Contracts 1.1 – The Study of Contract Law
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The Study of Contract Law


Welcome to the study of contract law. Glad to have you with us. I want to start our time together with a story. Back in the early part of the 20th century, there was this young man, and he worked on a farm. And while he was working on the farm, he came in contact with an electrical fence and it burned his hand really really bad. It left all kinds of scars on that hand. And he suffered, it was painful, he lost range of motion and it really According to him, impaired visibility to get worked on, to be useful to to hold on a job to do just all the things while we're doing daily life.

And it just so happened that there was a doctor in this young man's town, and this doctor had gotten some experience during the First World War with doing what was then really radical surgery, which was skin grafting. The doctor really saw this skin grafting technique that he had learned as a way for him to distinguish himself amongst all the other doctors in the town.

And he heard about the young man and he had approached the young man and his father and said, look, I can help you can fix that hand for you. Will you let me do this new thing called skin grafting operation on your hand? And the father and the son they were very skeptical about it, 'cause it sounds like a crazy idea that this doctor would be able to take skin from one part of the young man's body and put it on to his hand and fix his hand.

But the doctor, he was pretty persuasive and he said all kinds of things to the young man and his dad and he said, look, it won't be particularly painful, the convalescence time will be really, really short. And don't worry about it I can do this I've done it a bunch of times and they were still really skeptical about this and the doctor finally said, look, I can give you a 100% Good hand.

And at that point, the young man and his father were sold. So, young man has the operation, doctor does a skin graft from one part of the young man's body onto his hand. And as it turns out, all of the predictions about recuperation time, about pain, etc, etc, are wrong. Most importantly, for generations of law school students, the doctor had transplanted skin from the young man's chest onto his hand, and hair began to grow on the young man's hand.

The Father and the Son brought a lawsuit against the doctor. And they basically said, look, every representation that you made to us that we weren't going to have a long time in the hospital, that recuperation time was going to be short, that there wasn't going to be a lot of pain, and that my son would be given a 100% perfect or good hand, They were just all untrue. The father and the son said, look, we were in the hospital for a long time, it was painful, recuperation time was very long. But look at his hand! He's got hair growing on his hand! That is not a 100% good hand. Doesn't even look like a hand.

So they brought a lawsuit. In the lawsuit, If you were just thinking about that as a complete newcomer to the study of law, you would think, having watched lots of law and order episodes and different things on television, you think, wow, that's a really great medical malpractice claim. But there would be a claim for negligence or for failure to live up to a particular standard of care and providing the medical services. But the case that you read, because this is a reported case, is actually a breach of contract claim.

Now, something we'll learn about later in this class is that there are these things called warranties, right when you enter into a contract, and you promise that you're going to perform in a particular way and you don't perform in that particular way, the other side sue you for breach of contract. You didn't do what you said you were going to do. You said you were going to do one thing, you did something less, that's a warranty, a promise, a promise that your goods or your services are going to be of a particular quality.

But normally, doctors don't say, "I'm going to give you a 100% good heart when you come in for a heart operation." Or "You know that bum hip you've got, when I do a replacement, I guarantee you or I warrant that that hip is going to be 100% correct." They just don't do it. And in this case, the very famous case almost all contrast courses start with it. Case is called Hawkins vs. McGee, often referred to as the hairy hand case for obvious reasons. The Court recognized this, the court and its opinion said we realize that normally, we don't think about a doctor patient relationship as being contractual. And we normally never think about whether or not the doctor gave a particular guarantee about the quality of their service, but the court made an exception in this case.

And the exception is why this case is very famous, and why I want us to think about it as we start thinking about contract law. The court said, you know, normally we don't have a situation where a doctor gives a guarantee of quality and even if we do, we assume that the patient hearing that promise, doesn't believe it, sees it for what it is. It's is not as a promise, not as a warranty, but just as an effort by the doctor to put the patient at ease, to encourage the patient to do something that's in the patient's best interest.

But the court found a difference here. The court found the difference in this particular situation, because the doctor was getting something of value in return beyond whatever fee normally would be charged. There was something of value given to the doctor, beyond a normal doctor's fee. The evidence showed in this particular case that the doctor was getting the opportunity to try a skill, perfect the skill, create a market differentiator for himself, there was something of great value and the value that the doctor was going to receive, he gave in exchange, listen to those words, in exchange for vote warranty, or the promise or the guarantee that he gave to the patient. That essentially establishes the nature of contract law.

Duties to Exchange of Value

Common law: contract law is law about people mutually owing duties; modern idea: contract law is law of exchange of values.

Now, there was a time when we in the common law system thought about contract law in a very similar way that we think about property law or tort law. We thought about it as a common law recognizes that private citizens owe duties to each other. There's just a right way to act in society and wrong way to act in society. You have a duty not to take property that doesn't belong to you. You have a duty to ensure that you do no harm to your fellow citizens. And you have a duty if you promise to perform, if you promise to pay, that you should perform or pay.

So, contract law and tort law and property law all pretty much started on the same sort of normative basis as each other. Everyone has a duty to act in a particular way. But that idea changed over time. There's a very famous saying in Latin that all law students learn, "x delicto x contracto, this is law." We'd like to put that on pillars and buildings and things like that. All that means is, through duty, and through contract is where the law comes from. So at some point, this idea of duty migrated when it came to contract law, to the idea of obligation to perform or to do something when you promise to do it.

So Hawkins vs McGee is a great way to start thinking about the difference between tort law duties of care and medical malpractice etc, and the law regarding exchanges of value. Contract law is the law of exchanges of value. Thinking about whether or not a contract has been breached, is thinking about whether or not the law should enforce a failure to perform the exchange of value that you had agreed to. In that way, in this migration from the idea of duties, contract law has become quite different from the study of property, the study of tort law.

Contract law is really the only place particularly in your first year of legal studies, where you will be thinking about whether or not a court should enforce a private agreement. You know, a lot of times we talk about in the common law system, all the different sources of law, right? We talk about, you know, we know that the hallmark of, of the common law is that there's judge made law and precedents and we know that when we also have statutes and we know that there are constitutions and treaties and administrative proclamations and regulations, we never think about contracts as a source of law.

But in fact, when we study contract law we're studying when a court will in fact give a contract the force of law, a private agreement that was entered into between two parties who are just looking to make a profit or get something done, when should the court step in and say, you know what, we are going to insist that that agreement be enforced that that agreement be performed.

That's a very different thing than saying, you know, it's wrong to slap someone in the head, that would be a tort. It's wrong to park your trailer on someone else's property and leave it there forever, right? That would be an inappropriate taking on a property law. Contract law is different in that we have set up a set of rules and understandings about when the force of law, the authority of the state, through its courts are going to enforce a private agreement.

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