Torts Introduction
I. Chapter I. Introduction to Tort Liability

A. Prologue

1. The Nature of Tort Law

a. No satisfactory definition: There is no really useful definition of a “tort” which will allow all tortious conduct to be distinguished from non-tortious conduct. In fact, courts are constantly changing their view of what constitutes tortious conduct (usually by way of expansion of liability). The best that can be done is to identify a few of the main features and purposes of tort law:

(1) Compensation: The overall purpose of tort law is to compensate plaintiffs for unreasonable harm which they have sustained.

(a) Competing Policy Reasons:

i) Compensation for victims
ii) Deterrence: Deter accidents and defendants from taking risks
iii) Judicial administration: stare decisis, bright line rules for future cases
iv) Economic efficiency: it’s fair to make the defendant pay for the accident if it would have been cheaper for the defendant to have prevented the accident
v) Justice, fairness: underpins everything. Courts will ask “What is the fair result?”

B. When should unintended injury result in liability:

1. Shifting losses: The fundamental issue addressed by a system of tort liability for untended injury is when losses should be shifted from an injury victim to an injurer or some other source of compensation. The courts could apply a theory of strict liability by requiring people to pay for all harms they cause. In the alternative, the courts could require that people only pay for injuries they cause through their own negligence or fault.
- posted by Brian @ 12:56 AM

 
Criminal Procedure
A. Defining Due Process – 14th Amendment

1. Methodology – determining “The Law of The Land,” see Hurtado

a. What is the national consensus?

i. State and Federal laws
ii. Judicial enactment
iii. Administrative bodies, other sources of law

b. Normative analysis – standard for allowing innovation
i. Fundamental Fairness
(a) The hollow sounding words – does this procedure uphold Justice, Truth, The American Way?
(b) Focuses on what police practices we should allow – how the state should relate to its citizens.
(c) “Shocks the Conscience” standard, see Rochin, Breithaupt
ii. Accuracy
(a) Is this procedure likely to convict innocent people?
(b) Inaccurate procedures are prima facie unfair, but accuracy alone does not prove constitutionality. See Brown.
(c) Dirty Uncle Alschuler: Accuracy is just a placeholder for reprehensible state action (fairness) and we should focus on that.
iii. Voluntariness
(a) Involuntary testimony violates Due Process. Unfair practices are prima facie involuntary; involuntary practices are prima facie unfair. See Brown, Ashcraft, Beecher, but see Breithaupt.
(b) Finding of voluntariness does not always prove constitutionality – Ashcraft, but see Miller v. Fenton
c. Rule: fundamental fairness is the standard, taking into account both accuracy and voluntariness in determining what is fundamentally fair.

2. Application of Due Process Methodology
a. Hurtado v. California
i. Due Process does not mandate a grand jury consideration for every criminal conviction
ii. Harlan Dissent – introduces concept of due process as “fundamental fairness”
b. Rochin v. California
i. Pumping stomach for pills “shocks the conscience”
ii. Though accurate, the practice is inadmissible because it offends “fair play and decency”
iii. Notable because majority uses Due Process instead of 5th or 4th Amendment
(a) This approach is overruled in Graham v. Connor
c. Breithaupt v. Abram, Warden
i. Removing blood from unconscious crash victim is admissible because it doesn’t “shock the conscience.”
ii. At first glance, seems to be violative of 5th amendment, but subsequent decisions indicate otherwise. At this time, 5th, 4th amendments didn’t apply to states.
iii. At any rate, case is decided according to 14th amendment. Hard to distinguish factually from Rochin, though the outcomes are opposite.
iv. Stands for principle that some types of evidence procured from D against his will are allowed.
d. Brown v. Mississippi
i. Physically compelled confessions are violative of Due Process.
ii. Tortured confessions offends fundamental justice because:
(a) Accuracy problem; torture “shocks the conscience,”
(b) Practice violates “fundamental fairness” – not just about accuracy but determining what is an acceptable use of state power.
iii. Proper appellate procedure is not followed; Court reverses anyway.
e. Beecher v. Alabama
i. Gunpoint confession is violative of Due Process because procedure is shocking, unfair; therefore involuntary.
f. Ashcraft v. Tennessee
i. Unfair practice (36 hour interrogation) renders confession involuntary, therefore violative of Due Process.
ii. Focuses on police practice that is inherently unfair, not the voluntariness of the individual circumstance.
g. Miller v. Fenton
i. Interrogation tom-foolery – Boyce tells Miller that old lady Margolin is dead, when in fact not – Gotcha!
(a) Intrinsic lie ok; extrinsic lie (If you confess I’ll let you go) per se not ok.
ii. Court finds against fundamental unfairness; considers whether confession itself was “voluntary,” instead of basing decision solely on the fairness of the practice in the abstract.
B. Pre-Miranda 5th Amendment/ 6th Amendment
1. Privilege against self-incrimination – 5th Amendment
a. “The State Can’t Make You Make It’s Case Against You”
b. Bram v. United States
i. Subject is denuded, put in “awkward position” and confesses.
ii. Confession violates 5th amendment – custodial interrogation is inherently coercive; 5th amendment protects silence against coercion.
(a) If silence creates an inference of guilt, then it is not really available, but the 5th amendment demands that it must be.
c. Vast Exceptions: otherwise constitutional interrogation, grand jury subpoenas, most personal records, examination of physical traits, electronic surveillance, blood (see Schmerber) etc.
d. Schmerber v. California
i. Petitioner forced to give blood test, but this does not constitute self-incrimination covered by 5th Amendment – not compelled to be a “witness against himself.”
ii. Holmes in Holt: 5th amendment prohibits “communication, not an exclusion of body evidence when it may be material.”
iii. Holding: the 4th amendment covers bodily intrusions, not the 5th. From these facts, 4th amendment was not violated, but it applies.
2. 6th Amendment Right to Attorney
a. Massiah v. United States
i. G-Men get incriminating evidence from D by listening to Schmidt Radio installed beneath D’s Studtz Bearcat. Evidence is excluded.
ii. Evidence violates 5th/6th amendments (really 6th amendment) because G-Men “deliberately elicited [evidence] from him after he had been indicted and in the absence of his retained counsel.”
b. 6th Amendment right attaches at arraignment – when proceedings originate. Police cannot question w/o attorney after that point, even through a third party and a Schmidt Radio.
3. A Hybrid Beast
a. Escobedo v. Illinois
i. D is arrested but not charged, and asks to see an attorney. He is denied, and lets slip that he is guilty of the Great Merkin Caper.
ii. Held: D’s 6th (!) amendment rights have been violated, even though the formal proceedings have not begun. Reasoning indicates that 5th (!) amendment right of silence cannot be maintained w/o attorney.
(a) Important: if it is a 6th amendment right, it is less easily waived; result would be fleets of jailhouse lawyers.
b. To the extent that Escobedo creates a pre-indictment 6th amendment right, it is overruled by Miranda; to the extent that it creates a 5th amendment right to attorney, it is supported by Miranda.
II. Miranda Doctrine
A. Ideal World Miranda
1. We want people who wish to remain silent to do so.
2. We want people who wish to speak to do so.
a. They may wish to confess
b. Or they may wish to prove themselves innocent
3. We don’t want people to speak if they wish to remain silent
B. Underlying Presumptions
1. Police custodial interrogation is inherently coercive
2. A 5th amendment violation occurs if a confession is in fact coerced
a. So a prophylaxis is needed to protect potential violations
b. It might exclude some confessions that were not coerced in fact.
C. Miranda v. Arizona
1. Procedural safeguards are needed to ensure that custodial interrogation does not coerce confession (because interrogation is inherently coercive)
a. Prior to questioning, subject must be warned of
i. Right to remain silent
ii. If waived, the information given may be used against him
iii. Right to an attorney
b. Subject can waive the rights, but if i. or ii. is asserted, questioning must stop.
2. All of these rights (even the right to attorney) stem from the 5th amendment.
a. Without the ability to consult with an attorney, subject may not properly be able to waive right to silence. D might confess while he really wants to remain silent.
b. Right is not only for a one time consultation, but to have counsel present during interrogation.
c. Indigents get lawyers appointed to them (the very finest too)
d. BUT police stations aren’t required to have “station house lawyers”
i. After warnings, the right to attorney must be asserted
ii. White’s problem (in dissent)
(a) “How can the Court ever accept his negative answer to the question of whether he wants to consult his retained counsel or counsel whom the court will appoint?”
(b) If interrogation is inherently compulsive, won’t this answer be compulsed?
(c) This is a more serious problem if there is in fact a high standard of proof for waiver – then “station house lawyers” are in fact required. However, subsequent case law indicates that the standard of proof for waiver isn’t all that high.
3. Interrogation – required for Miranda to apply
a. Direct questioning designed to elicit a response
b. Or, words or actions that the officers should have known were reasonably likely to elicit an incriminating response. (an objective test)
i. Rhode Island v. Innis
(a) Respondent requests to speak to lawyer after receiving Miranda warnings. While driving R to police station, Patrolman Jackass says to his partner:
• “Boy it sure would be a shame if a handicapped cripple child fell upon this here missing shotgun, as handicapped cripple children are apt to shoot themselves.”
• Respondent interrupts to show them where the shotgun is. Handicapped cripple children throughout the world rejoice.
(b) Held: Respondent was not interrogated – the patrolmen should not necessarily have known that their conversation was reasonably likely to elicit an incriminating response. A finding of “subtle compulsion” is not enough.
ii. Normal procedures (booking, fingerprinting) are also not protected by Miranda (court follows Schmerber)
(a) During fingerprinting Johnny Moron says: “Man I’m screwed.” Officer Jackass says: “Why whatever for?” Johnny says: “Because I’m guilty of thieving the Cremaster Jewels.”
• Not an interrogation
(b) Police officer stare-down: this is not direct questioning, but it doesn’t have to be. Issue: is this likely to elicit an incriminating response? Court says no.
iii. Illinois v. Perkins
(a) Johnny Moron confesses murdering Baby Lindberg to undercover cop/ cellmate/ pocket-holder while in jail. Although this is technically police questioning while in custody, Miranda doesn’t apply.
(b) Reason for Miranda was to overcome “inherently compelling pressures” of the interrogation room. Since Johnny Moron doesn’t know that his prison bitch is a cop, he’s not subject to such pressures. Silence would not have been incriminating.
• But see Fulminate; United States v. Henry (where 6th amendment rights bar information “deliberately elicited” by informant in a jail cell)
4. Custody
a. Miranda Rights do not exist until the time of arrest – Terry stops and street encounters are covered only by the 4th amendment. (4th amendment applies before 5th in this situation)
i. See Berkemer v McCarty: “Custody is to be determined by reference to whether a reasonable person in the defendant’s position would have believed himself to be deprived of his freedom in a significant manner by the police.” Denial of Freedom of movement
ii. Police enter house and find wife on the floor, ask what happened. Husband says: I hit my wife.
(a) This statement is not made in custody; Miranda doesn’t apply.
(b) But all subsequent questions are made in custody – a reasonable person would think himself deprived of freedom after making that statement.
b. Also, Miranda doesn’t apply to defendants who voluntarily go to the station house – California v. Beheler
i. Gordon Schumway is stopped at O’Hare; admits to smuggling merkins and pooping on the lawn.
(a) Miranda doesn’t apply. Gordon Schumway came to the airport voluntarily.
(b) This is also similar to a booking situation – routinized screening –, which raises interrogation issues.
ii. Minnesota v. Murphy
(a) Murphy confesses to his probation officer. Miranda doesn’t apply.
(b) Murphy’s meeting with the probation officer was not “in custody,” because there was no formal arrest or restraint of freedom of movement.
• Note: this is very similar to Grand Jury investigations, which are also inexplicably not subject to Miranda.
c. Two areas that are NOT CUSTODIAL
i. Street encounters.
ii. Encounters on state land not resulting from arrest.
5. Waiver
a. Though Miranda indicates that the state has to meet a heavy burden to demonstrate waiver, it has not been interpreted as such later on.
i. North Carolina v. Butler – “waiver can be clearly inferred from the actions and words of the person interrogated.”
ii. Colorado v. Connelly – state need only prove waiver by preponderance of evidence. Philosophical free-will analysis does not apply – if the bogey man told you to confess, that’s just fine.
iii. Common Procedure: officer gives subject a waiver card with the Miranda warnings on it; subject signs the card.
b. Moran v. Burbine – how much information must the police provide?
i. D’s waiver is valid even though the police failed to inform him that his lawyer was trying to contact him.
ii. A waiver requires knowledge of what one is waiving, not of any extra information that might make the decision to waive more or less appealing.
iii. “Because respondent’s voluntary decision to speak was made with full awareness and comprehension of all the information Miranda requires the police to convey, the waivers were valid.”
6. Invocations
a. Necessary elements to achieve invocation
i. Right to remain silent
(a) D states: I won’t speak
ii. Right to an attorney
(a) D states: I want a lawyer
iii. Vagueness – Davis v. United States
(a) If statement is objectively vague, invocation has not been made: An ambiguous request is no request
(b) Police have no duty to clarify vague statements that could potentially be invocations; they must be made affirmatively
b. The implications of invocation
i. Right to Silence
(a) Michigan v. Mosley
• Once D has invoked right to silence, police CAN re-question so long as the D’s “right to cut off questioning” was “scrupulously honored.”
• Two hours after cessation, Mosely was questioned by a different officer at a different location about a different crime, after providing a fresh set of warnings. He spoke, and incriminated himself.
ii. Right to Attorney
(a) Edwards v. Arizona
• Once D has invoked his right to an attorney, police CANNOT initiate further questioning w/o the lawyer present, even if they read Miranda rights again.
• Once exercised by the accused, “interrogation must cease until an attorney is present.”
 But had Edwards initiated the meeting, he would have made a valid waiver. See, Oregon v. Bradshaw.
 Even if Edwards had met with his lawyer, the police could not thereafter have initiated questioning without the lawyer being present. See Minnick v. Mississippi (a fairyland castle of prophylaxis upon prophylaxis – Scalia’s dissent)
 Even interrogation as to another crime is invalid if initiated by the police after an invocation of the Miranda right to attorney (even if the second interrogation is initiated by an officer unaware of the invocation). See, Arizona v. Roberson
 BUT if defendant has initiated his 6th Amendment right to an attorney (which attaches after formal proceedings have begun) then interrogation for other crimes is allowed, because the 6th Amendment is offense specific. See, McNeil v. Wisconsin.
iii. Reconciling Angry Lovers
(a) Even under the very same fact patterns, invocation means different things for right to silence than for right to attorney (see Arizona v. Roberson)
(b) This is because requesting a lawyer is quite different from demanding cessation.
• One signals an ability to deal with the compulsion by oneself, and the other indicates that very inability. Since these are different situations, the Court treats them differently.
D. Testing Miranda’s Extremities
1. Public Safety Exception
a. New York v. Quarles
i. Considerations of public safety can override Miranda requirements
ii. Officer had reason to believe Quarles hid gun in convenience store; he handcuffed Quarles and asked him where the gun was.
(a) Motivation of individual officer is not a consideration – objective test
b. Miranda is prophylactic; not itself demanded by the constitution, so public policy can override it in certain circumstances.
2. Fruit of the Poisonous Miranda Tree is Tasty and Nutritious
a. Oregon v. Elstad
i. A defendant’s signed, voluntary confession is not excluded, even though it occurred subsequent to a previous Miranda violation
ii. Officers interrogate Mikey Elstad about the Great Gross Burglary, in Mikey’s room while listening to Dark Side of the Moon, all clad in their under-shorts, clearly a Miranda violation.
iii. Afterwards, they read Miranda rights and Mikey confesses again. This confession is valid.
b. Wong Sun doctrine does not apply to Miranda, because Miranda rights are prophylactic and not directly constitutionally mandated.
3. Harmless error can be applied to Miranda and other 5th amendment violations
a. Arizona v. Fulminate
i. Jail-cell confession to butt buddy undercover agent violates the 5th amendment – it was coerced as it was made in return for a promise of “protection.” Finding of physical coercion – stronger than just a Miranda violation
ii. Since it is not a fundamental “trial error,” a court can apply a harmless error analysis to a 5th amendment violation. But in this case, the error was not harmless.
b. Even physically coerced confessions (whose inadmissibility is NOT based on prophylaxis) are subject to a harmless error analysis.
i. This seems a far cry from Brown v. Mississippi, which indicated that physically coerced confessions rendered an entire trial a nullity.
(a) Perhaps, though, a physically coerced confession might still apply itself to “shocks the conscience” doctrine.
4. “Free will” is not required for Miranda confession to be valid
a. Colorado v. Connelly
i. Connelly confesses to Officer Joe under God’s duress. This is ok. 5th amendment violations apply only to police action, not God’s action.
ii. 14th amendment also does not require the court to intervene with God’s duress. There is no right of sanity.
5. More Exceptions
a. Confessions made in violation of Miranda can be used to impeach defendants who take the stand in their own behalf.
b. Miranda warnings are not required for grand jury investigations
6. Conservatives rally to save Miranda
a. Dickerson v. United States
i. Congress passes act effectively replacing Miranda requirements with a voluntariness standard. Although Miranda allows for alternative prophylactic solutions, this isn’t a prophylactic solution at all but an effective appeal of Miranda, as the previous standard was “voluntariness.”
ii. Court elects not to overrule Miranda.
E. Distinctions between Miranda and the Sixth Amendment
1. Brewer v. Williams
a. After arraignment, officers drive Williams from one precinct to another. Williams has met with his lawyer who has requested that the officers not interrogate Williams during the trip.
b. Officers deliver the “Christian Burial Speech,” and Williams tells them where the body is.
c. Although factually similar to Innis, the confession must be suppressed, because we are dealing with the 6th, not 5th amendment – Williams has already been arraigned. Court follows the rule in Massiah.
i. The standard for 6th amendment protection is “deliberate elicitation,” which is different from “interrogation,” because it does not require a situation that is inherently coercive.
2. The 6th amendment right to attorney is not so easily waived as Miranda rights; it “requires not merely comprehension but relinquishment.”
3. Black Letter Distinctions
a. 6th amendment is relevant only when adversarial process has begun; custody is irrelevant to analysis. (see, Moran v. Burbine)
b. 5th amendment is relevant only when D is in custody, and the initiation of formal proceedings is irrelevant.
c. 5th amendment right must be invoked, while the 6th amendment right attaches automatically (but for the Edwards extension to apply, there must be invocation).
d. Miranda applies only to interrogation where the D knows he is being interrogated; 6th amendment applies to any “deliberate elicitation” from the D (see, United States v. Henry where an undercover jail-cell buddy’s deliberate elicitation did invoke the 6th amendment)
i. But see Kuhlmann v. Wilson, where a strictly voluntary confession in the same situation was not violative of the 6th.
e. 6th Amendment is offense specific, whereas the 5th amendment right extends to all possible topics of discourse.
4. Muddying the waters
a. Michigan v. Jackson
i. Court extends 5th amendment Edwards protection to defendant’s 6th amendment right to counsel.
ii. Once D has invoked right to counsel, even after arraignment, police cannot question him without an attorney being present, even if the D signs a waiver relinquishing his right to an attorney.
iii. So, a defendant does not have to invoke his 6th amendment right to an attorney to exercise that right in most situations. However, he must invoke it for Edwards to apply – that is, for a subsequent waiver made pursuant to police initiated interrogation to be invalid.
(a) But, just like Miranda violations, incriminating statements violative of the 6th amendment may be used to impeach.
b. But Michigan v. Jackson applies only to interrogations for the same offense because the 6th amendment is offense specific. See McNeil v. Wisconsin.
III. Fourth Amendment Analysis – Trimming the Fuzzy Muff
A. Textual Overview
1. Right of people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures.
2. No warrants shall issue, except those supported by probable cause, describing the circumstances of the search particularly.
3. This has been interpreted to mean:
a. Searches
i. Most searches are violative of 4th amendment unless made pursuant to a warrant, supported by probable cause.
ii. Some searches are allowed without a warrant. These searches must be either made pursuant to exigent circumstances, or they must be limited searches, such as Terry stops
b. Seizures
i. Most seizures are violative if they are made without a search or arrest warrant.
ii. Some seizures are otherwise reasonable.
c. Warrants
i. Warrants are usually required. They must be supported by probable cause, and must be particular.
ii. Some warrants that are not supported by probable cause will not render evidence excludable, if the police acted in good faith reliance.
B. The Meaning of “Searches and Seizures”
1. Searches
a. Katz v. United States
i. Searches apply to more than just “houses papers and effects.” 4th amendment protects people, not places.
ii. Recording telephone conversations with an electronic listening device attached to the outside of a public telephone booth constitutes a search.
iii. If a surveillance activity “violates a privacy upon which [the subject] justifiably relied,” it constitutes a search.
iv. The search is ruled “unreasonable” for lack of a warrant.
b. Harlan’s concurrence to Katz
i. Katz overrules the Olmstead physical entrance requirement.
ii. Creates a clear rule for the Katz holding:
(a) The person must have exhibited an actual (subjective) expectation of privacy.
(b) This expectation must be one that society is prepared to recognize as reasonable.
c. Applying Harlan’s Katz test
i. FBI agent investigating a print shop climbs a ladder and looks in an unblocked window to find a vast marijuana field.
(a) Is society prepared to recognize a reasonable expectation of privacy for an unblocked window, albeit one that is very high up?
(b) No. This is not a search.
ii. State trouper, while investigating a truck on the side of the road with its doors open, notices a vast marijuana field sticking out of one of the doors, and all the while a naked woman screams and prances about the area.
(a) Can a person possibly have a subjective intent of privacy, reasonably observed by society, to a car with its lights flashing, and the doors open, with a vast marijuana field sticking out?
(b) No. This is not a search.
iii. Police officer looks into Joe’s clear soup and sees something odd; he reaches in and pulls out a vast marijuana field.
(a) Does society reasonably observe the privacy of what is inside a person’s clear soup?
(b) This could go either way, but it seems that there is no reasonable expectation of privacy, since whoever looks into a clear bowl of soup can see at least some objects that are inside of it. If the soup were opaque, there would probably be a different outcome.
iv. Police officers drive up a secluded, private road, pass many obstacles and a “No Hunting” sign to find the ubiquitous marijuana field.
(a) This is not a search. Private property rights do not automatically entail a reasonable expectation of privacy.
v. FBI agent walks the aisles of a train, feeling all the luggage. He feels what seems to be a gun in one of the bags, opens it up, and finds a vast marijuana field.
(a) The initial feeling of the luggage was not a search. There is no reasonable expectation that no one will touch the outside of your luggage.
vi. Fred has been pruning his marijuana; he puts the clippings in an opaque plastic bag, and puts that in a garbage can. Police look in can and find a big bag of marijuana.
(a) Is there a reasonable expectation of privacy for one’s garbage? Is garbage analogous to a sealed letter? No, but there are still some privacy issues at stake. Court ruled, however, that this was not a search
vii. A search pursuant to consent is not a search, see Schneckloth
d. United States v. White
i. Testimony obtained through a radio transmitter concealed on the person of a police informant is not the product of a search.
ii. Since the 4th amendment does not protect information relayed from a police informant without the use of such device, it should make no difference if the informant happens to record that same information.
iii. So then, there is no reasonable expectation that one’s conversation is not being recorded by the person that one is conversing with.
(a) Harlan, who created the test, dissents: the test is not just a mirror of society, but a normative test, and a person should have a reasonable expectation that his conversation is not being recorded.
e. United States v. Karo
i. Beeper is installed into a can of ether with permission of the owner of the ether, then delivered to a buyer who had no knowledge of the beeper.
ii. Beeper then reveals information that could not otherwise have been obtained through visual surveillance.
iii. Holding
(a) The monitoring of the beeper occasions the only 4th amendment interest.
• The mere fact that the beeper is there violates no privacy interest
(b) The monitoring of the beeper does not constitute a search if the same information could have been obtained through visual surveillance
• Because it could have been obtained in such fashion, there was no reasonable expectation of privacy for such information.
(c) The monitoring of the beeper does constitute a search if the information could not be obtained through visual surveillance and a person has a reasonable expectation of privacy to the information that it provides.
iv. Since the beeper related information regarding the interior of a house that could not have been observed from the outside, the surveillance constitutes a search.
f. Kyllo v. United States
i. Obtaining by heat-gun information regarding the interior of a home that could not otherwise have been obtained w/o physical intrusion constitutes a search.
(a) No logical distinction can be made between “off the wall” and “through the wall” surveillance.
(b) In Katz, the sound waves were going “through the wall,” though the human ear would not have heard them.
(c) In the home, all details are intimate details.
ii. This reasonable expectation extends to the curtilage of the house.
(a) United States v. Dunn: four factor test for curtilage
• Proximity of the area to the home
• Whether the area is included within an enclosure surrounding the home
• The nature of the uses to which the area is put
• The steps taken by the resident to protect the area from observation
g. California v. Greenwood
i. Police look inside opaque trash bags set at the curb and find marijuana.
ii. This is not a search – no reasonable expectation of privacy
(a) Respondents exposed their garbage to the public – readily accessible by animals, children, scavengers, and police officers.
(b) Police cannot reasonably be expected to avert their eyes from evidence of criminal activity that could be observed by the public.
iii. Using a pen register to record the telephone numbers dialed out by a criminal suspect is also not a search, Smith v. Maryland
iv. Surveillance of back-yard by plane also not a search, CA v. Ciraolo
2. Seizures
a. Three tiers of interaction (see, Wesley Wilson v. State)
i. Arrest
(a) Arises under the 4th amendment
(b) Requires justification by probable cause
ii. Investigatory stop
(a) Arises under the 4th amendment
(b) Requires only reasonable suspicion
iii. A consensual encounter
(a) No restraint of liberty; not governed by 4th amendment
(b) Requires nothing
b. Florida v. Bostick
i. A seizure does not occur simply because a police officer approaches an individual and asks a few questions. The encounter must lose its consensual nature – reasonable person would not feel free to disregard.
ii. Issue is not whether a reasonable person would be “free to leave,” instead the standard is “free to disregard.”
(a) On a bus, any person would not feel “free to leave,” so that standard provides little edification.
(b) Appropriate standard is whether a reasonable person would feel free to disregard the officer’s questions or otherwise terminate the encounter.
iii. Where a police officer boards a bus, and asks consent for a search of his bags and person, a seizure has not occurred for purposes of the 4th amendment.
iv. Problem: People never really feel free to say “no” to the police.
c. United States v. Mendenhall
i. Factors to consider in applying the “free to disregard” test
(a) The threatening presence of several officers
(b) The display of a weapon
(c) Physical touching
(d) The use of language or tone of voice indicating that compliance might be compelled
ii. An “objective test,” – subjective intent of police, perceptions of the suspect are irrelevant.
iii. However, legally defined seizures may be a term of art – the average person seldom feels free to terminate encounters with the police
(a) Tracey Maclin argues that black males in particular have this problem, and so race should be a factor in a Mendenhall analysis.
d. If a suspect in fact disregards, or leaves, it proves that he felt free to disregard or leave – Hodaridi (where police say “stop,” and D runs)
e. Schneckloth v. Bustamante
i. A search pursuant to consent is not a search.
(a) But for consent to be valid it must be voluntary – not pursuant to a seizure.
(b) When the subject of a search is not in custody, and the State attempts to justify a search on the basis of his consent, 4th amendment requires only that consent was voluntarily given, and not the result of duress or coercion.
ii. Prosecution is not required to demonstrate knowledge of a right to refuse, though it is a factor to be taken into account.
(a) This would be like applying Miranda to the 4th amendment
iii. As long as there is no seizure, and D agrees to the search, it is not a search with respect to the 4th amendment.
iv. To determine whether D was seized, Stewart (for the majority) applies a totality of the circumstances test
(a) Characteristics of the encounter
(b) Also, court should consider the characteristics of the accused
• Here, Maclin’s race factorization might apply
f. Wesley Wilson v. State
i. Officer Ritter encounters Wilson limping drunkenly through the streets near a fire. Hilarity ensues:
(a) Ritter asks for identification, radios for a warrant check
• This is neither a seizure nor a search. See Schneckloth
(b) Ritter then leaves to check on the fire, tells Wilson to “stay in the area”
• This is not a seizure. We know this because Wilson, that wily bastard, limped about 40 feet away, disregarding the command.
(c) Officer Ritter comes back, tells Wilson to “wait,” at a nearby corner while the officer returns to the fire scene. Wilson does so.
• Here a seizure occurs. The show of authority restrained Wilson’s liberty. Game over, because there was also no reasonable suspicion.
(d) Ritter learns that Wilson has two outstanding warrants. Ritter notices an oily patch on Wilson’s shirt, to which Wilson shrewdly remarks, “What are you doing? I don’t smell like smoke. I mean I didn’t start any fire with these here matches and lighter fluid.”
• All for nothing, because an illegal seizure already occurred. Wilson is freed to start more fires.
ii. It matters not that Ritter did not suspect Wilson until he noticed the oily patch – this is an objective test.
C. Justification for Searches and Seizures
1. For most searches, both a warrant and probable cause are required. The warrant identifies the probable cause for the search.
a. The Probable Cause Standard
i. Nathanson v. United States – mere affirmance of belief or suspicion is not enough. Warrant must stipulate facts or circumstances.
ii. Draper v. United States – probable cause exists where warrant stipulates the source of the tip (who had a previous history of accuracy) and specific details of the suspect that turned out to be true.
iii. Spinelli v. United States – sets up a two-part test for probable cause.
(a) Warrant must identify a basis of knowledge for the incriminating evidence
(b) Warrant must make some assessment of the credibility of this basis of knowledge (e.g. the informant making the tip)
• The veracity of the affiant’s informant, or
• The reliability of the informant’s report in this individual case
iv. The Modern Test – Illinois v. Gates
(a) Spinelli provides a good framework, but seems to leave little room for the use of a confidential informant.
(b) Therefore, Gates holds that a surplusage in one of the prongs can make up for a deficiency in the other
• The two prongs are intertwined
• They may both illuminate the question of “probable cause”
(c) Court overrules Spinelli; states that its two prongs are merely to be considered in a totality of the circumstances test.
• White, concurring, states that Spinelli has not been overruled but modified.
(d) Police receive an anonymous letter incriminating the Gates as Original Gangstas. The letter includes specific, verifiable information pertaining to a future drug trafficking. After verifying several of these facts, Officer Shmo submits an affidavit, and the judge issues a warrant.
• Held: warrant is supported by probable cause. The corroboration of the police work proves the reliability of the informant’s report
• This is enough to overcome the admitted deficiency as to the basis of knowledge for the evidence – letter was anonymous.
(e) Dissent: letter included some facts that the police investigation proved incorrect. This should point to the unreliability of the letter.
• Court’s holding indicates that some inconsistencies can be overlooked.
(f) Remember: standard of review for findings of probable cause with a warrant is for clear error only.
b. Probable Cause and “Subjective Intent”
i. Whren v. United States
(a) Petitioner claims that seizure for traffic violations should require more than just probable cause, but also “that a reasonable police officer would have made the stop for the reason given.”
(b) Court disagrees – probable cause is enough, and the subjective intent of the police officer is irrelevant.
(c) The same is true, presumably, for the “individualized suspicion” requirements for Terry stops.
c. Substantive Probable Cause (w/o a warrant)
i. Ornelas v. United States
(a) Court applies a totality of the circumstances test for probable cause
• Probable cause to search exists where the known facts and circumstances are sufficient to warrant a man of reasonable prudence in the belief that contraband or evidence of a crime will be found. In short, probable cause exists where probable cause exists.
(b) Police officers spot a chevy (’64 red, to be exact) with bitches on the side, and bitches in the back. It’s got Cali plates; they check the registration and learn that the owner and a second man have recently checked into the motel wherein the car is parked.
(c) They run NADDIS and learn the two are dealers. When the two emerge from the motel, officers ask them whether they have any illegal drugs, D’s deny, officers ask to search the car, D’s consent.
• Up to this point there are no constitutional issues. D’s aren’t in custody, and there has been no search or seizure, because D’s consented to the car inspection.
(d) During the inspection, the fuzz notices a loose panel. He dismantles the panel and discovers (surprise surprise) cocaine.
• This constitutes a search. However, we don’t know whether or not there is probable cause. This is because the appellate court used the wrong standard of review.
• Because “the 4th amendment demonstrates a strong preference for searches conducted pursuant to a warrant,” an appellate court should apply a greater level of scrutiny – de novo standard for appeal.
2. Warrant Specifics
a. Warrants must be “supported by oath of affirmation”
i. Must particularly describe the place to be searched, and the persons or things to be seized.
(a) A facially sufficient affidavit may be challenged after the fact if it contains false statements. Franks v. Delaware
(b) “Negligent,” or “Innocent,” falsehoods will not invalidate an otherwise valid warrant.
(c) However, perjured statements, or statements made in “reckless disregard,” of the truth will render a warrant void, so long as its remaining content wouldn’t be sufficient to establish probable cause by itself.
ii. Must be issued by a magistrate who is “neutral and detached,” Johnson v. United States
(a) Void if issued by an attorney general involved in the investigation (Coolidge v. New Hampshire) or if by a magistrate who receives a fee for issuing warrants but not for refusing them (Connally v. Georgia)
(b) But clerks w/o law degrees can issue warrants – Shadwick v. City of Tampa
b. Particularity requirement
i. Must be particular enough for an officer “with reasonable effort to ascertain and identify the place intended.” Steele v. United States
ii. However, objectively reasonable mistakes made with regard to individual details may be tolerated. Maryland v. Garrison
c. Execution
i. Base-line rule is “knock and announce” – Wilson v. Arkansas
(a) However, law enforcement interests can justify exceptions
(b) In order to justify, police must have a reasonable suspicion that “knocking and announcing would be dangerous, futile, or inhibit the investigation.” United States v. Ramirez
ii. Search warrant doesn’t automatically convey to the police the power to search every person in the premises. Ybarra v. Illinois.
(a) But see Michigan v. Summers – it is sometimes reasonable to detain people temporarily found on the premises.
3. Anticipatory Warrants
a. Magistrate can issue an anticipatory warrant contingent on the existence of certain facts at the time of the search – makes corroboration of tips more expedient
b. United States v. Garcia – test for proper issuance of anticipatory warrant
i. Magistrate should require independent evidence giving rise to probable cause,
ii. Protect against premature issuance by listing in the warrant conditions that are explicit, clear, and narrowly drawn.
iii. The warrant must particularly describe the place, and persons to be searched/seized.
iv. Scope should be no narrower than the scope of the search that would be allowed under “exigent circumstances.”
c. State v. Craig Parent
i. Magistrate issues an anticipatory warrant for the arrest of G Money, who an informant has stated will arrive at the airport with two women, and a baby bottle full of cocaine, as he is wont to travel.
ii. Warrant is issued subject to G Money’s arrival on the individual flight number that the tip had indicated.
iii. Warrant and search do not violate the 4th amendment
iv. Issue: What if some of the facts had been incorrect? What if the two women weren’t there, and it was just G Money who arrived? Illinois v. Gates applies.
4. Arrests
a. Arrest warrants are required only when the officer must enter private property to make the arrest.
b. United States v. Watson
i. Postal inspector has probable cause (information from an identified, reliable source) to arrest Watson.
ii. He does so, without a warrant, and searches Watson for the stolen credit cards, to no avail.
iii. Inspector then asks Watson whether he can search his car, stating “if I find anything, it’ll go against you,” (this is irrelevant as Miranda does not apply to searches under the 4th amendment)
iv. Inspector finds credit cards.
v. Issue: was the initial arrest constitutional?
(a) If not, the credit cards are inadmissible either as fruits of an unconstitutional arrest, or because Watson’s otherwise voluntary consent was tainted.
vi. The arrest is justified because an act of congress authorizes postal inspectors to make arrests w/o warrants. Why is the act constitutional?
vii. Because warrantless public arrests are valid under the 4th amendment, regardless of exigent circumstances, so long as probable cause exists.
(a) Based on ancient common law: a peace officer is permitted to arrest without a warrant for a misdemeanor or a felony committed in his presence.
(b) See Atwater v. Lago Vista
• If an officer has probable cause to believe that an individual has committed even a very minor criminal offense in his presence, he may, without violating the 4th amendment, arrest the offender
• D can be arrested and taken into custody even for a crime that is statutorily exempt from jail time.
c. County of Riverside v. McLaughlin
i. A defendant arrested without a warrant and held in custody must receive within 48 hours a judicial determination of whether his arrest met the probable cause standard.
ii. Even at that, it must not be delayed unreasonably, e.g.
(a) For the purposes of gathering additional evidence
(b) Motivated by ill will
(c) Delay for delay’s sake
d. Payton v. New York
i. Warrants are required for arrests that take place in the home, absent exigent circumstances.
ii. However, it need only be an arrest warrant, not a search warrant, so long as the police are entering the suspect’s home (not somebody else’s)
(a) See, Steagald v. United States, where an arrest warrant does not justify the search of the home of someone other than the arrestee
5. Exceptions to the “Warrant Preference”
a. Exigent Circumstances
i. Mincey v. Arizona
(a) Mincey shoots officer Hendricks during a drug bust. In the ensuing excitement, an extensive search four day of Mincey’s apartment takes place.
(b) A warrantless search must be “strictly circumscribed by the exigencies which justify its initiation, e.g.
• Police safety
• Potential for loss of evidence
(c) Here there are no such exigent circumstances; the fact that the police were investigating a murder is not enough.
ii. Illinois v. McArthur
(a) Officer Reggie Love enforces a warrantless seizure (which presumably, because it takes place on private property, would require a warrant) so that D’s trailer will not be disturbed while he waits for a search warrant – “Chuck had some dope in there.”
(b) Seizure is does not violate 4th amendment – exigent circumstances existed.
(c) Court applies a balancing reasonableness test instead of the normal per se unreasonableness rule.
• Because “the restraint at issue” was tailored to the urgent law enforcement need, and was limited in time and scope.
• Also, it was a seizure, which are normally subject to a much looser warrant requirement.
(d) Case turns on the issue of whether the police could have searched the trailer without a warrant – they could, because exigent circumstances existed.
b. “Plain View” Doctrine
i. Horton v. California
(a) Warrantless seizure of evidence in plain view is not prohibited by the 4th amendment, even if its discovery is not inadvertent.
(b) Coolidge test:
• Item must be in plain view
• Its incriminating character must be immediately apparent
• Officer’s presence must not be in violation of 4th amendment
• Officer must have a lawful right of access to the object itself.
(c) Officer LaRault searches a private dwelling (pursuant to a warrant) for the stolen Free Mason Jewels.
(d) He was presumably interested in finding other evidence of the crime, though such was not stipulated in the warrant. He finds various weaponry and other incriminating evidence (a Shriner Fez) in plain view, and seizes it.
(e) The seizure was justified under the Plain View Doctrine – Coolidge test is satisfied, and the fact that Officer LaRault anticipated such evidence to be present is not dispositive (or relevant)
c. The “Automobile Exception”
i. As to all searches of automobiles, the police may search without a warrant so long as there is probable cause.
ii. Carol v. United States
(a) Court recognizes a difference between searching a store, dwelling, or other structure, and searching a car (or other form of transportation). It is not practicable to obtain a search warrant, because these things can move away.
(b) Court establishes an exception to the warrant requirement for moving vehicles: A warrantless search of an automobile, based upon probable cause, in light of an exigency arising out of its likely disappearance does not contravene the warrant clause of the 4th amendment.
• Chambers v. Maroney: if the car is seized, it may be searched at the station so long as exigent circumstances existed at the time of the seizure
iii. California v. Acevedo
(a) Acevedo leaves house with brown bag that police believe contains marijuana. Fearing loss of evidence, they open the trunk, and the bag, and find marijuana.
(b) Police have probable cause to search the bag, but not the car itself.
(c) Problem: a warrant exception exists for cars (Carol), but not for closed containers (Chadwick). What about a search of a closed container that is in a car?
• Ross – if a search of an entire car produces a sealed container, that container can be opened.
• So if the probable cause exists only as to the container, why should it not be opened without a warrant?
(d) H: The fourth amendment does not require the police to obtain a warrant to open a sack in a movable vehicle simply because they lack probable cause to search the entire car.
• However, once that container is out of the car and on the D’s person, a search warrant is required.
 Unless that person is arrested
iv. Wyoming v. Houghton
(a) Popo stop car for speeding, notice a syringe in the driver’s pocket, ask him what it’s for, he says: “I use it to take drugs.” They then search the car, including the passenger compartment and find, surprise, drugs. They belong to one of the passengers.
(b) Police had probable cause to search the car, including all of the containers therein. This means that they don’t need a warrant, Ross. Court finds that this exception extends to passengers’ belongings found within the car that are capable of concealing the object of the search. No 4th amendment violation.
d. Searches Incident to Arrest
i. A search incident to a lawful arrest is a traditional exception to the warrant requirement
(a) A search may be made of the arrestee’s person, Robinson
• Settled from its first enunciation
• Arises from need to disarm. “If he may disarm, he may search; the search being lawful, he retains what he finds.”
(b) A search may be made of the area within the control of the arrestee, Chimel
• Subject to different interpretations
• Also arises from safety concerns
ii. United States v. Robinson
(a) Officer Jenks arrests Robinson for operating vehicle w/o license, an offense for which he has probable cause, on a public thoroughfare.
(b) Jenks then searched Robinson. He pats him down and feels an object that he can’t identify, removes what looks like a crumpled cigarette package, the contents of which he still can’t identify, and finally opens the package to find 14 gelatin capsules.
(c) Held: Jenks was entitled to search Robinson
• In the case of a lawful arrest, a full search of the person is not only an exception to the warrant requirement, but also a “reasonable” search under the Amendment.
• Jenks was entitled to inspect the package, and was entitled to seize the capsules.
iii. Chimel v. California
(a) Hour long search of the entire house without a warrant, pursuant to an arrest violates the 4th amendment.
(b) Two justifications for searches pursuant to arrests
• To disarm
• To seize evidence that might easily be concealed or destroyed
(c) These justifications only apply to areas “within the immediate control” of the arrestee.
(d) No justification for searching any room other than that in which the arrest occurs, or searching through closed or concealed areas in that room itself.
iv. New York v. Belton – synthesis of the arrest and automobile exceptions
(a) When a policeman has made a lawful custodial arrest of the occupant of an automobile, he may search the passenger compartments of that automobile.
(b) This matters only for defendants that are arrested for offenses for which evidence is not likely to be found in the car.
v. Colorado v. Bertine – “Inventory search” is also allowed when subject has been arrested; same rationale.
vi. Knowles v. Iowa
(a) If an officer stops an individual for committing an offense, but elects to issue a citation instead of arresting him, then there is no fourth amendment exception to probable cause for a car search.
(b) Officer stops Knowles for speeding, but issues a citation in lieu of an arrest. He then searches the car without probable cause, and finds pot.
(c) Neither rationale (safety and preservation of evidence) applies to this situation, so the search is unconstitutional.
• But an officer can get around this by arresting, searching, and if nothing is found, changing his mind about the arrest.
6. Stops and Frisks
a. Terry v. Ohio
i. The 4th amendment permits limited searches and seizures in absence of both probable cause and warrants based on a standard of individualized suspicion.
ii. Distinction between stop and arrest
(a) A stop is a brief detainment for questioning upon suspicion that he may be connected with criminal activity
iii. Distinction between frisk and search
(a) A frisk is a pat-down for the purpose of disarming
iv. Stops and Frisks are “Searches” and “Seizures” respectively, and they do fall under 4th amendment regulation
(a) The standard is simply lower for 4th amendment compliance
(b) There must be “reasonable suspicion”
• Would the facts available at the moment of the seizure or search warrant a man of reasonable caution in the belief that the action was appropriate?
• Consider first the nature and extent of the governmental interests involved
 Not only the interest of crime prevention, but also the interest of safety of the officer (for the frisk)
• Consider next the nature and quality of the intrusion on individual rights
v. Policy: Aggressive use and misuse of the stop-and-frisk power continues to be a major source of tension between police and people of color. David Cole – No Equal Justice.
(a) Warren: police harassment of minorities “will not be stopped by the exclusion of any evidence from any criminal trial.”
(b) Justice Stevens: the fact that many stops never lead to an arrest (8 out of 9) “exacerbates the perceptions of discrimination felt by racial minorities and people living in high crime areas,” and also “indicates that society as a whole is paying a significant cost in infringement on liberty” by virtue of such stops.
b. Florida v. J.L.
i. An anonymous tip that a person is carrying a gun is, without more, insufficient to justify a Terry stop-and-frisk.
ii. Caller reports to police station that a young black male standing at a particular bus stop and wearing a plaid shirt is carrying a gun.
iii. Officers arrive at bus stop, see a black male wearing a plaid shirt, stop him, and get frisky. They find a gun and seize it.
iv. Held: officers did not have a reasonable “articulable suspicion” that J.L had a gun.
(a) An anonymous tip alone seldom demonstrates the informant’s basis of knowledge or veracity
(b) This tip provided no other verification – it contained no predictive information.
v. Presumably, the standard for “articulable suspicion” resulting from an anonymous tip will be less than the “probable cause” test for warrants sworn out at the behest of anonymous informants. See, Illinois v. Gates
(a) Court states that if the danger had been greater (e.g. a bomb threat) then the indicia of reliability would have been lesser.
c. United States v. Ralph Arvizu
i. Arvizu’s car is stopped near the Mexico border by a border agent. Arvizu, being very intelligent, consents to a vehicle search, though he knows that his car is filled to the brim with marijuana leaf. The border agent finds such marijuana leaf.
ii. Held: the stop, being based on “reasonable suspicion,” was not violative of the 4th amendment.
(a) Agent basis his determination on several factors.
• Vehicle took a route that smugglers commonly take, avoiding the checkpoint.
• Vehicle was a minivan, a type that smugglers often use.
• Children’s feet were propped up on cargo, and they waived oddly and mechanically to the officer, as though they were instructed to, or perhaps as though they were not real children but automatons, yes, automatons that require marijuana leaf for fuel.
(b) Court rules that “reasonable suspicion” requires a “totality of the circumstances” test, to determine whether the officer has a “particularized and objective basis,” for suspecting odious behavior.
• Observations of the officer that he believes are important should not be left out – court overrules “divide and conquer” analysis.
• Perhaps this leaves open the door for racial profiling
iii. Also, the stop occurred along the border, where the powers of the 4th amendment are weakest, for on the border we draw close to the darkness of heathen lands.
d. Illinois v. Wardlow
i. An individual who flees at the sight of a police car, in what is known as a “high crime area,” carrying an opaque bag, is subject to a Terry stop under the 4th amendment.
ii. High crime area + flight = “reasonable, articulable suspicion.”
iii. Problems:
(a) Is an individual in a high crime area who runs more or less suspicious than a person in a low crime area who runs? Isn’t a person in a high crime area more likely to fear police, and even more likely to fear a police car as an indication of nearby criminal activity?
(b) Is enforcing Wardlow only in high crime areas invidious?
D. Racial Profiling
1. Definitions:
a. “Occurs whenever a law enforcement officer questions, stops, arrests, searches, or otherwise investigates a person because the officer believes that members of that person’s racial or ethnic group are more likely than the population at large to commit the sort of crime the officer is investigating.” Gross and Livingston article.
b. Must be as a result of a generalized belief, not a particular description in an individual case.
2. Is racial profiling inherently unconstitutional?
a. United States v. Martinez-Fuerte – under the 4th amendment it is constitutional to use race as one factor among several for a decision to stop a person, but not as the sole basis.
b. There may be a better argument under the Equal Protection clause of the 14th amendment, but remedies under this clause are not as well developed as they are for the 4th amendment.
3. Is racial profiling bad policy? Five Factors
a. Is the investigation based on race or ethnicity?
i. Brennan: “the line between discrimination based on ‘ancestry or ethnic characteristics’ and discrimination based on “place or nation of origin” is not a bright one.
ii. Often, such investigations are abhorrent, because there is no justification for them, and they result in undue harm.
(a) Stigmatization of an entire ethnic group
(b) Harassment
(c) Reinforcement of inferiority, alienation: to be treated as a criminal is a basic insult to a person’s self image.
iii. But it is difficult to determine whether 911 investigations meet the definition for racial profiling, because “the police have information that the specific crime they are investigating was committed by someone of that ethnic group.”
b. Is race a strong predictor of criminal behavior?
i. Probably not in relation to drug trafficking
ii. But it might be with respect to terrorism
(a) However, even if ethnicity is a strong predictor of criminal behavior, an individual member of the relevant groups is very unlikely to be a criminal.
(b) Then the benefit of racial profiling might be slight, and the price steep.
c. What does the government do based on race?
i. A letter sent out requesting help in fighting terrorism might be bad
ii. But it is not as bad as routine stops, searches, and arrests.
iii. Which is itself not as bad as being put in a Japanese internment camp.
(a) Did the investigators impinge on the subject by confronting him or covertly invading his privacy?
(b) Will the suspect ever know that he was racially profiled
• If not, the damage may be minimal
(c) Is the subject treated as one of us or one of them?
iv. The racially motivated drug interdiction of the highway gets the shit end of all of these factors.
d. How strong is the evidence of a racially identified suspect’s guilt or innocence?
i. The less likely the guilt of any individual, the higher the proportion of innocent people among those affected, and the higher the social cost.
ii. What if the likelihood of guilt is very strong?
(a) Three white men flee into a bar where they are the only whites. One of them is guilty. It seems that we could arrest all three without feeling bad about it.
(b) Also, we can use this kind of reasoning to rule out innocents.
e. What are the likely benefits of racial profiling?
i. The greater the threat, the more willing we are to accept the restrictions, and the less precision we demand.
(a) Ye olde balancing test
(b) How great is the potential harm?
(c) How likely is the conduct to be useful?
ii. Of course, we might use this evaluation to exaggerate the danger, resulting in unjust outcomes.
4. Are some kinds of racial profiling good policy, and others bad policy?
a. Issue with racially motivated stops and treatment do not necessarily begin and end with the question of whether it is technically “racial profiling”
b. A more helpful assessment may be how many innocents are stopped in relation to arrests, and how severe the crime is.
i. Highway Drug Stops – “Driving While Black”
(a) There is evidence that police use race to decide whom to stop and search
(b) But the drug culture here is a wondrous rainbow.
(c) Probability of guilt for any individual is low; no discernable benefits
(d) Stops are intrusive, humiliating, and divisive
(e) Bad Policy
ii. Gun Searches
(a) Not as much evidence for racial motivation (but let us assume)
(b) Here only a small minority of those searched carried guns
(c) But arguably the benefits were high – drop in criminal gun use
(d) Cost was high – ugly public relations
(e) Probably a Bad Policy
iii. Racial Incongruity
(a) Used as a basis of suspicion
• Most courts have ruled it unconstitutional
(b) It might be that, though it is not as highly inaccurate as the gun searches, the public is ambivalent about the benefits – war on drugs.
iv. Underworld Segregation
(a) Involves monitoring of criminal organizations
(b) Surveillance is minimally intrusive
(c) If there are some benefits this may be a Good Policy
v. Wen Ho Lee Espionage
(a) This wouldn’t have been technical racial profiling
(b) However, the treatment was quite bad. There was little evidence that this Chinese American man was guilty; governments willingness to treat him so poorly does indicate racism.
(c) Also, the magnitude of the potential crime was very high – nuclear espionage.
(d) Important factors are: quality of evidence against Lee, harshness of the treatment, magnitude of the risk.
vi. Oneonta Investigation
(a) Because description was, “a young black man with a knife, and a cut on his hand,” all the black people had to submit to hand examinations.
(b) Not technical racial profiling, but disturbing because
• Investigation was intrusive
• Likelihood of criminality was extraordinarily low
• Severity of the risk was not astronomical.
E. Alternatives to Probable Cause
1. United States v. Montoya de Hernandez
a. Customs inspector notices that D has made 8 recent trips from Bogotá to Miami or L.A. She refers D to a second inspector. Both ask D general questions about herself and her trip.
b. The answers are suspicious if not undoubtedly incriminating. The two inspectors suspect D of balloon swallowing. A third inspector comes, at the other two’s behest, to conduct a pat down and strip search.
c. During the strip search, inspector notices a “full firmness,” also notices that D was wearing two pairs of elastic underpants with a paper towel lining the crotch. This watermelon is ripe with coke. Otherwise, no incriminating evidence is found.
d. Head inspector requests an x-ray, D consents, then states she is pregnant, then agrees to a pregnancy test before the x-ray. Finally, she withdraws the consent when she learns she will be handcuffed on the way to the hospital.
e. Inspector then gives D the option of returning to Columbia, agreeing to an x-ray, or staying in the detention room until she poops in a wastebasket. D elects to go home, but until there is a flight, she must stay in the room until she poops. Inspectors refuse her requests to make a phone call.
f. D holds it. Finally, inspectors seek a warrant for an x-ray, the magistrate issues one (which authorizes a rectal exam as well) she is treated to both, and surprise, surprise, there are little baggies in her ass.
g. How the hell does this not violate the 4th amendment?
i. The seizure (and searches) took place at the international border
ii. Congress has granted plenary authority to conduct routine searches and seizures at the border, without probable cause or a warrant, to regulate the collection of duties and keep out contraband.
iii. The Fourth amendment is applied differently to the borders; this goes all the way back to Boyd. Reasonableness is qualitatively different.
iv. On the border, we just apply a balancing test, and the balance is heavily in favor of strip-searching and anally probing retarded nuns.
v. “Not only is the expectation of privacy less, but the 4th amendment balance strikes much more heavily in favor of the government at the border.”
h. Holding: detention on the border, beyond a routine customs search and inspection, is justified at its inception if customs agents reasonably suspect that the traveler has blow in the flow, coke in spokes, or little baggies in his or her respective doody hole.
i. Customs agents had “reasonable suspicion” based on “common sense human behavior.” A low hurdle, because of the Gov. interest.
ii. The original strip search requires no justification at all.
iii. The x-ray and poopy-finger-procedure do require a warrant, but you can hold the D until you get one.
2. Colorado v. Thompson
a. During a drug bust, D puts an unidentified object in his mouth, and swallows it, though ordered to spit it out. Police search and find nothing, and then D is taken to the hospital for observation.
b. Police request and obtain a search warrant for an x-ray. The police then request a laxative to expedite the poop loop.
c. D produces excrement chock full of cocaine balloons, and nuts.
d. Rule: a request for an intrusive body search must demonstrate not only “probable cause,” but a “clear indication” that the sought evidence will be found.
i. Also, court must consider whether the procedure will present a risk to the suspect’s life or health.
ii. Finally, court must be satisfied that the intrusion will be performed in a reasonable manner.
e. Held: the warrant for the x-ray was properly given
i. The danger presented by the rupture of the balloons is far greater than that presented by an x-ray. Also, there seems to be a “clear indication” that D swallowed a druggie balloon.
f. But, the warrant for the laxative was improperly given
i. Warrant did not indicate the same “clear indication” – problem of jewelry up the bum.
ii. Warrant did not consider side effects, “risk to suspect’s health.”
g. Moral: The police are dirty bum-lookers.
3. Checkpoints
a. Indianapolis v. Edmund
i. Checkpoint set up to stop a predetermined number of vehicles. Officers check license and registration, look for signs of impairment, and conduct an open-view examination of the vehicle while a narc dog sniffs around.
ii. Checkpoints are identified with lighted signs as “Narcotics Checkpoint.”
iii. Held: Drug checkpoint violates the 4th amendment
(a) For a checkpoint to be legal, its primary purpose must not be to detect evidence of ordinary criminal wrongdoing
b. United States v. Martinez-Fuertez
i. Brief, suspicionless seizures of motorists at a fixed border checkpoint, for the purpose of intercepting illegal aliens, does not violate 4th amendment.
ii. Purpose is: control the border
c. Michigan v. Sitz
i. Suspicionless stops of motorists for signs of intoxication does not violate 4th amendment
ii. Purpose is: reduce drunk driving and the hazards it causes.
d. Delaware v. Prouse
i. A discretionless stop for a spot check of driver’s licenses and registration does violate the 4th amendment
ii. No primary purpose outside of general law enforcement.
iii. Presumably a temporary such checkpoint to catch a terrorist, etc. would be ok.
4. Chicago v. Morales and the Return of Due Process
a. Chicago law permits arrest of individuals found loitering with known street gang members, who refuse to disperse.
i. Officer must believe that at least one person in group is a gang member
ii. Persons must be loitering with no apparent purpose
iii. Officer must order group to disperse
iv. Individual must disobey this order
b. Court rules the law violative of Due Process clause of the 14th amendment for being vague and open to invidious discrimination.
c. Original law is arguably vague, but police board provides guidelines
i. Original order
(a) Person must have no apparent purpose
(b) Areas are designated for greater enforcement
ii. General order
(a) Identification of gang members
(b) Areas picked
(c) Limits on who police can arrest
(d) Aggregate amount of discretion is limited, but a particular officer may have a lot of discretion
(e) Provides structural methods for limiting discretion
(f) Unlike disorderly conduct – which can be enforced anywhere or anyone
• How does this cut? Might race or ethnicity be a category of enforcement? Would we rather enforce it against particular group, or against everyone?
d. Majority Holding:
i. Ordinance was unconstitutionally vague and did not meet the fair notice requirement – it did not provide adequate notice as to what conduct was prohibited.
ii. Ordinance also violated the requirement that a legislature establish minimal guidelines to govern law enforcement
(a) The “no apparent purpose” standard is subjective because its application depends on whether some purpose is apparent to the officer.
(b) This encompasses harmless behavior
• Stevens: law infringes “right to loiter”
iii. Vagueness can invalidate a law for two reasons:
(a) Failure to provide notice to ordinary citizens as to what conduct is prohibited
• This creates a situation where a person might not be able to avoid breaking the law.
• What exactly is “no purpose?” What exactly is “dispersal?”
• If we have a “right to loiter,” then the dispersal is an unjustified impairment of liberty.
(b) It may authorize or encourage arbitrary or invidious, discriminatory enforcement
e. O’Conner
i. You can fix the law by requiring a “harmful” purpose instead of “no purpose.”
ii. Otherwise, law is unconstitutionally vague. “No apparent purpose” allows for too much discretion.
f. Scalia and Thomas
i. The “right to loiter” is quite a good right … for me to poop on!
ii. Loitering has been a crime throughout the ages, ever since Pliny the Elder was put in the stocks for spending too much time in the public baths.
iii. There’s plenty of notice in here (so take off all your clothes), and freedom of movement is often infringed upon by the public interest.
F. Searches and Seizures by Non-Police Actors
1. Vernonia School District v. Acton
a. Random urinalysis drug testing of student athletes by a public school district does not violate 4th amendment
i. “Special needs” of schools obviate the need for probable cause and warrants.
ii. Privacy needs are already reduced in high school, where the weak and pimply receive daily swirlies, wedgies, and towel-snappings of the ass, and where the proverbial “goose” is constantly “loose.”
iii. Skinner v. Railway Labor Executives: a state-compelled collection of urine is a search, but is subject only to a “reasonableness” requirement (without reference to a warrant or probable cause) so long as the search is not undertaken to discover evidence of criminal wrongdoing.
b. Reasonableness Test
i. Consider the privacy interest
(a) It is reduced in adolescent locker rooms – peeing in a cup is not so bad
(b) Also, the information disclosed is not turned over to law enforcement agencies
ii. Consider the nature and immediacy of the government concern
(a) Concern is large. This is your brain. This is your brain on drugs.
(b) Finding was that drugs were quite prevalent at said high school
c. Question should be: whether the search is one that a reasonable guardian and tutor might undertake.
d. See, New Jersey v. TLO where Court ruled that “neither warrant nor probable cause requirements were suitable to “maintenance of the swift and informal disciplinary procedures needed in the school.”
i. You just apply a “reasonable guardian” test
ii. Griffin v. Wisconsin: same standard applies to probation officers
iii. O’Connor v. Ortega: ditto for a doctor in a government hospital.
e. But see Chandler v. Miller where a drug test for electoral candidates did not pass the reasonableness test, because there was no substantial government interest.
i. Camara v. Municipal Court of San Francisco: requires an “administrative warrant” for routine periodic inspections to ensure compliance with health and safety codes.
(a) But these warrants do not require specific knowledge of code violations of a specific dwelling.
(b) BUT closely regulated industries can be inspected even without one of these – New York v. Burger.
2. Ferguson v. Charleston
a. Medical University adopts policy whereby pregnant mothers are tested for cocaine, and depending on the stage of pregnancy and the result of earlier tests, turned over to law enforcement.
b. Held: these searches were unreasonable and therefore violative of the 4th Amendment.
i. For random drug testing to be reasonable under the 4th amendment, its purpose must be “divorced from the State’s general interest in law enforcement.”
ii. Ultimate purpose here may be beneficent, but the direct purpose of the drug tests was to turn the information over to law enforcement.
(a) This implies a special obligation to make sure that the patients are fully aware of their constitutional rights.
iii. Because of this purpose, the gravity of the threat cannot be dispositive.
3. Private PoPo
a. Like private citizens generally, private police can arrest for misdemeanors committed in their presence.
b. And for felonies they have probable cause to believe the arrestee has committed, provided that someone has in fact committed said felony.
c. Most states also have a “Merchant’s privilege” for Terry style stops.
d. The Private PoPo play the old Copper’s role
i. They walk the beat – order maintenance
ii. Perhaps due to the fact that the real police’s role has become more reactive due to 4th Amendment restrictions.
iii. Perhaps this is worse than police because they are subject to disparities of wealth and may be instructed by private individuals to enforce their power invidiously.
(a) A more unequal distribution of security
(b) Of course, when the public PoPo had these powers, they also exercised it to the detriment of the poor and racial minorities.
G. Reasonableness of Force
1. Tennessee v. Garner
a. Deadly force may be used only if it is necessary to prevent an escape and the officer has probable cause to believe that the suspect poses a significant threat of death or serious physical injury to the officer or others.
b. Burglary suspect flees over a fence, Officer Dirty Harry yells “halt,” suspect does not do so, and Dirty Harry shoots him in the head.
c. Held: Use of force violates the reasonableness requirement of the 4th Amendment. Where the suspect poses no immediate threat to the officer or others, the harm resulting from failing to apprehend him does not justify the use of deadly force to do so.
2. Graham v. Connor
a. Held: All claims of excessive force, deadly or not, in the course of an arrest, stop, or other seizure should be analyzed under 4th Amendment Reasonableness Standard and not under “substantive due process.”
b. Graham leave convenience store hastily, has a diabetic sugar reaction, the police seize him and his companions, hand-cuff them, and toss them around, refusing Graham’s requests for sugar, reasoning that “there aint nothing wrong with the motherfucker but drunk, lock that sonofabitch up.”
c. Graham sustains a broken foot, cuts, a bruised forehead, and an injured shoulder.
d. Court, surprisingly, finds the use of force excessive.
i. Overrules Johnson v. Glick, Rochin v. California. Due process and four factors are no longer applicable; apply the 4th amendment reasonableness standard.
ii. Reasonableness depends both on when the seizure is made, and how it is carried out. The inquiry is an objective one:
(a) Question is whether the officer’s actions are “objectively reasonable” in light of the facts and circumstances around them.
• Subjective intent of the officers is irrelevant
(b) Look to the severity of the crime, whether the suspect poses an immediate threat to safety of officers or public, whether he is actively resisting arrest or attempting to evade by flight.
IV. Remedies
A. Recompensatory Remedies
1. Injunctions: Hard to prove standing
a. Los Angeles v. Lyons
i. Lyons is stopped by officers who apply a chokehold, rendering him unconscious and damaging his larynx. He seeks a preliminary and permanent injunction against the city, barring use of chokeholds.
ii. Holding: no injunction may be granted. The equitable remedy is unavailable absent a showing of irreparable injury
(a) Lyons cannot prove that he will be choked again
(b) To establish a controversy Lyons would have to prove
• That he would have another encounter with the police
• That all police officers in LA always choke citizens with whom they have an encounter
• That the city authorizes this behavior
iii. Lyons lacks standing because it is speculative that he will again experience injury. But he does presumably have standing to claim damages against the individual officers, and perhaps the city, for the original choke.
b. O’Shea v. Littleton
i. Injunctive relief for discriminatory enforcement is thrown out: “past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief.”
c. Rizzo v. Goode
i. Plaintiff’s showing at trail of a relatively few instances of violation by individual police officers, without a showing of deliberate policy on behalf of named defendants did not provide a basis for equitable relief.
2. Damages
a. Unconstitutional searches and seizures may give rise to state tort claims such as false arrest or trespass, or to claims under state constitutions.
b. 42 U.S.C. § 1983
i. Gives plaintiffs a right of action in federal or state court when their federal constitutional rights have been violated by persons acting under color of state law.
c. Federal Torts Claims Act makes the feds liable for specified torts of its law enforcement officers that may involve violations of the 4th amendment.
d. However, the typical 4th amendment case – a gratuitous car search – does not translate into significant damages.
e. Immunity doctrines also provide a barrier
i. Eleventh amendment and § 1983
ii. States and state agencies are absolutely immune from damages liability for constitutional violations
iii. Individual police officers may be held liable, but you must overcome qualified immunity.
f. Anderson v. Creighton
i. Creighton files suit against Anderson for monetary damages under the 4th amendment.
ii. Held: qualified immunity bars the suit
(a) Qualified immunity can be overcome only on an assertion that a clearly established right was violated.
(b) This right must be specific – it is not enough to say that the search violated the 4th amendment for lack of probable cause. It has to be sufficiently clear that a reasonable officer would understand that what he is doing violates that right.
• It is an objective, though fact specific standard, so the officer’s subjective beliefs are irrelevant.
• Otherwise, enforcement officers might be “unduly inhibited” from taking actions that seem reasonable at the time.
iii. Hence, the officer not only must have violated the 4th amendment’s reasonableness standard, but it must be an unreasonable violation of the reasonableness standard.
iv. Because a reasonable officer could have believed that Anderson’s search was lawful, qualified immunity applies, and the suit is barred.
B. Other Potential Remedies
1. Criminal Prosecution
a. Not so great for regulating police practice
i. Paul Cheviny – it is a cumbersome tool
(a) Charges are made after the fact
(b) It is a matter of hazard as to which cases can be proved
(c) Likelihood of success is small
• Creates a patchy deterrent
(d) Police standards should often be higher than the usual criminal standards
• Poor police standards can be cited in defense of criminal behavior.
b. E.g. Rodney King
2. Administrative and Political Remedies
a. Goldstein recommends police administrative discipline – provides day-to-day direction.
b. However, “there is widespread recognition that police departments have failed to develop adequate methods of accountability.” Samuel Walker.
c. Political oversight
i. Can be corrupt
ii. Can provide for the wrong motivation
(a) “Jerry Kline is soft on criminals – he punishes the police and lets murdering rapist child pornographers go free. Bob Boberson is serious about crime, he’ll keep his hands off and his eyes closed to let god fearing policemen do the dirty work for you.”
(b) Citizen review boards might work
• But they haven’t worked all that well so far.
C. The Exclusionary Rule
1. Weeks v. United States
a. Inception of the exclusionary rule
b. Evidence obtained in violation of the 4th and 5th amendments cannot be used in court.
2. Wolf v. United States
a. Although the 4th and 5th amendments apply to the states, the Weeks exclusionary rule does not.
3. Mapp v. Ohio
a. Overrules Wolf. “All evidence obtained by searches and seizures in violation of the Constitution is, by that same authority, inadmissible in a state court.
b. Without the Weeks rule, the assurance against unreasonable searches and seizures would be “a form of words.”
c. This is the necessary to uphold “the imperative of judicial integrity,” whose precedent may be found in volumes of fairy law, in the jurisdiction of Elfin Land.
i. If the government becomes a lawbreaker, it breeds contempt for the law.
ii. The judicial use of illegal evidence implicates the judiciary in the act
iii. This is why, under the doctrine of sovereign immunity, the government can rarely be held accountable for its wrongs. Of course, fairy law is quite different.
iv. Anyway, might judicial integrity cut the other way?
(a) Does a process in which we pretend that damning evidence doesn’t exist reflect integrity?
(b) Is suppression a fraud perpetrated on the fact finder?
• Why not just give the evidence, and specify how it was gathered.
• The types of evidence with which we arguably have the most reservations (physically coerced) might be disregarded by a jury. Such evidence might even cut in favor of a defendant, who seems to have been treated so very badly.
(c) It also might encourage perjury on the part of the police officer as to the methods of inquiry.
v. Also, it might not really deter bad behavior
(a) So long as you don’t want to use the evidence in court, you can do as you please.
(b) Also, the rule is rarely applied.
d. Case is originally argued under 1st amendment, but these are good facts for extending the exclusionary rule – the woman just wants to look at porn, for goodness sake.
4. Coppers like the exclusionary rule because it is low cost – perhaps less deterring than a robust damages regime (getting rid of qualified immunity).
5. Some have suggested an administrative regime that would be more flexible, quick, clear, personal, and specific.
6. United States v. Leon
a. Holding: There is a good faith exception to the exclusionary rule for officers who reasonably relied on a search warrant that was subsequently found defective.
b. The purpose of the exclusionary rule is to deter police behavior that violates the 4th amendment. If a police officer acts in good faith reliance on a search warrant, that is all we can ask – use of the exclusionary rule will not deter his mistake in the future. But it will result in “letting criminals go free.”
i. Exclusionary rule, like Miranda, is prophylactic, not itself required by the constitution, but required to ensure that the constitution isn’t violated.
ii. Overlooks the possibility that the exclusionary rule also deters magistrates from issuing warrants that are constitutionally insufficient.
c. Holding does not preclude inquiry into the knowing or reckless falsity of the affidavit.
i. Reliance on the warrant must be in “good faith.”
ii. Magistrate must manifest neutrality and detachment – must himself act in good faith.
iii. Warrant must provide magistrate with a substantial basis for determining the existence of probable cause.
d. One could argue that this doctrine simply creates a strong imperative of reasonable doubt in favor of magistrates.
i. Illinois v. Gates already states that magistrates’ decisions to issue warrants should be given lots of deference.
ii. Perhaps holding does not change things as much as it seems.
e. Dissent:
i. Fairy law dictates that the courts practice judicial integrity
ii. The exclusionary rule is not limited by the deterrence rationale; it is not even prophylactic, but an integral part of the very rights outlined in the 5th and 4th amendments.
7. Standing
a. Minnesota v. Carter
i. To claim the protection of the 4th amendment, a defendant must demonstrate that he personally has an expectation of privacy in the place searched, and that his expectation is reasonable.
(a) This seems a lot like the definition of a search
ii. Household guests do not all have standing
(a) Overnight guests do have standing – Minnesota v. Olsen
(b) But one who is just there “for a while” with the consent of the householder does not necessarily – Rakas v. Illinois.
iii. Here, respondents were not overnight guests, but were in the house merely for the purpose of bagging crack rock.
(a) It was simply a place of business
(b) So there was no expectation of privacy
8. Fruit of the Poisonous Tree – doesn’t apply to Miranda
a. To have evidence excluded you have to show
i. The police did something illegal to the claimant
ii. The illegal action led to the evidence found against the claimant
b. It’s a causation rule.
c. Wong Sun v. United States
i. Agents arrest Hom Way, and find heroin in his possession. He tells the fuzz that he got it from “Blackie Toy.”
ii. Agents assume that “Blackie Toy” is James Wah Toy. They go to his home, and when he refuses their entry, they break down the door, and place him under arrest. Toy implicates “Johnny,” tells agents where to find him.
(a) The entry and arrest are illegal.
(b) “Verbal evidence which derives so immediately from an unlawful entry and unauthorized arrest is no less the ‘fruit’ of official illegality than the more common tangible fruits of the intrusion” (such as pomegranates and tangerines)
(c) Therefore the verbal evidence obtained here is also illegal.
iii. Agents find “Johnny,” a.k.a. Johnny Yee. Yee gives them heroin, and implicates “Sea Dog,” who is Wong Sun. They find and arrest Wong Sun. Later they release both Toy and Sun, and a few days later each makes a written, though unsigned confession.
(a) Wong Sun’s arrest is also without probable cause
(b) However, his confession is not tainted; it’s good to eat
• This is because the connection between arrest and statement had become “so attenuated as to dissipate the taint.
• NOT a strict but-for rationale
(c) Toy’s confession is also not poisonous fruit, however it is excluded for other reasons.
iv. Test:
(a) Whether, granting establishment of the primary illegality, the evidence has been come at by exploitation of the illegality
(b) Or instead by means sufficiently distinguishable to be purged of the primary taint.
d. Hypo:
i. Police search X’s house illegally, find no incriminating evidence. They do find a piece of paper w/ Y’s address.
ii. Then they go to Y’s house, search illegally, find evidence that incriminates both X and Y.
iii. Y can exclude the evidence. This search is illegal because the piece of paper was fruit of the poisonous tree.
(a) However, he could not exclude the paper itself, because he doesn’t have standing for evidence in X’s house.
iv. X can also exclude the evidence, as fruit of the poisonous tree.
(a) However, if the police had only searched Y’s house, he couldn’t exclude the evidence for the same reasons of standing.
e. Exceptions
i. The independent source rule
(a) If police locate evidence from both legal and illegal means, the evidence is not excludable.
(b) There is no causal link
(c) Requires that the legal discovery of evidence be independent from the illegal means.
(d) See Silverthorne Lumber Company
ii. The inevitable discovery rule
(a) If the police would have eventually discovered the evidence by legal means had they not discovered it by illegal means, the evidence is not excludable
(b) Court must be certain that the evidence would in fact have been discovered
• Police might point to a positive track record in mutilated corpse discovery
• Also, point to the mutilated corpses team and its fine procedures, replete with wisdom.
(c) See Murray, where the fuzz not only would have discovered the evidence legally, but they in fact did.
iii. Murray v. United States
(a) With probable cause but no warrant in hands, agents force entry into warehouse to discover large bales of marijuana. They leave, apply for a warrant, and come back.
• No mention of the first search is contained in the warrant.
(b) Court analogizes to both “independent source” and “inevitable discovery” doctrine. However, there is no independent source, so inevitable discovery seems more applicable.
• Court remands. If the fuzz would have “inevitably” gotten a warrant, or if the warrant search was an “independent source” then the evidence is not excludable
iv. Goal: for the PoPo to be in the SAME POSITION as they would be had the illegal procedure not occurred – no more, no less.
9. Impeachment
a. United States v. Havens
i. Evidence suppressed as fruit of an unlawful search or seizure may be used to impeach a defendant’s false trial testimony
ii. This is true even if the false testimony is given in response to cross-examination, and was not uttered during direct examination.
iii. D was arrested along with his buddy for drugs. Buddy had drugs sewn into his clothes, D had patches cut from his shirt that matched the drug pouches. On cross-examination, D claims that he was not found with such clothing.
(a) D’s luggage had been searched illegally
(b) Nevertheless, it may be introduced to impeach his false statements
iv. Holding puts a powerful tool in prosecutor’s hand – he can ask D about evidence that was excluded, and the D either has to admit to its existence, or lie, in which case it can be introduced to impeach.
v. Tough issue: we don’t want the evidence brought in, but we don’t want Ds to perjure themselves.
b. Tough issue: we don’t want the evidence brought in, but we don’t want Ds to perjure themselves.
V. Investigating Complex Crimes
A. Nature of complex investigations
1. Complex investigations are covert, rather than overt, proactive rather than reactive
2. The categories that are most open to abuse are similarly covert, proactive investigations
3. So, the goal is to achieve the greatest amount of crime control while minimizing transgressions of civil liberty
B. Electronic Surveillance and the Search of Electronic Data
1. Title III of the Omnibus Crime Control and Safe Streets Act
a. Regulates the “nonconsensual” interception through use of any electronic, mechanical, or other device of the contents of any wire, oral or electronic communication
b. An interception is “consensual” if any party to the communication consents to being overheard
c. Sets forth circumstances in which federal law enforcement agencies may obtain court orders from federal judges authorizing interceptions
d. It empowers states to enact statutes permitting state law enforcement agencies to seek similar orders from state judges
i. Most states have done so
e. Wiretapping
i. Law enforcement agents are required to obtain a warrant before resorting to nonconsensual electronic surveillance of wire, oral or electronic communications in most cases.
(a) Federal wire or oral communications (but not electronic) must also be authorized by specially designate high-ranking Justice Department officials.
(b) State applications similarly require the approval of the district attorney or analogue
(c) Applications must be written, under oath, and include details regarding
• The particular offense under investigation
• The types of communication sought
• Identity of the person or persons, if known, committing the offense
• Whose communications are being intercepted
• Facilities from which or the place where the communication is to be intercepted (unless the circumstances merit a “roving” interception order)
(d) Applications must also include a “full and complete” statement as to whether or not other investigative procedures have been tried and failed, or as to why they reasonably appear either unlikely to succeed or too dangerous.
(e) They must describe any previous application for surveillance of the same persons or places
(f) Must include the period of time for which the interception is required, not to exceed 30 days
(g) Interception orders are premised on multiple probable cause determinations, issuing court must find that other techniques would be inadequate
• United States v. Kahn – title III surveillance is not permitted if “traditional legal techniques would suffice”
ii. No later than 90 days after either the denial of an application, or the termination of the period of authorized surveillance, the issuing magistrate must serve an “inventory” on the people named in the application or order, and on whichever other parties subject to the interception the judge sees fit to include
iii. Agents required where possible to record intercepted communications and make such available to the issuing judge
iv. Provides for civil, criminal remedies, as well as an exclusionary rule for all communications EXCEPT electronic
(a) But this rule does not always require exclusion
v. Title III also contains a “minimization” requirement
(a) Agents must minimize the interception of communications not otherwise subject to interception under this chapter
(b) They must stop listening to calls that do not fall under the scope of the wiretap order
(c) However, this provision contains few enforceable teeth. See Scott
2. Scott v. United States
a. Agents intercept all the phone conversations over a particular phone for a period of one month.
b. Court finds that this is “reasonable minimization,” and that the subjective intent of the officers is irrelevant
c. This seems to miss the point, for if, regardless of the intent, the agents intercepted every single phone call, and took no steps to minimize the interceptions, how could that be “reasonable minimization” without negating the entire requirement?
d. Also, since this is a statute and not the 4th amendment, it is unclear that the fourth amendment “reasonableness” doctrine applies.
C. The Search of Electronic Files
1. Carnivore problem
a. FBI has program that surgically removes portions of only a targeted subject’s e-mail. Is this constitutional?
i. It seems that it would be. It takes care of the minimization requirement of title III automatically. The search is less intrusive than a Terry stop – you wouldn’t even know when it occurred. And the government interest seems high.
ii. It seems similar to a drunk driving checkpoint: a search that encompasses a wide net but is minimally intrusive and serves a specific end. Here you are not even conscious of the intrusion
2. The Stored Wire and Electronic Communications and Transactional Records Access Act (SWECTRAA)
a. Applies only to electronic communications transmitted on a system that affects interstate or foreign commerce, and then only to communications in electronic storage
b. Applies to data maintained on a remote service provider’s system, but not to stored communications residing on an individual’s hard-drive or to private, internal corporate computer networks
c. The law generally prohibits service providers from disclosing to the government information about or the contents of electronic communications stored incidental to the transmission process.
d. It then provides for government access through special procedures:
i. For more than basic subscriber information, or source, addressee, and routing information, it must generally apply for an order showing that the information is relevant to an ongoing investigation
ii. To obtain access to the contents of a stored e-mail, it requires
(a) A search warrant if the e-mail is 180 days old or younger
(b) Just a subpoena (with no showing of PC) if it is older
• But the owner must receive prior notice, unless it would jeopardize the investigation, in which case it can be delayed
e. Statute contains a civil damages remedy but no exclusionary rule
3. How would courts decide stored e-mail issue?
a. Subscriber information
i. This is in the public domain, probably does not constitute a search
b. Addressing information
i. Is there a reasonable expectation of privacy here? Does it matter if you have received the e-mail (or the recipient has received it) yet? Is it analogous to a letter in the mail? Is that strictly in the public domain before it has been searched (even the addressing information)?
ii. The information is all on a server. It’s not on your computer. What is the appropriate analogy?
iii. Nobody sees the e-mail except the proper recipient (not even it’s outside form). So which way does that cut? With mechanized sorting, an actual person never sees the letter as well. (well, the mailman does)
iv. Is e-mail more or less private than an actual letter? It may be less private, because it is so easily forwarded. Also, it is often viewed in public places where others can view it.
c. Content
i. Is this any different from the content of a fed ex package? This would most certainly constitute a search.
ii. So why does congress come up with this 180 day rule? It seems pretty arbitrary. The stuff you save is often the important stuff.
iii. Would a good analogy be to a voicemail message? What if we called it a file? Don’t you need warrants to search physical files?
(a) This seems especially specious if you haven’t even opened the e-mail.
(b) But if it’s a file, the information on grand jury subpoenas seems to cut against the need for a warrant.
4. USA Patriot Act
a. This lessened the requirements governing the acquisition and disclosure of grand jury, electronic, foreign intelligence, and search warrant information for a criminal investigation
b. Post Sept 11 – the balance may have shifter – government concern seems to be greater than it was previously
c. Expressly authorizes voicemail to be obtained with a warrant rather than an intercept order.
D. Undercover Agents and Entrapment
1. Objective entrapment
a. Looks to the conduct of the police – did the police offer inducements that are of a sort to which even normally law-abiding citizens would respond?
b. More likely to be a question of law for the judge
2. Subjective entrapment
a. Looks to a defendant’s “predisposition” to commit crimes by affording a defense to a person who was induced, but cannot be shown to be otherwise predisposed in that direction
b. More likely to be a question for the jury
3. Jacobson v. United States
a. Employs the subjective test
b. Farmer who likes kiddie porn buys some. The law is changed outlawing kiddie porn (a dark day in our nation’s history) and agents get D’s name off kiddie porn mailing list. Inspectors send D various letters from fabricated kiddie porn societies such as “American Buggery Society” until finally, D orders some kiddie porn.
c. Held: D was entrapped.
i. D was not disposed to commit the criminal act “prior to first being approached by government agents,” though he was certainly predisposed after reading about the “American Buggery Society.”
ii. The original purchase could have been mistaken, as D claims, after which he was convinced that he should buy kiddie porn by the government’s persuasive brochures
iii. Evidence that merely indicates a generic inclination to act within a broad range of activities, not all of which is criminal, is of little probative value in establishing predisposition.
(a) D has the predisposition to get off watching kiddie porn.
(b) But he might not have had the predisposition to break the law were it not for the rascally government.
d. Holding entails that the government must prove not only that a suspect was predisposed to commit the crime before the opportunity arose, but also before the government arrived on the scene.
i. This seems unreasonable, as it would mean that the government must have a reasonable suspicion of criminal activity before it begins an investigation.
4. Entrapment is not duress. There is a lower standard. The rationale behind entrapment is that we shouldn’t persuade people to commit crimes for the purpose of punishing them, not that they somehow lacked agency, or that any reasonable person would have done as they did.
5. There are new FBI guidelines that attempt to regulate improper relationships between undercover agents, informants, and their various lesser forms.
E. Grand Jury Investigations
1. Grand juries were historically enacted to protect the accused, but now they serve as a tool of investigation for prosecutors.
a. They can compel witnesses to testify without (gasp) reading Miranda
b. They can compel witnesses to produce evidence
2. United States v. R. Enterprises
a. Standards for compliance with subpoenas duces tecum issued in compliance with grand jury investigation
b. “The government cannot be required to justify the issuance of grand jury subpoenas by presenting evidence sufficient to justify the probable cause because the very purpose of requesting the information is to ascertain whether probable cause exists.”
c. Therefore, “a grand jury may compel the production of evidence or the testimony of witnesses as it considers appropriate, and its operation generally is unrestrained by the technical procedural and evidentiary rules governing the conduct of criminal trials.
d. Federal Rule of Criminal Procedure 17(c) applies
i. The court on motion made promptly may quash or modify the subpoena if compliance would be unreasonable or oppressive.
e. Holding: where the subpoena is challenged on relevancy grounds, the motion to quash must be denied unless there is no reasonable possibility that the materials sought will produce information relevant to the general subject of the investigation.
i. Rule: the subpoena must seek relevant material, it must not be unreasonably broad, and it must not be unreasonably oppressive
3. Secrecy
a. In Re Sealed Case
i. Parties to a grand jury investigation are not allowed to disclose “matters before the grand jury,” to the public.
ii. Oh but they do. Ken Starr leaks lots of salacious details to the Times. How shall we respond?
iii. It’s ok. You can leak some things.
(a) If the information is already in the public domain, or if one is only postulating on one’s belief as to what one should do, but isn’t strictly a “matter occurring before the grand jury.”
(b) This really matters not at all to the course.
iv. What might be relevant about this case:
(a) The policy question of why we allow this protection to a group of people who are likely to be, strictly speaking, rich.
(b) One might argue that grand jury investigations allow for much fewer protections than regular old interrogation and investigation.
4. United States v. Dionisio
a. A subpoena to appear before a grand jury is not a “seizure” in the Fourth Amendment sense.
b. Therefore, citizens are not generally constitutionally immune from grand jury subpoenas.
c. The fourth amendment is somewhat relevant to subpoenas duces tecum (United States v. Henkel) but only very slightly.
5. How Can This Be?
a. Grand juries are the people, not police, so they can do what they want.
b. Also, a self-search is perhaps less intrusive than a “now take of all your clothes” search. But if this were the deciding factor, it would seem that police could order self-searches. But alas they cannot.
VI. The Fall of Boyd and Lots of Confusing Doctrine (or, why the hell does this go here?)
A. What Boyd said:
1. We didn’t read Boyd, but here is what it said, from what I can tell.
a. The fourth and fifth amendment overlap, because the fifth amendment means that nothing belonging to a person that indicates his thoughts may be used against him, as that is the same as compulsion to testify, or some other such nonsense.
b. We no longer follow Boyd at all.
c. The 5th amendment does not strictly mean that “the government cannot force a person to make its case against him.” They do that all the time.
2. In Fisher v. United States and Andresen v. Maryland, the government could demand documents prepared by accountants on behalf of the D’s.
B. Producing Documents
1. In Fisher and Andresen Court has held that producing a document is not testimonial because the prosecution already knows that it exists, and its contents aren’t protected, except
a. That by producing, the D admits that he knows of the documents, and that he thinks these documents are those that the government is referring to.
b. So if there is an independent basis of knowledge that D knows of these documents, then there is no compulsed testimony.
c. So long as the government did not compel the production, then the content of the papers is not protected.
C. What this means
1. Other aspects of Boyd were overruled long before Fisher and Andresen, in that a prosecutor may most certainly use private papers obtained through a legal search warrant against an individual.
2. Law enforcement now depends on information, and we can’t have nasty old Boyd getting in the way of our trust busting. So people have to turn over documents and should stop whining if it seems to violate the 5th amendment when thought of abstractly.
3. “Boyd style privacy protection was not compatible with activist government because government cannot be very activist if it cannot force people to tell it things.”
4. Justice White: if you are being forced to tell the truth, there is no 5th amendment problem – it is only if you are being forced to perjure yourself when asked to tell the truth. This seems like a good organizing principle for these last cases.

