Spears v. Blackwell

Brief Fact Summary.

Spears filed a negligence suit against Blackwell when Spears collided into an oncoming car in front of the Blackwell property.

Synopsis of Rule of Law.

A landowner does not owe a duty to citizens using the public road to protect them from harm from the natural conditions of the land.

Facts.

Spears was driving by the Blackwell property, and vegeatation by the property made it difficult for passersby to see clearly. Spears filed a negligence suit against Blackwell when Spears collided into an oncoming car in front of the Blackwell property. The trial court granted summary judgment to Blackwell.

Issue.

Whether a landowner owes a duty to citizens using the public road to protect them from harm from the natural conditions of the land?

Held.

No. The judgment of the trial court is reversed. The vegetation was not a natural condition because the Blackwells and their predecessor modified the land by planting shrubs and mowing the area. The Blackwells owed a duty to Spears.

Discussion.

A landowner does not owe a duty to citizens using the public road to protect them from harm from the natural conditions of the land. A condition of the land will not be considered a natural condition if it was changed by the act of the landowner or the landowner’s predecessor.

A & M Produce Co. v. FMC Corp.

Brief Fact Summary.

A & M Produce Co. sued FMC Corp. for breach of express and implied warranties when FMC’s farming equipment caused a tomato harvest to go awry.

Synopsis of Rule of Law.

A contract that contains a term that is procedurally and substantively unconscionable is void.

Facts.

Abatti, who owned A & M Produce Co. (A & M) chose a bid with FMC Corp. (FMC) to purchase equipment to harvest tomatoes. FMC informed Abatti that he did not need a hydrocooler. Abatti signed an order form that disclaimed all warranties and consequential damages. The equipment did not sort the tomatoes fast enough and the lack of a hydrocooler caused the tomatoes to develop fungus. When A & M sought a refund, FMC refused. A & M sued for breach of implied and express warranties. The trial court ruled for A & M.

Issue.

Whether an unconscionable contract is void?

Held.

Yes. The judgment of the trial court is affirmed. Sellers cannot disclaim representations that they have made. The contract remained procedurally unconscionable because FMC did not point out the contract’s terms to Abatti. Similarly, the contract remained substantively unconscionable because the order form disclaimed what the products were designed to do.

Discussion.

A contract that contains a term that is procedurally and substantively unconscionable is void. A contract is procedurally unconscionable if a contract term is hidden or causes unfair surprise. A contract is substantively unconscionable if a contract term is unfair or oppressive. A contract is void if it is both procedurally and substantively unconscionable.

Abrams v. Illinois College of Podiatric Medicine

Brief Fact Summary.

Abrams sued Illinois College of Podiatric Medicine for breach of contract when he was expelled and his professors failed to update him regarding his progression throughout the semester.

Synopsis of Rule of Law.

A binding contract is not created with vague statements expressing that an action will or should be taken.

Facts.

Abrams, a student at Illinois College of Podiatric Medicine (College), failed Physiology 101 twice. College removed Physiology 203 from the next semester and claimed that Abrams would be permitted to retake Physiology 101 in the summer if he passed all his classes. The student handbook claimed that professors would update students about their progress, let students know how they are doing after midterms, and provide suggestions for improvement. Abrams professors failed to update him and he failed two of his courses in the second semester. Abrams was subsequently expelled and sued for breach of contract. The trial court granted judgment to the college.

Issue.

Whether a binding contract is created with vague statements expressing that an action will or should be taken?

Held.

No. The judgment of the trial court is affirmed. The statements in the student handbook do not constitute an offer inviting an acceptance.

Discussion.

A binding contract is not created with vague statements expressing that an action will or should be taken.

Aigner v. Cowell Sales Co.

Brief Fact Summary.

Cowell Sales Co. sued for unpaid rent after terminating Aigner’s lease.

Synopsis of Rule of Law.

A landlord does not get damages for the portion of the lease term after termination if the landlord terminates the lease.

Facts.

