CONTRACTS

Somerset Legal Journal headnotes from approximately 1991 through the present.

For earlier cases, please visit the Somerset County Law Library.

 

BREACH OF CONTRACT

 

Where an allegedly defective product causes damage only to itself, and other consequential damages resulted from the loss of the use of the product, the law of contract is the proper arena for redressing the harm because in such a case, the damages alleged relate specifically to product quality and value as to which the parties have had the opportunity to negotiate and contract in advance.  Otto and Otto v. Fristick, d/b/a Steem Kleen Flooring, 60 Som. L.J. 290. (2002) (Gibson, J.). 

 

In order to set forth a viable cause of action for breach of contract, three elements are necessary: (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract; and (3) resultant damages.  Otto and Otto v. Fristick, d/b/a Steem Kleen Flooring, 60 Som. L.J. 290. (2002) (Gibson, J.). 

 

A party asserting a cause of action for breach of contract must establish by pleading (1) the existence of a contract; including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.  Windridge Farm, LLC v. Delmont Hearn and Elizabeth Hearn t/a Delmont Grain & Feed, 61 Som.L.J. (2003) (Cascio, J.)

 

To prevail on a cause of action for breach of contract in Pennsylvania, a plaintiff must establish: (1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract; and (3) resultant damages.  Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

CAPACITY TO CONTRACT

 

To prevail on a claim that the effects of medication prevented petitioner from understanding the consequences of her actions, petitioner must prove that she was under the influence of medication to such and extent that she was so destitute of reason as not to know the consequences of her contract.  Baer v. Baer, 53 Som.L.J. 70 (1993). 

 

Where mental capacity is in issue, that capacity is best determined by the party's spoken words and conduct and the testimony of the persons who observed that conduct on the date in question.  Baer v. Baer, 53 Som.L.J. 70 (1993).

 

COHABITATION AGREEMENTS

 

The motion for judgment on the pleadings is a pretrial mechanism to determine the issues on their merits before the legal sufficiency of the case is examined by the trial court.  The purpose is to expedite justice, to obviate the need for pursuing to trial cases where the pleadings demonstrate that no genuine issue of fact exists and that the moving party is entitled to judgment as a matter of law, their case being clear and free from doubt such that a trial would clearly prove to be a fruitless exercise.  Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

 

Having a relationship status as cohabitors does not have any effect on the ability to enter into a contractual relationship as long as the contract is not in contemplation of sexual services.  A contractual relationship founded solely upon consideration paid for the procurement of sexual services would be unenforceable as contrary to public policy, however, the mere contemplated cohabitation between negotiating parties does not render them incompetent to form binding contracts regarding other transactions.  Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

 

Parties are generally free to contract as they please as long as all of the essential elements of a contract are present and the agreement does not offend public policy.  The essential elements of a contract include parties competent to contract, a valid subject matter, a legal consideration, mutuality of agreement and mutuality of obligation.  Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

 

There is much case law establishing that a person may form an agreement for title to property in cohabitation situations for services rendered, such as housekeeping or childrearing.  Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

 

Cohabitation agreements have been construed to follow the same principles as premarital agreements and have been enforced as such.  Simeone v. Simeone is the seminal case regarding pre-nuptial agreements; that court found that a pre-nuptial agreement is not executed under duress even if the agreement was signed on the eve of the wedding and the consequence of not signing the agreement would result in a cancellation of the wedding.  Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

 

A potential break-up is not sufficient to establish duress in signing a pre-nuptial agreement, and thus, by syllogism, would not establish duress for a cohabitation agreement. Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

 

The Defendant argues that because the Plaintiff did not come to this action with “clean hands” that she is unable to assert a claim of quantum meruit.  The parties were cohabiting together and concepts of guilt cannot justify an unequal division of property betwee4n two equqlly “guilty” persons.  In other words, Defendant cannot assert that Plaintiff has no right to the claim because she was in a meretricious relationship when he was the other party to that relationship.  Therefore, Plaintiff has the right to bring any claim that any party to any contract would have the right to bring.  Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

 

Restitution is based on equitable principles of unjust enrichment; it may be employed whenever one party confers a benefit on a second party who accepts and retains the benefit and is unjustly enriched.  The relief is to put the person back in the same position she formerly occupied by return of the benefit or its monetary equivalent.  Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

 

Quantum meruit is an equitable doctrine that involves a class of obligations imposed by law for reasons dictated by justice and is based on the concept that no one who benefits from the labors and materials of another should be unjustly enriched.  Thus, the law implies a promise to pay a reasonable amount for labor and materials furnished.  Ryan v. Sarver, 63 Som.L.J. 201 (2007)(Klementik, J.).

           

CONFLIFT OF LAWS – STATUTE OF LIMITATIONS

 

It is the duty of the one asserting a cause of action to use all reasonable diligence to inform himself or herself properly of the facts and circumstances upon which the right of recovery is based and to institute suit within the prescribed statutory period.  Mere mistake, misunderstanding or lack of knowledge on the part of the plaintiff is not sufficient to toll the running of the statute of limitations. Discover Bank v. Trina M. Henry, 65 Som.L.J. 135 (2012) (Klementik, J.).

 

Under the Uniform Statute of Limitations on Foreign Claims Act, 42 Pa.C.S.A. § 5521, also known as the borrowing statute, the period of limitations applicable to a claim accruing outside the Commonwealth shall be either that provided or prescribed by the law of the place where the claim accrued or by the law of this Commonwealth, whichever first bars the claim. Discover Bank v. Trina M. Henry, 65 Som.L.J. 135 (2012) (Klementik, J.).

 

When deciding which statute of limitations is appropriate, the long-standing rule of Pennsylvania is that the law of the forum determines the time within which a cause of action shall be commenced. This rule has not been changed despite the adoption of the significant contacts/interest analysis on substantive choice of law matters by the Supreme Court; rather the proper source of analysis is the terms the borrowing statute at 42 Pa.C.S.A. § 5521. Discover Bank v. Trina M. Henry, 65 Som.L.J. 135 (2012) (Klementik, J.).

 

Delaware law imposes a 3-year statute of limitations for contract claims such as this, Pennsylvania imposes a 4-year statute of limitations for this type of action; thus, Delaware law applies, because it operates to first bar the claim. Discover Bank v. Trina M. Henry, 65 Som.L.J. 135 (2012) (Klementik, J.).

 

The Delaware tolling statute, Del. Code Ann. Tit. 10, § 8117, that serves to delay the running of the statute of limitations for non-residents of Delaware does not apply to this case, because it applies only to those instances in which service becomes difficult as to a Defendant with prior connections to the state. Discover Bank v. Trina M. Henry, 65 Som.L.J. 135 (2012) (Klementik, J.).

 

The provisions of Pennsylvania's borrowing statute unequivocally evince the legislative intent to prevent a plaintiff who sues in Pennsylvania from obtaining greater rights than those available in the state where the cause of action arose, and the application of the Delaware tolling statute would be in direct opposition to this policy aim. Discover Bank v. Trina M. Henry, 65 Som.L.J. 135 (2012) (Klementik, J.).