- posted by Brian @ 5:16 PM

 
Contracts
I. Introduction
a. A contract is a legally enforceable promise. We will discuss how to decide which set of promises are contracts—which you can get the courts and the state to enforce; when one of these legally enforceable promises is satisfied or excused; and what remedies we have if that promise is not satisfied or executed.
Legally Enforceable Promise:
1. We can ascertain whether there was detrimental reliance by the promisee
2. We can look at a more traditional consideration bargaining model—if certain elements are present in addition to the promise (classical model considerations)—then there is an understanding of mutual consent
3. We can look at the excused performance piece of contracts—it may be that someone made a promise on the mistaken belief and you may use that as an excuse to not to abide by the contract
4. As a general matter, it is not essential that an agreement be written. There are some instances, however, where the agreement must be written (for example the statutes of fraud).
5. When trying to determine the intention, we ask: What would most people in that situation do? What would a reasonable person in that situation do?
6. For a promise to become a contract, there must be a promise + something else, for example:
a. Promise + detrimental reliance
b. Promise + mutual consideration
c. Promise + obligation (or moral obligation)-- perhaps the trickiest area
7. Contracts are exchanges among individuals. On one end of the spectrum are discrete exchanges, which are one shot and do not include reputation, trust, or expectation for future exchanges. On the other end are relational exchanges, which have an expectation of future exchange, in which beliefs and social norms are important, even if it is a one time exchange, and it happens over a long period of time.
a. For relational exchanges—for example, employer and employee—we may need a different type of law (like employment law.)
b. If two parties are going into a joint venture, would need partnership law.
c. For discrete exchanges, we may need classical or neoclassical contract law.
1. Our primary source of law for our neoclassical contract law is in common law. The Restatement of Contracts was intended to be a codification of the laws in the 50 states. It turns out that the Restatements didn’t really turn out to be truly restatements; rather than “the law”, the Restatements what the legal scholars etc. believed should have been the law.
2. We will also be looking at the UCC, specifically Article 2 (which is currently being revised).
3. There are some aspects of contract law that have been legislated which cannot be contracted around, such as a duty to disclose if you know something is wrong when selling your house.
4. You can have a default rule that is a majoritarian rule, which is what most people would want.
5. Another type of default rule may be called the penalty default rule, meaning we will penalize you to encourage you to be more specific in your contracts because it is a burden to the courts to have to work out poorly defined rules.
b. Contract Example: “The Ricky Lake Show”
1. A guest of the show was a man, Alvin, who promised to pay child support if the woman promised not to disclose that she was carrying his baby. He had political aspirations he though may be hurt if the community found out he had fathered the child. It turns out that the child wasn’t Alvin’s. After he found out, he stopped paying child support.
a. Q: Was the contract enforceable? A: Was the promise conditional? Did he say that he will pay for the child if it is his baby? Let’s say that he did not explicitly say that, so maybe the promise that Alvin made should be enforceable because of Michelle’s detrimental reliance. Let’s say Michelle had a good faith belief that Alvin was the father. But if Michelle got really drunk one night, wasn’t really totally sure what happened, would she still have a good faith belief that Alvin was the father? Did Alvin get something of value? He got silence, and this is what he was bargaining for (so his political aspirations wouldn’t be ruined.) In this case, even if there were a 50% chance that the child was his that could still hurt his political aspirations. So he gained from the contract.
b. Barnett’s theory of why some contracts are enforceable—promissory liability
1. According to Barnett, there are five reasons why promises ought to be enforceable:
i. Will-- the parties intended their promises to be legally enforceable. Problem: If it is based on intention, it must be based on subjective intention. Did this person really intend for that promise to be enforceable? And if you are only relying on subjective intention, there is a moral hazard in this. Using a subjective measure of intention must rely on some objective notion—and that objective notion is what most people would do. It is impractical to use subjective measures, but using objective measures is contrary to the intention of identifying subjective intention.
ii. Reliance--did the promisee rely to her detriment? If someone relies to their detriment on your promise, then that promise should be enforceable. We can look at this on a tort level, where an act that leads to a physical or mechanical non-cognizant response with an outcome of harm yields tort remedies. We have an act (promise) then reliance (the mechanism), and when that promise is broken there is a detriment to our promisee, and then we have our contract remedy. Problem: Barnett suggests that if we use something like this in contracts, the first thing to identify is if reliance itself was reasonable—and it may not be. Let’s say someone made an incorrect inference and then relied on it to their detriment. The promise will be enforced if it is reasonable. Then the circularity comes into play where what most people do defines what is reasonable, and what is reasonable will be treated as enforceable.
ii. Efficiency: the object of the law and legal rules is to bring about efficiency (this is the economic argument). There are two ways to think about efficiency:
a. What is the law?
b. Is the law efficient?
1) Barnett talks about allocative efficiency. For example, A is a producer who makes a good, a low-quality version for $10 and a high-quality version for $20. B is a consumer who wants this good and can’t distinguish between high and low quality. B buys at $15. Economic efficiency says that the good should only be given to B if B values it more than A does. The decision should be made to give the low quality product on allocative efficiency grounds, because by giving it to B we create a net gain of $5. If A were thinking about producing a high quality good, then the contract should not be enforced because it costs more to create the good. The key questions are: Who values the good the most? Who should get it? But sometimes there is an information limit and we won’t be able to parse this out.
2) Investment efficiency: C values A’s good at $100. A should produce the high-quality good and sell it to C because this creates a net benefit of $80. But what if A produces a high quality good, and then C says, “I’m only going to give you $50”? If A believes this, then A may not want to make a high-quality good. So for investment purposes, it makes sense to create enforceable contracts as a commitment mechanism. If you have a contract stand for something, then people can rely on that contract.
iv. Substantive fairness says “Enforce those promises that are fair.” Problem: How do you determine what is fair?
v. Process-based fairness relies on process which can be fair process, but doesn’t have to be. So long as the promises are exchanged in a particular fashion, the promises are enforceable as a contract. Problem: there could be flaws in the process; the process may be followed perfectly but isn’t fair; the process may not be efficient; or it may cause detrimental reliance.
But Barnett says none of these theories really help us. Professor Brooks maintains that all of these theories may help us because the sum of these gives us a useful, enforceable contract. Much of contract law is based on all of these, though not in sum.

II. Four types of enforceable promises: contracts
a. Modern American law recognizes four types of enforceable promises or contracts, each involving a transaction where something is added to the promise to make it legally binding:
i. promise + consideration
ii. promise + antecedent benefit
iii. promise + unbargained-for reliance
iv. promise + form
1. Consideration can be either a benefit to promisor or a detriment to promisee. It encompasses both a benefit to the promisor (the equivalent of the former quid pro quo) and a detriment to the promisee (the equivalent of the former requirement of injury in action sounding in assumpsit) This dual notion has continued to the present day, where a valuable consideration may be some right, interest, profit, or benefit accruing to one party or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other. The promisee who has incurred a specific, bargained-for legal detriment may enforce a promise against the promisor notwithstanding the fact that the latter may have realized no concrete benefit as a result of the bargain. Consideration is bargained-for exchange and implies that something happened.
The Second Restatement says:
1) to constitute a consideration, a performance or a return promise must be bargained for and
2) a performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise
3) performance may consist of a) an act other than a promise or b) a forbearance or c) the creation, modification, or destruction of legal relation
4) the performance or return promise may be given to the promisor or some other person. It may be given by the promisee or by some other person.

b. CASES:
Bolin Farms v. American Cotton Shippers Association (Western District of Louisiana, 1974) p. 18
Facts: Plaintiffs, 11 cotton farmers, wanted out of contracts in which they obligated themselves to sell and deliver their cotton. Defendants agreed to purchase whatever was planted at an agreed-upon price irrespective of price at actual harvest time (forward sale contract). Price of cotton unexpectedly skyrocketed to at least double the price agreed upon. 13 similar cases were all upheld in federal and state courts.
Issue: Validity and enforceability of a contract for the purchase and sale of cotton entered into between willing buyers and sellers, both adult and experienced cotton farmers and buyers.
Ruling: Contracts valid.
Rationale: Whatever causes the market to go up and down after the date of a contract has no relevance to its validity.