Aigner leased space from Cowell Sales Co. to run a laundry. Within the first year, when Agner fell behind on rent, Cowell sent a letter demanding that Aigner pay the rent within three days or vacate the premises. Aigner took his property and left, and Cowell subsequently sued for three months of unpaid rent. The trial court granted judgment to Cowell and Aigner appealed.

Issue.

Whether a landlord gets damages for the portion of the lease term after termination if the landlord terminates the lease?

Held.

The judgment of the trial court is affirmed in part and reversed in part. Cowell was not entitled to rent from Aigner after terminating the lease agreement.

Discussion.

A landlord does not get damages for the portion of the lease term after termination if the landlord terminates the lease. Terminating a contract ends the contract, thus terminating the tenant’s right to occupy the space and terminating landlord’s right to receive rent.

Allen R. Krauss Co. v. Fox

Brief Fact Summary.

Allen R. Krauss Co. (Krauss) sued Fox to compel Fox to sell land when Krauss accepted a counteroffer before the proposed deadline.

Synopsis of Rule of Law.

An offer that claims to remain open until a deadline can be rescinded prior to the deadline if the offeree did not provide consideration to keep the offer open.

Facts.

Allen R. Krauss Co. (Krauss) offered to purchase land from Fox for $265,000 with a $5,000 deposit. Fox sent a counteroffer with five days to act for $486,000 in cash. When Krauss signed the acceptance form two hours before the acceptance deadline, Krauss’s lawyer informed Krauss that Fox no longer wished to sell the property. Krauss nevertheless delivered the acceptance form and Krauss sued Fox to compel Fox to sell the land. The trial court granted judgment to Krauss.

Issue.

Whether an offer that claims to remain open until a deadline can be rescinded prior to the deadline if the offeree did not provide consideration to keep the offer open?

Held.

Yes. The judgment of the trial court is reversed. When Fox revoked the counteroffer, Krauss’s acceptance did not constitute a contract.

Discussion.

An offer that claims to remain open until a deadline can be rescinded prior to the deadline if the offeree did not provide consideration to keep the offer open. Similarly, an offer may be revoked prior to acceptance if the offer has not been accepted.

American Continental Life Insurance Co. v. Ranier Construction Co., Inc.

Brief Fact Summary.

Ranier Construction Co., Inc. (Ranier) sued American Continental Life Insurance Co. (American) for breach of contract when American refused to make payment under the contract terms.

Synopsis of Rule of Law.

A contract’s procedural requirements are not waived if some of the other procedural requirements are not followed.

Facts.

American Continental Life Insurance Co. (American) hired Ranier Construction Co., Inc. (Ranier) to build a building. American paid Ranier for 90 percent of the work completed on a monthly basis after receiving a certificate of payment from the architect. At the end of the project, Ranier received a punch list from the architect for tasks that needed to be completed prior to receiving a final payment certificate. American refused to accept the architect’s final punch list and gave Ranier its own final tasks. Because Ranier never got a final certificate of payment from the architect, American refused to pay under the contract. Ranier sued for breach of contract and American countersued for construction defects.

Issue.

Whether a contract’s procedural requirements are waived if some of the other procedural requirements are not strictly followed?

Held.

No. The judgment for Ranier is reversed. American was not obliged to make the final payment because Ranier did not receive the certificate of payment from the architect.

Dissent.

(Struckmeyer, CJ.) The builder is entitled to payment minus any damages for defects because the owner occupied the building and refused to accept the architect’s punch list.

Discussion.

A contract’s procedural requirements are not waived if some of the other procedural requirements are not followed.

Ard Dr. Pepper Bottling Co. v. Dr. Pepper Co.

Brief Fact Summary.

Ard Dr. Pepper Bottling Co. (Ard) sued Dr. Pepper Co. (Dr. Pepper) for breach of contract although a termination agreement provided Dr. Pepper the discretion to determine whether any contract term was violated.

Synopsis of Rule of Law.

