Contract Law

Assignment #2 – “major” research essay.  Due March 13th (tentative).
Will settle on questions in the next week.  Can suggest our own topics.
Read commentary on Dec. exam on TWEN.  Can see Bell about your particular exam.  Would like to see anyone who did ‘poorly’.

Remedies
•    In our legal trad. we usually do not give the victorious plaintiff specific performance.
•    For the most part, translate the promised performance into an award of money.
•    Will study how courts approch this “translation”.
•    Money as a substitute for the performance, because to make the def. perofm literally for the plaintiff would often be to force two adversarial parties to then cooperate.
•    Allows the pl. to go out into the marketplace and buy a replacement performance.
•    Damages – the money remedy that courts award victorious plaintiffs.  This (says Bell) is the only time to use ‘Damages’ with the ‘s’.  ‘Damage’ (no ‘s’) is the injury itself.  This appears to be something that Bell will nail us to the wall for.
•    Though money is the principle remedy used by the courts, there are alternatives.
o    All non-damages remedies are lumped under equitable remedies
o    Damages was the only remedy with the courts of England before the judicature act awarded.
o    Specific performance – some occasions where no amt. of money would give the pl. what he/she wants.  Ex:  If one were buying the Mona Lisa, no amt. of money would allow the pl. to buy a substitute in the marketplace.
o    May want the def. to be prevented from doing something, as once done, it may not be undone.
•    For instance, the publishing of something injurious to one’s reputation, or a neighbour building something that would irrevocably subtract water from one’s land or alter a landscape forever.  In these situations, the pl. desires an injunction – an equitable remedy.
•    We will, however, begin with legal remedies.
•    Law is the realm of right.
o    Equitable remedies are discretionary, not of right.

•    Note quote on page 5 from Wertheim v. Chicoutimi Pulp Co.
o    Damages is not a science… it is an art…
o    Try to give the pl. a money substitute award.

Page 28 – Fuller & Purdue
•    From legal realist period of 1930s.
•    Subject of the article is the reliance interest in contracts.
o    Our excerpt consists of the preface.  The establishment of the vocabulary of the article.
•    Enunciate 3 interests which a court might be seeking to vindicate when seeking to award damages to victorious plaintiff.
•    Contract law is the embodiment of laissez-faire economics.  Mirror-image of Darwinian conception of economics.
•    When people in the 30s began questioning the usefulness of an economic system which led to monopolies; when laissez-faire¬ produced the Great Depression, the public response was the invention of the regulatory/administrative state – ensured that the economy was regulated, in an effort to avert future catastrophes.
•    Legal realists attacked and reconceptualized “the legal heartland” of laissez-faire – contract law.
o    The legal realist approach can often be reduced to what courts do, that is the law.
•    If one wishes to understand the law of contract, one should not look at a treatise on contracts – one should look at what courts do in concrete cases.  Judges often deviate from supposed rules.
•    If real judges in real cases do not use supposed rules, then is a rule a rule?
•    Lord Denning, for example, in High Trees, cited a group of cases since the judicature act in which courts had enforced promises without consideration.  He pointed these out, and gave the phenomenon the name of equitable estoppel.
•    Legal realists were ‘terribly empirical’.
o    Study the law in action.

•    Fuller begins by saying that everyone says that at the end of contracts cases courts contract expectations into monetary terms.  Tries to put the vic. pl. into the same position they would have been had the def. fulfilled their obligations.
o    Label this the expectation measure of damages.
•    Great contribution of this article is to point out two other common approaches to awarding damages (two other interests).

Reliance Interest
•    Commonly, courts do not award expectation interest at all.  In many, courts award what Fuller labels the reliance measure.
•    This differs in that it tries to put the pl. in the pos. that he/she were in before the contract.  Try to make the victim “whole” again.
•    Plaintiff has not only not gained, but has in fact lost something by non-performance of the contract.
•    Para 7, page 30.  The pl. has, in reliance on the promise, changed his position.

Restitution Interest
•    See Deglman v. Guaranty Trust
•    Happens when, in the context of the contract, the pl. has conferred a benefit on the def.
o    The pl. has been impoverished to the extent of this conferral, and the def. has been enriched to the same extent.
o    Court forces the def. to ‘disgorge’ the benefit conferred; to restore the benefit to the pl.
•    If the court does this, it is trying to prevent the def. from being enriched unjustly.
o    In Deglman, court said that the nephew had conferred a benefit on his aunt (and not out of the goodness of his heart).  To prevent unjust enrichment, put his services into a dollar amount, and had the estate disgorge this amount.
o    Could not give him his expectation, as it was non-enforceable.  Instead based the decisionon equity and unjust enrichment.
•    Restitution rarely arises inside of real orthodox litigation.
o    Usually arises while trying to clean up “near-contract” situations.

Economic Analysis of Law
•    Response to Lord Atkin.
•    Page 38 – the basic insight is that the propositions of the common law are economic propositions (as, they would say, are moral propositions [such as, ‘thou shalt not steal’]).
•    The law that exists, has evolved as it has, because it is conducive to economic activity.
o    Bell calls this the “is” proposition
•    The “ought” proposition:
o    Judges ought, in deciding new cases, make the decision that is most conducive to economic efficiency.
o    Make liable the person who could have most cheaply avoided a tort, for instance.

Peevyhouse v. Garland Coal & Mining Co.
•    Garland leased property from the Peevyhouses for the purposes of strip-mining coal.  A clause in the contract obliged Garland to perform “certain restorative and remedial work” at the end of the lease period.  All other obligations of the contract had been lived up to by both parties, but for this one.
•    The cost of performace was expertly estimated at about $29,000.
•    Ma and Pa Peevyhouse win in contract law.  That is not in dispute.
o    Issue: Should the judgment for the plaintiffs be in the amount equal to the cost of performance of the remedial measures, or for the amount that the value that the property was diminished?
o    The debate is over how to give the Peevyhouses their expectation.
•    By spending $29,000 to restore the farm to its “original” condition, its value would be increased by $300.
•    Would awarding the Peevyhouses the $29,000 simply be awarding them an unjust windfall?  Would they restore the property themselves, or pull up stakes and move to Florida?
•    The value of the land to the plaintiffs might be quite different from the actual fairmarket value.

There is no area of contract law in which there is more of a disjuncture between theory and practice, than remedies.
Here, the debate is not over which measure to use.  They both use the same measure, but in different ways.  Remedies jurisprudence is full of sub-jurisprudence.

For Next Monday, do Anglia Television, Bowlay loggin, Jarvis.