Kirksey v. Kirksey (Supreme Court of Alabama, 1845) p. 39
Facts: Plaintiff is widow with several children. Her brother-in-law who lives 60-70 miles away writes letter stating, “if you will come down and see me, I will let you have a place to raise your family…” Plaintiff leaves her own land after receiving letter (it was public land, under lease, and she might have attempted to secure the land) and goes to live with defendant. For two years she lives in a “plain comfortable houses” and land to cultivate; then defendant asks her to leave; puts her in an uncomfortable house in the woods; later throws her out of that house.
Issue: Was brother-in-law’s promise “mere gratuity?” If so, is the promise unenforceable?
Ruling: This promise is a “mere gratuity,” and actions in contrary to that promise of gratuity do not constitute a breach of contract. The Court says there was not any bargaining nor evidence that these exchanges, promises, or acts were bargained for.
Rationale: This is not a promise + consideration (though there was detriment to promisee, her giving up the land gives nothing beneficial to the brother-in-law, which is a condition for consideration; but in later cases, we will see that detriment alone will be sufficient for consideration.
Class Notes:
• Courts are often reluctant to consider psychic benefits, esteem benefits, emotional detriment, emotional harm, etc. because they are speculative and hard to measure
• Courts recognize emotional harms in contracts with tort-like elements
• Gratuitous promise v. promise + consideration: Is the condition an event that may or may not occur? If it does occur, is it likely to confer a benefit to the promisor? If so, it is most likely promise + consideration. If it doesn’t, it probably is a gratuitous promise with a condition
• Sometimes conduct itself will establish a contract: promissory estoppel. Here, the focus on the promisor-- should the promisor have reasonably foreseen that the promisee would detrimentally rely? Then ask if the person actually relied to her detriment. If so, the promisor is estopped from saying there wasn’t consideration. This theory of liability is based on promises separate from consideration (but this theory wasn’t in force at the time of the Kirksey case).
• Lost expectation of the promise cannot by itself satisfy the detriment requirement for consideration.
• Legal detriments are those you suffer specifically as a consequence of the promise

Hamer v. Sidway (Court of Appeals of New York, 1891) p. 40
Takeaway: Forbearance from activities that you have the right to do can count as sufficient consideration.
Facts: Defendant William E. Story, in the presence of guests, promised nephew $5000 to stop drinking, using tobacco, and playing cards or billiards for money until turning 21 years old. Nephew held up his end of the bargain and wrote asking for payment. Uncle responded, affirming entitlement to the money, but stating he would like to wait to pay until the nephew was “capable of taking care of it [money].” Defendant also offered nephew interest on the money. Nephew agreed. Defendant died without paying nephew any of the $5,000 or interest.
Issue: Does consideration require promisor receive a benefit?
Ruling: In limiting or abandoning his legal right to drink, play billiards for money, etc., the plaintiff restricted his lawful freedom of action within certain prescribed limits upon the faith of his uncle’s agreement. Now that the plaintiff fulfilled agreement, it is of no importance whether such performance actually benefited the promisor
Rationale: Consideration is not so much that one party profits as the other party abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of the first party.
Class notes:
• If the nephew hadn’t suffered a detriment, and, in fact, benefited from his abstinence, it is still sufficient to constitute consideration insofar as that he suffered legal detriment because he was not able to do things which were his legal right to do. The benefit would not matter.
• What is the difference in the detriment that the nephew suffered and the detriment Kirksey suffered? There are differences in how definite and explicit the promises are, but that’s not really it. The fact that the nephew stopped these activities is what induced the uncle’s promise; this is what made it bargained-for. It doesn’t matter who proposed it, we shouldn’t think of inducement as a response.
• In Kirksey, is the reason the brother-in-law made his promise to induce Kirksey’s actions? Her moving is not analogous to the nephew’s cessation of drinking.
• Inducement will be another test for consideration.
• Key question to test for consideration: is the condition what made the promisor make the promise?
• So when we talk about bargaining, we are talking about what induces people, that is, why the person made the promise in return.

Langer v. Superior Steel Corp. (Superior Court of Pennsylvania, 1932) p. 43
Takeaway: You only need one of these elements to constitute consideration: benefit to the promisor or detriment to the promisee.
Facts: Plaintiff Langer received letter from former employer that he would receive a monthly pension of $100 for the rest of his life, so long as he is not employed in any competitive occupation and his “good attitude.” Defendant paid $100/month for four years then notified plaintiff that the company would stop payments.
Issue: Did the letter create a gratuitous promise with a condition or an enforceable contract?
Ruling: Enforceable contract. (But ultimately Langer loses because it turns out that the company president didn’t have authority to bind the company to the agreement).
Rationale: Good consideration exists if one refrains from doing anything that he has a right to do, “whether there is any actual loss or detriment to him or actual benefit to the promisor or not.” It is reasonable to conclude that it is to the advantage of the defendant if the plaintiff, who had been employed by defendant for a long time and had a lot of knowledge, is not employed by a competing company--this must have been the inducing reason for inserting that provision. By receiving the monthly payment, plaintiff implicitly accepted the conditions imposed and was thus restrained from doing what he had a right to do (seek work). And this was sufficient consideration to support a contract.
The court says that the contract is also enforceable on the theory of promissory estoppel.
Class Notes:
• If the condition will benefit the promisor, you can fairly infer that the happening was requested as consideration.
• Promissory estoppel differs from equitable estoppel in that it rests on promise to do something in future, while latter rests on statement of present fact.
• Another test of whether it was bargained-for is whether or not both parties can breach.
• Inducement has to do with what the promisee promises in return. If there are multiple motivations, you just need one inducement: the inducement for the promise.
• Authority comes from agency law and agency principles. In this case we have an agent who works for the principal (Superior Steel), and an agent (the president) entering a contract with the third party (Langer). Sometimes when agents harm a third party through contract breach or torts, the principal is liable. Technically the agent is liable too, but the principal has to indemnify. But for the contract to be enforceable, the principal must have given the agent authority to enter into the contract.
• There are two types of authority: actual authority, where the principal makes manifest the agent’s authority to make certain agreements, and apparent authority, where it looks like the agent has authority but doesn’t.

Bogigian v. Bogigian (Court of Appeals of Indiana, Second District, 1990) p. 47
Takeaway: The mere presence of some incident to a contract, which might, under certain circumstances, be upheld as consideration for a promise, does not necessarily make it the consideration for the promise in that contract. To give it that effect, it must have been offered by one party, and accepted by the other, as one element of the contract.
Facts: Appelant David Bogigan and Hazel Bogigian divorce; Hazel given judgment for family home (in amount of $10,300 at the occurrence of various events including the sale of the home). David sold residence, Hazel executed a quit claim deed and the release of her judgment against David to effectuate the sale of the house. David claims that Hazel received a benefit, that is, the release from mortgage liability. David did not have equity in the house, sale did not provide funds to satisfy Hazel’s judgment, and David gave Hazel $5.00 as her share of the sale’s proceeds
Issues: Since Hazel received a benefit, was her release supported by consideration, even though she did not realize that she was signing a release of her judgment against David?
Should Hazel be estopped from executing the judgment because David relied to his detriment on her release?
Holding: Hazel’s release was not supported by consideration. She was not equitably estopped from asserting invalidity of release.
Rationale: To be valid, the release must be supported by consideration. Consideration consists of a bargained-for exchange. Hazel and David did not bargain for the release in exchange for any benefits flowing to Hazel for detriments incurred by David (she didn’t even understand what she signed). Because they did not bargain for the release, David failed to establish that the release was made with the intent that he act upon it: no estoppel.
Class Notes:
• Dissent says that Hazel did get value, and as long as she didn’t sign as a matter of fraud, the value didn’t need to be bargained for. Further, the benefit doesn’t have to come directly from the promisor.
• Equitable Estoppel: Hypothetical two parties: A and B. Facts: X, Y, and Z.
o If A can establish X, Y, and Z in court, then A has a valid legal claim against B. A wins.
o The way equitable estoppel works is that A shows X and Y through direct evidence, then A tries to show that Z is true by showing that B represented Z as true. B tries to introduce evidence that Z is not true. A objects saying B told me that Z was true, and I detrimentally relied on that statement in a way foreseeable to B. If A can show this, then the court says B is estopped from introducing evidence countering the representation. A wins.
o Let X be Hazel had judgment for $10,300, let Y be that said that money was due when the house was sold unless she independently released him, and let Z be Hazel’s release of David.
• The problem for the Bogigian majority had is that when Hazel represented B, she actually wasn’t cognizant of what she was doing. But the majority dismisses the equitable estoppel claim in another way: imposing an intentionality requirement. May be trying to protect Hazel from being duped by taking this narrow view.
• In the consideration doctrine, consideration has both procedural and substantive elements: the procedural element is what it is bargained-for; in addition to being bargained for, it must be valuable; we need both of these elements for consideration.
• Assumpsit: a promise made, either orally or on paper, that was not backed up by a seal.

Thomas v. Thomas (Queen’s Bench, 1842) p. 52
Facts: Plaintiff’s husband’s dying wish was that his wife have either the house in which he lived or 100 pounds. The declaration was relayed to the plaintiff’s brothers (one being the defendant) and they agreed to carry out the intentions. Agreement was that plaintiff would have a house for her life, or until she remarried. She agreed to pay 1 pound yearly for ground rent and keep house in repair. Defendant brought an ejectment after death of second brother.
Issue: Is there consideration for this contract?
Holding: Mere motive need not be stated, and we are not obliged to look for the legal consideration in any particular part of the instrument, we may look to any part.
Rationale: The stipulation for ground rent was not a mere proviso, but was an express agreement. In this case, the consideration was not stated in the usual place. However, in another part we find express agreement to pay annual sum and distinct agreement to repair.
Class Notes:
• Courts are not going to look at the adequacy of the consideration (that they aren’t going to look to whether the values are equal in the exchange) but they are going require value above a nominal amount.
• The judge talks about value flowing from the promisee, but understand that this does not reflect law (see Borgigan)
• The inducement test doesn’t work here, as the pound and upkeep aren’t what induced the conferment of the house. You can have multiple motives, and one motive must have both value and be bargained-for; the inducement was to follow the intentions of the brother, and this did not have value in the American courts. The judges disregarded the psychic or emotional value that the executors of the will may have derived and therefore did not have value in the eyes of the court.
• The bargained-for requirement wasn’t part of the common law in England at this time; American contract law is much more focused on this consideration requirement.
• Note that the breach test isn’t really part of the common law, but courts have used it over time to see if something was actually bargained for.
• Mutuality of obligation is satisfied here. The rent and the repairs were not merely attached to the gift; they are good consideration, newly created and not part of the old ground rent.

Haigh v. Brooks (Exch.Ch. 1840) p. 61
Facts: Plaintiff Haigh sold goods to Lees on credit. Defendant Brooks guaranteed in writing (guaranty) Lees’ debts (10,000 pounds). But that guaranty probably could not constitute consideration under the statute of frauds because of the way it was written (which referenced goods already received as opposed to goods to be received). Defendant induced plaintiff to surrender the writing in exchange for a promise that Lees would pay 9,666 pounds from 3 drafts when they came due. Lees did not pay. Plaintiff sued.
Issue: Was there consideration?
Holding: Plaintiff’s surrender of defendant’s guaranty in writing back to the defendant was sufficient consideration (without reference to its contents).
Rationale: The guaranty may, in fact, have had value, and that is good enough for consideration. The very fact that defendant bargained to get the written promise back it shows he had some value assigned to it. The bargaining itself may be enough to reveal value. The court says there was a benefit to the defendant in getting the guaranty back.
Class Notes:
• Is the court using an objective or subjective test? Subjective: so long as the defendant Brooks didn’t know that the goods had been delivered, there is a chance that there was value. The plaintiff was induced by the defendant’s promise to part with something which they might have kept, and the defendant obtained what he desired by means of that promise. A defendant cannot be justified in breaking the promise because he has discovered afterward that the thing in consideration of which he gave the promise did not possess the value which he supposed to belong to it. It cannot be decided that the value was what the defendant most regarded: he may have had other motives.

Apfel v. Prudential-Bache Securities, Inc. (Court of Appeals of New York, 1993) p.62
Facts: Plaintiffs devised an idea for a new computerized municipal securities system. Plaintiffs conveyed to defendants their rights to the techniques and certain trade names. Defendant agreed to pay specific rate based on use of its techniques (even if techniques became public knowledge or standard practice). Defendants tried to patent and get trademarks for techniques but were denied. Defendants said ideas they bought had already been in the public domain at the time of agreement. Plaintiffs promised they had not previously disclosed the techniques. After several years, defendant refused to continue payments.
Issue: Can an idea be legally sufficient consideration unless if it is not novel?
Holding: Showing of novelty is not required to validate the contract for purchase of idea, only that the idea is valuable. It is sufficient to prove that the party to whom the idea was disclosed was not aware of the idea. Lack of novelty does not in and of itself demonstrate a lack of value; the buyer can reap benefit from such a contract in a number of ways, such as not having to expend resources pursuing the idea through other channels, etc.
Rationale: Traditionally, parties at contract are free to make their bargain, even if the consideration exchanged is grossly unequal or of dubious value. It is enough that some real value in the eye of the law was exchanged. The fact that the sellers may not have had a property right in what they sold does not, by itself, render the contract void for lack of consideration. Defendant’s conduct shows that defendant received something of value (paying plaintiffs for more than two years, etc.). Here, the court is establishing the bargained-for aspect of consideration; plaintiff was unable to get a patent from the techniques, but they did get use. So even if the primary reason for entering the agreement was to get a patent, they still got value from use.
Class Notes:
• An aside question is “can you sell something you don’t own?” Defendant conceded that the idea for techniques came from plaintiffs. Thus, the question is whether the idea had value to the buyer and thus constitutes valid consideration. The court will not ordinarily go behind that determination.
• There is an issue of how sellers can prove that the buyer obtained the idea from them, and no one else. Does the buyer’s use thus constitutes misappropriation? There is no equity in enforcing a seemingly valid contract when it turns out that the buyer already possessed the idea.
• Novelty can establish both the attributes of ownership necessary for a property-based claim and the value of the consideration necessary for contract-based claim.
• Novelty is tricky; the seller presents idea to potential buyer; buyer can purchase idea; or can say they already knew about idea; then the seller of the idea is stuck.
• For something to count for consideration, it must be valuable, bargained-for. So the key is that it must be bargained-for and valuable
o The general rule for value is that you need something that is more than nominal value (more than a peppercorn [a small or insignificant thing or amount]- the “peppercorn test.”)
o Bargained-for and value provide evidence that there was a meaningful agreement between the parties. It also provides for exercising caution in decisions.
o Bargained-for and value also serve a channeling function. If you have a particular form to follow to make your promises enforceable, then the defined way will channel your promises in an efficient and appropriate way.

09.16.03-09.18.03

HAIGH v. BROOKS (1840) p. 61
Takeaway: For a guaranty to be enforceable under the statute of frauds, it has to show in writing that consideration was given for the promise to answer for the debt of another

Facts: Haigh sold goods to Lees on credit. Brooks signed a writing guaranteeing Lees debts to Haigh in the amount of 10,000 pounds. Brooks induced Haigh to surrender the writing in exchange for a promise that Lees would pay 9,666 pounds. Lees failed to pay, Haigh sued on the promise. Brooks argues that there was no consideration, saying that Haigh had already given the goods to Lees so the guaranty had no value.
Is there consideration?
Answer: Yes. Brooks gave up something (a promise) in return for something (getting the guaranty back).
Class notes:
• The very fact that Brooks bargained for the guaranty shows that it has value to him.
• The bargaining itself is sufficient to show value.

APFEL v. PRUDENTIAL-BACHE SECURITIES, INC. (1993) p. 62
Takeaway: The question is whether the idea had value, not whether it was novel

Facts: Apfel is an investment banker who has an idea of how to trade securities. He enters into a contract with prudential that states that prudential will pay him a certain sum of money in exchange for their using of the idea to trade securities. After a FEW years, prudential stops paying him. Prudential argues that the contract wasn’t valid for lack of consideration because Apfel had no property right since the idea was not novel.
Is there consideration?
Answer: Yes. Lack of novelty, in and of itself, does not demonstrate a lack of value. Here, the buyer concedes that the idea came from the seller and was not aware of the idea before the seller disclosed it. The buyer knows what he/she is buying and has agreed that the idea has value.
Class notes:
• Long negotiation period shows bargained for
• Novelty is not required for a contract to be valid
• Value
o If all Pru Bache was seeking was the ability to patent the idea, but they weren’t able to, then they received no value (Pru’s argument)
o However, Pru Bache also got use out of the idea
o Apfel was selling the property rights and the use rights.
 Since it couldn’t be patented, he didn’t have the property rights.
 Apfel Gave:
• Idea
• The rights to the idea
• Trademark
• The implementation of the idea
• Exclusive use of that idea coming from Apfel
• Even through rights & trademark had no value because it wasn’t patentable, Pru Bache still received the other items.
• The patentability issue is what’s interesting here.
o There was a chance that it could have been patentable.
o That chance is what gave value.
• How does the court view novelty?
o Usefulness
o It’s new to Pru Bache, that’s why there is value.
o They also bought Apfel’s silence.
o In many cases a seller of ideas will convey the idea to the buyer and the buyer will give the money. But after the seller conveys the idea, buyers may say “oh I already knew about that.” Then the seller is stuck. Novelty in this context is an evidentiary function. If the seller can prove that the idea really is novel (objective standard - most of the world didn’t know about it) or if you can prove that the idea is novel to the buyer (subjective standard) then the seller can win
 However that’s not where the contention in this case lies.
• For something to have consideration:
o Bargained for
o Value beyond something that’s nominal
o When we’re talking about consideration, what matters is what’s going on in the buyer’s mind, not necessarily the seller’s mind (be aware of fraud though)

IN RE GREENE (1930) p. 72
Takeaway: For consideration, there has to be value exchanged. “Peppercorn” exchanges do not count as value. For example, $1 paid in exchange for being given hundreds of thousands of dollars does not count as consideration.

Facts: Claimant was having an illicit affair with a married man, Greene (now deceased). Greene had made a contract with claimant to pay $1,000/month for their joint lives and a $100,000 life insurance policy and to pay rent for 4 years on her apartment. In return the claimant released Greene from all claims she had against him. The bankrupt failed to make payments after Aug. 1928.
Is there consideration?
Answer: No. Past illicit intercourse does not count as consideration and other returns have no value.
Class notes:
• PAST consideration does not count.
• Even if the affair wasn’t in the past:
o Illegality of his adultery
o Against public policy
• To the idea that the contract should be enforced because it was intended to be enforced is a “non-sequitor”
• Other things the Claimant gave in return:
o $1
o release from paying taxes
o seal
o “other valuable consideration”
o intention
• Why the claimants returns have no value:
o The release from paying taxes is not valid because he was never bound to pay taxes in the first place because the house wasn’t in his name.
o The one dollar is nominal.
o No longer recognizes seal.
o PAST ILLICIT intercourse.
o Intention: can’t enforce gratuitous contract.
o Other valuable consideration: vacuous
• Greene also promises to marry her once he divorces his wife (according to claimant but refuted by bankrupt).
o He’s proven unworthy of fulfilling his promises already because he’s cheating on his wife.
o So obviously a reasonable person shouldn’t rely on his promises.
o His promise to marry isn’t upheld except in a few states (i.e. Alaska)
• However, they went through a whole set of hoops to set up the contract, obviously it was bargained for.
o Court says “non-sequitor” but gives no reason.
o Why not enforce a clearly expressed intention?
 You can’t enforce gratuitous promises through contracts.
 If Greene really wanted to give the claimant these items, he should have done it as a gratuity or something else.
• This type of situation is referred to as a fraudulent conveyance. If the bankrupt had worked the contract with the claimant so they could keep the money and defraud the creditors that would be fraudulent.

FIEGE v. BOEHM (1956) p. 75
Takeaway: Forbearances from pursuing a certain legal claim counts as valuable consideration so long as you have (these are necessary):
- good faith
- reasonable belief.
You still have to satisfy the other elements (bargaining, etc.)

Facts: Suit brought by Boehm against Fiege to recover for breach of a contract to pay expenses incident to the birth of Fiege’s bastard child and to provide for its support upon condition that Boehm would refrain from prosecuting Fiege for bastardy. In January of 1951 around midnight Boehm and Fiege procreated, Fiege contests that he never had sex with Boehm. September 1951 birth and payment began. Fiege was supposed to pay the medical expenses and loss of salary because of childbirth and 10 dollars per week until the child reached 21. From 9/51 to 5/53 the payments totaled around $480. In 5/53 the defendant takes a blood test showing that he could not have fathered the child. He stops payment. (Civil Case). Boehm files bastardy charges. (Crim Case). September 1953 bastardy charges proceedings begin. Criminal case is settled one month later in 10/53. Boehm puts the child up for adoption in July, 1954. Opinion rendered in 1956.
Is there consideration?
Answer: Yes. Forbearance from prosecution is valuable, there is no proof of fraud or unfairness, charges are made in good faith.
Class notes:
• He promised something based on a fact that turned out to be not true.
• Forbearance from prosecution is valuable.
• Claims must be bona fide (subjective) and reasonable (objective) basis for support.
• Forbearance plus claim (as described above) = consideration.
• Why is there an element of force in this case?
o Let’s say sex happened and they are certain of that, but she’s not certain that he’s the father.
 Does she tell him that he’s definitely the father?
• Unenforceable - fraud
 Does she say she thinks he’s the father?
o Could there be a good faith dispute over whether or not sex actually happened.
• You need good faith and you need a reasonable belief that the charge is valid for there to be consideration.
o It doesn’t have to be belief beyond a shadow of a doubt, just a reasonable one (i.e. 50-50).
o What would happen if she entered into contract with the other guy as well?
 Without disclosing that the other preceding is happening, it might undermine the good-faith element.
• What about the fact that she breached the contract in response to him breaching the contract. (Aka he breached by stopping payment, and she breached by going forth with bastardy proceedings).
o As a general matter if someone breaches their contract, then you can’t breach your end to still have the full case against them.
o However in this case, the court says they won’t use that to prevent her from getting full contractual remedies.
• The fact that making the promise connected with the affection the father has for his child plus a naked promise or the moral obligation with the promise might be enough to make the promise binding.

JONES v. STAR CREDIT CORP (1969) p. 68
Takeaway: For a guaranty to be enforceable under the statute of frauds, it has to show in writing that consideration was given for the promise to answer for the debt of another

Facts: Plaintiffs, who are welfare recipients, agreed to purchase a home freezer for $900. With additional taxes and charges, the total purchase price became $1,234.80. Thus far the plaintiffs have paid $619.88 towards the purchase. Defendant claims that with various charges relating to the extension of time for payment, there is a balance of $819.81 still due. The maximum retail value of the freezer is $300.
Are the transaction and resulting contract unconscionable within the meaning of UCC $2-302?
Answer: Yes. The sale of a freezer having a retail value of $300 for $1,439.69 is unconscionable as a matter of law. Defendant has been amply compensated.
Class notes:
• Unconscionablility:
o Court can choose not to enforce the contract in total.
o Or can choose to not enforce the part that was unconscionable.
o Or you can limit the application of the unconscionable clause to achieve a fair result.
• Fraud is not required for unconscionability. (Not present in the instant case – the court decides)
• Contract must be found “unconscionable at the time it was made”
• The limited financial resources of the purchaser, known to the sellers at the time of sale, is weighed in determining unconscionability.
• Also, gross inequality in bargaining power
• Two types of unconscionability:
o Procedural – fine print, clauses (look for unfair surprise, things that negate your confidence that this thing was bargained for farily).
o Substantive – terms itself, price (look for lack of meaningful choice, gross inequality in bargaining power, commercially unreasonable contract)

WILLIAMS v. WALKER-THOMAS FURNITURE (1964/1965) p. 536/538
Takeaway: Ordinarily one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain. But when a party of little bargaining power (no real choice) signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that consent was really given to those terms. In such a case, the court should consider whether the terms of the contract are so unfair that enforcement should be withheld.

Facts: During 1957-1962, Williams, supporting herself and her seven children on public assistance, agreed to purchase a number of items from Walker-Thomas. 14 contracts were signed which provided that payments, after the first purchase, were to be prorated on all purchases then outstanding, effectively unless all payments were made on all items purchased, none of the items belonged to Williams. Therefore, if there was a default on any payment on any item, Walker-Thomas could reclaim all 14 items. Williams defaulted on a payment and Walker-Thomas sued for all of the items purchased by Williams. Williams claimed 1) there was no meeting of the minds; 2) the contracts are against public policy
Are the contracts unconscionable ?
Answer: Remanded to lower court for findings on unconsionability as a matter of law. It is hardly likely that Williams understood what she was consenting to.
Class notes:
• “Unconsionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” (pg. 539)
• Walker was almost inducing breach by selling all of these items to Williams
• If she fully understood the contracts, would that be OK? No, the contracts are still against public policy.


09.23.03: The Holmesian Contract Option and the Coase Theorem

Definitions
1. Allocative efficiency: the good ought to be allocated to the individual who values it the most. You will increase the aggregate social welfare if every time there is a choice between who wants a good, you always give it to the person who values it the most.
2. Remedies
a. Specific Performance: the court will make the parties do specifically what they agreed to do in the contract
b. Substitute Performance/Compensatory Damages/Money Damages (general category for the remaining four remedies, for these purposes we will treat them as the same, though you could draw ven diagrams for each that don’t overlap)
i. Restitution: the breaching party has to convey back to the non-breaching party any benefits that the breaching party reaped as a consequence of breaking the contract with the non-breaching party
ii. Reliance: breaching party has to pay non-breaching party all of the costs the non-breaching party laid out on reliance on the promise.
iii. Expectation: breaching party has to pay a sum of money that would put the non-breaching party in the same position she would have been in had the breach not occurred.
iv. Disgorgement: Any gains the breaching party gets by breaching must be paid to the non-breaching party.

The Efficient Breach Hypothesis/The Holmesian Contract Option
1. Example: Let’s say we have Abby and Ben and they are negotiating the sale of a car. Abby wants the car from Ben. Let’s say Abby values the car at $15,000 and Ben values the car at $10,000. After negotiation Abby agrees to give Ben $12,000 for the car and Ben agrees to give Abby the car.
a. Allocative efficiency implies Abby should get the car and there should not be a breach.
b. Let’s say that Abby paid her $12,000 up front and she is waiting for the delivery of the car.
c. Let’s also say that thinking she will receive the car, Abby rented a parking space and signed a 12-month lease at $100/month, paying first and last months up front ($200)
d. Just before Ben delivers the car, Caroline shows up and she offers Ben $14,000 for the car. Ben breaches the contract. Let’s say for the moment that Caroline values the car at $14,000)
2. So what ought the remedies be?
a. Let’s look at the five primary remedies
i. Specific Performance: Car
ii. Substitute Performance/Compensatory Damages/Money Damages
1. Restitution: Ben would have to pay Abby back the price, which was $12,000: P
2. Reliance: Ben would have to pay Abby the Price + the Reliance Damages, which is $13,200 (the reliance damages are 1200 for the 12-month lease, assuming she could not get out of the lease): P + r
3. Expectation: Here, had the breach not occurred, what value would the non-breaching party have enjoyed? Value (V) equals $15,000 (because this is how much Abby valued the car)
a. P is supposed to always be subsumed in expectation damages, but we will see that this will not always be true. (For example, for losing contracts)
b. What would have happened if the breach had not occurred? She would have the Value – Price she paid V-P. So if she hadn’t paid upfront, she would have had expectation damages of $3,000
iii. Disgorgement: Any gains the breaching party gets by breaching must be paid to the non-breaching party. D = how much the breaching party earned from the wrongful act, D = 14,000
b. Which of these remedies comply with allocative efficiency?


Caroline’s Values A Caroline’s Values B
$14,000 $20,000
Specific Car √ X
Restitution $12,000 X √
Reliance $13,200 X √
Expectation $15,000 √ √
Disgorgement $14,000 √ X

i. If calculated properly, expectation damages will always be efficient—the Efficient Breach Hypothesis/The Holmesian Contract Option. If you have the option to deliver the goods or breach, you will always make the efficient choice
1. This sort of rewards the breaching party. Rewarding the breaching party is a bit uncomfortable—promises ought to be kept.
2. People answer this by appealing to the Holmesian Option. Holmes said that the promise you make is to deliver the car or pay the remedy. So here, there is not a “wrong party.”
ii. If you’re going to have to pay the full cost of the harm you create, you will always have incentive to do the most efficient thing

The Coase Theorem: If transaction costs are zero, we will always get the efficient allocative result no matter which remedy we use
1. The fundamental of the Coase theorem is that it doesn’t matter which remedy you use—you’ll always get the most efficient result assuming they can privately bargain
a. For example, if the remedy is specific performance, and Abby values the car at 12,000 and Caroline values the car at 20,000, Ben can negotiate with Abby and say, “Why don’t I just pay you 15,100 instead?” Abby is better off than she would have been had she bought the car, and Ben gets to keep the car, and now he can turn around and sell it to Caroline for 20,000. Ben and Abby can negotiate around the contract remedy
b. If the remedy were restitution, and Abby values the car at 15,000 and Caroline values the car at 14,000, we would have inefficient breach. But let’s say that Abby approaches Ben and says, “I will be willing to offer you 14,100 for the car.” In this case, Ben is better off, and Abby is better off.
c. For disgorgement, let’s say Ben approaches Abby and tells her, “I now value the car at $15,000, I will give you $15,100 to release me from my contractual obligation,” and Abby releases Ben from his obligation. Now, he can turn around and sell it to Caroline

9.25.03-10.02.03

II. Preexisting duty rule - doctrine
a. Original rule is that the performance or the promise to perform a preexisting duty does not constitute consideration
b. However, the preexisting duty rule has been replaced by a good faith requirement:
i. A promise modifying a contractual duty will be binding on the promisor “if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made.” Restatement first Section 89
ii. The UCC 2-209 entirely eliminates the need for consideration in this context. The UCC requires only that the modification be made in “good faith” and for a “legitimate commercial reason.”
iii. Where there is “extortion,” “coercion,” or “the use of bad faith to escape performance” the UCC and courts regard the modification as ineffective and will permit the promisor to treat the promise as voidable.
c. CASES:

Levine v. Blumenthal (N.J, 1936) p. 81
Takeaway: A preexisting, enforceable duty cannot count as consideration for the purposes of contract formation. (original doctrine-no longer in effect in the firm way this court declares)
Facts: Leasers agreed to pay a certain amount of rent for two years, with an increase in the second year. It was found as a fact in district court that there was verbal agreement to allow the defendants to pay the original year’s amount of rent for the second year. Renters stated that their business was not going well, and that an increase in rent would put them out of business.
Question: Can the promise to perform a preexisting duty (in this case paying rent) count as consideration?
Answer: No
Rationale: Some consideration, even minor, is necessary to make a change to an original contract binding. Payment of part of a debt with a promise not to enter bankruptcy voluntarily is sufficient consideration. However, the fear of bankruptcy is not enough to show that the creditor requested that the debtor refrain from pursuing bankruptcy.
Class notes:
• In the initial contract, there was sufficiently high value and satisfied bargained-for requirement for consideration.
• At stage two, there was a modification, which is considered a new agreement.
• Agreeing to do something that you already have an enforceable duty to do does not count as any consideration.

Alaska Packers’ Association v. Domenico. (9th Cir. 1902), p. 84
Takeaway point: One cannot coerce a promise for increased compensation for doing that which he is legally bound to do by threatening non-performance. In this case, the court relied upon the preexisting duty rule (now defunct) rather than attempting to demonstrate economic duress.
Facts: Sailors agreed to work in Alaska for a set sum, but once there, demanded higher wages for the same work from the company’s representative. The representative claimed that he had no authority to alter the contract, but, being in a situation where it was impossible to bring in other workers, agreed to the change in pay. Later the company refused to pay the higher wages.
Question: Is there consideration when two parties renegotiate a contract after one party refuses to uphold its end?
Answer: No
Reasoning: In this case the appellant gains nothing from the new contract. The sailors were already required to work for less wages, and thus there was no consideration in making a new contract. The sailors were taking advantage of the necessities of the other party. The company is not estopped from showing that its promise was made without consideration just because they entered into a promise (that appellees claim) withdrawing their right to sue for damages.
Class notes:
• Person claiming that a modification to the contract is a good modification has the burden of proof. Burden of proof is on the party that wants an idiosyncratic preference in a contract outside of industry norms. (may or may not have been the case here)

Angel v. Murray (Sup.C. R.I.1974), p. 87
Takeaway: Preexisting duty rule is dead. Instead, the new rule does not “compel a modification of an unprofitable or unfair contract; it only enforces a modification if the parties voluntarily agree and if (1) the promise modifying the original contract was made before the contract was fully performed on either side, (2) the underlying circumstances which prompted the modification were unanticipated by the parties, and (3) the modification is fair and equitable. Good faith as an important element in these forms of modifications.
Facts: City of Newport had a series of 5 year agreements with Maher for collecting and disposing of all waste materials generated within the city. He twice requested additional amounts of $10,000 per year from the city council due to an unanticipated increase in refuse due to an unanticipated increase off 400 new dwelling units, and opposed to the assumed 20-25 new units per year. Trial court found for the plaintiff against Maher and the city.
Question: Can there be consideration in a case where a party requests more money due to unforeseen circumstances and the other party agrees?
Answer: Yes
Reasoning: UCC states that agreements modifying contracts need no consideration to be binding, and, from the 2nd Restatement, “a promise modifying a duty under a contract not fully performed on either side is binding if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made.”

Roth Steel Products v. Sharon Steel Corp. (6th Cir. 1983), p. 703
Takeaway: : “In determining whether a particular modification was obtained in good faith, a court must make two distinct inquiries: whether the party’s conduct is consistent with ‘reasonable commercial standards of fair dealing in the trade,’…and whether the parties were in fact motivated to seek modification by an honest desire to compensate for commercial exigencies.” Facts: Roth contracted to buy 200 tons of hot rolled steel per month for about a year, and also Sharon “indicated” that it could sell hot and cold rolled steel at various cheaper prices. During that year, steel prices skyrocketed, and Sharon told all purchasers, including Roth, that no price concessions would be honored. After threatening breach and reluctantly agreeing to renegotiations, Roth paid a higher but still under market value rate because “they were unable to purchase sufficient steel elsewhere to meet their production requirements.”
Question: Was there good faith here?
Answer: No
Reasoning: There was agreement that Sharon would have suffered a loss through the initial contract, and thus the modification was consistent with reasonable commercial standards of fair dealing. Coercive conduct (threatening not to ship any steel without a modification) is prima facie evidence of bad faith but may be rebutted by the party seeking enforcement of the modification. However, Sharon fails to rebut this evidence of bad faith (page 708), and thus fails the honesty in fact clause of the good faith requirement. The issue of economic duress was not officially decided by the appeals court because they had already found Sharon guilty of bad faith. However, they indicate in a footnote that proof of coercive means is necessary to establish economic duress, and that it cannot be used to void a contract modification sought in good faith. So, if good faith is found, the economic duress argument is moot according to this court.


II. Mutuality of obligation--doctrine
a. Can be thought of as the last part of “promise + consideration” after the bargained-for and value requirements
b. Both parties must have an enforceable obligation to the other in order for the promise to be binding
c. Only applies to bilateral, not unilateral contracts
d. CASES:

Rehm-Zeiher Co. v. F.G. Walker Co (C.A. Ken. 1913) p. 95
Takeaway: For mutuality to exist, both parties must be able to breach their promises, and the courts must be able, at some level, to determine whether such a breach has occurred.
Facts: Walker Co. entered into agreement to sell certain (increasing) amounts of whisky to Rehm Co. for five years. There was a part of contract stating that “[i]f for any unforeseen reason the party of the second part find that they cannot use the full amount of the above-named (whisky) goods, the party of the first part (Walker Co.) agrees to release them from the contract for the amount desired by party of the second part (Rehm Co.)” For the first two years, the plaintiff order less than the contracted amount, then sued because (after the price of whisky went up) the Rehm Co. would not sell the full amount stipulated in the third year of the contract.
Question: Can there be consideration if one party has the opportunity to modify the contract at any time at their own discretion?
Answer: No, where there is no standard that the court can judge by to determine if a party has met its obligation
Reasoning: There is precedent that one may have unspecified amounts in a contract (as in, “as much as is needed to fulfill contracts”), but in this case the words “unforeseen reason” leaves the amount entirely up the discretion of the second company. They do not require a “rational” reason or anything of the sort. If the first company tried to bring suit, it would fail because the Rehm Co. could simply claim any reason had arisen to not take the whisky, and therefore the contract was unenforceable. Since it was “nonenforceable by the Walker Company, either in whole or in part, it was certainly lacking in such mutuality of obligation as rendered it nonenforceable by the Rehm-Zeiher Company.” The fact that whisky was bought under terms of the contract for two years does not have any controlling weight in this litigation.
Class notes:
• Without mutuality of obligation there is no consideration because consideration is a promise bargained for and given in exchange for a promise.

McMichael v. Price. (Oklahoma, 1936) p. 98
Takeaway: This case is the foil to and demonstrates the limits of the Rehm-Zeiher case. Courts have a relatively low threshold for determining that a party has created a legally enforceable obligation for itself through its promise.
Facts: Plaintiff, an experienced sand seller in the past who was beginning a new sand selling business, entered into a contract to sell sand to the defendant. Defendant promised to purchase all sand that the plaintiff could sell, provided good quality, at a fixed percent price of market value. This agree was to last ten years. Defendant stopped purchasing sand before that time.
Question: Is there mutuality of obligation in these promises?
Answer: Yes
Reasoning: Plaintiff was bound to buy all the sand he was able to sell from the defendant, and thus he could have been made to respond in damages had he breached such a contract. The fact that he could have been held liable establishes mutual obligations of the parties involved.
Class notes:
• Both parties were able to breach, and thus there is a mutuality of obligations. Basic test is, “can both sides breach?”
• Assumption that, because of experience selling sand, there was an expectation that sand would be sold, and thus that both sides could breach. Fact that he was expected to sell sand counts as enough mutuality of obligation for these purposes.
• Courts only look for a minimal amount of obligation in these cases rather than an adequacy of obligation


Wood v. Lucy, Lady Duff-Gordon (C.A.N.Y. 1917), p.100
Takeaway: Different standards for charities - as a policy, courts want charities to rely on promises to they can keep doing good things, so it’s easier to satisfy requirements of promissory estoppel

Facts: Defendant, a fashion designer, agreed to give plaintiff exclusive rights to her design endorsement for a year, and to take one-half of all of his profits of contracts he might make (and give monthly statements to her and to take out the necessary patents and trademarks). The contract never stipulates that Wood has to enter into any contracts explicitly. She then gave endorsement to other fabrics without his knowledge and withheld the profits.
Question: Can there be mutuality through implication in the contract?
Answer: Yes.
Reasoning: “The law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal. It takes a broader view today. A promise may be lacking, and yet the whole writing may be “ instinct with an obligation, ‘imperfectly expressed.’ If that is so, there is a contract.” Wood had a business organization adapted to placing such endorsements, and the implication is that his business would be used for its purpose here. The fact that the compensation to defendant was a share of profits indicates that there had to be an implication, otherwise the transaction would have lacked the efficacy both parties must have intended it to have. His promise to pay the defendant one-half of the profits was a promise to use reasonable efforts to bring profits into existence. Also, he could have breached on the terms of the monthly statement or acquiring trademarks and patents.
Class notes:
• Cardozo creates an implied duty of good faith. Use of agency language implies duties through agency (employment). Leveraging the duty of care is assumed under agency.
• For Cardozo, the implied duty of good faith is apparent from the terms of the contract. Since (being a sophisticated actor) defendant agreed to half the profits (no up-front fee), it is implied that she expected Wood to use good faith efforts to sell her designs.


Omni Group, Inc. v. Seattle-First National Bank. (C.A. Wash. 1982), p. 103
Takeaway: Use of the idea of “good faith” as a duty that the promisor has, and that it may be enforceable.
Facts; Omni was purchasing property owned by the Clarks through an exclusive agency (Royal). Earnest money agreement was made. Important point was that such agreement included, in part, that the transaction was subject to Omni receiving an engineer’s feasibility report and that if the report was satisfactory to Omni, then they would notify the seller. Omni decided to forgo that study, which was agreed to by the Clarks. Later, the Clarks decided not to sell.
Question: Was the engineer’s report a necessary precondition for the contract to occur?
Answer: No
Reasoning: There was no mutuality of obligation because making obligations subject to a satisfactory report made the promise illusory. “A promise for a promise is sufficient consideration to support a contract.” Making a promise dependent upon a condition does not make it illusory. “Satisfactory” requirement in the contract does create an obligation because it is a matter of fact, so it does not make the promise illusory.
Class notes:
• Condition Precedent
o Once an occurrence happens to satisfy one part of the contract, then the other part becomes binding. Either before (fire insurance-if your house burns down, we will pay x), or after (unless you didn’t have working smoke detectors).
o In conditions based on a future occurrence (I will pay you x to wash my car, if I drive to work today) where it is enforceable, the contract will still be enforceable
o Other case where the will of the promisor is unverifiable (I will pay you x to wash my car, if I feel like it) often is not enforceable. How do you verify if these conditions are realized?
• Omni case
o Omni is claiming that they will pay if the report is satisfactory to them. They waived the report, and the argument from the plaintiff is that there was an implied understanding that the parties would use good faith to get that report. So, since Omni chose in good faith not to get the report, there still was a valid contract.
o Idea of “satisfaction” with the report as illusory: Court argues that this is a decidable question of fact, decidable through a reasonable person standard. Or, even if we use a subjective standard, we could have a jury/fact-finder decide if the Omni employees were telling the truth about their “satisfaction” with the report. Omni also had to give notice to the Clarks within 15 days about their satisfaction (if they are satisfied), so Omni does not have total discretion along the “satisfaction” lines.


Summary-the traditional model of contracts that we’ve been studying

Promise Plus
(1) Consideration
a. What counts as valuable consideration? (act, promise, forbearance)
b. What doesn’t count? (peppercorn, form-like a seal-forbearance from invalid claims, pre-existing duties, past consideration,)
i. Note: some of these, like preexisting duty rule, do not hold up over time)
c. Elements
i. Adequacy doesn’t matter (in reality, not always true)
ii. Parties must have meaningfully meant for there to have been a commitment (no reserved discretion, i.e. mutuality of obligation)
iii. Bargained for requirement
1. inducement test
2. benefit test
(2) Moral obligation
a. A benefit conferred upon promisor
(3) Detriment (promissory estoppel)
(4) Form

III. Implied contracts and Moral obligation--doctrine
A confers benefit on B does A expect to be compensated?
• If No, it was a gift, but it could be converted into a contract later
• If Yes, does B’s conduct imply that B expected or should expect to pay A?
o If Yes, then there is a contract implied in fact (with expectation damages)
o If No, then there could be a contract implied by law [smaller subset of restitution] (same as quasi contract, related to: restitution [liability arising because someone was deprived of something], unjust enrichment, quantum valebat, quantum meruit). In order to be a quasi contract (same thing as contract implied in fact), one must ask and show:
 Did B receive the benefit?
 Did B appreciate (accept) and retain the benefit (did B have the opportunity to reject the benefit)?
 Injustice (fuzzy notion)


Mills v. Wyman (1825), p. 114
Takeaway: Though the defendant had a recognized “moral duty” to pay, because he had no preexisting obligation to take care of his son (who was an adult), there can be no legal enforcement unless there is some gain to the promisor himself (defendant).
Facts Plaintiff took in defendant’s sick son. Son died, and the defendant (father) wrote a letter promising to pay such expenses. The father was not legally obligated to care for his son anymore, because the son was 25 years old. There was no consideration in the promise except the relation between defendant and his son. Father then refused to pay the expenses.
Question: Can a moral obligation in itself create a binding promise?
Answer: No
Reasoning: Regarding moral obligations, they are not enough on their own to be sufficient consideration. Instead, “there must have been some preexisting obligation, which has become inoperative by positive law, to form a basis for an effective promise.” (Such as a legal obligation that, due to a procedural matter has voided the contract, and the parties agree to make it count again)
Class notes:
• Since there was no present consideration, father had no opportunity to reject the services of the plaintiff, and therefore there is also no implied contract here

Manwill v. Oyler (Sup. C. Utah 1961), p. 117
Takeaway: Even prior legal obligation plus antecedent promise to pay after the statute of limitations may not combine to create consideration for the promisee. Strong focus in this case is on the necessity of explicit consent.
Facts; Plaintiff made payments on behalf of defendant between 1950-4 on a farm, grazing permit, and cattle. Action on those transactions were barred by the stature of limitations. Plaintiff alleged that in 1957, defendant made an oral promise to pay $5,500. Law states that an action to promise to pay after the statute of limitations is up must be in writing.
Question: Contract implied in fact? Even if there is one, can a subsequent verbal promise (in Utah) count as consideration?
Answer: No and No
Reasoning: Moral obligation, taken alone, would “practically erode to the vanishing point the necessity for finding a consideration.” There is basically always a moral element to any promise (note: contrast with Holmes’ view of contracts as non-moral). Plaintiff failed to prove that it was reasonable to suppose that the promisee (plaintiff) expected to be compensated when he made the payments on behalf of the defendant.
Class notes:
• This Court is really concerned with the promisor. If a promisor wants a moral obligation to have binding force, he or she must make it very clear and explicit in order for the court to enforce it.

Webb v. McGowin (C.A. Ala. 1935), p. 121
Takeaway: Contrast this case with Mills v. Wyman. Here, either a benefit to the promisor or an injury to the promisee counts as sufficient legal consideration for the promisor’s later agreement to pay.
Facts; Plaintiff, acting under his work duties, was dropping a 75 pound pine block when the defendant walked under it. In order to prevent injury to the defendant, the plaintiff fell with the block, being crippled in the process. Defendant agreed to pay for the care of the plaintiff, and did so until his death, after which his estate stopped payment.
Question: Where a promisee cares for, improves, or preserves the property of the promisor, though done without his request, is it sufficient consideration for the promisor’s later agreement to pay for the service because of the benefit received?
Answer: Yes.
Reasoning: “A moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit, although there was no original duty or liability resting on the promisor.” “Benefit to the promisor or injury to the promisee is a sufficient legal consideration for the promisor’s agreement to pay.” In this case, both existed. It is not the case that a moral obligation requires a previous legal obligation, where the promisor is morally bound to compensate the promisee for a material benefit conferred. “In such cases the subsequent promise to pay is an affirmance or ratification for the services rendered carrying with it the presumption that a previous request for the service was made.”
Class notes:
• Use of the “material benefit” rule: if you get a direct antecedent benefit, it is sufficient consideration for a subsequent agreement to pay for the service.
• In this case, the court states that saving a life is a material benefit.
• Direct material (antecedent) benefit + moral obligation. + subsequent promise = consideration.

Harrington v. Taylor (Sup. C. N.C. 1945), p. 124
Takeaway: In this case, the court did not use the “material benefit” rule, instead using the traditional theory of moral obligation that without a preexisting legal obligation there is no consideration in an agreement (moral obligation) to pay for a previous benefit that was not asked for.
Facts; Defendant’s wife was in the house of the plaintiff. Defendant entered house and attacked her, and the wife knocked him down with an axe and was going to kill him when the plaintiff intervened and stopped her, but the plaintiff lost use of her hand because of the axe in the process. Defendant agreed to pay for her damages, but only paid a small sum and nothing more.
Question: Was there a contract based on promissory estoppel?
Answer: Yes.
Reasoning: A voluntarily performed humanitarian act is not a legally recognized consideration for a later promise.
Class notes:
• Opposite ruling as Webb v. McGowin.
• Possible reasons for differences here:
o Home situation here v. work situation in Webb case
o Gender roles
o Loss of plaintiff’s ability to work in Webb case
• In this case there was no duty according to court- it was a voluntary act. Different jurisdictions can follow different rules with regards to moral obligation theory.

10.9.03-10.16.03

I. Promissory Estoppel – doctrine
a. In certain instances, promises without consideration can be binding
b. One of these instances is promissory estoppel
c. Statutory basis:
Restatement (Second) § 90(1) “Promissory Estoppel:
A promise which promisor should have reasonably expected to induce an action or forbearance and does induce that action or forbearance is binding if injustice can only be avoided by enforcement of the promise and the remedy for breach is limited by what justice requires.
d. Requirements for asserting promissory estoppel:
i. Promise given which promisor should reasonably expect to induce action
ii. Promise does induce action
iii. Injustice can only be avoided with enforcement
e. Damages: typically RELIANCE
f. CASES:

KIRKSEY v. KIRKSEY (Alabama, 1845) p. 39
Takeaway:
• Early court decision decides that reliance does not count as consideration if there is no benefit to promisor – probably different result later based on promissory estoppel.

