Lecture 1 1 Tuesday August 20, 2019

Contracts
Lecture 1 — Nature & History of Contracts

Office Hours: Tuesdays & Thursdays 3:45-4:45 (200 McAllister, Room 380)

OVERVIEW
• Sources of law

• Nature of contract law

- Shaheen v. Knight

• Brief history of action for breach

COMMON LAW OF ENGLND & CONTRACTS

• What body of law would govern the contract?

- Civil law

- Contract law is generally state law

- Each state has a different “contract law”

- However, there are general principles that are common in contract law
amongst mostly all the jurisdictions in the US

• Choice between federal and state?

- Contract cases however can be tried in federal court, but the state contract law is
applied by the judges

• Common law is the basic law that all law is based on except for civil procedure

- Common law comes from case law — judges interpreting English law

- Common law of England (as long as not repugnant to or inconsistent to the

constitution of this state or the USA) is binding on all states

- Despite declaring independence in 1776, USA adopted the common law of England

- Reception statute — adopting English common law, adopted by most of USA except
for Louisiana which follows civil law because it is based on Napoleonic code

• Where do we find this English common law?

- Dates back to 1066, (Battle of Hastings)

- The common law is a body of law that is common throughout the entire
kingdom. The body of law that is articulated by the kingdom.

SOURCES OF LAW
• Case Law:

- English Common Law

- Subsequent court decisions

• Common law can be referred to as both a system or a traditional body of rules:

- Common law is a system where courts develop law through court decisions,
specifically precedent, which is binding on its lower courts.

- A body of doctrine that began to be modified in the late 19th/ 20th century.

• We don’t follow the common law of England when it is inconsistent with the US
Constitution or the laws of this state (statute).

- Common law yields to constitution (both state and federal) and statutes

• Statutes:

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- Uniform Commercial Code (UCC)

- Created in the mid 20th century

- Goals:

1. To create a uniform body of state law that would regulate commerce

throughout the entire country

2. Make the commercial law correspond more closely to the actual practice
of people involved in commerce

- This is because the common law is abstract and not really tethered to
commercial reality

- UCC is law because it has been enacted by every state in USA except for
Louisiana

- Authoritative law only because of enactment by state legislatures

- UCC will override any conflicting common law principles

- State Statutes

- A few states (part of a codification movement) enacted statutes that codifies the
common law subjects like property/ torts/ contracts etc…

- But statutes just basically restate common law principles

- State statutes will override common law principles if conflicting occurs

• The Case Law and Statutes category are binding to a court and judges.

• Persuasive Authorities —> Authorities/ rules that are only persuasive to courts and not
binding

- Restatement (2nd) of Contracts (1981)

- First restatement = 1932

- Authors tried to summarize and synthesize the principles brought out in cases

- Very persuasive but IT IS NOT LAW (has not been enacted by state legislature)

- Cases from other courts

- Legal scholarship & commentary

NATURE OF CONTRACT LAW — Shaheen v. Knight

• Refer to Shaheen v. Knight Case Brief
• Working definition of a contract:

- A bargained-for exchange of either a promise for a promise, or a promise for a

performance.

- Promise — at least one promise must be involved. If no promise, then no

contract.

- Can be expressed explicitly or implied.

- Do not depend on the intent of the promisee when making the promise.

- Exchange — There must be at least one exchange.

- Ex. A present exchange that does not involve any promises for future actions is
not a contract.

- Ex. Trade a book for a phone.

• The law of obligations:

- Obligations that we have to each other or that we have to the state.

- In this course, the law of obligations is those obligations/ responsibilities that we

have to each other.

- The law of obligations can be in two categories:

1. Tort:

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- Imposed by law

- Binds everyone (with a certain status)

- Ex. All physicians are bound by a certain law of obligations based on

their status

2. Contracts:

- Created by agreement

- Binds only the parties

• Sir Henry Mane Reading (Pg. 15-16):

- Progressive societies (especially western societies) — We are moving away from

status to contracts

- Feudal system (rights and responsibilities depended completely on how you

were born and the level of status which you were born into) — not based on any
agreement between parties, but only on status

- Society has moved from feudal system to current through contracts — your
rights and responsibilities depend on contracts now

- Status as attorney and relationship with client — (refer to application point C in

Shaheen v. Knight)