 

 

CONSTRUCTION OF CONTRACTS

 

In construing a contract, each and every part of it must be taken into consideration and given effect, if possible, and the intention of the parties must be ascertained from the entire instrument.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.).

 

CONTRACTS – CONTRACT INTERPRETATION- INSURANCE CONTRACTS

 

The principles governing our interpretation of a contract of insurance are familiar and well settled.  The task of interpreting a contract is generally performed by a court rather than a jury.  The goal of that task is, of course, to ascertain the intent of the parties as manifested by the language of the written instrument. Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

Where a provision of a policy is ambiguous, the policy provision is to be construed in favor of the insured and against the insurer, the drafter of the agreement.  Where, however, the language of the contract is clear and unambiguous, a court is required to give effect to that language. Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

In the absence of proof of fraud, failure to read the contract is an unavailing excuse or defense and cannot justify an avoidance, modification or nullification of the contract or any provision thereof.  Indeed, if a party, who can read will not read a contract put before him for execution, or if, being unable to read, will not demand to have it read or explained to him, he is guilty of supine negligence, which is not the subject of protection, either in equity or at law. Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

An insured cannot avoid application of clear and unambiguous policy limitations. Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

Where the policy limitation relied upon by the insurer to deny coverage is clearly worded and conspicuously displayed, the insured may not avoid the consequences of that limitation by proof that he failed to read the limitation or that he did not understand it.  Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

When the insurer elects to issue a policy differing from what the insured requested and paid for, there is clearly a duty to advise the insured of the changes so made.  The burden is not on the insured to read the policy and discover such changes, or not read it at his peril.  Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

When an individual applies and prepays for specific insurance coverage, the insurer may not unilaterally change the coverage provided without an affirmative showing that the insured was notified of, and understood, the change, regardless of whether the insured read the policy. Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

The so-call “hall-marks of ambiguity” are as follows:  Contractual language is ambiguous if it is reasonably susceptible of different constructions and capable of being understood in more than one sense.  This is not a question to be resolved in a vacuum.  Rather, contractual terms are ambiguous if they are subject to more than one reasonable interpretation when applied to a particular set of facts. Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

By no stretch of the imagination is an insured who agrees to an insurance contract utilizing a premium that is an “annual minimum” able to reasonably conclude that he or she might receive a part of it back.  The only conclusion that can be reached is that the insured could be required to pay more if the audit yields an amount higher than the exposure basis. Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

Plaintiff’s claim cannot prevail in that the insured received precisely the coverage that he requested but failed to read the policy to discover clauses that are the usual incident of the coverage applied for.   Laurel Mountain Ski Company v. Tudor Insurance Company, 65 Som.L.J. 1 (2010) (Klementik, J.).

 

CORPORATE OFFICER PERSONAL LIABILITY – PARTICIPATION THEORY

 

Where a party enters into a contract with a corporation, no action will lie against the shareholder of that corporation individually for a breach of that contract. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

The breach of the contract is the breach of a promise made by the corporation, and not by the breach of any promise extended by the corporate officer. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

Shareholders, officers, and directors are not held liable for the corporation’s breach of contract, absent an establishment of participation theory or the successful assertion of the equitable doctrine of piercing the corporate veil. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

Under the participation theory, “a corporate officer can be held liable for misfeasance,” i.e., the improper performance of an act, but not for “mere nonfeasance,” i.e., the omission of an act which a person ought to do.  Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

DEFENSES – GENERALLY

 

In determining the existence or non existence of a meritorious defense, a court must view the evidence presented in the light most favorable to the moving party, accepting as true all evidence and reasonable and proper inferences flowing therefrom.  Beckwith Machinery v. Five-R Excavating, Inc., 53 Som.L.J. 309 (Apr. 3, 1992) (Fike, P.J.) 

 

Generally, the failure to read a contract before signing is unavailing as a defense and will not justify an avoidance of the contract, however, where it is established that the other party was guilty of deliberate fraud in preparing a contract designed to mislead and take advantage of the unwary, - or even careless, - whom he might be able to trap by the form of contract thus fraudulently prepared, another factor enters into the case.  Beckwith Machinery v. Five-R Excavating, Inc., 53 Som.L.J. 309 (Apr. 3, 1992) (Fike, P.J.) 

 

One guilty of deliberate fraud in his dealings with another cannot defend his fraud or deceit by averring that the other party to the contract was careless; that carelessness of the party defrauded does not prevent his defending against deliberate and intentional fraud.  Beckwith Machinery v. Five-R Excavating, Inc., 53 Som.L.J. 309 (Apr. 3, 1992) (Fike, P.J.) 

 

Such "floating" venue provisions weigh against enforcement of the contact.  Global Incorporated v. IFC Credit Corporation, 62 Som. L.J. 75 (2005) (J. Upor).

 

Where it is more expensive to defend a cause of action than to pay a default judgment solely because of the location in which the matter is being adjudicated, litigation in the foreign forum is no longer a matter of mere inconvenience or additional expense; rather it rises to the level of serious impairment of the parties' ability to defend against the action.  Global Incorporated v. IFC Credit Corporation, 62 Som. L.J. 75 (2005) (J. Upor). 

 

It is axiomatic in this Commonwealth that a contract induced by fraud may be rescinded. Global Incorporated v. IFC Credit Corporation, 62 Som. L.J. 75 (2005) (J. Upor). 

 

DEFENSES – PUBLIC POLICY

 

§178(1) of the Restatement (Second) of Contracts provides that a promise or other term of an agreement is unenforceable if the interest to be enforced is clearly outweighed under the circumstances by a public policy against the enforcement of such terms.  Ritchey v. Hoover, 59 Som.L.J. 444 (2002) (Cascio, J.). 

 

A public policy against the enforcement of promises or other terms may be derived by the court from the need to protect some aspect of the public welfare, as is the case for judicial policies against, for example: (a) impairment of family relations, and (b) interference with other protected interests. Restatement (Second) of Contracts, §179. Ritchey v. Hoover, 59 Som.L.J. 444 (2002) (Cascio, J.). 

 

When weighing a public policy against enforcement of a term, account is taken of: (1) the strength of the policy as manifested by legislation or judicial decisions; (2) the likelihood that a refusal to enforce the term will further that policy; (3) the seriousness of any misconduct involved and the extent to which it was deliberate, and (4) the directness of the connection between the misconduct and the term. Restatement (Second) of Contracts, §178(3).  Ritchey v. Hoover, 59 Som.L.J. 444 (2002) (Cascio, J.). 

 

An agreement signed during the course of settling a divorce that contains a clause waiving the right to file for protection from abuse is void as against public policy because the right to file for protection from abuse does not pertain to support, alimony, or property rights between the husband and wife, but, rather, is related to the right of the party to defend herself.  Ritchey v. Hoover, 59 Som.L.J. 444 (2002) (Cascio, J.).

