Contracts
Elements of a Contract: legally enforceable agreement - promise that the law will enforce
- Offer
- Acceptance
- Consideration: bargaining that leads to an exchange between parties
- Legality: for a lawful purpose
- Capacity: parties must be adults of sound mind
- Consent: without certain kinds of trickery and force
- Writing: some contracts MUST be in writing to be enforceable
Remedies: court will award money or other relief to party injured by breach of contract
Types of contracts:
Bilateral contract: both parties make a promise
Unilateral contract: one party makes a promise that the other party can accept only by doing something
Executory contract: binding agreement in which one or more of the parties has not fulfilled its obligations
Executed contract: agreement in which all parties have fulfilled their obligations
Valid contract: contract that satisfies all the law's requirements
Unenforceable agreement: contract where parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it
Voidable contract: agreement that, because of some defect, may be terminated by one party, such as a minor, but not by both parties
Void agreement: agreement that neither party may legally enforce
Express contract: agreement with all important terms explicitly stated
Implied contract: where the words and conduct of the parties indicate that they intended an agreement
Promissory Estoppel: doctrine in which a court may enforce a promise made by the defendant even when there is no contract - even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendant's promise if he can show that:
1. defendant made a promise knowing that plaintiff would likely rely on it
2. plaintiff did rely on promise AND
3. the only way to avoid injustice is to enforce the promise
Quasi-contract: legal fiction in which, to avoid injustice, the court awards damages as if a contract had existed, although one did not - even when there is no contract, a court may use a quasi-contract to compensate a plaintiff who can show that:
1. plaintiff gave some benefit to defendant
2. plaintiff reasonably expected to be paid for the benefit and defendant knew this AND
3. defendant would be unjustly enriched if he did not pay
Quantum meruit: "As much as he deserved" - damages awarded in a quasi-contract case
Exculpatory Contract: rarely used risk management tool - high level of risk as to be uninsurable
An agreement between the aircraft or airport operator and a participant in an aviation operation by which the participant agrees not to sue the operator of the aircraft or airport if the participant is killed or injured during the operation
Appropriate risk management tool ONLY where:
1. operation is NOT a common carrier operation (eg carrying passengers for hire under 14 CFR Part 135 or 121)
2. activity or relationship is NOT one in which the law requires the operator to carry liability insurance
Federal Aviation Act of 1958 and state law (e.g. Arizona)
3. insurance, although not required by law, is NOT available to the operator
Uses:
- airlifting skydivers
- bungee jumpers
- motion picture "stunt flying"
Contract which serves to relieve the operator of legal responsibility for the consequences of her own or her employee's negligence, have been held void as a matter of public policy in NY - most other states courts very closely scrutinize such contracts but enforce them if:
1. there is some equality in bargaining power between the parties, AND
2. subject matter is not an essential of life (eg food, medicine, medical care, shelter, public utilities, public transportation, or communications)
Some states' courts hold that an exculpatory contract does not relieve an operator from liability for acts of gross negligence or willful or wanton misconduct
Assumption of Risk:
Person signing the agreement knows and understands the scope, nature, and extent of the risk involved in the operation (which may include personal injury or even death) and that the person freely and voluntarily chooses to incur that risk (for thrills and or remunerations, as the case may be)
Contract is even more compelling if it provides the person the choice between:
1. relieving operator from legal and financial responsibility for accidents that may injure that person (including those resulting from ordinary negligence of the operator and employees and others protected by contract) OR
2. paying the operator some additional price to be allowed to participate in the activity without waiving responsibility for negligence (but still assuming the risk)
Gross negligence is a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or both. It is conduct that is extreme when compared with ordinary Negligence, which is a mere failure to exercise reasonable care.
The video below - hoax?
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Case 16: American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995)
American Airlines v. Wolens - C-SPAN video
After the U.S. Supreme Court oral arguments in American Airlines v. Wolens, a news conference was held on the steps of the Supreme Court with some of those involved. The case involved American Airlines and changes in Frequent Flyer policies. Consumers questioned if the changes were in violation of the Airline Deregulation Act and their contract rights. Messrs. Hyman and Gordon are attorneys for Wolens and other American Airlines Frequent Flyers.
1. Unlike many of the cases presented in this chapter, American Airlines, Inc. v. Wolens does not center on the interpretation of the language “relating to … rates, routes, or services” in the Airline Deregulation Act. What clause does the court focus on?
2. Is the Illinois Consumer Fraud Act preempted by the Airline Deregulation Act? Explain why or why not.
3. As between a court or the Department of Transportation, which is the authorized adjudicator of air carrier contract disputes, according to the parties in this case? Which party prevailed and why?
4. The majority opinion states that the “distinction between what the state dictates and what the airline itself undertakes confines courts, in breach-of-contract actions, to the parties’ bargain, with no enlargement or enhancement based on state laws or policies external to the agreement.” What does this mean? Reading Northwest, Inc. v. Ginsberg, 572 U.S. 273(2014), infra, may be instructive in responding.
5. Summarize the main points in the concurring and dissenting opinions. Which is most persuasive and why?
Case 17: Northwest, Inc. v. Ginsburg, 572 U.S. 273 (2014)
1. Define implied covenant of good faith and fair dealing.
2. Do common law claims fall outside the scope of preemption under the Airline Deregulation Act? Explain the court’s reasoning.
3. Explain the court’s analysis of the phrase “other provision having the force and effect of law” with respect to the common law claims and preemption under the Airline Deregulation Act.
4. Does the breach of implied covenant claim here “relate to” an airline rate, route, or service? Detail.
5. Is the implied covenant applicable to the frequent flyer program a legal obligation (and thus preempted) or a voluntary undertaking (and thus not preempted)? What could the respondent have done to obtain a different result, according to Justice Alito?
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