agreement were not satisfied.
Here, the condition was not satisfied, in Wakeman it was.
Possible argument for plaintiff: Unitlateral power on part of the defendant. What if defendant said he decided not
to alter it at all? No contract no performance on defendants part.
Suppose P sais he waived his right to approve the alterations.
o Only allowed if only for Ps benefit or
o Only allowed if contract is alterable.
Defendant has an interest in what the building looks like because of future value and issues upon resale.
Plaintiff (lessee / buyer) has an interest because if they want to house a law firm, for example, they dont
want the building looking like a night club.
o Attract clientele, nice place to work atetc
The defendant breached the contract by selling the property without allowing the plaintiff to agree on the
alterations.
o Diff from Wakeman in Style, Theory of Contract law, and the way it was written.

Did the Attorney (Dunning) have any impact on the court? Would it have been a wise thing for Dunning to say
there is no agreement at all? Or to say that there is an agreement, but damages should be limited to x, y , z.
o Not a good idea to argue there is no agreement, the facts clearly show there is an agreement but with a
condition that plans be mutually agreed upon.
o Think about when advising your client: Do you tell them to put things to be mutually agreed upon? Do
you tell them to separate contracts?
If your lessee what do you say in your offer? One contract is to lease it with nothing to be agreed
upon, with second to be agreed upon after alterations? Might say this contract is to be agreed on
upon the following terms:
Mustbe some notion of what contract law means to fit both of these cases in (Wakeman and Mayer)
.

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United Press v. New York Press Co 164 N.Y. 406 (Court of Appeals of New York 1900)
Important case in this sequence because: (One of several)
Changes the nature of contract law in NY.
o Wakeman is in Court of Appeals
o Mayer is in Court of Appeals
o United Press is in Court of Appeals (Highest Court)
o Following Cases (Mackintosh) are in lower courts
Those courts must understand what the higher court is communicating in
regard to the contract law rulings.
Found the contract to be valid, however damages could not be awarded because of the
indefiniteness of the price to be paid. (Awarded nominal amount $0.06)
Formalistic Theory
Indefiniteness: Price
Type: Executory, written
o Any long term contract that has been breached before the obligations are fulfilled is executory.
If obligations have been satisfied, then it is executed.
Both parties would have understood things would change over time (Ex: price of labor, supplies
etc) Must have thought indefinite terms were necessary
Set a maximum, not a minimum.
o Parties may not want to put terms in concrete phrases because they dont
know how much the market is going to change.
May have needed to use indefinite clause
Common practice in the industry
Known as an anti-commercial case!

Plaintiff wins only nominal damages

**Could be most important case in indefiniteness sequence**
Rule: For a contract to be enforceable, the contract must be in writing and contain mutually agreed upon terms that are
not indefinite and render the parties calculable damages for breach; a contract must be certain and explicit in its terms.
This is an executory contract.

Indefiniteness: Price term is indefinite and therefore, could not determine the price to be paid for breach.

Chain: Only a question of damages, not a question of if there was a contract like Mayer.
Court will not handle ambiguities like Wakeman and price cannot be supplied by oral evidence
Limits Wakeman: Example of extreme formalismthe court decides based on the express words of the K
and will not let the parties prove damages to a reasonable certainty
Follows Mayer: Lack of intent reduces this K to an agreement to agree
Step 1: Express Words if the ct. cannot discern intention, they will not allow extrinsic evidence/custom

57
 Statement of Case: Newspaper delivery company brought an action against a distributor of newspapers for
damages from a breach of a contract in writing entered into by the parties. The contract held for the news-
vending agency was to receive a sum not exceeding $300 per week to deliver news reports to the press company
for publication. UP wants damages beginning at breach until the end of the contract term.

Facts: UPI agreed to deliver to the defendant the nightly news report of the United Press for publication every
morning in the city of NY and the defendant agreed to receive the new report and pay a sum not exceeding three
hundred dollars during each and every week the news report was received until the first day of January 1900, it being
understood and agreed that said news report continue to be fully equal in quality and quantity to its present average
standard.
It was further provided that the defendant shall have the right to receive the news report without interruption
from and after the first day of January and the plaintiff shall continue to deliver the same if required by the second party
at a price which shall be fair and equitable to both of the parties hereto, provided that such price is not more then the
competition.
The plaintiff furnished news reports and the defendant paid the sum of $300 per week. However, the defendant
notified manager to cease sending the report. Discussion of lowering prices ensued, but no agreement occurred. The
plaintiff brought this action claiming the amount per week until the agreement runs out. The seek damages from the
date of breach to the end of 1900.

Plaintiff could no longer afford 300/week and tried to negotiate a lower price. Newspaper company
would not lower price even though agreement said a price not to exceed $300/week.

Plaintiff claims that by paying 300/week for a long period of time, he constructively agreed to pay that for the
length of the contract.

Defendant (newspaper company) gets COSTS at the end of the lawsuit. Although plaintiff won and got
nominal damages, the defendant really won.

The plaintiffs argument of 300/week payment for a long period of time cannot be permitted as evidence
for practical construction of an agreement because the agreement in dispute was not merely ambiguous. The
contract lacked the essential element of a statement of price.
If the intention of the parties, in so essential a particular (Such as the price), cannot be ascertained from the
instrument, niethre the court, nor the jury, will be allowed to make an agreement for them upon the subject.

Procedure: The plaintiff brought suit against demanding judgment in damages for upwards of $93,000 based on its
right to $300 per week until January 1900. The trial judge denied a motion to dismiss the claim and at the close of the
plaintiffs case, a verdict was directed for the plaintiff in the sum of six cents, nominal damages. There was a technical
breach of the agreement; the terms of the breach were too indefinite to agree as to what the terms will be. Defendant
asked for a directed verdict, but directs for the plaintiff for nominal damages, too indefinite to figure out the damages
substantive question of damages.
The appellate court affirmed the judgment. Plaintiff was given nominal damages of $0.06.

Issue: Was the contract so indefinite, by its failure to state the price to be paid by the defendant as to preclude a
recovery of substantial damages for its breach? (Question of damages)
OR

58
Was a directed verdict for nominal damages proper and awarding nominal damages on the grounds of the BOK when
(1) the K was written, (2) with a variable price term not to exceed $300 and (3) price term was contingent upon the
parties agreeing?

s Arument Parties gave a practical construction to price by paying itthis mode of term is not indefinite. Courts
need to take this into account.
s Argument Agreement was too indefinite and uncertain that no action for a beach of it will lie. Contends that
there wasnt even a K
Lower court said there was a contract
o Should not kick the lower court in the teeth should say they are right, but even so, the terms
were so indefinite that damages could not be awarded for breach.
o If Ds attorney thought the court would use the Wakeman ruling and were worried that the
judge would let the jury decide future damages, they maybe would claim that there is no
contract.

Result of Appeal: Affirmed with costs for the defendant because the damages nominal.

Holding: K was not legally binding on either party. Agreement lacked support of one of its essential elements
(the absence to be paid). This defect was beyond the ability of oral evidence to supply. This was not an executory
K wanting the element of mutuality. The payment of $300/week in the past was not an acknowledgement of an
obligation to pay that amount during the anticipated like of the K. The K was operative only as long as the
parties could agree on a weekly price.
Narrow: When the parties entered into an executory contract for the sale of news reports for a price not to
exceed what other press companies paid, and where the defendant paid the plaintiff $300 per week during the first 1
years of the contract and the defendant discontinued payment before the end of the contracts term, there was an
unenforceable, executory contact between the parties because the price was indefinite; thus the penalty for its breach
was merely nominal damages.
Broad: Where there is an agreement to agree, and no basis for determining damages of an executory contract
because there is no exact price, the contract is vague, indefinite, and has no binding force so only nominal damages will
be awarded for the breach.

Reasoning
Doctrinal: Where a contract is of an executory character and requires performance over a future period of time
and is silent as to the price which is to be paid to the plaintiff during its term, the contract does not have a binding
character.
For a contract to be enforceable the terms must be certain and specific, nor can the court ascertain what the
damages will be.
Substantial damages cannot be awarded because terms were too uncertain.
Court decided there WAS a contract, but terms too indefinite (Agreement said not exceeding
$300/week).
Specific contract terms necessary for a court to render damages, parole evidence will not be binding.
Parties state terms to a reasonable degree of certainty.
Prior dealings do not establish a binding price because the price was said not to exceed an outside standard
Policy: It is not the role of the court to interfere with commerce.
Anti-commercialism: discourages long-term contracts, court trying to channel behavior into a formalized
writing. Formalized way of looking at contracts. Demands specificity.
59
 You cant make long-term contracts without being real fucking specific.
Blocks any contracts without specificity.

Notes:
Quantum Meruit: To recover under QM the plaintiff must perform valuable services for or furnished
materials to the person to be charged and that person must have accepted such services or goods under
circumstances giving notice that the plaintiff expected to be paid (contract implied in law)
Quantum Valenbant: Same, but for goods sold and delivereddefendant to pay plaintiff what the goods are
reasonably worth.

The opinion is void of any situational sense of the nature of the business world and the typical construction of
such contracts in the newspaper biz.
UP is the leading Anti-commercial case
No situational sense
Might be reasons why a K such as this would keep price term indefinite (custom)
Judicial Formalism at its finest! everything must be specified in the K
No extrinsic evidence
The court didnt find that the contract was invalid because the issue didnt come before it lower courts
holding didnt require them to.
This case is a roadblock to Cardozos vision that contract terms can be open and flexible.
technically breached the K (hence the nominal damages) but there was no basis for establishing any
measure of damages. , because recovered less than $50, was in fact the prevailing party and thus
entitled to the costs granted.
Cardozos Rule where parties intended to reserve the price for future adjustment, only
nominal damages will be awarded
Stotzky While it was found to be a binding K, it was too indefinite the minds of the parties
never met and parole evidence was not allowed to clarify
said K too indefinite
said valid K -- could not recover more than nominal damages

Diff From Wakeman: The Ct. does not allow the jury to handle ambiguities as it did in Wakeman
Puts a road block on long term executory contracts where you dont have definite terms.

Notes

Associated Press gets reports from around the world and send them to individual newspaper companies. Each
newspaper cannot report on everything around the world.
- News Vending Agencies who have reporters all over the world.
- Supply to NY Times, Miami Heraldetc will often show an AP report

The plaintiffs argument of 300/week payment for a long period of time cannot be permitted as evidence
for practical construction of an agreement because the agreement in dispute was not merely ambiguous. The
contract lacked the essential element of a statement of price.

60
 If the intention of the parties, in so essential a particular (Such as the price), cannot be ascertained from the
instrument, niethre the court, nor the jury, will be allowed to make an agreement for them upon the subject.
If the agreement is vague or indefinite, parol (oral) proof cannot be resorted to.

This court did not say the contract was not valid beause that issue did not come up on appeal; the only issue was
whether the lower court was correct in awarding only nominal damages for P.

Diff from Wakeman: The only issue of indifference is the price of the contract. Here, we have a length of
time, locality, dateetc

Essential elements of a contract must be in writing.

o Oral evidence is only allowed to explain technical or ambiguous language of the contract

Court here failed to:

o Recognize the fact that this was the way businesses conducted business in this day. Open price terms to
accommodate fluctuations in the market.
This is considered a leading anti-commercial decision.
They dont consider that because the plaintiff never rose the issue with them
If P said this is the way the market operates; we have 1000 contracts with other companies
with open terms because they want it and we want it due to unpredictable market
conditions.
How do you tell the court that open price terms are needed when the court is so formalistic in regard to contract law.
(Both parties need to explicitly understand what each term specifically means).
Court seems to think that formalism is at hand that both parties must be sure of the specific terms.
2 kinds of contracts that are interesting
o Output contract person that purchases goods agrees to purchase everything the manufacturer produces
o Other the party who purchases needs to purchase only for their needs. (Everything that I need for the year
indefinite)
Ex: The market booms for yo-yos. All of the sudden the buyer needs millions of yo-yos.
Manufacturer would be put out of business because they agrees to sell at the current demand level, now demand has
increased would normally charge more.
o In United Press there is only a weekly set of goods that are being purchased.
Plaintiff wants damages for the entire length of the contract.
Reasoning: Since D paid 300/week for so long that they should be obligated to pay out the rest at 300.
o Practical construction
Easily rebutted by the court
Mistake Lawyer Made: Could have said the Reasonable value of the newspapers over
the length of the contact.

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 Problem with that argument: No idea how much different costs will increase,
impossible to determine what the future value would be.
Laywer failed to prove that in this type of business, we NEED long term
contracts indefinite on terms of price due to varying market prices.
Whether the court would have accepted it based on their formalistic views is
unsure, but it would have been a better argument.

If buyer received the newspapers and did not pay for them, P would have a cause of action.
o Quantum Valenbant
o Quantum Meruit

Under this formalistic view if the contract said anywhere between $299.50 and $300, under this
courts reasoning the terms would still be indefinite (no meeting of the minds), and damages would
only be nominal.
o What would you tell your client?
Set your price? No, would be unhappy
Determine the market value constantly? Buyer wouldnt be happy with that

What is the rule of indefiniteness after Wakeman v. Wheeler, Mayer v. McCreery, and United Press?

Can the lower court interpret the rulings in United Press? (Next cases are in the appellate court rather than
the court of appeals highest court of NY). See Mackintosh v. Thompson & Mackintosh v. Kimball. (The
courts misread the ruling in Mackintosh)

Mackintosh v. Thompson (MACK I) 58 App. Div. 25 (Appellate Division of the Supreme Court of New York 1901)

Rule of Indefiniteness: Where an employee relies upon an oral promise that his compensation will be enlarged, but the
increase is indefinite as to amount, term, and type, the promise is unenforceable for indefiniteness despite being a part
of a fully executed contract. Says should have tried QM

Indefiniteness: Price/Salary to be paid.

Chain: Many misuses of United Press

Contract was too vague and indefinite to be enforced because the intent of the parties cannot be determined
with reasonable certainty
An executed contract (UP was executory); this is a case of existence of contract (UP damages);
UP allowed for recovery under quantum meruit for executed contracts.

Statement of Case: This is an action by an employee/architect against his employer/architect for a breach of contract
and quantum meruit (reasonable value of services above his service), seeking in addition to his salary, the reasonably
value of his services and time spent upon two buildings he helped to design while employed at the firm--$12,356.20.
The complaint says that he contracted (or was promised) by D to be paid in addition to his salary reasonable
value of his services and time while designing the building, the opening statement says that D promised an
interest in the 2 buildings if he should stay until they were completed.

62
 o Ps attorney tries to amend the complaint
Denied by the judge.

Facts: The plaintiff testified he was an architect and architectural designer, and considered himself thoroughly
competent as an expert designer and draftsman in the architectural line; he was employed by the defendants in 1893,
and in 1895, told them he intended to leave their employ unless his pay was increased. The defendants informed him no
increase could be given but he should be paid more if work came in.
On or about March 11, 1896, the plaintiff entered into a contract with the defendant in which the plaintiff
agreed to remain in their employ at the same salary, which he was then receiving, during the completion by the
defendant of two buildings. In addition to his salary of $36 per week, he was to be paid reasonable value of this
services and the time spent on the buildings while under their employment. When explained this deal the plaintiff
asked, How am I to know what I will get? and the defendant responded, You can rely on me; I will see that it is all
right. You dont know what I have in view.
Plaintiff remained with the firm for two more years, however, he was not given an interest in the buildings upon
the completion. The plaintiff claims the reasonable value of his services above his salary to be $12,356.20. Plaintiff
identified various drawings and designs he made and testified he worked 5,122 hours and estimated his work at $3 an
hour, or $15,366, of which $4,656 had been paid; he trusted something would be done to give him an interest in the
profits.

Procedure: Plaintiff asked to add to the complaint a claim for the reasonable interest in the two buildings if he should
stay until they were completed. This amendment was denied, for plaintiff mentioned nothing of it in his pleadings.
The defendants at the close of trial, made a motion to dismiss, which was granted. A motion made by the plaintiff to
go to the jury as to the value of the plaintiffs services was denied. The plaintiff appealed.

Issue: Did the trial court err in dismissing the plaintiffs complaint as too indefinite to be enforceable?

Result of Appeal: The trial courts dismissal of the complaint is affirmed with costs.

Holding: A contract is not enforceable if the minds of the parties do not meet upon any binding agreement and if the
consideration for an alleged promise to pay an increased salary does not stipulate that promisee was under obligation to
remain with the promisor for any fixed period of time.
Narrow: Where an architect is promised by his employer that the architect can rely on his compensation
(amount, term, and type) being enlarged and the architect relies upon his employers promise, the employers promise is
too indefinite (regarding amount, term, and type) to be enforceable despite being a part of a fully executed employment
contract.
Broad: A promise to enlarge compensation is unenforceable due to indefiniteness where the promise fails to
show with reasonable certainty that the minds of the parties met upon some settled terms, even if the contract is fully
executed and the court will not imply definite terms.

Reasoning
Doctrinal: If a promise for increased compensations is not sufficiently definite to determine the intent of the
parties, it is not enforceable.

If a contracts terms are not definite it is not enforceable; To be enforced, executed or executory contracts
must be sufficiently definite and certain in terms that can be seen that the minds of the parties have met upon
the settled terms.

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 To be enforced, whether executory or executed, contract must be sufficiently definite and certain in terms
that it can be seen that the minds of the parties have met upon some settled terms.
o Undoubtedly, where one person requests another to render him services and they are rendered, the law
will raise an implied agreement to pay the reasonable value of such services
Here the plaintiff was working at a stated weekly salary and therefore received a form of
compensation for his workwhat he wants now is more money!
Policy: The plaintiff was compensated in the form of his salary; the second agreement for an increase was
indefinite. He should not have stated that he was employed in the same capacity for the same $$$...he really needs to
show that hes doing work above and beyond the call of duty of his job

Notes:
Court sites United Press but misreads the decision:
o This contract is executed and not executory!
o UPI was a scope of damages case, this is a determination of the existence of a contract
o UPI said that an offeree could recover under quantum meruit if the contract was executed.
Plaintiff seems to be making up a story, impossible to work that many hours

Why Quantum Merit will not work in this case:

o In this case formal contract theory is confused with quantum meruit theory
o Plaintiff mistakenly based his claims upon breach of contract when he really wanted to recover the
reasonably value of his services. Plaintiff is trying to argue for reasonable value of his services on an
expressed contract and quantum meruit clause.
o Uncertainty in the lack of mutuality of obligations
Res Judicata: Same cause of action may not be litigated against; prior adjudication is conclusive on all things
decided by the court. But got to re-litigate this case, different causes of action!!

Attorney fucked up these pleadings re: the profits he was either stupid or trying to pull a fast one. The re-
direct examination was also shady he brought up things not discussed in the direct/cross.
Was Mackintosh induced against his will to stay at the job?

Notes

If P is asking for profits that is a formal contract

If P is asking for reasonable value of his services thats an implied contract under quantum meruit

Plaintiff alleges that he agrees to remain employed by defendant because he promised to pay him above his
salary (reasonable value of services in the form of an interest in the building profits).
o Seems plaintiff is confused because he states the 3/hour value of his services, but is saying D promised him
an interest.
o Stotzky: Confused because he cant get around United Press.

Court said there was no consideration in this cae for increased profits above his salary.
Isnt there though? Didnt the Plaintiff stay for the 2 years? The plaintiff did not agree to stay for any
period of time.

64
 Likely that the employer was making this promise to try to get him to do the work for nothing.

The court states there is no contract which can be enforced which entitles him to receive anything in
addition to which he was paid in his employment contract on quantum meruit.
o Improper interpretation of quantum meruit.
o United Press Could be if contract was indefinite.
o Court here said contract is not enforeceable because too indefinite perfect case for quantum
meruit.
Because he has a salary not entitled to other compensation.
United Press is a Road Block for 2 reasons
Real one if terms are unclear and its a formal contract
Court seems to be confused between quantum meruit theory and contract t
heory and doesnt understand what United Press was talking about.
United Press only determined the scope of the contract, not if it was a valid
contract.
Here, the court uses United Press to determine if it is a valid contract, where in
UP they decided it was a contract and only ruled on the damages.

356-357: Letter used by plaintiff that was sent by a lower court judge.
o Judge cannot sent (ex parte) to one side and not the other
o Court slaps plaintiff down and not the court and sais he never should have put this in the case.
Letter said if you get up here, youre going to win the case.

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Mackintosh v. Kimball (MACK II) (Appellate Division of the Supreme Court of New York)

Rule: There can be no recovery when an arrangement is so indefinite as to provide the court with no basis for
determining the parties intent.

Indefiniteness: Term satisfactory amount

Chain: Similarities to UP
For the validity of a contract, the promise or agreement of the parties to it must be certain and explicit, and
that their full intention may be ascertained to a reasonable degree of certainty. Neither vague nor
indefinite. (Quoting UP).
Distinguished from UP: look above, same!

Statement of Case: This is the second action of the above case; this time the cause of action is based solely on
quantum meruit.

Facts: New Facts:

1. wanted to leave s said if work came up, theyd pay more
2. said if could use s office to start his own business hed stay at same salary.
3. important work came up for s and was to write up the plans
4. reminded s about promise to increase salary.
5. threatens to leave again if s dont give him a raise
6. tells that can count on to get a satisfactory amt.
7. stays on and completes work, receiving regular salary but not more.
8. Thompson was now a party
9. Kimbell promised an increase if plaintiff stayed on and saw the work through
You can depend on me, I will see you get a satisfactory amount

*Roadblock: United Press

First court never really decided the quantum meruit count, so plaintiffs attorney is re-bringing the case without
violating res judicata.
Court admits there is a distinction, but the promise is so indefinite because the plaintiff was already receiving
contractual compensation for his work. Once the plaintiff tries to claim compensation above and beyond his
contract, he is slapped down by United Press because the terms of that compensation are too indefinite.
Plaintiff brings up the threat he made of starting his own firm in the office. This actually hurts plaintiff,
because the providing of the office by the defendant could be seen as the additional compensation.

Procedure: The first action was dismissed and affirmed by the Appellate division of the court. Here a jury found in
favor of the plaintiff and the defendant is appealing the decision and an order denying their motion for a new trial.

Issue: Was the TC correct in ruling that the s promise to give an increase in salary that is satisfactory to
constitutes an enforceable K? Did TC err in allowing testimony about the about a promise made after the
dissolution of the 2 s partnership?