A contract’s termination clause permits the terminating party to interpret whether the conditions permitting termination have been met.

Facts.

Ard Dr. Pepper Bottling Co. (Ard) bottled soda for Dr. Pepper Co. (Dr. Pepper). The contract contained a termination clause that allowed Dr. Pepper to determine whether any contract term was violated. Dr. Pepper terminated the contract twelve years later because Ard’s bottling equipment was not up to Dr. Pepper’s standards and Ard failed to promote Dr. Pepper’s products. Ard sued Dr. Pepper for breach of contract. The trial court granted judgment to Dr. Pepper.

Issue.

Whether a contracts termination clause permits the terminating party to interpret whether the conditions permitting termination have been met?

Held.

Yes. The judgment of the trial court is affirmed. The contract gave Dr. Pepper the right to terminate the agreement based on Dr. Pepper’s determination of Ard’s performance.

Discussion.

A contract’s termination clause permits the terminating party to interpret whether the conditions permitting termination have been met.

Bachewicz v. American National Bank& Trust Co.

Brief Fact Summary.

Bachewicz sued American National Bank & Trust Co. (American) for breach of contract when American made an agreement to sell real property and breached the agreement by refusing to sell.

Synopsis of Rule of Law.

Damages are calculated by a property’s fair market value at the time of the breach if a seller breaches a contract for the sale of real property.

Facts.

Bachewicz offered to buy a building held in trust by American National Bank & Trust Co. (American), and American agreed to sell. American breached the agreement before closing, by refusing to sell. Bachewicz sued American for breach of contract and the trial court granted judgment to Bachewicz.

Issue.

Whether damages are calculated by a property’s fair market value at the time of the breach if a seller breaches a contract for the sale of real property?

Held.

Yes. The judgment of the trial court is reversed. The trial court erred by considering the property’s resale price. Damages should have been calculated by using the property’s fair market value at the time of the breach.

Dissent.

(Jiganti, J.) Fair market value is relative and the trial court’s resolution was reasonable. The value of real estate varies depending on the expert.

Discussion.

Damages are calculated by a property’s fair market value at the time of the breach if a seller breaches a contract for the sale of real property.

Board of Public Works v. L. Cosby Bernard and Co.

Brief Fact Summary.

L. Cosby Bernard and Co. (Cosby) sued Board of Public Works (Board) for breach of contract after Board failed to pay Cosby the agreed upon commission price.

Synopsis of Rule of Law.

A person who makes an agreement with an unauthorized agent may receive quantum meruit relief.

Facts.

Board of Public Works (Board) hired L. Cosby Bernard and Co. (Cosby) to design a building. Cosby was originally supposed to receive a commission of 6.5 percent, but when federal funding for the project was approved, Cosby doubled its commission. Ultimately, Cosby only received the original 6.5 percent commission. Cosby sued for breach of contract and the trial court granted judgment to Cosby.

Issue.

Whether a person who makes an agreement with an unauthorized agent receive quantum meruit relief?

Held.

Yes. Summary judgment is reversed. The trial court must consider whether Cosby can prove the four quantum meruit requirements.

Discussion.

A person who makes an agreement with an unauthorized agent may receive quantum meruit relief. It is unfair for a principal to avoid payment for services that the principal approved. For quantum meruit to apply: (1) the services must benefit the city, (2) the city had knowledge that the services would be provided, (3) the city accepted the benefits, and (4) the contract was not outside of the city’s power.

Booker v. Midpac Lumber Co. Ltd

Brief Fact Summary.

Ingman filed a lien for payment after Book fired Ingman as the attorney in the suit against Midpac Lumber Co. Ltd.

Synopsis of Rule of Law.

A court does not have to only consider the time a discharged attorney spent on a case under the reasonable-fee rule if other reasonable factors exist.

Facts.

Booker hired Ingman to represent him in a suit against Midpac Lumber Co. Ltd (Midpac). Ingman was supposed to receive one-third of Booker’s damages award in the suit, but was fired after Ingmanintiated the lawsuit. Ingman filed a lien for payment and filed an appeal after the trial court awarded Ingman $1,500 in attorney’s fees.