Facts: Plaintiff is widow of defendant’s brother. Upon brother’s death, defendant wrote to plaintiff and said “if you come down and see me, I will let you have a place to raise your family”. Later she came down, but after a period of two years, he evicted her.
Issue: Is her reliance on his promise to her detriment suitable consideration?
Ruling: No
Rationale: Promise was “mere gratuity,” and plaintiff getting up and moving did not constitute adequate consideration.
Class notes:
• Consideration v. condition: placing a condition on an agreement does not constitute consideration in the absence of benefit to promisor: if the condition being satisfied benefits the promisor, then it’s probably consideration; if the satisfaction does not benefit the promisor, then it’s probably not.
• Mutuality: when looking for consideration, ask whether or not both people could be eligible to be sued; in Kirksey, if the widow could be sued for NOT moving, then it might be consideration—if not though, then probably not
• Inducement Test: No bargaining here: the promise that he received that she would come did not induce his promise of land. Courts want people to really think about making their promises, and the mechanism by which this is ensured is the bargaining process
• Detriment: what you give up specifically as a result of the promise you receive
o Lost expectation of promise cannot satisfy “detriment” requirement: her sense that she would have gained x and y if she had stayed on living there for another year does not entitle her to request x and y as damages
o Emotional detriment doesn’t often count because it is deemed too speculative, unverifiable; only time emotions come in is when the contract breach is more like a tort

RICKETTS v. SCOTHORN (1898), p. 130
Takeaway point:
• Court holds promise enforceable in absence of consideration because grandfather intentionally induced Π to alter position for worse – early instance of modern promissory estoppel analysis

Facts: Katie Scothorn was working a $10 a week job when her grandfather came in and gave her the promise to pay her $2,000 suggesting “none of my other grandchildren work”. She promptly quit her job, presumably on this promise of future financial support. When the grandfather died he did not arrange to have the money left to her, although he expressed regret in being unable to pay rest of note.
Does Katie have a claim against her grandpa’s estate?
Answer: Yes. The grandfather, having intentionally influenced/induced Π to alter her position for the worse on the faith of the note being paid when due, has to pay, even though there was no consideration.
Class notes:
• First question: was there consideration? No: grandfather didn’t get anything -- we can’t count “good feelings” grandfather got from giving money as consideration
• Second question: did promise induce the detriment (i.e. quitting job)? No: she probably would have gotten the money whether or not she quit
• Damages: courts typically award reliance damages for promissory estoppel, but courts have discretion
o In this case, Katie gets expectation damages
o She could have gotten reliance damages, and they would be calculated as follows:
 $10 a week times 52 weeks = $520 (what she would have gotten) minus $120 (what she got) = $400
o NOTE: because damages are generally limited to reliance for promissory estoppel, you’d rather have consideration because you can generally expectation, i.e. GET MORE MONEY

HOFFMAN v. RED OWL STORES (1965), p. 435
Takeaway:
• promissory estoppel can be used to recover damages in absence of a clear contract and finalized details
• damages are limited to “those necessary to avoid injustice”

Facts: Lukowitz (as agent for Red Owl) made an agreement with Hoffmans that Red Owl would build a store and stock it with merchandise in return for Πs putting up $18,000. In reliance on this agreement, Hoffmans sold their bakery building/business and grocery building/business; they also rented a house in Chilton where they thought they were going to move. Basically, Hoffman let Red Owl know he could only get $18,000, and he received assurances like “everything is ready to go, get your money together and we are set.” Things seemed to change over time, though, and ultimately Red Owl asked for $34,000. At this point, Hoffman said he couldn’t go along with this. So they had negotiated but had not reached final agreement on all details at the time Π withdrew from negotiations.
What role out Red Owl’s promises and representations play in the damages (if any) awarded to Hoffman?
Answer: There is an element of promissory estoppel even though all the details weren’t squared away. However, this shouldn’t be treated like a breach of contract case and damages must be limited to only those necessary to avoid injustice – in this case, the difference between what he sold the grocery store for and its fair market value, and not anticipated profits, etc.
Class notes:
• Court is clear that this was never a contract – the terms weren’t sufficient to create an acceptable offer
• However, the details are sufficiently clear to justify a claim of reliance
• Damages analysis: allows damages limited to those necessary to avoid injustice, i.e. reliance
o in this case, Hoffman only gets difference between fair market value of store and the price he received
o he does NOT get expected profits, because the court thinks this would be expectation
o he is allowed, however, to indirectly incorporate expected profits from high season into fair market value

GROUSE v. GROUP HEALTH PLAN (1981), p. 147
Facts: Grouse is a pharmacist working for Richter Drug. He interviews with Elliott at Group Health, and later with Shoberg (general manager). They go well and Elliott offers Grouse a job. As a result of this job offer, Grouse quits his current job and turns down another job offer with Veteran’s Administration Hospital. Due to administrative problems getting a necessary reco for Grouse, Elliott hires someone else. When Grouse is ready to start work, there is no longer a job for him with Group Health, and he has trouble finding employment elsewhere.
Can we use promissory estoppel here?
Answer: Doctrine of promissory estoppel suggests Grouse should get damages. There is some concern that with employment contracts, the employer should be at liberty to “fire” employee whenever they want – Group Health argues it shouldn’t make a difference whether Grouse gets let go a day before work or a day after. The court agrees, saying in both cases Grouse needs to be given “a good faith opportunity to perform his duties to the satisfaction of respondent once he was on the job”. This is not meant to imply, however, that employer will be liable whenever he discharges an employee. (But where do you draw the line?)
Class notes:
• Issue of agency: Elliot may not have had authority to make job offer
o Maybe apparent authority: it is reasonable for Grouse to believe that Elliot had the authority to hire him
o Maybe estoppel (authority) – if the principal knew of or should have known of the belief by the third party that an agency had the authority to make the offer and if that principal could have, at reasonable cost, corrected that belief, and yet chose not to, and if the third party relies to his detriment on that belief, then the principal is estopped from denying the existence of authority

COHEN v. COWLES MEDIA (1992) p. 152
Takeaway: Application of promissory estoppel analysis to award damages despite (1) no intention to contract and (2) possible intrusion of 1st amendment

Facts: Cohen gives disparaging info about rival political candidates to newspapers on promise of confidentiality. Papers cited Cohen as the source in breach of this confidentiality promise, identified him as an associate of the Republican gubernatorial candidate, and named the advertising firm where he worked. The editors decided that the identity of the source of the information was as newsworthy as the information itself. Cohen was fired on the same day that the newspaper stories were published. Jury verdict for Cohen for $200,000. Putting aside 1st amendment issues…
Is the award sustainable on theory of promissory estoppel?
Answer: Yes. Reporters expected to and did induce Cohen’s disclosure with promise of confidentiality, and some remedy is necessary to avoid injustice.
Class notes:
• Was there a contract? NO
• Some issue of agency and authority here: Whether or not there was actual authority, could there be an apparent authority or estoppel argument?
• Even though there’s no intention to contract, there’s an intention to induce reliance
• Court uses stricter Restatement First analysis (looking for “substantial reliance”), but courts now go with less strict analysis of Restatement Second (at top) – unclear why they decided to use this analysis

ALL-TECH TELECOM v. AMWAY CORP. (1999) p. 157
Takeaway:
• If a contract exists, a Π cannot collect on a theory of promissory estoppel
• In certain cases, reliance may be higher than expectation, but you can’t go for reliance

Facts: Amway warranties to All-Tech tele-charge technology but somehow this warranty breaks down and there is a bunch of breach litigation. All Tech suffered costs on the basis of these representations and so is suing on three different claims:
1) Breach of contract (warranty)
2) Tort of misrepresentation
3) Promissory estoppel
Basically the jury found that a contract existed and was breached but the jury awarded $0 damages. So then they try to get tort but they’re shut down because of economic loss. Then they try to collect on basis of proimissory estoppel but Posner says they can’t because they do have a binding contract.
Why would remedies be different? Contract might only give expectations, which could be $0, whereas promissory estoppel may be reliance and what has already been spent, which may be more.
• With expectations, court tries to put party in the position the party would be in if breach hadn’t occurred.
• In reliance, court tries to put someone in same position if contract had never been formed.
• In 99% of cases, expectations will be higher than reliance damages – but in “losing contracts”, this might not be true
• Economic loss doctrine – only the injured person or owner of damaged property himself can win tort damages – e.g. you can be compensated if your store gets burned down in a tort (pure economic loss), but you can’t be compensated if you relied on that store for merchandise, etc.. Why do this?
o There are costs and benefits for tortfeasor and for the indirect loser that aren’t accounted for if the indirect loser just gets paid
o Assuming there are ex ante contracts and such, any losses will hopefully be worked out in that way

ALLEGHENY COLLEGE v. NATIONAL CHAUTAUQUA BANK (1927), p.134
Takeaway: Different standards for charities – as a policy, courts want charities to rely on promises to they can keep doing good things, so it’s easier to satisfy requirements of promissory estoppel

Facts: In 1921, Mary Yates Johnston, response to a fundraising drive at Allegheny College, promised in writing to contribute $5,000 beginning 30 days after she died for a scholarship fund in her name. In 1923, she paid the first $1,000. In 1924 she repudiated her promise and gave notice to the school. Still, 30 days after she died, the school brought action against the executor of her will to recover the unpaid balance.
Does Mary have to pay the rest?
Answer: Yes. The moment the college accepted the $1,000 there was an assumption of duty to maintain the memorial and name. The duty to maintain the name was sufficient consideration to establish a bilateral agreement. We don’t even need to consider if this is a promissory estoppel case.
Class notes:
• Cardozo treats this as a “bilateral agreement”, yet this is in the section of promissory estoppel – what gives?
o Cardozo seems to want to have Mary give full $5,000 and this is why he frames it as a bilateral contract
• Requirements for Detriment (consideration):
o (i) detriment must induce the promise AND
o (ii) promise must induce the detriment
o in our case, we don’t have (i) – Mary didn’t make the promise of money on the basis of the college’s detriment of “not pursuing other monies for scholarship fund”—for promissory estoppel, only (ii) is necessary
• Current Doctrine of Promissory Estoppel:
o Restatement § 90(2) – a charitable subscription is binding without proof that a promise induced a detriment – so (ii) isn’t even a requirement

FEINBERG v. PFEIFFER CO. (1959), p. 141
Takeaway: Court rules enforceable contract based on promissory estoppel

Facts; Feinberg Π was promised, as per a meeting of her company’s (Δ) board of directors, an increased salary and “retirement pay (at any time she may see fit to retire) of $200 per month, for the remainder of her life”. Feinberg didn’t know about this in advance and would have continued working for awhile no matter what. The promise created no condition for the pension. She quit and received the checks for roughly 7 years, at which time new management and new accounting firm decided to cut her checks in half because there was no contractual obligation.
Was there a contract based on promissory estoppel?
Answer: Yes. It was not valid consideration that she continued working for several years after the promise was made, as nothing in the promise was contingent on her continued employ. However, she did retire and thereby give up the opportunity for continued employment in reliance on the $200 a month pension.
Class notes:
• There is no basis for consideration
o 40 years of devoted and able service – PAST consideration doesn’t count
o worked an additional 2 years after pension was available – no mutuality because she didn’t have to
o bargained for her early retirement – no mutuality, the company could fire her at any time
o bargained to keep her – no mutuality, because offer does not say she has to stay


10.26.03-11.06.03

1. Statute of Frauds - doctrine
a. Doctrine:
i. Central Concept: Some contracts are only enforceable if they are in writing.
ii. Statutory Basis: UCC 2-201 (See page 173-174)
iii. Types of transactions in which writing is generally required:
1. Involving real estate.
2. Take more than one year to perform.
3. Surety agreements (to pay the debts of another person)
4. For goods in excess of $5,000.
b. Case Applications

THE ONE YEAR CLAUSE: North Shore Bottling Co. v. C. Schmidt & Sons, Inc. (N.Y. 1968) p. 169
Takeaway:
 The statute of frauds “one year” provision applies only to agreements that are, by expressed stipulation, not to be performed within one year; if it is possible for contract performance to be completed within one year, then the contract is not covered by the “one year” provision in the statute of frauds.
Facts: Plaintiff and Defendant made an oral agreement making Plaintiff the exclusive wholesale distributor of Defendant’s beer in a particular county for as long as the Defendant sold beer in the NY metropolitan area. The Defendant then breached the oral agreement.
Issue: Does the agreement fall under the statute of frauds (making it unenforceable)?
Ruling: No.
Rationale: The terms of the contract made it possible for performance to occur within one year. The statute of frauds “one year” provision only covers contracts in which parties cannot perform within one year.
Class Notes:
 Performance vs. Destruction: The key provision in this case permitted one party to terminate the contract within one year. The defense contended that termination is not performance, but is the destruction of the contract, which would not excuse the contract from the statute of frauds writing requirement (because destruction isn’t performance/completion). However, if the contract makes an actual provision regarding termination, as it did in this case, the termination simply becomes performance.
 Completion vs. Excuse: Presumably some unanticipated event could happen that would excuse performance within one year of a contract, such as a factory burning down. However, in such a case the contract would not be considered completed (and thus would not fall outside of the statute of frauds “one year” provision; again, contracts only escape this statute of frauds provision when they can be completed within one year).

COMPLIANCE WITH THE STATUTE OF FRAUDS: Crabtree v. Elizabeth Sales Corp. (N.Y. 1953) p. 177
Takeaway:
• A document, even if unsigned, might be allowed to support a prior signed document if it either (1) specifically mentions the prior document or (2) obviously deals with the same subject as the prior document. (i.e. All of the writing needed to satisfy the statute of frauds writing requirement doesn’t necessarily have to be in the same place.)
Facts: Terms for the Plaintiff’s employment with the Defendant were laid out in several documents, and not all of these documents were signed. In order to satisfy the statute of frauds requirement
Issue: Can unsigned, supplementary documents be considered part of a written contract?
Ruling: Yes.
Rationale: If later documents clearly refer to the same subject as a prior signed document, these later documents may be considered part of the written contract (even if they are unsigned or if their creators were not intending to draft evidence of a contract).
Class notes:
• Oral Evidence: If a supplementary document no longer exists, the court can consider oral evidence about what it said.
• A written contract does not need to be comprehensive in order to satisfy the statute of frauds; however, the most essential features are terms regarding quantity and a signature.

EFFECT OF NON-COMPLIANCE: DF Activities Corp. v. Brown (7th Cir.1988) p. 184
Takeaway:
• If a party admits the existence of an oral contract that would ordinarily be governed by the statute of frauds, it is enforceable. However, if one party swears that the contract was not formed, the case can’t go on merely so the other party can try to badger him or her into an admission.
Facts: Plaintiffs claim that they had an oral contract with the defendant to buy a chair for $60,000. The Plaintiffs grant that such a contract would be governed by the statute of frauds, and admit that the Defendant has denied the existence of the contract.
Issue: Should the court permit the Plaintiffs to continue to depose the Defendant in the hopes that they will be able to badger him into admitting that there was a contract?
Ruling: No.
Rationale: The chance that the Defendant will make an admission is too slim to justify further discovery.

2. INTRODUCTION TO REMEDIES
a. Basic Concepts
i. 3 Ways to Breach & Trigger Remedies
1. Failure to perform at the time agreed
2. Repudiation of a promise or bargain
3. Bad Faith (preventing or hindering the other party’s performance or otherwise failing to cooperate)
ii. Basic Remedial Policies
1. A contractual duty is usually conditioned on the other side not breaching its own promises.
a. If there is a material breach, the non-breaching party can suspend or cancel performance and sue for damages; parties usually don’t have the option to cancel if the breach is non-material
2. Specific performance is usually only ordered if the contract is unique or if monetary damages are inadequate.
3. The primary purpose of damages is to put parties in the position that they would have been in had the defendant fully performed
a. Punishment is rarely an objective – instead of encouraging people to keep their promises, the law seeks to assure those who might rely on the promises of others.
4. In order to recover, a Plaintiff must show:
a. The breach was the cause of the losses they’re claiming
b. The size of the loss (with reasonable certainty).
5. Damages must have been reasonably foreseeable.
6. The Plaintiff must make efforts to mitigate damages resulting from a breach.
7. The Parties are able to expand or narrow remedies in their contracts.
8. Plaintiffs may also be awarded interest on damages or litigation costs.
iii. Case Applications

Sullivan v. O’Connor (Mass. 1973)
Takeaway:
• There is no rule barring recovery for psychological injury.
• Commercial losses are also covered, provided they were foreseeable and can be proven.
• General overview of types of damages, included below.
Facts: An entertainer contracted for plastic surgery on her nose with a physician who had promised to “enhance her beauty.” The doctor ultimately performed extra surgery to try and get it right.
Issue: What damages are the defendant owed?
Ruling: She is awarded reliance damages, including restitution and all other damages that flowed from the breach (including her psychological injuries).
Rationale: Contracting parties are to be put in the position that they’d have been in had the contract been performed as promised, and psychological damages are part of the equation.
Class Notes:
• The Court did not rule on the question of expectation damages because the plaintiff waived her appeal on that matter.
• Types of Possible Damages in this Case:
1. Out of Pocket Expenses of Plaintiff
a. With Respect to the Defendant
b. With Respect to Other Parties
2. Consequential Damages
a. Foreseeable Commercial Losses
b. Foreseeable Psychic Losses
3. Pain and Suffering
a. With Respect to the First Operation
b. With Respect to the Second Operation
c. With Respect to the Third Operation
• In this case:
o Restitution [Giving the plaintiff back what she gave the defendant] (received here): 1a
o Reliance Damages [Putting the plaintiff in the position that she’d been in if she’d never entered the contract] (received here): 1, 2 (the difference between what she has and what she’d have had if she’d not had the surgery, and kept her average nose), 3
o Expectation Damages [Putting the plaintiff in the position she’d been in had the contract been fully performed] (not reached in this case): 2 (the difference between what she has and what she’d have had if the surgery had improved her nose), 3c (what she suffered in a surgery that she never would have had if the first surgeries had been as successful as promised)
• Expectation damages are the standard remedy in American Law.

Curtice Brothers Co. v. Catts, (N.J. 1907) p. 200
Takeaway:
o Specific performance may be ordered when the goods contracted for are unique, or in other circumstances where monetary damages would be insufficient.
Facts: The Plaintiffs can tomatoes, and give the Defendants cash for their entire crop of tomatoes. The Defendants breach, and the Plaintiffs seek specific performance of contract
Issue: Can the Court order specific performance?
Ruling: Yes.
Rationale: Specific performance can be ordered in contracts for the sales of personal property if no adequate remedy at law exists (this is based on the features of the contract or the unique needs of the parties). Here, because Curtice Brothers depends on the availability of tomatoes of certain quantity and quality for successful operation of their business, specific performance may be ordered.
Class Notes:
 Specific performance is typically used in cases involving real estate because of the difficulty in measuring its value.
 The Courts typically seek to avoid the Constitutional problems that may arise if they ordered people to work; in this case they said that if the farmers refused, they could simply be forced to pay for someone else to harvest the tomatoes.

Hadley v Baxendale (1854) p. 206
Takeaway:
o The victims of a breach of contract are only eligible to be awarded consequential damages that were reasonably foreseeable at the time that the contract was made.
Facts: Plaintiffs mill was stopped when their crankshaft broke. An employee sent by the Plaintiff to arrange for a replacement did not relate to the carrier that the mill was stopped and that the shaft had to be sent immediately. The contract for delivery was breached by a delay.
Issue: What damages must the defendants pay to the mill?
Ruling: Only those damages that were reasonably foreseeable at the time that the contract was made. They weren’t aware that a delay in delivery would prevent the entire mill from operating.
Class Notes:
 Objective Standard: Damages must have been reasonably foreseeable to the breacher at the time the contract was formed.
 Statutory Basis: Second Restatement § 351—damages are not recoverable unless they were foreseeable by the breachor at the time of contract, and foreseeable can be through circumstances or specifically informed.
o § 353(3): court can limit damages even if they were foreseeable
o UCC 2-715(2): won’t have to pay consequential damages if the buyer could have prevented the loss (like mitigation)—if you can reasonably mitigate the loss and you choose not to, you don’t get that expense even if it is foreseeable.

MENTAL ANGUISH & PUNITIVE DAMAGES

Bohac v. Department of Agriculture (Fed. Cir.2001) p. 211
Takeaway:
o Emotional/mental harm is recoverable only when it was reasonably foreseeable at the time that the contract was made. (Section 353 of Second Restatements)
Facts: A whistleblower was fired, and she brought a claim that included a request for emotional/mental damages.
Issue: Are the emotional/mental damages recoverable?
Ruling: No.
Rationale: These damages were not “reasonable and foreseeable consequential changes” that were recoverable under the terms of the contract.
Class Notes:
 Contracting parties typically do not foresee non-pecuniary losses and they are thus typically not recoverable. Exceptions are found in Restatements § 353, which says mental anguish is recoverable when it either accompanies physical harm or is “of such a kind that serious emotional disturbance was a particularly likely result.”
 The word “compensatory” in a contract is typically interpreted to refer to non-pecuniary damages.
Hawkins v. McGee (N.H. 1929) supplement
Takeaway:
o Damages that were not foreseeable or could have been mitigated by the non-breaching party are not included in expectation damages.
Facts: A doctor was aggressive in his attempts to convince the parents of an injured son that he could fix the son’s hand. The hand didn’t turn out “perfect,” as the doctor had promised.
Issue: What damages does the doctor owe?
Ruling: Expectation damages.
Rationale: True measure of the plaintiff's damage in the present case is the difference between the value to him of a perfect hand or a good hand, such as the jury found the defendant promised him, and the value of his hand in its present condition, including any incidental consequences fairly within the contemplation of the parties when they made their contract (that could not have been mitigated).
Class Notes:
o The doctor’s promise of a perfect hand induced the son to enter the contract.


Acquista v. New York Life Insurance Company (N. Y. 2001) p. 216
Takeaway:
o Emotional harm is recoverable only if reasonably foreseeable at the time of contract; the Court can charge more than the state-adopted interest rate in determining damages for deterrence purposes.
Facts: Plaintiff becomes ill, and is later diagnosed with a disease that might convert into leukemia. The plaintiff’s insurance company denies his application for disability benefits, claiming that he could still do his job.
Issue: What damages is he owed?
Ruling: The amount of the contract plus interest, which is determined with an interest rate greater than that adopted by the state in order to prevent the breaching party from profiting through its breach.
Class Notes:
o The Court also justifies its ruling on the grounds that contract damages plus interest may not actually put the patient in the position that he’d have been in had the contract been performed. The court augments its discussion of incentives for insurance companies by suggesting that the delay in receiving money may have cost the patient more than the state-adopted interest rate.

Boise Doge, Inc. v. Clark (Idaho 1969) p. 221
Takeaway:
o Courts are to take into account the totality of the circumstances in evaluating the appropriateness of punitive damages.
Facts: Clark buys a car and later finds out that Boise had rolled back the miles. Clark then stopped payment on his check for the car, and sued Boise for breach of contract and deceit. Boise is appealing the damage award.
Issue: What punitive damages are appropriate?
Ruling/Rationale: The circumstances of the case—calculated commercial fraud in an area of sales where consumers are unable to gain accurate information about the product—render punitive damages appropriate.
Class Notes:
 Relevant considerations in determining punitive damages include their potential deterrent effect, the motives of the defendant, the degree of calculation involved, and extent of defendant’s disregard for others.
 The Court says that there does not have to be a mathematical formula, but says that there needs to be a reasonable relationship between actual damages and punitive damages.

11.11.03

ACQUISTA v. NEW YORK LIFE INSURANCE COMPANY (2001) p. 216
Takeaway: Damages can be expanded beyond just the amount specified in contract for mental/physical anguish or punitive reasons.

Facts: Doctor became ill and was diagnosed with a condition that would likely turn into leukemia, told he must stay away from radiation. He suffers from fatigue, headaches, and diffuse muscle and joint pain. Doctor feels he is disabled, applies for disability benefits, but insurer rejects his claims because they think he can still perform some of “the substantial and material duties” of his regular job. Contract: Acquista gave money to NY Life Ins Co. agents and NY was supposed to give 3 disability policies.
Acquista has four claims:
• Breach of contract
• Bad faith
• Fraud and fraudulent misrepresentation
• Negligent infliction of emotional harm
What damages, if any, should be awarded?
Answer: No reason to limit damages recoverable for breach of a duty to investigate, bargain, and settle claims in good faith to the amount specified in the insurance policy.
Class notes:
• The Court looks at the bad faith allegation
o Insurance company says “so what? There’s no morality aspect to breach of contract, at least in New York”
o Court of Appeals says you’re right, but we’re not satisfied. So instead of giving a whole new set of damages based on bad faith, we’ll just expand the current damages (B).
 Does not necessarily mean punitive damages are being imposed, could be disgorgement of the insurance company or consequential damages that were foreseeable at time of breach.
 Some states allow tortuous claims when an insurer breaches contract, the Court in this case decided not to take that route.
• One type of damage = B + rB where r is state determined interest rate and B is policy amount.
o However, if “i” is the interest rate the NY Life would receive by keeping the money, and i>r, then NY Life would have an incentive to decline to cover or pay on any claim, they would breach every time.
o Damages larger than B+ iB would serve to dissuade NY Life from breaching contracts.
• For the negligent infliction of emotional harm claim (not addressed in the case), Brooks says:
o If the harm was foreseeable at the time of contract, it is possible to recover.
o Typically this claim is an independent action.

BOISE DODGE, INC. v. CLARK (1969) p. 221
Takeaway: There should be a reasonable relationship between actual and punitive damages, but remedy does not have to be confined in cases such as these (willful, wanton, gross, or outrageous actions) to actual damages. Confining remedies to actual damages gives companies like Boise an incentive to fraudulently represent cars, because they would take a small hit the few times they got caught, but overall it would be more profitable to fraudulently represent cars.

Facts: Boise sold a car to Clark that had 165 miles on the odometer and described as “new”. Really, the mileage had been rolled back from 6, 968. For the purchase of the car, Clark traded in his car valued at $1,100 and issued checks totaling $2,062. Clark discovered that the car was used and stopped payment. Boise sued for the checks, Clark counterclaimed for damages for breach of contract and deceit as well as punitive damages. The jury in the trial court chose to enforce payment from Clark but then gives Clark expectation damages ($2400 - $2050 = $350). The jury also awarded Clark $12,500 in punitive damages. On appeal, Boise questions whether the award of punitive damages was proper.
Answer: Yes. In case of willful, wanton, gross, or outrageous action, punitive damages may be awarded.
Class notes:
• Remedies
o Breach of contract would be expectation damages (value of car as represented – actual value)
o Deceit would be compensation (price – actual value)
• Typically the price you pay is less than the value, so expectation damages would be better.
• Determining punitive damages
o Enforcement rate (e) * actual damages (A) compared to cost of avoiding harm
 If e < 1, then that would not deter fraudulent behavior
 Damage multiplier (DM) = perfect enforcement/actual = 100%/e = 1/e
 How does that affect what the total award should be?
• A*DM = total award = P + A
• Where P = punitive damages
• 1/e*A = P + A  P + 1/e*A – A  P = (1/e – 1)*A
• The smaller the e, the higher the punitive damages you should have.
o Look at:
 Actual damages sustained by plaintiff
 Deterrent effect of such an award upon persons similarly situated to the defendant
 Motives actuating defendant’s conduct
 Degree of calculation involved in defendant’s conduct
 Extent of defendant’s disregard of the rights of others
• Is it appropriate when taking into account punitive damages, how wealthy the defendant is?
o From the formula, you don’t, but courts do it all the time
o Courts are hesitant to award punitive damages if it will make the defendant bankrupt.
• Note in Campbell the Court said you can’t award punitive damages that are more than 10 times the actual harm (can’t use an e that’s less than 10%)

Mutual Assent

EMBRY v. HARGADINE, MCKITTRICK DRY GOODS CO. (1907) p. 231
Takeaway: Meeting of the minds is not determined by the secret intention of parties but by the expressed intention.

Facts: Embry works for Dry Goods Co. Contract expires in December, meets with President to renew it for a year. President says “go ahead, you’re all right; get your men out and don’t let that worry you.” Contract is terminated a few months later. Embry brings suit based on breach of contract.
Was there a valid contract?
Answer: Yes. If the conversation happened as Embry says, and Embry understood that he was employed, then there was a valid contract in law. It is only necessary that a reasonable man would have understood what McKittrick said to be employment and that Embry so understood it.
Class notes:
• At trial level, jury had to find
o (i) The conversation (S) actually happened
o (ii) McKittrick intended S to imply the contract
o (iii) Embry inferred S to imply the contract
o (ii) and (iii) are sometimes referred to as “meeting of the minds”
• Trial court finds (ii) wasn’t present
• Appellate court say (ii) is not required
o It’s not what McKittrick intended
o It’s what a reasonable person would infer as what McKittrick intended.
• What a reasonable person infers from a statement is usually a factual matter (would be remanded to jury), but in this case the court says “as a matter of law, no reasonable person could infer S differently.”
• (iii) is necessary. The party hearing the statement has to make a reasonable and good faith inference to sustain the claim.
• Could have an equitable estoppel claim here (although that wasn’t brought up).
• It sounds like Embry relied to his detriment based on the promise by McKittrick – is this the same type of evaluation we would do for promissory estoppel?
o With promissory estoppel you look at reasonableness from perspective of promisor (vs. in this context we look at promise from perspective of promisee).
• Court is basically saying that they think Embry is reasonable, so we’re not worried about (iii)

LUCY v. ZEHMER (1954) p. 233
Takeaway: A person cannot claim that he was merely jesting when his conduct and words would warrant a reasonable person to believe that he intended a real agreement.

Facts: W.O. Lucy and J.C. Lucy are suing the Zehmers for specific performance of a contract in which the Zehmers sold to W.O. Lucy a tract of land containing 471.6 acres for $50,000. Lucy and Zehmer are sitting around before Christmas drinking together; they have a conversation about selling land for $50,000. They write up a contract signed by the Zehmers saying they would give up the land for $50,000. Lucy offers $5 to ensure that the contract and Zehmer refuses. Waitress even testifies that Zehmer said it was joking. Lucy goes out and gets his brother to put up half of the money. Lucy goes back to Zehmer and Zehmer says I was only joking (he claims that he told Lucy he was joking right after the contract was made). Zehmer’s attorneys admit that he wasn’t too drunk to make a contract.
Is the contract valid?
Answer: Yes. The evidence shows that Lucy was warranted in believing that execution of the contract was a serious business transaction.
Class notes:
• Does it matter whether Zehmer was joking?
o No. It matters what a reasonable person believes
• Court doesn’t believe the parties were too drunk to contract - must have specific performance of contract
• In addition to bargained for consideration, we have to have mutual assent.
• Detrimental reliance issue
o If you’re going to sacrifice subjective intent and replace with an objective requirement, you better have a good reason like real detrimental reliance
o The fact that Lucy lost 5 minutes of hope isn’t great enough for a general interest in subject intent.
o The assent requirement is no longer a meeting of the minds, just want to make sure that there is an objective standard – statement heard by a reasonable person would mean x.
o Objective standard is huge compromise on what we generally want with meeting of minds
• Problems with Appellate Court’s ruling
o Relies to excessively objective extent on its own reading of the facts and what’s going on instead of turning to trial court
o Troubling that the appellate court reverses the trial court’s finding that there was no contract, because the trial court hears all of the evidence of what occurred during the execution of the contract, the appellate court gets a much more objective record.
o Even if it did want to override and say there was a satisfactory objective expectation, what was it protecting? 5 minutes of expectancy?

11.18-11.25: The Tail-End of Mutual Assent, Reason-to-Know, Offers, Acceptance, and Navigating the UCC

COHEN V. COWLES MEDIA COMPANY (Minnesota, 1990), p. 241
Takeaway:
• Intent and mutual assent differ in that intent is about the desire of the parties to enter into the agreement, while mutual assent looks for the elements of an agreement and is less concerned with a demonstrable desire to enter the contract
Facts: Two newspapers published a story that raised charges against a DFL nominee for governor. The papers identified and cited Cohen as the source. Cohen definitely gave the papers the information in return for the reporters’ promises that Cohen’s identity be kept confidential. The newspapers’ editors overruled the promises
Question: Whether the law should superimpose a legal obligation on a moral and ethical obligation (here whether the promise to keep Cohen’s identity secret, which was a moral and ethical obligation, should be legally enforceable)
Answer: No
Rationale: The law does not create a contract where the parties intended none, and the law does not consider every promise exchange as binding. The Court does not believe the reporter and the source think they are engaged in making legally binding contracts; the parties are thinking in terms of offers and acceptances in a commercial or business sense.
Class Notes
 The court uses both a subjective and objective standard to decide the case. Subjectively, the court says we’re going to look at the actual intent of the parties. However, the court goes on to say that reporters and their sources don’t usually think that they are entering into these contracts, and therefore ends up going with more of an objective notion
 The court is saying, look, reporters and their sources don’t typically tend to intend for these agreements to be enforceable, and the court uses this to say that in this context, there wasn’t an agreement that was enforceable in court
 Professor Brooks thinks the Plaintiff could make a solid promissory estoppel claim, because Professor Brooks thinks that consideration for the contract is in place. But Professor Brooks doesn’t think the court went far enough in demonstrating that there wasn’t intent between the parties.

REASON TO KNOW
1. The “reason to know” standard
o (1) Did some party, “A,” understand that the other party, “B,” made a promise?
 If not, there is no manifestation of assent.
 In order to have manifestation of assent, A must have that understanding.
o (2) If A did have that understanding, the next question is whether B knew party A had this understanding (and this is a question of actual knowledge) at the time of his conduct (and that conduct could be words or acts)
• Note that actual knowledge is a departure from the “reasonable person” standard. A and B can be completely unreasonable.
 If yes, then we have mutual assent
o (3) If the answer to number 2 is no, the next question is which of the facts of the total situation B did know (again, this is actual knowledge) (i.e. what aspects of the general circumstances did B actually know about?)
o (4) After answering number 3, we ask, ”given this actual knowledge and B’s level of intelligence (this varies in different jurisdictions, some jurisdictions will actually use a measure of intelligence of a reasonable person and other jurisdictions will use B’s level) should he have inferred A’s understanding?”
 If the answer to number 4 is yes, then we say that B had “reason to know”—this is the “reason to know” standard.
 If number 4 is not satisfied, it gets a little messier. The next question would be should B have reasonably inferred A’s understanding? And you can ask whether B could have corrected the misunderstanding, and if B could have done so then B might be held responsible. But if correcting the misunderstanding were too costly or an extreme possibility, it is unlikely that there will be any liability on B.

RAFFLES v. WICHELHAUS (the Peerless Case) (Court of Exchequer (England), 1864) p. 393
Takeaway:
• There is no contract if there was no consensus between the parties (no mutual assent)
Facts: Wichelhaus agreed to buy cotton from Raffles, which would arrive by the ship,
the Peerless, sailing from Bombay. They also agreed on the quality, quantity, and rate.
Well, the goods did arrive via the Peerless, sailing from Bombay, in December, but the
ship that Wichelhaus meant was the Peerless that arrives from Bombay in October.
Wichelhaus didn’t accept the cotton, and Raffles sued him.
Issue: If parties attempt to enter into a contract, but have a different understanding of the ship that is to deliver the goods, and there are in fact two different ships, is there a contract?
Ruling: No
Rationale: Nothing on the face of the contract shows which Peerless was meant
Parol evidence can be given to show Raffles meant one Peerless and Wichelhaus meant another. There was not consensus and therefore there wasn’t a contract
Class Notes:
• This is a case of a failure to meet mutual assent, rather than a mistake.
o A mistake would be that there is a truth out there, a truth “Z” and Raffles may think Z is really X, and the other party may think that Z is really Y—this will be a mutual mistake, they are both mistaken about the truth. You could also have a unilateral mistake where only one of the parties is mistaken about the truth.
o Mistake does have a strong subjective component
o But the mistake here could be that each party was mistaken about the other party’s understanding—

II. OFFERS—doctrine
a. If the other party did not have the power of acceptance, then there isn’t an offer, but if the other party did have the power of acceptance, then there is an offer
b. An offer conveys the power of acceptance to another person—the test is always could the person have accepted?
c. Background notes
i. Remember that the offeror, or the person making the offer, is the master of the offer
ii. Offers can be destroyed in several ways
1. The offeror can revoke the offer (§36 of the Restatement)
2. Offers can also be destroyed after a lapse of reasonable time (§36 of the Restatement)
3. If the offeror dies, the offer is destroyed and you can’t collect from the offeror’s estate, for example, the offer is destroyed (§ 36 of the Restatement)
4. Additionally, if the offeree rejects the offer, the offer is destroyed (§38 of the Restatement)
5. Also, the offer is destroyed if the offeree makes a counteroffer (in making the counteroffer the original offer is destroyed) (§39 of the Restatement)
iii. There is often distinction between a revoked offer and a withdrawn offer
1. Revocation occurs after the other party has learned of the offer.
2. A withdrawal hits the offeree at the same time or before the offer.
d. Timing—when do offers, acceptances, counteroffers, and revocation take place?
i. Offers: take effect when they are received
ii. Acceptances: take effect when they are sent
iii. Counteroffers: take effect when they are received
iv. Revocations: take effect when they are received
v. Promise does induce action
vi. Injustice can only be avoided with enforcement
e. CASES:
LONERGAN v. SCOLNICK (California, 1954) p. 245
Takeaway:
• Fixed purpose rule: offers must be sufficiently clear and definite to count. Offers cannot be too ambiguous, they must be really obvious.
• How do we reconcile this case with Embry v. McKintrick? Well, in Embry, the terms were not ambiguous because it was a renewal contract—but offers need to be clear and definite to count!
Facts
• The Defendant placed an ad in the newspaper for the sale of his land. The Plaintiff makes an inquiry to the Defendant in March, and the Defendant responds by sending a form letter on March 26. On April 7, the Plaintiff asks for more information, and on April 8, the Defendant gives the information, but writes that the Plaintiff must hurry if really interested because the Defendant expects to have a buyer within the next week or so. On April 12, the Defendant sells to a third party, and on April 14, the Plaintiff gets the April 8 letter from the Defendant. On April 15, the “would be offeree”-Plaintiff “accepts.” The Plaintiff is suing for specific performance or damages if specific performance is impossible
Issue
• Did the Defendant make an offer to the Plaintiff?
Answer
• No
Rationale
 The ad was a mere request for an offer, the March 26 letter contained no definite offer and clearly stated that it was a form letter, and the April 8 letter added nothing in the way of a definitive offer, and indicated that the def intended to sell to the first-comer and was reserving the right to do so
Class Notes
o The Appellate court says that there was not an offer because (1) the ad was not really clear and (2) the form letter was just a form letter with information.
o The April 8 letter was deemed to be more about negotiations, and wasn’t sufficiently definite to constitute an offer

SOUTHWORTH v.OLIVER (Oregon, 1978) p. 267
Takeaway:
• It is an offer if the offeror objectively intended it to be an offer
• It is an offer if the offeree reasonably believes that she has the power to accept
Facts: The Defendant approached the Plaintiff about a sale of land. The Plaintiff expressed interest and the two parties spoke on the phone, et cetera, to talk about the deal. The Defendant subsequently mailed a letter to the Plaintiff with two attachments (Attachment 1: selling 2933 acres, $324 K, 29% down, Rest over 5 years at 5%, Also selling: grazing permits Attachment 2: selling 6365 acres). The Plaintiff thought this was an offer, and accepted the first attachment save the part that said “also selling: grazing permits.” The Defendant’s lawyer drafted a letter of return to the Plaintiff saying this wasn’t an offer, and certainly it wasn’t for you to “pick and chose.” The Plaintiff then sued.
Question: Did the letter constitute an offer to sell land?
Answer: Yes
Rationale:
• The Court looked at what was said and what can be necessarily implied from what was said to decide that the Plaintiff could reasonably infer there was an offer
• It only counts as an offer it there was an intent for it to be an offer—but this intent does not have to be subjective, it is your words and actions
• You have the power to accept if you think that given the circumstances, the power to accept was conveyed to you


BRETZ v. PORTLAND GENERAL ELECTRIC (9th Cir. 1999) p. 272 (not assigned for class,
but was discussed briefly).
Takeaway:
• The law construes acts and words as having the meaning a reasonable person would put upon them in view of the surrounding circumstances
Facts: Bretz sent a letter to PGE offering to buy PGE’s stock in another company, Beartooth. PGE responded by sending a revised version of Bretz’ letter with a request that he resubmit his letter as an offer. Bretz replied with the revisions. PGE responded by stating that the amount Bretz offered as not enough, but PGE would be receptive to an increased the price, and that PGE “would appreciate you resubmitting your offer on the above basis.” Bretz responded with another letter that stated he was accepting PGE’s counteroffer. Bretz then entered into a contract with a third part based on the assumption that he had contracted to purchase PGE’s stock in Beartooth. Bretz is suing for breach of contract and equitable estoppel
Question: Did the letter, in light of previous negotiations and expectations of the parties, reasonably lead Bretz to believe it was within his power to close the deal by accepting? Was Bretz’ equitable estoppel claim valid?
Answer: No, No
Rationale: In light of PGE’s language in the letter (stated PGE was “receptive to an offer” from Bretz, referred to another commitment PGE would have to free itself from, specified the deal had to be closed in a certain way, requested that Bretz resubmit his offer), it is clear PGE’s letter was an invitation to continue negotiations. For equitable estoppel, even if Bretz believed there was a valid contact with PGE, he entered into the third party contract on the same day he mailed the letter to PGE; the contract with PGE could not be formed until PGE received the letter (acceptance of counteroffers counts upon receipt of the counter-offeror)
Class Notes:
• Professor Brooks wasn’t sure that the estoppel claim was decided fairly.

LA SALLE NATIONAL BANK v. VEGA (Illinois, 1998) p. 284
Takeaway:
• If someone does not have the power to ultimately accept, it is not an offer
Takeaway:
Facts: Mel Vega entered into a transaction with Buyer 1, La Salle Bank, to sell his property. Vega also entered into a contract with Buyer 2, Borg. The real estate contract prepared by La Salle’s agent Ruekberg said that the La Salle is purchasing the property on the behalf of Trust 10952. La Salle Bank is the trustee for Trust 19052, making Ruekberg an agent of the trustee. Ruekberg prepared the document and signed it and Vega subsequently signed the document. However, the document stipulated that it had to go back to the trust for signature. Therefore, the trustee did not confer the ultimate power of acceptance to Vega. La Salle is seeking specific performance of the contract, and if that it isn’t available, damages. Buyer 2 intervened and filed a claim to ask for specific performance of his purported contract and a declaration that the contract between Vega and La Salle was not valid.
Question: Could the contract be formed without execution of the document by the trust?
Answer: No
Rationale: The contract’s language (especially, “upon the trust’s execution, this contract will be in full force”), makes it apparent that the document was not a contract; when the language of an offer governs the mode of acceptance required, ad an offer requires written acceptance, no other mode may be used
Class Notes
• The document was an offer because Vega conferred the power of acceptance to the trustee. And since the trustee did not sign it, we don’t have a valid contract

III. ADS AS OFFERS
a. To count as an offer, the ad must be clear and definite, leaving no room for negotiation
b. From Emanuel: Most advertisements appearing in newspapers, store windows, etc., are not offers to sell. This is because they do not contain sufficient words of commitment to sell (this “sufficient words of commitment to sell” is the clear and definite, leaving no room for negotiation).
c. CASES

LEFKOWITZ v. GREAT MINNEAPOLIS SURPLUS STORE (Minnesota, 1957) p. 249
Takeaway:
• For ads to be enforceable they need to be clear and definite, leaving no room for negotiation.
• The ads must make it clear who you are giving the power of acceptance to—doing so makes the chances of converting the ad to an offer increase
Facts: The store published ads in the newspaper two weeks in a row that offered merchandise for $1 on a “first come, first served” basis. The first ad said the merchandise was worth “to $100” and the second ad said the merchandise was worth “139.50.” Lefkowitz went to the store both weeks, was denied the merchandise and told that a house rule that the offer was intended for women only and sales would not be made to men. The house rule was not listed in the newspaper, and Lefkowitz brought suit for damages for breach of contract.
Issue: Did the ad constitute an offer?
Answer: The first ad did not constitute an offer, but the second ad did constitute an offer
Rationale: When an offer is clear, definite, and explicit, and leaves nothing open for negotiation, it constitutes an offer, acceptance of which completes the contract; whether an ad is an offer rather than an invitation to make an offer depends on the legal intention of the parties and the surrounding circumstances
Class Notes:
• An ad can count as an offer if it is clear, definite, and explicit, leaving no room for negotiation; an ad is especially likely to count if it specifies who can accept.
• Why is the house rule of “only for women’ defective?
o The condition has to come before the acceptance, and it is too late to modify the offer after the acceptance.
o The house rules weren’t actually stipulated in the advertisement, and therefore came after acceptance (the acceptance was showing up at the store)
• If Lefkowitz accepted the first ad, why is it not a valid contract?
o To constitute offers, the ads have to be clear and definite, and the term “worth to $100” means we are not putting a definite value on the coat; the court enforces the second ad because it provides a specific value, as opposed to the “worth to $100”
o But Professor Brooks does not see that specifying the worth as opposed to saying “worth to $100” makes the second offer more valid.
o The court is probably okay with enforcing against the store because the store is getting some benefit from the ad, that is bringing people into the store at 9 AM and they will probably go ahead and shop for other items as well.
o Professor Brooks thinks that the court is sensitive to deceptive practices by the store and wants to attach liability, and also the court may be sensitive to Lefkowitz appearing each week

CARLILL v. CARBOLIC SMOKE BALL CO. (England, Court of Appeals, 1893) p. 296
Facts: Defendant produces a medicine called the “Carbolic Smoke Ball.” The Defendant placed an ad in the paper saying that anyone who caught influenza or other cold-induce disease after using the ball three times/day for two weeks would be entitled to 100£. In the ad, the Defendant stated it had deposited 1000£ in a bank account to show its sincerity. Plaintiff “on full faith of the ad” used the carbolic smoke ball from 11/20/1891-1/17/1892, then caught the flu. Plaintiff is suing for 100£
Question: Was there a valid contract between the parties?
Answer: Yes
Rationale: The ad is a promise, rather than a mere puff, especially in light of the deposit “as proof of sincerity. Advertisements offering awards are offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer.
Class Notes:
• The court says that anybody who performs all of these clear and definite conditions have accepted the advertisement’s offer
• The Defendant told Carlill, “We will give you 100£ if you use the carbolic ball accordingly and you get a cold.” What is the consideration? The detriment to Carlill, the promisee, of using the smokeball (she didn’t have to use it). There is also the benefit to the Defendant of future sales. Notice that the initial sale does not count as consideration, but prospective sales count as additional consideration.
• Beginning performance under a bilateral contract does not convert it into an irrevocable offer but instead constitutes acceptance.
• The offeror gave up the requirement of notification through implication; by laying out exactly what needed to happen in the ad, the Defendant was basically saying, “We didn’t need explicit, ex ante notification.”

LEONARD v. PEPSICO, INC. (S.D.N.Y., 1999) aff’d 2d Circuit p. 253
Takeaway:
• To make an offer generating the power of acceptance, you have to have intent to make the offer or you should reasonably know that what you are doing will be inferred to be an offer
Facts: The Plaintiff is a young man who watched a Pepsi television commercial that encourage consumers to collect “Pepsi Points” and redeem point for Pepsi merchandise. The commercial included a scene where a teenager flies a Harriet Jet to school and the commercial announces Harriet Fighter 7,000,000 points. The jet was not featured in the catalogue. The Plaintiff raised the points, wrote in the Harriet Jet, and sued for specific performance of the jet
Issue: Did the commercial constitute an offer?
Answer: No
Rationale: Ads are presumptively not offers; there would be no enforceable contract until the Defendant accepted the order form and cashed the check. The judge uses the “objective reasonable person standard” to decide that no objective, reasonable person would have concluded the commercial actually offers a Harriet Jet
Class Notes:
• The ad was not an offer
o Ads are presumptively not offers, and the Plaintiff has the burden of proving otherwise by showing the ad is sufficiently definite, explicit, and leaves nothing open for negotiation (the Lefkowitz criteria; the Leonard court distinguished itself from Lefkowitz by saying the Plaintiff did not meet this burden)
o The ad was not sufficiently definitive. In fact, the advertisement made reference to other things you have to do (namely refer to catalogue and forms), and then if you referred to the catalogue and forms, the carrier jet was not mentioned
o There was not intent for the ad to constitute an offer—this was a joke, and there was no intent to offer the jet
• What if the ad had mentioned a T-shirt for 7 points, said to reference the catalogue and forms, and the T-Shirt was not listed. Would this be able to be enforced? By the court’s reasoning, such an ad would not constitute an offer.
• Judge says even if other people thought the jet was available, this doesn’t matter. Is this right if the standard is reasonable? Because of course how other people interpret it does matter if the standard is reasonable. So the judge vaguely uses the reasonable person standard, but very stringently—decides there is NO reasonable person who could reasonably see as an offer.
• How did this court distinguish itself from Lefkowitz? Well, in Lefkowitz it was clear that the ad was intended for one person. Professor Brook’s reads the Leonard Court as focusing on intent—there was no way that Pepsi intended to give a $23 million dollar fighter jet for $700K, and since Pepsi did not put a limit on the number to be sold, then it would most likely put Pepsi out of business and Pepsi could not have intended for this.
• Think about this case in conjunction with Lefkowitz—if the story here were about a deceptive advertisement, then maybe the Leonard Court would actually rule that the company was liable.

