contracts questions

[Jake_MONDATTA]

1) When are reliance damages appropriate under common law?

2) when are adhesion contracts considered to be unconscionable?


 

[dubsy]

disclaimer: i'm a 1L in the middle of studying for contracts as well so i could be totally wrong.


1) On the exam, I'm sure if you find a way around it you can always argue for reliance damages (think of Grant Gilmore's skepticism of how you can find reliance damages in everything so promissory estoppel is a never-ending game).  But technically speaking it's when the promisee incurs some detriment because they thought the promise was for real - so reliance damages need to restore them back to the way they would have been had the contract not been performed/relied on.

2) Adhesion contracts are unconscionable if they don't give you the option to walk away from it. that's why even though EULA's (the extremely long, convoluted contracts that pop up when you download a file and it says "Accept" or not) seem a bit unfair by forcing you take all or nothing, at least they give you the option so they're not unconscionable). also, they're unconscionable if they dupe you somehow into signing it or signing into terms you didn't understand.

[Jake_MONDATTA]

Thanks guys, follow up q's:

1) If promissory estoppel were a true substitute for consideration, then the appropriate remedy would be exactly the same remedy for breach of a bi-lateral contract.  That is, the appropriate remedy would be expectation damages.  However, I can find almost no court decisions in which promissory estoppel is used to recover expectation damages... even in specific cases in which there is some kind of contractor/subcontractor relationship (see Traynor's deicision in Drennan).

So what gives?  Is promissory estoppel only a half ass substitute for consideration?  Is there a way to work this out in the doctrine?  Or, is the rule that promissory estoppel always a subsitute for consideration except in cases in which it isn't?

2) What's the best way to reference the Restatement 2nd of Contracts in an answer on a contracts exam?  Of course, we know that it's not the law... but then neither is the UCC unless it is adopted by the particular jurisdiction in which your fact pattern lives.  Practice exam answers seem to indicate that we should pretend as if it were binding law.  Does that sound right?

3) When people say "black letter law" what is the precise meaning?  This term seems to be bandied about by people new to the legal profession and used to refer to several different catagories of sources.  Is there any universal definition of this term?

[dischord]

I'm going to try my hand at Q1, but I'm a 0L who knows nothing so someone correct me if I'm wrong.

I wouldn't say that reliance/promissory estoppel is a literal substitute for consideration.  Instead, it's a way of protecting an offeree's reliance interest in situations where consideration can't be found.  So precisely because you can't get damages for the expectation interest, you want to try and find consideration before moving to promissory estoppel.

Also, Drennan expanded §90 to create what's now §87 -- it's a case where reliance on an offer for a bilateral contract made that offer irrevocable (basically, in this situation an option is created).  If the subcontractor hadn't tried to revoke before acceptance, there would have been a perfectly good consideration-based contract, as opposed to a scenario where the promise wasn't supported by consideration at all.

[Jake_MONDATTA]

Great answer, thanks.

Follow up question:  What's to stop R2d87b from making every bilateral contract an option?  Just the bit about "is binding as an option contract to the extent necessary to avoid injustice?"  I also read in my notes that R2d 87 is not adopted in most states.  Any concurrence?  Would you use it to answer an exam question?

[dischord]

I would talk about it because my professor focused so much on it, and because his exams sort of invite you to argue in favor of expanding doctrine -- like, they'll explicitly say, "This jurisdiction hasn't decided a case like this" or "This jurisdiction has only applied 87(2) to subcontractor bidding".  If you haven't gone over it much at all, or you've been dissuaded from using it, then I think it's really only important to know it because it helps in understanding the outer limits of §90.  

And yes, I think that the PART of the reason that it doesn't extend to every bilateral contract is that it's only to be applied in order to avoid injustice.  Remember that Drennan/subcontractor cases posed really industry-specific problems (for ex. bid shopping), and it would be really unfair to the contractor to decide otherwise.  

But I think the real reason that it doesn't turn every bilateral contract into an option is because in most situations you wouldn't be able to meet the rest of the promissory estoppel requirements.  You have to show that the offer induced reasonable reliance as well.  

[Jake_MONDATTA]

Thank you guys.  This is super-helpful for me. 

I think I would probably use 87(2) too on an exam for exactly the reasons you discussed. 

 

[dischord]

I mean, from what I understand about exam taking, it never hurts to discuss something relevant if only to conclude that it won't apply? 

[Jake_MONDATTA]

I mean, from what I understand about exam taking, it never hurts to discuss something relevant if only to conclude that it won't apply? 

That's my understanding too.  In other words, all other things being equal, an answer mentioning that 87(2) didn't apply (and explaining why) would be better than the same answer omitting such a discussion.  That is, of course, unless it's truly unreasonable to apply 87(2) for some other reason (e.g., the contract was not bilateral, the contract was for the sale of goods).

The only worry I would have would be in terms of time constraints.  I'm finding practice exams fairly manageable, but even having 60 minutes to answer a question on a fact pattern is not a super long amount of time.

[Jake_MONDATTA]

Another question for any takers:  Is there anything like the implied warranty in the restatement?  Is there such a thing for the rendering of a service, as opposed to a sale of goods?