Result of Appeal: Reversed with costs to the appellant to abide the event.
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Holding
Narrow: When an architects employee relies upon an indefinite promise that he will receive a satisfactory
increase in compensation from his employer, and he is already being paid a salary, the promise 1) is too indefinite too
support a claim under QM, and 2) not recoverable as the employee was already being paid for his services.
Broad: When a promise or agreement between parties is not certain and explicit so that their full intentions can
be ascertained to a reasonable degree of certainty, the agreement will not be enforceable. Reliance on an indefinite
promise and prior acceptance of compensation will bar recovery.

Reasoning
Doctrinal: The validity of a contract is based on the definiteness of its terms.
Once a partnership has dissolved neither former partner has decision making power that can bind the other
party. He may bind himself of his admission, but as to his former partners, his agency, except for special
purposes, is terminated by the dissolution, and his admissions are like those of a stanger.
Policy: A promise/proposal for future arrangement of profits does not entitled an employee to receive pay or
quantum meruit if the proposal is indefinite.
Court cannot create employment contracts.
Notes:
What about this letter from the Highest Courtnot really legal.

Differences between Mack I and Mack II:

o adds that s promise was to be satisfactory to .
o adds that he asked to use s office for personal business in exchange to stay at same salary
o added that he made suggestions to on how to do business (implying partnership duties)

Distinguished from United Press:

UP: Action to enforce an executory contract (not executed)
o Here: Contract was executed
Court sais there is that distinction, but the promise is so vague and since P is already being
compensated, he does not have a quantum meruit case. The additional compensation was too
indefinite.
Planintiff claims the use of a new office as part of the promise that proves the promise to pay more
o Actually hurts the plaintiff new office could be seen as the sole additional compensation

Plaintiff entitles that since he was made a partner, he is entitled to profits over and above his salary.
o He must show exactly what the promise is in order to recover
o Court: No contract in force that entitles him to receive compensation in addition to his salary without
specified terms.
o Court wants to treat quantum meruit theory as formal contract theory. The P may be able to claim
additional compensation if what he is getting paid is insufficient for services rendered.
Court is getting confused between formal contract theory and quantum meruit theory.
Mack 1 The minds of the parties never met
Mack 2 The contract is not enforceable because its too indefinite

Wont give xtract relief because its too indefinite (He promised me I would get paid more)
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 Wont give quantum meruit relief because he is already compensated (He needs to pay me for those services I
rendered only because he said I would get addl compensation)

What would you tell your client to do to avoid this problem?

o Fair Share or Profits How much, what %?
o Writing definite terms
o When, How much, For How Long, What %, For what?

Court seems to have overreacted to United Press

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Bluemner v. Garvin 120 App Div 29, (Appellate Division of the Supreme Court of New York 1907)

Rule: A promise to pay a fair share of commissions is too vague and indefinite to be enforced under formal contract
theory, but with appropriate factual evidence, can be enforced under QM.

Indefiniteness: share of commission

Chain: Uses UP to show that an executed contract (that is indefinite and unenforceable) where the employee has not
been paid, can entitle an employee to the reasonable value of services under QM
Overrules MacII because it would allow recovery for QM where the terms are too indefinite to support an
express contract (also no salary here)
Overrules Mac I because it allows for recovery under QM for an executed contract
o Must bring expert testimony to understand service payment

Statement of Case: Action brought by an architect/employee against his employer to recover the value of a contract
in which he was to be paid a fair share of commissions (50% of Garvins earnings = $20,000) and a second cause of
action in quantum meruit for the reasonable value of services rendered ($10,000).
*Court charges the jury only on the 1st cause of action Jury awards 9,800. D appeals the 1st cause of action.
Plaintiff appeals the dismissal of the 2nd cause of action.

Facts: Prior of August 13th, the defendant was employed by the city of New York as an architect to design and draw
plans for a public building to be known as the Bronx Borough Court House, however, the municipal art commission
rejected his designs.
Garvin then entered into an agreement whereby in consideration of the designing, forming, and preparing by the
plaintiff of plans for the said court house building such as would meet with the approval of the said art commission
thereby ratifying, confirming, and securing to the defendant the contract of employment as architects with the city of
New York, defendant agreed to associate plaintiff with him in aid undertaking as associate architect, would recognize
plaintiff as the author and designer of the plans prepared by plaintiff and would fairly share with plaintiff the
commission received by defendant on account of the said contract with the said city of NY for his services as architect
of the said Court House Building. Garvin did not submit Bluemners name on the submission to the art commission.
The plaintiffs plans were approved and his claims to have complied with the agreement. However, in July 1904, the
defendant terminated the contract and has refused to associate plaintiff as associate architect of the building or to
recognize him as the author and designer of the plans, or pay him of the commissions.
Under the second cause of action, it is alleged that between August 13, 1903 and July 6, 1904, the plaintiff
rendered services to the defendant at his request as an architect in making plans for the erection of a public building.

Procedure: Before testimony, the defendant moved to dismiss the first cause of action, and at the close of the
plaintiffs case renewed the motion. Both of these motions to dismiss were denied. At the close of testimony, the
defendant moved to dismiss the complaint on the first cause of action, which being denied, the defendant asked the
court to direct the plaintiff to elect upon which cause of action set out in the complaint he intended to go to the jury,
which motion was also denied. The court charged the jury upon the first cause of action. The Supreme Court ruled in
favor of the plaintiff (Bluemer). The court denied the defendants motion for a new trial. Defendant appeals

Issue: Did the trial court err in not granting the defendants motion to dismiss the plaintiff claim based on the
indefiniteness of the contract in failing to provide specific terms as to the commissions being divided? Is a contract
binding based on the theory of QM, where the only evidence to support a finding in the plaintiffs own testimony?

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Result of Appeal: The judgment and order appealed from are reversed and a new trial is ordered, with costs to the
appellant to abide the event.

Holding: By treating this case as an action at law for the recovery of damages upon a breach of contract the contract
alleged cannot sustain the action, it is too vague and indefinite to constitute a valid contract (by citing United Press). As
for a cause of action of QM, need more evidence then just the plaintiffs testimony (too biased and one sided).

Narrow: When an employer promised an architect a fair share of the commissions if the architect drew up
satisfactory plans that were approved, the promise is too indefinite to support an enforceable contract because it was not
possible to determine the parties intent but, with sufficient factual evidence, there could be a good cause of action
under QM.
Broad: If nothing in K fixes an amount of commissions to be divided, nothing to stipulate what constitutes fair,
and if there was nothing to stipulate whether the commissions to be fairly divided should be the gross or net
commissions as profits after deducting the necessary expenses, then the agreement is too indefinite and too vague to
constitute a valid K.

Reasoning:
Doctrinal: When an agreement is so uncertain that the court cannot enforce it, then no obligation exists and no
contract exists either.
Policy: Interpretation not the business of the courts

Notes:
First cause of action was for the value of the buildings and the second for value of services rendered.
What did counsel learn from previous cases? He separated his case into two types of actions.

Quntum Meruit: Valid cause of action, but cannot be sustained in this case because:
o Never charged the jury under this theory
o Only evidence was the plaintiffs own testimony
o Cannot get QM because the defendant made the plaintiffs attorney pick an action
o Not sufficient evidence to sustain jurys $9800 verdict.

In new trial: bring this under QM theory and get the witnesses and testimony to prove case
Different from Macintosh, not receiving salary

The difference between this case and the Macintosh cases from the view of which case was more reasonable is
that Macintosh was receiving salary while he was working and Bluemner was not.
Bluemner could have had a better case if he would have presented expert testimony

Plaintiffs attorney files both causes of action (Quantum Meruit + Breach of Contract for future income).
If jury believes plaintiffs testimony, they hold that they have a valid contract. However, damages cannot be
awarded because the terms were too indefinite.
Plaintiff has a good cause of action for quantum meruit because he performed his duties and did not get paid for
doing it.
o However, the judgment cannot be sustained because there is not enough evidence for the value of his
work.

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 Testimony used for value of his work (By P): His own opinion of how much his services were
worth.
However, the cause of action for quanum meruit was never submitted to the jury,
therefore a new trial was granted.
Bluemner is a better case for recovery than Mackintosh because the terms as far as worth of the
buildings, and what the defendant said he would do. However, we dont know what a fair share would
be.
o Also, it is an easier case for quantum meruit
Would need to bring in expert testimony by architects of NY who do business at such a scale.
Garvin may find other architects, however, and say even though it passed the art commission,
I dont think the value of services is what the other experts are saying.

Fair Share / % of Profits = Too indefinite to award damages (common theme).

o Court does breathe some life back into wakeman by allowing recovery on quanum meruit.
(Allowing recovery even if temrs are not 100% clear)

Wakeman seems unclear now even though it is a major factor in modern contract law.
Bluemner is a better case of recover under both formal contract theory and quantum meruit than
Mackintosh.

Better Cause of Action: Defendant said he would recognize P as the author of the plans
o Plaintiff could ask for specific performance for D to put his name on the building.
Having your name on the building would allow him to become famous and get more business
in the future.

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Moran v. Standard Oil Co. 211 N.Y. 187 (Court of Appeals New York, 1914) Cardozo opinion.

Rule of Indefiniteness: Mutuality of obligation can be implied where the parties enter into an agreement. Where a
plaintiff and a defendant entered into an agency contract, which stipulated an agreement to pay commissions on sales
made for 5 years, the contract also implied a duty to employ the plaintiff for 5 yearssupplying the requisite mutuality
of obligation.
Contracts must be construed in the most favorable light to the party who did not write it (this argument was
supplied by Morans counsel and was picked up by Cardozo)

Indefiniteness: Duration of employment (court interprets it to be 5 years)

Chain: Hello Judge Cardozothings start getting WILD!

Moves away from United Press (looked at specific terms) and begins to look at the intent of the parties
Recovery even with indefiniteness.

Statement of Case: Paint salesman initiated an action against paint manufacturer (employer / principal)), seeking
commissions (which was on a schedule that changed every 90 days) he earned as the defendants salesman from April
1903, to September 1903. The 2nd cause of action is for damages for breach of contract under which he was employed,
to recover damages from September 1903, to April, 1908.

Class Notes 10/31:

How do you calculate the amount of damages for the breach of employment K which was for the future?
The lower court held that there was a K to entitle commissions on the first cause of action but did not have a K on the
2nd cause of action.
Is inconsistent, have a K and can recover commissions but you dont have K and you cant recover damages.

Facts: The plaintiff is a paint supplies salesman. The defendant is a paint manufacturer. The defendant sought to get
into the general market through the medium of the plaintiff. The plaintiff was to buy his paint exclusively from the
defendant. The plaintiff purchased $125,000 worth of paint from the defendant from May, 1901, to April, 1903, and
agreed to handle the defendants entire output. (output K). Since they entered into a xtract, they formed a principle /
agent relationship. Many customers complained about the quality of the paint the plaintiff supplied to them from the
defendants factory, and he carried these complaints to the defendants superintendent who told the plaintiff that if he
would keep track of the bad goods the defendant would repay him for any losses. However, the superintended denies
this agreement.
Dealings between the parties continued for two years, at which point there was a balance due from the plaintiff
for $27,650.79. The plaintiff stopped buying paint from the defendant, and became its agent under a contract to serve it
for a commission. (K-pg 369) No mention of what commissions are and said to be adjustable every 90 days according
to an index. The plaintiff claims the debt was wiped out except for $5,200. The plaintiff claims to have told the
superintendent about his losses--$23,000, to which the super did not reply (Highly unusual.) P took this silence as
acceptance. Silence does not amount to acceptance.
Further, the defendant alleges that the plaintiff was informed before the contract was entered into that any commissions
due to him would be held back and applied in reduction of his indebtedness. The plaintiff denies this agreement and
brought suit against the defendant.

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 The defendant takes the plaintiffs commissions in repayment for the 27K+ that P owes. P claims that debt
was wiped out and files suit against D for his commissions. The commissions were based on a schedule to be changed
very 90 days based on the market.

Salesman has the risk here they have to buy whatever the manufacturer makes.
Plaintiff alleges the defendant made vague promises to compensate him D sais he never did.

Procedure: Court ruled in favor of the plaintiff as to the first cause of action, commission base from April September
1903; the court dismissed the 2nd cause of action, damages for breach of contract. The Supreme Court of NY affirmed
both parties cross-appeals of these rulings.

Issue: Did the trial court err in affirming the plaintiffs first cause of action for the commissions he earned as the
defendants salesman (specifically in admitting the schedules P submitted to show losses incurred) and further err in
affirming the dismissal of the second cause of action for breach of contract?
Did the lower court err in refusing the plaintiffs evidence for lost commissions?
Did the judge err in dismissing the 2nd cause of action for breach of contract for 5 years of employment on
the ground that the employer had no obligation to employ P for 5 years?

Result of Appeal: The judgment should be reversed upon both appeals and a new trial granted without costs to either
party.

Plaintiff is denied recover from April 1903-Sept1903

However, the cause of action for breach (once they established the contract) was submitted for new
trial.

Holding:
Narrow: Where the plaintiff and the defendant entered into an agency contract, which stipulated an
agreement to pay commissions on sales made for 5 years, the contract also implied a duty on the part of the defendant
to employ the plaintiff for 5 years, supplying the requisite mutuality of obligation. (look at pg 373-374 for discussion)
Broad: Where two parties enter into an agreement, the mutuality of obligation can be implied.
Reasoning
Doctrinal: An agreement is not merely a promise made by one party to the other, but it was an agreement made
by both and binding on both by every principle of law and morality applicable to the construction of contracts.
The whole contract may be instinct with obligation imperfectly expressed.
Policy: There are times when parties enter into agreement in which the words are the same but intentions and
interpretations are different. We therefore can imply obligation.
Rule:
Notes:
Difference between UP and Moran, is that in UP the issue was the scope of the contract and there was no
intent to be bound, and in Moran the issue is whether there was a contract.

Cardozo attempts to clarify UP he feels it is a roadblock to business in general: all of these NY courts keep
getting the decision wrong.
o The contract is drafted by the manufacturer and there is mutuality of obligation because the word
agreement is used. The manufacturer constructs the contract, if it is indefinite it has to be interpreted
against him and has to be looked in the light of how a reasonable person would have seen the contract.

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 Canons of Cardozo Construction (helps people understand K):
o Agreement implies mutuality of obligation (if one is bound so is the other)
o An intention to make so one-sided an agreement cannot be readily inferred
o Construe language of a contract most favorably to the party that did not write it
o Give the words the meaning which the writer should reasonably have expected to give them

Output contract- a purchaser buys all of what is manufactured by a seller no matter what volume is produced.
Requirements contract- where a manufacturer has to make whatever the buyer needs no matter what volume is needed.

Additional Notes 10/31: The NY Court of Appeals reversed the lower courts decision on commissions because failed to
satisfy the requirement of proving with reasonable certainty that the vendor agreed to indemnify the P against those
losses he allege. (See pg 372) The court imposes the burden of proof on the P and also asserts that the schedule that was
submitted as evidence was incompetent and without this evidence, there would have been no proof for the jury to see
the extent of Ps losses. So the incompetent evidence was inadmissible and without it there is not enough evidence to
support the claim of commissions. He should have showed the circumstances surrounding his losses. Show that the
paint was crappy. Call up the customers with the complaint and use their testimony. Cardozo want to hear it from the
customers and not from P. Let the jury decide. Reversed.

Under what K theory did the lower court award commissions?

Not under formal K theory because there was no K. The lower court did not know what they were doing. Confused
QM.

Lower court tried to admit evidence to recover commissions under formal contract theory pursuant to a schedule. The
lower court gets confused with the ruling form UP.

The difference between the UP and Moran, the focus now is on the intent of the parties and not on the specificity of
terms. Cardozo is coming up with methods in interpreting the intent of the K. In UP the issue was not the
existence of the K but a theory for determining damages. This case is distinguished in that the issue here is
whether there is a K at all. In this case they can determine damages through the use of the index that was to be used in
calculating commissions. In UP you can also calculate it based on market price but the court did not consider this.

We can look at these circumstances in various ways:

What does it mean to have a binding K?
The shield of United Press is starting to weaken. UP is no longer an obstacle. We need to make predictions as to what
we need to do to make a binding K. Cardozo makes a fresh start with old material. Who is suing whom for what? This
is important because these canons of construction may not hold up in time. This is an action between a little guy
(Moran) versus huge corporation (Standard Oil). David v Goliath setting probably moved Cardozo. Wanted to level
the playing field.

Cardozo thinks United Press is a road block Tries to change the UP ruling by allowing recover even if some
terms are indefinite.

First Cause of Action Denied: Only proof offered was his own accounting of the wages he should have earned.
Insufficient Needed proof of the volume of business with who, the quality of the paint and the reasons the
plaintiffs clients said they didnt want to use him anymore (shitty paint).

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 Second Cause of Action (addl $ for 5 years submitted for new trial): Cardozo sais he actually has a 5 year
contract. B/c it was drawn up by the defendant, you must view it in light most favorable to the plaintiff. They both
signed it, and it said AGREEMENT, which means that both sides are subject to a mutual obligation.
o First Time We are Seeing an interpretation distinguishing agreement from promise.
o Must view the contract (since written by D) in a way that the plaintiff would have viewed it upon signing it.

Cardozo applies quantum meruit theory under both causes of action.

o Tries to remedy what he thinks the lower courts misunderstood about United Press
o United Press = Certain, Formal, lets ppl know how to behave
o However, the agreement is distinct with an obligation, but with imperfect terms.

The seeds for changing United Press are set

Mr. Moran is just a poor plaintiff who cant hang with Standard Oil (Rockefeller), and had no say in the
contract.

Cardozo basically says if one party is bound by an agreement then both are bound.
o United Press: Decided the scope of damages
o Here Moving from question of law to a question of fact.
!!! LOOK AT THE INTENT OF THE PARTIES Based on the facts
Difficult to determine someones intent.
Not formalistic
Moran contract said that the commission was to be changed every 90 days based on market prices.
o This court permits the contract. How do you predict the market prices in the future?
Is this inconsistent with the Court in United Press? (There, the price was also indefinite)
o The court allows damages because of the schedule that was supposed to be followed.
However, this would not have been allowed in United Press.

Wakeman Indefitness: Everything

Bluemner: Fair share of the contract is enforeceable but too vague for damages
United Press: Not to exceed 300/week = too indefinite not enforceable
Moran: Price is indefinite (schedule) Quanitity is idefinite yet damages are awared
o We dont know why wakeman is not being cited
o Wakeman is a more modern position on contract law than any of the other cases (even though the
older)
o Cardozo is trying to get back to Wakeman Removing United Press as a roadblock
Contracts with indefinite terms may still be binding and we may be able to still compute
damages.

VOTE: UNANIMOUS OPINION

Cardozo looks at both causes of action under formal contract theory.

o Implies mutuality of obligation
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 o Party that drafted the xtract is the more powerful party between the two (always).

Comparing the vision the court in UP to the vision of the court in Moran:
o UP More of an equal bargaining position (dont know who drafted the xtract)
o Moran The employer (architect) drafted the contract
o UP sais in regard to mutuality there is no rate of compensation or price fixc to which the defendant was
bound and there no mutuality in this regard.
o Moran Price (wage) was to change every 90 days based on the market value (VALID here)
o Moran Court implies an obligation
If one party is bound, the other party is bound
o UP Did not imply an obligation
If one party is not bound, the other party is not bound
o Moran Uses Agreement as a term of art binding obligation mutuality btwn parties

Is Cardozo trying to invalidate UP or is he trying to make more of a policy decision based on the lack of bargaining
power of the plaintiff here?

Law is about attacking power, regulating it, and keeping it in its place whether its business, government, or unequal
relationships Stotzky

Cardozo sees that long term contracts with open terms may be important in business. He is not trying to overrule
United Press, thinks the way its been used is too restrictive.

Does this case create a rule, or just it just deal with the lack of bargaining power of the plaintiff? Or, does it allow open
terms in a contract to be viable?

United Press is Strick / Moran is more flexible

Moran evaluates what is needed to make a contract enforceable.

Cardozo takes a set of cases brought up by counsel

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Varney v. Ditmars 217 N.Y. 223 (Court of Appeals NY 1916)
K issue
Plaintiff winsCardozo dissents and Chase writes majority.

Rule: A promise to give a fair share of profits and where there is not a reasonable method for calculating the share is
unenforceable because it is too indefinite to determine the reasonable intent of the parties.

Cardozo dissents alone: Saying these terms may be implied; limits UP as a case without intent to be bound, in this
case there is an intent to be bound. He sees the contract failing due to lack of evidence for damages and not because of
form. Fair share can be interpreted by looking at the industry.

Indefiniteness: Fair share of profits.

Chain: Restates Mac, Bluemner, Mayer. If damages are too indefinite, the contract is unenforceable (step back from
Moran).
Uses United Press and clarifies that it did not stand for the proposition that a contract of sale is unenforceable
unless the price is expressly mentioned and determined; agreement not vague or indefinite.
Chase adheres to formalism-we need intent to be bound before we look at evidence
Cardozo switches it up-we can get to intent VIA evidence
Cardozo limits UP- we need to look at each K individually. Simply because UP K was executory/no
price/unenforceable does not mean all such Ks are unenforceable

Statement of Case: This is an action for wrongful discharge brought by an architect draftsman against his employer,
an architect.
The plaintiff is seeking to recover for services render via contract for services between 11/7/11 to 12/31/11 at
$40 a week, (1st claim); and
A fair and reasonable percentage of the net profits of the defendants business from 2/1/11 until 1/1/12 (2nd
claim) ($1,680). (2 causes of action)
Under formal contract theory, he is suing because his boss wouldnt let him work, even though he wanted to.

Facts: In October 1910, the plaintiff applied to the defendant for employment, he was granted this employment at the
salary of $35 per week. A short time after the plaintiff informed the defendant that he had another job offer, the
defendant said that if he would remain with him and help him through the work in his office he thought he could offer
him a better future than anybody else.
On 2/1/11 the plaintiff and another designer in the office spoke to the defendant about work in the office. The
defendant responded by saying, I am going to give you $5 more a week; if you boys will go on and continue the way
you have been and get me out of this trouble and get these jobs started there were in the office three years, on the first of
next January I will close my books and give you a fair share of my profits.
Thereafter, the plaintiff was paid $40 per week and worked overtime to help the defendant. On November 6,
1911, the night before the general election in this state, the defendant requested that all of his employees that could do
so should work on Election Day. At 4 on the day of the election the plaintiff was taken ill and remained at his house.
On Saturday, November 11, the defendant delivered a letter to the plaintiff stating, that the plaintiff is fired for
not reporting to work on the Election Day (Pg 379). After the plaintiff recovered from the illness he returned to the
defendants office to work. The defendant denied that he had any agreement with the plaintiff and refused to allow him
to continue his service. Plaintiff was paid $50 for special work.

