Cook's Pest Control, Inc. v. Robert and Margo Rebar

This is a contract formation case in which Cook's attempted to insert an arbitration in lieu of litigation clause into renewal contracts with its customers. Margo Rebar, however, included an addendum with her renewal application that changed Cook's proposed terms regarding the arbitration clause. Mrs. Rebar's counterproposal preserved the Rebar's right to litigate their disputes against Cook's. The counterproposal included a proviso that cashing the accompanying check would constitute acceptance of the counterproposal. The check was cashed and a dispute arose shortly thereafter which resulted in the filing of a lawsuit against Cook's. Cook's unsuccessfully sought to compel arbitration from the trial court and appealed to the Alabama Supreme Court, which affirmed the trial court and concluded that the Rebar's counterproposal had been accepted by Cook's and that there had been no agreement between the parties to arbitrate their disputes.

Carter v. Matthews

The appellant was awarded the equitable remedy of rescission of a contract for the sale of property on the ground of mutual mistake. She had also sought money damages for fraud, but the chancellor refused the request. Based on the refusal, she appealed to the state supreme court. The appellee cross-appealed, contending that the only basis for rescission is fraud, not mistake and, thus, the appellee argued that the chancellor had erred in granting rescission.

The state supreme court affirmed the decision of the chancellor on all grounds. The court ruled that a mutual mistake of fact is a legal basis for rescission, and that because the appellant could not prove reliance on the appellee's misrepresentations, the denial of money damages was not clearly erroneous.

Modern Laundry and Dry Cleaning v. Farrer

Farrer signed an employment contract with Modern Laundry that contained a restrictive covenant: in the event of Farrer's termination from the company, he could not work in the laundry business for a period of one year within a designated territory. After approximately fifteen years of service, Farrer left the company and opened his own laundry business. On the basis of the restrictive covenant, Modern Laundry brought suit to enjoin Farrer from operating his business. A temporary restraining order was originally issued and then dissolved following a hearing on the matter. The motion for a preliminary injunction was denied on the ground that the contract was not ancillary to Farrer's acceptance of employment.

The appellate court of Pennsylvania reversed and remanded the case to the lower court, holding that the restrictive covenant was ancillary to Farrer's taking of employment, was supported by adequate consideration, and was, therefore, enforceable.

Principal Casualty Insurance Company v. Blair

Stephen and Debbie Blair are the parents of Michael, the victim of a bicycle accident. Stephen allegedly failed to properly assemble Michael's bicycle, which caused a wheel to come off and resulted in injuries to their son. Debbie sued Stephen on behalf of Michael. The Blairs were insured by Principal Casualty Insurance Company. Principal brought this declaratory judgment action to have the court rule that its insurance contract with the Blairs did not provide coverage for Michael's injuries. The trial court granted summary judgment, and the Iowa Supreme Court affirmed. It ruled that public policy did not require Principal to provide insurance coverage to family members who are negligently injured by insureds.

Redlee/SCS, Inc. v. Carl J. Pieper

This dispute in this case involves postemployment noncompetition agreements (also known as restrictive covenants) entered into by Carl Pieper, Ben Simon, and their employer, Redlee. Under the terms of the agreements, Pieper and Simon agreed not to compete with Redlee for two years after leaving that company and they further agreed not to disclose confidential information about Redlee to which they became privy while in Redlee's employ. Both Pieper and Simon subsequently left Redlee and went to work for Allied International Building Services, Inc. Relee claimed that such employment violated the terms of the postemployment noncompetition agreements. The trial court preliminarily enjoined Pieper and Simon and both defendants appealed. Because Redlee's claims against Pieper were moot by the time the case reached the appeals court, the North Carolina Court of Appeals only addressed the claim against Simon. The appeals court affirmed the trial court after determining that the agreements were "valid and . . . fully enforceable." The court agreed with the trial court that Redlee would be seriously damaged were Simon not enjoined from working for Allied.

Douglas D. Owens v. Leonard Goldammer

Leonard Goldammer owned Golden Accounting Tax and Consultant Service. Goldammer's firm provided companies owned by Douglas Owens and Barbara Naughton with accounting services. Owens sued claiming that Goldammer had committed fraud, negligent misrepresentation, and breach of fiduciary duty and had failed to fulfill a contractual obligation to guarantee a $50,000 loan from Owens to Naughton. When Naughton declared bankruptcy, Owens filed suit to recoup his losses from Goldammer The jury found in favor of Owens on fraud and contract claims and for Goldammer on the fiduciary duty and negligent misrepresentation claims. They both appealed to the intermediate appellate court.