IV. AUCTIONS
a. (from Emanuel): When an item is put up for auction, this is usually not an offer, but is rather a solicitation of offers (bids) from the audience. So unless the sale is expressly said to be "without reserve," the auctioneer may withdraw the goods from the sale even after the start of bidding. See UCC § 2-328(3).
b. CASE

EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. FIRST NATIONAL
BANK (South Dakota, 1999) p. 276
Takeaway:
• The offeror can revoke a contract before it is accepted
Facts: The Olsons defaulted on both their first and second mortgages. Equitable holds the first mortgage and First National holds the second mortgage. As a result of the default, Equitable put the house on auction. The auction wasn’t declared to be “without reserve.” Then, First National offered to buy out Equitable’s first mortgage. For some reason, the notice of the transfer of funds to Equitable arrives late, and the auction for the home already began when Equitable received the transfer. Though Equitable tried to stop the auction, the auction continued and the house was sold. The lower court confirmed the sale, and Equitable, FNB, and the Olsons appealed.
Issue: Did Equitable have the power to withdraw the home from sale?
Answer:Yes
Rationale: In a sale that isn’t declared to be “without reserve,” a bid constitutes a mere offer for a contract and until it is accepted there is no contract between the parties. Equitable had the power and authority to decide whether or not to cancel the sale
Class Notes
 While the bidding was going on, the offeror said stop the auction, so the offer was revoked.
 Definition of “with reserve”—the party is allowed to withdraw whatever they are selling during the bidding process
 Definition of “without reserve”—the party is not allowed to bid on the item that they are selling, and they are not allowed to withdraw the item

V. ACCEPTANCE
a. Doctrine
i. Three means of accepting offers
1. Through Express words (express words can be written or spoken. When an offer is accepted through spoken words, be aware of the limitations of the statute of frauds!!!)
2. Through Acts (Performance)
a. Unilateral Performance
i. Full performance means acceptance
ii. Partial performance means the offer is irrevocable (Restatement §45), but only for a reasonable time
b. Bilateral Performance
i. Full performance means acceptance
ii. Partial performance means acceptance (Restatement §62)
3. Through Reliance
a. If the offeror should have reasonably expected that the offer would induce reliance by the offeree, and offeree does rely, the offer becomes irrevocable to the extent necessary to avoid injustice—options contract (§87(2) of the Restatement)(See Drennan v. Star Paving Co.)
b. General Notes about Notification
i. If an offer is accepted by performance, notification is unnecessary (Restatement §54). You don’t even need actual notification (the mailbox rule)
ii. If the offer is accepted by a promise, the party must make at least a reasonable effort to notify
c. General Notes about Omissions
i. Omissions can either be some sort of inaction or silence. Most of this is covered under the common law §69(1) of the Restatements.
1. §69(a)(1) basically says that when an offeree takes the benefit with a reasonable opportunity to reject it and has a reason to know that the offeror expects compensation, there is a contract. Rephrased, if someone makes an offer to you, and you don’t say, “I accept” but you enjoy the benefit and you had the opportunity to reject it and you know that the offeror was expecting compensation, there is a contract
2. §69(b) says that if an offeror said explicitly that silence will be interpreted as acceptance or if the offeree had reason to believe that the offeror would treat silence as acceptance and the offeree actually intends to accept by silence (and that acceptance is an objective intention)—-then the silence will count as an acceptance.
3. §69(c) basically says if prior dealing has led to the reasonable inference that silence counts as acceptance, then it will count as acceptance if you are silent.
d. The Mirror Image Rule
i. Mirror Image Rule: acceptances must be the mirror image of offers. If not, they are considered counteroffers and destroy the offer.
ii. This was the traditional common law rule.
iii. Because of typographical errors and all of the strange things that can happen, the mirror rule can be difficult to meet
iv. The standard way of meeting the mirror image rule is simply saying, “I accept” rather than re-iterating the terms.
v. We no longer operate in the world of the mirror image rule, and even the Restatements say as a common law matter, we don’t need the mirror image rule
vi. Under the mirror image rule, let’s say that the Plaintiff requested X amount of wood at X price, and Defendant responded with additional conditions (in small print on the back of the form).
vii. Under the traditional mirror image rule, the last person to ship a form’s terms will be the ones included in the contract, because every form that went back and forth functioned as counter-offers, destroying the previous offers
viii. This approach was problematic because you don’t want sellers having advantages over the buyers—you want the contract to match the intention of the parties
e. The Mailbox Rule (default rule)
i. Acceptance of an offer counts once it leaves the offeree’s possession (the “Mailbox Rule”)
ii. Default exceptions to the mailbox rule
1. Acceptance to an options contract (an options contract is an irrevocable offer) is counted when it is received (Restatement §63(b))
2. Acceptance of a counteroffer is counted when it is received (Restatement §40)
3. Acceptance of an offer following an offer that was revoked is effective when it is received
4. Counteroffers destroy or revoke prior offers, and are destructions of the offer by the offeree, and revocations are destructions of offers by the offeror
f. CASES

HENDRICKS v. BEHEE (Missouri, 1990) p. 286
Takeaway:
• Acceptance of an offer counts once it leaves the offeree’s possession (the “Mailbox Rule”)
Facts: On 3/2, Behee made a written offer to the Smiths for real estate and landscape items, and the Smiths agent mailed the Smiths the offer on March 3. On March 4, the Smiths signed the proposed agreement. Before Behee was notified that the Smiths accepted the offer, Behee withdrew the offer by telling the Smiths’ agent (this occurred between 3/5 and 3/7).
Question: Does signing of the offer on 3/4 count as acceptance?
Answer: No
Rationale: An offeror may withdraw his offer at any time before acceptance and communication of that fact to him
Class Notes:
• There is no contract until acceptance of the offer is communicated to offeror
• The signature on 3/4 did not constitute an acceptance because Behee did not know about the acceptance.
• Acceptance of the offer count does not count when you sign it—it counts only when it leaves your possession (the “mailbox rule”)
• Remember that parties can contract around default rules, and the parties can contract around the “mailbox rule.”
• If an agent is acting outside of their authority, the court may still hold the principal liable if there was apparent authority
• Under the mailbox rule, actual confirmation is not required. For example, it if were “lost in the mail,” it could go to a jury for decision re. whether or not it really was signed and mailed—and if it was, then that constitutes the contract
• The acceptance “communication” scale: Thinking ---Signature---signed acceptance is given to the offeree’s agent—offeree’s agent mails acceptance--Offeror’s agent picks up mail—offeror’s agent gives to offeror—offeror reads and understands the acceptance.
 The mailbox rule just picks something near the middle of this scale, something that is black letter, easily identifiable, and clear.

EVER-TITE ROOKING CORP. v. GREEN (Louisiana, 1955) p. 288
Takeaway:
• A reasonable time standard is used when the contract does not specify the amount of time for acceptance
Facts: The Defendants signed and executed an agreement for the Plaintiffs to re-roof their home. The contract provided that it would become binding upon the Plaintiff’s written acceptance or commencement of the work. The contract was not signed by the Plaintiff (Plaintiff’s sales rep did not have authority to sign). Almost a week passed while the Plaintiff checked the Defendant’s credit report (which the Defendant knew would occur). When the Plaintiff appeared to start work on the Defendant’s roof, they found another team already at work.
Question: Did the Plaintiff’s intent to become performance constitute acceptance? Did the Plaintiff accept within a reasonable amount of time?
Answer: Yes, yes
Rationale: Plaintiffs’ acceptance began with the loading of trucks and necessary materials, and acceptance occurred before the Defendants notified the Plaintiff of any dissent from the contract. When the contract does not specify a time for acceptance, a reasonable time is allowed, and there were not unusual delays in processing the Defendant’s credit application.
Class Notes
• The Court says Ever-Tite was reasonable in the amount of time it took to commence performance
• This was a bilateral offer (here you either promise to do the work or start to do the work)
• The court ultimately says that work commences from the moment you begin packing the truck, et cetera. Professor Brooks felt the court was being generous—though fair—in their determination of when the work did begin.
• According to the mailbox rule, acceptances count when they are sent. Everything else (offers, revocations) all count when they are received. There is an exception, however—an acceptance of a counteroffer (as opposed to the acceptance of an offer) is valid when it is received.
• For remedies, the court awards both expected profits and reliance costs to put Ever-Tite back in the position it should have been in had the breach not occurred
Emmanuel
• Lapse of time: The offeror, as "master of his offer," can set a time limit for acceptance. At the end of this time limit, the offeree's power of acceptance automatically terminates.
• End of reasonable time: If the offeror does not set a time limit for acceptance, the power of acceptance terminates at the end of a reasonable time period.


GLOVER V. JEWISH WAR VETERANS OF UNITED STATES (D.C. Court of Appeals, 1949), p. 302
Takeaway:
• Restatement: It is impossible that there should be an acceptance unless the offeree knows of the existence of the offer
Facts: Glover gave information about the identity of a murderer without knowing that there was a reward available for such information. The award was for $500 and was from a private organization, the Jewish War Veterans of the United States.
Issue: Whether a person giving information leading to the arrest of a murderer without any knowledge that a reward has been offered for such information by a non-governmental organization is entitled to collect the reward
Answer: No
Rationale: When a reward is offered by a private organization, there can be no contract unless claimant knew of the offer of the award when he/she was disclosing the information
Class Notes
• Was this ad an offer? Yes.
• Could this ad as an offer be revoked? Yes, you can revoke if in revoking the ad you have as much publicity as the former ad and there is no reasonable means of notifying everybody (§46 of the Restatements)
• The beginning of performance can either make the offer irrevocable or it can count as full acceptance, making it a contract once you begin performance
• Was this a gratuitous act? Yes. This was a gratuitous act, because Glover didn’t know that the offer was there in the first place. She wasn’t a volunteer in the traditional sense, as the police approached her, but she was not required to give the information.
• Was the reason why she gave the reason to the police the ad? Was the ad the inducement? No.
• There are two types of volunteers (1) the typical volunteer that we think of, the one who calls the police themselves to volunteer the information, et cetera (2) and the gratuitous gifter, someone who was not required by law to offer the information, such as this woman who was approached by the police

INDUSTRIAL AMERICA, INC. v. FULTON INDUSTRIES, INC. (Delaware, 1971), p. 305
(not assigned for reading but was discussed in class)
Takeaway:
• Objective intent is all that is required for the formation of a contract
• You can have mixed motivations for the act that constitutes acceptance
• You have to have actual knowledge of the offer. If you didn’t have actual knowledge of the offer there is no way that the court will say you accepted the offer
Facts: There was a contract between Industrial America’s agent and Bush Hog, Inc. for the agent to find a merger partner for Bush Hog. At some point, the agent discovered an ad placed by Fulton Industries stating that Fulton was looking to acquire a firm that matched Bush Hog’s description, and the bottom of the ad said, “Brokers full protected.” The Industrial broker called up Fulton’s president and said I think I have a firm for you, just like the company you mentioned in your ad. After several discussions, the broker told Fulton the name of the company—Bush Hog. Then, Fulton and Hogbush tried to merge without Industrial’s involvement. Fulton said Industrial was already under a contract to find a company for Bush Hog, and Industrial’s actions with Fulton were encompassed in the activities for Bush Hog, so therefore, there wasn’t a new contract between Industrial and Fulton. Essentially, Fulton argued that there wasn’t a contract between Industrial and Fulton. because Industrial already had a contractual agreement to find a company
Question: Does Industrial have the burden of proving the agent’s subjective intent to accept Fulton’s offer of guaranty in the advertisement?
Answer: No
Rationale: overt manifestation of assent—not subjective intent—controls the formation of a contract. Restatement § 20: The intention to accept is unimportant except as manifested
Class Notes:
• In contracts, you can have multiple reasons for doing the action; acceptance of a contract just ahs to b one of these reasons, however small
• In contracts, the test for reason for action is not a subjective test; no one has to look and see whether the contract is exactly why a party chose to perform. This is an objective test.

RUSSELL V. TEXAS CO. (9th Cir. 1957), p. 311
Takeaway:
• Even if you don’t subjectively intend to accept, if you lead an offeror to reasonably believe that you accepted, then you accepted. This can be through silence or inaction.
Facts: Plaintiff sent an offer on Oct. 30, 1952 to the TX Company for a revocable license to cover the use of his land in connection with mining operations on adjacent lands. The offer said, “Your continued use of the roadway, water, and/or materials will constitute your acceptance of this revocable permit” and required payment of $150.00 for the permit. The company continued to use the land until November 22, 1952, and in December, the company told Russell that the offer was rejected. Russell sued for damages.
Question: Can the TX Company accept and retain the benefits of the contract and then vitiate the contract by claiming they never had the intent to accept the contract despite the contract’s statement that use of the land constitutes acceptance?
Answer: No
Rationale:
• The true test for whether there was acceptance is whether or not the offeror was reasonably led to believe that the act of the offeree was an acceptance, and in this case that seems evident
• §72(2) of the Restatement: Where the offeree exercises dominion over things which are offered to him, such exercise of dominion in the absence of other circumstances showing a contrary intention is an acceptance


AMMONS v. WILSON & CO. (Mississippi, 1936)
Takeaway:
• The court can say, “you delayed so long in responding that this counted as acceptance”
Facts: Ammons is a grocer and Wilson is a meat-packing company. Ammons had ordered shortening in the past, and the orders had always been accepted and shipped not later than one week from the time the order was placed. The two companies also had a booking that did not constitute a contract, but was merely tentative. Ammons ordered the “prompt” shipment of a large amount of shortening on Aug. 23 or 24, and did not hear anything until the Sep. 4, when he was told that Wilson did not accept the offer. The price of shortening had raised from the price provided for in their booking.
Question: Whether or not, under the law, Wilson implicitly accepted the order through its silence
Answer: Whether or not the delay before rejecting the order, in view of a past history of these kinds of transactions, constituted an implied acceptance is a question for the jury
Rationale: Restatement § 72(1)(c): (1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases and in no other: where because of previous dealings or otherwise, the offeree has given the offeror reason to understand that the silence of [or] inaction is intended by the offeree as a manifestation of assent, and the offeror does so understand

ADAMS v. LINDSEL (England, Court of King’s Bench, 1818), p. 320
Takeaway:
• The default “mailbox” rule was derived from this case
Facts: Defendants deal wool and sent a letter on Sept. 2 to the Plaintiffs (wool manufacturers in a different town) offering wool at a price to be paid in two months, and to be “weighed up by your agent within fourteen days receiving your answer in course of post.” Defendants misdirected the letter, Plaintiffs did not receive it until Sept. 5, and the Defendants did not receive answer until Sept. 9. On Sept 8th, not having received the letter, the Defendants sold the wool to someone else
Question: Was there an agreement to deliver the wool?
Answer: Yes
Rationale: The Defendants must be considered in law to be making the same identical offer to the Plaintiffs at every instant the letter is in route, and the contract is completed by acceptance by the Plaintiff. If the Defendants were not bound by their offer after acceptance by the Plaintiffs until answer was received, then the Plaintiffs ought not to be bound until they receive notice of the Defendant’s receipt and assent to that, and so on and so on. There would be no end!
Class Notes:
• This is not a perfectly clear mailbox rule case because there was some negligence on behalf of the offeror.
• The most reasonable way to think about the mailbox rule is that the offeror chooses the mode of acceptance, and by that the offeror can say I need actual notification for this to count as acceptance. So if the offeror chooses not to do that, UCC §2-206 provides that any reasonable means of accepting counts as accepting—and one of those reasonable means can be sending it through the mail. The offeror has essentially or in effect chosen the post office as the offeror’s agent, so once you mail the acceptance by giving it to the postal service, your acceptance can be seen as being in the possession of the offeror’s agent, and therefore the offeror has been effectively notified.
• The mailbox rule is a default rule. If the offeror were to say, “I need actual notification,” the mailbox rule would not count

CORINTHIAN PHARMACEUTICAL SYSTEMS, INC. v. LEDERLE LABORATORIES (Southern District Indiana, 1989), p. 291
Takeaway:
• The shipment of non-conforming goods is not acceptance if the seller seasonably notifies the buyer that the shipment is only an accommodation, and it is not intended to be acceptance.
Facts: Defendant Lederle Laboratories makes DTP vaccine and Plaintiff regularly buys and distributes this vaccine. Lederle decided to self insure in 1986, and increased the price of the vaccine to cover those costs. Lederle was going to notify its customers of the price increase on May 20, but the Plaintiff heard of this increase on May 19 and placed an order for 1,000 vials. After placing the order, on the same day the Plaintiff sent two written confirmations, with each stating order is to receive $64.32 per vial price. Lederle later sent invoice to Corinthian for 50 vials at the lower price, and stated that the balance would be priced at $171 because the price is set at the date of shipment, but as a courtesy Lederle is offering the first 50 at the lower priced, and Corinthian can cancel the order if they so desire
Question: Whether Lederle agreed to sell Corinthian 1,000 vials at $64.32 each
Answer: No
Rationale:
• UCC§2-206(b)—a seller accepts the offer by shipping goods, whether they are conforming or not, but if the seller ships non-conforming goods and seasonably notifies the buyer that the shipment is a mere accommodation, the seller has not accepted the buyer’s offer
• Whereas the notification is properly made, the shipment of nonconforming goods is treated as a counteroffer just as in the common law and the buyer may accept of reject the counteroffer under normal contract rules. § 2-206(b)(1) is satisfied
Class Notes:
• When Corinthian placed the order, Corinthian received a tracking number. The Court basically said that just because a computer said it was accepted does not mean it was accepted. This is no longer true today, and electronic agents today can give acceptance. But during the time of this case, electronic agent acceptance was not valid.
• The UCC throws around the term “nonconforming goods.” The shipment of non-conforming goods is not acceptance if the seller seasonably notifies the buyer that the shipment is only an accommodation, and it is not intended to be acceptance.
• Further clarification of §2-206(b): When someone fills out an order form or makes an order—and you can think of orders as offers for buyers—and that order calls for prompt shipment, one way to accept that type of order/offer is to say “I promise to ship it.” The other way to accept the order/offer is to ship the goods/perform. If you fully perform, exactly to the specification of the order, the UCC calls that the delivery of conforming goods. But if you begin performing through nonconforming goods, it does not count as acceptance if the deliverer of the goods notifies the buyer that the delivery of these nonconforming goods is an accommodation, it is not intended to be acceptance. That is how Corinthian and Lederle fit under the rule.
• UCC § 2-206 are the rules that talk about how acceptances operate under the UCC. It states that an offer should be construed to confer acceptance in any medium that is reasonable under the circumstances
Emmanuel
• Accommodation shipment: If the seller is "accommodating" the buyer by shipping what the seller knows and says are non-conforming goods, this does not act as an acceptance. In this "accommodation shipment" situation, the seller is making a counter-offer, which the buyer can then either accept or reject. If the buyer accepts, there is a contract for the quantity and type of goods actually sent by the seller, not for those originally ordered by the buyer. If the buyer rejects, he can send back the goods. In any event, seller will not be found to be in breach. UCC § 2-206(1)(b). [28]


CHART FOR NAVIGATING THE UCC (OFFERS, COUNTEROFFERS,
AND ACCEPTANCE)
Let’s set up some terms
The first set of terms is “X”
Price: $50
Quantity: 10,000
Date: Delivered Feb. 1st
Warranties: Blank
Liquidated Clauses: Yes, limits
Other clauses: Yes

The second set of terms is “Y”
Price: $50
Quantity: 10,000
Date: Jan. 1st
Warranties: Yes
Liquidated Clauses: Yes—unlimited
Other clauses Blank

• The intersection between the sets of terms is defined as X intercept Y (this is where the two intercept, as in on a en diagram
• And let’s create a new symbol, “T” where X T Y is everything that you could include in a contract that includes both sets of terms, throwing out everything in direct conflict. To illustrate T, the warranties field for X is blank while the warranties field for Y is yes, so there is a silent conflict, but not a direct conflict such as the conflict between the liquidated damages clauses. The T is a term that does not present direct conflict
• Let’s say we have an offer with terms X. If we have an acceptance without any different or additional terms, we have a contract with the terms X.
• If we have “acceptance” with additional or different terms, the terms Y, then how we proceed in the analysis depends on whether we are dealing with an old common law case or the UCC. If it is old common law case, by the mirror image rule there is not a contract. If we are dealing with a UCC case, the issue is covered by §2-207
• The first part of 2-207 (found on top of 331) says that the additional terms (Y) will become part of the contract unless the initial offer expressly limits acceptance to those original terms.
• 2-207(3) says that if parties are behaving in a manner (if there is conduct that acknowledges or recognizes the existence of a contract), then there is a contract. This is a lot like contracts implied in fact, because it states that if the behavior signals there was a contract, then we’ll treat it as a contract.


Offer with Terms X




Acceptance w/o any Acceptance w/ additional
different or additional terms or different terms (Y)



Contract with terms X

UCC or Common Law





Was acceptance of Y a condition of acceptance?

YES No
what are the terms?
(look at 2-207(2))



Does not meet a, b, or c (does not materially alter). Contract Y.
Contract with terms the parties
agreed to. Contract X I Y or
Contract X T Y..



Did offeror assent to Y

YES NO


Contract with terms in the
counter-offer. Contract Y

No contract under 2-207(1), but maybe there can be a contract implied in fact 2-207(3). If so, the contract would have terms X I Y (what the parties agreed to in their written terms, what the parties agreed to in their actions, and “gap-fillers” or default rules from UCC).





12.02.03-12.10-03

Counteroffers

Minneapolis & St. Louis Rail Co. v. Columbus Rolling Mill Co., 119 U.S. 149 (1886) pg. 325
Facts/Chronology:
• 12/5: Railway company (P) sends mill company (D) letter requesting iron/steel rails.
• 12/8: D responds with letter clarifying that it only makes iron rails. It offers to supply 2K-5K tons of iron rails at $54 per ton. Requests notification by 12/20.
• 12/16: P “accepts” and orders 1,200 tons at $54.
• 12/18: D rejects.
• 12/19: P tries to go back to old offer, agrees to 2K at $54. Reiterates at 12/22.
• 1/19: In court with D saying there was no contract.
• Jury in lower court returns verdict for the D. Affirmed.
Question: Does an offer remain after a counteroffer is communicated? No.
Analysis:
• 12/5 letter was a solicitation for an offer. D’s 12/8 letter was an offer. 12/16 letter a counteroffer b/c changed terms. 12/18 is a rejection of counteroffer. Thus, deal dead!
• One party, having rejected an offer (via a counteroffer), cannot afterward revive it by tendering an acceptance of it.
Take-Away: Mirror-Image rule- acceptances must be the mirror image of offers; if not, they are considered counteroffers and destroy the offer.
Note: This rule is rarely used now. Restatement (Second) § 59 states that an offer is not invalidated if the acceptance merely requests a change in terms.

Leonard Pevar Company v. Evans Products Co., 524 F.Supp. 546 (1981) pg. 329
Facts: Alleged breach of express and implied warranties in D’s sale of medium density overlay plywood. D denies liability, claiming that it expressly disclaimed warranties and limited its liability in its contract with P. Dispute over whether D accepted P’s offer.
Question: Can an offeree add terms to the contract? Depends on whether it materially alters the terms.
Analysis:
• It is up to the trier of fact to determine if altering the contract (disclaiming warranties/liability) materially alters the terms of the original agreement.
• UCC § 2-207 tries to eliminate the “mirror” rule requiring the confirmation/acceptance to be identical to the offer.
• However, allowing provisos on the back of an agreement to be honored unduly rewards the party who sends the last form prior to shipping the goods.
• Thus, before a counter-offer is accepted, the counter-offeree must expressly assent to the new terms.
Take-Away: Battle of the Forms- Don’t want the shipper to have such an advantage over the buyer just because he/she can include a form with new terms as a “counteroffer.”



Brooks’ Flowchart on UCC Deviations from the Mirror Image Rule (§ 2-207)

Contract terms: price/quantity/date/warranties/liquidated damages/other clauses
One party offers contract with terms X: $50, 10K, 2/1, blank, limited damages, other clauses
The other makes counteroffer with terms Y: $50, 10K, 1/1, warranty, unlimited, no other clauses
xIy = Intersect: all common/overlapping clauses ($50 and 10K)
xTy = Union: all similar clauses that do not directly conflict ($50, 10K, warranties, other clauses)

• If there is express acceptance, then there is K(x)
• If no express acceptance…
o Does the conduct indicate K?
 No  then no K
 Yes  xIy UCC 2-207(3). This is a contract implied in fact, based on conduct.
• If there is “acceptance” with additional or different (or both) terms  xTy
o If old common law rule, no K because of counteroffer (destroys original contract). Mirror Image Rule. Acceptances must be the mirror-image of offers.
o If UCC, is offeree’s acceptance conditional on accepting new terms (Y)?
 If conditional, did offeror assent to Y?
• If yes, then K(y)
• If no, then no K under 2-207(1) but maybe have K under 2-207(3)-contract implied in fact (see above)
 If acceptance not conditional on Y, then K (but have 2 sets of terms).
• If no objection to terms Y, and Y doesn’t materially alter the initial offer, then K(y)
• If objection to terms Y, and/or Y materially alters the initial offer, then xIy, and use gap fillers for other terms. “Knock-out Rule”: terms that are in direct conflict are eliminated. Might use xTy.

Recent Cases Involving Counteroffers with New Terms
• Roto-Lite: Buyer accepting delivery and paying counts as acceptance.
• Pevar: Buyer must expressly assent; accepting delivery/paying not sufficient.
• Textile Case: Agrees with Pevar; buyer must give specific/unequivocal assent.
Shrinkwrap Cases: offeree must actively do something to reject the offer.
• Pro CD: Offeror is master of the offer and can make acceptance of the offer be anything he/she wants.
• Hill v. Gateway (Easterbrook): Held that 30 days was sufficient because the buyer expected more terms (agent would not explain them all). UCC § 2-207 does not apply because there is only one offer (as opposed to a counteroffer with new terms).
• Klocek v. Gateway: In this case the return period is only 5 days and the buyer knew nothing about more terms coming. Held that express assent is necessary. Applies § 2-207 even though there is only one set of terms.
• Sprecht v. Netscape: (clickwrap) Court held that the notice of additional terms was too obscure and so no acceptance.
Issues:
1) Does the buyer know that more terms are coming? If you as the buyer are ordering goods and paying at the same time, do you have any idea that new terms are coming?
2) How significant is the burden on the offeree? Will offeror pay for shipping if it demands return? Will there be a reasonable amount of time?
3) Contracts of adhesion- form contracts that don’t give the other party any room to negotiate or reject in a meaningful way.

Contracts Are Irrevocable When:
1) Offer requires some kind of performance as acceptance, and only performance. If offeree begins to perform, but doesn’t completely perform, it may make the offer irrevocable
2) Offeree doesn’t actually begin performance, but relies detrimentally in a way that was foreseeable to the offeror
3) Option contracts- offeree pays to make the offer irrevocable.

Justified Non-Performance

Mistake
Types:
• § 152: Bilateral/Mutual Mistake- Truth is X. Party A believes that X is Z. Party B believes X is Z also. Contract will be voidable by the adversely affected party unless he/she bears the risk of the mistake.
• § 153: Unilateral Mistake- A believes X is Z, but B knows that X is X, or believes that X is Y. In many ways this is a failure of mutual assent (thus no K). Courts will rarely void a contract because of a unilateral mistake, unless enforcement would be unconscionable, or if the other party had reason to know of the mistake.
Requirements:
• Mistake based on a basic assumption on which the K was formed.
• Mistake must have a material effect (make the K unjust)
• The risk of mistake is not assigned to the party seeking to be excused.
Remedies (Equitable):
• Rescission: avoidance of the contract. Often combine with restitution if one party gave money p front. In some cases, give reliance damages.
• Reformation: fix the contract. Include a term that both parties forgot to put in.

Boise Junior College District v. Mattefs Construction Co., 92 Idaho 757 (Sup Ct 1969) pg. 472
Facts: General contractor solicited bids for subcontract work on a building project. Many construction companies submitted bids, including a bid bond containing a promise to pay the difference b/w its bid and the next higher bid if it ultimately refused to perform. D submits a bid that is artificially low because of a clerical mistake, and later refuses performance. P tried to collect on bond, and trial court found against it. Appeals court confirms.
Question: Is a party entitled to rescission for a unilateral clerical mistake? Yes (5-step test)
Analysis: [Spear]
• This is an example of a unilateral mistake.
• Five-element test for relief: 1) mistake was material; 2) enforcing of the contract would be unconscionable; 3) mistake did not result from culpable negligence; 4) party to whom bid was submitted will not be prejudiced except by the loss of the bargain (can allow loss of windfall); 5) prompt notice of error was given.
• Material: omission of an item representing 14% of the total cost is material.
• Unconscionable: not just a reduction in profit, but a $10,000 loss if D forced to comply.
• Origin of mistake: from a clerical error, not fraudulence or a lack of good faith.
• Hardship: none on the P, just a failure to save extra money.
• Notice of Error: adequate.
Take-Away: snap up theory- can’t quickly take offer if you have reason to be suspicious it is mistaken. Though generally do not excuse errors of negligence or bad business judgment.

Drennan v. Star Paving Co., 51 Cal.2d 409 pg. 383
• Similar to Boise with subcontractor submitting a mistaken bid.
• Difference is that general contractor relied to its detriment in its bid; forced to go with an alternate subcontractor that was $3,187 more expensive.
• Court held that the offer was therefore irrevocable. Brooks believes this may be because the P asked the D to double-check and make sure its offer was correct.

Beachcomber Coins, Inc. v. Boskett, 166 N.J.Super 442 (Sup Ct NJ 1979) pg. 479
Facts: Part-time coin dealer (D) purchases a special dime from retail coin seller (P) which both the D and P’s agent thought contained a sign that it was minted in Denver, and therefore rare. P’s agent inspects the coin and enters into an agreement to buy for $500. A third party then offers P $700 conditional on verification of authenticity. Discover it is a fake. P tries to get rescission of original purchase from D, asserting mutual mistake of fact as to the genuineness of the coin. D admits that the coin was a fake, but holds to the sale. The trial court held for D, ruling that the industry custom is for purchaser to “assume the risk” and investigate the coin’s authenticity. Appeals court reverses.
Question: Is a party entitled to rescission for a mutual mistake over an item’s authenticity? Yes.
Analysis: [Conford]
• This is an example of a mutual mistake. Both sides believed coin to be genuine.
• Court refuses to invoke customary practice. Only hold the buyer to assume the risk if the genuineness of the article is uncertain. In this case, it was not.
• Even if the P was negligent in inspecting the coin, can still claim for rescission.
Take-Away: least cost avoider- place the risk on the party who can avoid the risk at the least cost. In this case, theoretically it was the seller. However, Brooks believes the buyer may have had more expertise in this case and is troubled by the appellate court ignoring industry custom.

Sherwood v. Walker, 66 Mich, 568 (Sup Ct Michigan 1887) pg. 482
Facts: P desired to purchase some of D’s cows, and selects one (Rose of Alberone) that is reputedly barren. It later turns out that the cow is with calf, and so D tries to renege on the deal, arguing a mistaken belief at the time of sale. Lower Court holds that the contract should be honored; Appeals Court reverses.
Question: Is a sale void if there is a mutual mistake over the nature of the item? Yes.
Analysis: [Morse]
• The cow was obviously sold for beef, and not for its possible breeding value.
• There was a misapprehension over what was bargained for-and it went to the substance of the agreement.
Dissent [Sherwood]
• The sale was made, and just because an unknown discovery of greater value was uncovered, the seller should not be able to renege.
• There was no difference b/w the parties; the P believed the cow could be something the D did not. ** Each side took its chances.
Take-Away: Nature of Mistake- Party excused from performance if there is a mistake about the very nature/character of the thing being bargained over. No relief if it is just a disagreement or mistaken belief over the quality or value of the object.
Brooks:
• This is similar to the snap-up theory. Seems that P was not bargaining in “good faith” and knew of the mistake. The mistake may not have been mutual.
• Like in Beachcomber, it would be different if there was uncertainty over value of item and it was factored into the price (junk yard sale like selling “lottery tickets”)

Lenawee County Board of Health v. Messerly, 417 Mich. 17 (Sup Ct Mich 1982) pg. 484
Facts: Old owner of home (Bloom) illegally installs a septic tank without a permit. Land changes hands many times, and appellees (Pickles) buy from appellants (Messerlys) without knowing of the defective sewage system. The contract includes a clause which stated that the “Purchaser has examined this property and agrees to accept same in present condition.” (quick claim deed that conveys all of seller’s rights (and risk) to buyer) The land is subsequently condemned as non-habitable and the Pickles refuse to pay for the property, claiming for rescission, while the appellants claim for payment. The lower court found for the appellants, because none of the parties knew Bloom’s earlier transgression. The Court of Appeals reversed the finding of no cause of action, concluding the existence of a mutual mistake. The Supreme Court reverses again, finding no basis in equity for rescission.
Question: Will a mutual mistake void a contract including a quick claim deed? No.
Analysis: [Ryan]
• Case of mutual mistake over the value of the property. In general, UCC § 152 allows for rescission if this has a material effect on the agreed exchange.
• However, rescission is not available if a party has assumed the risk of loss in connection with the mistake. In this case, the contract clause represents such an assumption.
• Must undertake a “risk of loss” analysis: which blameless party should assume the loss resulting from the mutual misapprehension?
Take-Away: Mutual Mistake Exception- does not apply if one side has assumed the risk.

Ayer v. Western Union Telegraph Co., 79 Me. 493 (Maine 1887) pg. 495
Facts: P delivers a sale offer message that is transmitted with an error by D, resulting in a lower price for the goods P wished to sell. D admits the mistake, but argues that the P should not have felt obliged to sell the goods based on the error and could have just not performed.
Question: Does the party selecting a means of communication assume the risk of error? Yes.
Analysis: [Emery]
• Seems unfair to saddle D, though in error, with liability it never authorized nor contemplated. But equally the receiver should not have to bear the cost either.
• Most fair rule is to have the party which selected the telegraph as a means of communication should bear the loss (with a refund for cost of telegram).
Take-Away: Risk is assumed by the party that chooses the means of communication.
Brooks:
• The D is just the agent of the P; can’t assume that Western Union employees read all of the messages for mistakes. P should have to pay more if will effectively make the communicating party liable for all mistakes.

Impossibility/Impracticability

Doctrine:
• Original doctrine: if the contract was impossible at the time of K (existing), or if it became impossible after (supervening), then no duty to perform. Ex- death of performer, destruction of goods, etc…
• Doctrine today: not limited to things that are technically impossible, also allows for burdens that are impracticable (commercially difficult).
Requirements: (similar to mistake and frustration)
1) Event occurs making performance impracticable/(impossible)
2) The nonoccurrence of the event was a basic assumption of the parties.
3) There is no fault on the party seeking to be excused from performance.
4) There is no assignment of risk onto a party or law imposing a duty.
5) For existing impracticability, must be that neither party knew or had reason to know.

Mineral Park Land Co. v. Howard, 172 Cal. 289 (Sup Ct Calif 1916) pg. 805
Facts: Mineral Park enters into contract with the City of Pasadena to build a bridge. It enters into a requirements subcontract with Howard to haul approximately 114,000 cubic yards of earth and gravel, but only ends up taking 50K and procures the rest elsewhere. Howard sues, claiming for the cost of the extra gravel that should have been taken. Mineral Park responds that the extra gravel was below the water-line, and thus would have been too costly to take. Trial Court finds for Howard. Appeals Court reverses and requires Mineral Park to only pay the balance of the gravel it took.
Question: Can a party be excused from a contract if part of it turns out to be impracticable? Yes.
Analysis: [Sloss]
• A determination of what earth/gravel was “available” must be made in a practical and reasonable way
• This contract was effectively impossible to perform and was not contemplated.
Take-Away: Doctrine of Impossibility also includes Impracticability.

Bolin Farms v. American Cotton Shippers pg. 18 [see Week One]
• Forward contract in which D agreed to purchase all of P’s cotton at a set price irrespective of market value. Prices go way up so suppliers want to breach and sell at better price.
Take-Away: Doctrine of Impracticability does not include commercial difficulty. Both sides contemplated this change in price-it is the purpose of a futures market, where risk is explicitly assigned.

United States v. Wegematic Corp., 360 F.2d 674 (2d Cir 1966) pg. 808
Facts: P contracts with D to deliver a computing system (based on revolutionary new technology), with liquidated damages at $100 per day for delay. Contract also held that if D failed to comply “with any provision,” P could procure alternate services and hold D responsible for any excess cost. D reneges on the contract, claiming that “basic engineering difficulties” made the development of the computer impossible, and thus excused performance. As a result, P goes to IBM as an alternative supplier and sues for the difference in price. Trial court awards P liquidated damages and the difference in cost. Affirmed.
Question: Can a contracting party avoid performance based on alleged impossibility? No.
Analysis: [Friendly]
• Accepting the D’s argument would allow any manufacturer to make fanciful statements of hopeful technologies and gamble on probabilities of fulfillment.
• If a manufacturer wants to be relieved of such risk, should say so in the contract.
• The seller is assuming the risk in this contract; also had the choice of doing a “cost-plus” contract which would assign the risk to the buyer.
Take-Away: Doctrine of Impracticability does not include the failure of unproven technology, unless explicitly written in the contract.
Brooks:
• D probably had a good faith belief in its ability to meet the contract, but there was no mutuality of obligation if they could back out at any time based on high costs. This was not a venture capital/development deal.
• Similar to Bolin; if you allow excused performance, it will undermine the incentives of other parties in the future to enter into transactions with innovators.

Taylor v. Caldwell, 122 Eng.Rep. 309 (King’s Bench 1863) pg. 813
Facts: D agrees to let P use the Surrey Gardens and Music Hall to put on four grand concerts for £100 each. After the agreement, the Music Hall burns down. P wants the money from the expected profits of the show, but court finds for D.
Question: Can a contracting party avoid performance if it is no longer possible? Yes.
Analysis: [Blackburn]
• A party cannot be held to perform a duty based on an unforeseen intervening force which makes it impossible. What if the contracting party dies? Can’t hold estate liable.
• Parties contracted on the basis of the continued existence of the Music Hall. Since it is no more, both parties are excused from performance.
Take-Away: Doctrine of Impossibility excuses performance.
Brooks: Look to intentions; excuse parties who face performance under conditions never intended. Also consider who is the least-cost avoider.

Canadian Industrial Alcohol Co. v. Dunbar Molasses Co., 258 N.Y. 194 (NY 1932) pg. 818
Facts: P contracts to buy 1.5 million gallons of molasses, but D only delivers a small portion. D claims that it was reliant upon the Nat’l Sugar Refinery as a supplier and could not get more; thus the contract was impracticable.
Question: Can a contracting party avoid performance based on the failure of a supplier? No. Analysis: [CJ Cardozo]
• D would only be relieved if the refinery had been destroyed, or if output had been curtailed by war or the failure of the sugar crop.
• No mention of special circumstances in the contract.
• The D’s claim would force the manufacturer to be at the mercy of the refiner.
Note: A party cannot create its own impracticability of performance.
Take-Away: Doctrine of Impracticability does not include a normal failure of supply, unless it is explicitly written in the contract. [see Wegematic]
Brooks: Cardozo probably felt the D was at fault here; dragged its feet.

Dills v. Town of Enfield, 210 Conn. 705 (Sup Ct Conn 1989) pg. 821
Facts: D solicits bids for private developers to construct an Industrial Park. Under a contract with P, D agrees to convey the property on two conditions: 1) submission and approval of construction plans; 2) submission of evidence of financial capacity for contract. D is allowed to keep the down-payment if condition #1 is not satisfied. If condition #2 is not satisfied, then P can breach and get down-payment back. P only submits preliminary plans, and is eventually unable to obtain mortgage financing. Both sides try to terminate the contract and keep down-payment. Referee finds for P, but trial court reverses for D.
Question: Does failure to perform part of a contract excuse performance of other terms? No.
Analysis: [CJ Peters]
• The conditions of impracticability must be unforeseen; the P knew of the possibility of not being able to find funding.
• The nonoccurrence was not a basic assumption of the contract.
Take-Away: The Doctrine of Impossibility does not invalidate an entire contract.

Frustration

Requirements:
1) Nonoccurrence of an event has a substantial effect/impact
2) Nonoccurrence must be a basic assumption of both parties.
3) No fault on the party seeking to be excused.
4) No greater legal obligation exists
• Difference b/w impracticability and frustration: With impracticability, have one party who values a performance (V) and have the cost of performance (C), and the cost shoots way up. In frustration, the value shoots way down.
Remedies for impracticability and frustration
• Typical remedy is rescission, though sometimes the court will reform the K.
• If contract is severable, can get rid of offending portions.

Paradine v. Jane, 82 Eng.Rep. 897 (King’s Bench 1647) pg. 844
• D renting land from P. Invading force (Rupert) comes in and kicks D out for a few years. D claims that its purpose in contracting if frustrated.
• Court says a renter assumes the risk. Unfair for renter to get all upside risks from rent if weather is great, but avoid all down-side risks. D assumed the risk.
• Brooks: In essence, property is trumping contract law. When you enter into a lease agreement, you must pay no matter what.

Krell v. Henry, 2 K.B. 740 (1903) pg. 845
Facts: D hired a flat from P to view the coronation procession of the King. Unfortunately, the King became ill and the procession did not occur. D tries to get out of the contract (and receive his deposit) based on a lack of consideration and the P tries to recover the rest of the money. Trial judge found for the D, arguing that the procession was an implied condition of the contract.
Question: Can a contract be rescinded if the reason for its creation does not occur? Yes.
Analysis: [Williams]
• Test: 1) what was the foundation of the contract? 2) Was the performance of the contract prevented? 3) Was the event which prevented performance of such a character that it cannot reasonably be said to have been in the contemplation of the parties at the date of the contract? If yes to all of these, then both parties are discharged from performance.
• In this case, the room was let and taken solely for the purpose of seeing the procession; there was no other use for it-it was the foundation of the contract. The King becoming sick was not foreseeable.
Take-Away: If the basic purpose of a contract is frustrated, it is no longer valid.
Brooks: Unlike a wedding hall, where the hall is still valuable even if the event doesn’t occur, in this case, the coronation itself generated the value.

Wash State Hop Producers Inc. v. Goschie Farms, Inc., 112 Wash.2d 694 (1989) pg. 850
Facts: In 1965 the government created a federal “hop base,” which a trust of Hop Producers (P) acquired, leased, and sold. Some changes were under consideration by the USDA, but nothing was enacted at the time that P sold hop base to various buyers, including D. After bids were awarded, the USDA unexpectedly terminated the marketing order, and the D tried to get out of its contract. The lower courts found for D because of supervening frustration. Affirmed.
Question: Does the termination of a government marketing order excuse contracts based upon it? Yes.
Analysis:
• § 265: “Where, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.”
• § 265 Comment: the object must be the basis of the contract, and the frustration must be substantial (not just less profitable, etc…).
• Once the federal requirement of a hop base was removed, there was no subject matter for the contracts nor any consideration from the trust to support the transactions.
• The decision of the D to purchase and not merely lease the hop base supports the notion that the nonoccurrence of the hop base termination was fundamental to the K.
• The decline in price is not sufficient to indicate frustration; but the irrelevance of the hop base is.
• The Trust could have drafted the language to account for the change, but did not. Thus, the termination was very likely unforeseen.
Take-Away: When the very basis of a contract is destroyed (and not merely its value), the purpose of the contract is frustrated and it is void.
Infancy

Bowling v. Sperry, 184 N.E.2d 901 (Indiana 1962) pg. 451
Facts: Minor (P) buys a car (with help of aunt) from D for $140 and returns it after discovers that it is defective. D estimates that repairs will cost $45-95, so P tries to disaffirm the contract. D responds that P’s grandmother and aunt were present at the time of purchase. Trial court holds for D. Reversed.
Question: Can a minor enter into a contract to purchase a non-necessary item? No.
Analysis: [Myers]
• General rule that contracts of minors are voidable. Irrelevant whether adults were present at the time of purchase, or even loaned P money.
• Lying Exception: Contract valid if minor lies about his/her age (depends on jurisdiction). In this case, D was aware of P’s age when sale was negotiated.
• Necessity Exception: Infants can contract for necessities if they are offered at a reasonable price. Burden of proving this is on the D. In this case, it does not seem that the car was necessary to P.
• Standard remedy is restoration- just give back whatever the minor has. Does not matter even if P caused the damage to the car. The parties do not need to be placed in statu quo (whereas restoration would require the item to be back in its original state).
Note: If minor turns 18 after the contract, after time silence will count as affirmation of its terms.
Take-Away: Contracts by infants are voidable.

CitiFinancial, Inc. v. Brown, 2001 WL 1530352; reversed 304 F.3d 469 (5th Cir. 2002) pg. 464
Facts: D, a severely retarded individual, and his mother obtained a loan from P that consolidated their debts and lowered their monthly payments. The D was required to sign a contract with an arbitration clause that required any claims against P to be arbitrated. D brings suit alleging fraud and breach of contract, and seeks to avoid arbitration on the grounds that D is incompetent and thus the agreement is void. P argues that the D’s mother signed the agreement as guardian, and that the issue of competence should be decided by an arbitrator.
Question: Can a party void a contract based on incapacity? Yes.
Analysis: [Davidson]
• If a party lacks capacity to consent, there is no contract.
Take-Away: Contracts with incompetent individuals are void.
Brooks:
• Whereas contracts with infants or incapacitated individuals are voidable, those with incompetent individuals are void. For instance, contacts with drunks can be affirmed once they sober up, but contracts with incompetents can probably never be confirmed.
• There is a public policy preference for arbitration clauses. This decision was reversed on appeal.

Illegality
• 2 kinds of contract: those against public policy (crimes on one end of the spectrum, or against regulations) and those with problems with the bargain (fraud/nondisclosure, etc…)
• 3 phases of illegality: 1) objective; 2) bargain; 3) performance. Illegality with respect to any of these can make the contract unenforceable.
• Where both parties are equally guilty, the typical remedy is for courts to leave the parties as it finds them; reduces the incentive to enter into illegal contracts.
• Exceptions: 1) If parties are not equally at fault, court may choose to enforce or get involved via its equitable powers. 2) If the offense is not sufficiently serious, the courts may enforce it anyway (watering a lawn on a no-water day). 3) the courts may sever the contract and enforce the non-illegal parts. 4) If one party repudiates before the commission of the illegality, may be able to get restitution.

Sinnar v. Le Roy, 270 P.2d 800 (Sup Ct of Washington 1954) pg. 575
Facts: Grocery store owner (P) gives money to a friend (D) who says he knows someone who can bribe an official to get a liquor license. Turns out the D’s friend can’t get the license, and the P tries to get his money back.
Question: Can the P estop the D from claiming illegality if it is not initially raised? No.
Analysis: [Weaver]
• Contract is void because it is illegal.
• A defendant cannot waive the defense of illegality; the court has a strong state interest in voiding illegal contracts.
Take-Away: Contracts are void when illegal, even if illegality is not raised at trial.
Brooks: A lot will depend on whether the P knew or should have known about the illegality.

