Month: September 2019

Pennsy Supply, Inc. v American Ash Recycling Corp. of Pennsylvania

Posted on by davidsmacmillan

Dispute

Pennsy, a subcontractor, was made aware that American Ash, a recycling company, offered Treated Ash Aggregate (AggRite) at no cost for use in paving work. After obtaining and using 11,000 tones of AggRite, Pennsy learned that the material developed extensive defects, and was ordered to replace it under a separate contract. Pennsy sued American Ash to recover the costs of removal and disposal of AggRite, which was hazardous waste. Dismissed by trial court, appealed.

Rules of law

In the formation of a contract, a detriment to a promisor must induce the promise, and the promise to the promisee must induce the detriment. Consideration must not be incidental, but bargained for as the exchange for the promise.

If the occurence of a named condition would benefit the promisor, the occurrence was requested as consideration.

Arguments

American Ash argued that there was no contract because there was no consideration and they had offered the AggRite freely, with no exchange or bargain from Pennsy. They argued that the AggRite was merely a conditional gift.

Pennsy argued that the disposal of the hazardous waste was a benefit to American Ash and a detriment to them, and that American Ash was offering the product on the basis of that benefit.

Conclusion

The court concluded that American Ash was induced to offer the product at no cost by the advantage of not having to dispose of it, and therefore valid consideration existed. The court further concluded that although the avoidance of disposal costs was not discussed by the parties, this was not a requirement of the bargain theory of consideration; the promise and consideration merely needed to have a reciprocal nature.

Hamer v Sidway

Posted on by davidsmacmillan

Dispute

A nephew and his uncle reached an agreement under which the nephew promised to abstain from the use of alcohol, tobacco, profanity, and gambling until reaching the age of 21, and under which the uncle promised to pay him the sum of $5,000.00. Following the nephew’s 21st birthday, the two exchanged letters in which the uncle affirmed the promise and stated he would hold the $5,000.00 at interest on behalf of the nephew. At the uncle’s death, the nephew sued the estate for recovery. Judgment for the plaintiff, reversed on appeal.

Rules of law

To be valid, a contract must include mutual agreement and consideration.

Consideration can be anything of value to the promisee or anything of detriment to the promisor.

“In general a waiver of any legal right at the request of another party is a sufficient consideration for a promise.”

Arguments

The executor argued that because the promise of abstaining from various vices held no detriment to the plaintiff, and was in fact a benefit to him, the requirement of consideration was not met.

The plaintiff argued that merely abstaining from something he had a legal right to do, at the request of the deceased, had been valid and sufficient consideration, and that the deceased had in fact satisfied the contract when he held the funds in trust for the plaintiff.

Conclusion

The court found for the plaintiff and pointed to numerous cases in which a promise of performing any act or abstaining from any legal right constituted valid consideration for the purposes of the formation of a contract, including specific cases in which the overall benefit to the promisor by abstinence from undesirable behavior was judged immaterial.

Quake Construction, Inc. v American Airlines, Inc.

Posted on by davidsmacmillan

Dispute

Quake Construction and American Airlines reached an agreement regarding a construction project, formalized by a letter of intent which referenced a further written form contract. The letter of intent clearly awarded the contract but reserved a right of cancellation. Before the written form contract was completed, American Airlines attempted to terminate the relationship. Quake sued for damages on breach. The lower court dismissed, stating that there was no contract, and Quake appealed. The appellate court found the letter of intent ambiguous and remanded, and American Airlines appealed to the Supreme Court of IL.

Rules of law

Letters of intent may be enforceable, but only if the parties intend them to be contractually binding.

If the terms of an alleged contract are ambiguous or unclear, parol evidence is admissible to determine intent.

Determining whether two parties intend to reduce their agreement to writing, i.e., be contractually bound, depends on whether the written agreement has few or many details, whether it involves small or large amounts of money, and other factors.

Arguments

Quake argued that the letter of intent clearly stated that American Airlines had chosen to award the contract to them and constituted an acceptance of the offer which arose from their prior negotiations. It argued that ambiguities in the letter were mere formalities, that no material elements of the contract remained to be negotiated, and that the reservation of cancellation right was ineffectual.

American Airlines argued that the reservation of cancellation right was binding and rendered the letter of intent non-contractual. It also argued that there was no intent to be bound because of the references to a further contract.