 

EMPLOYMENT CONTRACTS - GENERALLY

 

Under Ohio law, employment is at will absent a specific contract defining a period of employment.  Walker v. Revco, 50 Som.L.J. 319 

 

Enumerated examples in employee handbooks for immediate discharge are not exclusive.             Walker v. Revco, 50 Som.L.J. 319 

 

Under Pennsylvania law, a presumption exists that an employee is an at-will employee.  Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235 

 

Absent a valid contract providing to the contrary, at-will employees may be discharged at any time, for any or no reason at all.  Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235 

 

If an employee is unable to overcome the at-will presumption, the discharge is not reviewable in a judicial forum, except in the most limited of circumstances.  Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235 

 

The clearest way to overcome the at-will presumption is where the employer and employee have entered into an express contract which contains a definite term of employment and forbids discharge in the absence of just cause or without first utilizing an internal dispute resolution mechanism. In other words a clear and definite intention to overcome the presumption must be expressed in the contract.  Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235 

 

The at-will presumption may also be overcome where an employee gives the employer sufficient consideration in addition to the services for which the employee was hired, or by an implied contract where all the surrounding circumstances of the hiring indicate that the employer and employee did not intend the contract to be at-will.  Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235 

 

In the case of implied contract to overcome the at-will presumption, the employee must clearly show that the employer intended to form a contract.  Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235 

 

Case law interpreting whether a policy manual is an implied contract indicates a strict adherence to the employee's burden of showing the clearest of intentions of the employer to overcome the at-will presumption.  Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235 

 

On employer's demurrer, employee's averments that certain disciplinary procedures were set forth in the employee policy manual and that the manual was in effect throughout the entire duration of employee's employment were insufficient to state a cause of action for breach of an employment contract.  Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235 

 

Discussion of wrongful discharge and new standard clarified by Rutherfoord v. Presbyterian University, 417 Pa.Super. 316, 612 A.2d 500 (1992). Sandusky v. Somerset Hospital Center For Health, 52 Som.L.J. 235

 

EMPLOYMENT CONTRACTS – ARBITRATION

 

In reviewing an arbitration award under the Public Employee Relations Act (PERA), Pennsylvania courts apply the “essence test,” a standard that requires great deference to an arbitrator's interpretation of the Collective Bargaining Agreement (CBA). Shade-Central School District v. Shade-Central City Education Assoc., 65 Som.L.J. 145 (2012) (Klementik, J.).

 

Even if the court’s interpretation of the CBA differs from that of the arbitrator’s, the court may not substitute its judgment for that of the arbitrator so long as the arbitrator's award interpretation can in any rational way be derived from the agreement, viewed in light of its language, its context, and any other indicia of the parties' intention. Shade-Central School District v. Shade-Central City Education Assoc., 65 Som.L.J. 145 (2012) (Klementik, J.).

 

Under the “public policy exception” to the “essence test,” a three-step analysis is applied.  The court must determine: (1) the nature of the conduct leading to the discipline; (2) if that conduct implicates a public policy which is “well-defined, dominant, and ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests;” and (3) if the arbitrator's award poses an unacceptable risk that it will undermine the implicated policy and cause the public employer to breach its lawful obligations or public duty. Shade-Central School District v. Shade-Central City Education Assoc., 65 Som.L.J. 145 (2012) (Klementik, J.).

 

The issuance of an unsatisfactory rating of a tenured professional employee by the school administration constitutes a matter that arises out of the interpretation or application of the terms of the collective bargaining agreement and, therefore, is subject to binding arbitration pursuant to §903 of Act 195. 43 P.S. §1101.903. Shade-Central School District v. Shade-Central City Education Assoc., 65 Som.L.J. 145 (2012) (Klementik, J.).

 

Under the Public School Code of 1949, unsatisfactory teaching performance based on unsatisfactory ratings can be a valid cause for termination of an employee's contract. 24 P.S.§11-1122. Shade-Central School District v. Shade-Central City Education Assoc., 65 Som.L.J. 145 (2012) (Klementik, J.).

 

An arbitrator’s determination of the propriety of an unsatisfactory rating is binding should the rating be introduced into evidence at a subsequent dismissal hearing before the board. Shade-Central School District v. Shade-Central City Education Assoc., 65 Som.L.J. 145 (2012) (Klementik, J.).

 

Where the CBA is silent as to its definition of just cause, it is within the arbitrator’s province to interpret the just cause provision. Shade-Central School District v. Shade-Central City Education Assoc., 65 Som.L.J. 145 (2012) (Klementik, J.).

 

The regulations regarding such professional employee observations provide that whenever an unsatisfactory rating is given, anecdotal records that shall include specific evidence likely to be important in the event of a dismissal must support the rating. 22 Pa.Code §351.26(c).

The public policy exception cannot be raised for the first time on the appeal to the trial court or the appellate court.  Where the argument that the Arbitrator should not disturb the unsatisfactory rating issued by the School Administration because it violated public policy in denying administrators the right to effectively evaluate and improve their staff was not presented to the Arbitrator for consideration and the receipt of testimony, it is not proper for the court’s analysis. Shade-Central School District v. Shade-Central City Education Assoc., 65 Som.L.J. 145 (2012) (Klementik, J.).

 

EXECUTORY CONTRACTS

 

Under an executory contract of sale title does not pass to the buyer as against the seller or persons claiming under him as long as the contract remains executory.  Somerset Welding & Steel, Inc. v. Timsco, Inc., 52 Som.L.J. 124 

 

As a general rule, where any condition precedent to the vesting of title remains to be performed or, as between the seller and buyer, any material act connected with the subject matter remains to be done, the title to the property does not pass until such act or condition is performed or waived.  Somerset Welding & Steel, Inc. v. Timsco, Inc., 52 Som.L.J. 124

 

FORMATION – GENERALLY

 

A contract is created where there is a mutual assent to the terms of a contract by the parties with the capacity to contract.  An agreement is a valid binding contract if: the parties have manifested an intent to be bound by the agreement's terms; the terms are sufficiently definite; and there was consideration.  Woodmancy v. Turkeyfoot Fish & Game Association v. Clevenger, 59 Som.L.J. 58 (2001) (P.J. Fike).  

 

To determine the existence and terms of a contract, a court must determine the parties' intent.  Woodmancy v. Turkeyfoot Fish & Game Association v. Clevenger, 59 Som.L.J. 58 (2001) (P.J. Fike). 

 

The law of contract formation in Pennsylvania is governed generally by the following inquiries: (1) whether both parties manifested an intention to be bound by the agreement; (2) whether the terms of the agreement are sufficiently definite to be enforced, and (3) whether there was consideration. Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

Manifestation of assent to be bound requires mutual assent between the parties as to essential terms or the subject matter of the transaction, and all issues surrounding the structure of the proposed transaction must be closed.   Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.).