The appellate court decided that the "decisive issue" on appeal was the breach of contract claim. The appellate court determined that Goldammer had orally promised to guarantee Owen's loan to Naughton. Owens, however, could produce no promissory note or written documentation for the loan, and no writing was introduced in to evidence establishing Goldammer's promise to guarantee the loan. Under Missouri law, said the court, there was an exception to the statute of frauds requirement that agreements to answer for the debt of another be in writing. The exception, said the court, would apply if the oral promise was an "original promise" as opposed to a "collateral promise."

The court concluded that Goldammer's purpose in promising to repay the loan was not original. He did not make it to further his own interests nor to gain a benefit for himself nor to bring harm to Owens. Any gains he would receive would have been "incidental and indirect" and furthermore, there was no consideration going from Owens to Goldammer in exchange for Goldammer's oral promise to guarantee the loan. Therefore, ruled the court, the statute of frauds applied, there was no written documentation, and the judgment in favor of Owens on the breach of contract claim had to be reversed and remanded.

Mulford v. Borg-Warner Acceptance Corp.

The plaintiff and the defendant had executed three written leases for office space in a single property. Prior to the expiration date, the plaintiff proposed a new three-year lease. The defendant wanted only a two-year lease on its one remaining space. The plaintiff prepared and signed the new lease. The defendant never signed the new agreement, but paid rent according to its terms. Prior to the expiration of the two years, the defendant notified the plaintiff that it was leaving the property. The plaintiff commenced suit, alleging that the unexecuted lease was a valid contract because the signed monthly checks constituted sufficient memoranda to satisfy the statute of frauds.

Borg-Warner filed for summary judgment, and the court granted its motion. On appeal, the Supreme Court of New York, Appellate Division (not the highest court), held that the rent checks did not embody the material terms of the contract and, therefore, did not satisfy the statute of frauds. The court did order the defendant to pay one additional month's rent, however, since it had stipulated that it would do so as a result of giving its termination notice one day late.

Ronald A. Yocca v. The Pittsburgh Steelers Sports, Inc.

Ronald A. Yocca purchased "stadium builder licenses" from the Pittsburgh Steelers of the National Football League. These SBLs were sold in order to help finance the cost of building a new football stadium in Pittsburgh. Yocca claimed to have completed the application documents and sent in his checks in a timely manner, all in accordance with a brochure issued by the Steelers to persons interested in purchasing SBLs. The brochure explained the advantages that accompanied the purchase of each SBL. When Yocca entered the field he noted that his seats were not where he had expected them to be. They were both further away from the playing field and were on the eighteen yard line rather than between the 20 yard lines as he maintained was promised SBL purchasers in the sales brochure.

In short, he had paid for Club I seats and he was assigned to sit in what the brochure classified as Club II seats. Yocca filed suit for breach of contract. The trial court concluded that the parole evidence rule required dismissal of Yocca's suit because the document entitled SBL Agreement contained an integration clause and contained all the terms of the agreement. Yocca appealed, claiming that the trial court had incorrectly applied the parole evidence rule. The appeals court concluded that the agreement between Yocca and the Steelers was formed when the Yocca responded to the SBL Brochure prior to the April 15th deadline and sent in his first non-refundable deposit along with his application, and not in October, when the Steelers sent Yocca the SBL Agreement and Additional Terms documents. The trial judge had erroneously applied the parole evidence rule, said the appellate court, and the dismissal of the breach of contract claim was reversed.

Jinright v. Russell

By oral agreement, the defendants agreed to purchase all assets and interests in the plaintiff's liquor store for $6,500. As partial payment, the defendants gave the plaintiff a check for $1,500 but then stopped payment on same. The check was signed, and on its face were written the words "For Binder on Store." Since the contract was for a sale of goods in excess of $500, and there was no actual memorandum in writing to satisfy the statute of frauds, the defendants claimed that the contract was unenforceable.

The court denied the defendants' motion for summary judgment. The appellate court in Georgia affirmed the judgment and held that under the Uniform Commercial Code, the check met the requirements of a writing because it indicated that a contract for sale was made between the parties.

Macke Company v. Pizza of Gaithersburg, Inc.