Fraud/Misrepresentation

Wallis v. Smith, 130 N.M. 214 (Ct Appeals of New Mexico 2001) pg. 608
Facts: P is in a consensual sexual relationship with D, and believes her to be on birth control when she is not. D becomes pregnant, and P sues for fraud, breach of contract, conversion, and prima facie tort. District court dismisses for failure to state a claim upon which relief may be granted. Appeals court affirms. b/c the cause of action contravenes public policy of the state.
Question: Can child support damages be sought for contraceptive fraud? No.
Analysis: [Bosson]
• The P’s cause of action contravenes the public policy of the state, which claims an interest in avoiding the financial burden of supporting single-parent children. Wants both parents involved.
• The child’s interest are paramount over a violated promise between the parents.
• Thus, the state won’t enforce an “illegal” agreement that would allow one parent to be able to contract away his/her obligation for the child. Birth control is non-delegable.
Concurrence: there are many immoral acts that are not torts.
Take-Away: Individuals are not able to contract around contraception or child support.
Issue: Should courts refuse to enforce contracts only when the are illegal, or when they are offensive to public policy concerns?



12.11.03-12.18.03

I. Fraud, Misrepresentation & Nondisclosure (12/11/03)
A. Doctrine
1. In general, the misrepresentation must be an assertion or affirmation of an existing facts (not an expression of opinion, a promise to do something in the future, or a prediction of future events) upon which the other party justifiably relies in entering the contract. - see Restatement 2d of Contracts, § 159
2. The misrepresentation may be fraudulent or innocent. Moreover, the misrepresentation may be the assertion of a “half truth” or consist of the concealment of a fact or even the failure to disclose. - see Restatement 2d of Contracts, § 164
3. The usual effect of wrongful misrepresentation is to render the contract “voidable”, but courts have identified a kind of fraud in the “execution” (as distinguished from the ordinary fraud in the “inducement”) which precludes the formation of any contract at all (a “void” contract). - see Restatement 2d of Contracts, § 163.
4. Modern view of “duty to disclosure” - see Restatement 2d of Contract, § 161 (1981)
a. Disclosure is necessary to prevent a previous assertion from being a misrepresentation or from being fraudulent or material;
b. Disclosure would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if nondisclosure amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing;
c. Disclosure would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part;
d. The other person is entitled to know the fact because of a relationship of trust and confidence between them.

B. Cases

Laidlaw v. Organ (Supreme Court of the United States, 1817) - p. 498

Takeaway: Non-disclosure by itself does not count as fraud; but in light of other circumstances, non-disclosure could amount to fraud. Being silent is not fraud, but one cannot say anything to falsely impose information on the other party. Sometimes, silence amounts to bad faith, then there could be liability.
Generally, there is no duty to disclose. If the information is in the public domain, and the other party would have been able to obtain it by due diligence, then there is no duty to disclose. Maybe the concern is a rule otherwise will diminish people’s incentive to look hard for information. If the information is in the private domain, because it may be deliberately acquired by the party, then there is also no duty to disclose.

Facts: Laidlaw (seller), was to sell 111 hogsheads of tobacco. Organ (buyer), was to pay $7,544.69. The night before the day of the transaction, the war between America and Britain was over and the news was made public in a handbill in the early morning on the day of the transaction (tobacco price was expected to go up once the war was over). Buyer called the seller about the transaction before the seller had heard the said news. The seller asked the buyer whether there was “any news which was calculated to enhance the price or value of the tobacco”. The buyer remained silent and the purchase was made.

Issue: Whether the sale was invalid because the buyer did not communicate information which he received precisely as the seller might have got it had he been equally diligent or equally fortunate.

Ruling: Lower court found for buyer. The Supreme Court reversed and remanded to the district court of Louisiana for further finding as to whether the buyer acted in bad faith.

Rationale: the news was in the public domain, the buyer was not bound to communicate it to the seller. However, each party must take care not to say or do anything tending to impose upon the other party. And whether any imposition was practiced by the buyer was a question for the jury to decide. The lower court erred in the jury instruction.

Hill v. Jones (Court of Appeals of Arizona, 1986) - p. 507

Takeaway:
Duty to disclose
a. If there is trust and confidence in relationship between the parties, for example, family members, principle and agent relationship.
b. If disclosure would amount to correct a previous misstatement or false impression, or a mistake about the basic assumption of the contract.
c. Through statutes. U.C.C or common law- good faith; FTC law requires disclosure in some conditions, or State law, lemon law.

Facts: The buyers entered into an agreement to purchase sellers’ residence for $72,000. Before the final purchase, the buyers visited the residence a few times and the sellers did not mention the past termite infestation and treatment to the buyers, the realtor or the termite inspector. There was evidence of termite treatment in the residence which was ignored by the buyers as well as by the termite inspector. After the buyers moved in, they discovered the termite infestation.

Issue: Must the seller of a residence disclose to the buyer facts pertaining to past termite infestation?

Ruling: Lower court dismissed the buyers’ claim for misrepresentation based on the so called “integration clause” in the parties’ agreement and granted summary judgment for the sellers. The appellate court reversed and remanded for further finding as to whether the termite infection was a material important fact.

Rationale:
a. The contract has an integration clause, which means the court can only look at documents, no evidences should be introduced. But if there is possibility of fraud, then parol evidence can always be introduced.
b. The court used a two-parts test: 1) is there a duty to disclose material important fact? - Yes. 2) Was the termite infection a material important fact? (a jury question)
c. Even if the second prong was not satisfied, the sellers were still obligated to disclose the information according to Arizona law.


Wallis v. Smith (Court of Appeals of New Mexico, 2001) - p. 608

Facts: Wallis and Smith entered into a consensual sexual relationship under the condition that Smith would use birth control pills. Smith stopped taking the pills and did not inform Wallis. Smith became pregnant and gave birth to a baby girl. Wallis sued for money damages alleging fraud on the part of Smith.

Issue: Whether sound public policy would permit our courts to require Smith to indemnify Wallis for child support under the circumstances of this case.

Ruling: lower court dismissed the case for lack of cause of action. Appellate court affirmed.

Rationale: 1) it is difficult to harmonize the legislative concern for the child, reflected in the immutable duty of parental support, with Wallis’s effort in this lawsuit to shift the financial burden solely to the mother; 2) the contract analogy in this case fails because children have the same needs regardless of whether their contraception violated a promise between the parents; 3) individuals are entitled a sphere of privacy into which courts should not tread.

Vokes v. Arthur Murray, Inc. (District Court of Appeal of Florida, 2nd Disctrict, 1968)

Takeaway: opinion usually does not amount to misrepresentation. But in certain context, it could be. Misrepresentation usually only includes representation of current facts. Exceptions: 1) Trust and confidence in relationship; 2) Trick and sting; 3) If the other party really does not have an opportunity to get correct information about the truth of the opinion.

Facts: Mrs. Vokes, a widow with no family, entered into a total of 14 contracts with one of Arthur Murray, Inc.’s dancing schools for 2303 hours of dancing lessons. Mrs. Vokes was to pay the dancing lessons for a total cash outlay of $31,090.45. While inducing her to enter into these contracts, the dancing school allegedly used methods of “sales puffing” and intruded well into the forbidden area of undue influence, the suggestion of falsehood, the suppression of truth, and the free exercise of rational judgment.

Issue: Was the “sales puffing” used by the dancing school a form of misrepresentation?

Ruling: The lower court dismissed the case for lack of cause of action. The appellate court reversed and remanded.

Rationale: A misrepresentation, to be actionable, must be one of fact rather than of opinion. However, it does not apply where there is a fiduciary relationship between the parties, or where there has been some artifice or trick employed by the representor, or where the parties do not in general deal at “arm’s length”, or where the representee does not have equal opportunity to become apprised of the truth or falsity of the fact represented. Even in contractual situations where a party to a transaction owes no duty to disclose facts or to answer inquiries respecting such facts, the law is if he undertakes to do so, he must disclose the “whole truth”.

Class Notes:
a. Whether all the contracts should be treated as one transaction, or they should be treated separately? - probably separately.
b. Unconscionable in this case: usually, when courts consider unconscionable cases, they are concerned with poverty or welfare of the party. That is probably why the court in this case used misrepresentation, not unconscionability.
c. In this case, the reasonable person standard was not used; in stead, a more subjective standard was used. In this case, the court was concerned that the person did not have a meaningful opportunity to discover the truth of the opinion.

C. Professor’s Summary of Fraud, Misrepresentation & Nondisclosure
¦Misrepresentation:
1. Fraudulent - can be innocent misrepresentation.
2. Assertion - words, or conduct, or omissions (non-disclosure)
3. Material fact - generally, does not include opinions, but under some circumstances, opinions do count.
¦Fraud: (the misrepresentation has to be willful or intentional)
1 to 3, plus
4. Reliance upon Assertion.
5. Reliance is justified.

¦Remedy:
1. Generally, the contract is voidable; under some circumstances, it is void when the misrepresentation really goes to the basic agreement of the contract;
2. For voidable, the remedy could be rescission, or engorgement, or severability.


II. Duress & Contracts of Adhesion (12_11_03)

A. Doctrine:
1. Duress by physical compulsion prevents formation of a contract. - see Restatement (Second) § 174.
2. Duress by threats makes a contract voidable. - see Restatement (Second) § 175. (If a party’s manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim).
3. For a threat to be wrongful, the key factor must be the fact that the threatened action is an unreasonable alternative to an injurious contractual demand in a bargaining situation. The wrongfulness is related to the unreasonableness of the alternatives.

B. Cases:

Rubenstein v. Rubenstein (Supreme Court of New Jersey, 1956) - p. 523

Takeaway: This court used a subjective standard: the party’s state of mind is relevant in determining whether there is an interference of free will in contracting.

Facts: The husband alleged that while in fear of his safety and under duress practiced by his wife, he conveyed to her wholly-owned corporation all his right, title and interest in a farm of 126.5 acres of the value of $90,000, and a plot of ground and a factory building of the value of $12,000. The properties were sold to a third party for $23,000. The wife promised to support the two infant children out of the incomes of these properties; however, if the properties were allowed to be sold at the said price, the interest of the two infant children would be seriously jeopardized.

Issue: Whether the husband’s state of mind should be looked into to determine if he was under duress at the time of transaction.

Ruling: The lower court refused to allow the husband to testify to a state of mind and dismissed the case. The supreme court of New Jersey reversed and remanded.

Rationale: In the modern view, moral compulsion or psychological pressure may constitute duress if the subject of the pressure is overborne and he is deprived of the exercise of his free will. In this case, the husband gave a circumstantial account of threats of gangster violence, arsenic poisoning, and a course of action designed to overcome his will. The lower court’s findings also suggest psychological factors bearing on the subjective standard of free will. Therefore, the husband’s state of mind should be looked into to determine if he was under duress.

Austin Instrument, Inc. v. Loral Corp. (Court of Appeals of New York, 1971) - p. 527

Takeaway: economic duress (in business contracts): 1) There is a threat to breach (wonton, willful); 2) The other party can not recover by other reasonable alternatives; 3) The contractual remedy won’t cover the contractual loss.

Facts: Loral Corp. was awarded a $6,000,000 contract by the Navy for the production of radar sets. The contract contained a schedule of deliveries, a liquidated damages clause applying to late deliveries and a cancellation clause in case of default by Loral. Loral subcontracted to Austin for the supply of 23 precision gear components needed for the radar sets. Later, Loral was awarded a second contract by Navy and again solicited bids on the gear components. Austin bid on all 40 gear components and told Loral that Loral must award all 40 components to Austin on a elevated price, and Loral also must increase the price of the existing subcontract; otherwise, Austin would cease deliveries of the gear components due under the existing subcontract. Austin did stop delivery after a short while. Loral tried to contract 10 other manufacturers but none would be able to deliver the parts in time. Finally, Loral agreed to Austin’s conditions. After Austin’s last delivery, Loral informed Austin of its intention to seek recovery of the price increases and Austin commenced the law suit.

Issue: whether Loral was under economic duress when it agreed to Austin’s conditions?

Ruling: the lower court ruled that Loral did not meet the burden of demonstrating that it could not have obtained the gear components from other sources in time to meet its deadline under the first contract. The court of appeals reversed.

Rationale: First, Austin’s threat to Loral deprived it of its free will because: 1) Loral’s relationship with the Navy is most significant and it would not jeopardize its chance for future contract; 2) Loral would have to pay liquidated damages in case of late delivery; 3) non-performance by subcontractor would not excuse Loral from non-performing or late-performing. Second, the 10 manufacturers with whom Loral tried to contract comprised of its entire list of “approved vendors” for precision gears; it would be unreasonable to ask Loral to contract with other vendors that it had no previous contracting experience. Therefore, Loral also met the burden of demonstrating that there was no reasonable alternative.

Class Notes:
a. According to Holmes, either perform or pay for the damage, why is it wrongful for practicing duress? -- preexisting contractual duty disallow you to demand differently. A better explanation: bad faith makes it wrongful.
b. The dissenter thinks there is indication from lower court opinion that Loral had reasonable alternatives to recover, so the upper court should not interfere with lower court’s fact finding.

Machinery Hauling, Inc. v. Steel of West Virginia (Supreme Court of Appeals of West Virginia, 1989) - p. 530
Note: this opinion has a good explanation of duress and economic duress, worth reading.

Facts: Machinery Hauling contracted with Steel to purchase steel and have it delivered to a third party. The third party rejected the steel because of its low quality. Steel told Machinery that if it did not pay for the undelivered steel, Steel would cease doing business with Machinery.

Issue: Whether Steel’s statement constitute a threat.
Ruling: The lower court held that Steel’s statement did not constitute an unlawful act. The court of appeals affirmed.

Rationale: First, Steel’s statement was not coupled with a threat to terminate an existing contract and the plaintiff did not pay over the money; second, future expectancy is not a legal right on which the plaintiff can anchor a claim for economic duress; third, duress is generally not shown because one party to the contract has driven a hard bargain or that market or other conditions now make the contract more difficult to perform by one of the parties, or that financial circumstances may have caused one party to make concessions.

Class Notes: 1.) even if you have a right not to business with others, it could still be duress if there is bad faith involved. 2.) In this case, it should be kept in mind that there might be contract remedy for the defective steel, and there is still meaningful alternative for Machinery.

III. Market Price & Contract Price (12_16_03)

American Mechanical Corp. v. Union Machine Co. of Lynn, Inc. (Appeals Court of Massachusetts, 1985) - p. 897

Takeaway: The expectation remedy is usually the difference between the contract price and the market value at the time of breach. However, when the losses are reasonably foreseeable or within the contemplation of the parties, the contract damages can be measured as the actual losses.

Facts: American contracted with Union to sell its real estate and business equipment for $135,000. Union knew American was in financial difficulty and it was in arrears on mortgage payments to Saugus Bank at the time of contracting, nevertheless, Union repudiated the contract. Saugus bank took possession of the property and after American could not find another buyer it sold the equipment and real estate for a total of $90,000.

Issue: whether the actual losses in this case could be used as the amount of contract damage.

Ruling: the lower court ruled that since American could not establish the market value of the property at the time of breach, a nominal damage should be awarded to American. The appeals court ruled that in this case, the actual loss could be used as the amount of contract damage.

Rationale: although in real estate, the contract damages are usually measured as the difference between the contract price and the market value at the time of breach; in this case, the actual loss was reasonably foreseeable by Union at the time of breach, it is therefore reasonable to award American the full amount of its actual loss. American did have a duty to mitigate the losses after Union’s breach; however, in this case, Union failed to establish that American failed to meet the burden of mitigation.
Class Notes: The Saugus Bank does not have a duty to mitigate the loss in respect to Union. But the bank does have a duty to American not to sell the property at very low price. Nevertheless, it is likely that foreclosure price is much lower than the market value.

New Era Homes Corp. v. Forester (Court of Appeals of New York, 1949) - p. 901

Facts: New Era was to repair Foresters’ home and the parties entered into an agreement as to the terms of the payment: $150 on signing of contract, $1,000 upon delivery of materials and starting of work; $1,500 on completion of rough carpentry and rough plumbing; $425 upon job being completed. The work was commenced and the first two payments were made; however, after New Era finished the “rough work”, Forester breached the contract. New Era sued for $1,500; Forester argued that the remedy should be the value of the work actually done less the payments made plus lost profits.

Ruling: in lower court, the jury rewarded New Era $1,500. The court of appeals ruled that the correct measure should be the contract price less payments made and less the cost of completion.

Rationale: The contract is in no way severable, and the total price of $3,075 is the single consideration for the whole of the work. The remedy for the plaintiff should be the value of what the plaintiff had lost - that is, the contract price, less payments made and less the cost of completion.

Class Notes: expectation damage (contract price - performance made) is to put the breachee back to the position as if the contract had not been breached; disgorgement is to put the breachor back to the position as if the contract had not been breached. Disgorgement is justified because it catches hidden expectation value in some instances; however, disgorgement remedy intends to lead to inefficient outcome.

IV. Lost Volume & Lost Profits (12_16_03)

Locks v. Wade (Superior Court of New Jersey, Appellate Division, 1955) - p. 916

Takeaway: the test for lost volume -- was the breach the only reason the breachee could have sold the goods to a second buyer (but for test)? If the answer is yes, then there is no lost volume.

Facts: Locks was to lease to Wade an automatic phonograph and a juke box for two years and agreed to supply records and replace parts wearing out. In return, Wade was to pay Locks $20 per week. Wade breached the contract and Locks never installed the machine. Locks later found another customer for the machine.

Issue: whether Locks sustained an actual loss in volume since he leased the instruments to another customer.
Ruling: The lower court awarded Locks $836 - the sum of the profit Locks would have made in two years if the contract had not been breached. The superior court affirmed.

Rationale: the equipment called for in this case was readily available in the market but the locations were hard to find. If there had been no breach and the other customer had appeared, Locks could easily have obtained another machine and entered into a second contract. Therefore, Locks has suffered a loss in volume and should be awarded the expectation remedy.

Class Notes: Locks was able to find a second buyer not because of the breach. If there is only one juke box, then it would be different. Or if the juke box is in short supply, and it is hard for the plaintiff to get a second juke box, then it would not be treated as lost volume. We can also look at this question from the mitigation point of view: is the seller able to mitigate his loss perfectly?


V. Losing Contracts (12_16_03)

A. Doctrine
1. Suppose: Expectation = V; Expected Costs = C; Contract Price = P
Typically, EV > C, and contract price usually is negotiated to be a price in between. Typically, V > P+reliance (r) > P. Or: Expectation damages > Reliance > Restitution
In certain instances, the expectation damages could be zero, or less than P and less than P+r. Or: expectation damages < P < P+r - that is losing contract.

2. The remedy: generally restitution is available. One exception: if the breachee has completely performed already, all that have left is for the breachor to pay some money to the breachee, then the breachor is not forced to restitute.

B. Cases

L. Albert & Son v. Armstrong Rubber Co. (United States Court of Appeals, Second Circuit, 1949) - on the blackboard.

Takeaway: Reliance damage is usually not allowed in losing contract. But the burden falls on the breachor to demonstrate that it is a losing contract.

Facts: L. Albert & Son was to sell Armstrong Rubber Co. four refiners, machines designed to recondition old rubber in 1943. L. Albert & Son delivered two in 1943, two in 1945 after the war was over. Armstrong rejected all four claiming that the delivery was too late. L. Albert & Son sued for the price of the four refiners and Armstrong counterclaimed for breach of contract by L. Albert & Son.

Ruling: The lower court dismissed both claims but gave judgment to L. Albert for the price without interest of a part of the equipment which Armstrong put in use in 1946. The Court of Appeals modified the judgment, holding that there was breach of contract by L. Albert due to the late delivery; that L. Albert was entitled to interest of the value of the part put into use by Armstrong; and that Armstrong was entitled to the reliance damage it had spent in preparation for installing the refiners subject to L. Albert’s privilege to deduct from that reliance damage any sum which it could prove would have been lost had the contract not been breached.

Rationale: the contract could not be severed into two separate ones, each for two. Since the second two was delivered after the war was over, it was reasonable to say that the delivery was too late, and therefore, Armstrong was entitled to reject the whole contract. Furthermore, the evidence put forth by L. Albert failed to establish Armstrong’s acceptance of the refiners despite the late delivery of the second two machines. As to Armstrong’s claim for reliance damage, it was entitled to recovery. However, since the purpose of remedy is to put the breachee back to the position where he should have been had the contract been performed, the reliance remedy claimed by Armstrong should subject to L. Albert’s privilege to deduct from that amount any sum which it could prove would have been Armstrong’s loss had the refiners been delivered on time.

VI. Cost of Completion (12_16_03)

A. Doctrine
1. The Doctrine of Substantial Performance - To constitute substantial compliance, the contractor must have in good faith intended to comply with the contract, and shall have substantially done so in the sense that the defects are not pervasive, do not constitute a deviation from the general plan contemplated for the work, and are not so essential that the object of the parties in making the contract and its purpose cannot, without difficulty, be accomplished by remedying them. Such performance permits only such omissions or deviations from the contract as are inadvertent and unintentional, are not due to bad faith, do not impair the structure as a whole, and are remediable without doing material damage to other parts of the building in tearing down and reconstructing. (O.W. Grun Roofing and Construction Co. v. Cope, CB 784)
2. The Doctrine of “economic waste” -- Sometimes defects in a completed structure cannot be physically remedied without tearing down and rebuilding, at a cost that would be imprudent and unreasonable. The law does not require damages to be measured by a method requiring such economic waste. If no such waste is involved, the cost of remedying the defect is the amount awarded as compensation for failure to render the promised performance. Restatement, Contracts, Volume 1, §346, comment b.

B. Cases

Jacob & Youngs v. Kent (Court of Appeals of New York, 1921) - p. 780

Takeaway
Three rules of performance:
1. Perfect tender -- if the other party has not performed perfectly, then you are free to breach too.
2. Unconditional duty to perform -- always have to perform, then later take it to the court.
3. Substantial Performance - intention of the party and justice rule. The breaching is incidental to the main performance.

Facts: Jacob & Young built a country residence for Kent at a cost of upwards of $77,000. In the contract, it was specified that “all wrought iron pipe must be ‘standard pipe’ of Reading manufacture”. After completion, Kent learned that some of the pipe used by Jacob & Young was manufactured by other factories but of the exact same quality. Kent ordered Jacob & Young to do the work anew. However, obedience to the order meant the demolition at great expense of substantial parts of the completed structure. Jacob & Young left the work untouched and sued for final payment due.

Ruling: the lower court found for Jacob & Young. The Court of Appeals affirmed.

Rationale: the mistake by Jacob & Young was neither fraudulent nor willful. The defect was insignificant in its relation to the whole project. The cost of completion is grossly and unfairly out of proportion to the good to be attained. Therefore, in this case, the measure of damage is the difference in value, not the cost of replacement.

Groves v. John Wunder Co. et al. ( Supreme Court of Minnesota, 1939) - on the blackboard

Takeaway: there could be two remedies: cost of completion and diminution in value. The court indicated that cost of completion could be the first remedy to give and might be seeing it as a way to punish the willful breachor.

Facts: Groves leased a tract of 24 acres, a heavy industrial property to Wunder for a term of seven years for $105,000. Wunder agreed to remove the sand and gravel and leave the property at a uniform grade at the end of the lease. However, Wunder only removed the richest and the best of the gravel’ and surrendered the property not at a grade required by the contract at the end of the lease term. The cost of completion was estimated to be $60,000; while if Wunder left the property as it was, the diminution in value of the property was $12,160.

Issue: Whether Groves was entitled to the reasonable cost to him of doing the work called for by the contract but left undone by Wunder?

Ruling: Lower court granted Groves the diminution in value. The Supreme Court of Minnesota reversed and ordered a new trial to find out the reasonable cost of completion if the property was to be returned at a condition called for by the contract.

Rationale: Wunder willfully breached the contract. The work completed by Wunder did not reach the level of “substantial performance”. The work called for by the contract was part of the consideration, so Groves has a right to have the work performed as made and how the work would affect the value of the property is no concern of the breachor’s. Under a construction contract, the thing lost by a breach such as what it is in this case is a physical structure or accomplishment, a promised and paid for alteration in land. That is the “injury” for which the law gives the breechee compensation. Its only appropriate measure is the cost of performance.

Peevyhouse v. Garland Coal & Mining Company (Supreme Court of Oklahoma, 1962) - p. 936

Takeaway: This court distinguished the main purpose and incidental effect.

Facts: Peevyhouse owned a farm containing coal deposits and leased it to Garland for a period of five years for coal mining purposes. Garland specifically agreed to perform certain restorative and remedial work at the end of the lease period. Except this remedial work, all covenants and agreements in the contract were fully carried out by both parties. The cost of completion of the remedial work was estimated to be $29,000, while the diminution in value was $300.

Issue: whether the remedy should be cost of completion or diminution in value?

Ruling: the lower court left the amount of remedy for jury determination and the jury returned a verdict for $5,000, a value between the cost of completion and the diminution in value. Supreme Court of Oklahoma reversed and awarded Peevyhouse $300, the diminution in value.

Rationale: the contract provision breached in this case was merely incidental to the main purpose in view, and where the economic benefit which would result to lessor by full performance of the work is grossly disproportionate to the cost of performance. Oklahoma statutes, 23 O.S.1961 §§ 96, 97 (CB page 938) prevent Peevyhouse from recovering a “greater amount in damages for the breach of an obligation” than they would have “gained by the full performance thereof”. Therefore the proper remedy is the diminution in value.

American Standard, Inc. v. Schectman (Supreme Court of New York, Appellate Division, 1981) - p. 941

Facts: American Standard conveyed a pig iron manufacturing plant to Schectman for a payment of $275,000 and his promise to remove the equipment, demolish the structure and grade the property as specified. Schectman failed to perform as agreed. The cost of performance was estimated to be $90,000 while the diminution in value was only $3,000.

Issue: Whether the difference in value of plaintiffs’ property with and without the promised performance should be the measure of the damage?

Ruling: In lower court, plaintiffs recovered a judgment on a jury verdict of $90,000. The Supreme Court of New York affirmed.

Rationale: The general rule of damages for breach of construction contract is that the injured party may recover those damages which are the direct, natural and immediate consequence of the breach and which can reasonably be said to have been in the contemplation of the parties at the time of contracting. In this case, the agreement to grade the property is part of the consideration of the contract, and that the damages of nonperformance would be the cost of completion can reasonably be said to have been in the contemplation of the parties. The work left undone is not incidental to the whole contract and the work completed did not reach the level of “substantial performance”. Therefore, the proper damage measure is the cost of completion.

C. Professor’s comments on Cost of Completion
1. The economic waste argument is not a good argument. Ultimately, it is about allocating the profit. We ought not to trust the diminution in value because we can not trust the market value in many cases.
2. Cost of completion will not be rewarded if it creates forfeiture, or it is excessive.
But if the breach is willful or substantial, then the diminution in value should not be rewarded.

VI. Non-conforming Goods Theory (12_18_03)

A. What do buyers expect: to get a good service and pay some money for it.
1. Specific Performance (SP) - see UCC 2-716
Covering (V) - get from someone else - see U.C.C. 2-712 (mitigation)
In the case of perfect covering: SP= V
2. In the case SP is not equal to V, there should be substitute / compensatory remedies: money compensation
Suppose value of good is the value of the good at the date and place of the scheduled performance, then the remedy is: value of good - price + incidental losses (associated with trying to mitigate or dealing with the breach) + consequential losses (reasonable foreseeable at the time of contract time) - savings due to sellers’ breach - see U.C.C. section 2-715
3. If before the date of the scheduled performance, the party makes a definite statement that he is not going to perform, then there is repudiation. The other party does not have to do anything. He can accept the repudiation (acknowledging breaching), then acceptance date is the date of breach. Some jurisdictions say that breachee has no duty to mitigate even after acknowledging breaching. However, U.C.C. says, after a reasonable time, if you are reasonably sure that the breaching is happening, you have a duty to mitigate even if you don’t acknowledge the repudiation. Accepting the repudiation may affect the value of good.
4. If the cost of mitigation is less than the gain from the mitigation, then it is reasonable for you to mitigate.
5. If one party has a reason to suspect the other party is breaching, he can put forth a request for insurance. If the request is denied, can say the other party repudiating, and can sue for insurance.
6. If the buyer accepts the non-performing goods:
Expectation remedy=Value (performance) - Value (breach)
Under U.C.C. § 2-714, value of performance is market value (performance)
Value of breach (market value)
7. If the buyer rejects or there is no performance at all
Expectation remedy = Market value of performance see U.C.C. § 2-713
8. If the buyer is able to cover:
Value (performance) = Value (breach)
Expectation remedy = Value (performance) - Value (breach) - KP (contract price) + CP (covering Price)

B. What do sellers expect: to deliver good/service, get some money
1. Profit = KP (revenue) - cost
2. When buyer rejects:
Expectation remedy = KP (contract price) - market price of the goods that are not sold - see U.C.C. § 2-708.
3. When Buyer accepts:
Expectation remedy = KP (contract price) - see U.C.C. § 2-709.

VII. Parol Evidence (12_18_03)

A. Doctrines
1. Definition: parol evidence is the evidence outside of the contract. An integration clause in a contract usually is a final expression of some terms of the contract.
2. Four ways for parol evidence to be introduced depending on the purpose sought by introduction of parol evidence (given integrated contract -K)
a. Enforcing oral contract
1) If the oral contract contradicts K, then no parol evidence is allowed.
2) If there is no contradiction, then:
¦ If the oral agreement is collateral to K and is expected to be included in K, no parol evidence is allowed.
¦ If the oral agreement is collateral to K and is not expected to be included in K, then parol evidence is admissible.
¦ If the oral agreement is not collateral to K, then parol evidence is admissible but not controlling.
b. Modifying written contract
1) If the parol evidence contradicts K, then it is not allowed.
2) If the parol evidence does not contradict K but K is complete, then the parol evidence is not allowed.
3) If the parol evidence does not contradict K and K is not complete, then:
¦ If the parol evidence is collateral to K and is expected to be included in K, no parol evidence is allowed.
¦ If the parol evidence is collateral to K and is not expected to be included in K, then parol evidence is admissible.
¦ If the parol evidence is not collateral to K, then parol evidence is admissible but not controlling.
c. Challenge K
Parol evidence may be introduced.
d. Interpretation of K
1) If K is susceptible to competing interpretation, then
¦ if parol evidence is relevant to K, it is admissible.
¦ if parol evidence is not relevant to K, it is not admissible.
2) If K is not susceptible to competing interpretation, then parol evidence is not allowed.

B. Cases

Mitchill v. Lath (Court of Appeals of New York, 1928) - p. 615

Takeaway: For an oral agreement to be introduced it has to be collateral and not independent (a quick test is whether it has a separate consideration); it has to be consistent with the existing written contract, and it is not naturally expected to be in written contract.

Facts: Mrs. Mitchill was to buy a farm from the Laths for $8,400. Before the contract was made, the Laths orally promised to remove an ice house across from the property which Mitchill found objectionable. After the transaction was completed, Mitchill found the ice house not removed and sued for damages.

Ruling: The lower courts found for the plaintiff. The court of appeals reversed.

Rationale: The written contract is a full and complete agreement, setting forth in detail the obligations of each party. Were the oral agreement to remove the icehouse made it would seem most natural that an inquirer should find it in the contract itself. Therefore, the plaintiff does not satisfy the third requirement for a parol evidence to be introduced: it is not naturally expected to be in written contract.

Class Notes: The majority thinks the contract is detailed; if the parties intended the icehouse agreement, they should have included it in the written contract. The majority may believe that there is an oral contract. But they are more concerned with Type II error. The dissent thinks the contract is not necessarily so broad to cover the oral agreement.

Masterson v. Sine (Supreme Court of California, 1968) - p. 619

Takeaway: This court used a more relaxed standard for the natural requirement. “We could not say it could be naturally included in the written contract, so we should allow the parol evidence.”
In determining the parties’ intention, a court should look at conduct, language, and all circumstances surrounding the negotiation. - That could be a problem when there is an integration clause or a merger clause.

Facts: Dallas and Rebecca Masterson conveyed a ranch which they owned as tenants in common to Medora and Lu Sine by a grant deed “Reserving unto the Grantors herein an option to purchase the above described property on or before February 25, 1968” for the “same consideration as being paid heretofore plus their depreciation value of any improvements Grantees may add to the property from and after two and half years from this date.” Medora is Dallas’ sister and Lu’s wife. Dallas later went bankruptcy. His trustee in bankruptcy and Rebecca brought this declaratory relief action to establish their right to enforce the option.
Issue: Whether the parol evidence that the parties wanted to keep the property in the Masterson family and that the option was therefore not exercisable by the trustee in bankruptcy should be allowed?
Ruling: The lower court did not allow the above parol evidence. The Supreme Court of California reversed the judgment.
Rationale: The crucial issue in determining whether there has been an integration that excludes parol evidence is whether the parties intended their writing to serve as the exclusive embodiment of their agreement. Collateral agreements and other circumstances at the time of the writing may be examined to determine the parties’ intention. In this case, the option clause does not explicitly provide that it contains the complete agreement, and the deed is silent on the question of assignability. Furthermore, the collateral agreement as to the assignability of the option might naturally be made as a separate agreement. Therefore, the parol evidence should be introduced to determine whether the parties intend to keep the property in the Masterson family.

- posted by Brian @ 2:19 PM

 
Torts
I. Chapter I. Introduction to Tort Liability

A. Prologue

1. The Nature of Tort Law

a. No satisfactory definition: There is no really useful definition of a “tort” which will allow all tortious conduct to be distinguished from non-tortious conduct. In fact, courts are constantly changing their view of what constitutes tortious conduct (usually by way of expansion of liability). The best that can be done is to identify a few of the main features and purposes of tort law:

(1) Compensation: The overall purpose of tort law is to compensate plaintiffs for unreasonable harm which they have sustained.

(a) Competing Policy Reasons:

i) Compensation for victims
ii) Deterrence: Deter accidents and defendants from taking risks
iii) Judicial administration: stare decisis, bright line rules for future cases
iv) Economic efficiency: it’s fair to make the defendant pay for the accident if it would have been cheaper for the defendant to have prevented the accident
v) Justice, fairness: underpins everything. Courts will ask “What is the fair result?”

B. When should unintended injury result in liability:

1. Shifting losses: The fundamental issue addressed by a system of tort liability for untended injury is when losses should be shifted from an injury victim to an injurer or some other source of compensation. The courts could apply a theory of strict liability by requiring people to pay for all harms they cause. In the alternative, the courts could require that people only pay for injuries they cause through their own negligence or fault.

a. Strict liability or negligence - Hammontree v. Jenner


(1) Facts: Jennfer (D) had suffered a seizure in 1952 and was subsequently diagnosed as an epileptic. He was given medication and his seizures were brought under control. Beginning in 1955 or 1956, D had to report his condition to the DMV on a periodic basis. Since his seizures were under control, he was able to keep his driver’s license. In 1967, D had a seizure while driving, lost control of his car, hit Hammontrees’ (Ps’) shop, and struck Mrs. Hammontree. Ps sued for personal injury and property damage. Ps wanted the jury to be instructed on strict liability, but the trial court refused the strict liability instruction and instructed on negligence instead. The jury found for D, and Ps appeal.

(2) Issue: Is strict liability an appropriate theory for recovery when sudden illness renders an automobile driver unconscious?

(3) Held. No. Judgment affirmed.

(a) When products cause injury, strict liability is an appropriate theory. The manufacturers make a profit from sales and should pay for any injuries. Those costs are costs of doing business.

(b) The theory of negligence, however, is adequate for automobile accidents. Drivers share the roads and should allocate damages based on fault. Since D used reasonable care to control his seizures, negligence has not been shown.

C. The Litigation Process

1. Client visits attorney to discuss possible case. Lawyer calls other party to attempt to reach a settlement. If other party refuses, lawyer may file a complaint.

2. Defendant responds. Could file a motion to dismiss because “no legal grounds for complaint” even if the facts are true (demurrer). The motion to dismiss would say that the complaint does not state a cause of action. If the judge agrees with the defendant, the judge will dismiss the suit and judgment is granted for the defendant.

3. If judge does not dismiss, the defendant will file an answer, in which he denies some or all of plaintiff’s allegations of fact. The defendant could file a motion for summary judgment. That is, there is no need for a trial because there is no genuine dispute as to the facts. If motion for summary judgment is granted, judgment is granted and the case ends.

4. If motion for summary judgment is not granted, case goes to trial.

5. Before jury reaches verdict, defendant could make motion for directed verdict. This asks the judge to rule in defendant’s favor because the plaintiff’s evidence is so lacking on at least one essential fact that no jury could reasonably find in the plaintiff’s favor and thus it is pointless to continue the trial. If motion for directed verdict is granted, judgment is entered and the case ends.

6. If directed verdict is denied, jury instructions are presented by both sides to the judge, and he selects which instructions to give the jury.

7. The jury will be charged and will go deliberate.


8. After verdict is reached, the loser may enter a motion for judgment n.o.v. If the motion is granted, case ends.

9. If motion isn’t granted, a judgment is entered and the loser may appeal on the ground that an error of law was committed by the trial court.

D. The Parties and Vicarious Liability

1. Nature of Doctrine: The doctrine of vicarious liability provides that in some situations, the tortious act of one person may be imputed to another, because of some special relationship between the two. As a result, the latter will be held liable, even though his own conduct may have been blameless. The most frequent situation in which vicarious liability exists is that involving tortious acts (usually negligent ones) committed by an employee; under appropriate circumstances, the employer is held vicariously liable for the tort.

2. Respondeat superior doctrine: If an employee commits a tort during the “scope of his employment” his employer will (jointly with the employee) be liable. This rule is often described as the doctrine of “respondeat superior” (which means, literally, “Let the person higher up answer.”)

a. DOCTRINE:

(1) An employee, not an independent contractor

(2) Acting within the scope of his employment:

(a) Employee’s conduct must be of the general kind the employee is hired to perform

(b) Employee’s conduct must occur substantially within the hours and ordinary spatial boundaries of employment

(c) Employee’s conduct must be motivated, at least in part, by the purpose of serving the employer’s interest.

b. POLICY:

(1) Deterrence: If the employer is made strictly liable for employee’s torts, he will be more careful in his hiring, training, disciplinary practices, etc., and fewer accidents will result.

(2) Economic efficiency: It would be easier for the employer to absorb the costs of the litigation; business can spread the costs across their consumers


(3) Fairness: Indemnity. The employer has a legal right to get indemnified from the employee. At least in theory, it’s fair from the defendant’s perspective, because the employer can get the money back from the employee.

(4) Compensation: The employer has deep pockets.

(5) Fairness: Quid pro quo (this for that). It’s fair to hold the employer liable for the employee’s torts because the employer gets the benefit (makes money) from the employee’s actions. It is unseemly if the employer can make money from the employee’s actions and not lose money from the employee’s actions.

c. Trips from home: Most courts hold that where an accident occurs where the employee is traveling from her home to work, she is not acting within the scope of her employment; this conclusion is often based on the theory that the employer has no “control” over the employee at that time.

(1) Returning home: When the employee is returning home after business activities, the courts are divided, although most would probably deny liability on the employer’s part here as well.

d. Frolic and detour: It frequently happens that, while on a business trip, the employee makes a short “side trip” or “detour” for her own purposes.

(1) Traditional view: The traditional view has been that while the employee is on the first leg of her side trip (i.e., going to the personal objective) she is engaging in what is often called a “frolic and detour,” and thus is not within the scope of her employment. But as soon as she begins to return towards the path of her original business trip, she is once again within the scope of her employment, no matter how fair afield she may be at that point.

(2) Modern view: But many modern courts have taken a less mechanical view of the frolic and detour problem. These courts have held that the employee is within the scope of business if the deviation is “reasonably foreseeable.” Under this view, the employee might be within the scope of employment even while she was heading toward the object of her personal errand, if this deviation was slight in terms of distance. But if the deviation was large and unforeseeable then the employee is not within the scope of business even while heading back towards her business goal, at least until she gets reasonably near the route she was supposed to take.

e. Acts prohibited by employer: Since the whole idea behind respondeat superior is that the employer is liable completely irrespective of his own negligence, it follows that the employer liability will exist even if the acts done were expressly forbidden by the employer, as long as it is found that they were done in the furtherance of the employment.


f. Unauthorized delegation by employee: If the employee, without his employer’s permission, hires an assistant, or permits an unauthorized person to use the employer’s property, and the latter commits a tort, the employer will not automatically be vicariously liable, in most courts. Rather, there will be vicarious liability only if the employee himself was negligent in brining in the third person (as where he should have known that the third person would not be able to do the job safely).

g. Intentional torts: Respondeat superior may, as noted, apply to intentional torts. Generally, “the master is held liable for any intentional tort committed by the servant where its purpose, however, misguided, is wholly or partly to further the master’s business.”

(1) Debt collection: Thus the employer will be liable if his employee attempts to collect a debt owed to the employer by assault, batter or false imprisonment.

(2) Personal motives: But if the employee acts purely from personal motives (e.g., a violent dislike of a customer), the employer will not be liable.

(a) Special duty owed by employer: But even in this “personal motive” situation, the employer may still be liable if he owes an independent duty of protection to the victim. A common carrier owes its passengers a duty of reasonable care to protect them against torts by third persons. Therefore, if a railroad conductor attacked a passenger, even though solely for his own motives, the railroad would still be liable, on the grounds that it breached its direct duty of care.

(3) Lost temper: If the employee gets into an argument during a business transaction, and then loses his temper and commits an intentional tort, most courts hold that the employer is not liable.

(4) Foreseeability rule: Just as in the case of negligence, a few modern courts have adopted a “foreseeability rule”, whereby the employer is liable even for intentional torts if their occurrence was foreseeable or “characteristics.”

3. Ostensible Agency (p. 929 HB)

a. The ostensible agency addition to vicarious liability: By estoppel or ostensible agency, an employer may be liable for the torts of a non-employee. The party asserting ostensible agency must demonstrate that:

(1) The principal, by its conduct

(2) Caused him or her to reasonably believe that the putative agent was an employee or agent of the principal, and


(3) That he or she justifiably relied on the appearance of agency.

b. Baptist Memorial Hospital System v. Sampson

(1) The hospital here was not liable under ostensible agency because its conduct had not led the plaintiff to believe the emergency room doctors were employees of the hospital.

II. Chapter 2. The Negligence Principle

A. Historical Development of Fault Liability

1. Origins: Historians have disagreed as to the origins of the law of torts.

a. Early English law: In the common law courts of the 13th century, only two writes were available for redressing torts. These were the writ of trespass and the writ of trespass on the case.

(1) Trespass: The writ of trespass provided relief for all direct and immediate forcible injuries to person or property. It covered unintentional as well as intentional injuries, require no proof of actual damages, and did not require fault on the part of the defendant (i.e., wrongful intent or negligence was not required).

(2) Trespass on the case: The writ of trespass on the case provided relief for injuries that were intended but were either not forcible or not direct. Usually, the plaintiff was require to show actual damages and wrongful intent or negligence on the part of the defendant.

2. Present law: Today, tort liability generally falls into three classes:

a. Liability based on the intent of the defendant;

b. Liability based on the negligence of the defendant; and

c. Liability attaching irrespective of the state of mind of the defendant; i.e., strict liability.

3. The Fault Principle: Brown v. Kendall

a. In 1850, in Brown v. Kendall, the Massachusetts Court abolished the rule that a direct physical injury entailed strict liability. The court held that when the defendant who attempted to beat a dog but unintentionally struck the plaintiff instead would not be liable for battery in spite of the direct force applied. Instead, the defendant would be liable only if he intended to strike the plaintiff or if he was at fault (negligent) in striking him.


b. Held: When a defendant is engaged in a lawful act and injures a plaintiff, the plaintiff may not recover damages if:

(1) The plaintiff and defendant exercised ordinary care;

(2) The plaintiff and defendant failed to exercise ordinary care; or

(3) The plaintiff alone failed to exercise ordinary care.

c. Brown v. Kendall set the general standard for negligence law: the defendant should use ordinary care, or more particularly, the care of a reasonable and prudent person. The actual conduct that would count as ordinary care would vary with circumstances, since a reasonable person would exercise more care when danger is greater.

4. Elements of a Plaintiff’s Prima Facie Case: The rules for the negligence case require that the plaintiff has the burden of proving all of the following elements in order to establish an actionable claim for negligence:

a. The defendant owed the plaintiff a duty of care, for instance, not to engage in unreasonably risky conduct;

b. The defendant breached that duty by his unreasonably risky conduct;

c. The defendant’s conduct in fact caused harm to the plaintiff;

d. The defendant’s conduct was not only a cause in fact of the plaintiff’s harm but also a proximate cause, meaning that the defendant’s conduct is perceived to have a significant relationship to the harm suffered by the plaintiff.

e. The existence and amount of damages, based on actual harm of a legally recognized kind such as physical injury to person or property.

5. The Elements: Meaning and Terminology

a. Duty or Standard of Care

(1) The duty or standard of care imposed in most cases is the duty of reasonable care under the circumstances, no more, no less. Judges, not juries, ordinarily determine whether a duty exists and the standard it imposes.

b. Breach of Duty: Negligence:


(1) The defendant must have breached his duty of care tot he plaintiff. When the defendant owes a duty of reasonable care, the defendant breaches that duty by conduct that falls short of such care, that is, by conduct that is unreasonably risky. Juries, not judges, decide whether the defendant was negligent unless the question is too clear to permit different evaluations by reasonable people.

c. Cause in Fact:

(1) Actual harm requirement: The plaintiff cannot recover without showing actual harm resulting from the defendant’s conduct. Put differently, the defendant’s acts must cause the harm of which the plaintiff complaints.

(2) Tests of cause in fact: The traditional view is that the plaintiff’s injury is caused by the defendant’s conduct if, but for the defendant’s conduct, the plaintiff would not have suffered the injury.

d. Proximate Cause:

(1) The requirement: The plaintiff must prove that the defendant’s conduct was a proximate cause of the plaintiff’s harm. This means at the bottom that the plaintiff must persuade the court or jury that the defendant’s conduct not only in fact caused the plaintiff’s harm but that it was a reasonably significant cause.

(a) Excluding liability for fortuitous, unrisked harm: In some cases courts might think that the defendant’s misconduct is not a proximate cause of the plaintiff’s harm because the harm is perceived to be a fortuitous rather than a foreseeable result of the defendant’s negligent conduct.

i) Ex: Defendant’s speeding results in his being farther along on a highway than he would be if he were going the speed limit. A plane falls out of the sky and lands on the car, injuring the defendant’s passenger, the plaintiff. In such a case the defendant is negligent in speeding and his conduct is cause in fact of the harm. Nevertheless, his negligence is probably not a proximate cause of the harm. The risks that make us think the defendant was negligent do not include risks that look anything like the risk of being under a crashing airplane.

(b) Excluding liability for a trivial cause among more significant causes: In other cases the courts might think that the defendant’s misconduct is not a proximate cause of the plaintiff’s harm because the harm is perceived to be more significantly related to other causes. This usually occurs when some other person besides the defendant is also negligent and is the immediate trigger of the harm.


i) Ex: D leaves a log in the road, running the risk that someone might trip over it in the dark. As P walks along in the dark, a robber pushes P over the log, causing injury. D was negligent in leaving the log in the road, and P suffered as a result. Nevertheless, some courts might well emphasize the greater importance of the robber’s acts in causing P’s harm and conclude that D’s negligence was not a proximate cause.

B. The Central Concept

1. The Standard of Care: The defendant is bound only to use that care that is commensurate with the hazard involved. The risk, reasonably perceived, defines the duty owed.

a. Reasonable Care - Adams v. Bullock

(1) Facts: Bullock (D) operated a trolley with overhead wires. At one point the wires crossed near a bridge. Adams (P) was a 12-year old boy who used the bridge as a shortcut. While P walked along, he swung an eight-foot wire over his head. P’s wire contracted with D’s trolley wire, and P was injured. P successfully sued D. P’s verdict was affirmed on appeal, and D appeals.

(2) Issue: Whether D breached a duty of reasonable care.

(3) Held: No. Judgment Reversed.

(a) D must only exercise ordinary care in light of ordinary risk. In this case, it would take extraordinary foresight to have foreseen this risk. Even if the harm was remote, if the risk was avoidable, liability would attach. Here, however, the trolley line could not have been made safer.

(4) The opinion seems to suggest a balancing of factors to determine whether a duty is owed. The foreseeability of the harm is balanced against the ability to prevent the injury.

b. Unreasonable Risk:

(1) Imposition of risk: To show that the defendant’s conduct failed to meet the duty of care imposed on him the plaintiff must show that the defendant’s conduct imposed an unreasonable risk of harm on the plaintiff (or the class of persons of whom the plaintiff is a member).