Conclusion

The supreme court affirmed the appellate decision, finding that the combination of clear intent to be bound with apparent reservations of cancellation right rendered the language ambiguous. Thus, it was necessary to introduce parol evidence to resolve the ambiguity as to the parties’ intent, and so the original dismissal was improper.

Vincent v Lake Erie Transportation Co.

Posted on by davidsmacmillan

Fact pattern and procedural history

Prior to a heavy storm, defendant Lake Erie Transportation Company had its steamship Reynolds moored to a dock owned by plaintiff Vincent for the unloading of cargo. The wind became strong, and no tug was available to tow the Reynolds to another dock. Rather than casting off, defendant kept the lines secure to the dock, adding more to keep the steamship secure in the face of the increasing storm, and as a result the dock was damaged by repeated impacts with the Reynolds. Plaintiff sued for damages.

Questions of law

Does the doctrine of necessity preclude recovery for damages caused by an act arising out of necessity?

Finding

The court held that although the act of maintaining the mooring was not negligent and was justified by necessity, the plaintiff could still reasonably be called to pay the cost of damages brought on by the act. The necessity of the actions did mean it could not be held liable for any injury resulting to the property of others.

“Theologians hold that a starving man may, without moral guilt, take what is necessary to sustain life but it could hardly be said that the obligation would not be upon such person to pay the value of the property so taken when he became able to do so.”

Ploof v Putnam

Posted on by davidsmacmillan

Fact pattern and procedural history

During a heavy storm, Ploof and his family moored their sloop to a dock owned by Putnam. Putnam’s employee unmoored the sloop, causing it and its contents to be destroyed by the storm and causing bodily harm to Ploof and his family. Plaintiffs Ploof brought actions for trespass and negligent infliction of harm against Putnam.

Questions of law

What does the doctrine of necessity permit? Can an action be brought against an individual who resists torts protected by necessity?

Finding

The court held that the “doctrine of necessity applies with special force to the preservation of human life” and accordingly the case disclosed a necessity for mooring the sloop at the dock. Necessity was not only in force with respect to mooring, but to mooring at the most immediate point, the dock.

Young v New Haven Advocate

Posted on by davidsmacmillan

Fact pattern and procedural history

Plaintiff Young, a Virginia jailer, sued the New Haven Advocate in the Western District of Virginia for libel on the basis of articles it published about a Connecticut incarceration program. The program placed Connecticut inmates in Virginia prisons, and the articles alleged that the practice was harmful to inmates and their families, including statements which implied Young was racist. Defendant made a special appearance to contest jurisdiction under the federal rules of civil procedure.

Questions of law

If members of a jurisdiction read articles on the internet which defame a member of that jurisdiction, but the articles were published outside of the state, what is required for that jurisdiction to assert personal jurisdiction?

Finding

The court held that the defendants’ articles concerned the Connecticut incarceration policy and its impact on Connecticut inmates and Connecticut families. The court determined that the articles, despite any adverse impact they might have had on the plaintiff, were not directed into the jurisdiction of Virginia and accordingly did not give rise to personal jurisdiction.

International Shoe Co. v Washington

Posted on by davidsmacmillan

Fact pattern and procedural history

The state of Washington attempted to force a Delaware corporation with primary offices in Missouri to pay into a statutorily-formed state-level unemployment compensation fund. The corporation had no offices or warehouses in the state of Washington but employed a number of salespeople who were permanent residents of Washington State. The corporation resisted on the basis of a lack of jurisdiction. A chain of courts affirmed on the way up to SCOTUS.

Questions of law

What level of business conducted enables a state to claim jurisdiction over a corporation outside its borders?

Finding

The court agreed with the appellant that “the casual presence of the corporate agent or even his conduct of single or isolated items of activities in a state in the corporation’s behalf are not enough to subject it to suit.” However, it argued, “to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state.” It held that the activities carried out by the agent employees of the corporation were “systematic and continuous” over a lengthy period of time. Therefore the findings of the lower court were affirmed.

Hess V Pawloski

Posted on by davidsmacmillan

Fact pattern and procedural history

Defendant Hess, a resident of Pennsylvania, caused a motor vehicle accident on a public highway in Massachusetts, injuring plaintiff Pawlowski, who sued for personal injury. Massachusetts law provided for an altered service of process for nonresidents who operate motor vehicles on state highways, and Hess was so served. Hess appeared to contest jurisdiction and moved to dismiss on constitutional grounds, which the trial court denied. The case proceeded to SCOTUS.

