Professional Documents
Culture Documents
Principles of Relief
1. Approximation of Damages
-Because specific performance is rarely an option, the best a court can usually do is to try and
determine what monetary reward will approximate the plaintiff’s expectation.
2. Economic Nature of Contract Remedies
-Contract law almost never takes into account non-economic injuries. Damages measured purely by
the extent of the plaintiff’s loss do not generally distinguish between breaches that are inadvertent
and those that are willful and purposeful.
-Because the focus is on rectifying harm and not on sanctioning improper conduct, punitive damages
are not usually available for a breach of contract
3. Moral Dimension of Contract Remedies
-A contractual promise means nothing more than a commitment either to perform or to pay
compensation for not performing.
-However, there are some rules of contract law that have particular or stricter application where a
breach is willful or has an immoral dimension, and there are various ways in which the court or
jury’s disapprobation of the breacher can be reflected in the disposition of the case.
Ex. Shifting burden of proof onto defendant, giving jury leeway in deciding damages
4. The Economic Concept of Efficient Breach
-A breach of contract is said to be efficient if the defendant’s cost to perform would exceed the
benefit that performance would give to both parties. It satisfies the criterion of economic efficiency
in that it makes the defendant better off without making the plaintiff worse off.
1. Writ of Execution
-If judgment is obtained and defendant doesn’t pay, a clerk of the court can call on a sheriff to find,
seize, and sell property owned by the defendant to satisfy the judgment.
-A judgment itself is merely a finding of liability. If a defendant fails to satisfy it, and no assets can be
found to execute upon, the plaintiff may never see her money.
Types of Damages
Assent
1. Overview
-Mutual assent is the basis of contract. Means that each party must intend to enter the contract and
must agree with the other to do so on mutually acceptable terms.
-Courts can only enforce intentions that are communicated: employed outward signals such as
words and actions that are observed and given meaning and interpreted by another.
-Communication can be fouled up in many ways: utteror’s thinking may be confused or fuzzy, a poor
choice of words or actions may obscure intent, a manifestation of intent may be perceived
differently or misconstrued by the person to who it is addressed, or there might be secret
reservations or deviousness on the part of one of the parties
2. Objective Test
A. General Principles
I. Overview
-For a contract to be made and to be valid, both a “reasonable person” and the offeree in
question would need to understand offeror’s conduct as an acceptance.
-If agreement is apparent through the manifestations of assent, reasonably interpreted, a
contract is formed on the terms reflected in the manifestation
-The court’s focus on the manifestation of intent is not absolute. Evidence of a party’s state
of mind may sometimes be helpful in determining or giving context to words or conduct,
provided that the subjective evidence is credible and compatible with the overt behavior.
-In the absence of compelling contrary indications, however, assent is legally sufficient if
each party, by the deliberate use of words or conduct, manifested agreement to be
contractually bound.
B. Policies (for Solving Communication Disputes)
-Assent Policy: dictates that contractual obligation should not be imposed on a person who
did not agree to be bound.
-Protecting Reliance Policy: Promises must be relied upon if there is to be any confidence in
the system of commercial exchange.
-The assent policy must be tempered by the goal of protecting the expectations of one who
reasonably relied on the appearance of assent.
C. Objective Test Factors
I. Legal Standards for Determining Objectivity of Assent
-Courts are not concerned with what the words or actions did mean to either party during
the “offer,” but how they should have been understood if interpreted reasonably, in the
context of the transaction, by a person with the knowledge and attributes of the party to
whom they were directed.
-Objective Test is aimed at balancing the requirement of assent with the protection of
reasonably reliance. (See Policy section above)
Hypo: Penny borrowed money from George in the past, but never repaid the loan. One
day she again asks George to lend her $50. George, tired of Penny’s sponging, says
sarcastically, “Yes, and you’ll repay it like you did last time!” It does not matter that
George thought he was saying “No,” or that Penny (who is an idiot) thought that he was
saying “Yes, and you can take your time about repaying me.” The real issue is how
Penny, acting reasonably, should have understood the response.
II. The Evidentiary Aspect
-An objective standard must focus on objective evidence to establish contractual intent.
Some examples: a signature in writing, spoken words, or behavior pertinent to the
transaction.
-Subjective evidence is often of questionable value. A court may admit subjective testimony
as having some role in explaining the meaning of the manifestation but it is not likely to be
given weight unless it can be reconciled with the objective evidence or else explains why
the objective evidence should be discounted.
III. The Relationship between Objective and Subjective Elements
-When parties disagree on the meanings of their words and actions, the intent must be
decided by the factfinder. The resolution of ambiquity, obscurity, and miscommunication is
accomplished by an evaluation of observable, external signals used by the parties to
communicate intent.
-If it is clear that they made a contract, the focus of inquiry is on the question of what terms
were agreed. The external standard is used because an inquiry into what each party had in
mind is neither efficient nor fair. It would place too heavy an emphasis on unreliable
evidence and fails to protect reasonable reliance on words or conduct.
IV. Lack of Serious Intent
-Might be meant as a joke or otherwise not a serious offer. Just depends on the context and
the facts presented. If P could reasonably take the offer as a serious offer, then court will
hold defendant to that offer.
Ex. Embry v. Hargadine, McKittrick Dry Goods Co.
A meeting occurres wherein P said that he would seek work elsewhere unless his
contract was renewed. Hargadine’s president, McKittrick, told P ‘Go ahead, you’re all
right. Get your men out and don’t let that worry you.’ Embry remained with the
company until he was fired on February 15th. P sued.
-To form a valid contract there must be a meeting of the minds and both parties must
agree to the same thing in the same sense. If a man conducts himself such that a
reasonable person would believe that he was assenting to the terms proposed by
another party, and that other party upon that belief enters into the contract, that
man would be equally bound whether or not he had actual subjective intent.
-If what D said would have been taken by a reasonable man to be an employment
contract, and P understood it as such, it constituted a valid contract of employment
for the ensuing year. McKittrick’s subjective intent was not relevant.
Ex. Lucy v. Zehmer
One evening after several drinks, D wrote a contract on a restaurant bill in which he
agreed to sell his farm to P for $50,000. D later insisted that he had been intoxicated
and thought the matter was a joke, not realizing that P had been serious. P claimed that
he was not intoxicated and believed that D was also sober. D testified that he was
already “high as a Georgia pine” when he began drinking with P. He claimed that he was
merely bluffing to try to get D to admit that he did not actually have $50,000. P brought
suit for specific performance when D refused to complete the transaction.
-The court looks to the objective, outward expression of a person and not to their
secret and unexpressed subjective intent. The test is whether a reasonable person
would conclude that the party’s words and actions constituted an offer.
-In this case D’s acts and words could be reasonably interpreted by P as an offer to sell
his farm. The parties discussed the matter for over forty minutes, addressed the issue
of examination of title, and both D and his wife signed the agreement.
3. Manifestation of Assent
I.