(a) Not judged by results: To make this showing, plaintiff cannot simply show that the defendant’s conduct resulted in a terrible injury. Rather, she must show that the defendant’s conduct, viewed as of the time it occurred, without the benefit of hindsight, imposed an unreasonable risk of harm.


i) Inherently dangerous objects: This “no hindsight” principle is also illustrated by cases in which potentially dangerous objects are left lying around. Some objects (e.g., a shotgun) are so dangerous that it is negligence to leave them lying around without special handling (e.g., unloading the shotgun). But other objects pose less of a danger and it will not be negligence to leave them around even if it turns out that, unexpectedly, they cause harm. The risk is to be evaluated as it reasonably appeared before the accident.

(2) Balancing Test: In determining whether the risk of harm from a defendant’s conduct was so great as to be “unreasonable,” the test is whether a “reasonable person” would have recognized the risk, and have striven to avoid it. However, because it is often exceptionally difficult to what a reasonable person would have done in a particular situation, the courts have developed a “balancing test” as a rough guide was to whether the defendant’s conduct is so risky as to involve an unreasonable risk of harm to others. The most famous formulation is that stated by Judge Learned Hand: Liability exists if:

B < L x P

where B equals the burden which the defendant would have to bear to avoid the risk, L equals the gravity of the potential injury, and P equals the probability that the harm will occur from the defendant’s conduct.

Ex: This test was formulated by Judge Hand in U.S. v. Carroll Towing Co. There, P’s barge, docked at a pier, broke away from its moorings due to D’s negligence in shifting the lines that moored it. D, however, argued that P was also negligent in not having an employee on board the barge, and that, according to the rules of admiralty, the damage should be divided between D and P according to their respective degrees of negligence.

Held: It is burdensome, to a degree, to have an employee on board at all times. However, there was wartime activity going on in the harbor, and ships coming in and out all the time. Therefore, the risk that the mooring lines would come undone, and the danger to the barge and to other ships if they did, was sufficiently great that P should have borne the burden of supplying a watchman (unless he had some excuse for his absence) during working hours.

(a) Threat of serious injury: As the Hand formula implies, the more serious the potential injury, the less probable its occurrence need be before the defendant will be held to be negligent for not guarding against it.


c. Calculation of burden: “B” in the above equation is itself a function of not only the cost to him, but also the broader social utility of the conduct which he would have to forego. Hence the courts attempt, in effect, to answer the question: “Would society be better off if all defendants in a the position of D were permitted to act as D did, or were instead require to change their conduct so as to avoid the kind of risk which resulted in injury to P?” Only if the answer to this question Is that defendant in D’s position should be require to change their conduct will the cause of action for negligence lie (assuming that the other requirements are met).

(1) Ex: D Railroad maintains a railway turntable (a rotating platform with a track for tuning a locomotive) near a publicly traveled path. P, a child, discovers that the turntable is unlocked, climbs on it, and while playing on it with a group of children gets his foot caught between the rails and severed at the ankle joint.

(2) Held: It was negligent of D not to keep the turntable locked and guarded. The business of railroading is facilitated by the use of turntables, so the public good demands that their use not be entirely outlawed, since their utility is out of proportion to the occasional injuries which result. But the burden of keeping the turntable locked is so small that the danger of not doing so outweighs this burden.

d. Activity level v. care level: One of the peculiarities of our negligence system is that it usually focuses on the actor’s level of care in carrying out the activity, but not on the social utility of the actor’s decision to engage in that activity at all. Consequently, a defendant who engages in a fairly safe activity but does so negligently is likely to be liable for damages, whereas one who engages in a risky-and-not-socially-beneficial activity but does so carefully, will not - this is true even though the burden on others is greater in the latter situation.

(1) Compare with strict liability: Observe that something quite different happens when the liability scheme is strict liability rather than negligence. Under strict liability, an actor who engages in, say, an ultrahazardous activity is responsible for all injuries that he proximately causes, even if these occur without negligence.

2. The Reasonable Person

a. Objective Standard: The balancing test described above, for weighing burden against risk, is a very abstract one, and neither a jury nor a potential defendant can be expected to use it to evaluate conduct in most instances. Therefore, the negligence issue is usually put to the jury as “Would a reasonable person of ordinary prudence, in the position of the defendant, have conducted himself as the defendant did?” This is essentially an objective standard. That is, it does not ask whether the defendant intended to behave carefully or thought he was behaving carefully. However, this hypothetical “reasonable person” does, as we shall see below, bear some of the characteristics of the actual defendant, at least to the extent of some of his physical attributes.


b. Methods for determining risks acceptable to a reasonable person. The reasonable person standard is important, but it does not by itself direct juries or judges to clear conclusions in close cases. The legal system has developed three broad ways to make the reasonable person standard a little more specific:

(1) Courts invest the imaginary reasonable person with certain mental and physical characteristics. The defendant’s conduct can thus be compared to the conduct we would expect of a reasonable person having say, certain knowledge and ability.

(2) Courts may sidestep the effort to apply general standards by adopting specific rules about specific kinds of conduct such as speeding, condemning that conduct as at least prima facie negligence.

(3) Courts may attempt to estimate how the reasonable person would behave more directly. For instance, they might attempt to estimate the magnitude or the risks involved in the defendant’s conduct, and to weigh those risks along with the costs and benefits of acting more safely. Or, alternatively courts might regard a customary community behavior, not as a standard to be sure, but as persuasive evidence of how a reasonable person would behave.

c. Physical Characteristics: The circumstances under which a defendant is judged include external facts of the case, such as the traffic conditions, speed limit, etc. Most courts have extended the circumstances to include the physical characteristics of the defendant himself. That is, they have held that the test is whether a reasonable person with the physical attributes of the defendant would have behaved as the defendant did.

(1) Physical disability: Thus if the defendant has a physical disability, the standard for negligence is what a reasonable person with that physical disability would have done.

(a) Sudden disability: A key factor will often be whether the disability has struck for the first time immediately preceding the accident. A defendant who reasonably believes himself to be in good health, and who suddenly suffers, for the first time ever, a heart attack or epileptic seizure while driving, would almost certainly not be held to have negligently caused the ensuing accident. But one who knows he is subject to such attacks or seizures might well be negligent in driving at all.


(b) Blindness: Many disability cases have involved blindness. Typically, it is the plaintiff who is blind, who has been injured, and against whom the defense of contributory negligence is asserted. In such a case, the issue is: How would a reasonable blind person behave? Sometimes, the reasonable blind person will have to be more careful than a reasonable sighted person, sometimes less.

(2) Mental Attributes:

(a) The ordinary reasonable person is not, however, deemed to have the particular mental characteristics of the defendant. For instance, the defendant is not absolved of negligence because he is more stupid, hot-tempered, careless or of poorer judgment than the ordinary reasonable person.

(3) Imbecility: However, a mental state so low that it must be considered imbecilic or moronic, and which prevents the actor from even understanding that danger exists, will usually be held to render negligence impossible. The issue has usually arisen in the case of mentally defective plaintiffs against whom contributory negligence is asserted.

(4) Insanity: Paradoxically, the courts have bee more inclined to impose a “reasonable” objective standard upon insane persons than upon mentally deficient ones. However, recently courts have begun to hold that insane persons, whether plaintiff or defendant, are not negligent if their insane state prevented them from understanding or avoiding danger.

(5) Intoxication: A defendant who is intoxicated at the time of the accident is not permitted to claim that his intoxication stripped him of his ability to comprehend and avoid the danger; he is held to the standard of conduct of a reasonable sober person.

(6) Children: Another exception to the general objective reasonable person standard is that children are not held to the level of care which would be exercised by a reasonable adult. A child must merely conform to the conduct of a child of like age, intelligence and experience, under the circumstances.

(a) Definition of child: This special standard is applicable only to children, not to all “minors.” The Second Restatement notes that the test is generally for children of “tender years” and furthermore states that it has “seldom been applied to anyone over the age of sixteen.”

(b) Adult activity: Another exception to the special rules for children is that where a child engages in a potentially dangerous activity that is normally pursued only by adults, he will be held to the standard of care that a reasonable adult doing that activity would exercise. This principle has been applied to driving a car, a motorboat, a snowmobile, and even to playing golf.


i) Dangerous but not adult: Suppose the activity is potentially dangerous, but not one that is usually engaged in by adults rather than children. The courts are split as to the standard of care which should be applied to this situation. The Restatement would apply the child standard, since the adult standard would be applied to children only if the activity is

(c) both potentially dangerous and one that is normally engaged in by adults (thus, deer-hunting would not trigger the adult standard since it is an activity often engaged in by minors). But other courts have held that the adult standard of care should be triggered when the activity is significantly hazardous, even if it is one which is frequently engaged in by children (thus, snowmobiling is an inherently dangerous activity for which the adult standard should apply, even though children often do it. This rule discourages immature individuals from engaging in inherently dangerous activities, while still leaving them free to enjoy traditional childhood activities without being held to an adult standard of care).

d. Knowledge: Assuming that the general reasonable person standard is the one which applies to a case at hand, there are a number of basic issues about how a reasonable person generally behaves. One of these troublesome areas has to do with knowledge that a reasonable person would possess.

(1) Ordinary experience: There are obviously many things which every adult has learned; these include such things as that objects will fall when dropped, that flammable materials can catch fire, that other human beings are likely to react in certain ways such as by attempting to rescue a person in danger, etc. These items of knowledge that virtually every adult in the community posses will be imputed to the “reasonable adult” and thus to the defendant. This is true whether the defendant herself actually knows the fact in question or not.

(2) Stranger to the community: Furthermore, facts generally known to all adults in a particular community will be imputed to a stranger who enters the community without having had the experience of knowledge in question. Thus a city dweller who visits a farm, and who has never learned that a bull can be dangerous, will nonetheless be held to the standard of behavior that would be exercised by one who did have such knowledge, since the knowledge is common to dwellers in rural areas.

(3) Duty to investigate: Even where a certain fact is not known to members of the community at large, or to the defendant himself, he may be under a duty to end his ignorance. A driver who senses that something is wrong with his steering wheel, for instance, would have a duty to find out what the problem is before an accident is caused.


(4) Memory: Just as the reasonable person knows certain facts, she also has a certain level of memory. Thus, a motorist who has passed a particular intersection many times will be charged with remembering that it is dangerous in a certain way, whereas one who never or seldom has passed that intersection before would not have the same burden.

e. Custom: In litigating the defendant’s negligence, one thing that either side may point to is custom, that is, the way a certain activity is habitually carried out in a trade or a community. The plaintiff may try to show that the defendant did not follow the safety-motivated customs that others in the same business follow, or the defendant may try to show that he exercised due care by suing the same procedures as everyone else in the trade.

(1) Not conclusive: The vast majority of courts allow evidence as to custom for the purposes of showing the presence or absence of reasonable care, but do not treat this evidence as conclusive. Thus, the fact that everyone else in the defendant’s industry does a certain thing the same way the defendant did it does not mean that the way was not unduly dangerous, if there are other factors so indicating.

(a) Ex: Two tugboats owned by D are towing cargo owned by P. Most tugboats have not yet installed radio receiving sets, although some have. D’s two tugs do not yet have these sets. They are therefore unable to receive messages that a strong storm is overtaking them, and are sunk.

i) Held: The fact that most tugs have not installed sets does not conclusively establish that D was non-negligent in not having installed them. For custom is not dispositive on the issue of negligence - “a whole calling may have unduly lagged in the adoption of new and available devices...Courts must in the end say what is required; there are precautions so imperative that even their universal disregard will not excuse their omission.” Here some tug owners had already installed the sets, so D’s case is even weaker, and was liable. The T.J. Hooper.

(2) Advances in technology: The technological “state of the art” at a particular moment is, similarly, relevant to what constitutes negligence. For instance, the defendant’s failure to take action to prevent a certain known risk might be either negligent or non-negligent, depending upon whether technology exists that could reduce the risk. Consequently, the conduct that would be non-negligent in earlier times may have become negligent today due to technological advances.

(3) Constraints on use of custom: When custom is used to determine what reasonable care requires in the circumstances, or to prove that the defendant should have had knowledge of the customary safety precautions, courts impose limitations on its use, including the following:


(a) Widespread and notorious: Courts often say that to be a custom the practice must be widespread, notorious or even that it must be universal. If such demands are too stringent, it is at least true that the practice must be common and not merely a sporadic or occasional practice.

(b) Safety concern: When the plaintiff attempts to prove negligence by proving violation of custom, the custom must be one generated by safety concerns, not one arising for reasons unrelated to safety.

(c) Violation of statutes: A custom to violate statutory or regulatory requirements is not ordinarily to be admitted to show reasonable care, but such a custom may occasionally bear on the possibility that violation was excused.

(4) Malpractice: Except in malpractice cases, courts have rejected the argument that a prevailing custom defines the standard of care.

f. Emergency: As we have seen, the general rule is that the defendant must follow the standard of care that a reasonable person would exercise “considering all of the circumstances.” One of the circumstances of a particular case may be that the defendant was confronted with an emergency, and was forced to act with little time for reflection. If this is so, the defendant will not be held to the same standard of care as one who has ample time for thinking about what to do; instead he must merely behave as would a reasonable person confronted with the same emergency.

(1) Emergency caused by defendant: But if the emergency is caused by the defendant’s negligence, the fact that the emergency leads the defendant into an accident will not absolve him of liability. In such a situation, it is the initial negligence leading to the emergency, not the subsequent response to the emergency, that makes the defendant negligent.

(2) Negligence still possible: Even if the emergency is not of the defendant’s own making, he must still live up to the standard of care of a reasonable person confronted with such an emergency. That is, if he behaves unreasonably, even conceding the fact that he had little time for reflection, he will nonetheless be negligent. Thus a person driving on an undivided highway who sees an accident ahead of him, and who swerves left into oncoming traffic instead of right onto the shoulder, might well be held liable notwithstanding the fact that he had little time for reflection.


(3) Minority rule: The courts of at least one state seem to have taken the position that as long as the defendant is a generally careful person, the court will presume that his instinctive response in an emergency was non-negligent. “Carelessness means wrong thinking or failure to think in connection with an action, and an instinctive action, when there is not time to think, cannot of itself be called negligence.”

(4) Activity requiring special training: There are certain activities which by their nature require an unusual capacity to react well in an emergency. In a case involving such an activity, the defendant will therefore be held to this higher standard of preparedness. A bus driver, for instance, should by her training be better prepared than the average driver to anticipate various traffic emergencies, and she will be held to this higher standard. In fact, even the average motorist will probably be held to bear the burden of being capable of anticipating certain kinds of common emergencies (e.g., a child rushing out into the street after a ball), and will be charged with reacting more quickly in such a situation than if that kind of emergency arose less frequently.

g. Anticipating the conduct of others: Just as the reasonable person must possess certain knowledge, so she must possess a certain ability to anticipate the conduct of others. Following are few kinds of responses by third persons that a defendant may be charged with the burden of anticipating.

(1) Negligence of others: The defendant may be required to anticipate the possibility of negligence on the part of others. Generally, this will be so only if the likelihood of injury is great, or the magnitude of the injury is very substantial.

(a) Ex: An automobile driver is normally entitled to assume that other drivers will drive non-negligently. But if she has reason t know that the car ahead of her is being driven by a drunk driver, or if the road conditions are such that a short stop by the driver ahead is likely to cause the defendant to run over a pedestrian, the defendant will be required to guard extra carefully against these consequences.

(b) Children: Furthermore, the defendant is charged with anticipating careless or dangerous conduct on the part of children, since they are commonly known to be incapable of exercising the degree of care of the average adult. Thus one who drives down a street crowded with children playing is not entitled to assume that the children will stay out of the car’s path and must take extra precautions to guard against their carelessness.

(2) Criminal and intentionally tortious acts: The reasonable person, and hence the defendant, is normally entitled to assume that third persons will not commit crimes or intentional torts, unless he has some reason to believe to the contrary as to a particular third person.


(a) Special relationship: However, the defendant may have a special relationship with either the plaintiff or a third person, such that the defendant will bear the burden of anticipating and preventing intentionally tortious or criminal acts by the third person.

i) Ex: Poddar is under care of Ds, university psychotherapists. He tells them that he intends to kill Tatiana, the Ps’ daughter. One of the Ds asks the campus police to detain Poddar, but after he seems rational, they release him. Neither of the Ds warns Tatiana or the Ps. Two months later, Poddar in fact kills Tatiana.

ii) Held: The psychotherapist-patient relationship between Ds and Poddar was sufficiently “special” that it created a duty for the Ds to protect third persons such as Tatiana (with whom they had no relationship at all) from reasonably foreseeable harm by Poddar. The Ds therefore had the duty to take reasonable steps to protect her, including probably the giving or a warning to her or the Ps. The university police, on the other hand, had no special relationship to Poddar (even though they detained him) or to Tatiana; they therefore bore no duty to protect Tatiana against harm from Poddar, and the Ps’ complaint against them must be dismissed. Tarasoff v. Regents of the Univ. of CA.

(3) Misrepresentation: Just a defendant’s acts may be negligent, so her speech or other communication may be. Where the resulting injury is an abstract economic one (e.g., investors’ loss due to a financial statement negligently prepared by accountants), special rules apply, generally tending to limit the defendant’s liability.

3. The Role of Statutes

a. Nonprescriptive statutes: Statutes which provide only a criminal penalty or some form of administrative enforcement. These statutes provide nothing at all about tort law, so they can be identified as nonprescriptive statutes. Although such statutes prescribe no tort-law effects at all, courts are usually free nonetheless to adopt the standard or rules of conduct from such statutes and to apply them to tort cases.

b. Significance of statutory violation: Sometimes, however, the legislature passes a statute which appears to define reasonable conduct in a certain kind of situation. This is most often true of legislation establishing safety standards for industry, transportation, etc. A substantial body of case law has arisen discussing the extent to which the court is required to treat a violation of such legislation as negligence per se.


(1) Majority Rule - Negligence per se doctrine: When courts apply the standard or rule of conduct from a nonprescriptive statute, the majority do so under the rule of negligence per se. That rule holds that an adult’s violation of statute is negligence in itself if it causes harm of the kind the statute was intended to avoid and to a person within the class of persons the statute was intended to protect. In the absence of a valid excuse, violation conclusively shows negligence. Violation of statute equally proves the plaintiff’s contributory negligence in appropriate cases.

(a) Rebuttable: Because certain limited excuses are recognized, some courts describe the rule as a presumption of negligence rule or a prima facie negligence rule to emphasize that the finding of negligence can be rebutted under limited circumstances.

(2) Minority Rule - Evidence of Negligence: A few courts reject the per se rule and treat violation as merely some evidence of negligence or as “guidelines for civil liability.” This rule permits the jury to conclude that a statute violator behaved in a reasonable way even if he presents no particular excuse.

(a) Ordinances and regulations: Where the case involves a violation not of a legislatively enacted statute, but of a local ordinance or administrative regulation, a number of courts that follow the majority rule as to statutory violations apply the minority rule to violations of ordinances and administrative regulations, holding that such violations are merely evidence of negligence.

c. Statute must apply to facts: Even in states following the majority rule that statutory violations can sometimes be “negligence per se,” the courts have set up a series of requirements to ensure that, before the violation will be negligence per se, the statute was intended to guard against the very kind of injury in question.

(1) Class of persons protected: First, the plaintiff must be of the class of persons for whom the statute was designed to protect.

(a) General interests of state: A sub-species of this rule is the principle that where the statute is intended to protect only the interests of the state or of the public at large, not to protect particular individuals against harm, its violation will not be negligence per se.

i) Blue law: Thus, a blue law, prohibiting stores from being open on Sunday would not conclusively establish the negligence of a store owner who opened on Sunday, exercising all reasonable care, but whose customer slipped on the store floor. The law would be held to protect the interest of the public at large in having a day of rest, not to protect individuals who would otherwise shop on Sundays.

(b) Two classes of persons protected: But a statute may be held to have been intended to protect both the public at large as well as a particular class of individuals. If so, its violation may be negligence per se.


i) Ex: P, sitting in D bar, becomes innocently enmeshed in a barroom brawl, and is injured. An administrative regulation provides that no tavern owner “shall permit or suffer any loud, noisy, disorderly or boisterous conduct, nor permit any visibly intoxicated person to enter or remain upon his premises.”

ii) Held: This regulation, and the statute under the authority of which it was promulgated, were intended to protect not only the interest of the community at large in peace and quiet, but also barroom customers from the “carnage of the barroom brawl.” Therefore, P fell within one of the classes of persons to be protected by the act, and violation by D constitutes negligence in itself.

(2) Protection against particular harm: The second requirement the statute must meet before it is a violation per se is that it must have been intended to protect against the particular kind of harm that the plaintiff seeks to recover for.

(a) Ex: Animals on a shop not properly secured in cages are tossed overboard during a storm. The statute was intended to keep disease from spreading among the animals, not to keep them from washing overboard. Therefore, because the statute was not meant to prevent the kind of harm which occurred, it cannot be used as evidence of negligence per se.

(3) Excuse of violation: Once the plaintiff has shown that the statute was addressed to a class of person including herself, and that it was designed to guard against the kind of harm that she sustained (and assuming that she carries the more general burden of showing that the act that was violative of the statute was the actual cause of the harm), the defendant’s negligence per se has been established. However, in some circumstances, the defendant may then have the right to show that his violation of the statute was excusable. If he can do this, the violation will be stripped of its “negligence per se” nature, and will be at most, evidence of negligence which the jury will weigh, and may disregard.

(a) Absolute duties: There are some statutes which, the court may hold, by their nature and history leave no room for excuses. That is, they impose upon the defendant an absolute duty to comply with the statute, and a good faith attempt to do so is not sufficient.

i) Typical cases: For instance, statutes prohibiting child labor have generally been held to fall in this category. Thus an employer who hires a child in violation of the statute will beheld liable if an injury occurs of the sort that the act was intended to protect against, and the employer will not be heard to say that he believed in good faith that the child was above the minimum age.


ii) Brakes: Statutes requiring effective brakes on automobiles have also occasionally been held in fall in this absolute duty class.

(b) Rebuttable presumption or excuse: Most statutes, on the other hand, are not intended to impose an absolute duty of compliance. Courts have chosen two similar (but not identical) ways of preventing statutes from being given this absolute effect. Sometimes, the statute is viewed as merely establishing a rebuttable presumption of negligence; the defendant can then introduce evidence of due care in order to rebut the presumption. Other courts treat the statute as establishing negligence per se, but allow certain excuses for non-compliance; if one of the available excuses is demonstrated, the violation has no bearing on the issue of negligence.

i) Ignorance of need: The defendant was reasonably unaware of the particular occasion for compliance;

a) Ex: D’s brakes fail but he had no warning of the brake failure. This was sufficient to allow the jury to find his conduct reasonable, and he is therefore not negligent.

ii) Reasonable attempt to comply: Similarly, the violation may be excused because the defendant made a reasonable and diligent attempt to comply, but was unsuccessful;

iii) Emergency: Or it may be excusable because defendant was confronted with an emergency not of his own making;

iv) Greater risk of harm: A violation may be excused if compliance would have involved a greater risk of harm to the actor or to third persons than the path of noncompliance chosen by the defendant.

a) Ex: Tedla v. Ellman

v) Excuses and negligence per se: In jurisdictions which adopt the negligence per se rule, whether the excuse is a good one is a question for the judge to decide.

vi) Excuses and evidence of negligence: In jurisdictions which adopt the evidence of negligence rule, whether the excuse is a good one is a question for the jury.


(4) Foolish or obsolete legislation: There are many statutes on the books which have never been enforced, or which have not been enforced for so long that they may be treated as obsolete. In such a situation, the court will often in effect treat the violation as excused, although in reality the court is really simply declining to accept the legislative standard as binding on the civil liability question.

(5) Effect of the plaintiff’s contributory negligence: Even where the defendant’s negligence pre se is established, he may be able to assert the defense of contributory negligence or assumption of risk. However, if the statute is a sort that is held to impose an absolute duty on the defendant, and therefore to allow no excuses, these defenses may not be available. Thus an employer who violates the child labor laws will not be allowed to raise the defense of contributory negligence, since this would defeat the entire purpose of the statute.

(6) Contributory negligence per se: The defendant may, in an appropriate case, demonstrate that the plaintiff’s violation of a statute constitutes contributory negligence per se. Generally speaking, the rules are the same for asserting contributory negligence per se as for defendant’s negligence per se.

(a) Hurdles: But keep in mind that the hurdles which must be surmounted before negligence per se is established are still imposed; thus if the statute is construed as one which was not intended for the protection of the person in the position of the plaintiff, then the violation will not conclusively establish contributory negligence.

(b) Speed limits: Generally, however, such statutes as speed limits and other traffic regulations are held to be for the purpose of protecting plaintiff drivers who violate them, as well as innocent third parties.

(7) Violation as evidence: Even if the plaintiff is unable to meet all the requirements of the negligence per se doctrine, the statutory violation may still be taken as evidence of negligence.

(8) Per se doctrine not available for federal claims: All the cases involving negligence per se that we have examined thus far have been state court cases. What happens to the doctrine when a case is brought before a federal court?

(a) Diversity cases: In a diversity case, where the plaintiff is relying upon state negligence law, the Erie doctrine would require the federal court to follow the same rules regarding the effect of statutory violations as would the courts of the state in which the federal court sits.

(b) Federal question cases: But suppose the plaintiff argues that the defendant violated a federal statute, and that the doctrine of negligence per se should be applied. The federal court would not be able to apply the doctrine because it is a product of common law, and there is no federal common law.


i) Consequence: A plaintiff suing in federal court, seeking to establish civil liability from the defendant’s violation of a federal statute, will normally have to show that Congress created an “implied civil remedy” in passing the statute. This is a much harder showing to make than is generally required for application of the common law negligence per se doctrine.

(9) Compliance with statute not dispositive: The converse of the negligence per se doctrine does not hold true. That is, the fact that the defendant has fully complied with all applicable state safety regulations does not by itself establish that he was not negligent. The finder of fact is always free to conclude that a reasonable person would take precautions beyond those required by law.

(a) Usual care: But if the situation confronting the defendant was substantially the same as that which the statute was designed to control, the finder of fact may consider the defendant’s full compliance with all statutes as evidence that nothing more was required of a reasonable person.

C. Procedure in Jury Trials

1. Burden of proof: In a negligence case, as in virtually all torts cases, the plaintiff is said to bear the burden of proof. In reality, the plaintiff actually bears two distinct burdens:

a. Burden of production: First, she must come forward with some evidence that the defendant was negligent, that she suffered an injury, that the defendant’s negligence was the proximate cause of this injury, etc. This burden is generally known as the “burden of production.” The burden of production may be defined as the obligation upon a party to come forward with evidence in order to avoid a directed verdict. This burden can and does shift from the plaintiff to the defendant and possibly back again, depending on the strengths of the proof offered by each side.

(1) Directed verdict for the defendant: If the plaintiff does not produce any evidence in support of her prima facie case, the judge will order a directed verdict for the defendant. That is, she will tell the jury that as a matter of law, it must find for the defendant.

(2) Jury case: If the plaintiff comes forward with enough evidence in support of her prima facie case that a reasonable person could decide in the plaintiff’s favor, the case will go to the jury.


(3) Directed verdict for the plaintiff: It may be, however, that the plaintiff’s case is so strong that, unless the defendant comes forward with rebutting evidence, the court will have to order a directed verdict in the plaintiff’s favor (i.e., the court will decide that no reasonable person could find in favor of the defendant). If so, the plaintiff has essentially shifted the burden of production to the defendant.

b. Practical significance: The judge does not monitor the shifting of the burden of production throughout the trial. It is really only at two points that evaluation of the burden is significant: first, at the end of the plaintiff’s case, the defendant usually moves for a directed verdict; that is, he asks the court to declare that the plaintiff has failed to make her prima facie case, and that the jury should be instructed that it must decide in his favor. Secondly, at the end of the defendant’s case, each side is likely to move for a directed verdict.

c. Burden of persuasion: The second respect in which the plaintiff being by bearing the burden of proof is that she bears what is sometimes called the “burden of persuasion.” This means that if the case goes to the jury, the plaintiff must convince the jury that it is more probable than not that her injuries are due to the defendant’s negligence. To put it another way, the fact that the plaintiff bears the burden of persuasion means that if the jury believes that there is exactly a fifty percent chance that the defendant caused the injuries, the plaintiff loses. The concept is usually expressed by saying that the plaintiff must demonstrate her case by the preponderance of the evidence.

(1) Not usually shifted: The burden of persuasion in a negligence case rests on the plaintiff from the beginning and almost never shifts. However, there are a few jurisdictions which hold that application of the doctrine of res ipsa loquitor does shift this burden to the defendant.

2. Function of judge and jury:

a. Judge decides law: The judge decides all questions of law. In a negligence case, this means that the judge will decide, typically, the following issues:

(1) State of facts: She will decide, after all the evidence is in, whether that evidence admits more than one conclusion. If she decides that reasonable people could not differ as to what the facts of the case are, she will instruct the jury as to the findings of fact they must make.

(2) Existence of duty: The judge will also determine the defendant’s duty to the plaintiff. This is done as a matter of law. Thus in a suit by a plaintiff trespasser against a defendant landowner, the court will probably instruct the jury that provided the defendant did not know of the plaintiff’s presence, he owed him no duty of care at all.


(3) Directed verdict: By deciding aspects of both these matters, the judge may remove the case from the jury by directing a verdict.

b. Jury’s role: The jury, it is commonly said, is the finder of facts. However, since as we have seen the judge may sometimes decide the facts as a matter of law, what this really means is that the jury will be permitted to find the facts only where these facts are in such dispute that reasonable persons could differ on them. If the case is sufficiently unclear that it is permitted to go to the jury, the jury will decide two principle factual issues:

(1) What happened; and

(2) Particular standard of care: Whether the facts as found indicate that the defendant breached his duty of care to the plaintiff, in a way that proximately caused the plaintiff’s injuries.


D. Proof of Negligence

1. Circumstantial Evidence - Nature and Use:

a. Circumstantial evidence: Circumstantial evidence is evidence of a fat that tends to establish and thus to permit an inference of another fact.

b. Judge’s role in monitoring circumstantial evidence: The trial judge must decide in the first place whether the circumstantial evidence offered rationally tends to support the inference of any relevant fact and must exclude the evidence if it does not.

c. Circumstantial evidence going to the jury: If circumstantial evidence is sufficient to permit reasonable jurors to draw the inference sought, the issue goes to the jury, which assesses its weight.

d. Effect of circumstantial evidence: Drawing inferences of fact from circumstantial evidence is largely a matter of assessing probability. An inference is ordinarily permissible, but is not mandatory. Also, circumstantial evidence does not create a presumption or shift the burden of persuasion. It is evidence for the jury to consider and weigh, nothing more.

e. Expert testimony and circumstantial evidence: In many instances, circumstantial evidence must be explained by someone with special knowledge. While most of us might be quite sure that 500-ft skid marks indicate high speed, we are not likely to be sure what 45-ft skid marks mean. In that case the evidence might be rejected unless expert testimony can give a more or less scientific explanation of the circumstantial evidence.


f. Constructive notice: This is a notice arising out of presumption of law from the existence of facts and circumstances that a party had a duty to take notice of. To have constructive notice the defect must:

(1) Be visible and apparent; and

(2) Exist for a sufficient period of time prior to the accident to permit the defendant’s employees to discovery and remedy it.

2. Res Ipsa Loquitor

a. Aid in proving the case: To prove the defendant negligent, the plaintiff must normally provide evidence of the defendant’s specific conduct. Proof that an accident happened or even that the defendant caused an injury is not enough by itself; as courts say, negligence is not presumed. Cases that fit the res ipsa loquitor pattern constitute an exception. The Latin phrase means “the thing speaks for itself,” which is to say, the plaintiff’s injury and the immediate events surrounding it can by themselves show negligence, even though the plaintiff is unable to prove any specific act that was unreasonably dangerous.

b. Requirements for doctrine: Virtually all American courts recognize that there are situations in which the doctrine of res ipsa should be applied. The courts generally agree on at least four requirements before the doctrine may be applied:

(1) No direct evidence of D’s conduct: First, there must be no direct evidence of how D behaved in connection with the event.

(2) Seldom occurs without negligence: The plaintiff must demonstrate that the event is of a kind which ordinarily does not occur except through negligence (or other fault) of someone.

(3) In defendant’s control: Plaintiff must show that the instrument which caused her injury was, at the relevant time, in the exclusive control of the defendant.

(4) Rule out plaintiff’s contribution: Plaintiff must show that her injury was not due to her own action.

(5) Accessibility of information: Some courts have purported to hold that in addition to establishing these four things, the plaintiff must also show that a true explanation of the events is more readily accessible to the defendant than to herself. However, few courts have really relied on this requirement.


c. No direct evidence of D’s conduct: As a threshold matter, most courts insist that there must be no direct evidence of how D behaved in connection with the event. Res ipsa is only used as an indirect means of inferring that D was probably negligent, so there’s no need to use the doctrine if we know the details of D’s conduct.

d. Inference of someone’s negligence: The plaintiff must prove that the incident is one which does not normally occur in the absence of negligence. This is true of, for instance, falling elevators, escaping gas or water from utility mains, the explosion of boilers, etc. The plaintiff is not required to show that such events never occur except through someone’s negligence; all she has to do is show that most of the time, negligence is the cause of such occurrences.

(1) Aviation: Thus it is now generally accepted that where an airplane crashes without explanation, the jury may infer that negligence was more than likely the cause. In the early days of aviation, however, where the elements were often sufficient to cause a crash without anyone’s negligence, and where there was no body of accident history to justify any conclusion about the general causes of accidents, most courts refused to allow this inference, and the doctrine of res ipsa was therefore not applied.

(2) Basis of conclusions: Normally, the fact that a particular kind of accident does not usually occur without negligence is within the general experience of the jury, and does not have to be explicitly proven by the plaintiff. However, there are other cases (e.g., medical malpractice), where the plaintiff may wish to provide expert testimony to the effect that accidents such as the one that occurred normally do not happen without negligence.

(3) Negating other causes: The plaintiff is not require to demonstrate that there were no other possible causes of the accident. She must merely prove the more than 50% probability that there was negligence.

(a) Ex: P’s decedent is a passenger on D’s airplane, which disappears over the Pacific Ocean. Only debris is ever found, and P produces no evidence at trial as to any actual negligence by anyone. D produces evidence that the airplane was properly maintained, the personnel adequately trained and briefed, the weather normal, etc.

(b) Held: D’s showing of general due care in its operation is not sufficient to deprive the finder of fact of the right to infer that negligence was more probably than not the cause of the accident. P is not required to demonstrate that there was no mechanical failure, or to negate every other possible cause. Therefore (since the other requirements were met) the doctrine of res ipsa is appropriate.


e. Showing that the negligence was the defendant’s: The plaintiff must also show, again by a preponderance of the evidence, that the negligence was probably that of the defendant. In the older cases, this requirement was usually expressed by stating that the plaintiff must demonstrate that the instrumentality which caused the harm was at all times within the exclusive control of the defendant.

(1) Ex: During the great V-J celebration, P is walking on the sidewalk next to D Hotel, when she is hit by a falling chair. P proves no other facts at trial.

(2) Held: A hotel does not have exclusive control, either actual or potential, of its furniture. The guests have, at least, partial control. Therefore, P has failed to establish the requirement for res ipsa.

(a) Modern view: Most modern cases, however, do not express this requirement solely in terms of exclusive control by the defendant. Instead, they simply require the plaintiff to show that, more likely than not, the negligence was the defendant’s, not someone else’s. Thus in the case above, t
- posted by Brian @ 5:32 PM

 
Torts
I. Chapter I. Introduction to Tort Liability

A. Prologue

1. The Nature of Tort Law

a. No satisfactory definition: There is no really useful definition of a “tort” which will allow all tortious conduct to be distinguished from non-tortious conduct. In fact, courts are constantly changing their view of what constitutes tortious conduct (usually by way of expansion of liability). The best that can be done is to identify a few of the main features and purposes of tort law:

(1) Compensation: The overall purpose of tort law is to compensate plaintiffs for unreasonable harm which they have sustained.

(a) Competing Policy Reasons:

i) Compensation for victims
ii) Deterrence: Deter accidents and defendants from taking risks
iii) Judicial administration: stare decisis, bright line rules for future cases
iv) Economic efficiency: it’s fair to make the defendant pay for the accident if it would have been cheaper for the defendant to have prevented the accident
v) Justice, fairness: underpins everything. Courts will ask “What is the fair result?”

B. When should unintended injury result in liability:

1. Shifting losses: The fundamental issue addressed by a system of tort liability for untended injury is when losses should be shifted from an injury victim to an injurer or some other source of compensation. The courts could apply a theory of strict liability by requiring people to pay for all harms they cause. In the alternative, the courts could require that people only pay for injuries they cause through their own negligence or fault.

a. Strict liability or negligence - Hammontree v. Jenner


(1) Facts: Jennfer (D) had suffered a seizure in 1952 and was subsequently diagnosed as an epileptic. He was given medication and his seizures were brought under control. Beginning in 1955 or 1956, D had to report his condition to the DMV on a periodic basis. Since his seizures were under control, he was able to keep his driver’s license. In 1967, D had a seizure while driving, lost control of his car, hit Hammontrees’ (Ps’) shop, and struck Mrs. Hammontree. Ps sued for personal injury and property damage. Ps wanted the jury to be instructed on strict liability, but the trial court refused the strict liability instruction and instructed on negligence instead. The jury found for D, and Ps appeal.

(2) Issue: Is strict liability an appropriate theory for recovery when sudden illness renders an automobile driver unconscious?

(3) Held. No. Judgment affirmed.

(a) When products cause injury, strict liability is an appropriate theory. The manufacturers make a profit from sales and should pay for any injuries. Those costs are costs of doing business.

(b) The theory of negligence, however, is adequate for automobile accidents. Drivers share the roads and should allocate damages based on fault. Since D used reasonable care to control his seizures, negligence has not been shown.

C. The Litigation Process

1. Client visits attorney to discuss possible case. Lawyer calls other party to attempt to reach a settlement. If other party refuses, lawyer may file a complaint.

2. Defendant responds. Could file a motion to dismiss because “no legal grounds for complaint” even if the facts are true (demurrer). The motion to dismiss would say that the complaint does not state a cause of action. If the judge agrees with the defendant, the judge will dismiss the suit and judgment is granted for the defendant.

3. If judge does not dismiss, the defendant will file an answer, in which he denies some or all of plaintiff’s allegations of fact. The defendant could file a motion for summary judgment. That is, there is no need for a trial because there is no genuine dispute as to the facts. If motion for summary judgment is granted, judgment is granted and the case ends.

4. If motion for summary judgment is not granted, case goes to trial.

5. Before jury reaches verdict, defendant could make motion for directed verdict. This asks the judge to rule in defendant’s favor because the plaintiff’s evidence is so lacking on at least one essential fact that no jury could reasonably find in the plaintiff’s favor and thus it is pointless to continue the trial. If motion for directed verdict is granted, judgment is entered and the case ends.

6. If directed verdict is denied, jury instructions are presented by both sides to the judge, and he selects which instructions to give the jury.

7. The jury will be charged and will go deliberate.


8. After verdict is reached, the loser may enter a motion for judgment n.o.v. If the motion is granted, case ends.

9. If motion isn’t granted, a judgment is entered and the loser may appeal on the ground that an error of law was committed by the trial court.

D. The Parties and Vicarious Liability

1. Nature of Doctrine: The doctrine of vicarious liability provides that in some situations, the tortious act of one person may be imputed to another, because of some special relationship between the two. As a result, the latter will be held liable, even though his own conduct may have been blameless. The most frequent situation in which vicarious liability exists is that involving tortious acts (usually negligent ones) committed by an employee; under appropriate circumstances, the employer is held vicariously liable for the tort.

2. Respondeat superior doctrine: If an employee commits a tort during the “scope of his employment” his employer will (jointly with the employee) be liable. This rule is often described as the doctrine of “respondeat superior” (which means, literally, “Let the person higher up answer.”)

a. DOCTRINE:

(1) An employee, not an independent contractor

(2) Acting within the scope of his employment:

(a) Employee’s conduct must be of the general kind the employee is hired to perform

(b) Employee’s conduct must occur substantially within the hours and ordinary spatial boundaries of employment

(c) Employee’s conduct must be motivated, at least in part, by the purpose of serving the employer’s interest.

b. POLICY:

(1) Deterrence: If the employer is made strictly liable for employee’s torts, he will be more careful in his hiring, training, disciplinary practices, etc., and fewer accidents will result.

(2) Economic efficiency: It would be easier for the employer to absorb the costs of the litigation; business can spread the costs across their consumers


(3) Fairness: Indemnity. The employer has a legal right to get indemnified from the employee. At least in theory, it’s fair from the defendant’s perspective, because the employer can get the money back from the employee.

(4) Compensation: The employer has deep pockets.

(5) Fairness: Quid pro quo (this for that). It’s fair to hold the employer liable for the employee’s torts because the employer gets the benefit (makes money) from the employee’s actions. It is unseemly if the employer can make money from the employee’s actions and not lose money from the employee’s actions.

c. Trips from home: Most courts hold that where an accident occurs where the employee is traveling from her home to work, she is not acting within the scope of her employment; this conclusion is often based on the theory that the employer has no “control” over the employee at that time.

(1) Returning home: When the employee is returning home after business activities, the courts are divided, although most would probably deny liability on the employer’s part here as well.

d. Frolic and detour: It frequently happens that, while on a business trip, the employee makes a short “side trip” or “detour” for her own purposes.

(1) Traditional view: The traditional view has been that while the employee is on the first leg of her side trip (i.e., going to the personal objective) she is engaging in what is often called a “frolic and detour,” and thus is not within the scope of her employment. But as soon as she begins to return towards the path of her original business trip, she is once again within the scope of her employment, no matter how fair afield she may be at that point.

(2) Modern view: But many modern courts have taken a less mechanical view of the frolic and detour problem. These courts have held that the employee is within the scope of business if the deviation is “reasonably foreseeable.” Under this view, the employee might be within the scope of employment even while she was heading toward the object of her personal errand, if this deviation was slight in terms of distance. But if the deviation was large and unforeseeable then the employee is not within the scope of business even while heading back towards her business goal, at least until she gets reasonably near the route she was supposed to take.

e. Acts prohibited by employer: Since the whole idea behind respondeat superior is that the employer is liable completely irrespective of his own negligence, it follows that the employer liability will exist even if the acts done were expressly forbidden by the employer, as long as it is found that they were done in the furtherance of the employment.


f. Unauthorized delegation by employee: If the employee, without his employer’s permission, hires an assistant, or permits an unauthorized person to use the employer’s property, and the latter commits a tort, the employer will not automatically be vicariously liable, in most courts. Rather, there will be vicarious liability only if the employee himself was negligent in brining in the third person (as where he should have known that the third person would not be able to do the job safely).

g. Intentional torts: Respondeat superior may, as noted, apply to intentional torts. Generally, “the master is held liable for any intentional tort committed by the servant where its purpose, however, misguided, is wholly or partly to further the master’s business.”

(1) Debt collection: Thus the employer will be liable if his employee attempts to collect a debt owed to the employer by assault, batter or false imprisonment.

(2) Personal motives: But if the employee acts purely from personal motives (e.g., a violent dislike of a customer), the employer will not be liable.

(a) Special duty owed by employer: But even in this “personal motive” situation, the employer may still be liable if he owes an independent duty of protection to the victim. A common carrier owes its passengers a duty of reasonable care to protect them against torts by third persons. Therefore, if a railroad conductor attacked a passenger, even though solely for his own motives, the railroad would still be liable, on the grounds that it breached its direct duty of care.

(3) Lost temper: If the employee gets into an argument during a business transaction, and then loses his temper and commits an intentional tort, most courts hold that the employer is not liable.

(4) Foreseeability rule: Just as in the case of negligence, a few modern courts have adopted a “foreseeability rule”, whereby the employer is liable even for intentional torts if their occurrence was foreseeable or “characteristics.”

3. Ostensible Agency (p. 929 HB)

a. The ostensible agency addition to vicarious liability: By estoppel or ostensible agency, an employer may be liable for the torts of a non-employee. The party asserting ostensible agency must demonstrate that:

(1) The principal, by its conduct

(2) Caused him or her to reasonably believe that the putative agent was an employee or agent of the principal, and


(3) That he or she justifiably relied on the appearance of agency.

b. Baptist Memorial Hospital System v. Sampson

(1) The hospital here was not liable under ostensible agency because its conduct had not led the plaintiff to believe the emergency room doctors were employees of the hospital.

II. Chapter 2. The Negligence Principle

A. Historical Development of Fault Liability

1. Origins: Historians have disagreed as to the origins of the law of torts.

a. Early English law: In the common law courts of the 13th century, only two writes were available for redressing torts. These were the writ of trespass and the writ of trespass on the case.

(1) Trespass: The writ of trespass provided relief for all direct and immediate forcible injuries to person or property. It covered unintentional as well as intentional injuries, require no proof of actual damages, and did not require fault on the part of the defendant (i.e., wrongful intent or negligence was not required).

(2) Trespass on the case: The writ of trespass on the case provided relief for injuries that were intended but were either not forcible or not direct. Usually, the plaintiff was require to show actual damages and wrongful intent or negligence on the part of the defendant.

2. Present law: Today, tort liability generally falls into three classes:

a. Liability based on the intent of the defendant;

b. Liability based on the negligence of the defendant; and

c. Liability attaching irrespective of the state of mind of the defendant; i.e., strict liability.

3. The Fault Principle: Brown v. Kendall

a. In 1850, in Brown v. Kendall, the Massachusetts Court abolished the rule that a direct physical injury entailed strict liability. The court held that when the defendant who attempted to beat a dog but unintentionally struck the plaintiff instead would not be liable for battery in spite of the direct force applied. Instead, the defendant would be liable only if he intended to strike the plaintiff or if he was at fault (negligent) in striking him.


b. Held: When a defendant is engaged in a lawful act and injures a plaintiff, the plaintiff may not recover damages if:

(1) The plaintiff and defendant exercised ordinary care;

(2) The plaintiff and defendant failed to exercise ordinary care; or

(3) The plaintiff alone failed to exercise ordinary care.

c. Brown v. Kendall set the general standard for negligence law: the defendant should use ordinary care, or more particularly, the care of a reasonable and prudent person. The actual conduct that would count as ordinary care would vary with circumstances, since a reasonable person would exercise more care when danger is greater.

4. Elements of a Plaintiff’s Prima Facie Case: The rules for the negligence case require that the plaintiff has the burden of proving all of the following elements in order to establish an actionable claim for negligence:

a. The defendant owed the plaintiff a duty of care, for instance, not to engage in unreasonably risky conduct;

b. The defendant breached that duty by his unreasonably risky conduct;

c. The defendant’s conduct in fact caused harm to the plaintiff;

d. The defendant’s conduct was not only a cause in fact of the plaintiff’s harm but also a proximate cause, meaning that the defendant’s conduct is perceived to have a significant relationship to the harm suffered by the plaintiff.

e. The existence and amount of damages, based on actual harm of a legally recognized kind such as physical injury to person or property.

5. The Elements: Meaning and Terminology

a. Duty or Standard of Care

(1) The duty or standard of care imposed in most cases is the duty of reasonable care under the circumstances, no more, no less. Judges, not juries, ordinarily determine whether a duty exists and the standard it imposes.

b. Breach of Duty: Negligence:


(1) The defendant must have breached his duty of care tot he plaintiff. When the defendant owes a duty of reasonable care, the defendant breaches that duty by conduct that falls short of such care, that is, by conduct that is unreasonably risky. Juries, not judges, decide whether the defendant was negligent unless the question is too clear to permit different evaluations by reasonable people.

c. Cause in Fact:

(1) Actual harm requirement: The plaintiff cannot recover without showing actual harm resulting from the defendant’s conduct. Put differently, the defendant’s acts must cause the harm of which the plaintiff complaints.

(2) Tests of cause in fact: The traditional view is that the plaintiff’s injury is caused by the defendant’s conduct if, but for the defendant’s conduct, the plaintiff would not have suffered the injury.

d. Proximate Cause:

(1) The requirement: The plaintiff must prove that the defendant’s conduct was a proximate cause of the plaintiff’s harm. This means at the bottom that the plaintiff must persuade the court or jury that the defendant’s conduct not only in fact caused the plaintiff’s harm but that it was a reasonably significant cause.