77
Procedure: The trial court ruled in favor of defendant and entered a dismissal of the complaint. P was the only witness
at the trial. The Appellate Division of the Supreme Court affirmed the judgment in favor of the defendant. The case is
now appealed by the plaintiff to the Supreme Court.

Issue: Did the lower courts err by dismissing the case, and not allowing the jury to decide whether the plaintiff was
entitled to recovery for work until January 1st based upon a lack of evidence on which damages for lost profits could be
computed?

Result of Appeal: Affirmed with costs. 4 to 3 decision.

Holding
Narrow: An oral promise by an employer to an employee to give fair share of profits upon a condition that is
not fulfilled (employee ill) and there is no reasonable method of computed share, there is an unenforceable K because of
the indefiniteness the trial court did not err in dismissing the claim because the term fair share is too indefinite
based on express words and the subject matter of the K.

Plaintiff can recover on quantum meruit on a proper complaintthis would be small, worked from
December to Jan and was paid $50.

Broad: Where the terms of contract to give the plaintiff a fair share of profit are vague, indefinite, and uncertain, and
the amount cannot be computed from any evidence presented, the court did not err in dismissing the case before letting
it go to jury.

An executory K must rest upon the honor and good faith of the parties making it. Ct.s cannot aid parties in
such a case where the are unable or unwilling to agree upon the terms of their proposed K.

Reasoning:
Cites UP, Mac I & II and Bluemner
When there is an indefinite term, a K will to be valid unless no intent to be bound can be determined based
on express words or subject matter of K
This K is uncertain and is affected by so many other indefinite facts, that intent of parties is speculative
Cannot recover on QM b/c employment must be deemed to have commenced with full understanding on part
of both parties
An executory K must rest upon the honor and good faith

Doctrinal: There is no contract and damages for loss of profits may not be recovered where a contract, as it
relates to a promise, is vague, indefinite, uncertain because the amount of profits cannot be computed on the
evidence. The question of the words fair and reasonable have a definite and enforceable meaning when used
in business transactions is dependent upon the intention of the parties in the use of such words and upon the
subject matter to which they refer.

Policy: Such an executory contract must rest for performance upon the honor and good faith of the parties
making it.
The court cannot aid parties in such a case when they are unable or unwilling to agree upon terms of their
own proposed contract.

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 Fair and Reasonable do not have meaning in business
Notes:
-Chase formalistically interprets UP as meaning that one may recover on an executory K depending on:
-intent of the parties (based on the express words of the K)
-subject matter
-No intent here based on the express words
-In this decision the court moves further away from UP
- UPMoranVC

Additional Notes:
This is the first case where the NY Court of Appeals considers the fair share of profits issue. Pg 380 The question
whether the words fair and reasonable have a definite and enforceable meaning when used in business transactions
is dependent upon the intention of the parties in the use if such words and upon the subject matter to which they refer.
The court asserts that the opinion in UP was not intended to assert that a contract of sale is unenforceable unless the
price is expressly mentioned and determined.

(pg 381) In the case of a K for the sale of goods or for hire without a fixed price or consideration being named it will be
presumed that a reasonable price or consideration is intended and the person who enters into such a K for goods or
service is liable therefore as an implied K.

The court clarifies United Press. Even in open price terms we can find that there can be a K (depends on the
circumstances). There is still a problem here because it is difficult to assess the value of the service. Fair share in these
circumstances could mean X %age. In this case it is not enforceable because it is very difficult to measure what is fair
and reasonable (is vague and indefinite).

Pg 384 The court implies that the P can make a claim for QM if the P can show that his work was worth more than $40
per week. The court says that you may not be able to recover fair share of profits because it is too indefinite but can be
recoverable through QM. This is inconsistent and untenable. The key to QM is the reliance upon the terms. QM does
not work when compensation is not being paid. A promise to pay more is a formal promise and not an implied promise.

The court denies recovery for period between Nov 1 to Dec 31. Should he get covered? Cardozo says he should get
paid because they had an agreement.
Notes:
Plaintiff did not present evidence on how the amount for the work from Dec to Jan would be calculated,
when he returned to work after the election/sickness.
Restatement of Mackintosh, Bluemer, and Mayer
o Macintosh: The court held that the arrangement was too indefinite for form the basis of any
obligation on the part of the defendant.
How did the Court deal with UP?
o UP was not intended to assert that a contract of sale is unenforceable unless price is expressly
mentioned
o The opinion of the Court in UPwas not intended to assert that a contract of sale is
unenforceable unless the price is expressly mentioned and determined.
Contracts will be considered fair and reasonable when the goo
Dissent by Cardozo (Pg 385 to 386):
o A promise to pay a fair share of the profits is not always indefinite

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 Look at the industry, custom,
o Not consistent with United Press: held that the parties intended to reserve the price for future
adjustment; if instead of reserving the price they had manifested an intent on the one hand to pay and on
the other to accept a fair price, the case is far from holding that a jury could not determine what such a
price would be and assess the damages accordingly
o Intent can be inferred from the contract
o Dissent in conclusion that he failed to make a case for salary; even if this amount is small he is
still entitled to it.
o Held that the parties intended to reserve the price for future adjustment; if instead of reserving
the price they had manifested an intent on the one hand to pay and on the other to accept a fair price, the
case is far from holding that a jury could not determine what such a price would be and assess the
damages accordingly
o Intent can be determined by express statement and reasonable implication
o Interprets UP the case did not say that an executory agreement to purchase goods at a fair
and reasonable price is so indefinite that it cannot be enforced; rather the case construed a particular
agreement and denied recovery because there was no intent to be bound (the price was indefinite FOR
A REASON)
If the Ct. can determine intent to be bound then it can determine a measure for price
so long as the ct. can discern your intention, you may recover even though the K is
indefinite.

The big fight in this case is how to read UP.

Additional Notes:
Now, how are we going to look at future cases? We need open price terms. Fair share of profits must mean something
otherwise people wouldnt use them. QM is ok to use for recovery of reasonable value of services but not if the person
is already being compensated.

Whether fair and reasonable and are definite enough in a business transaction depends on the intent of parties, and
subject-matter (i.e. wages/profits vs. price of chattels)
Court classifies certain kinds of contracts that might be binding.
Chattels: Fair & reasonable value = Market Value

Chase: Where no contract for sale of goods or services is made and no price is found, we are going to imply a price.
Court of appeals have never decided a fair share of profits case. United Press & Bluemnberg were
in the appellate court.
Implies the usage of the custom of the industry.
United Press cannot imply a price via custom or market value without express terms
Here Pushing United Press.
Howver, the court here still sais the contract damages are not enforceable.
No market price, no way to assess its value too many factors.

!! Would be a way to determine fair share of profits : Could look at the industry in that area, or look at
the specific firm.

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 This contract w regard to profits is so indefinite and depends on too man factors that cannot be determined
by an index like mkt value, other firms, or the firm itseld.
o Could range from nominmal to substantial in this case cannot determine with any specificity.
o Even though we can determine the intent of the parties (by subject matter or kind of contract i.e. purchase
of sale of goods or when someone is being hired). Cannot enforce this contract b/c too many factors!
Court looks at intent and the business meeting. Even if intent is found it must be able to be interpreted to be
enforced. Terms must be capable of being understood.
o In some types of contracts as a matter of law, it would not be pure conjecture. (Subjective)
Court sais he may be able to collect on quantum meruit case for his services rendered.
o If the value of his services are proven to be above what he was getting paid, he could get the
difference in damages. (Mackintosh I and II say you CANNOT do this)
o Key to Quantum Meruit getting paid for services already performed. But, if plaintiff has already
been paid for those, then its formal contract.
o Court here is saying that Mackintosh II was a formal contract theory case. But sais that under Mackintosh
II would rule under QM for greater value than paid for services Fair share

Why did the majority deny recovery for November 7 to December 1?

o Theres nothing in the contract specifying the length of service except as stated. Similar to UNITED PRESS
nothing in the contract saying how long it would last.
Cardozo (DISSENT)

o Necessary data to determine damages for fair value may or may not be there need case by case
analysis
o Not always too vague to be enforced.
o Cites no NY cases cuz there are not any UP has driven the opinions
o Difficulty here for Plaintiff: He did not produce the evidence needed to make his claim.
o Could have collected damages if he provided proof (expert testimony to prove custom of industry
or firm) as to what the fair share would be.
o Looks at UP differently than the majority: UP is usually cited as aying if price is so indefinite that a ction
may not be maintained for its breah so far as it is still executory Dozo It does not say that
o Reason UP court had the agreement void cuz it wasnt executed was b/c there was neither an
express statement nor a reasonable implication of such intent.
o PUTS UNITED PRESS AWAY Sais since they did not show any intent, this notion of indefinitness
is ridiculous.
o Dozo would look at each contract individually rather than grouping them into a class of cases.
o Started this in Moran - but tries to push it further by saying United Press was only a specific case and does not
apply to any other case but United Press (Puts it in a little box)
o Just means to say its in recession.
o Dissents on the fact that he thinks the terms were implied by the contract when employer said he would
give him a fair share of profits up until he end of the year.
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 o Could prove by testimony by those competent to give testimony Expert Witness

4-3 Vote Cardozo is beginning to convince his colleagues that UP should be put away and cases should be
decide individually

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Rubber Trading Co. v. Manhattan Rubber Manufacturing Co 221 N.Y. 120 (Court of Appeals New York 1917)

Rule: A contract remains in effect even where the party repudiates it if the other party refuses to acknowledge the
breach. Where the buyer repudiates the contract by imposing a new condition which alters the contract, yet the seller
does not abandon the contract but imposes a new unilateral condition in good faith, the seller has failed to keep his
conduct free from blame and therefore, cannot recover.

Indefiniteness: Where the acceptance takes place; a breached contract; defendant changed location for inspection.

Chain: Cardozo looks at the practice of rubber traders to fill in the blanks of this contract he is applying real-life
custom to the application of law.

Statement of Case: This is an action by an importer/seller of rubber against a manufacturer/buyer of rubber for
an anticipatory breach of where the manufacturer refused to receive shipments and wrongfully repudiated the
contract (because they wanted inspection to occur at different places).

Facts: The defendant agreed to buy 15 tons of prime thin discs Manicoba rubber at $1 per pound; delivery was made at
the rate of about five tons a month in September, October, and November 1912. Delivery orders were to be sent to the
buyer when the rubber was ready. Goods were to be billed on a credit of ten days.
The first delivery under this contract was made in August and paid for in September. Defendant did not like the
quality of the rubber sent them back. At the time of payment, inspection had not been made and defects were later
discovered7,900 lbs were returned with the plaintiffs consent. This is a huge return 79% of the goods were deemed
defective.
A second shipment arrives in October. The defendants president refused to inspect the rubber at the warehouse
or dock (as stated in contract) and said there would be no acceptance until the rubber reached the defendants factory.
He also told the plaintiff he would only accept round discs but a few days later said the shape did not matterretracted
this statement.
The plaintiff, though unhappy about this change in terms continued the contract and sent another shipment
stating, the delivery orders would not be furnished until notice was received that the rubber was satisfactory. Neither
side would yield his position. Both claimed a breach of contract. Each notified the other that the contract had been
broken. The plaintiff sold the rubber at a reduced price and retained the rest. The P sold the rubber at a reduced price
because the market price droppedprice he paid was a lot higher then what he could have paid on the open market.
Brought suit for profits lost.
Defendant/buyer was at fault first, renounced performance and insisted right to withhold payments if defects
were discovered at the factory, not warehouse as agreed.
The seller did not give the defendant notice that the contract was abandoned
The plaintiff made an untenable tender, the reject of which he counted on as the sole evidence of the breach
The plaintiff rescinded the contract for the defendants rejection of a tender, which imposed an unauthorized
condition all parties at fault!!
Seller knew that he would be out a lot of money b/c the defendant could get the rubber a lot cheaper on the open
market. Told the defendant that he had to inspect on the dock and if he removed it to his factory it would be
considered an acceptance.

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Procedure: The trial court ruled in favor of the plaintiff, plaintiff complained that the tender had been coupled with a
condition that approval must precede delivery. The plaintiff amended their complaint. New action is that the
defendant wrongfully repudiated the said contract and definitely notified the plaintiff that it would not thereafter
perform the same. This was an anticipatory breach that made tender meaningless the two acts are 1) the defendants
announcement that withdrawal of the goods from the warehouse must be without prejudice to their rejection thereafter
and 2) the round shape of discs (which was withdrawn).
The trial court ruled for the plaintiff and the Appellate Division of the Supreme Court affirmed the denial of a
motion for a new trial.

Issue: Did the trial court err in allowing the plaintiff to recover damages for lost profits where the defendant/buyer
repudiated the contract by imposing a new condition, and the plaintiff/seller des not abandon the contract but imposes a
new condition unilaterally?

Result of Appeal: The award of damages to the plaintiff is reversed and a new trial is granted with costs to abide
(tolerate, perform, execute) the event.

Holding (Cardozo Reverses the lower and appellate court)

Narrow: Where the defendant committed an anticipatory breach of the contract by refusing to pay for the
delivery of the rubber until the rubber passed an inspection at his warehouse, the plaintiff breached the contract by
insisting upon acceptance of the rubber upon its withdrawal from the warehouse (new tender), and the plaintiff
continued to attempt to perform the contract without notifying the defendant that it considered the contract abandoned,
the plaintiff was not entitled to damages for breach.
Broad: Where there is a failure to agree on a term of the contract, & that term later becomes the subject of
disagreement, it does not invalidate the contract, but where both parties accept & act upon new terms, damages are
awarded.

Reasoning
Doctrinal: A contract remains alive if after a breach both parties continue to act upon the new terms of the
contract.
Policy: The plaintiff cannot collect if he does not keep his own conduct free from blame.
Important to allow business to conduct itselfcustom is better than courts to decide ways of the business
world.

Notes:
First time the court of appeals ruled on anticipatory breach. There was no case law before this, and before
this people could really get screwed, they would have to wait until the execution of the contract to sue.
Tender an unconditional offer of money or performance to satisfy a debt or an obligation
Anticipatory breach a breach of contract caused by a partys anticipatory repudiation of the contract;
gives the non-breaching party three remedies: Contract survives until the plaintiff does SOMETHING
giving notice of breach.

o Await performance by the repudiating party

o Resort to any remedy for breach
o Suspends own performance of the contract

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 Indefiniteness: In the terms of inspection!! Cardozo implies this is a reasonable inspection term
o The contract does not say anything about inspection but looks at the world/custom btwn parties to
understand how this occurred. This is a change in the policy of the court, becoming involved in
interpretation. (Not done in UP).
o If this is done poorly could throw havoc into the market place. However, by changing custom we could
throw the market into disarray as well.
o Cardozo was careful in not going to far enough to disturb the business world.
o Why Cardozo is the manhe got the entire court onto his side!! Formalism is dead!

Defendants error: The defendants refusal to inspect at the dock/warehouse was a breach of contract
however, the plaintiff continued to send the rubber and also allowed him to perform this inspection
UCC 2-610 (1978) Anticipatory Repudiation: When either party repudiates the contract with respect to a
performance not yet due the loss of which will substantially impair the value of the contract to the other, the
aggrieved party may:
a. Await performance by the repudiators
b. Resort to any remedy for breach, even though he has notified the repudiators that he would await
performance
c. In either case, suspend his own performance or proceed in accordance with the provisions of this
Article on the sellers right to identify goods to the contract notwithstanding breach or to salvage
unfinished goods.
UCC 2-611 (1978): Retraction of Anticipatory Repudiation
1) Until the repudiating partys next performance is due he can retract this repudiation unless the aggrieved party
has cancelled or changed his position or indicated he considers the repudiation final
2) Retraction may be by any method proving performance
3) Retraction reinstates the repudiating partys rights under the contact with due excuse and allows to the
aggrieved party for any delay occasioned.

In the law of the sale of property (both real estate and personal property or chattels) a LATENT
DEFECT is a fault in the property that could not have been discovered by a reasonably thorough
inspection before the sale.
The general law of the sale of property is caveat emptor (let the buyer beware) and buyers are under a
general duty to inspect their purchase before taking possession.
Cardozo is using the custom between the parties to determine the terms of the contract.
o Warehouse delivery is where the inspection should have been done (before getting to factory)
Defendant was at fault by saying he would inspect at factory
Contract survived despite the defendants fault unless the plaintiff notifes defendant that the contract
has been abandoned.
Cardozo uses custom to fill in the terms of the contract (custom was to examine at the
dock/warehouse not once taken to the factory)
Plaintiff made a mistake by offering a tender without notifying the defendant of his abandonment
of the contract.

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 Cardozo reverses the opinion and remands for a new trial.
UNANYMOUS DECISION
What does this case have to do with the indefiniteness?
o The inspection terms were indefinite USES CUSTOM / BUSINESS PRACTICES to
determine the indefinite inspection terms
o Implies reasonable inspection terms! Since the warehouse was the place of delivery, it is
where the inspection could have bene made and should have been made, but it is up to the
jury as to whether a reasonable inspection could have been performed there.
Custom: Usually, the goods were inspected upon delivery at the warehouse. They were
inspected for patent defects. Then warehouse provides a receipt of acceptance. Then, further
tests are performed at the factory Chemical tests to determine if the goods come up to sample.
However, not allowed to return goods that you should have seen patent defects in at the warehouse.
o Here, seller sais inspect the goods at the warehouse. Buyer sais he will not inspect the goods at
all until they take them back to the factory. Cardozo sais they (by custom) always inspected at
the dock.
o Buyer repudiated the contract by saying he wouldnt check them on the dock/warehouse.
o Seller messed up by offering a tender

Seller could have said the contract was void rather than adapting to the changes the buyer
wanted. Could have sued right away for anticiputitory braech. Or he could have made a
good tender, and said he must inspect on the dock and then can examine further at the
factory can return items with latent defects discovered at factory, but not those which
have patent defects which should have been discovered at the warehouse.
o Cardozo assumes the inspection should be done at the warehouse/dock because of
custom (OF THE WORLD).
o Why wasnt plaintiff (sellers) tender notice? (You must inspect the goods and once you say they
are satisfactory they will be delivered) Plaintiff then claimed he rescinded the contract based on
the anticipatory breach, but really (Cardozo sais) he claimed he rescinded the contract b/c
defendant refused his tender office. Offering a tender by the plaintiff was not rescinding /
abandoning the contract.
o Buyer wins the case He cant get any damages. Could have mitigated damages (when P did
not deliver rubber) by buying elsewhere on the market.
o Why cant seller win even though it is clear the buyer can take advantage of the seller and breach
the contract and buy rubber elsewhere for cheaper since the market went down. Allowing the
seller to recover, while equally at fault by tendering an offer rather than claiming the
contract abandoned by D. No one would know how to operate in the real world, would
leave ppl confused.
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 P could have cancelled contract
Sue immediately
Waive the breach, demand performance, and wait until performance is supposed to
take place. Basically until the time the defendant is supposed to perform.
Things may occur between waiver of breach that would free the defendant from the
breach make him unable to live up to the contract.
o Nuclear War for example.
o Incredible change from United Press Tells us how the business (rubber trade) works.
o If a buyer breaches the contract, or sais he is unable to perform the terms of the contract,
the seller can repudiate the contract by notice. Cardozo sais the plaintiff (seller)
repudiated the contract only based on the defendants refusal to agree to the improper
tender.
o Defendant 1st repudiated the contract by saying hes not taking the goods until inspected
later at factory. P does not elect to treat that repudiation as one, but makes a tender
saying approval must precede delivery.
Cardozo found 2 breaches of contract
o RULE OF CASE: Better know what the custom of the industry, or at least the custom
between the two parties in order to figure out what should be done. (Incredibly far cry from
the earlier cases).
Unanimous Decision! - Pulled the entire court along despite previous rulings. Construes
the contract in terms of custom and action.

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Wood v. Lucy, Lady Duff Gordon 222 N.Y. 88 (Court of Appeals New York)
** Formalism is completely dead
* Parties must have had an obligation (Cardozo) New Consideration theory

Rule: A contract in which mutuality of obligation is not expressly stated, can still be enforceable if obligation is
implied by the actions of the parties in fulfilling the contractual obligations.

Indefiniteness: mutuality of obligation; consideration

Chain: Moves further away from formalities; looks at how people should act and interprets the contract accordingly
A promise may be lacking, and yet the whole writing may be instinct with an obligation, imperfectly
expressed. (Moran). But disregards Moran regarding the drafting of a contract.

Statement of the Case: Clothing agent/salesman is suing a clothing endorser/designer for damages for breach of an
exclusive dealings contract, alleging that she placed her endorsement on fabrics, dresses, and millinery without his
knowledge and withheld profits.

Facts: The defendant is a creator of fashion whose taste is valuable (what she says is cool becomes cool). She
employed the plaintiff to help her turn this vogue into money. He was to have the exclusive right, subject to her
approval, to place her endorsements on the designs of others. He was also to have the exclusive right to place designs
on sale, or license others to market them. In return, she was to have one-half of the all profits and revenues derived
from any contract he might make. The exclusive right was to last at least one year from April 1, 1915, and thereafter
year to year terminated by notice of 90 days.
The plaintiff says that he kept the contract on his part but the defendant broke hers by placing her endorsements without
his knowledge and withholding profits.
Complaints (2): Lady Duff Gordon designed the interior of a vehicle (Chalmers auto car) and tried to set up a
contract with Sears for clothing to the middle class.

Procedure: The lower court denied the defendants motion for judgment in her favor upon the pleadings, she demurred
it is a so what or a 12(b)(6) motion. The Appellate Court reversed this order in favor of the defendant. The plaintiff
is appealing.

Issue: Did the Appellate court err in granting the defendants demure that no valid contract existed between these
parties?

Result of Appeal: Judgment is reversed with costs in the Appellate Division and this court demure is denied.

Holding
Narrow: Where the plaintiff and the defendant entered into an exclusive agency contract, the plaintiffs
obligation to use his best efforts to sell the defendants dresses was implied from his contractual duties, especially his
duty to remit half the resulting profits to the defendant, and the contract did not fail for lack of mutuality of obligation.
Broad: Where mutuality of obligation is not expressly stated in a contract it may be implied through the
actions of the parties.