The defendants-appellees had contracted with the plaintiff's predecessor, Virginia Coffee Service, to install cold drink vending machines in six locations. Macke bought Virginia's assets, and the six contracts were accordingly assigned to Macke. When the defendants tried to terminate the contracts, Macke filed suit. The lower court held for the defendants, and Macke appealed.

The Court of Appeals of Maryland reversed the judgment as to liability. It held that absent a contractual provision, the contracts could be assigned since they were not for personal services, nor did they require particular or unique skill on Virginia's part. The case was remanded for a new trial on damages.

Castorino v. Unifast Bldg. Products

The plaintiff's decedent was murdered by an assailant who entered her apartment through a window that either did not have a lock or that had a defective lock. The defendant, Unifast, had contracted with DCI Contracting Corporation to install windows in the decedent's apartment building. Unifast moved for summary judgment, contending that the plaintiff could not recover on a theory of either contractual or tort liability. The trial court denied the motion without prejudice to Unifast resubmitting it after discovery determined whether the windows were manufactured and delivered in a defective condition.

Unifast appealed, and the appellate court in New York reversed and granted Unifast's motion. The court held that an intended third-party beneficiary cannot maintain a breach of contract action since the contract does not indicate an intent to allow recovery to that party for a breach. As for tort liability, the court ruled that it would be beyond "sound public policy" to hold a window supplier responsible for the "alleged consequences of an allegedly defective window locking mechanism."

Clarkson v. Orkin Exterminating Company, Inc.

Upon purchasing a house, the plaintiff continued her predecessor's contract with defendant Orkin for termite inspections and treatment. When Clarkson prepared to sell her house, Orkin inspected the property and issued a report that it was free of termites. One day after Orkin's inspection, another exterminator inspected the house and found termite tunnels and water damage caused by the termites. After the repairs were made, Clarkson sued to have Orkin reimburse her for the repairs. She also asked Orkin to reinspect the house and certify that it was free of termites. Orkin refused.

A jury awarded the plaintiff money damages for breach of contract and violations of the state's Unfair Trade Practices Act, actual damages, and punitive damages for fraud. Orkin appealed, and the U.S. Court of Appeals for the Fourth Circuit reversed on the fraud and Unfair Trade Practices Act claims, but affirmed on the breach of contract claim. The court held that the failure to discover termites demonstrates a breach of contract but does not establish fraud or unfair trade practices. Since the plaintiff had not chosen to purchase Orkin's guarantee to repair property damage caused by termite infestation, she was not entitled to the cost of such repairs. The matter was remanded solely for a new determination of damages.

Anuszewski v. Jurevic

The Jurevics contracted with the plaintiff to build a home in Kennebunkport, Maine. On the date the house was to be completed, it was only half done. After the Jurevics discharged the plaintiff, he brought an action to recover damages for the unpaid part of the contract price, or alternatively, the value of labor and materials for which he had not been paid. The Jurevics counterclaimed that Anuszewksi's work was defective and that the cost to correct the defects and finish the house included a general contractor's markup. The court refused to allow the jury to consider the markup in assessing damages on the counterclaim. After the jury awarded damages to both parties, the Jurevics appealed the denial of their motion for a mistrial, a new trial, or an additur.

The Supreme Judicial Court of Maine affirmed the judgment on the complaint but vacated the judgment on the counterclaim, reasoning that contract damages are intended to place the injured party in the same position he or she would have been in but for the breach. Therefore, the court concluded that a general contractor's markup must be considered by a jury in determining contract damages.

Hibschman Pontiac, Inc. v. Batchelor

Batchelor purchased an automobile from Hibschman Pontiac upon personal representations from the salesman, the service manager, and the vice president that the service department was "above average." Batchelor experienced numerous problems with the car, and each time he brought it to Hibschman Pontiac for repairs, the work was either done poorly or not done at all, despite assurances to the contrary. A jury trial resulted in a verdict for Batchelor. He was awarded $1,500 in damages and $15,000 in punitive damages. The state appellate court reversed the granting of punitive damages. On appeal, the Supreme Court of Indiana held that there was sufficient evidence to warrant the jury awarding punitive damages since it could have found that elements of a common law tort, including fraud, malice, gross negligence, or oppression, were "mingled" into the breach of warranty claim. The court rejected Hibschman's contention that the trial court should have directed a verdict in its favor on the issue of punitive damages.