When it is not exactly clear what parties agreed upon but it is clear that the parties intended to agree, a court must determine what terms apply. If various forms have been sent back and forth between the parties common law only gives us two options to apply to the forms: Offer and Acceptance or Counteroffer. The Uniform Commercial Code (UCC) gives us a third option: acceptance with additional terms.
This option can be found in the UCC 2-207. The goal of 2-207 is to determine which terms apply from the contract negotiation; however, the language of the section can be very confusing and hard to follow. This UCC 2-207 flowchart should be helpful in navigating this section of the UCC.
Case Name: Joyner v. Adams Plaintiff: Joyners (husband and wife) Defendant: J.R. Adams (substitute lessee/developer) Citation: 87 N.C. App. 570 (1987) Key Facts: Joyner leased a property to an investment company to develop it (“base lease”). The original investment company was not able to complete this, so Adams assumed the lessee/developer position. The lease obligated Adams to have subdivided “all of the undeveloped land…and have it developed and eligible for the execution of a “lot lease” by September 30, 1980 (recomputation provision). By that date, Adams had executed separate lot leases and built buildings on all but one lot. However, that lot was subdivided, graded, and had installed water and sewer lines, etc.
Joyner filed a complaint seeking to recover the rent which it would have received had the last lot be developed.
Adams said that from his experience and the local real estate market, a lot is considered “developed” when water and sewer lines are installed and the lot is otherwise ready for the construction of a building.
Procedural Posture: The trial awarded judgment for plaintiff based on the rule that ambiguity in contract terms must be construed most strongly against the party which drafted the contract.
Judgment: Remanded because in order for the court to use the rule below “the form of expression in words was actually chosen by one party rather than by the other” in order to apply the rule.
Rule: Ambiguity in contract terms must be construed most strongly against the party which drafted the contract (typically used in adhesion contracts). The court stated that the plaintiff can prevail only if the trial court concludes that the defendant knew or at least had reason to know of the meaning he intended while the plaintiff did not know (or have reason to know) of the meaning the defendant intended. This would mean that there was no meeting of the minds on the term “developed.” Where both parties have knowledge of the other parties understanding, then there is no meeting of the minds. Therefore, the first step is to figure out if one party has knowledge of the term when the other party doesn’t.
Plaintiff operated a pharmacy and convenient store under a lease with defendant. The end of the lease was approaching and the plaintiff asked if he could renew the lease with the option to transfer the lease to a purchaser of his business. The defendant stated that it had no objection. The defendant delivered a two year lease which was not signed.
The plaintiff had a purchaser for his business but after the contract was signed, the defendant told him he would not allow him to transfer the lease to the new purchaser.
The plaintiff alleged:
(1) The landlord orally agreed to renew that lease and to permit him to assign it to a purchaser of his business,
(2) the landlord and its agents thereafter breached both the renewed lease and the assignment, and
(3) as a result of their conduct, he was required to reduce significantly the sale price of his business.
Procedural Posture: A jury awarded him $45,000 in damages. The court nullified that awarded by granting judgment N.O.V. on the basis that the Statute of Frauds made the allege lease renewal unenforceable, leaving nothing to assign.
Judgment: The court affirmed the court’s findings on the first two claims but agreed that the defendant did maliciously interfere with the plaintiff’s right to contract.
Reasoning: The plaintiff relied on “part performance” for counts 1 and 2. “Part performance” is an equitable doctrine available only where the principal relief sought is specific performance of the oral agreement. The claims were specifically for money damages.
Note: If he had been seeking specific performance, the exception of part performance would apply and he would have won.
Case Name: Crabtree v. Elizabeth Arden Sales Corp. Plaintiff: Crabtree
Defendant: Elizabeth Arden Sales Corp.
Citation: 305 N.Y. 48, 110 N.E.2d 551 (1953)
Key Facts: The plaintiff was seeking employment with defendant. He asked for a three-year contract at $25,000. He wanted a contract because he was entering a new field and wanted job security while he mastered the field. The defendant’s president offered him $20,000/year for the first 6 months, $25,000 for the next 6 months, and $30,000 for the second year. The president had her secretary create a memorandum that stated some of the terms (which was not signed) the executive VP created a “pay-roll change” card which also stated some of the terms (which was initialed). After the first year, the plaintiff was not given his payroll increase so he quit and filed this action. The president denied that there was a two year contract agreement and even if one was made, the statute of frauds barred it enforcement.
