Every contract creates both rights and duties'

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Assignment of Rights
Every contract creates both rights and duties. A
person who owes a duty is an obligor. A person to
whom a duty is owned is an obligee. An assignment
of rights is the voluntary transfer to a third
party of the rights arising from the contract The
person who transfers their rights to a third
party is the assignor. The person who is assigned
the rights is the assignee.
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Assignment of Personal Rights
When the rights under a contract are highly
personal,the rights are not assignable to a
third party. An extreme example of such a
contract is getting married the groom cant
assign to a third party the brides promise to
marry him.
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Case 16.1 Resier v. Dayton Country Club
Company

• Golf Membership at Dayton Country Club
• Limited Amount of Spaces for Golf Members
• Current Members can pay to get on a waitlist
• Magness and Redman, both filing for bankruptcy,
• wanted to sell their Golf Membership.
• However, this would be unfair to the members who
• paid to be considered in order of the
  waitlist.
• The Court judged that such personal rights as
• a Golf Membership were not assignable.

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Express Prohibition Against Assignment

• Contract terms prohibiting assignment of rights
  are strictly construed.
• The prohibition, if violated, gives the obligor
  a right to damages for breach of the terms
  forbidding assignment but does not render the
  assignment ineffective.

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Case 16.2 Aldana v. Colonial Palms Plaza, Inc.

• Landlord agreed to pay Tenant a construction
  allowance of up to 11,250 after Tenant completed
  certain improvements to the rented premises.
• Tenant assigned rights to 8,000 to Assignee. In
  return, Assignee loaned Tenant 8,000 to finance
  the construction.
• When construction was over, Landlord ignored
  assignment and paid Tenant the construction
  allowance. Anti-Assignment clausein the contract.
• Court ruled in favor of Landlord.

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Case 17.1 Silvestri v. Optus Software, Inc.

• Silvestri was director of support services
  supervisor of tech support
• Silvestri filed for breach of contract
• Silvestri had two year employment contract with
  Optus
• Terminated nine months into contract under their
  satisfactory clause
• Silvestri filed action against Optus stating
  companys dissatisfaction was objectively
  unreasonable
• Judge looked at satisfaction clause of contract-
  objective or subjective
• Concluded subjective dissatisfactionDefendants
  won

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Case 17.1 Silvestri v. Optus Software, Inc.

• Terms
• Condition - an event whose happening or no
  happening affects a duty of performance under
  a contract.
• - Satisfactory clause in the case
• Express condition
• - Explicitly set forth in language usually
  preceded by words like If, while, after, upon,
  or soon as
• Subjective Satisfaction- Satisfaction relates to
  matter of personal taste, opinion, or judgment.-
  If promissor in good faith is dissatisfied the
  condition has not occurred
• Objective Satisfaction- If contract does not
  indicate subjective satisfaction or relates to
  
• mechanical fitness, or utility.

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Case 17.2 Associated Builders Inc v. William
M. Coggins et al.

• Cogginses had late payment to Associated of
  70,005.54
• Judgment, make two payments of 25,000 by June
  1,1996 and June 1, 1997
• Ten percent interest added if payment was not
  made
• Cogginses made first payment
• Second payment late by four days
• Associated wanted 20,005.54 plus interest and
  cost
• Court found Cogginses late payment was not a
  material beach of accord.
• Cogginses paid the 25,000 fee w/o interest

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Case 17.2 Associated Builders Inc v. William
M. Coggins et al.

• Terms
• Breach of contract
• - is the unexcused failure of a party to
  perform their promise
• Material Breach
• - an unjustified failure to perform
  substantially the obligations promised in a
  contract
• - i.e. The late payment
• - five circumstances to determine whether a
  failure to render or to offer performance is
  material
• (a) The extent to which the injured party will
  be deprived of the benefit, which he
  reasonably expected.

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Discharge by Breach Anticipatory Repudiation

• Is an announcement made prior to the date
  performance is due that a party to a contract
  will not perform under a contract
• Notifies the other party that a breach is
  forthcoming
• The courts view it as a breach that discharges
  the non repudiating partys duty to perform
• The non-repudiating party has two options wait
  until the due date to see if the repudiator will
  perform his contractual duties or immediately
  seek a judicial remedy available for breachof
  contract If the repudiating party does not
  perform on the due date constitutes a material
  breach discharges then on-repudiating party from
  the contract permits recovery of money damages

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Case 17.3 Hochster v. De La Tour .