EMERGENCE OF THE ACTION OF ASSUMPSIT FOR BREACH OF PROMISE

• Not for exam

• Legal theory under early English common law highly constrained by the forms of action
• Common law lacked a general action for enforcement of informal executory promises

- Executory promise = promise that has yet to be performed or will be performed

- Covenant applied only to promises under seal

- Tort provided remedies for misfeasance, but not nonfeasance

• Slade’s Case (1602) made assumpsit into a general action for breach of an informal
executory promise

- Bargains imply a promise, even if no explicit promise

- Even for something bargained for to happened in the future

- Ex. 30 bushels of grain be delivered

- Assumpsit could be brought even if action for debt would lie

- Problem — if the other party owed you money, you could not bring assumpsit

- This change meant that you could bring assumpsit even if you got your 11
friends to lie for you that you don’t own the other party money

- What problems arose from the courts decision to provide relief fo informal
executory promise?

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Shaheen v. Knight
Court of Common Pleas of Lycoming County, PA; 1957; Pg. 11-14 (text)

Topic: Enforcing Private Agreements — Breach of Contract

Facts
• P: Robert M. Shaheen

• D: Dr. John E. Knight

• How do we know the facts of the case?

- The facts were laid out in the complaint of the suit.

• P suing defendant physician because of a vasectomy that was unsuccessful

- P does not allege any negligence by defendant. (contract only at issue)

- P wants damages because “despite his love and affection for his fifth child, as he would
have for any other child, now has the additional expenses of supporting, educating and
maintaining said child, and that such expense will continue until he maturity of said
child, none of which expense would have been incurred had D fulfilled the contract and
undertaking entered into by him, or fulfilled the representation made by him”

• Defendant has filed preliminary objections to the complaint:

1. An alleged contract to sterilize a man whose wide may have a child without any hazards
to her life is void as against public policy and public morals.

2. Under PA law, there is no implied “warranty of cure” by a physician.

3. The complaint charges no lack of skill, malpractice, or negligence in any respect in the
performance of the operation, a vasectomy, but merely seeks to recover upon the
ground that the operation did not achieve the purpose sought and the results allegedly
promised.

Procedural Posture
• Suit brought by Shaheen against Knight at Trial court.

• Knight moves to dismiss case based on arguments 1-6 on pg. 12 of text.

Issue
• The trial judge is ruling on the defendant’s motion to dismiss the complaint of Mr. Shaheen.

• P cause of action = breach of contract

Rule

Holding

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Application/ Reasoning
• Knights preliminary objections & courts reasoning:

A. Public policy and public morals — “There is no virtual unanimity of opinion regarding
sterilization”

- Mamlin v. Genoe — “There must be a positive, well-defined, universal… and in the

interest of the public weal”

- There was no virtual unanimity — based on Wilson. v. Wilson

B. No implied “warranty of cure” — “A doctor and his patient are at liberty to contract for a
particular result”

- Warranty of cure = no guarantee by a doctor that a medical procedure performed by

a doctor will produce the desired effect.

- Knight made an explicit promise that Shaheen would be made sterile if underwent
surgery.

C. No malpractice/ negligence — “Negligence is the basis of malpractice, while the action

in contract is based upon a failure to perform a special agreement”

- Malpractice is based on a certain level/quality of care

- Mane Reading Relevancy (Pg. 15-16)

- Doctor — patient relationship: the obligations to a patient are mostly not defined
by the doctor except for those implied by the status of the doctor and that of the
patient

- Ex. Doctor based on status has an obligation of care to the patient

D. Complaint based on deceit —> “We see little merit in defendants argument of deceit”

- This is because it doesn’t matter whether the defendant had any intent to make the
promise or not. There is a breach of contract and so the objection to deceit does not
actually have any merit because deceit is not being raised by Shaheen.

- Once a promise has been made, the intent behind the promise or the intent to
fill the promise is irrelevant when establishing liability in breach of contract.
E. No damage but, blessed with fatherhood — Awarding damages for the raising of a child
would be against public policy. Plaintiff has the opportunity to give child for adoption
but does not want this.

- Mr. Shaheen was not damaged : Court articulates that Shaheen is unwilling to give
the child up for adoption and in the courts view, if this child was a detriment to
Shaheen, you would give kid up for adoption, but since you are deciding to keep
child, then you are not damaged.

Conclusion
• Believes that a contract exists and that none of Knights objections are strong enough to
dismiss the case but that Shaheen has no remedy because he has no damages.

Dissent

Notes/Questions