 

FORMATION – OFFER AND ACCEPTANCE

 

The general rule of the law of contracts applicable to prize-winning contests provides that where an offer or promise for an act is made, the only necessary acceptance of that offer is the performance of the act.  Scanlan v. Lasky, 55 Som. L.J. 49 (June 9, 1997) (Cascio, J.)

 

FORUM SELECTION CLAUSE

 

Under Pennsylvania law, a forum selection clause is unjust and unreasonable when obtained fraudulently or where enforcement would violate a strong public policy of the forum or effectively deprive the other party of his day in court.  Global Incorporated v. IFC Credit Corporation, 62 Som. L.J. 75 (2005) (J. Upor).  

 

The party opposing the forum selection clause has the heavy burden of proving that the clause should not be enforced and that this burden requires more than a showing of inconvenience or additional expense.  Global Incorporated v. IFC Credit Corporation, 62 Som. L.J. 75 (2005) (J. Upor).  

 

Forum selection clauses are commonly used in contracts to specify the particular venue where a suit will be brought if a dispute arises under that agreement.  Their inclusion in a contract is not an admission of any right to sue, but rather a limitation on where a suit may be brought.  Chepkevich v. Hidden Valley Resort, 62 Som. L.J. 324 (2005) (Upor, J.).

 

GIST OF THE ACTION DOCTRINE

 

The gist of the action doctrine precludes Plaintiffs from re-casting ordinary breach of contract claims into tort claims. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

The important different between an action for breach of contract and tort is that the latter lie for breach of duties imposed by law as a matter of social policy, while former lie only for breaches of duties imposed by mutual consensus agreements between particular individuals. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

In certain situations, a breach of contract may give rise to an actionable tort where the wrong ascribed to the Defendant is the gist of the action, the contract being collateral. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

The gist of the action doctrine bars tort claims: (1) arising solely from a contract between the parties; (2) where the duties allegedly breached were created and grounded in the contract itself; (3) where the liability stems from a contract; or (4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

Fraud in the inducement of a contract is not necessarily covered by the gist of the action doctrine because fraud to induce a person to enter into a contract is generally collateral to (i.e., not “interwoven” with) the terms of the contract itself. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

Where the subject matter of the alleged false statement is covered by the terms of the contract, the gist of the action doctrine will bar recovery of an alleged fraud in the inducement of the contract. Miele v. Tradewinds Group, Inc. and Paula Shaffer, 64 Som.L.J. 86 (2009) (J. Klementik).

 

INDEMNIFICATION CLAUSE

 

An indemnitee is not entitled to recover under the agreement until he has made actual payment or otherwise suffered actual loss or damage, or unless the indemnitee's liability is clear, with no apparent defense available.  Clark v. Tiedt, et al., 51 Som.L.J. 26

 

INTERPRETATION – GENERALLY

 

The task of interpreting an insurance contract is a matter of law for the court.  Luther P. Miller, Inc., v. Cincinnati Ins. Co., 59 Som.L.J. 413 (2002) (Gibson, J.). 

 

The primary objective of contract interpretation is to ascertain and effectuate the intent of the parties as it is reasonably manifested by the language of their written contract.  Luther P. Miller, Inc., v. Cincinnati Ins. Co., 59 Som.L.J. 413 (2002) (Gibson, J.). 

 

The words of an insurance policy which are unambiguous should be construed according to their plain and ordinary meaning.      Luther P. Miller, Inc., v. Cincinnati Ins. Co., 59 Som.L.J. 413 (2002) (Gibson, J.). 

 

The court must assess the writing as a whole, and not in discrete units, when determining whether a writing is ambiguously drafted.  Luther P. Miller, Inc., v. Cincinnati Ins. Co., 59 Som.L.J. 413 (2002) (Gibson, J.). 

 

A contract terms or provision may properly be deemed ambiguous if reasonable minds could differ as to its meaning.  Luther P. Miller, Inc., v. Cincinnati Ins. Co., 59 Som.L.J. 413 (2002) (Gibson, J.). 

 

While the court will not allow an overly-subtle or technical interpretation to defeat the reasonable expectations of the insured, it will not convolute the plain meaning of a writing merely to find an ambiguity.  Luther P. Miller, Inc., v. Cincinnati Ins. Co., 59 Som.L.J. 413 (2002) (Gibson, J.). 

 

INTERPRETATION – INTENT

 

Notice of forfeiture constitutes "claim" and pending appeal of forfeiture the "suit" referred to in indemnity agreement, thus triggering insurance company's obligation to establish reserve and consequently, its right to demand defendant's payment as collateral security.  Mid-Continent Ins. Co. v. Clarksburg Coal Co., et al, 50 Som.L.J. 5 

 

Under indemnity agreement, any money recovered from defendant-indemnitors pursuant to a notice of bond forfeiture will be held as additional collateral and parties will remain bound by terms of the agreement.  Mid-Continent Ins. Co. v. Clarksburg Coal Co., et al, 50 Som.L.J. 5 

 

Signing of a note in blank does not affect its enforceability, and payee is generally authorized to fill in the blanks in accordance with the agreement.  Piotek v. Fabry, 50 Som.L.J. 21 

 

Although it is clear that a court cannot construe an event mentioned in a contract as a condition precedent unless expressly made such a condition, that event may be so construed if it clearly appears to be the intention of the parties.  Somerset Welding & Steel, Inc. v. Timsco, Inc., 52 Som.L.J. 124 

 

A contract is ambiguous when its relevant terms permit drawing more than one reasonable inference. Fisher Auto Parts, Inc. v. Timsco, Inc., 52 Som.L.J. 326 

 

The parol evidence rule is designed to preclude the introduction of evidence of later or simultaneous agreements or understandings of the contracting parties for the purpose of altering or contradicting the terms of the contract which the parties intended to represent their complete agreement. Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

For the parol evidence rule to apply, the parties must have intended that their written contract represent the full and complete statement of their agreement.  Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

Section 2202 of the Pennsylvania Commercial Code prohibits final written expressions of contracting parties from being altered by evidence of a prior agreement or contemporaneous oral agreement.  The terms of the final written agreement may, however, be supplemented by course of dealing, usage of trade or consistent additional terms.           Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

Defendant's purchase orders, packing slips, color catalogs and price lists did not contain the requisite elements of a final written contract intended by the parties to be a complete expression of their agreement.  Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

Factors to be considered in determining whether the subject writings were intended to be a complete and final expression of the parties' agreement include (1) whether the evidence show an intent that the purchase orders and packing slips were intended to memorialize the governing oral agreement, (2) the absence or presence of individual negotiation before each transaction, and (3) whether the writings bear the signature of each party.  Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

The best evidence rule requires parties seeking to prove the terms of a writing to present the original writing where the terms of the writing were material to a contested issue.  Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

Testimony with respect to the terms of plaintiff's other contracts was presented only in rebuttal, was not essential on the controlling issues of this case, and therefore, the best evidence rule was inapplicable.  Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

Under general rules, a provision in a contract survives a modification as to some other term; a covenant of a lessee is binding upon his assignee; and a promise on the second page of a document is binding upon a promisor who signs on the first page.  But, with respect to a cognovit provision, Pennsylvania will not presume an intent of parties to a modified contract to perpetuate a warrant of attorney.  Nor will a lease's cognovit clause be binding upon the lessee's assignee.  And a warrant of attorney on the second page of a document will not be conclusive against the signer of the first page.  Beckwith Machinery v. Five-R Excavating, Inc., 53 Som.L.J. 309 

 

JOINT & SEVERAL LIABILITY

 

It is well established that, except as otherwise provided in an instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, indorsers, who indorse as joint payees, or anomalous indorsers, are jointly and severally liable in the capacity in which they sign.  First Philson Bank, N.A. v. Long (November 14, 1997) (Cascio, J.) 