• Rule of Law Anticipatory Repudiation
• Facts of the case April 12, 1852, Hochster
  contracted with De La Tour to act as a guide for
  De La Tour on his three-month trip to Europe
  beginning June 1 at an agreed-upon salary
• Anticipatory Repudiation May 11, De La Tour
  notified Hochster that he would no longer need
  his services and refuses to pay Hochster
  compensation
• Option exercised Hochster brings an action to
  recover damages for breach of contract
• Issue Whether Hochster was permitted to sue
  immediately
• Courts Decision Judgment for Hochster
• Evidence supporting the Courts decision
  Hochster is permitted to sue immediately
  allowing him to seek employment elsewhere which
  mitigates the damages

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Impossibility Commercial Impracticability

• Governed by Restatement and the Code
• Discharge of the contractual duties are brought
  about by the operation of law
• Discharges a party from performing their duty
  only when an intervening event occurs not caused
  by his fault which makes the partys performance
  impracticable
• Intervening events do not include mere hardship
  or an unexpected increase in costs
• Examples of intervening events
• severe shortage of raw materials or supplies
• local crop failureetc.
• The nonoccurrence of the intervening event must
  have been a basic assumption both parties made
  when entering into the contract, neither party
  assumed the risk that the event would occur
• Commercial impracticability is grounded upon the
  assumption that in legal contemplation something
  is impracticable when it can only be done at an
  excessive and unreasonable cost

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Case 17.4 Northern Corp. v. Chugach
Electrical Association .

• Rule of Law Impossibility
• Facts of Case Northern Corp. and Chugach
  Electrical Association entered into a contract
  which required Northern to obtain rock from a
  quarry site on the other side of the lake and to
  transport the rock (during the winter) across the
  frozen lake to Cooper Lake Dam by April 1.
• Basic Assumption transportation of the rock
  across the lake would occur when the lake froze
  to a sufficient depth to permit heavy vehicle
  traffic thereon
• Intervening event the lake did not freeze to a
  sufficient depth resulting in three trucks
  breaking through the ice and sinking and the
  tragic deaths of two of the drivers
• Issue involved whether the contract was
  impossible of performance
• Northerns argument termination of the contract
  and recovery of incurred costs was available for
  impossibility of performance
• Chugachs argument Northern was bound to the
  contract and that it could have used any method
  to transport the rock
• Courts Decision Northern was discharged by
  reason of impossibility
• Evidence supporting the Courts decision
• The hauling method was part of basis of the
  agreement
• The hauling method was not commercially feasible
  within the financial parameters of the contract

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Contract Remedies .

• Interests Protected by Contract Remedies
• Expectation Interest
• Reliance Interest
• Restitution Interest
• Monetary Damages
• Compensatory Damages
• Loss of Value
• Incidental Damages
• Consequential Damages
• Cost Avoided

• Nominal Damages
• Reliance Damages
• Damaxges for Misrepresentation
• Fraud
• Non-Fraudulent Misrepresentation
• Punitive Damages
• Liquidated Damages

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Case 18.1 Merritt v. Craig .
Election of Remedies/Punitive DamagesCourt of
Special Appeals of Maryland, 2000

• Merritt Appellant/Plaintiff
• Craig Defendant
• The Merritts bought property from the Craigs,
  withstanding that a satisfactory inspection be
  done. Merritts were told that the well on the
  property was used to supply the water. On
  11-02-05 they signed a Disclosure statement
  saying the water was fine and finally bought the
  house.

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Case 18.1 Merritt v. Craig .

• Nov 5 June 96, the Craigs cut the second water
  line that the Merritts knew about, but did not
  know it supplied water to them. The Craigs also
  did work to stop the water after the house was
  sold.
• The Merritts noticed their waster was depleting
  and told the Craigs about it. The agreed to
  build a new well and found themselves paying for
  two new wells that did not produce water.
• They called a plumber and found out what the
  Craigs had done and finally on 2-11-97, they
  brought suit to the Craigs for the punitative
  damages done.