Issue: Whether the length of the employment contract can be inferred by multiple writings and oral testimony.
Procedural Posture: The trial court found for the plaintiff $14,000 and the appellate court affirmed.
Reasoning: If the court finds a sufficient connection between the documents, through a reference in them to the same subject matter or transaction, and oral testimony is admitted to show the connection, the signed and unsigned writings can be read together.
Notes: Under the Statute of Frauds, courts require some writing but there does not need to be a formal or written contract. There should at least be a document(s) that lists the essential terms, particularly the terms that are in dispute.
Depending on the jurisdiction, courts will read the two documents together if either
If the signed writings explicitly mentions the unsigned document(s), or
The documents appear to relate to each other (more liberal approach which the court in this case used)
Case Name: Alaska Democratic Party v. Rice Plaintiff/Appellee: KathleenRice Defendant/Appellant: Greg Wakefield and Alaska Democratic Party Citation: 934 P.2d 1313 (1997)
Issue: Whether the doctrine of promissory estoppel can be invoked to enforce an oral contract that falls within the Statute of Frauds.
Key Facts: Ms. Rice contended that Mr. Wakefield (the chair-elect of the Alaska Democratic Party) offered her a two-year position as executive director of the party. Because of this offer she quit her current employment and moved from Maryland to Alaska.
No written contract was entered into between Rice and the defendants.
Rice brought two claims: (1) promissory estoppel and (2) misrepresentation.
Procedural Posture: The jury awarded a total of $30,422 ($28,864 on her promissory estoppel claim and $1,558 on her misrepresentation claim)
Judgment: The court affirmed the claims but reduced the recovery to $28,864 – the amount that represents only lost wages and benefits.
Reasoning: “The purpose of the Statute of Frauds is to prevent fraud by requiring that certain categories of contracts be reduced to writing. However, it is not intended as an escape route for persons seeking to avoid obligations undertaken by or imposed upon them.”
Case Name: Wright v. Newman Plaintiff/Appellee: Kim Newman Defendant/Appellant: Bruce Wright Citation: 266 Ga. 519, 467 S.E.2d 533 (1996)
Issue: Whether Wright can be held liable for child support for Newman’s son under the doctrine of promissory estoppel, even though the child is not Wright’s son.
Key Facts: Wright is the father of Newman’s daughter but not the father of Newman’s son. Newman filed suit to recover child support for both her daughter and son. Wright listed himself as the father on the son’s birth certificate and gave the son his last name. Wright knew that he was not the natural father. This evidenced that Wright promised both Newman and her son that he would assume the obligations and responsibilities of fatherhood, including providing support.
The detriment alleged is that Newman refrained from identifying and seeking support from the child’s natural father.
Procedural History: The trial court ordered Wright to pay child support for both children.
Holding: Under the evidence, the duty to support, which the defendant voluntarily assumed 10 years ago remains enforceable under the doctrine of promissory estoppel.
Reasoning: Elements of promissory estoppel were met:
A promise – The defendant listed himself as the father on the child’s birth certificate and gave the child his last name, although he knew he was not the natural father.
The detriment – The plaintiff refrained from identifying and seeking support from the child’s natural father.
Reasonable Reliance – The defendant was the father of her other child and although it is disputed, remained in the child’s life for 10 years.
Injustice – Loss of child support for her son
Dissent: Plaintiff failed to meet her burden of proof that she incurred detriment by refraining from identifying and seeking support from the child’s natural father. The majority fails to state why she is prevented from now instituting a child support action against the natural father. Furthermore, Wright’s undisputed contentions are that he did not support the child the past seven years.
Case Name: Watts v. Watts Plaintiff: Sue Ann Evans Watts
Defendant: James Watts
Citation: 137 Wis. 2d 506
Key Facts: The parties began living together in a “marriage-like” relationship, holding themselves out to the public as husband and wife. The plaintiff assumed the defendant’s surname, had two children with the defendant who also assumed his surname. The plaintiff did the home making services and even worked in the defendant’s office. She did not receive any compensation.
The plaintiff alleges that the defendant indicated to the plaintiff both orally and through his conduct that he considered her to be his wife and that she would share equally in the increased wealth.
Procedural Posture: The circuit court dismissed the amended complaint stating that the statutes authorizing a court to divide property does not apply to unmarried persons. The circuit court did not analyze the four other legal theories.