Issue.

Whether a court can only use the time a discharged attorney spent on a case under the reasonable-fee rule?

Held.

No. The judgment of the trial court is reversed. The trial court erred by refusing to acknowledge the fee agreement and the value of Booker’s suit against Midpac.

Discussion.

A court does not have to only consider the time a discharged attorney spent on a case under the reasonable-fee rule if other reasonable factors exist.

Bradshaw v. Burningham

Brief Fact Summary.

Bradshaw sued Burningham to uphold payment price for work done on a well in Burningham’s property.

Synopsis of Rule of Law.

Parties cannot sue the original version of any changed terms if a compromise agreement is a modification of a prior contract.

Facts.

Burningham hired Bradshaw to drill a well. Bradshaw stopped construction on the first well after running into a metal object that prevented the completion of the original well. Burningham agreed to pay Bradshaw $6,300 for the work done on the original well, and made a compromise agreement honoring the terms of the original contract for construction on a second well at an alternate location. Bradshaw sued Burningham when Burningham failed to pay the $6,300. The trial court granted judgment to Bradshaw.

Issue.

Whether parties can sue the original version of any changed terms if a compromise agreement is a modification of a prior contract?

Held.

No. The judgment of the trial court is affirmed. The second contract’s language identifies the contract as a modification because it states that the original contract would not hold where the compromise made changes. Bradshaw therefore was not entitled to sue under the original contract’s terms.

Discussion.

Parties cannot sue the original version of any changed terms if a compromise agreement is a modification of a prior contract. A contractual modification cancels the terms of an original contract. The modified terms in a contract are controlling and the original obligations in the contract are waived.

Bulley& Andrews, Inc. v. Symons Corp.

Brief Fact Summary.

Bulley& Andrews, Inc. (Bulley) sued to recover expenses from Symons Corp. (Symons) in accord with a contract to build on the Symons property.

Synopsis of Rule of Law.

The parol evidence rule does not prohibit parties from introducing evidence that a contract was modified by the way the parties carried out the agreement.

Facts.

Bulley& Andrews, Inc. (Bulley) entered a contract with Symons Corp. (Symons) to build on the Symons property. The contract stipulated that Symons would supply Bulley with equipment for Bulley’s concrete work on the property, and when Bulley submitted a claim to recover the expense that the equipment caused, Symons refused to pay, Bulley sued. The trial court granted judgment to Symon.

Issue.

Whether the parol evidence rule prohibits parties from introducing evidence that a contract was modified by the way the parties carried out the agreement?

Held.

No. The judgment of the trial court is affirmed. Bulley consented to the equipment provided by Symon and is not entitled to any extra payment not set out in the contract.

Discussion.

The parol evidence rule does not prohibit parties from introducing evidence that a contract was modified by the way the parties carried out the agreement. If a contract is ambiguous about contract terms, then the court may turn to the parties’ actions to clear up the ambiguous terms.

Burk v. Emmick

Brief Fact Summary.

Burk sued Emmick for breach of contract and fraud when checks returned in a transaction for cattle.

Synopsis of Rule of Law.

A seller can take back goods and seek damages under the Uniform Commercial Code if a cash buyer does not pay the contract price.

Facts.

Emmick contracted to buy cattle from Burk. When Burk delivered the cattle to Emmick, Emmick submitted two checks to Burk as payment. When the checks returned, Burk took back the cattle and sold them to another party for less than the contract price. The trial court granted judgment to Burk and Emmick appealed.

Issue.

Whether a seller can take back goods and seek damages under the Uniform Commercial Code if a cash buyer does not pay the contract price?

Held.

Yes. The judgment of the trial court is affirmed. Burk was permitted to reclaim the cattle under UCC § 2-507 and seek damages under UCC § 2-703.

Discussion.