Questions of law

Can a state enact legislation which gives it jurisdiction over corporations who conduct business in it or nonresidents who operate motor vehicles in it?

Finding

SCOTUS affirmed, finding that because motor vehicles were “dangerous machines” and a State naturally had the authority to make and enforce regulations governing their use, it also had the authority to require the appointment of an agent for service of process before permitting the use of its highways. States do not have the right to exclude natural persons, but they do have the right to restrict the use of its highways, and so the state was not violating constitutional rights by declaring that use of a state’s highways was consent to service of process upon the registrar, provided that certain notice requirements were met and that the implied consent was limited to proceedings growing out of accidents or collisions on the highway.

Walker v Keith

Posted on by davidsmacmillan

Dispute

Plaintiff lessee and defendant lessor had a lease which included an option for renewal, but did not sufficiently specify a monthly rental amount. When the renewal came, the parties could not agree on a rental amount, and lessee sued lessor for a declaratory judgment affirming the extension of their mutual lease. The trial court found for the lessee and fixed a “reasonable” monthly rental amount.

Rules of law

A contract to create a contract, or an agreement to agree, is not enforceable. Any covenant to affirm a future agreement must leave no element undetermined unless it clearly specifies a mechanism for resolution. Rent is an essential element of a lease agreement.

Arguments

Lessee argued that the intention of the parties had been to create an option for lease renewal, and this provision ought to be upheld. Lessee also argued that the agreement provided general guidelines by which the court could set the rental amount, and argued that the essential element of the contract was the renewal option, not necessarily any specific rental amount.

Lessor’s argument rejected the idea of an enforceable contract, as there was no agreement as to rent. There was no sufficiently-specific basis for agreeing on rent, and if the parties could not agree, there was no contract.

Conclusion

The court roundly rejected the lower court’s conclusion and attempt to enforce the lease renewal, stating that the lower court’s attempt to set a rental amount when the parties could have done so but failed was paternalistic. It also rejected any possibility that a lease could leave the rental amount unspecified, and if a primary lease without a specified rent was unenforceable, a renewal in like fashion was as well.

Sateriale v R.J. Reynolds Tobacco Co.

Posted on by davidsmacmillan

Dispute

Defendant RJR launched and then canceled a merchandise reward program connected to its sale of Camel cigarettes. A group of plaintiffs who had collected reward certificates sued for breach of contract, promissory estoppel, and consumer protection laws.

The trial court dismissed for failure to state a claim.

Rules of law

  • “The determination of whether a particular communication constitutes an operative offer, rather than an inoperative step in the preliminary negotiation of a contract…is whether the person to whom the communication was made had reason to believe that it was intended as an offer.”
  • “If the statement…calls for the performance…of specific acts, action in accordance with such an interpretation will close a contract or make the offer irrevocable. There are many cases of an offer…for the redemption of coupons.”
  • “Advertisements have been held to constitute offers where they invite the performance of a specific act without further communication and leave nothing for negotiation.”

Arguments

RJR argued that their advertisement was merely an invitation to offer, rather than an offer itself. They argued that they had reserved the right to cancel the program without notice, avoiding any mutuality of obligation, and they argued that any contract arising from any purported offer was too indefinite to be enforceable. They also challenged it on the question of untimeliness under the statute of limitations.

The plaintiffs argued that RJR’s incentive program constituted an offer for a unilateral contract because it guaranteed the opportunity to purchase merchandise for any person who collected the certificates. They argued that the contract thus created was definite in its guarantee of the opportunity to purchase, even if no specific merchandise was contemplated. They further argued that mutuality of obligation was no object, as this was a unilateral contract with no mutual obligation on both sides. They also pointed out that the reservation of right to cancel was not present in all advertisements, and that RJR had waived that right by noticing its customers with a definite end date.

Conclusion

The court found for the plaintiffs, determining that they had shown the prima facie claim and thus dismissal as to breach and promisory estoppel was improper. The court did not discuss whether the notice to customers was a waiver to reservation of right to cancel, but looked more closely to the inapplicability of mutuality of obligation. They found that because the advertisements were specific enough (and the steps taken by RJR over the course of the promotion were consistent enough) to be interpreted as an offer, it was in fact an offer for a unilateral contract and could be binding.