Reasoning
Doctrinal: A promise may be lacking and yet the whole writing may be instinct with an obligation,
imperfectly expressed and if so, there is a contract
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 An exclusive privilege is an implied assumption of duties
Policy: The law has outgrown its primitive stage of formalism when the precise word was the sovereign
talisman, and every slip was fatal

Notes:
Indefiniteness in the obligation/consideration: The plaintiff is under no obligation to fulfill his side of the
agreement
If defendant was angered by his performanceshe had rights to sue based upon his failure to conform to
good faith and/or the implied terms of the agreement for his to fulfill his obligation to sell her goods.
Vote is 4 to 3.
Pre-Code Common law was generally reluctant to impose a duty of good faith into contracts based upon the
belief in pure freedom of contract private volition and responsibility
o UCC 1-203: Every contract or duty within this Act imposes an obligation of good faith in its performance
or enforcement.
Griswold v. Heat: There was a binding contract since the agreement obligated Griswold to render some
services to Heat and imposed on him the duty to exercise good faith in the determination of the amount.

Cardozo found out that he previously sued a designer with whom he had an exclusive contract. He included a
best effort of performance clause in that one. He did not here, Cardozo seems to think it was intentional and
that he was under no obligation to the seller (Lucy).
o On its face, there is no consideration in this contract.
o Cardozo sais there is an implied agreement
Wood has this organization, has to account monthly, etc
W/o his performance, there would be no benefit to him (1/2 profit)
P (Wood) agreed to give Lucy profit which means he had incentive to perform,
therefore it was implied.
Why would defendant (Lucy) make the other contracts without telling him?
o Is it like Wakeman where she is taking advantage of him and the market condition
o Maybe she is unhappy w/ his performance.
Moran was arguing the defendant had an obligation
Here, they are arguing the plaintiff (Wood) had an obligation
Moran: Interpreted the contract against the party who drafted it
Moran: Used the word Agreement
Here: The law has outgrown its primitive form of formalism. Where a promise is lacking, it may be that the
whole promise is instinct with obligation.
Cardozo is looking at the contract in terms of what he thinks people intended in the contract.
o Implies a promise as a matter of commercial law. If ppl are involved in contracts like these, they
must intent / imply certain things.
Looks at the context in the business world itself.

o Important who drafted the contract: Wood was taking advantage by leaving out a best efforts clause.
Lucy was taking advantage by thinking she wouldnt have to pay him if she contracted w/
someone else.
What if Lucy had been dissatisfied with the work Wood was doing? What could she have done?

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 She could have sued on him not living up to his contract terms. Did not appear to use his best efforts. All
these contracts that were waiting to be made were out there and he did not bring them to her.
She would have had an opportunity to sue if he did not live up to his implied obligations under the contract.
Instead, she decided to sell herself.

Like Varney UP formalism is no longer viable in todays business world

Certain kinds ofd xtracts w open terms can be enforceable.

** Case is very close to Wakeman! Cardozo never cites Wakeman though.

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Oscar Schlegel Manufacturing Co. v. Peter Coopers Glue Factory189 App. Div.843 (Appellate Division of the
Supreme Court of NY 1919)

Rule: If a manufacturer and a jobber enter into a requirements contract and the manufacturer breaches the contract by
failing to fill the jobbers orders, then the contract is enforceable and the jobber is entitled to damages resulting from the
breach despite the vague quantity terms.
If a party contracts for goods upon a rising market he is ordinarily entitled to such profits as may accrue to
him by reason of a prudent or favorable contract. Speculation.

Indefiniteness: Quantity terms in agreement; is there a cap?

Chain: Lower court decision (requirements contract creates a mutuality of obligation).

Statement of Case: This is an action by a jobber/buyer for damages pursuant to the Glue Factory/sellers breach of a
contract in writing to provide glue to the plaintiff based on his requirements to sell in the market. The defendant
failed to deliver the glue requirements made by the jobber (79,891 lbs).
Jobber: Scours the market to see what people need. Acts like a broker between manufacturer and purchaser.
Finds things that are hot on the market and finds them and sells them elsewhere.
Advantage to Manufactuer: Has a market for his goods at a set price. But, takes the chance that the market will
collapse, and there will be no demand.
In an output contract, the buyer bears the burden (Ill buy all you produce).
In a requirements contract, the risk of fulfilling increasing needs falls on the seller.

Facts: On Dec 9, 1915, the defendant drafted a contract to plaintiff stating, to enter your contract for your
requirements of Special BB glue for the year 1916, price to be 9c. per lb., terms 2% 20th to 30th month following
purchase. Deliveries to be made to you as per your orders during the year and quality same as heretofore. Glue to be
packed in 500 lb. Or 350lb barrels and 100lb kegs, and your special Label t o be carefully pasted on top, bottom and
side of each barrel or keg.
This agreement was accepted in writing by the plaintiff and concededly constitutes the contract between them.
The parties entered upon performance and deliveries were made form time-to-time amounting in the aggregate to
169,800 lbs or 340 barrels. In December 1916, the plaintiff ordered delivery pursuant to the contract of 79,891 lbs of
glue, which plaintiff needed to meet its requirements and the defendant did not deliver. The plaintiff in anticipation of
performance sold 42,000 lbs of glue and it could no longer be bought in the open market, it lost profits on these sales.
The contract in question is similar in general terms to the contract between the parties for the year 1915, which
also was for the plaintiffs requirements of special bookbinders glue. This contract was also for a fixed price quoted.
No question arose as to this contracts enforceability, nor did a conflict arise in 1916 until the price of glue rose. This
change in price provided a great loss for the defendant and a gain for the plaintiff.
In this environment the plaintiff sought to reap a legitimate advantage from its contract and by soliciting the
trade received orders that aggregated to 126,000 lbs. Plaintiff repeatedly demanded performance of the contract and
defendants representative with whom the original contract was made promised repeatedly as late as the month of
December 1916, to ship glue to over the requisitions and said the glue was underway. Instead of repudiating the
contract, the defendant placed an arbitrary limit saying it would give the plaintiff as a jobber ten per cent more than it
had purchased during 1915. However, the defendant never alerted the defendant to stop taking orders from customers
for delivery for this glue, nor did the defendant notify the plaintiff while the orders in question were being taken that it
would not live up to its contract.
Plaintiff is a jobber and sent out agents to sell the defendants glue. In the year in question, there is a huge
deviation from the normal amounts of requirements asked by the plaintiff (only brought up in the dissent).
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Procedure: The trial court without a jury ruled in favor of the plaintiff and the Appellate Court upheld.

Issue: Did the trial court err in allowing the plaintiff to recover damages for the defendants failure to supply the goods
ordered by the plaintiff under a requirements contract?

Result of Appeal: Judgment affirmed with costs.

Holding
Narrow: When a buyer and a seller enter into a requirements contract for the sale of glue with an uncertain
quantity term and both parties are aware of the others practices, there is a mutuality of obligation to perform with good
faith and create an enforceable contract.
Broad: When a contract is made in good faith and with the sound judgment of both parties the contract is
enforceable and if a party plans on defaulting on the terms of the agreement, that party is liable for the costs incurred by
the other party for misinformation regarding this breach; a contract that is indefinite as to the amount of goods to be
furnished does not mean that it does not contain a mutual obligation on both parties, and is therefore, invalid (Appellate
Division view awarding for P).

Reasoning
Doctrinal: If two parties enter into an agreement the terms may be implied if both parties enter into this
agreement understanding the conditions that may arise and are contracting in good faith.
Policy: Contracts made in good faith and made with terms understood by both parties are enforceable.

A rising market could have been guarded against by the defendant by inserting in the contract a clause fixing
the maximum amount which under the plaintiff might be entitled to receive, instead the defendant made an
absolute contract at a fixed price for the entire year to deliver as much as the plaintiff could sell to its
customers.
Breaching party should not profit from the breach
Notes:
In terms of practicalityremember it is WWI
The appellate division refuses to view the marketplace in Cardozian termsit looks at the conduct of the
breaching party only.
Mutuality and Requirements contract are governed under UCC 2-306; output contracts
Dissent: The alleged agreement lacked mutuality of obligation and was too indefinite and uncertain as to the
intentions of the parties to be held as binding. There is no consideration!

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Oscar Schlegel Manufacturing Co. v. Peter Coopers Glue Factory II231 N.Y. 459 (Court of Appeals NY 1921)

Rule: A requirements contract which imposes no duty upon the purchaser is unenforceable due to lack of mutuality; if
the parties are not bound so that either may sue for breach, then neither is bound.

Chain: Distinguished from Lucy as there is no agency being paid half the profits which forced the plaintiff to act in
good faith and buy, but here there was nothing to imply mutuality. Decided without Cardozo.

Facts: same as above!

Procedure: At the trial, a jury was waived and the trial proceeded before the trial justice. At its conclusion he rendered
a decision awarding the plaintiff a substantial amount. Judgment was entered upon the decision, from which an appeal
was taken to the Appellate Division, first department, where the same was affirmed, two of the judges dissenting. The
appeal to this court followed.

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Issue: Is the contract between these parties binding?

Result of Appeal: Reversed and the complaint dismissed, with costs to all courts

Holding:
Narrow: Where the plaintiff and the defendant entered into a requirements contract for the purchase of glue in
which the plaintiff was not bound to use the defendant as his exclusive supplier and was not bound to sell a minimum
quantity of glue, the contract is unenforceable due to a lack of mutuality of obligation/consideration.
Broad: Where a requirement contract exists with an indefinite quantity term and the buyer was not required to
buy a minimum quantity of the good, a mutual promise cannot be inferred because there is no standard by which the
quantity can be accurately declared. The contract was invalid since consideration was lacking and mutual promises or
obligations of parties to a contract, either expressed or necessarily implied, may furnish the requisite consideration.

Reasoning
Doctrinal: For a contract to be enforceable it must have mutual promises or obligations of parties to a contract,
either express or necessarily implied to furnish the requisite consideration.
Policy: No obligation for the plaintiff to do ANYTHING!

Class Notes
Did the K lack mutuality?

P says they had an obligation. Buy any glue that they had orders from. D could have put a clause in the K put a max
amount to sell to P.
D says that P had no obligation to them. They did not have to buy from them. They could have bought glue someone
else. They did not push their products.

What do reasonable requirements mean?

What is incidental to Ps business.

What is bad faith?

Pushing the customers to buy for next year? Or is it buying a substantial quantity higher than previous
years.
Should D have kept promising goods and arbitrarily capping it?

Should have included a max price or max quantity in case the market went haywire in order to protect
themselves. Requirements K are good things for one side. What is the advantage to buyer and seller in
this type of agreement? One could put so many clauses in the K to diminish the strength of the
requirements. We do know that people want to get into these types of agreements otherwise they
wouldnt enter them.

Dissent (Intermediate Apellate Court): Plaintiff took advantage of the defendant by hiring more people, ordering
126,100 lbs (as much as 5 past years combined) and ordered 25k more than it actually had orders from.

Did the buyer have any obligations? (Look at Lucy Lady Duff, Moran, Varney?) Do we imply obligations?
Court was confused said Wood v. Lucy Lady Duff does not have an impact on the case, but it actually does
have an impact. Only case that had no obligation on its face and Cardozo finds an obligation.
Court sais it was diff b/c of exclusive privilege. However, didnt the parties here have an obligation due to
the past 5 years?
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 - Nothing here that sais buyer had to buy a Max or Min amount. (Seller did nothing to protect
themselves) Also evident the plaintiff took advantage of the xtract. If you can imply exclusivity and requirements
implies all that you need the question is still whether the plaintiff acted in good faith in takin advantage of the
market.

Hangs on what Reasonable Requirements Means: lower court talks about 3 types of contracts where
reasonable requirements can be foreseen.
1. Resell of goods and the party knows about it
2. Goods that he purchases are incidental to his business
3. Resell to the third party for a specific # that the seller ought to know about

Not the case that those are the ONLY circumstances where we can determine what Reasonable requirements may
be.

Cardozo is not sitting on this court. What would he have said (Do you thinks the court misread wood?)
Cardozo would say an agreement would imply a mutuality of obligation.

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United States Rubber Co. v. Silverstein 229 N.Y. 168 (Court of Appeals of New York 1920)

Rule: If the defendant makes an uncertain promise, he will be held liable for the meaning that the defendant had reason
to supposed it to be understood by the plaintiff.

Indefiniteness: they, which son? Intent of defendant in letter.

Chain:
Different from UP: says that if words have more than one meaning, the contract is indefiniteonly
concerned here with who the guaranty covers and not with scope of damages/where there is a binding
contract.
Follows Moran indefinite term against the writer of the contract.

Statement of Case: Creditor/merchant is suing a Guarantor/merchant for the money due for default payment, alleging
that the merchant breached a contract guaranteeing he would be responsible for his sons accounts.

Facts: The defendant is a merchant in Rome, NY and has two sons who are merchants in Oneida and Little Falls
respectively. The former began business in April, 1914; the latter in July. A salesman in the plaintiffs service visited
the defendant in May of the same year. The defendant then started that he would be good fro any sales that the plaintiff
might make to Louis. Moses, not being yet in business was not included in the promise. The plaintiff made sales to
Louis, charging them on the defendant. It made sales later to Moses, charging them to him directly. In October, 1914,
the defendant, dissatisfied with the form of the accounts wrote a letter stating that, enclosed were three checks for the
above bills, that he does not want his statements sent with his sons statements, and that they do business for
themselves, and therefore send them separate statements, but I am good for what they buy. Signed B. Silverstein.

Procedure: The trial judge found the contract ambiguous and left its meaning to a jury. The jury found for the
plaintiff. The Appellate Court reversed and dismissed the complaint. The plaintiff appeals.

Issue: Did the Appellate division err in reversing a judgment in favor of the plaintiff and directing a dismissal of the
compliant, where the promisor claims his letter of guarantee was misunderstood to include the son who defaulted on his
debt?

Result of Appeal: Reversed for a judgment in favor of the plaintiff. The Debtors letter using the word they can be
reasonably interpreted to mean the son.

Holding
Narrow: Where the guarantor/father makes an ambiguous guaranty that the plaintiff reasonably understood to
cover the purchases of his two sons and the seller relied on the guaranty to extend credit to one of the sons, and that son
defaulted, the father will be held liable for the meaning that he had reason to suppose that the plaintiff would reasonably
attach to the guaranty.
Broad: Where the guarantor makes an ambiguous promise, he will be held to the meaning that he had reason to
believe that the plaintiff would reasonably attach to the promise.

Reasoning
Doctrinal: An uncertain promise is to be taken in the sense in which the promisor had reason to suppose it
was understood by the promisee. (Canon of Moran).

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 If the defendant makes an uncertain promise, he will be held liable for the meaning that the defendant had
reason to suppose it was going to be understood by the plaintiff.
Indefiniteness/intent is deemed as a question of fact and not law

Policy: The circumstances of family life and the family enterprise made this reading/inference a fair.
Different than United press, he treats this dispute as a question for the jury.

The consideration was the guaranty given by Mr. Silverstein for the P to give the goods to the brothers.

Like UP Contract was said to exist, but damages are unclear due to the indefinite terms.

Could Mr. Silverstein testify as to what he thought the guaranty meant? He was but in a case like moran oral evidence
was not allowed. Only hard facts were allowed previously.

Cardozo seems to say that w have to interpret the xtract in the way the promisor would think the promisee would
understand it. What if the D(Promisor) thinks he understands it one way, but he understands it another.
Cardozo thinks Silverstein is lying. Sais we have never heard of Rachel until the testimony.

What is the consideration? The consideration is the defendants guaranty to pay for the goods his son buys.

Even though the plaintiff is more sophisticated than the defendant in terms of the English language, but maybe the
defendant is more sophisticated in getting a good deal.

While Cardozo is supposed to be objective, you can see he thinks Silverstein is a liar.

Plaintiff may not have known the defendant was illiterate, may have misread it that way. Also, a good salesman in the
defendan

Silverstein case may or may not help us for Oscar Schleiger.

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Heyman Cohen & Sons, INC. v. M. Lurie Woolen Co.Plaintiff wins, Cardozo 232 N.Y. 122 (Court of Appeals of
New York 1921)

Rule: An option to order more is a part of the consideration of an original contract with a stated minimum. The
privilege to order more is coupled with a promise and obligation to accept a stated minimum.

Indefiniteness: Quantity requirement (mutuality of option to purchase more), price, time

Type: Executed, written

Chain: Total Rejection of Formalism for Realism (look at the market);

Interpreted as a matter of law and not fact (opposed to US Rubber)
Options are not revocable (Schlegel II)
Court reads into Quantity (fixed by the buyer); Price (reasonable); Time (reasonable)
Distinguishable from Schlegel: here the option is supported by the consideration for the original 200 pieces.
There, there was nothing for consideration.
But could argue past dealings=consideration
Rejection of Formalism alone the option would have not stood, so Cardozo piggybacks it

Statement of Case: Buyer of cloth is suing a seller of cloth for breach of a contract, by which the seller was required to
procure to the Buyer all the cloth it could procure, for the damages of the five hundred pieces withheld from the
plaintiff. (option requirement K)

Facts: The pleadings show a written contract, dated April 10, 1919, by the which the plaintiff agrees to buy and the
defendant to sell two hundred pieces of tricotine at $3.02 per yard, delivery to be completed by June 1, 1919. The
plaintiff is given the privilege to purchase to more of the above if M. Lurie Woolen Company [the defendant] can get
more. The two hundred pieces were delivered and paid for. The plaintiff, exercising its option, demanded as much
more of the cloth as the defendant could procure. The defendant confirmed the exercise of the option, and delivered
sixteen additional pieces with the statement that it cold procure no more. In fact, it had procured five hundred pieces,
which it withheld. Possible reason for the demand of more tricotine: higher price in the market (Damages). Seller hung
on to the tricotine he actually had b/c he could sell it for more on the open market

Procedure: The initial pleadings were defective, making the case subject to a demurrer. The Special Term denied the
defendants motion for judgment on the pleadings. The Appellate Division reversed and granted the defendants motion
on the pleadings. Plaintiff appeals.

Issue: Was the defendant obligated to sell all of the cloth it could procure to the plaintiff and does this contract contain
adequate consideration?

Result of Appeal: Reversed; motion for judgment on the pleadings is denied and the plaintiff wins.

Holding
Rule: If 2 parties enter into a K which includes an option that is part of the consideration for the K, then
the option is enforceable.

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 Narrow: Where the and entered into a written K for the purchase of triacertin and the K contained an
option for additional purchases, and the excercises its option to buy all the triactrin the could procure and the
breached the K by not supplying all of its supply, there was mutual consideration for the option because it was part of
the consideration for sale.
The option was an inseparable and dependant part of the original K. Where there was consideration on the original K,
there is consideration here as well. (Joins the 2 Ks and makes them 1)
Broad: Where two parties enter into a contract and that contract has an option which is consideration for the
original, there is mutuality of obligation to make the option enforceable.

Reasoning
Doctrinal: When an option is supported by consideration of the sale it is enforceable.
A contract in which the terms of price, quantity, and time were uncertain the court implied the reasonable
terms based on the intent of the parties
Contract interpreted as a matter of law (Different from Silverstein)
Policy: Since merchants drew the contract they must be able to determine what they mean by the contracts
terms.
Looked at the good faith of the parties and intent
Notes:
There is no lack of consideration for the concession of the option because it was part of the consideration for
the original sale.
The privilege to order more is coupled with the promise and obligation to accept the stated minimum,
therefore the option is supported by consideration.
Schlgel is a roadblock. Cardozo barely addresses the casedistinguishes it in that in the glue case the option
was voluntary/revocable, here the option is supported by consideration of the sale.
Cardozo says time, money, quantity reasonableness, says merchants must know what they are doing. They
know the market. Indefiniteness must reach a point where construction becomes futilediff from UP.
Limits Schlegel: There the option stood alone; it was voluntary and revocable. Here the option is
supported by the consideration of the sale (of first 200 pcs).
o In this case consideration is supported by the sale; mutuality and contract!!

- Court goes far to find a K. Uses humanistic approachlooked at good faith of the parties and their intent
- K interpreted as a mater of law not fact

Class Notes:
Issues:
Max quantity, price, duration of the option.
P was not bound to buy any more tricotine. He could have bought tricotine from someone else.
o One could make the argument that in Schlegel, the option was supported by their previous dealings the
last 5 years. Here its like a one time deal. Here the Cardozo is involved while in Schlegel he wasnt
there. What Cardozo seems to say to the court is that they made a mistake in Schlegel. That is why he
limits Schlegel. He seems to say that there are circumstances where requirement Ks are ok. They
need to redo the K to be more specific in regards to quantity and price.
o Cardozo states that indefiniteness must reach the point where construction becomes futile.
Uncertainties, thought to be impenetrable, are suggested in respect of subject matter, time and price.
He implies price, time, and amount. The policy behind here is that these two were merchants and they
intended to be bound. Merchants must know what this mean. (industry custom). The court thinks that

99
 the implication is plain that the buyer is to fix the quantity, subject only to the proviso that quantity
shall be limited by the ability to supply. This cas suggests that more evidence should be introduced to
support industry custom. This will help determine what these kind of K mean. Judges dont know
what they mean in writing up these K. The ones entering into the K have a better idea of what they
would need to write up a K. Cardozo seems to be shying away from his active judicial interpretation of
K.
o Seems to be a good place to cite Wakeman v Wheeler. This case was indefinite to price, quantity, and
duration of time. Could have used Wakeman that even though there are all these open terms the court
still found a K.

Is plaintiff bound to purchase more tricotine? No, he had an OPTION to purchase more.
In Coopers Glue The court found that the requirements contract was void for lack of mutuality of obligation
(Lack of Consideration) in the plaintiff was not bound to purchase solely from defendant and was not bound to
purchase any glue at all.

Is Cardozo trying to limit Scheigel to save his colleagues face? It appears Cardozo thinks the court made a
mistake in Schleigel (He did not sit)
o Indefiniteness must reach a point where construction becomes futile.

Here, the buyer is to fix the quantity up to the sellers capacity to fill the order. In both cases (Schleigel and here)
the buyer fixes the price and the seller is obligated (as claimed by buyer) to supply the requested amount based on
the terms of requirement (Schleigel: As much as is required Lurie Woolen: Option to buy as much as you want
as long as the seller can get it)

Indefiniteness
Time of contract: Cardozo: Reasonable
Price: Price of the initial quantity is implied
This contract was made by merchants, they must have known what they were doing. The court sais we know how
merchants interpret such contracts.
o Rubber Trading Co: Bad Faith in that the seller could have said I am not enforcing the contract b/c the
terms are too indefinite, but decided to fill 16 orders rather than rescind at the beginning.

Look at the theories of the judges, also the personalities of the judges and their interactions and disagreements btwn
eachothers.