A seller can take back goods and seek damages under the Uniform Commercial Code if a cash buyer does not pay the contract price.UCC § 2-507 allows a seller to keep the goods if the buyer pays the purchase price. UCC § 2-703 permits a seller to resell the goods and recover damages for breach of contract.

Cameron v. Benson

Brief Fact Summary.

Cameron sued Benson for specific performance when Benson did not follow through with a contract for the sale of land.

Synopsis of Rule of Law.

Money damages are calculated using the time of specific-performance if the court awards money damages rather than specific-performance.

Facts.

Cameron contracted to buy land from Benson but Benson did not follow-through with the sale. Cameron sued Benson for specific performance when Benson did not follow through with a contract for the sale of land. The trial court granted Cameron specific performance of the contract as well as money damages. The appellate court increased the monetary damages and Cameron appealed.

Issue.

Whether money damages are calculated using the time of specific-performance if the court awards money damages rather than specific-performance?

Held.

Yes. The judgment of the appellate court is reversed and the trial court’s award is reinstated. Money damages should have been calculated from when the specific performance is awarded.

Discussion.

Money damages are calculated using the time of specific-performance if the court awards money damages rather than specific-performance. If a buyer of land seeks specific performance, money damages are based on when the court awarded specific performance, not when the breach occurred.

Cash v. Benward

Brief Fact Summary.

Cash sued Benward and Sisk for breach of contract when a life insurance policy solicited by Benward was not enforced at his wife’s death.

Synopsis of Rule of Law.

A contract is not formed without a detriment to the promisee or benefit to the promisor.

Facts.

Cash was in the National Guard and Benward was his unit clerk, with Sisk as Benward’s supervisor. Benward gave Cash a spousal life insurance policy that was not associated with the National Guard, although Cash was unaware. Cash sent Benward a check for the policy, but the check never cleared. When Cash asked about his life insurance application, Sisk informed Cash that his application had been thrown out and that Sisk would provide Cash with another application in December. When Cash received a new application, his wife died and Cash subsequently sued for breach of contract. The trial court granted summary judgment to Benward and Sisk.

Issue.

Whether a contract is formed without a detriment to the promisee or benefit to the promisor?

Held.

No. The judgment of the trial court is affirmed. Cash did not agree to do anything in exchange for Benward or Sisk’s help with the life insurance policy. Because there was no bargained-for-exchange, Benward and Sisk were not bound by a contract.

Discussion.

A contract is not formed without a detriment to the promisee or benefit to the promisor. Without consideration, or a promise for a promise, then a person is not legally bound to another party.

Cheek v. United Healthcare

Brief Fact Summary.

United Healthcare filed a motion to compel a suit to arbitration after Cheek sued in court despite signing an arbitration agreement.

Synopsis of Rule of Law.

An illusory promise does not create the consideration necessary to enforce a binding agreement.

Facts.

United Healthcare (United) made Cheek an oral offer of employment, written by a written offer of employment the same day. The written offer of employment included an arbitration policy and Cheek accepted the offer. On Cheek’s first day of work, Cheek was given an employee handbook with a summary of the arbitration agreement and Cheek signed a form acknowledging the arbitration agreement. When Cheek was terminated seven months later, Cheek sued in court and the matter was compelled to arbitration. Cheek appealed.

Issue.

Whether an illusory promise creates the consideration necessary to enforce a binding agreement?

Held.

No. The judgment of the trial court is reversed. There is no consideration for the arbitration agreement because the arbitration agreement is an illusory promise. The arbitration agreement permits United to alter or revoke the agreement if the agreement was unfavorable, making no promise to Cheek.

Discussion.

An illusory promise does not create the consideration necessary to enforce a binding agreement. Illusory promises sound like an agreement but promise nothing. Illusory promises permit the promisor not to fulfill the promise.

Cheney v. Jemmett

Brief Fact Summary.

Cheney sued Jemmett for breach of contract when Jemmett violated an anti-assignnment clause.

Synopsis of Rule of Law.

