Deck 12: Nature and Classes of Contracts: Contracting on the Internet

Question 1

Kay, an art collector, promised Hammer, an art student, that if Hammer could obtain certain rare artifacts within two weeks, Kay would pay for Hammer's postgraduate education. At considerable effort and expense, Hammer obtained the specified artifacts within the two-week period. When Hammer requested payment, Kay refused. Kay claimed that there was no consideration for the promise. Hammer would prevail against Kay based on:

A) Unilateral contract
B) Unjust enrichment
C) Public policy
D) Quasi contract

Answer 1

Person K promised to pay for Person H 's postgraduate education if H would obtain some rare artifacts for him within a specified duration. After getting the artifacts within the duration, Person K refused to make the payment claiming that there was no consideration for the promise. It needs to be determined under which claim H could prevail against K.
Unjust enrichment occurs when an individual or an organization gets certain benefits from other person or organization even in absence of any promise to pay in return. In this case, a court might impose an obligation on the benefited party to pay for the benefits received by them. Unlike the mentioned case, claim for unjust enrichment does not involve a promise. Therefore, unjust enrichment is not the correct option.
Hence, option b is wrong.
Public policy is applicable in cases that involves actions that are injurious to the public or violates the interest of society. This is mostly applicable in cases related to public health, safety, and welfare. Since, the given case is not related with the aforementioned issues, therefore public policy is not the correct option.
Hence, option c is wrong.
Quasi contract is imposed by the court to prevent unjust enrichment. This is applicable in cases where there is no contract between the parties involved in a case. Whereas, in the given case, contract was formed between the parties due to the promise made by Person K. Hence, quasi contract is not the correct option.
Hence, option d is wrong.
Unilateral contracts are those contracts in which one party (an offeror) makes a promise to the other (offeree) in exchange of certain act, and in turn the offeree accepts the offer by his/ her performance.
In the given case, Person K promised to pay for H's postgraduate education in exchange of some rare artifacts. Furthermore, H has performed his part by obtaining the artifacts for K within the specified duration. Hence, a unilateral contract has formed in this case, which makes K liable to pay for H's postgraduate education. Therefore, it is concluded that H would prevail against K on the basis of unilateral contracts claim.
Hence, the correct option is
.

Question 2

What is a contract?

Answer 2

Contract:
A contract is an agreement made by interested parties to perform or withhold certain duties. A contract must not be made for unlawful acts.
E.g. hiring someone commit murder, prevention of competition, price setting, etc. Protection of contracts stems from common law and also federal and local statutes.

Question 3

Fourteen applicants for a city of Providence, Rhode Island, police academy training class each received from the city a letter stating that it was a ''conditional offer of employment'' subject to successful completion of medical and psychological exams. The 14 applicants passed the medical and psychological exams. However, these applicants were replaced by others after the city changed the selection criteria. Can you identify an offer and acceptance in this case? Can you make out a bilateral or unilateral contract? [Ardito et al. v City of Providence, 213 F Supp 2d 358 (D RI)]

Answer 3

In the specified case, fourteen applicants received a "conditional offer of employment" from a police academy training class. Their offer was subjected to successful completion of medical and psychological exam.
However, later on, the plaintiffs were not offered employment despite passing the tests. Till then, the city has changed the selection criteria and these applicants were replaced by new ones.
Offer refers to the situation when one party shows his willingness to enter into an agreement. The other party accepting this offer under specified conditions would be termed as acceptance. In this case, the city has proposed an offer by sending the "conditional offer of employment" that required the candidates to pass the medical and psychological exam. The candidates have successfully passed the specified exams, which show their acceptance.
The offer is employment, with offeree (plaintiffs) having to fulfill the conditions in order to gain employment.
The court viewed the letters sent as a unilateral contract. The city defend that the letter sent was a notification because the plaintiffs are not obliged to enroll in academy, hence it can't be binding on them. However, the court argued mutual obligation is only required in bilateral contracts where both parties agree to certain duties, not in unilateral contracts. Hence, it is concluded that it was a " unilateral contract."

Question 4

Compare an implied contract with a quasi contract.

Question 5

The Jordan Keys law firm represented the Greater Southeast Community Hospital of Washington, D.C., in a medical malpractice suit against the hospital. The hospital was self-insured for the first $1,000,000 of liability and the St. Paul Insurance Co. provided excess coverage up to $4,000,000. The law firm was owed $67,000 for its work on the malpractice suit when the hospital went into bankruptcy. The bankruptcy court ordered the law firm to release its files on the case to St. Paul to defend under the excess coverage insurance, and the Jordan Keys firm sued St. Paul for its legal fees of $67,000 expended prior to the bankruptcy under an "implied-in-fact contract" because the insurance company would have the benefit of all of its work. Decide. [Jordan Keys v St. Paul Fire, 870 A2d 58 (DC)]

Question 6

Beck was the general manager of Chilkoot Lumber Co. Haines sold fuel to the company. To persuade Haines to sell on credit, Beck signed a paper by which he promised to pay any debt the lumber company owed Haines. He signed this paper with his name followed by "general manager." Haines later sued Beck on this promise, and Beck raised the defense that the addition of "general manager" showed that Beck, who was signing on behalf of Chilkoot, was not personally liable and did not intend to be bound by the paper. Was Beck liable on the paper? [Beck v Haines Terminal and Highway Co., 843 P2d 1229 (Alaska)]

