Contracts, Fall 2008

1. Contracts, Fall 2008 Class 15

2. Hypotheticals • You’re a professional dogwalker. I say to you • ‘walk my dog Fido 500 times, 10 bucks per walk.’ Typically, the dog is walked once a day. Is this contract within the statute of frauds? (is a writing required?) • 2. Same as 1, except that I say “walk my dog 500 times, ten bucks per walk, but no more than once a day.’ Is the contract within the statute of frauds?

3. Misunderstanding Cases (continued) • Example:A and B enter into a ‘net lease,’ pursuant to which the lessee pays certain expenses associated with the property. There is no list of which expenses are to be paid, both of the parties thinking that the term ‘net lease’ means only one set of things. In fact, A, the lessee, thinks it means real estate taxes and utilities. B, the lessor, thinks it means real estate taxes, utilities, insurance. How might a court proceed on these facts?

4. Net Lease Question • If A and B didn’t know of each other’s meanings, or if they knew of each other’s meaning, court may find that no contract is formed (but court nevertheless grants relief if there’s been performance, based on one of the theories we’ve discussed) • If B knew that A thought B was paying the insurance, but A didn’t know B thought it wasn’t paying the insurance, B is stuck paying the insurance.

5. Hypothetical I contract with Krusty the Klown- he’s to provide me with ‘entertainment’ for my party. I think he’s going to provide me with a bunch of clowns. As it turns out, Krusty also runs an adult entertainment business and what he actually wants to provide me is racy semi-clad dancers. The dancers turn up and I refuse to let them in, but they’ve gotten all geared up – they’ve dressed elaborately, and they’ve been practicing for weeks. I also of course refuse to pay Krusty. He sues to get the money I’d promised to pay him under the contract.

6. Questions • What if neither of us knew the other’s meaning? • What if I’d given him the money first and have to sue him to get my money back? • who has burden turns out to be critical • What if everybody in the community knows that Krusty only books ‘adult dancers’ and not clowns? • What kinds of evidence would tend to show that my meaning is reasonable? Is the ‘better’ meaning? • What kinds of evidence would tend to show that Krusty’s meaning is reasonable? Is the ‘better’ meaning?

7. What did parties mean? Sources and constraints • Is meaning ‘objectively reasonable’? • What parties ‘actually’ meant • Trade usage • Course of performance • Course of dealing • Dictionary • Etc. • Note: consider what parties knew and what they had reason to know

8. Reasonable Expectations • Don’t use • Use only if there is ambiguity • Look to relationship between policy and expectations: • “evisceration” of explicitly agreed upon terms • Always use, whether or not there is ambiguity

9. Hypothetical • Joe, who got an associate’s degree at a community college, has started a new business, a dessert bar. His specialty is carmelized desserts such as crème brulee, which require a blow torch. Naturally, one of his first calls is to his insurance broker; he explains that he’ll be using the blow torch and wants to be covered for risks associated with the torch. He specifically mentions fire. The broker says ‘ok.’ The deal is done. The torch leaks fluid while it’s on the counter in the kitchen; the fluid corrodes the floor, and an expensive replacement floor is needed.

10. Question • The policy covers “damage resulting from operation of the blow torch, including damage to persons or property from fire or heat generated by the blow torch.” • Is the damage covered?