When a purchaser has the right to assign his interest in a contract pending the seller’s approval, the seller must act in good faith in objecting to the assignment.

Facts.

When Cheney entered into a contract for the sale of property with Jemmett, the contract had an anti-assignment clause unless Cheney approved of the assignment. When Cheney refused the assignment of Jemmett’s interest to Honn, Jemmett nonetheless drafted a rental agreement to Honn. Cheney sued claiming that Jemmett violated the anti- assignment clause. The trial court granted judgment to Jemmett.

Issue.

When a purchaser has the right to assign his interest in a contract pending the seller’s approval, must the seller act in good faith in objecting to the assignment?

Held.

Yes. The judgment of the trial court is affirmed. Cheney provided no reason for refusing to consent to assignment, and therefore acted arbitrarily in refusing consent.

Dissent.

(Bakes, J.) It is not the court’s job to read in a provision of good faith where a contract does not require it.

Concurrence.

(Bistline, J.) Funk v. Funk requires good faith in withholding or granting consent in any anti-assignment provision in a contract.

Discussion.

When a purchaser has the right to assign his interest in a contract pending the seller’s approval, the seller must act in good faith in objecting to the assignment.

Collins v. Uniroyal, Inc.

Brief Fact Summary.

Collins sued Uniroyal, Inc. (Uniroyal) when defective tires supplied by Uniroyal caused a car to flip, ultimately killing her husband.

Synopsis of Rule of Law.

There is a presumption that disclaimers of consequential damages for injuries due to a defective product are unconscionable under the Uniform Commercial Code.

Facts.

Martin bought five tires from Uniroyal, Inc. (Uniroyal) with a disclaimer providing that warranties did not cover consequential damages, as well as limiting Uniroyal’s ability to repair or replace tires. The disclaimer also prevented any express or implied warranties. When one of the tires went out, the car flipped, and Martin died, Martin’s wife (Collins) sued Uniroyal. The trial court granted judgment to Collins and the appellate court affirmed.

Issue.

Whether there is a presumption that disclaimers of consequential damages for injuries due to a defective product are unconscionable under the Uniform Commercial Code?

Held.

Yes. The judgment of the appellate court is affirmed. It is unconscionable for Uniroyal to limit warranties to only fixing or repairing tires because buyers are relying on the warranties to protect themselves from personal injuries.

Dissent.

(Clifford, J.) UCC § 2-719(3) only applies to consumer goods, and the vehicle at issue was used for work travel. UCC § 2-719(3) is overcome because the tire was not proven to have any defect.

Discussion.

There is a presumption that disclaimers of consequential damages for injuries due to a defective product are unconscionable under the Uniform Commercial Code.UCC § 2-719(3) makes it prima facie unconscionable to limit personal-injury consequential damages.

Connecticut Investment Casting Corp. v. Made-Rite Tool Co.

Brief Fact Summary.

Connecticut Investment Casting Corp. appealed a trial court judgment that barred recovery for both Connecticut Investment Casting Corp. and Made-Rite Tool Co.

Synopsis of Rule of Law.

Under the Uniform Commercial Code, a buyer is required to notify the seller of his rejection or revocation of goods within a reasonable time.

Facts.

Made-Rite Tool Co. (MR) hired Connecticut Investment Casting Corp. (Casting) to make barrel latches. Casting was supposed to ship 1,600 latches by January 27th, but Casting only shipped 74 latches by that date. MR lost the project because MR did not meet the final deadline. Casting nevertheless shipped the remainder of the latches over the next four months. Casting sued MR when MR did not pay Casting for the latches. MR filed a counterclaim against Casting for causing MR to lose the project. The trial court ruled that neither party was entitled to recovery.

Issue.

Whether a buyer is required to notify the seller of his rejection or revocation of goods within a reasonable time?

Held.

Yes. The judgment of the trial court is reversed in part. Casting is entitled to full price for the latches because MR inspected the latches and never told Casting that they were rejecting the latches.