 

A party having joint and several liability who pays the instrument is entitled to receive from any party having the same joint and several liability contribution in accordance with applicable law.  13 Pa. C.S.A. § 3116(b).  First Philson Bank, N.A. v. Long (November 14, 1997) (Cascio, J.)

 

MODIFICATION

 

Despite the general principle of contract law that an attempted oral modification converts the entire contract into an oral one, thereby rendering it unenforceable, it is recognized that oral modifications which relate to the time of performance and which do not change the character of the written agreement are excepted from the general rules and are enforceable.  Burnworth v. Slagle, 53 Som.L.J. 329 (Jan. 14, 1993) (Fike, P.J.) 

 

A modification as to the time of settlement for a contract for the sale of real estate does not result in a new or substituted agreement and does not reduce the written contract to one in parol.  Burnworth v. Slagle, 53 Som.L.J. 329 (Jan. 14, 1993) (Fike, P.J.)

 

NEGOTIABLE INSTRUMENTS

 

Signing of a note in blank does not affect its enforceability, and payee is generally authorized to fill in the blanks in accordance with the agreement.          Piotek v. Fabry, 50 Som.L.J. 21 

 

In general, a demand for payment of a demand note is not a condition precedent to a right of action, the commencement of an action being sufficient demand.  First Philson Bank, N.A. v. Long (November 14, 1997) (Cascio, J.) 

 

It is well established that, except as otherwise provided in an instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, indorsers, who indorse as joint payees, or anomalous indorsers, are jointly and severally liable in the capacity in which they sign.  First Philson Bank, N.A. v. Long (November 14, 1997) (Cascio, J.) 

 

A party having joint and several liability who pays the instrument is entitled to receive from any party having the same joint and several liability contribution in accordance with applicable law.  13 Pa. C.S.A. § 3116(b).  First Philson Bank, N.A. v. Long (November 14, 1997) (Cascio, J.)

           

NOVATION

 

When a Defendant's insurance carrier enters into an agreement, whereby it accepts liability for the payment of settlement money, it becomes necessary for a court to determine whether the agreement constitutes a true novation or merely an executory accord.  Woodmancy v. Turkeyfoot Fish & Game Association v. Clevenger, 59 Som.L.J. 58 (2001) (P.J. Fike).

 

PAROL EVIDENCE

 

Where it appears from the face of a contract that a certain or specific tract was intended to be conveyed but its description is ambiguous, parol evidence will be admissible to allow a more precise description.  Lamens v. Forman and Ferguson 59 Som L.J. 1 (2001) (P.J. Fike). 

 

Parol evidence of the contents of a survey draft may be admissible to apply a written description to the land which the parties had agreed was to be conveyed.  Lamens v. Forman and Ferguson 59 Som L.J. 1 (2001) (P.J. Fike). 

 

Under the Statute of Frauds, parol evidence to identify the land intended to be sold is not permissible, although parol evidence may be used to provide evidence of the parties' circumstances, intent, and understanding, and to allow determination of the certain description or actual metes and bounds identification necessary for conveyance.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

When land was identified in sales agreement as "157 acres in Jenner Twp.", although sufficient to meet a statute of frauds challenge at the summary judgment stage, it will be the proponent's burden to present sufficient parol evidence of the parties' circumstances, intent, and understanding, to allow determination of certain description or actual metes and bounds identification necessary for conveyance.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

PARTIES TO THE CONTRACT

 

Absent fraud, misrepresentation or duress, spouses should be bound by the terms of their postnuptial agreements.  Sieling v. Sieling [No. 2], 50 Som.L.J. 86 

 

The terms of a postnuptial agreement must be regarded as binding, without regard to whether they were fully understood by the parties at the time of the agreement.  Sieling v. Sieling [No. 2], 50 Som.L.J. 86 

 

Defendant's failure to comply with the Fictitious Names Act, 54 Pa.C.S.A. ? 303(b) bars him from maintaining any action in any tribunal in the Commonwealth until he registers his fictitious name.  Albaugh v. Noon (No. 1), 52 Som.L.J. 154 

 

Until defendant pays his penalty under the Fictitious Names Act, 54 Pa.C.S.A. ? 331(b), he is precluded from pursuing his counterclaim.  Albaugh v. Noon (No. 1), 52 Som.L.J. 154    

 

PERFORMANCE OF CONTRACTS

 

Absent a specific provision for time of payment, the balance is due upon completion of the work.  Albaugh v. Noon (No. 1), 52 Som.L.J. 154

 

Payment under a contract is due at the plaintiff's place of business.  Lucas Enterprises, Inc. v. Paul C. Harman Company, Inc., 273 Pa. Super. 442, 417 A.2d 720 (1980).  Kitchens & Baths of Somerset, Inc. v. Robert Gardill and Julie Gardill 62 Som. L.J. 223 (2005) (Pike, P.J.)

 

POSTNUPTIAL AGREEMENTS

 

In Pennsylvania, contract principles apply to postnuptial agreements. A postnuptial agreement is enforceable if it is “supported by adequate consideration and if full disclosure of the assets of the parties are disclosed prior to execution, and if there be no fraud, coercion or unlawful purpose in the execution. In Re Estate of James C. Dinning, 64 Som.L.J. 208 (2009) (Klementik, J.)

 

The parties did not intent to execute an exhibit to the Agreement, which was merely a copy of the Will; the exhibit was included for the purpose of providing Respondent with notice as to the Will’s contents so she could determine whether to enter into the Agreement. In Re Estate of James C. Dinning, 64 Som.L.J. 208 (2009) (Klementik, J.)

 

A postnuptial agreement is “fully supported by consideration” if it is “signed under seal with the intention of being legally binding on the parties [and] contain[s] the mutual promises of the parties to waive claims in the other’s estate.” In Re Estate of James C. Dinning, 64 Som.L.J. 208 (2009) (Klementik, J.)

 

The postnuptial agreement in this case is fully supported by consideration like in Estate of Hartman. In Re Estate of James C. Dinning, 64 Som.L.J. 208 (2009) (Klementik, J.)

 

Although the parties to postnuptial agreements “do not quite deal at arm’s length” they do “stand in a relation of mutual confidence and trust that calls for disclosure of their financial resources.” In Re Estate of James C. Dinning, 64 Som.L.J. 208 (2009) (Klementik, J.)

 

It is well settled that this disclosure need not be exact, so long as it is “full and fair.” In Re Estate of James C. Dinning, 64 Som.L.J. 208 (2009) (Klementik, J.)

 

Whether adequate disclosure has been made is dependent upon the facts and circumstances of each individual case. A fact to be considered is whether “an agreement provides that full disclosure has been made[.]” If so, “a presumption of full disclosure arises” that may only be overcome by clear and convincing evidence to the contrary. In Re Estate of James C. Dinning, 64 Som.L.J. 208 (2009) (Klementik, J.)

 

In light of the fact that Respondent did not proffer any evidence that Decedent’s assets were misstated, the Court is satisfied that the facts and circumstances of this case display that she received full and fair disclosure. In Re Estate of James C. Dinning, 64 Som.L.J. 208 (2009) (Klementik, J.)

 

PREJUDGMENT INTEREST

 

In contract cases, prejudgment interest is awardable as of right.  Fisher Auto Parts, Inc. v. Timsco, Inc., 52 Som.L.J. 326 

 

If a breach of contract consists of a failure to pay a definite sum of money or to render a performance with fixed or ascertainable monetary value, interest is recoverable from the time due less all deductions to which the party in breach is entitled.  Fisher Auto Parts, Inc. v. Timsco, Inc., 52 Som.L.J. 326 

 

Interest is a standardized form of compensation to the injured party for the loss of that use, in the absence of agreement to the contrary; it is payable without compounding at the rate, commonly called the legal rate, fixed by statute for this purpose.  Fisher Auto Parts, Inc. v. Timsco, Inc., 52 Som.L.J. 326 

 

In contracts concerning payment of money, which bear an interest rate higher or lower than the legal rate, if the parties do not contract that it shall be the rate after the debt becomes due, then the interest rate fixed by law attaches for the detention of the principal sum.  Fisher Auto Parts, Inc. v. Timsco, Inc., 52 Som.L.J. 326 

 

Reference in any law or document enacted or executed heretofore or hereafter to legal rate of interest and reference in any document to an obligation to pay a sum of money with interest without specification of the applicable rate shall be construed to refer to the rate of interest of six per cent per annum.  41 P.S. 202.  Fisher Auto Parts, Inc. v. Timsco, Inc., 52 Som.L.J. 326 

 

A contract for the payment of interest cannot be created unilaterally by the seller's sending invoices to the debtor fixing an interest or service charge in excess of the legal rate, where the sale contract fixes no rate.  Fisher Auto Parts, Inc. v. Timsco, Inc., 52 Som.L.J. 326 

 

Plaintiff is not entitled to an award of prejudgment interest as a matter of right because the amount claimed was unliquidated, the breach did not consist of a failure to pay a definite sum of money, and the breach did not consist of a failure to render performance of a fixed, ascertainable value.  Moreover, the plaintiff's claim was not based upon a standard established by the contesting parties or upon a set market value or objective standard.  Wheeler Brother, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

Plaintiff's claim for prejudgment interest falls within the parameters of incidental damages.  Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

Plaintiff's claim for prejudgment interest based on an alternative tort theory was also disallowed.  Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

A discretionary award of prejudgment interest was not warranted under a Commercial Code analysis or general concepts of justice.  Wheeler Brothers, Inc. v. IPM Group, LTD., 53 Som.L.J. 240 

 

REAL ESTATE CONTRACTS

 

The Statute of Frauds requires that agreements for the sale of land be in writing.  The writing should include an adequate description of the property, a recital of consideration and signature of the party being charged.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

A contract for the sale of land must contain a description of the land to be conveyed and the parcel of property must be so described that it can be identified with reasonable certainty.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

The consideration or the price to be paid for the real estate must also be included in the writing to satisfy the statute.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

The essential terms that must be identified and agreed to in order to form a valid contract for the sale of real estate are the naming of the specific parties, property and consideration or purchase price.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

Description of property by name or lot number is adequate even though additional evidence may be needed for conveyancing purposes to ascertain metes and bounds.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.).

 

CONTRACTS – REAL ESTATE – RESULTING TRUST, EXPRESS TRUST & CONSTRUCTIVE TRUSTS

 

A resulting trust arises where a person makes or causes to be made a disposition of property under circumstances which raise an inference that he does not intend that the person taking or holding the property should have the beneficial interest therein, unless the inference is rebutted or the beneficial interest is otherwise effectively disposed of.  Barta v. Zarefoss, 63 Som. L.J. 286 (2006)(Klementik, J.).

 

Evidence to support a parol trust must be direct, positive, express, unambiguous and convincing.  Unless the evidence equates this standard a parol trust cannot be established.  The reason for the rule is evident: unless the evidence of the existence of an oral trust is of the highest probative value, equity should not act to convert an absolute ownership into an estate of lesser quantity. Barta v. Zarefoss, 63 Som. L.J. 286 (2006)(Klementik, J.).

 

A constructive trust may arise where the title holder is subject to an equitable duty to convey the property to another, on the grounds that he would be unjustly enriched if he were permitted to retain it.  Barta v. Zarefoss, 63 Som. L.J. 286 (2006)(Klementik, J.).

 

There is no rigid standard for determining whether the facts of a particular case require a court of equity to impose a constructive trust; the test is whether or not unjust enrichment can thereby be avoided. Barta v. Zarefoss, 63 Som. L.J. 286 (2006)(Klementik, J.).

 

A fundamental rule of real estate law is that agreements for the sale of real estate will not be enforced unless they are in writing and signed by the seller. Barta v. Zarefoss, 63 Som. L.J. 286 (2006)(Klementik, J.).

 

The general rule dealing with the formation of land sales contracts is that before preliminary negotiations can ripen into contractual obligations, there must be a manifested mutual assent to the terms of the bargain. Barta v. Zarefoss, 63 Som. L.J. 286 (2006)(Klementik, J.).

 

The elements of unjust enrichment are: benefits conferred on defendant by plaintiff, appreciation of such benefits by defendant, and acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. Barta v. Zarefoss, 63 Som. L.J. 286 (2006)(Klementik, J.).

 

 

REAL ESTATE LEASES

 

Leases are in the nature of contracts and are thus controlled by principles of contract law.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

A general rule of construction is that an ambiguous lease must be construed most strongly against the landlord and in favor of the tenant.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

In construing a contract, each and every part of it must be taken into consideration and given effect, if possible, and the intention of the parties must be ascertained from the entire instrument.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

Oral modification of the terms of a lease may be supported by course of conduct.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.).

           

REFORMATION

 

Courts of equity have the power to reform a written instrument where there is an error in or an omission from the writing as a result of fraud, accident or mistake.  Breining v. Breining, 54 Som.L.J. 54 (Aug. 21, 1995) (Shaulis, S.J.) 

 

In order to state a cause of action for reformation of an instrument, the mistake, accident, fraud or inequitable conduct relied on as the ground for reformation must be alleged, or the complaint must show circumstances from which the ground relied upon is necessarily implied.  Breining v. Breining, 54 Som.L.J. 54 (Aug. 21, 1995) (Shaulis, S.J.) 

 

A court of equity has no power to reform an agreement; it can only correct the written evidence of the agreement to make it correspond to the understanding of the parties.  Breining v. Breining, 54 Som.L.J. 54 (Aug. 21, 1995) (Shaulis, S.J.) 

 

SALE OF GOODS - GENERALLY

 

“A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.”  Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

“[Unless] otherwise unambiguously indicated by the language or circumstances:” (1) “an officer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances; and “ (2) “an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods.” Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

A blanket purchase order requesting specific quantities of four of Defendant’s sheet metals at the specified price of $0.75 per pound constitutes the offer because it is “an order or other offer to buy goods for prompt or current shipment.” Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

“[A] contract for sale of goods [was] made” when Defendant shipped its first delivery to Plaintiff.  Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

 

SALE OF GOODS – INSTALLMENT CONTRACTS

 

The contract is an “installment contract” because it “is one which requires. . . . the delivery of goods in separate lots to be separately accepted.” Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

 

SALE OF GOODS – “GAP FILLERS”

 

Because the contract itself does not provide a term by which Defendant is to calculate the weight of the sheet metals it shipped, Section 1303 establishes the weight term by which the parties are bound.  Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

“[T]he express terms of an agreement and any applicable course of performance, course of dealing or usage of trade must be construed whenever reasonable as consistent with each other.  If such a construction is unreasonable: (1) express terms prevail over course of performance, course of dealing and usage of trade; (2) course of performance prevails over course of dealing and usage of trade; and (3) course of dealing prevails over usage of trade.” Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

Section 1303(a), “Course of performance[,]” provides “[a] ‘course of performance’ is a sequence of conduct between the parties to a particular transaction that exists if:” (1) “the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and” (2) “the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.” Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

Plaintiff’s claim on the first contract fails because it, well aware that Defendant was calculating the weight, had 15 opportunities to inquire or object, but, instead, “accept[ed] the performance[s]” without doing so. Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

SALE OF GOODS – “BATTLE OF THE FORMS”

 

“[T]he language of [S]ection 2207(b) . . . does not address ‘different’ terms.”  “Different” terms “between [S]ection 2207 offer and acceptance are properly subject to the ‘knockout’ rule.” Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

Under the knockout rule, “[T]he offeree’s form is treated only as an acceptance of the terms in the offeror’s form which did not conflict.  The ultimate contract, then, includes those non-conflicting terms and any other terms supplied by the U.C.C., [see 13 Pa.C.S.A. § 2207(c),] including terms incorporated by course of performance, cou8rse of dealing, usage of trade, and other “gap fillers” or “off-the rack” terms . . . .” Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

Applying the knockout rule to this dispute, both the “stipulated weight” of Defendant’s offer and the “theoretical weight” of Plaintiff’s acceptance are out, and thus, the Court considers the “gap fillers” of Section 1303 to determine which term controls. Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

Because the “express terms” were knocked out, the course of performance is controlling.  Rockwood Manufacturing Company v. Ken-Mac Metals, Inc., 64 Som.L.J. 429 (2010) (Klementik, J.).

 

 

SETTLEMENT AGREEMENTS

 

The enforceability of a settlement agreement is to be determined according to principles of contract law.  Woodmancy v. Turkeyfoot Fish & Game Association v. Clevenger, 59 Som.L.J. 58 (2001) (P.J. Fike). 

 

When considering a petition to enforce a settlement agreement, it is the court's responsibility to develop a record even if not requested by the parties.  However, when the parties agree that an evidentiary hearing is not required, and the court concludes that the existing record provides a sufficient basis for decision, a court will not compel further presentation of evidence.  Woodmancy v. Turkeyfoot Fish & Game Association v. Clevenger, 59 Som.L.J. 58 (2001) (P.J. Fike).

 

When parties reach an agreement with respect to settlement and enter into a contract by which the plaintiff agrees to accept a certain amount of money for his claims, to be paid by the defendant's insurance carrier, in return for which the plaintiff provides a release, the parties could not have intended that the defendant itself and not its insurance carrier was to pay the agreed upon settlement.   Woodmancy v. Turkeyfoot Fish & Game Association v. Clevenger, 59 Som.L.J. 58 (2001) (P.J. Fike). 

 

When a Defendant's insurance carrier enters into an agreement, whereby it accepts liability for the payment of settlement money, it becomes necessary for a court to determine whether the agreement constitutes a true novation or merely an executory accord.  Woodmancy v. Turkeyfoot Fish & Game Association v. Clevenger, 59 Som.L.J. 58 (2001) (P.J. Fike).

 

STATUTE OF FRAUDS

 

The defense of the Statute of Frauds is to be pleaded as an affirmative defense as new matter in the answer, rather than by preliminary objection.  Lamens v. Forman and Ferguson 59 Som L.J. 1 (2001) (P.J. Fike). 

 

If the plaintiff files preliminary objections to the defendant's preliminary objections, the trial court cannot address a Statute of Frauds issue at the preliminary objection stage even if deemed appropriate to expedite final resolution of the case.  Lamens v. Forman and Ferguson 59 Som L.J. 1 (2001) (P.J. Fike). 

 

The Statute of Frauds requires that agreements for the sale of land be in writing.  The writing should include an adequate description of the property, a recital of consideration and signature of the party being charged.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

A contract for the sale of land must contain a description of the land to be conveyed and the parcel of property must be so described that it can be identified with reasonable certainty.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

The consideration or the price to be paid for the real estate must also be included in the writing to satisfy the statute.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

In order for the Statute of Frauds to be satisfied the writing must be signed by the party to be charged.  A note or memorandum, which is not signed, is not enforceable.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

Under the Statute of Frauds, parol evidence to identify the land intended to be sold is not permissible, although parol evidence may be used to provide evidence of the parties' circumstances, intent, and understanding, and to allow determination of the certain description or actual metes and bounds identification necessary for conveyance.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

When land was identified in sales agreement as "157 acres in Jenner Twp.", although sufficient to meet a statute of frauds challenge at the summary judgment stage, it will be the proponent's burden to present sufficient parol evidence of the parties' circumstances, intent, and understanding, to allow determination of certain description or actual metes and bounds identification necessary for conveyance.  Ankney v. Farkas and Wenturine Brothers Lumber Co., Inc., 59 Som.L.J. 22 (2000) (P.J. Fike). 

 

The Statute of Frauds relating to sales of interests in real estate presents a waivable defense which must be pleaded in accordance with the provisions of the Pennsylvania Rules of Civil Procedure.   Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

The reason for the rule requiring notice of the intention to stand on the defense of the Statute of Frauds is that the plaintiff is entitled to be informed, before proceeding to the expense and burden of the prosecution of a fruitless trial, whether the defendant intends, upon plaintiff's proof of an oral contract, to claim the protection of the Statute of Frauds.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

Waiver of the statute of frauds occurs where the party against whom enforcement of an oral contract is sought fails to raise the statute in pleadings, affirms the oral contract, or admits its existence in pleadings or testimony, even though such action is inadvertent.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

A party will be deemed to have renounced his rights under the statute of frauds if he does not in some way make known to the court his intention to invoke it either by pleading specially or interposing a timely objection to testimony in support of the oral agreement, or by claiming its protection in some other manner that gives the opposition an opportunity to meet the objection.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

The test for enforceability of an agreement is whether both parties have manifested an intention to be bound by its terms and whether the terms are sufficiently definite to be specifically enforced.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

To be sufficient to satisfy the statute of frauds, a memorandum must only contain a sufficient statement of the terms agreed upon and the signature of the party against whom enforcement is sought.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

Pennsylvania case law, as well as statutory law, provides that the statute of frauds requires that the authority of an agent to sell or lease real estate for more than three years, must be in writing in order to bind the principal.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.). 

 

Ratification of the unauthorized acts of an alleged agent must also be in writing based upon the requirements of the statute of frauds.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.).  

 

The purpose to be attained by the statute of frauds is to prevent owners of land from having their interests taken from them or defeated by false testimony in support of oral agreements, and is a declaration of public policy.  Reckner v. Baker, 59 Som.L.J. 327 (2002) (Gibson, J.).

 

STATUTE OF LIMITATIONS

 

The applicable limitations period for a contract not based upon a writing is four years.  Kauffman v. Kauffman; Stein & Golden v. Kaufman v. Kaufman. 58 Som.L.J. 385 (2001) (J. Cascio). 

 

When the amendment seeks to raise the bar of the statute of limitations, no substantial rights of the plaintiff are affected by the late filing inasmuch as timely notice could not have altered the plaintiff's position since the statute of limitations ran prior to commencement of the action.  Kauffman v. Kauffman; Stein & Golden v. Kaufman v. Kaufman. 58 Som.L.J. 385 (2001) (J. Cascio). 

 

STRUCTURED SETTLEMENTS

 

The Structured Settlement Protection Act—codified at 40 P.S. § 4001, et seq.—was enacted in February 2000 as a means of protecting recipients of structured settlement payments from the increasing number of factoring companies offering to purchase these payments at dramatically discounted rates. In Re: Petition of Burnsworth, 63 Som. L.J. 313 (2007)(Klementik, J).

 

40 P.S. § 4003(a)(3) requires the petitioner to establish that the proposed transfer is in his or her “best interest.”  In Re: Petition of Burnsworth, 63 Som. L.J. 313 (2007)(Klementik, J).

 

 

Our appellate courts have yet to define the term “best interest” within the structured settlement context.  We surmise, however, that factors such as the reasonableness of the discount rates employed, the fairness of the fees and expenses charged to the petitioner, the urgency of the petitioner’s need for immediate cash, and the petitioner’s intended use of that money are all relevant considerations under the “best interest” standard. In Re: Petition of Burnsworth, 63 Som. L.J. 313 (2007)(Klementik, J).

 

 

The structured settlement statute places the Court in the position of a guardian of a person who stands in the presumptive position of a defenseless recipient of a benefit; it is for the Court to determine, as a guardian would, on an independent basis, whether the transaction serves the best interests of an unsophisticated (if not incompetent) person. In Re: Petition of Burnsworth, 63 Som. L.J. 313 (2007)(Klementik, J).

 

SECURITY INTEREST – ASSIGNMENTS

 

If a secured party assigns a perfected security interest, no filing is required in order to continue the perfected status of the security interest against creditors of and transferees from the original debtor. 13 Pa.C.S.A. §9302. Somerset Welding & Steel, Inc. v. Timsco, 52 Som 245 

 

After the disclosure of filing of an assignment under this section, the assignee is the secured party of record.  13 Pa.C.S.A. §9405 (c).  Somerset Welding & Steel, Inc. v. Timsco, 52 Som 245 

 

No filing of such an assignment is required as a condition of continuing the perfected status of the security interest against creditors and transferees of the original debtor.  Somerset Welding & Steel, Inc. v. Timsco, 52 Som 245

 

THIRD PARTY BENEFICIARIES

 

Section 302 of the Restatement (Second) of Contracts states in part: Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either: 1. The performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or 2. The circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.  Tunstall et al. v. Boose et al., 59 Som.L.J. 157 (2000) (Gibson, J.). 

 

There is a two-part test for determining whether one is an intended third party beneficiary: (1) The recognition of the beneficiary's rights must be appropriate to  effectuate the intention of the parties, and The performance must satisfy an obligation of the promisee to pay money to help the beneficiary or the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.  Tunstall et al. v. Boose et al., 59 Som.L.J. 157 (2000) (Gibson, J.). 

 

The use of the third party beneficiary approach as an exception to the requirement for privity is warranted only when the circumstances are analogous to Guy v. Lierderbach or are equally compelling.  Tunstall et al. v. Boose et al., 59 Som.L.J. 157 (2000) (Gibson, J.).

 

UCC § 2-313: EXPRESS WARRANTIES BY AFFIRMATION

 

The Uniform Commercial Code §2313 provides for express warranties by affirmation, promise, description or sample.  Otto and Otto v. Fristick, d/b/a Steem Kleen Flooring, 60 Som. L.J. 290. (2002) (Gibson, J.).

 

UCC § 2-314: IMPLIED WARRANTY OF MERCHANTABILITY, USAGE OF TRADE

 

Section 2314 of the Uniform Commercial Code provides for implied warranties.  Otto and Otto v. Fristick, d/b/a Steem Kleen Flooring, 60 Som. L.J. 290. (2002) (Gibson, J.). 

 

UNJUST ENRICHMENT

 

Unjust enrichment is essentially an equitable doctrine.  The elements are: benefits conferred on defendant by plaintiff, appreciation of such benefits by defendant, and acceptance and retention under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value.  North American Mortgage Company v. Sabo, 59 Som.L.J. 44 (2001) (J. Cascio). 

 

The focus of unjust enrichment is not on what the parties intended but, rather, on whether the recipient of the benefit has been enriched unjustly.  North American Mortgage Company v. Sabo, 59 Som.L.J. 44 (2001) (J. Cascio). 

 

It must be shown that a person wrongly secured or passively received a benefit that it would be unconscionable to retain without making payment.  North American Mortgage Company v. Sabo, 59 Som.L.J. 44 (2001) (J. Cascio). 

 

Unjust enrichment is not applicable when the relationship between the parties is based on an express agreement.  Somerset Movers v. Button, Glenda, 61 Som.L.J. 276 (2004)(Fike, II, P.J.).