First legal theory – that her relationship with the defendant and their children constitute a family and entitle the plaintiff to bring an action for property division under the Family Code. The court rejected this claim because they believed the legislature specifically meant the legal family.
Second legal theory – Because of the defendant’s words and conduct, he should be estopped from asserting the lack of a legal marriage as a defense against the plaintiff’s claim for property division under sec. 767. The court concluded that “marriage by estoppel” should be applied in this cause because the legislature did not intend the family code to govern unmarried cohabitants.
Third legal theory – The parties had a contract, either express or implied in fact contract, to share equally the property accumulated during their relationship, which the defendant breached. The defendant’s defense was that their relationship was immoral and illegal and that any recognition of a contract between the parties contravenes public policy and weakens the integrity of marriage. The court was not persuaded by the defendant that enforcing an express or implied in fact contract would violate the Wisconsin Family Code.
Fourth legal theory – Unjust enrichment. She alleges that the defendant accepted and retained the benefit of services she provided knowing that she expected to share equally in the wealth accumulated during their relationship and that it is unfair for the defendant to retain all the assets. She also states that a constructive trust should be imposed on the property as a result of the defendant’s unjust enrichment.
A claim for unjust enrichment does not arise out of an agreement entered into by the parties. Rather, an action for recovery based upon unjust enrichment is grounded on the moral principle that one who has received a benefit has a duty to make restitution where retaining such a benefit would be unjust.
Holding: The court concluded that the plaintiff had pleaded the facts necessary to state a claim for damages. Unmarried cohabitants may raise claims based upon unjust enrichment following the termination of their relationships where one of the parties attempts to retain an unreasonable amount of the property acquired through the efforts of both.
Judgment: The plaintiff’s complaint has stated a claim upon which relief may be granted but that it may rest on contract, unjust enrichment or partition. Reversed for further proceedings.
Case Name: Katz v. Danny Dare, Inc. Plaintiff/Appellant: I.G. Katz Defendant/Appellee: Danny Dare, Inc. Citation: 610 S.W.2d 121 (1980)
Issue: Whether the plaintiff relied to his detriment on the promise of the defendant to pay him a pension for as long as he lived.
Key Facts: Katz employed by Dare, Inc. and was the brother-in-law of the president. Katz was earning $23,000. The president continually sought for Katz to retire and eventually can to an agreement after 13 months. Dare said that it would pay Katz a $13,000 pension so long as he lived. Three years later, Dare sent a check for half the normal amount because Katz had begun working part-time and one day a week at Dare. The defendant stated that Katz would have been fired had he not elected to retire so Katz could not apply the doctrine of promissory estoppel.
Procedural History: Judgment was entered in favor of the defendant. The trial court said that since Katz had the choice of accepting retirement and a pension or being fired, that it could not be said that he suffered any detriment when he elected to retire.
Judgment: Reversed and remanded with directions to enter judgment in all suits in favor of Katz for the amount of unpaid pension.
The elements of promissory estoppel are present:
1. A promise of a pension to Katz
2. His detrimental reliance on the promise (he would not have retired, he was no longer employable by the time Dare stopped paying him, and he failed to go out and obtain other employment)
3. Injustice can only be avoided by enforcing that promise
Case Name: Kirksey v. Kirksey (1845) Citation: 8 Ala. 131 (1845)
Issue: Whether the defendant’s promise lacked consideration and was therefore unenforceable when he told the plaintiff, the widow of his deceased brother, to sell everything she had and come live with him and he would provide a place for her and her children.
Key Facts: The plaintiff was the wife of the defendant’s brother, who is now deceased. The defendant wrote her a letter and told her that she should sell everything and come to him and he would provide a place for her and her children to live. Within a month, the plaintiff abandoned her property and removed her family sixty miles to the defendant’s property. The defendant put her in a comfortable house and gave her land to cultivate. Subsequently, he notified her to move to an uncomfortable house in the woods and then required her to leave.
Procedural History: Verdict for the plaintiff for $200.
Holding: Reversed; however, the decision was written by the judge who did not agree with it.
Reasoning: There was no consideration. Although the plaintiff moved a distance of sixty miles, which she contends is sufficient consideration to support the promise, the majority believed that this was a condition to a conditional gift. However, the judge writing the opinion stated that the moving to the defendant’s (60 miles) was enough to constitute consideration to support the promise.
Compare this to Greiner v. Greiner in which the court enforced a similar promise without consideration through promissory estoppel.