Discussion.

Under the Uniform Commercial Code, a buyer is required to notify the seller of his rejection or revocation of goods within a reasonable time. A buyer who had an opportunity to inspect the goods but did not give a timely notice of rejection has accepted the goods.

Copylease Corp. of America v. Memorex Corp.

Brief Fact Summary.

Copylease Corp. of America (Copylease) sued Memorex Corp. (Memorex) seeking specific performance of a distribution contract.

Synopsis of Rule of Law.

A buyer can get specific performance if the seller’s product is the best on the market.

Facts.

Copylease Corp. of America (Copylease) entered into a contract with Memorex Corp. (Memorex) for Copylease to be the exclusive distributor of Memorex’s products. When Memorex breached the contract, Copylease sued seeking specific performance.

Issue.

Whether a buyer can get specific performance if the seller’s product is the best on the market?

Held.

Yes. Testimony is required to determine whether money damages would be insufficient for Copylease.

Discussion.

A buyer can get specific performance if the seller’s product is the best on the market. Uniform Commercial Code (UCC) § 2-716 allows specific performance where goods are unique or money damages are inadequate.Specific performance is appropriate where contracts are calling for a quantity of a specific item and there is limited availability of the item.

Cuchine v. H.O. Bell, Inc.

Brief Fact Summary.

Cuchine sued H.O. Bell, Inc. (Bell) for breach of contract when Bell was unable to fix a faulty truck that was sold to Cuchine.

Synopsis of Rule of Law.

Under the Uniform Commercial Code, a party cannot sue another party’s assignee for the assignor’s breach of contract.

Facts.

Cuchine bought a truck from H.O. Bell, Inc. (Bell) under an installment contract. Bell assigned its interest in the contract to Ford Motor Credit Company (Credit). Cuchine brought the truck to Bell for repairs when Cuchine began to experience difficulties with the truck. Cuchine left the truck with Bell, stopped paying the installments, and sued both Bell and Credit when Bell could not fix the truck. Cuchine asked the trial court to rescind the contract and the trial court dismissed the case against Credit.

Issue.

Whether a party can sue another party’s assignee for the assignor’s breach of contract?

Held.

No. The judgment of the trial court is affirmed. The Uniform Commercial Code does not allow Credit for a breach of contract committed by Bell.

Discussion.

Under the Uniform Commercial Code, a party cannot sue another party’s assignee for the assignor’s breach of contract.Michelin Tires v. First National Bank of Boston, 666 F.2d 673 (1st Cir. 1981) prevents a party from suing the assignee for an assignor’s breach of contract. An assignee is not the guarantor of an assignor’s contract obligations.

Curtis Co. v. Mason

Brief Fact Summary.

Curtis Co. sued Mason for breach of contract when Mason remained silent about his acceptance of contract terms.

Synopsis of Rule of Law.

A binding contract is not created if a party is silent about a contract offer.

Facts.

Mason called Curtis Co. (Curtis) to ask about soybean farming. Mason then contracted with Curtis for the sale of Mason’s spring wheat crop. Curtis signed a confirmation memorandum that stipulated that keeping the memorandum without telling Curtis about any errors constituted acceptance of the contract. When Mason received the letter, he decided not to contract with Curtis, and did not respond to the letter. When Curtis employees threatened to sue for breach of contract, Mason returned the memorandum with “not accepted” written on the back. Curtis sued for breach of contract and the trial court granted judgment to Mason.

Issue.

Whether a binding contract is created if a party is silent about a contract offer?

Held.

No. The judgment of the trial court is affirmed. Curtis did not have the power to bind Mason to the contract without Mason’s consent.

Discussion.

A binding contract is not created if a party is silent about a contract offer. An offeree’s silence cannot bind him or her even if an offer constitutes silence as acceptance.

Darner Motor Sales v. Universal Underwriters Ins. Co.

Brief Fact Summary.

Darner Motor Sales (Darner) sued Universal Underwriters Ins. Co. after being sued for a discrepancy in insurance coverage from one of Darner’s renters.

Synopsis of Rule of Law.

The parol evidence rule sometimes allows the introduction of outside evidence to interpret agreements.

Facts.

Darner Motor Sales (Darner) bought insurance from Universal Underwriters Ins. Co. (Universal). The rental policy provided coverage for Darner’s renters for up to $15,000 for one injury and up to $30,000 for one accident. Darner was covered up to $100,000 for one injury and $300,000 for one accident. Darner’s renters form mistakenly stated that renters were covered for the higher amounts. When one of Darner’s renters, Crawford, caused an accident and was subsequently sued, Universal stated that Crawford’s coverage was limited to the lower coverage amounts. Crawford sued Darner and Darner sued Universal. The trial court granted judgment to Universal and the appellate court affirmed.

Issue.

Whether the parol evidence rule allows the introduction of outside evidence to interpret agreements?

Held.

Yes. The judgments of the lower courts are reversed. Darner could succeed against Universal because the parties agreed that Darner’s renters would be covered up to the higher amounts.

Dissent.

(Holohan, C.J.) This judgment undermines contract law because it does not show what terms customers should follow or what terms customers are permitted to ignore.

Discussion.

The parol evidence rule sometimes allows the introduction of outside evidence to interpret agreements.

Davey v. Nessan

Brief Fact Summary.

Davey sued Nessan for remaining payments under a contract for deed when Nessan defaulted on a loan for purchase of real estate.

Synopsis of Rule of Law.

An express assumption is the only way in which an assignee can assume the assignor’s obligation.

Facts.

Connecticut Mutual Life Insurance Company (Mutual) loaned money to Dessan to buy a farm from Davey. Nessan bought the farm through contracts for deed that permitted Nessan to pay the property off through installments. The sellers and Mutual entered into an agreement that permitted Mutual to make payments in the event that Nessan defaulted. When Nessan defaulted on the loan, Mutual gained Nessan’s interest in the farm. Mutual made payments on the farms for several years before giving the farm back to the sellers. The sellers accepted the farm but sued Nessan and Mutual for the remainder of payments under the contract for deed. The trial court dismissed Mutual from the suit.

Issue.

Is an express assumption the only way in which an assignee can assume the assignor’s obligation?

Held.

Yes. The order of the trial court is affirmed. The agreement between Mutual and Davey was that Mutual can make payments, but specifically stated that Mutual was without obligation under the contract. Davey subsequently has no case against Mutual.

Discussion.

An express assumption is the only way in which an assignee can assume the assignor’s obligation.

Donovan v. RRL Corp.

Brief Fact Summary.

Donovan is suing RRL Corp. (RRL) for breach of contract when a newspaper mistakenly advertised the sale of a car owned by RRL at a lower price.

Synopsis of Rule of Law.

A party is not required to follow through with a contract if he made a good faith mistake regarding a material fact of the agreement and the contract would result in a loss to that party.

Facts.

Donovan is suing RRL Corp. (RRL) for breach of contract when a newspaper mistakenly advertised the sale of a car owned by RRL at a lower price. Donovan attempted the purchase the vehicle at the advertised price but was rejected by RRL. The trial court granted judgment to RRL and the appellate court reversed.

Issue.

Whether a party is required to follow through with a contract if he made a good faith mistake regarding a material fact of the agreement and the contract would result in a loss for that party?

Held.

No. The judgment of the court of appeals is reversed. RRL is allowed to rescind the contract because it would be unconscionable for RRL to suffer such a great loss for such a minor mistake. The mistake in the advertisement was made in good faith and customers cannot always expect accuracy for prices listed in advertisements.

Discussion.

To get out of a contract, a party claiming unilateral mistake must prove: (1) the mistake was an assumption of the agreement, (2) the mistake affects the value of the agreement, (3) the defendant did not assume the risk of the mistake, (4) it would be substantively unconscionable to enforce the contract due to the mistake.