(a) Excluding liability for fortuitous, unrisked harm: In some cases courts might think that the defendant’s misconduct is not a proximate cause of the plaintiff’s harm because the harm is perceived to be a fortuitous rather than a foreseeable result of the defendant’s negligent conduct.

i) Ex: Defendant’s speeding results in his being farther along on a highway than he would be if he were going the speed limit. A plane falls out of the sky and lands on the car, injuring the defendant’s passenger, the plaintiff. In such a case the defendant is negligent in speeding and his conduct is cause in fact of the harm. Nevertheless, his negligence is probably not a proximate cause of the harm. The risks that make us think the defendant was negligent do not include risks that look anything like the risk of being under a crashing airplane.

(b) Excluding liability for a trivial cause among more significant causes: In other cases the courts might think that the defendant’s misconduct is not a proximate cause of the plaintiff’s harm because the harm is perceived to be more significantly related to other causes. This usually occurs when some other person besides the defendant is also negligent and is the immediate trigger of the harm.


i) Ex: D leaves a log in the road, running the risk that someone might trip over it in the dark. As P walks along in the dark, a robber pushes P over the log, causing injury. D was negligent in leaving the log in the road, and P suffered as a result. Nevertheless, some courts might well emphasize the greater importance of the robber’s acts in causing P’s harm and conclude that D’s negligence was not a proximate cause.

B. The Central Concept

1. The Standard of Care: The defendant is bound only to use that care that is commensurate with the hazard involved. The risk, reasonably perceived, defines the duty owed.

a. Reasonable Care - Adams v. Bullock

(1) Facts: Bullock (D) operated a trolley with overhead wires. At one point the wires crossed near a bridge. Adams (P) was a 12-year old boy who used the bridge as a shortcut. While P walked along, he swung an eight-foot wire over his head. P’s wire contracted with D’s trolley wire, and P was injured. P successfully sued D. P’s verdict was affirmed on appeal, and D appeals.

(2) Issue: Whether D breached a duty of reasonable care.

(3) Held: No. Judgment Reversed.

(a) D must only exercise ordinary care in light of ordinary risk. In this case, it would take extraordinary foresight to have foreseen this risk. Even if the harm was remote, if the risk was avoidable, liability would attach. Here, however, the trolley line could not have been made safer.

(4) The opinion seems to suggest a balancing of factors to determine whether a duty is owed. The foreseeability of the harm is balanced against the ability to prevent the injury.

b. Unreasonable Risk:

(1) Imposition of risk: To show that the defendant’s conduct failed to meet the duty of care imposed on him the plaintiff must show that the defendant’s conduct imposed an unreasonable risk of harm on the plaintiff (or the class of persons of whom the plaintiff is a member).

(a) Not judged by results: To make this showing, plaintiff cannot simply show that the defendant’s conduct resulted in a terrible injury. Rather, she must show that the defendant’s conduct, viewed as of the time it occurred, without the benefit of hindsight, imposed an unreasonable risk of harm.


i) Inherently dangerous objects: This “no hindsight” principle is also illustrated by cases in which potentially dangerous objects are left lying around. Some objects (e.g., a shotgun) are so dangerous that it is negligence to leave them lying around without special handling (e.g., unloading the shotgun). But other objects pose less of a danger and it will not be negligence to leave them around even if it turns out that, unexpectedly, they cause harm. The risk is to be evaluated as it reasonably appeared before the accident.

(2) Balancing Test: In determining whether the risk of harm from a defendant’s conduct was so great as to be “unreasonable,” the test is whether a “reasonable person” would have recognized the risk, and have striven to avoid it. However, because it is often exceptionally difficult to what a reasonable person would have done in a particular situation, the courts have developed a “balancing test” as a rough guide was to whether the defendant’s conduct is so risky as to involve an unreasonable risk of harm to others. The most famous formulation is that stated by Judge Learned Hand: Liability exists if:

B < L x P

where B equals the burden which the defendant would have to bear to avoid the risk, L equals the gravity of the potential injury, and P equals the probability that the harm will occur from the defendant’s conduct.

Ex: This test was formulated by Judge Hand in U.S. v. Carroll Towing Co. There, P’s barge, docked at a pier, broke away from its moorings due to D’s negligence in shifting the lines that moored it. D, however, argued that P was also negligent in not having an employee on board the barge, and that, according to the rules of admiralty, the damage should be divided between D and P according to their respective degrees of negligence.

Held: It is burdensome, to a degree, to have an employee on board at all times. However, there was wartime activity going on in the harbor, and ships coming in and out all the time. Therefore, the risk that the mooring lines would come undone, and the danger to the barge and to other ships if they did, was sufficiently great that P should have borne the burden of supplying a watchman (unless he had some excuse for his absence) during working hours.

(a) Threat of serious injury: As the Hand formula implies, the more serious the potential injury, the less probable its occurrence need be before the defendant will be held to be negligent for not guarding against it.


c. Calculation of burden: “B” in the above equation is itself a function of not only the cost to him, but also the broader social utility of the conduct which he would have to forego. Hence the courts attempt, in effect, to answer the question: “Would society be better off if all defendants in a the position of D were permitted to act as D did, or were instead require to change their conduct so as to avoid the kind of risk which resulted in injury to P?” Only if the answer to this question Is that defendant in D’s position should be require to change their conduct will the cause of action for negligence lie (assuming that the other requirements are met).

(1) Ex: D Railroad maintains a railway turntable (a rotating platform with a track for tuning a locomotive) near a publicly traveled path. P, a child, discovers that the turntable is unlocked, climbs on it, and while playing on it with a group of children gets his foot caught between the rails and severed at the ankle joint.

(2) Held: It was negligent of D not to keep the turntable locked and guarded. The business of railroading is facilitated by the use of turntables, so the public good demands that their use not be entirely outlawed, since their utility is out of proportion to the occasional injuries which result. But the burden of keeping the turntable locked is so small that the danger of not doing so outweighs this burden.

d. Activity level v. care level: One of the peculiarities of our negligence system is that it usually focuses on the actor’s level of care in carrying out the activity, but not on the social utility of the actor’s decision to engage in that activity at all. Consequently, a defendant who engages in a fairly safe activity but does so negligently is likely to be liable for damages, whereas one who engages in a risky-and-not-socially-beneficial activity but does so carefully, will not - this is true even though the burden on others is greater in the latter situation.

(1) Compare with strict liability: Observe that something quite different happens when the liability scheme is strict liability rather than negligence. Under strict liability, an actor who engages in, say, an ultrahazardous activity is responsible for all injuries that he proximately causes, even if these occur without negligence.

2. The Reasonable Person

a. Objective Standard: The balancing test described above, for weighing burden against risk, is a very abstract one, and neither a jury nor a potential defendant can be expected to use it to evaluate conduct in most instances. Therefore, the negligence issue is usually put to the jury as “Would a reasonable person of ordinary prudence, in the position of the defendant, have conducted himself as the defendant did?” This is essentially an objective standard. That is, it does not ask whether the defendant intended to behave carefully or thought he was behaving carefully. However, this hypothetical “reasonable person” does, as we shall see below, bear some of the characteristics of the actual defendant, at least to the extent of some of his physical attributes.


b. Methods for determining risks acceptable to a reasonable person. The reasonable person standard is important, but it does not by itself direct juries or judges to clear conclusions in close cases. The legal system has developed three broad ways to make the reasonable person standard a little more specific:

(1) Courts invest the imaginary reasonable person with certain mental and physical characteristics. The defendant’s conduct can thus be compared to the conduct we would expect of a reasonable person having say, certain knowledge and ability.

(2) Courts may sidestep the effort to apply general standards by adopting specific rules about specific kinds of conduct such as speeding, condemning that conduct as at least prima facie negligence.

(3) Courts may attempt to estimate how the reasonable person would behave more directly. For instance, they might attempt to estimate the magnitude or the risks involved in the defendant’s conduct, and to weigh those risks along with the costs and benefits of acting more safely. Or, alternatively courts might regard a customary community behavior, not as a standard to be sure, but as persuasive evidence of how a reasonable person would behave.

c. Physical Characteristics: The circumstances under which a defendant is judged include external facts of the case, such as the traffic conditions, speed limit, etc. Most courts have extended the circumstances to include the physical characteristics of the defendant himself. That is, they have held that the test is whether a reasonable person with the physical attributes of the defendant would have behaved as the defendant did.

(1) Physical disability: Thus if the defendant has a physical disability, the standard for negligence is what a reasonable person with that physical disability would have done.

(a) Sudden disability: A key factor will often be whether the disability has struck for the first time immediately preceding the accident. A defendant who reasonably believes himself to be in good health, and who suddenly suffers, for the first time ever, a heart attack or epileptic seizure while driving, would almost certainly not be held to have negligently caused the ensuing accident. But one who knows he is subject to such attacks or seizures might well be negligent in driving at all.


(b) Blindness: Many disability cases have involved blindness. Typically, it is the plaintiff who is blind, who has been injured, and against whom the defense of contributory negligence is asserted. In such a case, the issue is: How would a reasonable blind person behave? Sometimes, the reasonable blind person will have to be more careful than a reasonable sighted person, sometimes less.

(2) Mental Attributes:

(a) The ordinary reasonable person is not, however, deemed to have the particular mental characteristics of the defendant. For instance, the defendant is not absolved of negligence because he is more stupid, hot-tempered, careless or of poorer judgment than the ordinary reasonable person.

(3) Imbecility: However, a mental state so low that it must be considered imbecilic or moronic, and which prevents the actor from even understanding that danger exists, will usually be held to render negligence impossible. The issue has usually arisen in the case of mentally defective plaintiffs against whom contributory negligence is asserted.

(4) Insanity: Paradoxically, the courts have bee more inclined to impose a “reasonable” objective standard upon insane persons than upon mentally deficient ones. However, recently courts have begun to hold that insane persons, whether plaintiff or defendant, are not negligent if their insane state prevented them from understanding or avoiding danger.

(5) Intoxication: A defendant who is intoxicated at the time of the accident is not permitted to claim that his intoxication stripped him of his ability to comprehend and avoid the danger; he is held to the standard of conduct of a reasonable sober person.

(6) Children: Another exception to the general objective reasonable person standard is that children are not held to the level of care which would be exercised by a reasonable adult. A child must merely conform to the conduct of a child of like age, intelligence and experience, under the circumstances.

(a) Definition of child: This special standard is applicable only to children, not to all “minors.” The Second Restatement notes that the test is generally for children of “tender years” and furthermore states that it has “seldom been applied to anyone over the age of sixteen.”

(b) Adult activity: Another exception to the special rules for children is that where a child engages in a potentially dangerous activity that is normally pursued only by adults, he will be held to the standard of care that a reasonable adult doing that activity would exercise. This principle has been applied to driving a car, a motorboat, a snowmobile, and even to playing golf.


i) Dangerous but not adult: Suppose the activity is potentially dangerous, but not one that is usually engaged in by adults rather than children. The courts are split as to the standard of care which should be applied to this situation. The Restatement would apply the child standard, since the adult standard would be applied to children only if the activity is

(c) both potentially dangerous and one that is normally engaged in by adults (thus, deer-hunting would not trigger the adult standard since it is an activity often engaged in by minors). But other courts have held that the adult standard of care should be triggered when the activity is significantly hazardous, even if it is one which is frequently engaged in by children (thus, snowmobiling is an inherently dangerous activity for which the adult standard should apply, even though children often do it. This rule discourages immature individuals from engaging in inherently dangerous activities, while still leaving them free to enjoy traditional childhood activities without being held to an adult standard of care).

d. Knowledge: Assuming that the general reasonable person standard is the one which applies to a case at hand, there are a number of basic issues about how a reasonable person generally behaves. One of these troublesome areas has to do with knowledge that a reasonable person would possess.

(1) Ordinary experience: There are obviously many things which every adult has learned; these include such things as that objects will fall when dropped, that flammable materials can catch fire, that other human beings are likely to react in certain ways such as by attempting to rescue a person in danger, etc. These items of knowledge that virtually every adult in the community posses will be imputed to the “reasonable adult” and thus to the defendant. This is true whether the defendant herself actually knows the fact in question or not.

(2) Stranger to the community: Furthermore, facts generally known to all adults in a particular community will be imputed to a stranger who enters the community without having had the experience of knowledge in question. Thus a city dweller who visits a farm, and who has never learned that a bull can be dangerous, will nonetheless be held to the standard of behavior that would be exercised by one who did have such knowledge, since the knowledge is common to dwellers in rural areas.

(3) Duty to investigate: Even where a certain fact is not known to members of the community at large, or to the defendant himself, he may be under a duty to end his ignorance. A driver who senses that something is wrong with his steering wheel, for instance, would have a duty to find out what the problem is before an accident is caused.


(4) Memory: Just as the reasonable person knows certain facts, she also has a certain level of memory. Thus, a motorist who has passed a particular intersection many times will be charged with remembering that it is dangerous in a certain way, whereas one who never or seldom has passed that intersection before would not have the same burden.

e. Custom: In litigating the defendant’s negligence, one thing that either side may point to is custom, that is, the way a certain activity is habitually carried out in a trade or a community. The plaintiff may try to show that the defendant did not follow the safety-motivated customs that others in the same business follow, or the defendant may try to show that he exercised due care by suing the same procedures as everyone else in the trade.

(1) Not conclusive: The vast majority of courts allow evidence as to custom for the purposes of showing the presence or absence of reasonable care, but do not treat this evidence as conclusive. Thus, the fact that everyone else in the defendant’s industry does a certain thing the same way the defendant did it does not mean that the way was not unduly dangerous, if there are other factors so indicating.

(a) Ex: Two tugboats owned by D are towing cargo owned by P. Most tugboats have not yet installed radio receiving sets, although some have. D’s two tugs do not yet have these sets. They are therefore unable to receive messages that a strong storm is overtaking them, and are sunk.

i) Held: The fact that most tugs have not installed sets does not conclusively establish that D was non-negligent in not having installed them. For custom is not dispositive on the issue of negligence - “a whole calling may have unduly lagged in the adoption of new and available devices...Courts must in the end say what is required; there are precautions so imperative that even their universal disregard will not excuse their omission.” Here some tug owners had already installed the sets, so D’s case is even weaker, and was liable. The T.J. Hooper.

(2) Advances in technology: The technological “state of the art” at a particular moment is, similarly, relevant to what constitutes negligence. For instance, the defendant’s failure to take action to prevent a certain known risk might be either negligent or non-negligent, depending upon whether technology exists that could reduce the risk. Consequently, the conduct that would be non-negligent in earlier times may have become negligent today due to technological advances.

(3) Constraints on use of custom: When custom is used to determine what reasonable care requires in the circumstances, or to prove that the defendant should have had knowledge of the customary safety precautions, courts impose limitations on its use, including the following:


(a) Widespread and notorious: Courts often say that to be a custom the practice must be widespread, notorious or even that it must be universal. If such demands are too stringent, it is at least true that the practice must be common and not merely a sporadic or occasional practice.

(b) Safety concern: When the plaintiff attempts to prove negligence by proving violation of custom, the custom must be one generated by safety concerns, not one arising for reasons unrelated to safety.

(c) Violation of statutes: A custom to violate statutory or regulatory requirements is not ordinarily to be admitted to show reasonable care, but such a custom may occasionally bear on the possibility that violation was excused.

(4) Malpractice: Except in malpractice cases, courts have rejected the argument that a prevailing custom defines the standard of care.

f. Emergency: As we have seen, the general rule is that the defendant must follow the standard of care that a reasonable person would exercise “considering all of the circumstances.” One of the circumstances of a particular case may be that the defendant was confronted with an emergency, and was forced to act with little time for reflection. If this is so, the defendant will not be held to the same standard of care as one who has ample time for thinking about what to do; instead he must merely behave as would a reasonable person confronted with the same emergency.

(1) Emergency caused by defendant: But if the emergency is caused by the defendant’s negligence, the fact that the emergency leads the defendant into an accident will not absolve him of liability. In such a situation, it is the initial negligence leading to the emergency, not the subsequent response to the emergency, that makes the defendant negligent.

(2) Negligence still possible: Even if the emergency is not of the defendant’s own making, he must still live up to the standard of care of a reasonable person confronted with such an emergency. That is, if he behaves unreasonably, even conceding the fact that he had little time for reflection, he will nonetheless be negligent. Thus a person driving on an undivided highway who sees an accident ahead of him, and who swerves left into oncoming traffic instead of right onto the shoulder, might well be held liable notwithstanding the fact that he had little time for reflection.


(3) Minority rule: The courts of at least one state seem to have taken the position that as long as the defendant is a generally careful person, the court will presume that his instinctive response in an emergency was non-negligent. “Carelessness means wrong thinking or failure to think in connection with an action, and an instinctive action, when there is not time to think, cannot of itself be called negligence.”

(4) Activity requiring special training: There are certain activities which by their nature require an unusual capacity to react well in an emergency. In a case involving such an activity, the defendant will therefore be held to this higher standard of preparedness. A bus driver, for instance, should by her training be better prepared than the average driver to anticipate various traffic emergencies, and she will be held to this higher standard. In fact, even the average motorist will probably be held to bear the burden of being capable of anticipating certain kinds of common emergencies (e.g., a child rushing out into the street after a ball), and will be charged with reacting more quickly in such a situation than if that kind of emergency arose less frequently.

g. Anticipating the conduct of others: Just as the reasonable person must possess certain knowledge, so she must possess a certain ability to anticipate the conduct of others. Following are few kinds of responses by third persons that a defendant may be charged with the burden of anticipating.

(1) Negligence of others: The defendant may be required to anticipate the possibility of negligence on the part of others. Generally, this will be so only if the likelihood of injury is great, or the magnitude of the injury is very substantial.

(a) Ex: An automobile driver is normally entitled to assume that other drivers will drive non-negligently. But if she has reason t know that the car ahead of her is being driven by a drunk driver, or if the road conditions are such that a short stop by the driver ahead is likely to cause the defendant to run over a pedestrian, the defendant will be required to guard extra carefully against these consequences.

(b) Children: Furthermore, the defendant is charged with anticipating careless or dangerous conduct on the part of children, since they are commonly known to be incapable of exercising the degree of care of the average adult. Thus one who drives down a street crowded with children playing is not entitled to assume that the children will stay out of the car’s path and must take extra precautions to guard against their carelessness.

(2) Criminal and intentionally tortious acts: The reasonable person, and hence the defendant, is normally entitled to assume that third persons will not commit crimes or intentional torts, unless he has some reason to believe to the contrary as to a particular third person.


(a) Special relationship: However, the defendant may have a special relationship with either the plaintiff or a third person, such that the defendant will bear the burden of anticipating and preventing intentionally tortious or criminal acts by the third person.

i) Ex: Poddar is under care of Ds, university psychotherapists. He tells them that he intends to kill Tatiana, the Ps’ daughter. One of the Ds asks the campus police to detain Poddar, but after he seems rational, they release him. Neither of the Ds warns Tatiana or the Ps. Two months later, Poddar in fact kills Tatiana.

ii) Held: The psychotherapist-patient relationship between Ds and Poddar was sufficiently “special” that it created a duty for the Ds to protect third persons such as Tatiana (with whom they had no relationship at all) from reasonably foreseeable harm by Poddar. The Ds therefore had the duty to take reasonable steps to protect her, including probably the giving or a warning to her or the Ps. The university police, on the other hand, had no special relationship to Poddar (even though they detained him) or to Tatiana; they therefore bore no duty to protect Tatiana against harm from Poddar, and the Ps’ complaint against them must be dismissed. Tarasoff v. Regents of the Univ. of CA.

(3) Misrepresentation: Just a defendant’s acts may be negligent, so her speech or other communication may be. Where the resulting injury is an abstract economic one (e.g., investors’ loss due to a financial statement negligently prepared by accountants), special rules apply, generally tending to limit the defendant’s liability.

3. The Role of Statutes

a. Nonprescriptive statutes: Statutes which provide only a criminal penalty or some form of administrative enforcement. These statutes provide nothing at all about tort law, so they can be identified as nonprescriptive statutes. Although such statutes prescribe no tort-law effects at all, courts are usually free nonetheless to adopt the standard or rules of conduct from such statutes and to apply them to tort cases.

b. Significance of statutory violation: Sometimes, however, the legislature passes a statute which appears to define reasonable conduct in a certain kind of situation. This is most often true of legislation establishing safety standards for industry, transportation, etc. A substantial body of case law has arisen discussing the extent to which the court is required to treat a violation of such legislation as negligence per se.


(1) Majority Rule - Negligence per se doctrine: When courts apply the standard or rule of conduct from a nonprescriptive statute, the majority do so under the rule of negligence per se. That rule holds that an adult’s violation of statute is negligence in itself if it causes harm of the kind the statute was intended to avoid and to a person within the class of persons the statute was intended to protect. In the absence of a valid excuse, violation conclusively shows negligence. Violation of statute equally proves the plaintiff’s contributory negligence in appropriate cases.

(a) Rebuttable: Because certain limited excuses are recognized, some courts describe the rule as a presumption of negligence rule or a prima facie negligence rule to emphasize that the finding of negligence can be rebutted under limited circumstances.

(2) Minority Rule - Evidence of Negligence: A few courts reject the per se rule and treat violation as merely some evidence of negligence or as “guidelines for civil liability.” This rule permits the jury to conclude that a statute violator behaved in a reasonable way even if he presents no particular excuse.

(a) Ordinances and regulations: Where the case involves a violation not of a legislatively enacted statute, but of a local ordinance or administrative regulation, a number of courts that follow the majority rule as to statutory violations apply the minority rule to violations of ordinances and administrative regulations, holding that such violations are merely evidence of negligence.

c. Statute must apply to facts: Even in states following the majority rule that statutory violations can sometimes be “negligence per se,” the courts have set up a series of requirements to ensure that, before the violation will be negligence per se, the statute was intended to guard against the very kind of injury in question.

(1) Class of persons protected: First, the plaintiff must be of the class of persons for whom the statute was designed to protect.

(a) General interests of state: A sub-species of this rule is the principle that where the statute is intended to protect only the interests of the state or of the public at large, not to protect particular individuals against harm, its violation will not be negligence per se.

i) Blue law: Thus, a blue law, prohibiting stores from being open on Sunday would not conclusively establish the negligence of a store owner who opened on Sunday, exercising all reasonable care, but whose customer slipped on the store floor. The law would be held to protect the interest of the public at large in having a day of rest, not to protect individuals who would otherwise shop on Sundays.

(b) Two classes of persons protected: But a statute may be held to have been intended to protect both the public at large as well as a particular class of individuals. If so, its violation may be negligence per se.


i) Ex: P, sitting in D bar, becomes innocently enmeshed in a barroom brawl, and is injured. An administrative regulation provides that no tavern owner “shall permit or suffer any loud, noisy, disorderly or boisterous conduct, nor permit any visibly intoxicated person to enter or remain upon his premises.”

ii) Held: This regulation, and the statute under the authority of which it was promulgated, were intended to protect not only the interest of the community at large in peace and quiet, but also barroom customers from the “carnage of the barroom brawl.” Therefore, P fell within one of the classes of persons to be protected by the act, and violation by D constitutes negligence in itself.

(2) Protection against particular harm: The second requirement the statute must meet before it is a violation per se is that it must have been intended to protect against the particular kind of harm that the plaintiff seeks to recover for.

(a) Ex: Animals on a shop not properly secured in cages are tossed overboard during a storm. The statute was intended to keep disease from spreading among the animals, not to keep them from washing overboard. Therefore, because the statute was not meant to prevent the kind of harm which occurred, it cannot be used as evidence of negligence per se.

(3) Excuse of violation: Once the plaintiff has shown that the statute was addressed to a class of person including herself, and that it was designed to guard against the kind of harm that she sustained (and assuming that she carries the more general burden of showing that the act that was violative of the statute was the actual cause of the harm), the defendant’s negligence per se has been established. However, in some circumstances, the defendant may then have the right to show that his violation of the statute was excusable. If he can do this, the violation will be stripped of its “negligence per se” nature, and will be at most, evidence of negligence which the jury will weigh, and may disregard.

(a) Absolute duties: There are some statutes which, the court may hold, by their nature and history leave no room for excuses. That is, they impose upon the defendant an absolute duty to comply with the statute, and a good faith attempt to do so is not sufficient.

i) Typical cases: For instance, statutes prohibiting child labor have generally been held to fall in this category. Thus an employer who hires a child in violation of the statute will beheld liable if an injury occurs of the sort that the act was intended to protect against, and the employer will not be heard to say that he believed in good faith that the child was above the minimum age.


ii) Brakes: Statutes requiring effective brakes on automobiles have also occasionally been held in fall in this absolute duty class.

(b) Rebuttable presumption or excuse: Most statutes, on the other hand, are not intended to impose an absolute duty of compliance. Courts have chosen two similar (but not identical) ways of preventing statutes from being given this absolute effect. Sometimes, the statute is viewed as merely establishing a rebuttable presumption of negligence; the defendant can then introduce evidence of due care in order to rebut the presumption. Other courts treat the statute as establishing negligence per se, but allow certain excuses for non-compliance; if one of the available excuses is demonstrated, the violation has no bearing on the issue of negligence.

i) Ignorance of need: The defendant was reasonably unaware of the particular occasion for compliance;

a) Ex: D’s brakes fail but he had no warning of the brake failure. This was sufficient to allow the jury to find his conduct reasonable, and he is therefore not negligent.

ii) Reasonable attempt to comply: Similarly, the violation may be excused because the defendant made a reasonable and diligent attempt to comply, but was unsuccessful;

iii) Emergency: Or it may be excusable because defendant was confronted with an emergency not of his own making;

iv) Greater risk of harm: A violation may be excused if compliance would have involved a greater risk of harm to the actor or to third persons than the path of noncompliance chosen by the defendant.

a) Ex: Tedla v. Ellman

v) Excuses and negligence per se: In jurisdictions which adopt the negligence per se rule, whether the excuse is a good one is a question for the judge to decide.

vi) Excuses and evidence of negligence: In jurisdictions which adopt the evidence of negligence rule, whether the excuse is a good one is a question for the jury.


(4) Foolish or obsolete legislation: There are many statutes on the books which have never been enforced, or which have not been enforced for so long that they may be treated as obsolete. In such a situation, the court will often in effect treat the violation as excused, although in reality the court is really simply declining to accept the legislative standard as binding on the civil liability question.

(5) Effect of the plaintiff’s contributory negligence: Even where the defendant’s negligence pre se is established, he may be able to assert the defense of contributory negligence or assumption of risk. However, if the statute is a sort that is held to impose an absolute duty on the defendant, and therefore to allow no excuses, these defenses may not be available. Thus an employer who violates the child labor laws will not be allowed to raise the defense of contributory negligence, since this would defeat the entire purpose of the statute.

(6) Contributory negligence per se: The defendant may, in an appropriate case, demonstrate that the plaintiff’s violation of a statute constitutes contributory negligence per se. Generally speaking, the rules are the same for asserting contributory negligence per se as for defendant’s negligence per se.

(a) Hurdles: But keep in mind that the hurdles which must be surmounted before negligence per se is established are still imposed; thus if the statute is construed as one which was not intended for the protection of the person in the position of the plaintiff, then the violation will not conclusively establish contributory negligence.

(b) Speed limits: Generally, however, such statutes as speed limits and other traffic regulations are held to be for the purpose of protecting plaintiff drivers who violate them, as well as innocent third parties.

(7) Violation as evidence: Even if the plaintiff is unable to meet all the requirements of the negligence per se doctrine, the statutory violation may still be taken as evidence of negligence.

(8) Per se doctrine not available for federal claims: All the cases involving negligence per se that we have examined thus far have been state court cases. What happens to the doctrine when a case is brought before a federal court?

(a) Diversity cases: In a diversity case, where the plaintiff is relying upon state negligence law, the Erie doctrine would require the federal court to follow the same rules regarding the effect of statutory violations as would the courts of the state in which the federal court sits.

(b) Federal question cases: But suppose the plaintiff argues that the defendant violated a federal statute, and that the doctrine of negligence per se should be applied. The federal court would not be able to apply the doctrine because it is a product of common law, and there is no federal common law.


i) Consequence: A plaintiff suing in federal court, seeking to establish civil liability from the defendant’s violation of a federal statute, will normally have to show that Congress created an “implied civil remedy” in passing the statute. This is a much harder showing to make than is generally required for application of the common law negligence per se doctrine.

(9) Compliance with statute not dispositive: The converse of the negligence per se doctrine does not hold true. That is, the fact that the defendant has fully complied with all applicable state safety regulations does not by itself establish that he was not negligent. The finder of fact is always free to conclude that a reasonable person would take precautions beyond those required by law.

(a) Usual care: But if the situation confronting the defendant was substantially the same as that which the statute was designed to control, the finder of fact may consider the defendant’s full compliance with all statutes as evidence that nothing more was required of a reasonable person.

C. Procedure in Jury Trials

1. Burden of proof: In a negligence case, as in virtually all torts cases, the plaintiff is said to bear the burden of proof. In reality, the plaintiff actually bears two distinct burdens:

a. Burden of production: First, she must come forward with some evidence that the defendant was negligent, that she suffered an injury, that the defendant’s negligence was the proximate cause of this injury, etc. This burden is generally known as the “burden of production.” The burden of production may be defined as the obligation upon a party to come forward with evidence in order to avoid a directed verdict. This burden can and does shift from the plaintiff to the defendant and possibly back again, depending on the strengths of the proof offered by each side.

(1) Directed verdict for the defendant: If the plaintiff does not produce any evidence in support of her prima facie case, the judge will order a directed verdict for the defendant. That is, she will tell the jury that as a matter of law, it must find for the defendant.

(2) Jury case: If the plaintiff comes forward with enough evidence in support of her prima facie case that a reasonable person could decide in the plaintiff’s favor, the case will go to the jury.


(3) Directed verdict for the plaintiff: It may be, however, that the plaintiff’s case is so strong that, unless the defendant comes forward with rebutting evidence, the court will have to order a directed verdict in the plaintiff’s favor (i.e., the court will decide that no reasonable person could find in favor of the defendant). If so, the plaintiff has essentially shifted the burden of production to the defendant.

b. Practical significance: The judge does not monitor the shifting of the burden of production throughout the trial. It is really only at two points that evaluation of the burden is significant: first, at the end of the plaintiff’s case, the defendant usually moves for a directed verdict; that is, he asks the court to declare that the plaintiff has failed to make her prima facie case, and that the jury should be instructed that it must decide in his favor. Secondly, at the end of the defendant’s case, each side is likely to move for a directed verdict.

c. Burden of persuasion: The second respect in which the plaintiff being by bearing the burden of proof is that she bears what is sometimes called the “burden of persuasion.” This means that if the case goes to the jury, the plaintiff must convince the jury that it is more probable than not that her injuries are due to the defendant’s negligence. To put it another way, the fact that the plaintiff bears the burden of persuasion means that if the jury believes that there is exactly a fifty percent chance that the defendant caused the injuries, the plaintiff loses. The concept is usually expressed by saying that the plaintiff must demonstrate her case by the preponderance of the evidence.

(1) Not usually shifted: The burden of persuasion in a negligence case rests on the plaintiff from the beginning and almost never shifts. However, there are a few jurisdictions which hold that application of the doctrine of res ipsa loquitor does shift this burden to the defendant.

2. Function of judge and jury:

a. Judge decides law: The judge decides all questions of law. In a negligence case, this means that the judge will decide, typically, the following issues:

(1) State of facts: She will decide, after all the evidence is in, whether that evidence admits more than one conclusion. If she decides that reasonable people could not differ as to what the facts of the case are, she will instruct the jury as to the findings of fact they must make.

(2) Existence of duty: The judge will also determine the defendant’s duty to the plaintiff. This is done as a matter of law. Thus in a suit by a plaintiff trespasser against a defendant landowner, the court will probably instruct the jury that provided the defendant did not know of the plaintiff’s presence, he owed him no duty of care at all.


(3) Directed verdict: By deciding aspects of both these matters, the judge may remove the case from the jury by directing a verdict.

b. Jury’s role: The jury, it is commonly said, is the finder of facts. However, since as we have seen the judge may sometimes decide the facts as a matter of law, what this really means is that the jury will be permitted to find the facts only where these facts are in such dispute that reasonable persons could differ on them. If the case is sufficiently unclear that it is permitted to go to the jury, the jury will decide two principle factual issues:

(1) What happened; and

(2) Particular standard of care: Whether the facts as found indicate that the defendant breached his duty of care to the plaintiff, in a way that proximately caused the plaintiff’s injuries.


D. Proof of Negligence

1. Circumstantial Evidence - Nature and Use:

a. Circumstantial evidence: Circumstantial evidence is evidence of a fat that tends to establish and thus to permit an inference of another fact.

b. Judge’s role in monitoring circumstantial evidence: The trial judge must decide in the first place whether the circumstantial evidence offered rationally tends to support the inference of any relevant fact and must exclude the evidence if it does not.

c. Circumstantial evidence going to the jury: If circumstantial evidence is sufficient to permit reasonable jurors to draw the inference sought, the issue goes to the jury, which assesses its weight.

d. Effect of circumstantial evidence: Drawing inferences of fact from circumstantial evidence is largely a matter of assessing probability. An inference is ordinarily permissible, but is not mandatory. Also, circumstantial evidence does not create a presumption or shift the burden of persuasion. It is evidence for the jury to consider and weigh, nothing more.

e. Expert testimony and circumstantial evidence: In many instances, circumstantial evidence must be explained by someone with special knowledge. While most of us might be quite sure that 500-ft skid marks indicate high speed, we are not likely to be sure what 45-ft skid marks mean. In that case the evidence might be rejected unless expert testimony can give a more or less scientific explanation of the circumstantial evidence.


f. Constructive notice: This is a notice arising out of presumption of law from the existence of facts and circumstances that a party had a duty to take notice of. To have constructive notice the defect must:

(1) Be visible and apparent; and

(2) Exist for a sufficient period of time prior to the accident to permit the defendant’s employees to discovery and remedy it.

2. Res Ipsa Loquitor

a. Aid in proving the case: To prove the defendant negligent, the plaintiff must normally provide evidence of the defendant’s specific conduct. Proof that an accident happened or even that the defendant caused an injury is not enough by itself; as courts say, negligence is not presumed. Cases that fit the res ipsa loquitor pattern constitute an exception. The Latin phrase means “the thing speaks for itself,” which is to say, the plaintiff’s injury and the immediate events surrounding it can by themselves show negligence, even though the plaintiff is unable to prove any specific act that was unreasonably dangerous.

b. Requirements for doctrine: Virtually all American courts recognize that there are situations in which the doctrine of res ipsa should be applied. The courts generally agree on at least four requirements before the doctrine may be applied:

(1) No direct evidence of D’s conduct: First, there must be no direct evidence of how D behaved in connection with the event.

(2) Seldom occurs without negligence: The plaintiff must demonstrate that the event is of a kind which ordinarily does not occur except through negligence (or other fault) of someone.

(3) In defendant’s control: Plaintiff must show that the instrument which caused her injury was, at the relevant time, in the exclusive control of the defendant.

(4) Rule out plaintiff’s contribution: Plaintiff must show that her injury was not due to her own action.

(5) Accessibility of information: Some courts have purported to hold that in addition to establishing these four things, the plaintiff must also show that a true explanation of the events is more readily accessible to the defendant than to herself. However, few courts have really relied on this requirement.


c. No direct evidence of D’s conduct: As a threshold matter, most courts insist that there must be no direct evidence of how D behaved in connection with the event. Res ipsa is only used as an indirect means of inferring that D was probably negligent, so there’s no need to use the doctrine if we know the details of D’s conduct.

d. Inference of someone’s negligence: The plaintiff must prove that the incident is one which does not normally occur in the absence of negligence. This is true of, for instance, falling elevators, escaping gas or water from utility mains, the explosion of boilers, etc. The plaintiff is not required to show that such events never occur except through someone’s negligence; all she has to do is show that most of the time, negligence is the cause of such occurrences.

(1) Aviation: Thus it is now generally accepted that where an airplane crashes without explanation, the jury may infer that negligence was more than likely the cause. In the early days of aviation, however, where the elements were often sufficient to cause a crash without anyone’s negligence, and where there was no body of accident history to justify any conclusion about the general causes of accidents, most courts refused to allow this inference, and the doctrine of res ipsa was therefore not applied.

(2) Basis of conclusions: Normally, the fact that a particular kind of accident does not usually occur without negligence is within the general experience of the jury, and does not have to be explicitly proven by the plaintiff. However, there are other cases (e.g., medical malpractice), where the plaintiff may wish to provide expert testimony to the effect that accidents such as the one that occurred normally do not happen without negligence.

(3) Negating other causes: The plaintiff is not require to demonstrate that there were no other possible causes of the accident. She must merely prove the more than 50% probability that there was negligence.

(a) Ex: P’s decedent is a passenger on D’s airplane, which disappears over the Pacific Ocean. Only debris is ever found, and P produces no evidence at trial as to any actual negligence by anyone. D produces evidence that the airplane was properly maintained, the personnel adequately trained and briefed, the weather normal, etc.

(b) Held: D’s showing of general due care in its operation is not sufficient to deprive the finder of fact of the right to infer that negligence was more probably than not the cause of the accident. P is not required to demonstrate that there was no mechanical failure, or to negate every other possible cause. Therefore (since the other requirements were met) the doctrine of res ipsa is appropriate.


e. Showing that the negligence was the defendant’s: The plaintiff must also show, again by a preponderance of the evidence, that the negligence was probably that of the defendant. In the older cases, this requirement was usually expressed by stating that the plaintiff must demonstrate that the instrumentality which caused the harm was at all times within the exclusive control of the defendant.

(1) Ex: During the great V-J celebration, P is walking on the sidewalk next to D Hotel, when she is hit by a falling chair. P proves no other facts at trial.

(2) Held: A hotel does not have exclusive control, either actual or potential, of its furniture. The guests have, at least, partial control. Therefore, P has failed to establish the requirement for res ipsa.

(a) Modern view: Most modern cases, however, do not express this requirement solely in terms of exclusive control by the defendant. Instead, they simply require the plaintiff to show that, more likely than not, the negligence was the defendant’s, not someone else’s. Thus in the case above, the court, after speaking of exclusive control, also noted that the mishap would quite as likely be due to the fault of a guest or other person as to that of defendant’s. The most logical inference is that the chair was thrown by some such person from a window.

(b) Plaintiff’s particular evidence: To demonstrate that negligence is more probably that of the defendant, the plaintiff is required to produce evidence negating other possibilities. However, the evidence need not be conclusive, and only enough is required to permit a finding as to the greater probability. Thus a plaintiff injured by a soda bottle which explodes after she has bought it from a retailer must produce evidence showing that there was no intervening causes, i.e., that the retailer handled the bottle carefully and that she herself handled it carefully at all times.

(3) Multiple defendants: Sometimes the plaintiff sues two or more defendants at one, alleging that some or all of them have been negligent. If the plaintiff can demonstrate the probability that the injury was caused by the negligence of at least one of the defendants, but cannot show which of them, may the doctrine of res ipsa be applied against all? This has been one of the major question sin the recent history of the doctrine.

(a) Ybarra case: The most famous case holding that the answer to this question can sometimes be “yes” is Ybarra v. Spangard.


i) Held: Res ipsa may be applied. It would be unreasonable to require the plaintiff to identify the negligent defendant, insofar as he was unconscious throughout the operation. Furthermore, the defendants bore interrelated responsibilities; each of them had a duty to see that no harm befell P. Therefore, each of the defendants who had any control over or responsibility for P must bear the burden of rebutting the inference of negligence by making an explanation of what really happened.

(b) Special relationship: The result in Ybarra seems to be at least partially due to the fact that the defendants all bore an integrated relationship as professional colleagues, and that all had a responsibility for the patient’s safety. Where the multiple defendants are strangers to each other, and have only an ordinary duty of care to the plaintiff, res ipsa has generally not been allowed merely upon a showing that at least one of them must have been negligent.

(c) Other cases following Ybarra: But there are few nonmedical cases in which the rationale of Ybarra has been followed. For instance, a plaintiff injured by an exploding bottle, who ha sued both the retailer and the manufacturer, has been given the benefit of res ipsa even though he made no showing as to which of the two was negligent. But as a general rule, res ipsa will not apply against multiple defendants where the evidence is only that some unidentified one of them must have been negligent.

f. Not due to plaintiff: The final requirement for the application of res ipsa is that the plaintiff establish that the accident is probably not due to her own conduct.

(1) Contributory negligence: Contributory negligence on the part of the plaintiff will sometimes, but not always, constitute a failure to meet this requirement. But if the plaintiff’s contributory negligence does not lessen the probability that the defendant was also negligent, the requirement may be met.

g. Evidence more available to defendant: A number of courts have stated that res ipsa will only apply where evidence of what really happened is more available to the defendant than to the plaintiff. This was, for instance, once of the underlying rationales involved in Ybarra. However, although it is true that application of res ipsa helps to smoke out the defendant, it does not seem to be a real requirement that evidence be more available to the defendant than to the plaintiff.

h. Breach of duty: Even if res ipsa applies to permit the inference that the defendant must have been negligent, the plaintiff still has the burden of showing that this negligence constituted a breach by the defendant of his duty of care. Thus if an injured automobile passenger sues the owner-driver, and a guest statute provides for liability only in the event of gross negligence, res ipsa will only be helpful to the plaintiff if the facts permit an inference that the defendant must have been grossly negligent, not merely “ordinarily” negligent.


i. Effect of res ipsa: The usual effect of the application of res ipsa is to permit an inference that the defendant was negligent, even though there has been no direct, eyewitness evidence that he was. In this respect, res ipsa is merely a doctrine that sanctifies the use of a particular kind of circumstantial evidence. The consequences of the doctrine’s application is that the plaintiff has met her burden of production.

(1) More extended effect of doctrine: Most courts hold that the effect of res ipsa is no different than any other circumstantial evidence. That is, they hold that the inference of defendant’s negligence may be either strong or weak, depending on how convincingly the plaintiff has met her three requirements for the doctrine. In these courts, a res ipsa case may therefore either go to the jury or lead to a directed verdict. A few courts, however, give the doctrine an effect beyond this, and hold that it has an automatic effect on either the burden of production, the burden of persuasion, or both.

(a) Burden of production: Thus some states hold that once res ipsa applies, the burden of production is automatically shifted to the defendant. To put it another way, the mere application of the doctrine constitutes a presumption of the defendant’s negligence. Then, unless the defendant comes forward with rebuttal evidence, he will lose.

(b) Burden of persuasion: An additional small minority of courts hold that once res ipsa applies, the burden of persuasion shifts to the defendant. That is, the defendant must then prove by a preponderance of the evidence that he did not negligently cause the plaintiff’s harm.

j. Defendant’s rebuttal evidence: Suppose that the plaintiff, in her own case, establishes the elements of res ipsa sufficiently that she would, in the absence of evidence from the defendant, be entitled to go to the jury. Now, however, the defendant steps forward with rebuttal evidence of his own. What is the effect?

(1) General evidence of due care: If the defendant merely offers evidence to show that he was in fact careful, this will almost never be enough to rebut the plaintiff’s claim. He will only be able to prevent a directed verdict, and the case will go to the jury to decide.

(2) Rebuttal of res ipsa requirements: But the defendant’s evidence may, rather than merely tending to establish the defendant’s due care, directly disprove one of the requirements for application of res ipsa. Thus if the defendant conclusively does this, he will be entitled to a directed verdict.

E. The Special Case of Medical Malpractice


1. Superior ability or knowledge: We have seen that the usual standard of care and knowledge is an objective one, based on the level of a hypothetical reasonable person. But what if the defendant in fact has a higher degree of knowledge, skill or experience that this reasonable person - is she charged with using that higher level, so that she will be held for using, say, only the skill of an ordinary reasonable person? The answer is yes.

2. Malpractice generally: The issue of superior skill or knowledge arises most frequently in suits against professional persons, commonly known as malpractice suits. The general rule is that professionals, including doctors, lawyers, accountants, engineers, etc., must act with the level of skill and learning commonly possessed by members of the profession in good standing. There are, however, a number of more specific rules which, in practice, govern the disposition of malpractice suits.

a. Good results not guaranteed: The professional will not normally be held to guarantee that a successful result will occur. She is liable for malpractice only if she acted without the requisite minimum skill and competence, not merely because the operation, lawsuit, etc. was not successful.

b. Differing schools: As a gloss upon the rule that there is no malpractice where competent professionals could differ on the proper course, cases involving doctors have held that where there are conflicting schools of medical though, the defendant must be judged by reference to the beliefs of the school she follows.

(1) Caveat: However, a doctor may not set up her own “school.” A school must be a recognized one with definite principles, and it must be the line of thought of at least a respectable minority of the profession.

(2) Practical consequences: Because of this “school of thought” rule, the plaintiff’s lawyer in a medical malpractice case will frequently spend a large portion of his cross-examination of the defendant in trying to make the latter identify the proponents of her school, so that books and testimony by those proponents may be used to show the defendant’s lack of adherence to that school.

(3) Chiropractors and osteopaths: By this rationale, chiropractors and osteopaths are judged by the standards of chiropractic and osteopathy, but not by the standards of medicine at large. This is partially due to the fact that state legislatures have afforded these procedures virtually the status of distinct professions.

c. Specialists held to a higher standard: Where the defendant holds herself out as a specialist in a certain portion of her profession, she will be held to the minimum standards of that specialty (which will obviously be higher than those of the profession at large). This will be true, for instance, for an ophthalmologist or a tax lawyer.


d. Need for expert testimony: It is almost always held that the defendant professional’s negligence may be shown only through expert testimony. That is, in a medical malpractice case, the plaintiff must produce another doctor to testify to the defendant’s negligence. The expert testimony must normally establish both the standard course of conduct in the profession, and that the defendant departed from it.

(1) Standard applied: The correct standard has always been the level of skill of the minimally qualified member in good standing, not the average member. Those who have less than median or average skill may still be competent and qualified. Half of the physicians in America do not automatically become negligent in practicing medicine at all, merely because their skill is less than the professional average.

(2) Exception where negligence obvious to lay person: If the defendant’s negligence is so blatant that the court determines as a matter of law that a lay person could identify it as such, expert testimony will not be needed. This would be the case, for instance, if a doctor amputated the wrong leg, or injures the plaintiff’s shoulder during an appendectomy.

(3) Testimony by a witness belonging to a different specialty or school of medicine: As a matter of logic, any person who knows the relevant standard for a particular area of medicine could testify about that standard. It might be possible for obstetricians to testify about the standards for radiology.

(a) Exception: Some courts have stated a hard line against such testimony, however. One view requires the expert witness not merely to know the standard applicable to the defendant but to be in a specialty or kind of practice that uses substantially the same practice. Thus, an orthopedic surgeon who knows the standard of care for podiatry may not be heard in court.

e. Professional standard as negligence: Although, as noted, it is generally necessary for the plaintiff to prove that the defendant failed to follow the standards of her profession, there are a few cases in which the professional standards themselves are held to be negligent, and the defendant held liable for following them. These cases may be viewed as an application of the rule in The T.J. Hooper that custom may be evidence of the standard of care, but it is not dispositive.

(1) Example: Doctor who did not administer easy, short, inexpensive glaucoma test is liable for patient’s subsequent blindness even though the custom in his field was not to administer such a test except to high-risk patients.


f. “Standards of the community:” Until fairly recently doctors were almost always held to be bound by the professional standards prevailing in the community in which they practiced (or similar communities), not by a national professional standard.

(1) Changing rule: As professional education has become more uniform nationally, however, more and more courts have abolished the “local standards” rule; as a result, the plaintiff may now frequently fulfill his burden of producing expert testimony by calling on an expert from outside the community (who may be more willing to testify). Abolition of the local standards rule has been particularly common where the defendant is a specialist.

(a) Board-certified specialist: For board-certified specialists, the standard is usually said to be a single national standard of the specialty involved.

3. Informed Consent: Unless patients are incapacitated, they are entitled to material information about the nature of any proposed medical procedure. This includes information about the risks of the procedure, its necessity, and alt