Evading Promises Cases

Question 1

Laidlaw v. Organ, SCOTUS, 1817, p.504

Answer 1

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
π bought tobacco from ∆. π knew before the deal that a peace treaty had been signed, which caused the price of tobacco to go up after the deal was made. ∆ repossessed the tobacco after the announcement when the price went up.
Holding/Takeaway:
There is no duty for the party to have communicated information, but if they said something about the price, then it can’t be a misrepresentation/false.
Dissent:

Question 2

Sherwood v. Walker, MI, 1887, p.513

Answer 2

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
π agrees to buy ∆’s cow that they both believe is barren. After the agreement, the cow turns out to be pregnant and ∆ tries to rescind contract.
Holding/Takeaway:
If there is a mutual mistake as to the substance of the agreement, then a party can rescind the contract.
Dissent:
There was no mistake of the substance of the agreement here. The agreement was for a cow and the possibility and perceived unliklihood of the cow being fertile was priced in.

Question 3

Beachcomber Coins, Inc. v. Boskett, NJ, 1979, p.518

Answer 3

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
π purchased a rare coin from ∆ after taking time to examine it. When π tried to resell the coin, subject to certification of genuineness, it was determined to be counterfeit.
Holding/Takeaway:
Contract can be rescinded because both were certain the coin was genuine, therefore there was mutual mistake. (See RSC § 502)
Dissent:

Question 4

Tracy v. Morell, IN, 2011, p.522

Answer 4

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
π bought a tractor from ∆. π then had reason to believe that the tractor had been stolen before ∆ sold it, so π sued ∆ for fraud. ∆ counterclaimed for missing payments.
Holding/Takeaway:
The court couldn’t determine fraud, but it was altered property and thus there was a mutual mistake about the ∆ having a valid title and authority to sell the tractor, thus no contract.
Dissent:

Question 5

Gartner v. Eikill, MN, 1982, p.524

Answer 5

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
π bought property from ∆ that they both assumed could be developed based on relevant zoning regulations.
Holding/Takeaway:
Even though the purchaser could investigate the zoning through going to City Hall, they were not negligent, because they asked ∆’s realtor and were reasonable to rely on their assurance that the land could be developed. A mutual mistake in fact regarding the property’s suitability for commercial use entitles π to rescission.
Dissent:

Question 6

Elsinore Union Elementary School Dist. v. Kastorff, CA, 1960, p. 525

Answer 6

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
∆, a contractor, submitted a mistakenly low bid due to a clerical error to ∆, a school district. After learning of the error the next day, ∆ sought to rescind the contract.
Holding/Takeaway:
Because it was an honest clerical error, of a substantial nature, and ∆ promptly rescinded, ∆ is able to rescind their bid so long as π didn’t act in detrimental reliance.
Dissent:

Question 7

S.T.S. Transport Serv., Inc. v. Volvo White Truck Corp., 7th Cir., 1985, p.529

Answer 7

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
None
Holding/Takeaway:
Describes further rationale for one-sided mistakes like in Elsinore. To rescind, the mistake must be material and in spite of the exercise of reasonable care. Courts typically grant relief when the error is “clerical or mathematical.” Exception if the contract was relied upon by the other party.
Dissent:

Question 8

Tribe v. Peterson, WY, 1998, p.532

Answer 8

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
π was injured when a horse it bought from ∆ bucked. π alleged that ∆ made an express warranty through its verbal representations and the sales brochure that the horse would never buck and brought suit for breach of warranty.
Holding/Takeaway:“An express warranty is created by any affirmation of fact made by the seller to the buyer which relates to the goods and becomes a part of the basis of the bargain” but “a representation which expresses the seller’s opinion, belief, judgement or estimate does not constitute an express warranty.” Here there was no express warranty because the statements were deemed to be opinion.
Dissent:

Question 9

Hinson v. Jefferson, NC, 1975, p.540

Answer 9

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
π bought land from ∆ with the intent to build a residence on the land. Afterwards, the city denied a permit to build a septic tank, making the land useless for purposes of building a residence. π sued to recover the purchase price and cancel the deed.
Holding/Takeaway:
The court rejects applying mutual mistake doctrine to the sale and transfer of real property. Instead, it analyzes the situation as a breach of implied warranty, as an exception to caveat emptor. Here, there was an implied warranty that the land could be used for residential development.
Dissent:

Question 10

Cushman v. Kirby, VT, 1987, p.546

Answer 10

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
πs bought house from ∆s that had sulfur water. πs were told by one ∆ that the water was good, only a little hard and the other ∆ was silent. πs sued ∆s for misrepresentation.
Holding/Takeaway:“Where one has full information and represents that he has, if he discloses a part of his information only, and by words or conduct leads the one with whom he contracts to believe that he has made a full disclosure and does this with intent to deceive and overreach and to prevent investigation, he is guilty of fraud . . . if his words and conduct in consquence of reliance upon them bring about the result which he desires”
Dissent:

Question 11

Eytan v. Bach, DC, 1977, p.550

Answer 11

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
πs bought paintings from ∆ for about $50 each. The πs bought them believing them to be old, but ∆ made no express representations. πs sued ∆ to recovrer the price they paid for the paintings
Holding/Takeaway:
There is no duty for the vendor, ∆, to inform π of the obvious when the customer did not inquire about whether the paintings were originals.
Dissent:

Question 12

Taylor v. Caldwell, Eng. , 1863, p.552

Answer 12

Impossibility

Key Facts:
π contracted to use ∆’s hall and gardens for performances. After the contract was made, the hall was destroyed by fire. The contract had no express stipulation as to who bore the risk.
Holding/Takeaway:“In contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person of thing shall excuse the performance.”
Dissent:

Question 13

Roberts v. Lynn Ice Co., MA, 1905, p.554

Answer 13

Impossibility

Key Facts:
π leased his ice houses to the ∆, an ice company. Before the contract ended, the ice houses burned down. π sued to recover rent for the remaining term of the contract.
Holding/Takeaway:
Whether rent was due depended on whether the parties’ agreement was a lease or merely a license. If lease, ∆’s loss.
Dissent:

Question 14

Harrison v. Conlan, MA, 1865, p.555

Answer 14

Impossibility

Key Facts:
π was hired to perform as an organist at a priest’s church. The priest died and wasn’t replaced, so the church closed. π sued the priest’s administratrix.
Holding/Takeaway:“Contracts [which can only be performed personally by the promisor] terminate when death renders the personal performance impossible”
Dissent:

Question 15

Tompkins v. Dudley, NY, 1862, p.555

Answer 15

Impossibility

Key Facts:
π, trustees of a school district, ∆ to build a schoolhouse. It burned down before ∆ could finish it. π sued for the money it advanced and for non-performance of the contract.
Holding/Takeaway:
The burden and risk is on the builder before the building is completed. “When a party is prevented by the act of God from discharging a duty created by the law, he is excused; but when he engages unconditionally, by express contract, to do an act, performance is not excused by inevitable accident or other unforeseen contingency not within his control.”
Dissent:

Question 16

Garman v. Hoover, PA, 2002, p. 556

Answer 16

Impossibility

Key Facts:
π agreed to build a house on ∆’s land. π partially constructed the house and received progress payments before it was destroyed by fire. ∆ had insurance and were paid the amount made on the progress payments. π rebuilt a similar house and sued to recover the contract price, without deducting the progress payments.
Holding/Takeaway:
π were still obligated to perform the contract and are not entitled to any of the insurance proceeds that ∆ received through their prudence.
Dissent:

Question 17

Caroll v. Bowersock, KS, 1917, p.558

Answer 17

Impossibility

Key Facts:
RECOVERY FOR PART PERFORMANCE IS LIMITED TO THE AMOUNT OF CONTRACT WORK DONE AT THE TIME THE STRUCTURE WAS DESTROYED P to construct a reinforced concrete floor for warehouse. Removed old floor, put in concrete footing, built wooden forms for future concrete pillars, and installed reinforcing rods in the columns. Fire destroyed warehouse, ≠ the fault of either party. Ct: The Kor may recover when performance is prevented w/out fault of either party and neither party can be charged w/ delinquency b/c the K can≠ be fulfilled. P can recover any labor and materials incorporated into the structure b/c obligation on part of owner is consideration he has received by way of benefit, advantage, or value. No recover for material furnished or labor performed for columns (temporary and unfinished), nor the rods holding up the building temporarily.
Holding/Takeaway:

Dissent:

Impossibility

Key Facts:
RECOVERY FOR PART PERFORMANCE IS LIMITED TO THE AMOUNT OF CONTRACT WORK DONE AT THE TIME THE STRUCTURE WAS DESTROYED P to construct a reinforced concrete floor for warehouse. Removed old floor, put in concrete footing, built wooden forms for future concrete pillars, and installed reinforcing rods in the columns. Fire destroyed warehouse, ≠ the fault of either party. Ct: The Kor may recover when performance is prevented w/out fault of either party and neither party can be charged w/ delinquency b/c the K can≠ be fulfilled. P can recover any labor and materials incorporated into the structure b/c obligation on part of owner is consideration he has received by way of benefit, advantage, or value. No recover for material furnished or labor performed for columns (temporary and unfinished), nor the rods holding up the building temporarily.
Holding/Takeaway:

Dissent:

Question 18

Lincoln Welding Works v. Ramirez, NV, 1982, p.560

Answer 18

Impracticability

Key Facts:
Gen Kor, subKed sheet-piling work to P, who completed it and was paid in full. Work was on a sewage-lagoon project for sanitation district Month later, a flood damaged the work extensively and D asked P to repair. P repaired, believing he would be compensated for his additional work, but D refused to P the cost of repairs, $19000. (Originally paid $54000). Ct: subK made in reference to prime K, which obligated all subs to bear risk of loss for respective portions of job ‘till entire project was formally accepted by the sanitation district. P agreed to bear risk of loss to its work ‘till formal acceptance; P to do work to the entire satisfaction of owner, Kor, and architect
Holding/Takeaway:

Dissent:

Question 19

Louisville & Nashville R.R. Co. v. Crowe, 1913, p.564

Answer 19

Impracticability

Key Facts:
P conveyed to D’s predecessor land through farm in consideration of a promise to issue a lifelong pass on RR between Scottsville, KY and Gallatin, TN. SCOTUS then interpreted a statute as forbidding such passes in interstate commerce. P sued for specific performance of K, or money damages. Ct: K lawful when made and later terminated by gov regulation should ≠ be allowed to retain K w/out payment. Can≠ restore land taken.
Holding/Takeaway:

Dissent:

Question 20

The Isle of Mull, 4th Cir., 1921, p.564

Answer 20

Impracticability

Key Facts:
The Isles Steamship Co character Isle of Mull to P steamship line, a NY corporation. Charter K was for re: five yrs at a monthly rental price. Service begin in 1914, then ship was requisitioned by the British Admiralty, which fixed compensation more than P’s rental agreement. Lw Ct: P entitled to difference between the market value of the use of the ship and the rent P had agreed to pay. Ct: K discharged and D ≠ required to acct for profit; risk allocation.
Holding/Takeaway:

Dissent:

Question 21

American Trading & Prod. Corp. v. Shell Int’l Marine, Ltd., 2d Cir., 1972, p,568

Answer 21

Impracticability

Key Facts:
Owner entered in a K of voyage charter w/ UK corporation or voyage w/ cargo of lube oil from Beaumont to Bombay at freight rate provided by American Tanker Rate Schedule, plus 75%, and a charge of $.85 per long ton for passage through the Suez Canal. 2 weeks later, owner warned of possible closure of Suez Canal. Subsequently, canal was closed and they proceeded via the Cape of Good Hope. Vessel arrived in Bombay some 30 days later than expected and traversing nearly twice the number of miles. Owner billed extra compensation under quantum meruit, which charterer refused to pay. Ct: Cape route is an alternative – expectation that ship would go via Suez ≠ allocation to promisee of risk of closure ≠ equivalent to agreeing that it was to be exclusive method of performance. Express expectation does ≠ amount to condition of performance (via custom or otherwise). Analogue to Transatlantic Financing Corp. v. United States (1966). No commercial impracticability b/c of alternate route (increase in expense ≠ impracticability or excuse for nonperformance if it ≠ alter essential nature of K).
Holding/Takeaway:

Dissent:

Question 22

YPI 180 N. LaSalle Owner, LLC v. 180 N. LaSalle II, LLC, IL, 2010, p.571

Answer 22

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
The purchaser of commercial property tried to get out of the deal when the global financing crisis of 2008 made it difficult to obtain the anticipated financing, but the trial court granted the defendant seller’s motion to dismiss the buyer’s claim for rescission. The doctrine of impossibility of performance excuses performance when performance is rendered objectively impossible due to destruction of the subject matter of the contract or by operation of law. The doctrine has been narrowly applied. The party advancing the doctrine must show that the events or circumstances he claims rendered his performance impossible were not reasonably foreseeable at the time of contracting. The plaintiff fails to do that here. Even if the global credit crisis made it difficult, or near impossible, to procure financing, this is not the relevant issue. The primary issue is whether it was foreseeable that a commercial lender might not provide Younan and YPI (P) with the financing they sought, which is a foreseeable risk that could be guarded against by inclusion in the contract of a financing contingency provision. The doctrine of impossibility of performance does not excuse performance when it lies within the power of the promisor to remove the obstacle to performance.
Holding/Takeaway:

Dissent:

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
The purchaser of commercial property tried to get out of the deal when the global financing crisis of 2008 made it difficult to obtain the anticipated financing, but the trial court granted the defendant seller’s motion to dismiss the buyer’s claim for rescission. The doctrine of impossibility of performance excuses performance when performance is rendered objectively impossible due to destruction of the subject matter of the contract or by operation of law. The doctrine has been narrowly applied. The party advancing the doctrine must show that the events or circumstances he claims rendered his performance impossible were not reasonably foreseeable at the time of contracting. The plaintiff fails to do that here. Even if the global credit crisis made it difficult, or near impossible, to procure financing, this is not the relevant issue. The primary issue is whether it was foreseeable that a commercial lender might not provide Younan and YPI (P) with the financing they sought, which is a foreseeable risk that could be guarded against by inclusion in the contract of a financing contingency provision. The doctrine of impossibility of performance does not excuse performance when it lies within the power of the promisor to remove the obstacle to performance.
Holding/Takeaway:

Dissent:

Question 23

Krell v. Henry, UK, 1903, p.575

Answer 23

Frustration of Purpose

Key Facts:
D agreed to take rooms for Edward VII’s coronation on June 26 and 27, but only enclosed 25 pounds as deposit w/ a promise to pay the remainder on the 24th. Processions did ≠ take place b/c of the serious illness of the King, so D contended there was no consideration and did ≠ pay. D refused to pay and counterclaimed for deposit. Ct: implied condition that procession should take place; duties dischargeable if foundational reason no longer exists. TEST: ascertain what substance of K is AND ask if foundation of K is the assumption of the existence of a particular state of things… if so, it becomes impossible to perform b/c of the nonexistence of the thing assumed by both parties = no breach of K and both parties discharged. [question of who should have to bear risk of Edward not appearing]
Holding/Takeaway:

Dissent:

Question 24

Lloyd v. Murphy, CA, 1944, p.580

Answer 24

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
National Defense Act was law; auto industry and public knew production soon curtailed. Conditions and absence of lease provisions -> inference that risk was assumed. D failed to prove possibility of war, etc. was unanticipated circumstance. Ct: promisor seeking excuse from performance must prove risk of frustrating event was ≠ foreseeable and the value of counter performance is totally or nearly totally destroyed. Can still sell cars: just more difficult and less profitable.
Holding/Takeaway:

Dissent:

Question 25

Weyerhaeuser Real Estate Co. v. Stoneway Concrete, Inc., WA, 1981, p.581

Answer 25

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
P landowner and D company entered into lease for strip mining. Thought would wait no more than 2 yrs for permits, but public outcry delayed approval > 5 yrs. D abandoned project; P sued to recover min. rentals called for by the K. Lw Ct: K had a clause allowing D to terminate lease by giving one yr’s notice if in D’s reasonable judgment, operations were uneconomical. Hr Ct: Reversed. No commercial frustration. Parties agreed upon remedy in case project became economically unfeasible. SCOTUS: reversed. Was frustration and D was w/out fault. Supervening events were not contemplated and risks not allocated by K even if aware of a lengthy-permit application process. Clause’s purpose ≠ allocate risk. Dissent: public sentiment is fluid and changeable – they might have foreseen that it would have been against them
Holding/Takeaway:

Dissent:

Question 26

Halbman v,. Lemke, WI, 1980, p. 587

Answer 26

Infancy

Key Facts:
Halbman (P), a minor, sued Lemke (D) for the return of $1100 he paid toward the purchase of a vehicle, and Lemke (D) counterclaimed for $150, the amount still owing under the contract. Lw Ct: when minor disaffirms, he needs only to return property w/out making any restitution. Aff’d on appeals. If minor seeks to recover consideration after disaffirmation, different rules should apply. Minors ≠ obliged to make restitution b/c it would be on property he has given up.
Holding/Takeaway:

Dissent:

Question 27

Webster St. Partnership v. Sheridan, NE, 1985, p.590

Answer 27

Infancy

Key Facts:
Two minors unable to pay rent disaffirmed a lease for an apt after short occupancy. Paid landlord $500 rent and security deposition; wanted both returned. Landlord refused. Ct: restitution to minors. Infant only liable for values of “necessaries” supplied under the K. Necessaries depend on facts of each case – depends on social position and situation in life of infant and what his parents provide - ≠ just bare necessities – ≠ liable b/c apartment ≠ necessary here. Goods ≠ necessary if parent/guardian is willing and able to supply them. Minors had voluntarily decided to leave home
Holding/Takeaway:

Dissent:

Question 28

Kelly v. Provident Life & Accident Insurance Co., CA, 2010, p.599

Answer 28

Undue Influence

Key Facts:
Kelly (P) claimed total disability from his mental illness but his insurer, Provident (D), terminated his disability benefits when it learned that Kelly (P) was still earning some income; Provident (D) sued Kelly (P) for fraud and they entered into a settlement agreement, which Kelly (P) later sought to rescind based on Provident’s (D) undue influence. The evidence in this case is sufficient for a jury to conclude that, despite knowing that Kelly (P) was mentally ill, the defendant terminated his coverage after conducting a biased investigation, and even contacted law enforcement agencies to conduct further investigation. The defendant sued Kelly (P) for the return of all benefits, without a valid basis for doing so. Although none of the seven factors of overpersuasion may be present, this is not dispositive. If a jury determined that the defendant took these actions in bad faith in order to pressure Kelly (P) to surrender his benefits via a settlement agreement, it could find that the insurer took unfair advantage of Kelly’s (P) weakness of mind, allowing rescission of the settlement agreement for undue influence.
Holding/Takeaway:

Dissent:

Question 29

Von Hake v. Thomas, UT, 1985, p.604

Answer 29

Undue Influence

Key Facts:
Von Hake v. Thomas. Old farmer sold property. A confidential relationship is prereq for constructive fraud. Law assumes one will normally make one’s own judgment; ≠ they will be overborne by another. D induced P to believe he was interested in saving the ranch, but there was no ev that P so trusted D that D was able to substitute his will for D
Holding/Takeaway:

Dissent:

Question 30

Levine v. Blumenthal, NJ, 1936, p.628

Answer 30

Modifications

Key Facts:
P leased to D a shop premise. Lease was for two yrs w/ an increase over rent for the second yr; option to renew. D told P that it was absolutely impossible for them to pay any increase in rent; P agreed to let them remain at the current rate ‘till business improved. Before the last month of the first yr’s lease, D moved out, leaving last month unpaid. Lr Ct: oral modification ≠ supported by lawful consideration and thus, ineffective. Hr Ct: economic adversity ≠ reason for giving up primary principles in law –substituted performances can≠ standard w/out consideration [must have additional k for new K]
Holding/Takeaway:

Dissent:

Question 31

McDevitt v. Stokes, KY, 1917, p.630

Answer 31

Modifications

Key Facts:
Owner of horse Grace employed D as jockey. Winning a race would entitle jockey to $300 and increased value of mare’s relatives. Owner promised additional $1000 for victory; jockey won but owner refused to pay. Ct: Jockey already legally and morally bound to perform service to best (to win); jockey incurred no additional detriment and the benefit to him was incidental (one he was already entitled to).
Holding/Takeaway:

Dissent:

Question 32

Schwartzreich v. Bauman-Basch, Inc., NY, 1921, p.633

Answer 32

Modifications

Key Facts:
In 1917, P and D signed a K – Baumann agreed to employ Scwatzreich for $90/week for a yr. Shortly, S told B that he had received an offer of $110 from another firm. Baumann agreed to raise the salary to $100 if S stayed –> signed a new employment K. In less than a yr, S was discharged. Judgment for S was affirmed – parties to a K can rescind it by mutual consent and make a new K in which their mutual promises are consideration for each other.
Holding/Takeaway:

Dissent:

Question 33

Alaska Packers’ Ass’n v. Domenico, 9th Cir., 1901, p.618

Answer 33

Modifications

Key Facts:
Domenico (P) and a group of seamen under contract with the Alaska Packers’ Association (D) brought suit against Alaska Packers (D) to recover damages for money allegedly owed to them under contract. Ct: A promise to pay another party increased compensation for doing that which he or she is already legally bound to do is not enforceable absent additional consideration. The fishermen agreed, for a certain sum, to provide their services to Alaska Packers (D) in remote waters where the fishing season is short. The fishermen, for no apparent reason other than to attain more money, discharged their contract and refused to perform at a time when Alaska Packers (D) were unable to locate replacement workers. Alaska Packers’ (D) consent to the fishermen’s demand for more money was without consideration because it was based solely on the fishermen’s agreement to render the same services they were already obligated by contract to perform.
Holding/Takeaway:

Dissent:

Question 34

Austin Instrument, Inc. v. Loral Corp., NY, 1971, p.621

Answer 34

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
Austin (P) threatened to cease deliveries of parts it was supplying to Loral (D) pursuant to a subcontractor agreement unless Loral (D) awarded Austin (P) a second subcontract and agreed to a price increase on the items Austin (P) was supplying under the initial subcontractor agreement. A contract is voidable on the ground of duress if the party making the claim was forced to agree to the contract by means of a wrongful threat that precludes the exercise of free will. In order for economic duress to be present, one party must threaten to withhold goods unless the other party agrees to their demands, and the threatened party must be unable to obtain the goods from another source. Loral (D) was under contract to provide radar sets on a monthly basis, and the contract provided for liquidated damages and cancellation if the deliveries were late. Facing such strict deadlines and consequences, Loral (D) had no choice but to agree to Austin Instrument’s price increase demand, or risk losing the Navy contracts and being forced to pay significant liquidated damages. Loral (D) tried to find alternative sources, but was unable to do so. Therefore, Loral (D) either had to agree to Austin Instrument’s (P) conditions or be in breach of its Navy contract.
Holding/Takeaway:

Dissent:

Question 35

Smithwick v. Whitley, NC, 1910, p.624

Answer 35

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
P Ked in writing to purchase land from D; w/out getting the deed, P went into possession and worked the land. Three yrs later, D told P deal was off. P went to see D and agreed to pay more money/acre rather than lose the land AND actually paid. Finally got the deed. Ct: nonsuit – P voluntarily paid for the increase. Duress exists only where unlawful act of another deprived on of free will. Could have sued in equity for specific performance.
Holding/Takeaway:

Dissent:

Question 36

Wolf v. Marlton Corp., NJ, 1959, p.625

Answer 36

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
Husband and wife Ked to buy a house from developer, but after down payment, wanted out b/c of marital difficulties (and a refund). Developer refused to give back more than part of down payment. Husband said that if he didn’t get full amount back, he would purchase house and resell to “an undesirable purchaser.” Ct: duress does ≠ always involve physical violence, but can be tested by state of mind induced in victim. P had legal right to sell, but ≠ for purely malicious and unconscionable motives.
Holding/Takeaway:

Dissent:

Question 37

Universal Builders, Inc., v. Moon Motor Lodge, Inc. PA, 1968, p.633

Answer 37

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
United Builders, Inc. (P) moved to have a real estate conveyance set aside because it violated the Fraudulent Conveyance Act and to declare void a supplemental agreement with Moon Motor Lodge, Inc. (D). A contract can be modified orally even though it provides that it can be modified only in writing. Construction contracts often provide that the builder will not be paid for extra work unless approved in writing, yet courts frequently require owners to pay for extra work verbally authorized by them. A contract provision that a construction contract can be modified only in writing can be waived by the owner’s oral agreement that the extra work may be performed, if the builder relies on that permission and materially changes his position based on it.
Holding/Takeaway:

Dissent:

Question 38

Cole Taylor Bank v. Truck Ins. Exch., 7th Cir., 1995, p.637

Answer 38

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
Waivers don’t require special tokens of reliability (writing, consideration, reliance, judicial screening, heightened standard of proof) - can be implied (from words or actions) or expressed. Waiver = intentional relinquishment of a right. Often cts require proof of reliance on alleged waiver -> convert waiver into estoppel. Others require that waiver induced reliance or clearly inferable from the circumstances. No blanket requirement b/c of inherent implausibility of offers to waive rights in exchange for nothing? If something is given in return, then there is consideration
Holding/Takeaway:

Dissent:

Question 39

Quigley v. Wilson, IA, 1991, p.637

Answer 39

Duress

Key Facts:
P sold farm to D, D sold to third party, who returned the K b/c he could no longer afford it. D attempted to return K to P, but P agreed to change number of K’s original terms and D made payments under new K. P established conservatorship w/ his children, who sued D for default under the original K. Children argued the new K was unenforceable. Ct: K consisted a waiver (acknowledgement of a right and intention to give it up) – no consideration required. Hr Ct: changing payment schedule etc creates new/different obligations. Waivers for when party abandons rights; but if different duties incurred, it is a modification, which does require additional consideration. Only sometimes fair and equitable w/out proof of additional consideration.
Holding/Takeaway:

Dissent:

Question 40

Hackley v. Headley, MI, 1881, p.639

Answer 40

Duress

Key Facts:
Headley sued Hackley to recover compensation for logging in the river alleging duress in obtaining the discharge of the K. Headley signed indicating that he received $4000 which was the full amount of claims against Hackley; claimed that he did ≠ actually get payment for portion of logs (scale issues). Headley said he would be ruined, but Hackley would ≠ budge. Ct: duress: when the unlawful act of another induced to make K or perform in a way that deprives him of free will. No duress if party threatens something he has legal right to perform… in this case, the debtor refused to pay debt due even though Headley was in need… that was duress. Seems like a dangerous/unequal doctrine b/c one can≠ know when one will be safe in dealing on ordinary terms of negotiation w/ a party who professes to be in great need.
Holding/Takeaway:

Dissent:

Question 41

Capps v. Georgia Pacific Corp., OR, 1969, p.642

Answer 41

Duress

Key Facts:
Plaintiff alleged he was to find a lessee for industrial property owned by defendant, then he would get a commission. Defendant filed an affirmative defense based on a release granted by plaintiff. Lw Ct: There was economic duress b/c he informed D that his home was going to be foreclosed and that D threatened that unless he signed release, his attorneys would prevent payment of any sum owed. Hr Ct: reversed b/c dire financial circumstances are ≠ basis for finding duress. Concurrence only on results: strong case for operation of doctrine of economic duress. ≠ judicially wise b/c party asserting duress usually the unfortunate/unsuccessful party opposing the more successful party. Better to find problem w/ “lack of consideration”
Holding/Takeaway:

Dissent:

Question 42

Woollums v. Horsely, KY, 1892, p.684

Answer 42

Unconscionability

Key Facts:
Knowledgeable businessman tried to buy mineral rights from 60 yo uneducated, diseased, farmer way below value. Ct: a harmful or unconscionable bargain will ≠ be specifically enforced. No specific performance (equity) for K unless it is just and fair in all respects. Grossly inadequate price of purchase must mean that he was misled or acted under gross misapprehension
Holding/Takeaway:

Dissent:

Question 43

Waters v. Min Ltd., MA, 1992, p.690

Answer 43

Unconscionability

Key Facts:
Gail A. Waters assigned annuity to “the Devitos defendants” in exchange for $50,000. Ct: when disparities of interests in K are so gross, ct can≠ resist inference that K was improperly obtained and is unconscionable. Unconscionability determined case-by-case w/ particular attention to whether provision resulted in pressure/unfair surprise to disadvantaged party (≠ due to superior bargained power). Look to high-pressure sales tactics and misrep. D assumed no risk and P gained no advantage: gross disparity in values exchanged is fact to be considered
Holding/Takeaway:

Dissent:

Question 44

Williams v. Walker-Thomas Furniture Co., DC Cir., 1965, p.693

Answer 44

Unconscionability

Key Facts:
Furniture store cross-collateralized all purchases. Any default of payment on a monthly payment -> store repossessing ALL items purchased. Ct of Appeals: when element of unconscionability is present when L made, K should ≠ be enforced. Unconscionability = absence of meaningful choice on part of one parties, K terms that are unreasonably favorable to other, gross inequality of bargaining power, manner the K was entered. TEST: terms of the K considered in light of the circumstances existing when K was made. Corbin: whether the terms are “so extreme as to appear unconscionable according to the mores and business practices of the time and place”
Holding/Takeaway:

Dissent:

Question 45

Browser v. Gateway 2000, Inc., NY, 1998, p.699

Answer 45

Unconscionability

Key Facts:
Brower (P) brought suit against Gateway 2000, Inc. (D) on behalf of themselves and others for compensatory and punitive damages, alleging that the defendant engaged in deceptive sales practices and that the arbitration clause in the agreement was unconscionable. Unconscionability requires some showing of an absence of meaningful choice on the part of one of the parties together with contract terms unreasonably favorable to the other party. In determining whether there was a lack of meaningful choice on behalf of one of the parties, the court will look to factors such as the transaction’s setting, the parties’ relative experience and education, the presence of “fine print” in the contract, the use of high pressure persuasion tactics by the more powerful party, and disparity in the parties’ bargaining power. None of these conditions was present in this case. The agreement included with the merchandise was only three pages long and sixteen paragraphs, and the purchaser had thirty days to review the merchandise and the agreement. The arbitration site’s inconvenience does not alone lead to the conclusion of unconscionability. The purpose of the unconscionability doctrine is not to redress the inequality of the parties, but rather to prevent a more powerful party from surprising the other party with an excessively oppressive term
Holding/Takeaway:

Dissent:

Question 46

Market Street Associates Ltd. Partnership v. Frey, 7th Cir., 1991, p.710

Answer 46

Evading Promises - Mistake, Misrepresentation, Warranty, and Nondisclosure

Key Facts:
Property sold to trust, which then leased it back. ¶34 of lease entitled lessee to request lessor to finance additional improvements or allow lessee to buy back property (essentially for less than market value). Company wanted to lease prop but trust would ≠ return calls, etc; could ≠ get mortgage from other sources b/c ≠ owner, only lessee; so decided to buyback property -> did ≠ bring up ¶34 at any point during negotiations. Lw Ct: failure to mention ¶34 violated good faith. Hr Ct: duty of good faith ≠ duty of candor, but like fiduciary duty. Must determine frame of mind in ≠ mentioning ¶34.
Holding/Takeaway:

Dissent: