Patterson v. Meyerhofer : LUSENET : Lessig's Contracts : One Thread

I just finished reading the Patterson decision, and it seems inconsistent with itself. On one hand, the opinion holds that there was no relation between the parties, I assume because the plaintiff did not yet own the parcels and because "each party was free to act for his own interest restricted only by the stipulations of the contract." (lower court). According to this logic, there was only a contract once Plaintiff owned the parcels. Following from this, it seemed to me that Plaintiff was not entitled to any damages since defendant had a right to bid on the homes, and perhaps secure a lower price. But, the decision goes on to say that defendant must pay the plaintiff the different between the auction price and the contract price. But why is the defendant bound to the contract since the conditional event (plaintiff ownership of the homes) never occured? If the defendant didn't breach the contract, I don't understand why he is subject to damages -- he now loses all of the benefit of bidding lower.

Any ideas? Jenn

-- Anonymous, December 12, 1998


In trying to figure out how the cases in this section fit together, I think what several of them point to is the imporantance of Good Faith. The idea that you would sign a contract with a person and then undermine that contract through purposeful action (ie, make it impossible for the other party to perform) is the essence of "Not Good" faith. The court in this case seemed to want to simultaneously protect non-relational interests/rights (ie the woman should be able to bid at the auction) AND the integrity of the contract itself: the sanctity of the relationship she voluntarily entered. After all, courts don't want people running around making and then intentionally breaking contracts without good reason (cf Bread Crumbs). Seems like you are allowed to breach if you do so without malice, but if you're mean... watch out.

-- Anonymous, December 13, 1998

This was my reading of the case:

the court holds that there is no relation of "confidence" or "trust" between the parties (thus barring plaintiff's claim to liens on the four houses based on the notion that defendant possesses them "in trust" for him) not because plaintiff never owned the parcels but because defendant told him before the foreclosure sale that she did not intend to abide by their contract.

From the holding of this court, the contract always exists, but the defendant is allowed to breach it (to repudiate their relationship and bid for herself) -- for a price. (consistent with O.W. Holmes's view) The price is calculated in the traditional damages way: the difference between her purchase price and the contract price promised to plaintiff.

Damages are calculated to put the parties in the position they would have been in had the contract been performed: "The defendant will have paid no more than the contract obligated her to pay; the plaintiff will have received all to which the contract entitled him." While in this scheme the defendant does not benefit from her breach, it seems that the plaintiff is *possibly* harmed by the breach. What doesn't seem quite fair (in the idealistic sense of fairness) is the fact that plaintiff only gets the difference between the contract price and the price the defendant paid. It seems that if, in every case the plaintiff was OUTBID by the defendant (p. 901), without defendant's interference in the auction, the plaintiff would have paid LESS for each piece of property than it eventually sold for. If the contract was then complied with as agreed, plaintiff would have profited more than the $620 this judgment grants him. In the realm of practical fairness though, I do realize that it would be exceedingly difficult to estimate the amount that the plaintiff WOULD HAVE paid at the sale if not for the defendant's participation and that this is probably the best calculation of damages both practically and without penalizing the defendant for the breach.

-- Anonymous, December 13, 1998

Yep. Agreed with all said. My question though is what about the lower court's reasoning (that IMHO the ct. never actually overturns). pg. 902 The lower court seems to have reasoned that if there is a relation between the P and the D then D has to follow the k, otherwise when there is no relation, then D can breach.

It seems to me that this contradicts what we've gone over in class. If there is a relation between P and D then the court shouldn't nec. have to police the agreement because of outside norms. In other words, no penalties for breach because of other informal mechanisms. On the other hand, when there is no relation, the court may be the only means of enforcement available. Me think that at least the lower court is inconsistent with what we've stated in class. And again, I'm not certian that the higher court overturns this they????

Hope to hear at least a yes or no on the final question.............

-- Anonymous, December 13, 1998

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