Cardozo converts the whole court.

o As close to Wakeman as youre going to get.
Cardozo doesnt cite Wakeman
Cardozo in the past cases seems like he is trying to shape the free market
Takes a step back here
Crane Dissents who was against Cardozo on his other more liberal opinions

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101
St Regis Paper Co. v. Hubbs & Hastings Paper CoPlaintiff wins; Written by Pound, but Cardozo concurs
235 N.Y. 30 (Court of Appeals New York 1923)

Rule: If two parties enter into an executory contract, which expressly reserves the right to terminate the contract upon
failure to agree on an essential term, then good faith does not require the parties to do more than contract and the court
will not impose an agreement upon them.

Indefiniteness: Price (could not agree to new terms)

Chain: Court defines the relationship in the manner suiting its purpose (not brokerage but vendor to vendee)
Goes back to United Press and Varney by supporting that an agreement to agree is not enforceable and a
contract with this provision is void.

Statement of Case: Seller of paper is suing a buyer of paper for an unpaid balance on the sale of paper,
alleging breach of contract.
Buyer counter-claims, alleging that the seller, who is a manufacturer of paper such as newspapers are printed
on, repudiated the agreement to deliver paper to the buyer, a broker, who had secured contracts with publishers
for their supply of newspaper, and refused to pay the buyer the commissions to which it would have been
entitled.

Facts: The defendant as Buyer and the plaintiff as Seller entered into a contract for the sale of paper, 4,500 tons a year
for two years from January 1, 1919, price for the first three months ending March 31, 1919, $3.77 per hundred pounds,
price for the balance of the year to be fixed by mutual consent. In the event that the parties to this agreement shall fail
to arrange a price for any quarter before the expiration of the preceding three months, this contract, in so far as it
pertains to delivery over the unexpired period shall terminate. If at any time during the life of the contract, both parties
can agree on a fixed price for the balance of the contract, that agreement shall take the place of the three months price
agreement. The contract under the caption Remarks contains the usual provisions relieving either party from liability
for failure to take or supply such paper in consequence of strikes and other causes beyond their control. It also provides
that the provisions last referred to shall run through to an original contract between defendant and the Rochester
Printing Company for whose use the contract is placed, and that the publisher and plaintiff are the contracting parties as
to said conditions, as to strikes.
On the same date, Rochester Printing Company as buyer and defendant as seller entered into a contract of sale
in the same terms as the foregoing, excepting only that the price was fixed at $4.10 per hundred pounds.
The other two sets of contracts differ only as to name of publisher, price, amount of paper and period covered.
In the last quarter of 1919 plaintiff refused to agree with defendant on a price for the first quarter of 1920, and finally
quoted a price so high that the publishers could not agree on it with defendant. (3 Sets of contracts altogether).
Defendant thought the plaintiff raised the price so high to force him to terminate the contract and sell it directly
to the 3rd party. SIMILAR TO WAKEMAN

Procedure: The trial court submitted to the jury the question whether the defendant was a broker in the transaction and
whether plaintiff acted in good faith in trying to fix the price of paper. The jury found for the defendant. The trial judge
set the verdict aside and granted a new trial saying that, assuming the defendant acted as broker, its commissions must
be limited to 2 per cent paper to be delivered during the three months of the contract, as the only enforceable contract
between the parties was for the first months delivery and beyond that nothing but a possibility of future agreement
remained.
The Appellate division held that the contract was between the broker and principal and that it implied good faith
and required the exercise of an honest attempt to agree on the price of future deliveries; reversed and reinstated the
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verdict for the plaintiff. The jury verdict allowed the defendant counterclaim in the sum of $22,050 deducted from this
the plaintiffs award of $46,424.20. The plaintiff/seller appeals.

Issue: Did the appellate court err in holding that the K was between broker and principal and required the exercise of
an honest attempt to agree on the price of future deliveries?

Result of Appeal: Reversed in favor of the plaintiff. Judgment reversed and judgment granted in favor of the plaintiff
against the defendant for $44,426.03 with interest from January 15, 1920, with court costs.

Holding
Narrow: Where two parties enter into an executory contract which expressly states that it can be terminated if
the parties fail to reach an agreement on the price per a 3 month negotiation clause, either party is free to terminate the
contract be refusing to agree on price.
Broad: Where two parties enter into an executory contract which expressly reserves the right to cancel the
contract if the parties fail to agree to an essential term, either party may terminate the contract by refusing to agree to
that essential term, then good faith does not require the parties to do more than contract and the court will not impose an
agreement upon them.

Reasoning
Doctrinal: An agreement to agree is not enforceable (UP, Varney)
Prices were not fixed by mutual agreement and if the parties did not agree, the contracts were to terminate.
Policy: Good faith only requires that the parties act under the terms they are bound under by the agreement.
Notes:
Why is the broker distinction important? Decided vendor to vendee.
o If he is a broker the seller must act in good faith because he is an agent or an employee; did not act in
good faith because quoted really, really high prices.
Where a contract is complete and unambiguous the court has no right to interpret/alter the words of the
contractthe parties used the contract to express their intentions.
Is the buyer a broker? (Important question in the case): If a broker, the principle has a fiduciary duty to the
broker to reasonably agree to a price rather than state a price so high that they couldnt agree to it and essentially
intentionally terminating the contract.

B/c he was a broker, the plaintiff deliberately robbed him of his commission. He made the price so high that the
defendant could not sell it at that price.
Court kind of sais he is a broker: Doubtless a brokers authority cannot be terminated in bad faith so as to
permit the principal to take advantage of the brokers efforts in his behalf and at the same time escape the payment
of his commissions.
Parole evidence is not admissible
Niether is the way they operate in the field (But this is one of Cardozos main points in other cases)

Court sais it wont look to parole evidence b/c there is no ambiguity. If no different inferences can be drawn,
you cannot look at parole evidence for brokerage agreements.

Court sais commissions is in the collateral correspondence between the parties (oral) so cannot admit

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Doesnt resell part of the remarks section of contract mean brokerage? Court: No, it is not part of the
contract, only in the remarks part of the contract. Why doesnt the court permit this when the remarks section is
usually intended to clarify the terms of the contract.

The court sais the contract is unenforeceable after 3 monthe b/c of the indefiniteness of price. Even if the
contract is enforceable the plaintiff has a right to end the contract by not agreeing to a price. No reason to get to
indefiniteness because its gratuitous. (Unncessary that the talked about indefiniteness)

What else is unnecessary: The principal / broker relationship is unnecessary because that was part of the oral
corresposndence..
Court is looking at past cases and lokoing at the business market place as viewed by the NY Court of Appeals.
Why commissions = profits and why the parties did nto just call it profits? Shouldnt it be a jury question like it
was in other cases? Court holds it as a question of law. Parties can now see that the terms of the contract must be
within the contract, and not the remarks.

Court treats this as a case of agreements to agree. (p.501)

United Press (Still has some impact we thought wakeman was buried for UP. Then we thought UP was
laid to rest. Now UP comes back).

Varney v. Ditmars

How is the holding in this case limited? Contract sais the contract shall terminate unless they agree to a
price during the previous quarter. Shows their intent that the price was to be agreed upon or the xtract will
be terminated. Perhaps without such a term the price will be determined by reasonableness
Moran: Agreement = mutually bound
Here: What does remarks section mean in regard to Agents and commissions
Court uses Cardozos techniques saying they dont base it on technical grounds, but Stotzky thinks they base
it on broad grounds AND technical (narrow) grounds by looking @ specific temrs and sayin they dont mean
what they say.
LOOK @ DIFF btwn Agreement to Agree and Agree for mutuality

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Sun Printing & Publishing Association v. Remington Paper & Power Co. 235 N.Y. 338 (Court of Appeals of NY 1923)

Rule: If two parties enter into an agreement to agree, then either party may also exercise the right not to agree and the
court will not impose an agreement upon them.

Indefiniteness: The price term after Dec. 1919 and the length of time this term was to govern

Chain: Cardozo changes sides, he no longer feels like telling parties how to write contracts
The defendant drafted the contractdoes not stop him from siding with the defendant against Moran
Distinguishes from Cohen v. Lurie based on a month to month option to alter the contract; where there was
an option to buy more
Agreement to agree (St Regis paper. The right is not effected by our appraisal of the motive (Mayer).
But Cardozo gets his own meds in the dissent!!
Crane seems to be using Cardozos old reasoning against him

Statement of Case: Buyer, a printing and publishing company, is suing the seller of newsprint paper for the damages
suffered by the plaintiff for the defendants month-to-month price fluctuations.

Facts: An agreement was entered into for the defendant to sell to the plaintiff 1,000 tons of paper per month during the
months of September 1919, to December 1920 inclusive; adding up to 16,000 tons of paper in all. Size and quality of
the paper were adequately described in the contract. Payment was to be made on the 20th of each month for all paper
shipped the pervious month. The price for shipment is September 1919, was $3.73 per 100 pounds, and for shipment
in October, November, and December 1919, $4 per 100lbs.
For the balance of the period of this agreement the price of the paper and length of the terms for which
such price shall apply shall be agreed upon by and between the parties hereto 15 days prior to the expiration of
each period for which the price and said price in no event to be higher than the contract price for newsprint charged
by the Canadian Export Paper Company to the large consumers, the seller to receive the benefit of any differentials
in freight rates.
Between September, 1919 and December of that year, inclusive, shipments were made and paid for as required
by the contract. The time then arrived when there was to be an agreement upon a new price and upon the term of its
duration. The defendant in advance of that time gave notice that the contract was imperfect, and said he wasnt going to
deliver the paper. The plaintiff took the ground that the price was to be determined by an established standard. It made
demand that during each month of 1920, the defendant deliver 1,000 tons of paper at the contract price for
newsprint charged by the Canadian Export Paper Company to the large consumers, the defendant to receive the
benefit of any differentials in freight rates. The demand was renewed month to month until the end of the year. This
action is for the ensuing damages. First 4 months there is a contract and then the seller says I will not meet his demand.
The buyer then makes a demand every month for the paper at the Canadian pricethe defendant continues to refuse
delivery of the paper. This price is probably less then the defendant could get in the market.

Procedure: The defendant demurs and the Special Term denied a motion by the plaintiff for judgment on the
pleadings; the Appellate Court reversed the order.

Issue: Is there a contract upon which the plaintiffs cause of action of a breach can be tried?

Result of Appeal: Reversed and the order of the Special Term affirmed with costs to the plaintiff. The question
certified in the negative. There is no cause of action.

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Holding
Narrow: Where two parties enter into an executory contract that leaves the price term to future agreement and
there is a standard set by which only price can be determined, the contract will fail for indefiniteness.
Broad: Where an executory contract lacks certainty with respect to the length of time to govern a new fixed
price period, the contract is incomplete and the defendant is not bound.

Reasoning
Doctrinal: When an agreement is not reached between the parties to complete a contract the parties are not
bound.
Policy: The court is not at liberty to revise while professing to construe; also the court must preserve the
sanctity of contracts.

Notes:
How could the plaintiff have won? Prior to the action, the plaintiff demanded delivery each month at the
Canadian Export Price, thus he was deciding his own terms of the contract. He should have negotiated and
let the defendant make his own terms of the contract (Rubber Trading Co). He should have negotiated and
left the defendant to make the terms, then upon failure to deliver as to their own terms, there would have
been a breach.
They left the gap unfilled re: not guarding against the contingency of failing to come together as of
timemeans that its more of an agreement to agree.
Mistake by buyer was requiring price/month at Canadian export price.
Dissent: by Crane: the anti-Cardozo
o Cites: Wakeman, first time in entire line of cases, also Lady Duff, Moran, Rubber Trading
o We can imply a specific term from the Canadian Export Price
o We can imply the length term to govern the price (But, Cardozo sais the term was indef)
o K was drawn up by defendant and it should be construed in a manner than is most favorable to the
plaintiff Cardozo thinks the policy reason is more important well-paid counsel needs to do their job.
o Judge Crane seems to not get along with Cardozo at least on the theory of the cases (this might be a
fuck you to Cardozo. Might just be making fun of Cardozo whos right??
o To let D escape from its formal obligations when any one of these rulings as applied to this contract
would give a practical and just result is to give the sanction of law to a deliberate breach (cites Wood,
Moran)
o Here you have a ceiling price, United Press you had a ceiling price and it was held enforceable. Here,
you have a question as to the term that that max price is to be paid.

Indefiniteness Conclusion:

Ask yourself:
* How did the facts cut?
*How did the court/lawyers use precedent?
*What is the rule of indefiniteness?
*How did the situational facts effect the outcome of the case?

How does the UCC fit into these cases and help avoid these problems? P 519

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 Primarily for merchants, based on assumptions of how to practically enter into and use contracts effectively and
efficiently.

At no time can to price be higher than the max price charged by the Canadian newspaper company to their largest
company
Cardozo sais this is an invalid contract. Its not the prive that is indeterminable, but the time that the price
would last.

Suppose there is no discrepancy as to how long the price would last. Would there be a contract now?
o Suppose they interpreted a time? Cardozo sais it would be remaking the contract.
Why not take the contract on a monthly basis?
Cardozo: Doing so would amount to successive options, theres nothing in contract that
would permit such a view
What if the Canadian contract price doesnt fluxuate? Stays the same over a course of a few
years?
o If the prices didnt fluctuate, then the plaintiff should have plead that.
What about applying a reasonable term?
o Cardozo didnt have a convincing answer: That would re-make the contract
Dicta: Maybe Cardozo is beginning to think he doesnt know how the business operates?
Maybe he thinks he wants the court to be informed more of what the business is about? Not
sufficient on the pleading? Why should I inform the high-price counsel on how to plead their
case? Could we argue this is really a bad pleading case in the sense of the rubber trading
case? Cardozo: This is similar to the incomplete tender in the rubber trading case.
Could not set down a bright line rule could be limited in one sense or another to a
pleading defect.
Other interesting issues
o Have to do with what Crane is going after. Ironic that Crane dissents
He was the sole dissenter in Cohen and dissented in Lady Duff Gordon
Now he takes Cardozos old rule
Even uses Cardozos test that the xtract was drawn by the D and
should be interpreted against him.
Cardozo cites Cohen v. Lurie he wrote opinion
Everything was open and he found a binding contract
Cites St. Regis:
Clause said this contract will terminate if a price was not ag reed
upon in the previous quarter
Cites Regis again (510)
Cites Mayer v. McCreery (510

Crane Cites Wakeman v. Wheeler

First time its cited
Crane is saying in Wakeman everything was open (territory, time,
price, quanitityetc) We ruled for Wakeman b/c one party was
takin advantage of another

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 Crane: month-month / reasonable term (+ thinks the max candian price is indefinite enough) To
let this defendant escape from its formal obligations when any one of these ruling as applies to this
contract would give a practival and just result is to give the sanction of law to a deliberate breach.
Wood v. Duff, Moran v. Standard Oil, Unites States Rubber v. Silverstein
Is he tweaking Cardozo or has he become a true believer?
o Stotzky: He hides his light under a bushel
Pulls things out of his hat

RULES DO NOT DETERINE RESULTS! ITS THE JUDGES PERCEPTION OF THE

LIFE SITUATION AT HAND BASED ON HIS EXPERIECES. RULES GUIDE A
DECISION BUT CAN BE AMENDED

3. The idea that is inherent in Wakeman and even in Cranes dissent Parties enter contracts
to be safe. Price is not as important in a long term contract as is the assurance of price
4. Good faith is implied in every contract. Good faith can be very general. Whats GF in one
instance may not be in another. Merchants know what good faith means and how it operates
in their industry.
Whether the term for supplying a # of goods when the dollar is going to change in value is
a good idea to limit the other party taking advantage of the price flux.

It is clear in this sequence of cases that we were concerned with how you construct arguments. All based on the
perceptions that the judges have. Stotzky enjoys reading these for the skills one needs to be a lawyer which can be
translated to whatever kind of law you do.

CASE NAME INDEFINITENESS? K? DAMAGES? RULE ADDL PTS PRECEDENT?

Lost profits
are included
s lawyer
Price, length, delivery as damages
Wakeman v. K and Dams. acc. messed this
terms, quantity, and when
Wheeler to profits case up bad
duration breaches
law
after s
performance
An The ct. does
agreement is not want to
Wakeman parties had
Plans for renovation ~K and ~ Dams. ~ binding if a revise and
Mayer v. an agreement ct.
were to be agreed only an agreement term is interpret Ks
McCreery could pt. to; here only
upon later to agree subject to be outside of
agreement to agree
agreed on at parties
a later date language
Ct. is taking
All terms and formalistic
conds. of a K view on K,
Price cap set not to K but only nominal Ct. does ~ follow
United Press must be will ~
exceed $300 Dams. Wakeman or Mayer
explicitly interpret
stated outside of
Ks language
108
 Case brought
If a promise
as b.o.c.
to increase Defined UP wrong as
when it
Salary increase: amt. wages is too dealing w/executed
Mack I ~ Dams. should have
and type indef. it Ks; UP is for
been brought
cannot be executory Ks
as Quantum
enforced
Meruit
Quantum
Meruit: a
No dams. if claim for the
Term satisfactory Defined UP wrong
Mack II ~ Dams. promise is reasonable
amount again
indef. value of
services
rendered
Must bring Ct. only
expert instructed
UP absent a price to
testimony jury as to
pay, K is
Bluemner v. Term fair share of about value formal K
~ K and ~ Dams. unenforceable; Mack
Garvin commissions of services to theory diff.
I QM and b.o.c. are
recover for outcome if
separate
quantum QM
meruit instruction

109
 Construe K
A K may be
how drafting
instinct
party
Moran v. s consideration ~ K but ~ w/obligation Moving away from
reasonably
Standard Oil explicitly stated commissions though ~ formality of UP
expects 2d
explicitly
party to
stated
understand it
If a P is too
vague that
Parties Mack I, Bluemner,
intentions of
Varney v. Term fair share of intent must and Mayer; UP
~ K and ~ Dams. promisor
Ditmars profits be proven ~intended to state: if
cannot be
through facts ~ price ~ K
understood
~K
Non-
If 1st party
breaching
breaches, and
party must
Rubber Trading breached K the 2d party
inform Sale of Goods Act
v. Manhattan changed location of K but ~ Dams. conts.
breacher of 146
Rubber inspection listed in K performance
intent to no
the K is
longer be
still alive
bound
Ct. may infer
parties
Exclusive
obligations
s consideration ~ privilege Disregards Moran b/c
Wood v. Lucy K and Dams. from Ks
explicitly stated counts as here drafted K
terms and
consideration
parties
actions
Requirements Seller in
~ cap on quantity of
K creates requirements
Schlegel I glue to be sold; ~ min. K and Dams.
mutuality of K must state
for to buy
obligation quantity cap
Promise is
interpreted
Cardozos
how Diff than UP: if
theory of
Father sends a letter to promisor words have 2
US Rubber v. dams:
be sons guarantor, but K and Dams. should meanings too
Silverstein protect
which? reasonably indef.; Moran: rule
expectation
expect for draftee
interest
promisee to
interpret
Both parties could
~ cap on quantity of must be bought Wood v. Lucy this
Schlegel II glue to be sold; ~ min. ~ K and ~ Dams. bound to nothing from was ~ an exclusivity
for to buy some .: ~ K
performance consideration
110
 An option to
order more Looks at Diff than Schlegel II
coupled parties b/c here option is
Cohen and Sons No cap on how much
K and Dams. w/min. intentions supported by
v. Lurie Woolen could buy
purchase and good consideration of the
order is faith sale
enforceable
Either party
K and Dams (for Good faith
St. Regis v. Reserved rt. to cancel K can exercise UP and Varney: terms
to receive unpd. only requires
Hubbs and if price cannot be an option in a are so indefinite they
balance on paper parties to
Hastings agreed on K in good are ~ legal.
sale) contract.
faith
Ct. stops St. Regis: agreement 2
Agreement to
Price and length of time looking to agree; exercised
Sun Printing v. agree on a
price (of 3d co.) was to ~ K and ~ Dams. market to legal rt. when
Remington price does ~
govern clarify demanding more in
create a K.
indefiniteness K; UP

111
 PART IV: EQUITABLE RELIEFSPECIFIC PERFORMANCE AND INJUCTION

Sanford v. Boston Edison CoInjunction granted! (Union Case) 316 Mass. 631 (Supreme Judicial Court of
Massachusetts, 1944) p.175

Rule: General rule of when specific performance will be granted, where damages are an inadequate remedy and the
nature of the contract is such that specific enforcement of it will not involve too great practical difficulties, equity will
grant a decree of specific performance.
The difficulty in making an accurate valuation of the subject matter involved, in determining the effect of the
breach and the plaintiffs harm
The existence of sentimental value; cannot be measured in money
The difficulty of obtaining a substantial equivalent of the profit from money damages
Probability that damages could be awarded and not collected
The probability that full compensation cannot be had without multiple litigation

Statement of case: Bill in equity brought by the Officers of United Brotherhood of Edison Workers (labor union) on
behalf of themselves and all other members, against employer, Boston Edison (Power Company), for 1) Injunction
prohibiting from refusing to recognize assignments of wages for labor union dues;
2) For Specific Performance of a check-off provision in a collective bargaining agreement. / Officers and
members of a union sued employer for specific performance of their K for refusing to recognize the assignment
portion of their wages
3) An injunctive relief.
Specific Performance Compelling someone to comply with their contractual agreement
Check off Provision Employer pays the Union out of the paycheck
- Natural for people to put off bills theyre not that interested in
- Union needs money to pay their employees and to operate
- Would the Union like the check off to provision or would they want to receive a lump sum
Union wants Boston Edison to pay their check off agreement
Union wants to injoin them from refusing to recognize the check off agreement

Facts: On May 24, 1940, the union and the defendant entered into a written contract attached to the bill. Article 5, 7,
of the contract states. The Company will not by general rule or otherwise refuse to recognize or otherwise refuse to
recognize assignments of wages when made in accordance with the provisions of Chapter 96 of the Mass Acts of 1933.
A large number of union members have executed written assignments of a portion of their wages to be deducted
each month for the payment of their dues to the union. In agreement, the company has deducted these amounts of
wages and forwarded these deductions to the union. However, around August 31, 1943, the defendant notified the
union it would not recognize these assignments of wages for dues payments of approximately 120 union members.
These members gave written requests for the deduction of their union dues from the wages of the respective assignors
and it would not deduct the amounts so assigned from said members checks and forward the aggregate of such amounts
to the union. The defendant refused to forward these amounts.
The contract between the plaintiff and the defendant states that the union has been organized by employees of
the defendant; that all employees are eligible for membership; and that a majority of employees are members and have
designated the union as their exclusive collective bargaining representative. The bill also contains provisions of wages,
hours, tenure, and dispute settlement.