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Case 18.2 Westhaven Associates, Ltd. v. C.C.
of Madison, Inc.
Cost Cutters was renting space from the Westhaven
Shopping Mall. Partway through the leasing period
Cost Cutters closed their business. Westhaven
request liquidated Damages from Cost Cutters
that are stated in the contract in case of
breach. The Circuit court deemed the fees
associated with the liquidated damages
unreasonable, now Westhaven is requesting an
appeal
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Case 18.2 Westhaven Associates, Ltd. v. C.C.
of Madison, Inc.
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Liquidating Damages

• (Reasonable damages agreed to in advance by the
  parties to a contract)
• Agreed in advance of damages to be paid in case
  of breach of contract
• Only enforceable if court deems the liquidated
  amount to be reasonable forecast of the loss
  that may or does occur.
• Most common for small settlement amounts
• To compensate not punish
• Reduces expense of litigation
• Saves the time of the courts, juries, and both
  parties

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Review - Limitations on Damages

• Limitations on damages-limitations of
  foreseeability and certainty have been
  imposed upon monetary damages.
• Foresee ability of damages-the breaching party is
  not liable for loss that was not foreseeable at
  the time the contract was made.
• Certainty of damages-an injured party can recover
  for only reasonably certain damages.

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• Case 18.3 Schonfeld v. Hilliard

• 1988, Brothers Russ and Les Hilliard Formed
  International News Network (INN).
• Brought in Reese Schonfeld, initially as an
  investor then later as a shareholder.
• 1994, executed a written shareholders agreement
  where each became a 1/3 shareholder in return for
  a 10,000 capital contribution.
• Schonfeld alleged that the Hilliards induced him
  and INN to abandon the March Supply Agreement and
  enter into the Interim and December Supply
  Agreements by falsely representing their
  intention to personally fund the Interim
  Agreement.
• The Hilliard Brothers, allegedly, agreed to fund
  the 20 million necessary for the Interim
  Agreement
• The district court held that Schonfeld could not
  prove with reasonable certainty, the existence
  of amount of damages for lost profits.
• The damages must be capable of measurement based
  upon known reliable factors without undue
  speculation.
• Schonfeld appealed, and based his information on
  a hypothetical basis
• The court ruled that he could establish neither
  the existence nor the amount of lost profits
  with reasonable certainty.
• Final Ruling The Hilliards cannot be supposed
  to have assumed liability for approximately
  269 million in lost profits that might have
  been garnished in the future by a nonexistent
  operating entity.

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Case 18.4 Tamarind Lithography Workshop v.
Sanders

• Remedies is Equity
• Reformation--a process whereby the court rewrites
  or corrects a written contract to make it conform
  to the true agreement of the parties
• Injunction--a formal court order commanding a
  person to refrain from doing a
• specific act or to cease engaging in a specific
  conduct
• Specific Performance--equitable remedy that
  compels the defaulting party to
• perform their contractual obligations.

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Remedy Not Granted

• there is an adequate remedy at law
• it is impossible to enforce
• the terms of the contract are unfair
• the consideration is grossly inadequate
• the contract is tainted with fraud, duress,
  undue influence, mistake or
• unfair process
• the terms of the contract are not sufficiently
  certain
• the relief would cause unreasonable hardship

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Types of Specific Performance

• Personal Property--rarely granted
• Real Property--always granted
• Personal Services--never granted

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Case 18.5 Madison Square Gardens Corp., ILL
v. Carnera

• Carnera agreed to enter into contract with
• Garden with the following stipulations
• Carnera would render his services as a boxer for
  the Garden in a bout to determine the
  heavyweight championship title of the world
• Carnera would not box any other heavyweight boxer
  during the contract period or enter into
  agreement to box in any major boxing contest
  without written permission from the Garden
• The Garden would pay Carnera a percentageof
  the ticket sales
• The Garden would award Carnera the title of
  heavyweight champion of the world if he wasthe
  winner of the bout.

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Case 18.5 Madison Square Gardens Corp., ILL
v. Carnera
PROBLEM Carnera felt the contract was
inequitable and decided to enter into an
agreement to box Sharkey (a current heavyweight
boxer). SOLUTION The District Court found in
favor of the Garden and ordered an injunction
preventing Carnera from fighting Sharkey. NOTE
It was of interest to note that the court also
ordered the Plaintiff to secure a bond of
35,000 on behalf of the Defendant for his loss
caused by the injuction (in not allowing him
(Carnera) to fight Sharkey).
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Maëlle Dassonville - Cases 16.1 - 16.2April
Archuleta - Cases 16.3 - 16.4 (Plus PowerPoint
Design for 16.3 and 16.4) Katie Shreve - Cases
17.1 - 17.2Diane Perkins - Cases 17.3 -
17.4 Kathleen Oertig - Case 18.1 Angela Rose -
Case 18.2 Mark Akert - Case 18.3 Sara Faculak -
Case 18.4 Adrian King - Case 18.5 Bryant
Gregory - Designer, PowerPoint Presentation
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