Question 7

A made a contract to construct a house for B. Subsequently, B sued A for breach of contract. A raised the defense that the contract was not binding because it was not sealed. Is this a valid defense? [Cooper v G. E. Construction Co., 158 SE2d 305 (Ga App)]

Question 8

Edward Johnson III, the CEO and principal owner of the world's largest mutual fund company, Fidelity Investments, Inc., was a longtime tennis buddy of Richard Larson. In 1995, Johnson asked Larson, who had construction experience, to supervise the construction of a house on Long Pond, Mount Desert Island, Maine. Although they had no written contract, Larson agreed to take on the project for $6,700 per month plus lodging. At the end of the project in 1997, Johnson made a $175,000 cash payment to Larson, and he made arrangements for Larson to live rent-free on another Johnson property in the area called Pray's Meadow in exchange for looking after Johnson's extensive property interests in Maine. In the late summer of 1999, Johnson initiated a new project on the Long Pond property. Johnson had discussions with Larson about doing this project, but Larson asked to be paid his former rate, and Johnson balked because he had already hired a project manager. According to Johnson, at a later date he again asked Larson to take on the "shop project" as a favor and in consideration of continued rentfree use of the Pray's Meadow home. Johnson stated that Larson agreed to do the job "pro bono" in exchange for the use of the house, and Johnson acknowledged that he told Larson he would "take care" of Larson at the end of the project, which could mean as much or as little as Johnson determined. Larson stated that Johnson told him that he would "take care of" Larson if he would do the project and told him to "trust the Great Oracle" (meaning Johnson, the highly successful businessperson). Larson sought payment in March 2000 and asked Johnson for "something on account" in April. Johnson offered Larson a loan. In August during a tennis match, Larson again asked Johnson to pay him. Johnson became incensed, and through an employee, he ended Larson's participation in the project and asked him to vacate Pray's Meadow. Larson complied and filed suit for payment for work performed at the rate of $6,700 per month. Did Larson have an express contract with Johnson? What legal theory or theories could Larson utilize in his lawsuit? How would you decide this case if you believed Larson's version of the facts? How would you decide the case if you believed Johnson's version of the facts? [Larson v Johnson, 196 F Supp 2d 38 (D.Me 2002)]

Question 9

While Clara Novak was sick, her daughter Janie helped her in many ways. Clara died, and Janie then claimed that she was entitled to be paid for the services she had rendered her mother. This claim was opposed by three brothers and sisters who also rendered services to the mother. They claimed that Janie was barred because of the presumption that services rendered between family members are gratuitous. Janie claimed that this presumption was not applicable because she had not lived with her mother but had her own house. Was Janie correct? [In re Estate of Novak, 398 NW2d 653 (Minn App)]

Question 10

Dozier and his wife, daughter, and grandson lived in the house Dozier owned. At the request of the daughter and grandson, Paschall made some improvements to the house. Dozier did not authorize these, but he knew that the improvements were being made and did not object to them. Paschall sued Dozier for the reasonable value of the improvements, but Dozier argued that he had not made any contract for such improvements. Was he obligated to pay for such improvements?

Question 11

When Harriet went away for the summer, Landry, a house painter, painted her house. He had a contract to paint a neighbor's house but painted Harriet's house by mistake. When Harriet returned from vacation, Landry billed her for $3,100, which was a fair price for the work. She refused to pay. Landry claimed that she had a quasi-contractual liability for that amount. Was he correct?

Question 12

Margrethe and Charles Pyeatte, a married couple, agreed that she would work so that he could go to law school and that when he finished, she would go back to school for her master's degree. After Charles was admitted to the bar and before Margrethe went back to school, the two were divorced. She sued Charles, claiming that she was entitled to quasi-contractual recovery of the money that she had paid for Charles's support and law school tuition. He denied liability. Was she entitled to recover for the money she spent for Charles's maintenance and law school tuition? [Pyeatte v Pyeatte, 661 P2d 196 (Ariz App)]

Question 13

Carriage Way was a real estate development of approximately 80 houses and 132 apartments. The property owners were members of the Carriage Way Property Owners Association. Each year, the association would take care of certain open neighboring areas, including a nearby lake, that were used by the property owners. The board of directors of the association would make an assessment or charge against the property owners to cover the cost of this work. The property owners paid these assessments for a number of years and then refused to pay any more. In spite of this refusal, the association continued to take care of the areas in question. The association then sued the property owners and claimed that they were liable for the benefit that had been conferred on them. Were the owners liable? [Board of Directors of Carriage Way Property Owners Ass'n v Western National Bank, 487 NE2d 974 (Ill App)]

Question 14

Lombard insured his car, and when it was damaged, the insurer sent the car to General Auto Service for repairs. The insurance company went bankrupt and did not pay the repair bill. General Auto Service then sued Lombard for the bill because he had benefited from the repair work. Was he liable?

Question 15

When a college student complained about a particular course, the vice president of the college asked the teacher to prepare a detailed report about the course. The teacher did and then demanded additional compensation for the time spent in preparing the report. He claimed that the college was liable to provide compensation on an implied contract. Was he correct? [Zadrozny v City Colleges of Chicago, 581 NE2d 44 (Ill App)]

Question 16

Smith made a contract to sell automatic rifles to a foreign country. Because the sale of such weapons to that country was illegal under an act of Congress, the U.S. government prosecuted Smith for making the contract. He raised the defense that because the contract was illegal, it was void and there is no binding obligation when a contract is void; therefore, no contract for which he could be prosecuted existed. Was he correct?