Procedure: The defendant demurred on the ground that the plaintiff did not state a cause of action and that the
plaintiffs have a plain, adequate, and complete remedy at law. Demurrer based on the defendants contention that there
is no cause of action because there is an adequate remedy at law to pay damages. The prayers of this bill are that the
112
employer be joined for the specific performance of this contract and the execution of dues as made. Want money they
did not collect. The demurrer was sustained and the plaintiff appeals.

Issue: Does the plaintiff have an adequate remedy at law or can the plaintiff file in equity for specific performance of a
contract by the defendant?
Or
Whether the trial court erred in sustaining the demurrer because the s dont have a cause of action in equity and can
have a complete remedy at law (damages). (Could have sued for anticipatory breach)

Result of appeal: The demurrer was overruled by an interlocutory decree. Trial court erred in entering a demurrer to
this bill in equity.

Holding: Yes, the trial court erred. The bills states a cause of action for specific performance of the s promise to
recognize assignments.
Narrow: Where a party to a contract refuses to recognize and carry out its duty to the other party, and there is
no other adequate remedy at law for the non-breaching party, specific performance may be granted. An arbitration
clause does not oust a contract if not related to the question.
Broad: Specific performance should be granted to the plaintiff because this is the only remedy available to
allow the plaintiff the full benefit of contract. Specific performance is appropriate where: 1) it is the only remedy by
which the can receive the value and benefit of the agreement; 2) it would prevent multiplicity of suits; 3) damages are
inadequate remedy.

Reasoning:
The promise was rally an affirmative promise crouched in negative termsit meant that would not refuse
either by general rule or without general rule
Art. 5 7 is preventative relief that managers put in to protect themselves from the unions, although 9a
was passed to protect the unions from the managers of large companies
Court gets around 9a by granting SP v. an injunction. This extreme statutory interpretation may reflect the
court knowing that the s are being devious and trying to use the stature intended to protect s against
them.
Only by ordering specific performance can the ct secure the plaintiffs real benefit of their K
A series of suits brought in intervals as ling as the K remains in force to recover the sums assigned would
not give the union the benefit check off
The s gave their own promises, which formed the consideration on their part of the K. Forcing company
not to refuse is negative relief. Try to be sneaky not refusing need to get injunction.
There is a special course of action for specific performance of s promise to recognize the assignments. SP
will be granted because its the only way plaintiff will recover the real benefit of the K.
The parties intended that the union should secure regular payment of dues of its members while they were
earning wages. Plus refused to recognize 120 assignments-breach.
Drafting K probably by mgmt I will not refuse to vague, not committing to anything

Doctrinal: Specific performance shall be granted, where damages are an inadequate remedy and the nature of
the contract is such that specific enforcement of it will not involve too great practical difficulties, equity will
grant a decree of specific performance. --Wiliston.
The bill states a cause of action. Only by ordering specific performance can the court secure to the plaintiff
the benefit of the contract.
113
 Policy: The agreement /union was property and very valuable to the s. Such a provision would prevent
strikes. This was during WW2, when owners wanted to prevent strikes. Owners would benefit in the end if
the union benefited.

Role of Judge
Sometimes the tail must wag the dog
Issue was not only important to s but to labor in general
Judge could have easily interpreted the statute or constued the agreement a different way=different result
Judge had to pick his remedies accordingly
Ability to see beyond the four walls of the courtroom
Issue was of national importance
How will the decision affect not only these parties but also the nation?
Necessary for Judge to be well informed and have a world view
Was able to pick up on the shadiness of the and see what they were trying to do

CORBIN
Specific Performance
-Purpose to attain as fully and exactly as is reasonably possible, the realization of the justifiable
expectations of the promise
-Court cannot make parties perform by putting them in jail; but the threat of jail will be effective to
prevent them from breaking the promise.

Notes:
Costs of not issuing this injunction would be extraordinary (have to sue every month to get management to
pay dues to union, strike during wartime would not be good at all.)
Court is worried about strike due to wartime costs of WWII strike in a major industry would be
devastating to the war effort.
Spec performance v. Mandatory Injunctions - SP use limited to K actions. MI use is to make someone do
something, is in the public interest. Injunctive relief is sought when there is an inadequate legal remedy.
Legal remedy here is damages for a breach of contract. Why is it inadequate? This wouldnt guarantee
future performance of the K. Union would have to continually sue to get $$$.
Corbin: The purpose of a decree of specific performance is to attain, as fully as possible, the realization of
the justifiable expectation of the promise.
Anti-Injunction Acts purpose was to protect the union from managers getting injunctions to stop them from
forming. Section 9A refers to preventive injunctions, and here relief is affirmative. Management wants
union to have to go through a lot of requirements for union to get specific performance (via statue) - they
think they can use this statute for the betterment of the management (specifically 9A). They say that unless
P goes through all requirements of 9A, they cant get injunctive relief. Why is the strict statutory
interpretation necessary because management tried to use a statute intended to protect the unions to
protect itself. Need to look at statutes and figure out which parties are intended to be protected.
The court is trying to make a difference between affirmative and injunctive relief. Affirmative = specific
performance (dont have to use 9A). (Its not dont not recognize wage deductions, its take the money
out stupid).

114
 The Drafting clause was in the negative, thus, it would require the union to seek injunctive relief if the
managers were to breach the contract. To get an injunction, the union would have to go through a series of
other procedures.
o Here, the court says injunctive relief mans to prevent someone from doing something. And in this case,
the plaintiff needs defendant to do something specific performance is good!
Injunctive relief was criticized in the 60s because it was used in the civil rights movement and people said that
judges were being activists.

115
Wheelock v. NoonanTrespass; specific relief granted. 108 N.Y. 179 (Court of Appeals New York 1888)

Rule: A court of equity will act in such cases only after the plaintiffs right had been established at law, but that rule
has exceptions (discretionary rule)
Repeated trespassfor which there is no adequate remedy at law
o Equity will lie when a trespass is continuousmultiplicity of suit

Statement of Case: Plaintiff is suing the defendant, who by permission was allowed to use the plaintiffs land to place
rocks for a short period of time, made definite by the defendants promise to remove by spring, for specific performance
and the removal of said rocks.

Facts: The defendant, who was a stranger to the plaintiff, obtained from the latter a license to place a few rocks for a
short period of time on the unoccupied land of the plaintiff. The defendant assured the plaintiff the rocks would be
removed by springtime. Nothing was paid or asked for this permission and it was not a contract in any just sense of the
term, it was a mere license, of which the terms expired in the spring.
During the winter, and without the knowledge of the plaintiff the defendant covered six of the lots of the
plaintiff with huge quantities of rock some of them 10-15 ft long and piled to 14-18 ft. The conduct was a clear abuse
of the license and in excess of its terms, and so much so that if permission were sought it would be declined. In the
spring, the plaintiff, discovering the abuse of his permission, complained bitterly of defendants conduct and ordered
him to remove the rocks to some other locality. The defendant promised to do so but did not, and in the fact of repeated
demands has neglected to remove the rocks from the land.

Procedure: Special Term ruled in favor of the plaintiff, finding that once permission was revoked the defendant was a
continuing trespasser, entitling the plaintiff to equitable relief. The Superior Court affirmed. This is an appeal from a
judgment of the Supreme Court.

Issue: Was the relief granted within the power of the court, and the contention of the defendant is based upon the
proposition that equitable relief was improper since there was an adequate remedy at law.

Result of Appeal: Judgment affirmed.

Holding:
Narrow: The granting of specific performance was appropriate due to the continuing trespass of the defendant
making a remedy at law inadequate, the damages occurred to the plaintiff daily.
Broad: Where a license to use land is revoked, and the user does not oblige, he becomes a trespasser and a
court is entitled to grant an injunction when no other adequate remedy at law will cure the injury.

Reasoning:
Doctrinal: A court in equity will act in such cases only after the plaintiffs rights have been established at law,
with the exceptions being when the facts are in doubt and the decision makes the rule less important.
One who acts under a license is restricted to the terms the license allows. Once the license is expired chattels
presence is a trespass. Until chattel is removed, it is a continuous trespass.
Policy: The plaintiff can sue daily until removed, no end in site to the litigation. Shift the burden of the
problem on the defendant to move the rocks.

Notes:

116
 Granting equitable relief in this case would be a cost shifting mechanism; defendant must comply with the
court order or else risk a contempt citation. It may cost the defendant money to remove the rock, or he may
offer the plaintiff less money to rent the land.
o Injunction puts bargaining power in the hands of the landowner.
o There is a public interest in protecting landowners rights. They also want to use land as efficiently as
possible (storing rocks could be construed as more efficient usage than letting the lot sit vacant). The
benefit of clearing the land is outweighed by putting the rocks somewhere. The court is involved in
extensive social policy in drafting these methods of injunctive relief.
o Since there was only a license there was no consideration given by D so it just lets you do
something until P wants to take the privilege back.
o Court is concerned particularly with the facts of this case, but also the wider world.
Always have 2 facts: Facts of the life situation (taken as a type)
And the facts of the particular case.
o What is the nature of the plaintiffs interest? Has he waited too long to bring the case (SOLs)?
What is the harm to the defendant created by an injunction, and benefit to the plaintiff? What is
the interest to the general public (3rd parties)? Courts also consider the practicality of enforcing
an injunction.
Purpose of an injunction if the defendant is judgment proof is to put the bargaining
power back in the hands of the landowner.
If they want the plaintiff to have the bargaining power, they may give an injunction with certain
rules such as a time limit or a jail time following failure to comply.
o How do you balance these equities?
o

117
118
 WHY
DEFINITIONS HOLDINGS RULES ADDL PTS
EQUITY?
Replevin: An
Action of action for the To recover under
replevin to repossession of replevin must Ct. found
recover a ring personal property show: 1. that Pawnbrokers Act
Where a claims
that s husband wrongfully taken or property was to be
ownership of
took w/o detained by personal; 2. @ time unconstitutional in
property in
Butler v. permission and whereby gives a of suit, was this case, but did
question, he
Wolf sold to pawn security bond and entitled to property; not specify whether
waives s
Sussman broker. holds the property 3. wrongfully it was
requirement for
specifically till the ct. decides acquired property; unconstitutional on
demand.
wanted that ring who owns it 4. has a greater its face or just
that she Detinue: An action interest in the relative to facts at
inherited from to recover personal property at time of hand.
her mother. property wrongfully trial
detained by another
An action in equity
A bill in equity is
is proper where the Intrinsic value of
Specific proper for the
Duke of law is defective, in chattel should be
Performance to return of unique
Somerset In Specie: that, it cannot considered when
have chattel items of special
v. undefaced provide for the deciding if an
returned when the item
Cookson return of a unique action can be
undefaced. must be returned
item in its original brought in equity
undefaced
condition
Ejectment: an
Ejectment of To obtain an order of
action to recover the The law regards
telephone cos ejectment: 1. must Ejectment
immediate the empty space
wires from show he has title to damages: 1.
possession of real above land as if it
Butler v. airspace above land; 2. has Repossession of
property. were a solid,
Frontier s land. wrongfully been land;
Dissessin: the act of inseparable from
Telephone Trespass could dispossessed of land; 2. Value of land
wrongfully the soil, and
Co. have contd. w/ 3. has suffered and its use at that
depriving someone protects it from
paying repeated damages; 4. Sheriff time; 3. Ct. costs;
of the freehold hostile
damages (like has ability to give 4. Profits
possession of occupation.
rent). back land
property
Factors to justify Specific
specific performance performance of a K
of K: 1. The is intact for the
difficulty in making duration of the Ks
an accurate valuation life;
of the sub. mat. Corbin Contracts
involved, in 1138: The purpose
determining the of a decree of
1. An arbitration
effect of a breach, specific
clause does not
Injunction: An and in estimating s performance is to
Specific oust a ct. of its
order made by the ct. harm; attain, as fully as
performance of jurisdiction; 2.
forbidding a person 2. The existence of possible, the
a K and Clause in K that
or class or persons sentimental value, ~ realization of the
payment of all provisions
Sanford v. from doing a certain measurable in money justifiable
money owed to must be legal is
Boston act, or acts of a that would be expectations of the
a union. Large unnecessary; 3.
Edison certain class, upon affected by breach; promise
number of s A does not need 119
Co. the penalty of going 3. The difficulty of
would have to prove same
to prison for an obtaining a
required many facts for
indefinite amt. of substantial
 1. A ct. of equity will act
in such cases only after One who acts
1. The the s rt. has been under a license is
contends that established at law, but restricted to the
could have that rule has exceptions. terms the license
Removal of rocks Trespass: An
removed the More a matter of allows. Once the
from land that unlawful act
rocks and discretion than license is expired
Wheelock were put there w/a committed against
collected jurisdiction. 2. Repeated chattels presence
v. license that had the person or
damages, trespass, for which there of s land
Noonan since expired. property of
however, it is ~ is no adequate remedy at becomes a
Damages would ~ another; esp.
s job to find law, is grounds for an trespass. Until
have sufficed. wrongful entry.
somewhere to equitable remedy at law. the chattel is
move the rocks 3. Equity will lie where removed, it is a
to. a trespass is a continuing contd. trespass.
one and when there is a
multiplicity of suits.
1. Use your own as to
Nuisance: where
not injure anothers
Injunction to have one produces a It doesnt matter 1. If a party
property. 2. One cannot
stop tangible injury to a that the allows a nuisance
erect on his land
Campbell manufacturing 2d party, or such nuisance was to go on for an
something that the law
v. bricks b/c the as to render his not continuous extended pd. of
would regard as a
Seaman process emits gas enjoyment and that the time w/o filing a
nuisance if it is adjoined
that damages s specially injury was only complaint, he has
by anothers vacant lot,
property. uncomfortable or occasional. no COA.
thereby compelling
inconvenient.
owner to leave it vacant.

120
 PART V: PREVENTION OF LEGAL WRONGS

Posner, Economic Analysis of Law:

-Property rights are never exclusive, of only because exclusive property rights would too often be incompatible.
-The initial assignment of legal rights does not determine which use will ultimately prevail in the end the efficient
value-maximizing accommodation of the conflict will be adopted
-Property law deals with the recognition of rights who
-Tort law is based on imposing liability on the other partyparticularly related to accidents that cause personal injury.
These cases involve uncertainty and damage calculation not ordinarily involved in the interferences discussed in this
chapter

Campbell v. Seaman 63 N.Y. 568 (Court of Appeals New York 1876) (Re-Read) p.204

Rule: Use your own property as not to injure your neighbors

One cannot erect on his land something that the law would regard as a nuisance if it is adjoined by anothers
vacant lot, thereby compelling owner to leave it

Statement of Case: A landowner is suing a brick manufacturer is suing for damages for a nuisance and for an
injunction to stop it.

Facts:
The plaintiffs are the owners of 30 to 40 acres of land adjoining the village of Castleton; there are native yellow and
white pines on the land, which grew in the forest. The plaintiff as a protection against winds and also to ornament this
property saved many of these pines. The plaintiffs also removed many of these forest tress and have ornamented and
improved the grounds by making gravel roads and walks and by planting Norway spruce and other ornamental and
shade trees. The plaintiffs also erected a dwelling house with barns and an outhouse and have laid out large sums of
money for gardening.
The defendant, whose land adjoins the said lands of the plaintiff, manufactures brick on his own land. To
manufacture this brick, the defendant mixes anthracite coal dust with the clay and sand in molding his brick and in
construing his kiln a portion of the brick is left out and the space is filled with the antracite coal dust. This process is
done in the outer portions of the kiln. The object is heated and takes fire the burning of the kiln causes sulphurous acid
gas to escape from the burning. This gas is very poisonous to persons and injurious to persons who inhale it and also
destructive to vegetation.
The evidence shows that this gas has killed foliage on the plaintiffs white and yellow pines and other valuable
foliage of the plaintiffs. The evidence is also conclusive as to the destructive qualities of sulphurous acid to pine and
Norway spruce trees.
The defendant used this brickyard for 25 years and at the time the plaintiff improved and beautified their
property and knew that the property of the defendant had been previously applied to such use, and that in such use and
manufacture of bricks anthractie coal and coal dust was used and employed. Near the premise of the plaintiff, Smith
also has a brickyard and has employed the same in the manufacture of brick by anthracite coal in the same manner as
the defendant has one for the proof of five years. Also, the Hudson River Railroad Company, whose road runs in front
of the plaintiffs premises? Also, the burning of bricks on the premises of the defendant by the use of anthracite coal
dust does not affect the premises of the plaintiff except when there is a southerly wind at the time of the burning.
The anthracite coal, in the manner used by the defendant has been employed in England for more than half a
century, for nearly the same period in the US, and now is generally used in NY. If the use of this coal is prohibited in
121
the manufacture of brick upon his premises is of great damage to the defendant, and substantially destroys the value of
the defendants property as a brick-yard; that as a brick-yard, employed in the manufacture of brick by the common and
ordinary process with the use of mineral coals, it is very valuable and capable of producing a lot of brick and at a high
profit for the defendant.
Three most relevant facts to consider to see if injunction is appropriate and fair:
1) What property being used for prior to the harming by the brick
2) Cost of moving the manufacturing plant
3) There is another process that does not being this gascostly
4) Harm not continuouslyonly on last two days of the process
Bought a house in 1849
Defendants used as a brick yard between various periods in time, using the land for various purposes.depends on the
industry and time period.
-No complaint when originally moved into the area
-Brickyard is to the south of plaintiff home
Trying to get damages for nuisance AND an injunction for the nuisance

Nuisance tangible and material use of property that interferes with the neighbors use and enjoyment. Can be a
condition, an act, a failure to act, nuisance per se (via statute police power can regulate these public
nuisances).

Nuisance Test: Reasonableness of the use in a particular locality under the circumstances of the case.

Defendant: 1834-1840: Brick making Plaintiff: 1849: Bought Property

1840-1853: No Brick making 1857-1859: Issue came about
1853-1857: Brick making
1857-1867: No Brick making

** Plaintiff knew about the changing purpose of the defendants land. He came to the nuisance.
** Defendant had an alternative to burn wood instead of the coal but it was not as efficient and was more
expensive. The cost of moving the business would not be too expensive however

** D Claims this wasnt a nuisance. Claims it wasnt his fault htat the trains that come buy produces the same
sulfuric acid (Court Ignores this)
What effect would an injunction have on the brick making injury? It would be a detriment to the industry by
ruining it all together, or forcing them to move all over to not disturb people until there is no room.
Ruin Industry Centralize it (say around the Hudson river) Could inventivize them to make
technological advances
** Wouldnt it be easier for the neighbor to move the trees or plant different ones than for the brick maker to move his
whole operation?

The court sais the cost of moving the defendants plant is inexpensive.

Theory: It doesnt matter how the bargaining power is assigned in an injunction, the parties will work out what is in
both of their best interests

Procedure: The referee found the plaintiff entitled to recover the damage proved to have been sustained, and to an
injunction restraining defendant from burning brick. The defendant appeals.
122
Issue: Did the lower court properly uphold the referees decisions regarding damages?

Result of Appeal: Affirmed

Holding:
Narrow: Where ones conduct constitutes a nuisance, and there are no other adequate remedies at law, an
injunction is proper. Factors to be considered are the burdens to the respective parties; if the damage to the one
complaint is small and the damage to the one causing great, the courts will deny the injunction.
Broad: An injunction can be ordered in the case of a recurring nuisance affecting the value of anothers land.

Reasoning:
Doctrinal: s use of his property was a nuisance because it produced a tangible and appreciable injury to the
neighboring property of the and it rendered their enjoyment. Court below properly exercised its discretionary power
to granted a writ for 6 reasons (1) remedy inadequate; 2) damage to the is irreparable and substantial; 3) harm to in
restraining him is not serious 4) harm is recurrent; 5) no latches, even though plaintiff may sleep on his rights; 6) no
adverse possession and no prescriptive right
Policy: Ability to enjoy own property and be able to breathe on your property
Immaterial that the nuisance was not continuous and the injury was occasional.

Notes:
Brickmaker was there first first in time first in right?

Plaintiff bought land, put in a lot of plants, ornamental and useful, expensive

Cannot deny the fact that the brick maker was using this land for a while before P got t here

P would argue that for a period of 10 years when he bought the house, the D was not making bricks and then switched it
up and started making bricks again.
Want to make the damages sound predictable, but cant hide the fact that the damage only occurred when the wind blew
to the south.

P wants to stop the D from making the argument that the plants were only ornamental and not useful.

P would want to raise the argument that the brick maker knew there was another process they could use and that the
process they were using had consequences.

D might counter by saying the railroad and/or other businesss in the area caused the gas too and it wasnt his fault.
P would want to argue that not just the plants, but his family could get sick to

Defendant:

D might want to start off by saying hes been engaged in the business of brick burning, an important industry in the U.S.,
and many people including the plaintiff use my bricks to make their houses. I make my living doing this, its a legal
business, and its important to the country.
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Even though P knew that I used this particular kind of brick making process, he still bought the property and built these
trees.

Not only is this brick making process the kind that I use, but its the standardized process around the country. The other
process is not as efficient and more costly. No one uses it unless they have to.

Might also say that the cost of moving the business would be prohibitive.

While its possible that our clouds of dust came over our land, there are other possibilities that werent us. Assuming
that it was our process, it only occurs in very rare times. The last day of the process and when the wind is blowing to
the south. Doesnt happen when the wind blows in any other direction.

How you state the issue and how you paint the picture has great influence on the court. Cannot hide the facts,
you just have to construe them in your favor. If theres a case thats relevant in that jurisdiction, you must
disclose it even if its against your client. Try to differentiate the facts.

Should an important industry be enjoined from producing products necessary in our country?

Should a landowner who built a home and put all these nice trees around be prevented from enjoying the
property and living there because of the business ran by the neighbor?

