Delaware Contracts

Hadley v. Baxendale established the foundational rule for consequential damages in contract law, limiting recovery to losses that were reasonably foreseeable at the time of contracting. The case created a two-part test that distinguishes between general damages arising naturally from the breach and special damages arising from circumstances communicated to the breaching party. This rule remains the cornerstone of contract damages analysis in both English and American law.

Lucy v. Zehmer established the objective theory of contracts as the controlling standard for determining whether a valid contract exists, holding that a party's outward manifestations of intent govern rather than their subjective, undisclosed mental state. The case demonstrates that even a contract written on a bar napkin while drinking can be enforceable if a reasonable person would believe the offer was serious. It remains one of the most widely taught cases on mutual assent and contract formation.

Hamer v. Sidway established that forbearance from a legal right constitutes valid consideration for a contract, even if the forbearance benefits the promisor or the promisee is not actually harmed by the restraint. The case broadened the understanding of consideration by moving away from the requirement that consideration must involve a detriment in the common sense of harm or loss. It remains a foundational case on the doctrine of consideration in American contract law.

Carlill v. Carbolic Smoke Ball Co. is a landmark case on unilateral contracts, establishing that an advertisement can constitute a binding offer to the world at large when its terms are sufficiently definite and the offeror manifests a clear intent to be bound. The case also clarified that performance of the requested act constitutes both acceptance and consideration in a unilateral contract, and that communication of acceptance is not required. It remains one of the most celebrated cases in the common law of contracts.

Known as the 'Hairy Hand Case,' Hawkins v. McGee is the foundational case on expectation damages in contract law, establishing that the proper measure of contract damages is the difference between the value of what was promised and the value of what was actually delivered. The case drew a clear distinction between contract damages (putting the plaintiff in the position performance would have achieved) and tort damages (restoring the plaintiff to their pre-injury position). It is one of the most iconic first-year Contracts cases.

Sullivan v. O'Connor is a leading case on the availability of reliance damages as an alternative to expectation damages in breach of contract actions, particularly in the context of physician-patient contracts. The court held that reliance damages may be the more appropriate measure where expectation damages are too speculative or difficult to calculate. The case is frequently paired with Hawkins v. McGee to illustrate the different measures of contract damages.

Jacob & Youngs v. Kent is the seminal case on the doctrine of substantial performance, holding that a party who has substantially performed a contract in good faith is entitled to recover on the contract despite minor, unintentional deviations from its terms. The case also established that the proper measure of damages for a non-material breach is the diminution in value, not the cost of replacement, when the cost of correction would involve economic waste. Justice Cardozo's opinion is one of the most celebrated in American contract law.

Peevyhouse v. Garland Coal is a controversial and widely debated case on the measure of contract damages, holding that diminution in value rather than cost of performance is the proper measure when the cost of remedying the defect is grossly disproportionate to the resulting increase in property value. The case raises fundamental questions about whether contract law should protect the promisee's subjective expectations or limit recovery to objective economic loss. It is frequently paired with Jacob & Youngs v. Kent in casebook discussions of damages.

Williams v. Walker-Thomas Furniture is the leading case on unconscionability in contract law, establishing a two-part test distinguishing between procedural unconscionability (unfairness in the bargaining process) and substantive unconscionability (unfairness in the contract terms). The case brought the unconscionability doctrine from UCC Section 2-302 into prominence and applied it to protect consumers from oppressive contract terms. It is one of the most important cases on the limits of freedom of contract.

Wood v. Lucy, Lady Duff-Gordon is a landmark case on implied obligations and the duty of good faith in contract law. Justice Cardozo's opinion held that an exclusive dealing agreement imposes an implied obligation of reasonable efforts on the party granted exclusive rights, saving the contract from being struck down as illusory. The case established the foundation for the implied duty of best efforts or reasonable efforts that was later codified in the Uniform Commercial Code.