**W/ Group Try to construe the facts of each case for defendant and plaintiff.

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125

Who Cited Who and Why:
Case Name
Hadley v. Baxendale
Krauss v. Greenbarg
Virginia Railway v. Armentrout
In re Polemis ( responsible whether
reasonably foreseeable or not)
Christianson v. Chicago, Minneapolis
&Omaha
Hill v. Windsor
Palsgraf v. Long Isl& RR* (1928)
Wagon Mound I (Overseas Tankship
(UK) v. Morts Dock)
Wagon Mound II
Mauney v. Gulf Refining Co.
Wakeman v. Wheeler
Mayer v. McCreery
United Press v. New York Press Co.
(absence of situational sense)
Mack I (Mackintosh v. Thompson)
Mack II (Mackintosh v. Kimball)
CITATION CHAINS
Citing Cited By Why Cited
Rule for Special Damages- not
recoverable unless they can fairly
& reasonably be considered as
Hadley Court arising naturally from the breach
or being w/in contemplation of
the parties @the time K was made
as a probable result of the breach.
Doer should be responsible for
Polemis Dissent wrongful acts whether injuries
were foreseeable or not.
If the is responsible only if the
Against
Court events were foreseeable. (In this
Polemis
case the fire wasnt foreseeable).
Explains decision in Wagon
Wagon Mound I & the diff. b/w the two.
Court
Mound I (Here the fire was foreseeable &
there wasnt contributory neg.).
Misapplies UP b/c this was an
executed K & UP was a
executory K. (UP that in you
United Press Court
could collect under quantum
merit in an executed but not an
excutory K).
If the arrangement is too
United Press Court indefinite it cant be the basis for
recovery.
126

Bluemner v. Garvin
Moran v. Standard Oil Co* (1914,
Cardozos first decision)
Varney v. Ditmars^
Rubber Trading Co. v. Manhattan
Rubber Manufacturing Co. *
If an agreement is so uncertain
& ambiguous that the ct. is
unable to collect from it what
the parties intended the ct.
cannot enforce it, & since there
United Press Court is no obligation there is no K. If
the offer in a case is so
indefinite that it is impossible
for the ct. to decide what it
means & fix the legal liability of
the parties it isnt enforceable.
1) No K b/c too indefinite.
2) Limits holding of UPI- says
UPI was not intended to say that
K was unenforceable unless
prince was expressly mentioned
& determined.
3) If agreement is vague &
1 )UPI 1) indefinite parole proof c/n be
2) UPI 2) Court resorted to.
3) UPI 3) Court 4) Vague & indefinite Ks
4) Bluemner 4) Court cannot be enforced.
v. Garvin 5) Court 5) UPI doesnt prevent a
5) UPI 6) Dissent recovery upon quantum meriut
6)UPI (Cardozo) in case one party to an alleged K
has performed in reliance upon
the terms thereof, vague,
indefinite, & uncertain though
they are.
6) Here there was an intent to be
bound so the court should not
have relied on UPI.
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 1) The agreement is not
binding for lack of mutuality
and consideration.
2) A promise may be lacking
1) Moran 1) and yet the whole writing may
Wood v. Lucy, Lady Duff Gordon *
2) Moran 2) Court be instinct w/an obligation
imperfectly expressed. If this
is so there is a K.- Here
because of the intentions of the
parties the promise has value.
Schlegal I (Oscar Schlegal
Manufacturing Co. v. Peter Coopers
Glue Refinery)
The promise, if uncertain,
should be taken in the sense
United States Rubber Co. v.
Moran Court in which the promisor had
Silverstein *
reasons to suppose it was
understood by the promisee.

128
 Rules
Bluemner v Garvin: A promise to pay a fair share of commissions is too vague and
indefinite to be enforced under formal contract theory, but with appropriate factual evidence,
can be enforced under QM.
Butler v Sussman: Replevin will not lie for property lawfully in the possession of another
until a proper demand has been made for its delivery, but demand will be waived if answers
the complaint, even though complaint doesnt state a demand
Butler v Frontier Telephone: An ejectment will lie when the plaintiff shows he was
formally in possession, he was deprived of that possession and that he has a right to re-enter
and take possession.
Campbell v Seaman: One cannot erect on his land something that the law would regard
as a nuisance if it is adjoined by anothers vacant lot, thereby compelling owner to leave it
Christianson v Chicago: If the act itself is negligent, then the person guilty of it is
equally liable for all its natural and proximate consequences, whether he could have foreseen
them or not.
Cohen v Lurie Woolen: An option to order more is a part of the consideration of an
original contract with a stated minimum. The privilege to order more is coupled with a
promise and obligation to accept a stated minimum.
Duke of Sommerset v Cookson: A bill of equity can be used to recover property that
cannot otherwise be compensated by any method of monetary substitution and the return of
such property in the exact form upon being taken is essential, meaning no remedy of law
would suffice.
Hadley: at the time the K is formed, communication must lead the party to believe that in
the usual course of events, the damage would be foreseeable
Hill v Winsor: If the act constitutes negligence, it is not necessary that the injury in the
precise form in which it in fact resulted should have been foreseen. It is enough that it now
appears to have been a natural and probable consequence.
Krauss v Greenbarg: Special damages for breach of contract not recoverable unless
they can fairly and reasonably be considered as arising naturally from the breach or as being
within the contemplation of the parties at the time the contract was made as probably results
of the breach
Macintosh v Thompson (Mac I): Where an employee relies upon an oral promise that
his compensation will be enlarged, but the increase is indefinite as to amount, term, and type,
the promise is unenforceable for indefiniteness despite being a part of a fully executed
contract.
Macintosh v Kimball (Mac II): There can be no recovery when an arrangement is so
indefinite as to provide the court with no basis for determining the parties intent.
Mauney v Gulf: If the defendant could not reasonably foresee that his negligence would
cause the plaintiffs injuries then he is not liable for them. Defendant is not liable for those
injuries that are too remote, unusual, improabable, extraordinary (unforeseeable or
unreasonable).
Mayer v McCreery: All terms of a contract must be negotiated upon for the contract to
be enforceable. Otherwise it is merely an agreement to agree.

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 Moran v Standard Oil: Mutuality of obligation can be implied where the parties enter
into an agreement.
Oscar Schlegel v Coopers Glue (Schlegel I): If a manufacturer and a jobber enter
into a requirements contract and the manufacturer breaches the contract by failing to fill the
jobbers orders, then the contract is enforceable and the jobber is entitled to damages
resulting from the breach despite the vague quantity terms.
Oscar Schlegel v Coopers Glue (Schlegel II): A requirements contract which imposes
no duty upon the purchaser is unenforceable due to lack of mutuality; if the parties are not
bound so that either may sue for breach, then neither is bound.
Palsgraf: youre liable if the act you take part in causes harm that is foreseeable but not
liable if the person that is harmed is so outside of perceptions that they wouldve had no way
of knowing
Polemis the fact that the specific damages caused by negligence was not foreseeable is
immaterial as long as the damage is traceable to the negligenceall we have to see is that
the act is going to cause some harm
Rubber Trading v Manhattan Rubber: A contract remains in effect even
where the party repudiates it if the other party refuses to acknowledge the breach.
Sanford v Boston General rule of when specific performance will be granted,
where damages are an inadequate remedy and the nature of the contract is such that
specific enforcement of it will not involve too great practical difficulties, equity will grant a
decree of specific performance.
St. Regis Paper v Hubbs & Hastings Paper: If two parties enter into an
executory contract, which expressly reserves the right to terminate the contract upon failure
to agree on an essential term, then good faith does not require the parties to do more than
contract and the court will not impose an agreement upon them.
Sun Printing v Remington Paper: If two parties enter into an agreement to
agree, then either party may also exercise the right not to agree and the court will not impose
an agreement upon them.
United Press v NY Press: For a contract to be enforceable, the contract must
be in writing and contain mutually agreed upon terms that are not indefinite and render the
parties calculable damages for breach; a contract must be certain and explicit in its terms.
US Rubber v Silverstein: If the defendant makes an uncertain promise, he will
be held liable for the meaning that the defendant had reason to suppose it to be understood
by the plaintiff.
Varney v Ditmars: A promise to give a fair share of profits and where there
is not a reasonable method for calculating the share is unenforceable because it is too
indefinite to determine the reasonable intent of the parties.
Virginian Railway v Armentrout: Negligence must have been the proximate
cause of the injury in order to be liable for damages
Wagon Mound 1: Only liable for those injuries where it is foreseeable that the
defendants negligence caused the plaintiffs injuries; 2 Prongs to forseeability: (1) Is the risk
foreseeable and therefore negligent? (2) If so, where the damages foreseeable?
Wagon Mound 2: Liability for a risk that a reasonable man would have realized
or foreseen and prevented the risk, then it must follow that the appellant is liable in damages.

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 Wakeman v Wheeler: One who violates his contract with another is liable for
all direct and proximate damages which result from the violation.
Wheelock v Noonan A court of equity will act in such cases only after the
plaintiffs right had been established at law, but that rule has exceptions (discretionary rule)
Wood v Lucy Lady Duff A contract in which mutuality of obligation is not
expressly stated, can still be enforceable if obligation is implied by the actions of the parties
in fulfilling the contractual obligations.

Hadley / Polemis / Palsgraf /Wagon Mound tests can all be used for the same facts,
and come up with the same response.

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 Essays:
Breitel-Ethical Problems in the Performance of the Judicial Function-p.406
McCormick, Corbin, and Prosser- Kinds of Damages- p. 86-90
Michael- The Elements of Legal Controversy- p. 263
Llewellyn-The Study of Law as a Liberal Art- p. 272
Llewellyn- The Leeways of Precedent- p. 427
Llewellyn-Argument: The Art of Making Prophecy Come True- p. 447
Holmes- The Path of the Law- p. 524

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 Books:
Bramble Bush-Llewellyn
1. Study of law:
a. study of how law operates
b. law is about resolving actual and potential disputes (try to make peace)
c. concerned w/ the manner in which disputes are settled
d. offers insight into how the courts behave
2. Legal Rules
a. alone they are worthless
b. have value in that they can help predict what judges will do or can even help get judges to do
something (manipulation)
c. dissenting opinion helps predict what the court may say/do in the future
3. Lawyers Role
a. lawyer is the point of contact b/w the people and the legal officials
b. lawyers filter facts for the judge and jury by keeping in mind both legal relevance and the desire to
win
c. essentially can determine whether justice will be done
d. needs to be a good technician in framing issues in light of the facts (know what action is to be based
on the facts)
4. Judges
a. must compare what they say and what they do
b. their actions and the means of influencing their actions are what make up the law
5. Laws Function:
a. the outcome of the case is the function of the rule, but the rule laid down is a function of the
outcome of the case
b. judges will strain to reach what they see as the just outcome
c. precedent determines application of the rule in future cases
d. must go outside the rule to understand the opinion (impact on peoples behavior, impact on real
events outside, also facts win the opinion may be distorted)
e. precedent can help inexperienced/ignorant judges draw from experience and knowledge of
possession
6. Divisions of Law School Curriculum
a. Criminal Law
b. Civil Law
c. substantive law- substance of the law that deals with matters which can be determined and are
determined in terms of what ought to happen, and that rules can be laid down by legislature or by
courts, and are making clear what ought to happen in certain situations
d. public law-deals w/ the framework of the state, the operations of the state, and the more direct
relations b/w the state and the individual/ various groups of individuals
e. private law-deals w/ the legal relationship b/w individuals (ex. Contracts, property law, torts/private
wrongs)
f. adjective/procedural law- regulation of work courts or the business procedure by which they go

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 about doing what they ought to do and go about solving disputes to ends already indicated by the
substance of the law; the door to procedural law
7. Definitions-
a. legislature-tool for social readjustment; defines the new way to act
b. advocate- one who devotes himself to the study of what the courts are going to do (know the
rules)
c. counsel- understands the needs of his client and the community (working situation)
d. lawyer- has to be both an advocate and counsel
8. Real Machinery of Law-CASE LAW
a. allows the law to be studied and somewhat predicted
b. cases are to be read for their facts, issues, and decisions (match together facts with consequences)

GORGIAS:

Major Theme:
o Criticism of retoriticians and Athenian Society. It is a self promoting argument that he (Socrates) is the
only person who practices a moral way of living lifethrough philosophy.
Thesis:
o It is better to suffer wrong than to do wrong. The supreme object of a person is find out what is right
and to do it, not matter what the cost.
Each individual had to represent themselves when they were in a dispute, so you had to be skilled in the ability
to persuade.
Gorgias role was to teach people the ability to persuade people when making their arguments.
The method Gorgias engages in has moral worth and moral questions

Gorgias (character):
How does Socrates feel about Gorgias and how does he treat him?
o Treats him with respect b/c he sees him as a contemporary, not as a younger student
o Thinks Gorgias life as an orator is a waste
He becomes 1-dementional and doesnt appear to have the ability to engage in a good, persuasive discussion w/
Socrates
He thinks he does serve an impt function by being an orator, and is a little arrogant about it
Gorgias says that his job is to persuade others, Socrates argueswhat if people take this skill & use it to do
wrong. Gorgias then agrees that maybe morals should be taught before oratory.
If you cant teach people to do the right thing, then you havent completed your job
Socrates questions Gorgias existence as a human being, says what hes done his whole life has been wasted.
Gorgias is convinced that he should be teaching people btwn right and wrong.
Gorgias is a respectable guy, society treats him w/respect b/c they see what he does (orator) as respectable

Polus:
Socrates attacks Polus more than he does Gorgias
He thinks Socrates thesis is ridiculous---no one would rather suffer wrong than do wrong, in fact, anyone
would rather be a dictator than be punished by one.

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 Polus interjects his opinion when Socrates is arguing w/ Gorgias to protect him, this upsets Socrates, which is
why he attacks him more
Socrates says who do you think you are, you are even lower than Gorgias (b/c hes a disciple) & challenges him
to discuss his beliefs.
Socrates beats him in the argument, and makes Polus stop arguing
He didnt agree with Socrates, but he cant win the argument

Callicles:
Callicles beliefLaw of nature: might makes rightone should do whatever they can to get what they want.
Those who can get the most of what they want have might.
Thinks laws of nature are the laws of morality
Callicles tells Socrates that Socrates has wasted his life. Philosophy is good when you are young, but when you
get older you should put it away and go after what you want.
Tells Socrates he doesnt have the skills one needs to protect themselves. If he were to ever go on trial he
wouldnt be able to defend himself in a court of law as a man of action would
Also thinks Gorgias has wasted his life
Doesnt admire someone who teaches, admires someone can teachsomeone who learns and does something
with ita man of action
He admires politicianspeople with wealth and power
Stops arguing with Socrates, Socrates begins a monologue
Callicles thinks laws limit society b/c they protect the weak against the moral person who is wrong
Stronger=better
Socrates point is that there isnt anyone in society worthy of the name of a statesman except himself b/c he
tries to improve peoples lives.

Socrates:
Socrates thinks he can convince you of the rightness of his approach, and if he can improve your moral life,
then the methods (the means to the ends) are worthy.
His method is to push people so that they do right instead of wrong
Socrates thinks hes the only one that has the knowledge of moral worth, and that nothing except for what he
thinks, is good and right.
Main argument: he claims that while Callicles thinks only a person who gets what they want is right and moral,
when the time comes to die, Callicles is going to hell b/c he hasnt developed the skill of morality necessary in
heaven. That is why you have to live a moral life.
As soon as Callicles criticizes Socrates, Socrates starts to flatter him

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 Critical Thinkers:
Breitel
precedent is mindless bureaucracy, it crushes justice
law & society: judges should not be isolated from society, but rather reflective of society.
judges merely declare what is in the books.
the failure to supply the grounds of a decision is the place where the most common disservice occurs to the
administration of justice.
the community is responsible for strengthening the hand of the judge who tries to be even-handed w/
vicious crimes, as well as w/ trivial crimes. Judges should be aware of the stresses in their society(public
policy).
judges should take a less active role if the bar can carry the burden. Ideally a judge is neutral but not a
neutralist, disinterested but nor indifferent, impartial but not unconcerned, dispassionate, but not
uncommitted and disinterested an indifferent. As the Greeks have said, the ultimate is the highest good.
*** goal of a judge is to be detached, but not w/ a lack of concern.
***judges rely on lawyers to do the whole job of presenting the case and then the judge decides b/t
competing arguments prepared for hm. This would be ok if the lawyers were eqal in both competence and
preparation. This is not the case, & thus it creates injustice. Juries don make the right decisions all the
time w/o a great deal of guidance and the lawyers did not always perform as they should have.
Breitel would participate more and more to so justice would be served, theres a danger it becomes harder
to stop.
*** a judge should participate in cases depending on the particular needs of the counsel, case, and jury.
judge should issue opinions that describe the thought pattern behind their decision. Often judges dont b/c
they dont want to look for trouble.
personal aspects of the judges conduct: individual prejudices, unjustified coercion of counsel, judges duty to
disqualify himself if necessary, duty of judge to have courage to avoid subservience(a subordinate
place/condition) in his judicial function while at same time, submitting to proper administrative supervision.
judges should be careful when deciding criminal cases where the viciousness of the crime may present a
difficulty in applying the rules w/ a sense of detachment
problem w/ biases, w/ parties & lawyers, the judge should remove herself.
judge breitel also says a lawyer should continue to fight for their client w/o worrying if the judge has
made up their mind already, questions are usually meant to provoke discussion, not to choose sides. If
judges are coercive, then you should have the courage to tell them they are overstepping their
boundaries.
when placing judges it should be done on merit, not whether they punish or reward.
the more active a judge chooses to be, the greater responsibility to be pure, will not produce injustice..
The more mechanical, the less dangerous in allowing personal bias to seep in. Precedents can easily
become mechanical which can eliminate justice.
Cardozo
you have to have a duty to that particular person in order to be liable
limits liability
o The contract is drafted by the manufacturer and there is mutuality of obligation because the word
agreement is used. The manufacturer constructs the contract, if it is indefinite it has to be interpreted
against him and has to be looked in the light of how a reasonable person would have seen the contract.
Canons of Cardozo Construction (helps people understand K):
o Agreement implies mutuality of obligation (if one is bound so is the other)

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 o An intention to make so one-sided an agreement cannot be readily inferred
o Construe language of a contract most favorably to the party that did not write it
o Give the words the meaning which the writer should reasonably have expected to give them
look at intent of parties to determine the value of a K.
What Cardozo seems to say to the court is that they made a mistake in Schlegel. That is why he limits
Schlegel. He seems to say that there are circumstances where requirement Ks are ok. They need to redo the K
to be more specific in regards to quantity and price.
Cardozo states that indefiniteness must reach the point where construction becomes futile. Uncertainties,
thought to be impenetrable, are suggested in respect of subject matter, time and price. He implies price, time,
and amount.
he used precedent in his cases
movement towards realism: he looked at how he wanted a case to work out in the big picture and then wrote his
opinions accordingly)
was very conscientious of how the market place worked
liked to see binding contracts (Lucy)
***would look at the intent of the parties unlike Holmes who looked at the writing
also looked at custom as an indication of intent rather e than technicalities of the contract(Rubber)
if the parties intent could not be proved then the court would not try to imply them w/o such proof(when
construction of intentions would be futile then the contract is unenforceable) Sun Printing??
if he found agreement, he found obligation b/t partes
implied obligation is always possible.
also considering god faith in considering whether to enforce an agreement (watched out for little guy)
ambiguous contracts are to be interpreted on manner most favorable to the party who did not write it (Lucy)
contact should be given the meaning the writer expected or should have expected the reader would have from it
(Silverstein)
he looks at the ideal situation to determine intent.(what would happen in the circumstances)
Cannons of Construction:
- agreements implies mutuality of obligation
- an intention to make a one-sided agreement cannot be readily inferred
- a contract should be construed most favorable to the party who did not write it and against the author
(Silverstein, Lucy)
- a contract should be construed to have the meaning the writer would have or should have reasonably
expected the reader to interpret it (Silverstein)

Corbin
damages are not recoverable for injury that is too remote from the conduct of constituting his breach of duty;
Damages are not recoverable for losses suffered or gains prevented unless the requirements of the law as to
proximate causation are satisfied.
must be shown that the s relation to the harm was sufficiently near in space and time that compelling him to
make reparation will tend appreciably to prevent similar harms in the future and to prevent aggrieved persons
from attempting to take justice into their own hands.

Holmes
Holmes thought purpose was to limit the amt of recovery that could be had in these types of
cases

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 Holmes view was that in point of fact we shouldnt allow recovery for lost profits even if the
facts are communicated to the carrierhe says that even if carrier was aware of the lost profits, he cant be held
liable unless he agreed that he would pay the millers for lost profits if something went wrongthat idea has
been rejected
law does not equal logic, law equals experience by:
1. prevalent moral and legal theories
2. necessities of time
3. intuitions of public policy
4. prejudices of judges
5. weighing social advantages
6. object of the study of law: prediction
legal thought: make prophecies more precise
lawyers must look at historical evolution of law
law is the witness and external deposit of ethical life
development of law parallels with development of morality
law is a tool of society
society uses it to enforce value system
reflects society needs
created by weighing social advantages
a bad man who cares nothing for ethics has as much reason as a good man to want to avoid suffering adverse
legal consequences
a legal duty to a bad man is a prophecy that if he does or fails to do certain things he will
suffer adverse legal consequences
moral rights=legal rights
law is limited by morality: the legislature would refuse to make laws which the community would find morally
abhorrent even though the legislature has authority to do so
societal, personal and policy reasons are competent of legal decision and lawyers and judges should be moral
men.
dont adhere to law just because it is old-rules change as societies needs change.
intellect, thought, power of ideals are the true source of power and happiness.

Levi (BOOK: Intro to legal reasoning)

law responds to societys needs
law resolves disputes
the judge should not see the law through his own eyes, but through the eyes of the predecessor, otherwise, it is a
dominant pattern of rejection of the reasoning of the earlier court/or making a distinction where there is no
reasonable ground for doing so.
legal reasoning is a 3step process: similarity b/t cases, the rule of law is inherent in the first case its announced,
rule of law is applicable to the second case.
court must search for the legislative intent.
it appears that legal reasoning does attempt to fix the meaning of the word.
there can be no authoritative interpretation of the constitution. The constitution embodies the conflicting ideas
of the community. The words are ambiguous. Added to the problem of ambiguity and the additional fact that
the framers may have intended a growing instrument, there is the influence of constitution worship. This
influence gives great freedom to the court.
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 the loyalty of the community is directed toward the institution in which it participates. The words change to
receive the content which the community gives to them. The effort to find complete agreement before the
institution goes to work is meaningless. It is to forget the very purpose for which the institution if legal
reasoning has been fashioned. This should be remembered as a world community suffers in the absence of the
law. Law is indispensable to society.
law reflects in changing society. How society and law affect each other.
***law responds to community concerns-fluid concept
must have a liberal background to apply legal reasoning: legal reasoning, similarity b/t cases/differences, rule of
law of case, adapt rule of law to own case.
ambiguity in law is what it allows it to evolve, reinterprets as society changes.
precedent: following a precedent, avoidance of the decided, fresh start from old materials(Cardozo)
legal process is a system of rules, rules discovered in process of determining similarity and difference.

Llewellyn
law resolves disputes
role of judge/court: judges are human, they have different knowledge, prejudices
legal reasoning approach: law is not certain, there is a maximum and minimum value to belief of
precedents. Pattern of facts must be clear and simple pattern. Situation sense is important, be aware of
the situation surrounding the facts.
law & logic: law prevents disputes from arising in society, it is a dispute adjusting mechanism. Study
of law as liberal art. Most effective work of a lawyer depends on vision, depth, baalnce, and rich
humanity.
law reflects change in society and provides a means to an end. Order, logic, and justice are derived from
law. Law has attributed to the growth of society.
law & justice: it is law that we owe the concept of justice. The real job is to convince the court that
decency and justice require the rule you present and the result you desire.
use of precedent: prior holding is followed though seems distinguishable, the reason still applies. The
prior rule is consciously applied or extended to a new fact situation. Frame the legal issue and show that
there is one sound outcome. Make a prediction of te courts interpretation and use of case doctrine.
Bramble Bush, what law does. . .dispute. . .study of the law: cases are read and analyzed for their facts,
procedural issue and for their decision. See which facts have legal consequences, the decision plus the
opinion go far to show what this court speaks and will do again under the same facts.
canons on statutes: thrust & parry
statutory interpretation speaks a diplomatic tongue. There is a technical framework for maneuver. It requires a
situation sense and a simple construction of the language to achieve that sense out of the statutory language.
3 levels for mastery: technical, intellectual, and spiritual(like Michael)
o technical proficiency
o the meaning of law for society as a whole
o quest for th art of law for itself or for public service
7(12) abcs of appellate argument
o It is not enough to bring in a technically perfect case on the law. Struggle is for acceptance by
the tribunal of the one technically perfect view of the law against the other (other side will also
bring perfect case too)
o No matter what the state of the law may be, if the essential pattern of the facts is not seen by the
court as fitting cleanly under the rule you contend for, your case is still in jeopardy

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 o However, without a technically perfect case on the law, you have no business to expect to win
your case
o You must make your whole case, on law and facts, make sense, appeal as being obvious
inescapable sense.
o The statement of facts is the heart of the case. It is in the statement of facts that the advocate
has his first, best, and most precious access to the courts attention.
o Simplicity each unnecessary point sins severally!
o Gather as many points as possible into a single line of attack concentrate the fire!
o In any but freak situations, oral argument is a must
o Opinion Kernel What is wanted is a passage which can be quoted verbatim by the court
almost like youre writing a piece of their order/opinion for them. Can be very convincing.
o Type-situation has a steady pull on argument you can argue that the life-situation is the
right rule of law, or right application of an extension of theory etc.
o Confession and Avoidance of the Singing Rule Against You
o Judge Selection / Opinion Kernel The man or jedge who is stirred out of being a sleeping
dog comes awake with a growl and a mission.
if your pattern of fact does not fit cleanly under the rule you contend for, you r case is in jeopardy. do the work
for the court. 2fold sense: broad & narrow holding. The statement of the facts is the heart of your case. Keep it
simple. Treat pints of arguments as sub-points to one simple line/main point. oral argument is a must.

McCormick
Kinds of damages
Primary aim in damages is compensation, no more, no less.
K v. T => K cases constrict the damages to those which were in the contemplation of the parties when
the K was made
T cases bars recoveries for consequences not proximately caused by the D conduct.
Both doctrines give effect to major policies governing the larger outlines of risk or liability which the
courts are willing to impose for given conduct

Michael
to determine a practical problem in action: determine end you wish to achieve and efficient means to
accomplish
we solve a problem in action=use the means we have chosen to attain the end we desire.
ends are the first things to be thought about in the order of practical thinking.
*** a lawyer must have a profound understanding of law as political instrumentality and of law as a
science, he must possess all other knowledge, and he must be a master of the principles and rules of the
arts of law.legal education is both moral and intellectual. Intellectual: theoretical basis of the artistic
tasks of the lawyer and to develop in them good intellectual habits. Moral- must try to develop their
prudence and justice.
to be a good artist of the law, a lawyer must possess not only theortical basis of the arts of the law but
also good intellectual habits, and in addition he must be a prudent and just man.
legal controversy: 3 respects
o theoretical issues= matters of fact
o practical issues= what ought to be done
o resolution of law= remedies

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 the major objectives of this course:
understanding of legal controversy
o knowledge of theoretical basis
o formation of issues is logically prior to their trial and resolution
procedure=rules of operation, purpose of which to guide lawyer in the performance of his artistic tasks.
Rules of procedural law regulate controversy, intellectual ffair. Substantive law regulates political,
social and economical affairs and the regulation should serve the end if justice in the state.
procedural law like substance should serve the end of justice. Procedural law is subordinate to
substantive law and every legal controversy depends on 2 factors: justice of the rule of substantive law
by which it governs and better rather worse answers to the issues of which it is constituted.
final end of procedural law as well as substantive law is justice, the common good. Unfortunately,
justice does not always sit in the seat of judgment.

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 MISCELLANEOUS DIATRIBES

Prosser tort v. k differentiation

Tort
Actions to protect interest in freedom from various types
of harms
Duties of conduct which give rise to them are imposed
by law and based on social policy; irrelevant of the
intentions of the parties
May be owed to all of society or range of people
Broader measure of damages is applied
Contract
Contract action created to protect interests of a promise
being performed
Obligation imposed by the parties in the agreement
Owed to specific parties mentioned in the agreement
Damages limited to those reasonably within the
contemplation of the when the K was made.

Socrates
In Gorgias:
avoid wrong doing
do what is right
***better to suffer wrong than to do wrong; greatest misfortune is to do wrong.
if youre not punished for your faults, thats bad- you should know what you are doing wrong,
otherwise you have a fate thats worse. . = wrongdoer.
should have moral values, it will enable you to improve the character of the community=lawyer
*** wrong doing is the worst misfortune that can befall a man
you must know right from wrong=lawyer
knowledge & belief arent the same thing
Men & women are happy if they are honorable & upright, but miserable if they are vicious &
wicked.=lawyer
yet more misery if he does not pay the penalty & suffer punishment, 1st & greatest of all, if you escape
punishment, youre more miserable.
**** you should never suffer death penalty, live & be punished, not getting caught & dying is the
worst.
Callicles people who are intelligent in political matters & have the courage of their convictions.
They are the people who ought to rule states, & right consists in them as rules have the advantage of the
others = are subjects
Stotzky
law is the blueprint of society
law resolves disputes
role of precedent: the law allows you to broaden and narrow precedent to your case.
role of judges: all judges must explain their reasoning thus serving a check and balance. The judge
balances consequences and values, the society values at the time control decisions. Laws are rules when
the new facts are similar to the old facts. Similar facts give rise to common rules.
role of law: blueprint of society: it reflects the cultural and moral perceptions of the community and its
established ways/values. This is how law develops over time. Interaction b/t life and law. Law
conditions behaior and behavior conditions law
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 what is law: function is to settle disputes, channel behavior, increase the quality of life and to persuade
people to do something.
legal reasoning:
1. similarity is seen b/t cases
2. The rule of law is inherent in the first case announced
3. The rule of law is applicable to the second case
lawyers must understand substantive law, relations of people in activities, ways disputes can be
resolved, different methods of obtaining a goal. Must properly phrase the argument for the court
the most fundamental art is to persuade!!
legal education: does not teach enough craft, should be concerned w/ craft skill and technique as a
lawyer.

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 DEFINITIONS

1. Causation:
SoleOne action causes the damages
PrimaryOther actions may surround an event, however, one action is attributable for the damage
Substantialone party causes a greater damage in an action by a group.
2. Contempt:
Civil Contempt: you are put in jail until you decide to stop and follow the courts order
Criminal Contempt: you have a jury trial
3. Conversion The act of changing something from one form to another, or the wrongful disposition or
possession of ones property as if it were his own.
4. Detinue Action for return of goods wrongfully detained but lawfully taken
REQUIREMENTS:
- D came into lawful possession of the good
- P has property rights and right of immediate possession
- goods have some value
- goods are specifically identifiable
REMEDY:
- specific object returned to owner
- D can choose to return the item or its value
- also collect damages for detention but not for the taking. If D wins, he gets costs.
5. Doctrine of Treasure Trove finder has better title to the item found over anyone except for the true owner.
6. Ejectement action brought by one claiming a right to posses real property against another who has
wrongfully taken possession of the property
REQUIREMENTS:
- P was formerly in possession and was wrongfully dispossessed
- P has a right to re-enter and retake possession
- Sheriff can enter the land and deliver the possession back to the rightful owner
REMEDY:
- determines who is actually entitled to the property rights of the land
- damages awarded for the value of the use of the land during the period of interference (usually nominal) get
the thing removed
7. EquityHave to prove that remedies at law are inadequate.
8. Future Interest you have the right to something at a later date (you know you will inherit the ring when your
mother dies b/c it is disclosed in her will)
9. Intent:
General Intent recklessness or negligence
Specific Intent person specifically meant to commit the crime that was committed
10. Larceny intent to permanently deprive rightful possessor of property
11. Lien Legal right or interest that a creditor has in anothers property, lasting usually until a debt or duty that it
secures is satisfied. A relationship btwn 2 parties in which one has title (ex. I have title on my car) and one has
an interest (ex. the bank has an interest on it until I pay it off) The bank can have place a lien on my car.Party
that has title, cant also have a lien.
12. Mens Rea intent

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 13. Nuisance a wrong arising form an unreasonable or unlawful use of property to the discomfort, annoyance,
inconvenience, or damage of another (usually involved continuos or repeated acts); sometimes called a
continued trespass
REQUIREMENTS:
- actual harm
- must take place on your OWN property (ex-neighbors use interferes w/ mine)
REMEDY:
- no damages unless there is substantial harm removal, destruction, or stoppage of the nuisance.
14. Ouster the wrongful dispossession or exclusion of someone from property
15. Redelivery BondAct for restitution, or the return of something
16. Replevin action for recovery of property wrongfully taken or detained by the defendant
REQUIREMENTS:
- owners rights must be superior to that of the possessor
- owner must demand for the item
- must file a writ of replevin
- identify the specific good to that is being detained (cant identify the specific money taken)
- if D wants to hold onto the property, he must file a redelivery bond (money is security to assure return of
the good)
- good must be in Ds possession at the time of the commencement of the action
REMEDY:
- at the beginning of an action can file a writ and the sheriff can retrieve the object
- get back the good itself
- also get damages for loses sustained
- if D wins, he gets possession and damages for the disturbance of his possession
LIMITATIONS:
- even w/ judgment you might not get the item back
- the goods have to be found
- D may refuse to turn over the goods or may hide them even if the location is known, the law may prevent
recovery
17. Trespass
a form of action to recover damages for any unlawful injury to the Ps property , person, or rights; invasion of
exclusive interest property
REQUIREMENTS:
- dont need to show substantial harm to have a cause of action
- damage to chattel (personal property) while in owners possession
- act is immediately injurious
- act is accompanied by some force
REMEDY:
- damages for unlawful invasion (usually nominal). Recovery in proportion to injury which owner is able to
prove that the property sustained
18. Vested Interest you already have the right to something (mother died and you have inherited the ring)
19. Quantum Meruit implied contract to pay for what labor and services are worth
20. Quantum ValebantSame as Meruit but is for goods sold and delivered D is to pay the P what the goods are
reasonably worth.

Trespass and nuisance are distinguished by the fact that T is from physical invasion, N is not.

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Common Law Actions
Replevin (can be used to recover property)
Detinue (can be used to recover property)
Trover (can be used to recover damages not property)
Ejectment

Equitable Remedies
specific performance
injunction

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 SHORT DEFINITIONS

Acquiesce to accept tacitl or passively; to give implied consent to

Amicus curiae latin- friend of the court- a person who is not a party to a lawsuit but who petitions the court or is
requested by the court to file a brief in the action because that person has a strong interest in the subject matter
Anticipatory Breach- If action taken b/f the K was excuted.
Assumpsit latin- he undertook- an express or implied promise, not under seal, by which one person undertakes to do
some act or pay something to another; a common-law action for breach of such a promise or for breach of contract.
Caveat emptor latin- let the buyer beware- a doctrine holding that purchasers buy at their own risk
Class action a lawsuit in which a single person or a small group of people represents the interests of a larger group
Court of Chancery the courts of equity
Court of Exchequer a former English Superior Court responsible primarily for adjudicating disputes about the
collection of public revenue.
Damnum absque injuria- damage without wrongful act loss or harm for which there is no legal remedy.
Demurrer to wait or stay a pleading stating that although the facts alleged in a complaint may be true, they are
insufficient for the plaintiff to state a claim for relief and for the defendant to frame an answer.
Detinue a common-law action to recover personal property wrongfully taken by another.
Disseisin the act of wrongfully depriving someone of the freehold possession of property.
Ejectment a legal action by which a person wrongfully ejected from property seeks to recover possession and
damages; the essential allegations in an action for ejectment are that (1) the plaintiff has title to the land, (2) the plaintiff
has been wrongfully dispossessed or ousted, and (3) the plaintiff has suffered damages.
Eleemosynary of, relating to, or assisted by charity; not-for-profit
Executed contract a contract that has bee fully performed by both parties; a signed contract
Executory contract a contract that remains wholly unperformed or for which there remains something still to be done
on both sides
Eviscerate To deprive of essential or vital content or force; weaken deciseively
a fortiori by even greater force of logic; even more so.
Habeas corpus latin- that you have the body- a writ employed to bring a person before a court, most frequently to
ensure that the partys imprisonment or detention is not illegal
Inchoate partially completed or imperfectly formed; just begun
Injunction a court order commanding or preventing an action; to get an injunction, the complainant must show that
there is no plain, adequate, and complete remedy at law and that an irreparable injury will result unless the relief is
granted.
Interpolation the act of inserting words into a document to change or clarify the meaning; in a negative sense,
interpolation can refer to putting extraneous or false words into a document to change its meaning
Jura personam rights of persons
Jura rerum rights of things
Laches unreasonable delay or negligence in pursuing the right claim, almost always an equitable one, in a way that
prejudices the party against whom relief is sought; the equitable doctrine by which a court denies relief to a claimant
who has unreasonably delayed or been negligent in asserting the claim, when that delay or negligence has prejudiced the
party against whom relief is sought.
I. Larceny by bailee larceny committed by a bailee who converts the property to personal use or to the use of a third
person.
Nolle prosequi - to abandon a suit; to have a case dismissed by a nolle prosequi
Nuisance a condition or situation that interferes with the use or enjoyment of property
Obiter latin- by the way- incidentally; in passing
Opinion kernal A tag line of sorts used in an argument that the court adopts and uses in their opinion.
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Pro tanto latin- to that extent; for so much; as far as it goes.
Proximate cause a cause that is legally sufficient to result in liability; a cause that directly produces an event and
without which the event would not have occurred. But for an event occurring another result would not have.
Quantum meruit latin- as much as he has deserved- the reasonable value of services; damages awarded in an amount
considered reasonable to compensate a person who has rendered service in a quasi-contractual relationship. Only for
executed K cases.
Quantum valebant latin- as much as they were worth- the reasonable value of goods and materials; at common law, a
count in an assumpsit action to recover payment for goods sold and delivered to another. Only for executed K cases.
Replevin an action for the repossession of personal property wrongfully taken or detained by the defendant, whereby
the plaintiff gives security for and holds the property until the court decides who owns it.
Repudiation a contracting partys words or actions that indicate an intention not to perform the contract in the future;
a threatened breach of contract
Res judicata latin- a thing adjudicated- an issue that has been definitively settled by judicial decision
Rule nisi a courts decree that will become absolute unless the adversely affected party shows the court, within a
specified time, why it should be set aside.
Sine qua non latin- without which not- an indispensable condition of thing; something on which something else
necessarily depends.
Stipulation a material condition or requirement in an agreement; a factual representation that is incorporated into a
contract as a term
Tacit agreement implied but not actually expressed; implied by silence or silent acquiescence
Tenancy at will a tenancy in which the tenant holds possession with the landlords consent but without fixed terms;
such a tenancy can be terminated by either party upon fair notice
Treasure trove valuables found hidden in the ground or other private place, the owner of which is unknown; at
common law the finder of a treasure trove was entitled to title against all
except the true owner.
Trover a common-law action for the recovery of damages for the conversion of personal property, the damages
generally being measured by the value of the property.
Also termed trover and conversion
Union an organization formed to negotiate with employers, on behalf of workers collectively
Usque ad coelum latin- up to the sky
Writ of certiorari to be more fully informed- an extraordinary writ issued by an appellate court, at its discretion,
directing a lower court to deliver the record in the case for review.

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 SECTION SUMMARIES

Compensatory Damages
Goals of Damages:
Tort Give sum of money to person wronged which as nearly as possible will restore him to position he would be
in if wrong has not been committed. (McCormick p86) Allows punitive damages
Contract Award a sum equivalent to the performance of the bargain; place the plaintiff in the same position if the
contract was fulfilled. Doesnt allow punitive damages.

When are damages rewarded?

Proximate Cause: When the injury is not remote from the defendants breach of duty
Foreseeability: The defendant could/should have foreseen the relationship between the breach and the injury
Causal Relationship: Defendants conduct and the harm must be related
Wider range in tort than contract: reasonable within mind of the parties at time of K formation

Flow of the cases:

Cases start with classic foreseeability--> moves to causation--> then to extreme causation (Polemis which held
the defendant liable for the most improbable consequences of his action)--> then the court begins to limit causation
(Christianson held direct consequence with no intervening actions)-->and finally the court moves back to foreseeability
(Hill held a mix of causation and foreseeabilityWagon Mound and Mouney held for a strict foreseeability).

Contract:
Responsible for
o What flows from breach
o In contemplation (special contract)
Self-imposed, agreed mutually so limited liability for breach (Hadley)
Tort:
Two rules of Liability
o Any damages foreseen (negligent)all damages you are responsible for (limit changes)
o If some damage foreseen, enough; dont need to know exact damage (Polemis)
Duty imposed by law
o No choice, non-negotiable; cannot contract out of it. Its a higher standard.
No Tort:
No duty, no breach, no liability (Palsgraf)
Even if duty and breach, liability will have limits.

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 Indefiniteness

Impact of the lawyers argument of on the Court, the lawyer, the client, and general society over time.

Social context in which the Courts is dealing. What it is a part of the underlying situational sense and how does
the court perceive and respond to this social situation.
o What was the judges perception of the equities of a particular case and belief of what would be justice
specifically.
o How does the Court interpret past opinions, manipulate case for new client
Interaction of Institution and Judge. Each Court has its own traditions and each new Judge is affected by the
Court and may affect the Court as well. Change and get changed by joining the institution.

In these cases, the court is asking:

When is there no agreement between the parties?
When has a court no workable and decent way to put teeth into an agreement?
When should a court refuse to use its powers, even though there has been an argument?
Who should determine whether there has been an agreement?

focus on the threads that affect the social context

what impact did the lawyers argument have on the court
how the judges perception affects the case and future cases
how do you, as a lawyer, construct an argument to persuade the judgeyou have to know what judges like
be able to state the doctrine of indefiniteness at any point in the sequence & relate them to cases
what moves the courtdoctrine or policy?
if its the policy you want to make an argument on a policy basis, if its a doctrine you want to make argument
on a doctrinal basis
what moves the court to rule the way it did

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 Notes re: course / lawyering in general

2 Purposes of this course:

1) To learn the extent to which law operates and reflects life/social situations in court cases, and the issues &
methods used to resolve disputes. Relationship btwn whats going on in the world and in the law.
2) How the legal process itself operates. How should a lawyer operate? Should he take the case? What remedies
should he seek? After the process is over, reflect as to whether he should have taken the case?

Functions of law:
Settles disputes
Channel behavior so that there are less disputes (fanaticism/stereotyping is minimized)
To improve the quality of life for particular groups of society
To persuade people (on a moral basis)

Remedies:
A) Self Help
Self help is the most common remedy that anyone has in any legal situation.
Self help is that which you can do without being sued for doing it.
If it proceeds to Recovery in kind means that self help has failed.

B) Damages
most common remedy

C) Prevention of Legal Wrongs

An injunction tells you to either stop doing something or to start doing something
o Contempt
Contempt is not b/c you are doing a certain act, its b/c you fail to follow what the court has
said.

Law moves & changes as society moves & changes What is legal & moral at one time, will not be at another. (Ex.
Women were not allowed to vote. Ex. Slavery was legal)

What we will learn in Elements

What are the technical skills we need to know? How are we to judge the good and bad arguments?
What are the perceptions of the life situations by the lawyers, & judges? What their role is as judges in
reconciling those conceptions.
Interaction of institution and person.

Great Judges
A great judge may be able to change traditions. Cardozo made a change, he was a great judge. People
perceived him to have a good mind w/great ideas. His way of making arguments was highly skilled. Was
also a good writer.
Chief Justice Marshall great justice b/c he got the power for the Supreme Court to decide what is
constitutional and what isnt---Marbury v. Madison
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 What makes a great judge?
Some courts have a judge or chief justice who controls the courts. If the judge doesnt control his court,
you want to pick one that does.
People talk about him & write about him in law reviews
Reputation they have in their district
A great judge has heart.

How to make a good legal argument?

How to take a case apart? Cases are like onions, they come in layers. You have to peel them piece by piece
until you get to the core of it.
A really good argument starts with stating the issue.

A legal basis exists for everything in our society.

Why we study cases

To see law in action
Ideological Apprenticeshipstudying cases that arent real, arent going to have any bearing no matter
what you do. This protects you from coverage, unreality, structure, protection from malpractice

Law is an art in determining the tension btwn limited means and the ideal result.

Moral basis for being a lawyer?

to improve yourself
to improve society
to teach

Socrates-you cant win an argument with him, but you are never convinced he is right.

What it takes to be a lawyer:

Ability to persuade people
Have good judgmentintuition & instinct (not teachable)
The ability to be objective & subjective (can be taught)
How to make decisions, impt issues about society, and their clients
Need an ethical background

Reasons to be a lawyer:
1) Riches, power
2) Direct route to public good
Promote societies good:
3) Intrinsic Characteristics that are morally worthy of pursuing
Achieving goals of good judgment

Roles lawyers play:

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1) Persuade people
2) Serve as a Judge
3) Litigators & Trial Lawyers

What it means to have good judgment

Subjective-put yourself in the clients position
Objective-give good/helpful advice
Intuition-something you gain through experience
Ability to weigh different factors and come up with an approach that best suits everyone

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