1(1) Meeting of the Minds
1(2) Consideration
1(3) Offer and Acceptance
1(4) Requirement of a Writing: The Statute of Frauds
1(5) Oral Agreements
1(6) Bailment Contracts
1(7) Quasi Contract
1(8) Conditions Precedent and Subsequent
§ 2 Responsibilities and Authority of Parties Forming a Contract
§ 3 Unenforceability
3(1) Public Policy
3(2) Unfairness, Fraud and Unconscionability
3(3) Mistake and Impossibility
§ 4 Ratification and Repudiation
5(1) General Provisions
5(2) The Uniform Commercial Code
§ 7 Remedies
7(2) Specific Performance and Injunctions
7(3) General Measure of Damages
7(4) Quantum Meruit
7(5) Liquidated Damages
When one party signed a blank form believing that it would be filled out by the other party in the amount of $6,000, and the other party instead filled the contract out in the amount of $15,164, there was no agreement between the parties on a contract obligating the signing party to pay $15,164; the other party was entitled at most to a quantum meruit recovery. Development Bank v. Ilalio, 5 A.S.R.2d 110.
An employer's policy manual can give rise to contractual rights and obligations if the contents of the manual and the circumstances of its distribution suggest that it was designed to give the impression that such rights and obligations existed and thereby to elicit particular conduct on the part of employees. Palelei v. Star Kist Samoa, Inc., 5 A.S.R.2d 162.
Employee handbook that strongly advised employees not to join a labor union, described a system of "progressive discipline" prior to termination, and required the employee to sign a statement that he has read the manual and understands its provisions, gave rise to contractual rights and obligations with regard to discipline and termination of employment. Palelei v. Star Kist Samoa, Inc., 5 A.S.R.2d 162.
Where the parties to a putative contract of sale have made no definite commitments to each other, no contract is formed and thus relief on the contract is unavailable to either party. Chan Kau v. Samasoni, 7 A.S.R.2d 21.
No reasonable person could
conclude that creditor had agreed to a settlement proposed by debtor, and
therefore no question of material fact was raised with respect to such
settlement, where the evidence, taken in the light most favorable to the
debtor, was that (1) debtor had told creditor's representative he had no
intention of paying the debt but that he was willing to surrender a car that
had been taken as collateral security; (2) creditor never verbally agreed to
this proposal; (3) creditor had the legal right to take the car and then
collect the remainder of the debt; (4) debtor had the subjective impression
that creditor's representative was happy to receive the car, since otherwise
the creditor would receive nothing at all; (4) creditor never took the
car. Bank of
In an action for breach of an
oral contract for the settlement of an outstanding electric bill, court would
not find that the agreement included concessions by the electric company with
regard to land disputes unrelated to the bill in question, where: (1)
plaintiff's documentary evidence of the existence of such terms was
self-serving and prepared after the negotiations; (2) defendant's
representatives testified that there was no agreement on these terms; (3) notes
made during the negotiations by defendant's counsel reflected no agreement to
such terms; (4) plaintiff himself had sought the settlement as an alternative
to a trial scheduled the same day, over the objections of defendant's counsel
who had objected to a continuance for the purpose of settlement negotiations;
(5) a stipulation signed by both parties at the conclusion of the negotiations
had contained no reference to agreement on any collateral terms; (6) agreement
to such terms would have been beyond the scope of defendant's representatives'
authority; and (7) it made no business sense for defendant to agree to such
terms. Pene v.
Where invoices received and paid by buyers suggested that the contractor's actual bill would be well over the original contract price, but buyers already had a massive investment in the project and were in no position to call it off, neither their payment of invoices which did not bring their total payment above the contract price nor their silence in the face of subsequent invoices which did far exceed the contract price could fairly be regarded as consent to a dramatic and one sided modification of the contract. Hardco Inc. v. Lutali, 14 A.S.R.2d 1.
Where parties agreed that contractor would undertake work not included in the original contract, but did not discuss any modification in the contract price, it was unreasonable for the buyer to assume that there would be no extra charge, and just as unreasonable for the contractor to assume that the buyers would pay whatever he asked. Hardco Inc. v. Lutali, 14 A.S.R.2d 1.
Where parties did not even attempt to reach an agreement on the price of modifications to a building under construction, but instead each party chose to proceed in deliberate disregard of the materially different interpretation which he surely knew the other party would eventually place on the arrangement, there was no contract and no contractual basis for resolving a subsequent dispute over the price to be paid for the modifications; rather, the court must apply the doctrine of quantum meruit to award the contractor the value of the benefit conferred on the buyer. Restatement of Contracts (Second) § 20(1). Hardco Inc. v. Lutali, 14 A.S.R.2d 1.
A court will not presume that an injured worker settling a workmen's compensation claim clearly intended to release all his future claims against a third party who did not participate in negotiating the contract and apparently paid no consideration for such release. Etimani v. Samoa Packing Co., 19 A.S.R.2d 1.
Gratuity cannot be turned into consideration by subsequent promise to pay therefor so long as to make valid contract, and promise to give land after receipt of gratuity is not enforceable. Atofau v. Tuufuli, 2 A.S.R. 414.
The legal importance of an unfair bargaining process diminishes when the considerations given and received by the weaker party approach what they would have been had the process been above board. Development Bank v. Ilalio, 5 A.S.R.2d 1.
Forbearance from pressing a claim that is later found to be invalid may be consideration for a new promise provided that, at the time the new promise is made, the forbearing party believes in good faith that his claim is just. Development Bank v. Ilalio, 5 A.S.R.2d 110.
Plaintiff's forbearance to sue may be sufficient consideration for defendant's waiver of the statute of limitations even though it would be insufficient to supply missing essential elements of a contract that were previously absent. Development Bank v. Ilalio, 5 A.S.R.2d 110.
Consideration sufficient to support a guaranty need not flow directly to the guarantor, and may take the form of delivery of goods to a third party on the faith of the guarantor's assurance of payment. Ryan, Inc., v. Vaka, 5 A.S.R.2d 149.
In the absence of changed circumstances or other special equitable considerations, there was no consideration for a modification in the contract price where contractor proposed to do nothing for the higher price that he was not already obliged to do for the original contract price. Restatement of Contracts (Second) § 73. Hardco Inc. v. Lutali, 14 A.S.R.2d 1.
A court will not presume that an injured worker settling a workmen's compensation claim clearly intended to release all his future claims against a third party who did not participate in negotiating the contract and apparently paid no consideration for such release. Etimani v. Samoa Packing Co., 19 A.S.R.2d 1.
Parties may be bound by terms of contract even though they do not sign it where their assent is otherwise indicated by possession and compliance with terms of contract. Faiivae v. Tiumalu, 3 A.S.R. 402.
Where actions of parties indicate that they treated contract as valid, trial court is not in error in finding contract valid. Scanlan v. Steffany, 3 A.S.R. 583.
A proffered "settlement" of an already litigated claim, purporting to "adjust" boundaries established by the court, has no effect when it (1) was never judicially approved; (2) resulted from negotiations between a licensed legal practitioner and an adverse party represented by counsel in the absence of the latter party's counsel; (3) clearly results in disadvantage to the latter party; (4) was renounced by the latter party soon thereafter; and (5) bears a close resemblance to an earlier "settlement" asserted in court by the legal practitioner, the existence of which the adverse party denied immediately after having consulted his attorney. Te'o v. Sotoa, 5 A.S.R.2d 90.
Where buyer routinely accepted
deliveries of merchandise after notice of higher price than seller had
previously offered in connection with another transaction, made payments on
account, and did not question the price until after seller had filed suit,
buyer had accepted the higher price. R.P. Porter International, Inc., v.
Unconditional gifts are
irrevocable after delivery, so that one who has made an unconditional donation
of funds to a church may not demand repayment. Ofa v.
Where lease provided that tenant
would have a right to renew at the expiration of the original five-year term,
and where, after expiration and after various breaches of lease by both
landlord and tenant, the parties negotiated for subdivision of the leased
premises and landlord sent letter stating that tenant would retain a stated
square footage as its leasehold interest, with a designated space at the bottom
of the letter for acceptance by the tenant, such acceptance would give rise to
a new five-year lease on the modified terms. Development Bank of
Minuscule, lilliputian, or
exceedingly fine print does not satisfy requirement that passengers be given
conspicuous notice of incorporation by reference of baggage liability
limitations.
To be sufficiently conspicuous, a
notice of baggage liability limitations must be positioned and identified so as
to penetrate the traveling public's reasonably focused consciousness.
Defendant airline's notice of
incorporated terms was sufficiently conspicuous when the notice: (1) though
small was legible; (2) was preceded by a bold-face heading; and (3) was the
first thing a passenger would see in the ticket after the flight coupons.
In order for airline to limit its
liability for lost luggage it must provide passengers conspicuous written
material on or with the ticket that sets forth either (1) that airline's
monetary limitation or (2) a notice that "[f]ederal rules require any
limit on an airline's baggage liability to be at least $1250 per
passenger." 14 C.F.R. § 254.5.
Airline ticket's notice which
neither stated the airline's monetary limit on liability for lost baggage, nor
contained the exact text of an alternate notice approved by federal regulation,
was insufficient to limit the airline's liability. 14 C.F.R. § 254.5.
Baggage liability limitation
notice which was behind the flap in the ticket jacket which would ordinarily
contain the ticket did not provide passenger with conspicuous notice, since the
message was poorly positioned and the design encouraged the obscuring of the terms
of contract.
Baggage liability limitation
found on ticket jacket was sufficiently conspicuous where: (1) type though
small was legible; (2) the message was set out in a separate box at the tope of
the page; and (3) a bold-faced "PLEASE NOTE" drew attention to
it.
Where defendant airline did not
provide conspicuous notice of its liability limits for lost baggage, it would
not be able to limit liability and plaintiff would recover the full value of
his baggage since (1) a reasonable reading of the contract led to that result
and (2) that is the logical implication of federal regulations requiring
conspicuous notice.
Although the common law
prohibited a common carrier from attempting to exculpate itself from all
liability for loss of baggage due to its own negligence, federal common law has
developed the "released value doctrine" under which a carrier may
limit the amount of its liability to the agreed value of the goods, provided
that the shipper has the option of obtaining coverage for the full value of its
goods, is made aware of that option, and knowingly chooses to pay a lower price
for the lesser coverage.
In promulgating regulations
allowing airlines to limit liability for lost baggage by providing notice to
passengers, and in rejecting a proposal that would have required passengers to
sign a "statement of understanding" as a prerequisite to limitation
of liability, the Civil Aeronautics Board implicitly limited the extent to
which passengers may rely on the "released value doctrine" to avoid
an airline's attempt to limit liability.
Expressed intention of Civil
Aeronautics Board not to preempt state courts on applicability of
"released value doctrine" to limitation of airlines' liability for
lost baggage, and the Board's somewhat conflicting intention to facilitate
incorporation by reference of limitations of liability, could be harmonized by
requiring carriers (1) to make excess valuation insurance available; (2) to
make this fact known to the traveling public in a manner at least as
conspicuous as the required notices of the airline's limited liability; and (3)
to set out the outlines of the coverage provided.
Ambiguity in solicitation for
bids, which might otherwise prevent soliciting agency from determining which
bid was the lowest and what price it would have to pay if it accepted the low
bid, could be cured by information supplied in the bids themselves. Pago
Petroleum Products, Inc., v.
Ambiguities in offer and
acceptance, which might otherwise prevent the formation of a contract, may be
resolved by reference to the prior business relations of the parties.
Pago Petroleum Products, Inc., v.
A party who unilaterally places a
practical construction on contract language does not necessarily bind other
parties to this construction, but seriously limits his own chances of enforcing
an opposing construction when the old one should be of no further benefit to
him. Pago Petroleum Products, Inc., v.
Bid submitted to administrative
agency in competitive bidding process for fuel supply contract should be
construed not to include a terminal fee, where (1) bid did not specify whether
the terminal fee would be included or excluded from the bid price; (2) bidder
was currently charging the same agency extra for the terminal fee under a
contract in which the language of its bid had been essentially identical to
that of its present bid; (3) bidder's contention that the intervening six
months had given rise to a new custom with regard to terminal fee charges was
not supported by the evidence; and (4) bidder did not indicate its intention to
change its pricing policy until after the bids were opened, when it seemed
evident that bidder would not be awarded the contract unless its bid included
the terminal fee. Pago Petroleum Products, Inc., v.
Administrative rule allowing rejection
of bids on account of ambiguities in the solicitation, if construed to allow
rejection of a bid which was clearly the low one on account of an ambiguity in
the solicitation that had been cured by the bids themselves, would violate
competitive bidding statute prohibiting changes prejudicial to fair
competition. A.S.A.C. § 10.0232; A.S.C.A. § 12.0211. Pago Petroleum
Products, Inc., v.
Clause in bid solicitation by
government agency reserving the agency's right to reject all offers, if
construed to allow such rejection for no reason at all or just because the
government might get a better price if bidders are allowed to rebid after
looking at their competitors' bids, would violate competitive bidding statute
prohibiting changes prejudicial to fair competition. A.S.C.A. § 12.0211.
Pago Petroleum Products, Inc., v.
Auto parts, clothing, and
modestly priced mats are not the type of goods—such as live animals, jewelry,
fragile, perishable, or inherently dangerous items, or items with unique
value—which an airline may reject from carriage altogether, or for which it may
require increased payment or a release or other condition before agreeing to
carry the goods.
Language in airline ticket
limiting airline's liability for lost baggage adequately notifies passenger of
such limited liability where language is conspicuous and understandable, even
though the language deviates from that provided in federal regulation. 14
C.F.R. § 254.5(b).
Language suggested in federal
regulation to give notice of monetary limitations on airline's liability for
passengers' baggage is not mandatory; alternative language that effectively
notifies passengers is permitted. 14 C.F.R. § 254.5(b).
Where invoices received and paid by buyers suggested that the contractor's actual bill would be well over the original contract price, but buyers already had a massive investment in the project and were in no position to call it off, neither their payment of invoices which did not bring their total payment above the contract price nor their silence in the face of subsequent invoices which did far exceed the contract price could fairly be regarded as consent to a dramatic and one sided modification of the contract. Hardco Inc. v. Lutali, 14 A.S.R.2d 1.
Plaintiff was held to have accepted the terms and conditions of a contract when he signed and returned it to the other party; his acceptance of payments according to the stated contractual terms also corroborated the fact that he agreed to such terms. Mauga v. Pioneer Pacific Financial Services, Inc., 16 A.S.R.2d 16
Fact that defendant had not signed the contract in issue was immaterial, since he accepted the terms and conditions of such contract by making payments according to its terms. Mauga v. Pioneer Pacific Financial Services, Inc., 16 A.S.R.2d 16
Where the parties could be
ascertained from the face of a note and security agreement executed by
appellants in which terms, provisions, and conditions were fully set forth in
writing, and the lender did not sign the agreement, but accepted or adopted it
and relied on its validity as a promissory note, such note and security
agreement was a written contract subject to a ten-year statute of
limitations. A.S.C.A. § 43.0120. Pene v. Bank of
An untimely attempt to exercise an option to renew or extend a lease is ineffective. Reine v. Fiame, 23 A.S.R.2d 25.
When an individual lives as a member of a family's household, a presumption arises that the services for which compensation is sought were rendered gratuitously. This is true even when persons living in the same household are not related by blood or affinity. Farapo v. Schuster, 26 A.S.R.2d 112.
Where an original ground lease
did not contain a clause allowing for a second option or a right to extend the
lease, a letter extending the lease does not constitute a new
lease. Development Bank of
Receipt and free acceptance of goods, and partial payment for them, may constitute the incurrence of a debt. Carpenters Fiji, Ltd. v. Pen, 28 A.S.R.2d 202.
§ 1(4) Requirement of a Writing: The Statute of Frauds
Territorial statute providing that no debtor can be charged interest in excess of 6% unless the amount "is in writing and is signed by the party to be charged" precluded court from holding debtor liable to pay interest at a higher rate in the absence of a signed agreement, even when debtor knew bank would charge creditor a higher rate of interest on amounts not timely paid by debtor. A.S.C.A. § 28.1501(a). Meridian Breckwoldt Samoa, Ltd., v. Max Haleck, Inc., 7 A.S.R.2d 95.
Since in the absence of a written agreement specifying the rate of interest applicable to a promissory note the statutory rate of 6% will apply, where a note specified an interest rate of 12.5% "until maturity" the rate after maturity was 6%. A.S.C.A. § 28.1501. Pritchard v. Amerika Samoa Bank, 8 A.S.R.2d 157.
Territorial statute requiring
certain transactions to be "approved in writing by the Governor" was
not violated when Governor signed a lease document and then authorized members
of his staff to make certain revisions to the document before it left his office,
even though the Governor did not sign the document a second time after the
changes were made. A.S.C.A. § 30.0131.
Instrument containing all the
terms of a completed contract between two parties which is executed by one
party and accepted or adopted by the other constitutes a contract in writing
within the meaning of the applicable statute of limitations, regardless of the
fact that the latter party did not sign the instrument. Pene v. Bank of
A court may compel specific
performance of a partially performed, unwritten agreement; the court's power to
compel specific performance is expressly recognized in the statute of frauds
relating to land transactions. A.S.C.A. § 37.0211. Manoa v.
The maximum interest rate for business purposes is 18 percent, pursuant to A.S.C.A. § 28.1503, but interest rates greater than six percent must be in writing to be enforceable, pursuant to A.S.C.A. § 28.1501. Jessop v. Histake, 25 A.S.R.2d 12.
A verbal promise to convey any
interest in land is not legally binding.
Under A.S.C.A. § 27.1530, a
writing sufficient to satisfy the statute of frauds in the sale of goods need
not be the contract itself, but may be merely a memorial sufficient to indicate
that a contract for sale has been made.
The language of the A.S.C.A. §
27.1530 indicates that the writing need not be the contract itself, but merely
a memorial "sufficient to indicate that a contract for sale has been
made."
The fact that the instrument was
signed after the contract was entered does not operate to nullify the contract
under the statute of frauds.
Oral agreement by person who negotiated on behalf of purchaser that negotiator would guarantee payment from purchaser created an agency or surety relationship between purchaser and negotiator, and vendor could look to third party for payment. Ryan, Inc., v. Vaka, 5 A.S.R.2d 31.
In an action for breach of an
oral contract for the settlement of an outstanding electric bill, court would
not find that the agreement included concessions by the electric company with
regard to land disputes unrelated to the bill in question, where: (1)
plaintiff's documentary evidence of the existence of such terms was
self-serving and prepared after the negotiations; (2) defendant's
representatives testified that there was no agreement on these terms; (3) notes
made during the negotiations by defendant's counsel reflected no agreement to
such terms; (4) plaintiff himself had sought the settlement as an alternative
to a trial scheduled the same day, over the objections of defendant's counsel
who had objected to a continuance for the purpose of settlement negotiations;
(5) a stipulation signed by both parties at the conclusion of the negotiations
had contained no reference to agreement on any collateral terms; (6) agreement
to such terms would have been beyond the scope of defendant's representatives'
authority; and (7) it made no business sense for defendant to agree to such
terms. Pene v.
While a contemporaneous oral agreement may establish a lessor's duty to repair, a subsequent oral undertaking cannot vary a written lease complete in itself. Reine v. Fiame, 23 A.S.R.2d 25.
A verbal promise to convey any
interest in land is not legally binding.
A campaign promise, made when the
promisor was not acting on the government's behalf but merely as a private
citizen seeking elected office, is unenforceable.
Without valid consideration, a
verbal promise is at most an offer to make a gift and a mere promise to make a
gift is unenforceable.
Actions to recover bank deposits evidenced by entries in a depositor's account passbook are governed by statutes relating to actions on oral contracts, and not on written contracts, unless the passbook is signed by an authorized bank employee and contains a definite promise to pay. Passi v. Amerika Samoa Bank, 28 A.S.R.2d 130.
When there is no written partnership agreement between the parties the court may look to circumstantial evidence offered by each party to back his oral claim of the presence or absence of a partnership. Johnson v. Coulter, 28 A.S.R.2d 218.
SEE TORTS § 13 – BAILMENTS
Bailment for mutual benefit arises whenever both parties benefit from the transaction. Garcia v. Galea`i, 15 A.S.R.2d 14.
Bailee need not receive tangible compensation for a transaction to constitute a bailment, so long as the transaction is an incident of the business in which bailee profits, or was accepted because of benefits expected to accrue. Garcia v. Galea`i, 15 A.S.R.2d 14.
When lessor takes possession of leased premises and its contents to the exclusion of the lessor, the lessee becomes the bailee of such property and thus has a duty to look after it while it remains in his custody. Sala v. Tuika, 18 A.S.R.2d 29.
SEE CIVIL PROCEDURE § 9 – EQUITABLE REMEDIES
Liability under a quasi-contract theory is implied-in-law by the equitable principle against unjust enrichment. Farapo v. Schuster, 26 A.S.R.2d 112.
Restitutionary claims under the quasi-contract theory do not apply to family situations. Farapo v. Schuster, 26 A.S.R.2d 112.
§ 1(8) Conditions Precedent and Subsequent
Statement by one of lessors that lease would not be valid without signature of co-owner was merely incorrect legal opinion and not condition precedent to valid lease. Scanlan v. Steffany, 3 A.S.R. 583.
§ 2 Responsibilities and Authority of Parties Forming a Contract
Notarization serves to assure the authenticity and validity of signatory's assent to a document, and there is a strong presumption that a notarized signature is valid. Mailo v. Soane, 4 A.S.R.2d 140.
Every contracting party has an obligation to deal reasonably with the other. R.P. Porter International, Inc., v. Pacific International Engineering, Ltd., 11 A.S.R.2d 124.
Plaintiff suing for value of goods paid for by defendants with checks drawn against insufficient funds was denied summary judgment where defendants raised triable issues of fact, claiming that plaintiff coerced them into sales contract; supplied unordered goods and overcharged for incomplete quantities of goods; and induced one of the defendants to sign a letter acknowledging liability by assuring them it was merely "for the record" and that they should "not worry" about it. D. Gokal & Co. v. Daily Shoppers Inc., 13 A.S.R.2d 11.
No lease existed when the people who signed documents purporting to create various contract and/or property rights in some buildings had no authority to do so. Fagasoaia v. Fanene, 17 A.S.R.2d 91.
When three companies may otherwise be entitled to be treated as separate entities for most purposes but found it to their advantage to treat themselves as a single enterprise, the court treated them as a single entity in construing a contract. EW Truck & Equipment Co. v. Coulter, 19 A.S.R.2d 61.
A contract entered into by a
government official lacking authority, or failing to follow proper procedures,
is void. Rakshan v.
Whether a court will enforce illegal contract depends on many factors including whether nonenforcement will deter or punish wrongdoing, whether nonenforcement would reward the principal wrongdoer at the expense of less culpable parties, and whether the illegality involved "wicked intent." Enekosi v. Tu'ufuli, 3 A.S.R.2d 81.
A court may take cognizance of an illegal contract for some other purpose without "enforcing" it. Enekosi v. Tu'ufuli, 3 A.S.R.2d 81.
Under territorial statute, one who makes a contract within the territory to extend credit at the rate of 20 per cent commits the crime of usury and is liable to imprisonment and to forfeiture of the entire amount of the debt. A.S.C.A. § 28.1510. Shantilal Brothers Limited v. K.M.S.T. Wholesales, Inc., 9 A.S.R.2d 62.
Attempt by airline to exclude all
liability for loss of certain classes of baggage was void for violation of
public policy, since a carrier who stipulates not to be bound to the exercise
of care and diligence seeks to put off the essential duties of his
employment.
Promise to pay in exchange for a promise not to bring criminal prosecution is unenforceable, unlawful, and void as against public policy, regardless of guilt or innocence. Purse Seine Inc. v. Lumana`i Development Inc., 11 A.S.R.2d 1.
Airline's rule in its Contract of
Carriage exonerating the airline from all liability for irreplaceable articles,
valuable items, religious or ceremonial mats and artifacts, samples, and goods
for resale included in passenger's baggage was contrary to public policy and
void, at least as applied to personal property that was neither fragile,
perishable, inherently dangerous, nor uniquely valuable.
An airline may not limit its
liability for provable direct or consequential damage resulting from the
disappearance of, damage to, or delay in delivery of a passenger's personal
property, including baggage, in its custody to an amount less than $1250 for
each passenger. 14 C.F.R. § 254.4.
Contracts falling afoul of the
"No contract shall be entered into unless" formula should be treated
as a special instance of the contract that is partly illegal but in some
respects enforceable.
Not all unlawful agreements are
ipso facto void; if the denial of relief is disproportionately inequitable the
right to recover will not be denied.
Where legislature has not
specifically defined the consequences of a particular kind of illegal contract,
courts are left to a delicate balancing of factors for and against enforcement;
unenforceability may not always deter or punish and may sometimes even reward
the principal wrongdoer, and caution is necessary when so much of commercial
life is governed by regulations which may easily be broken without wicked
intent.
Court can excise the illegal
portions of a contract and enforce the remainder, with or without compensating
adjustments in the contractual obligations of the parties, or may modify an
illegal term to make it conform to the law.
Lease agreement omitting
inflation adjustment clause required by statute would be enforced, after
modification to include such a clause, where: (1) the statute did not provide
that contracts omitting the required term should be absolutely void; (2) the
contract complied with all applicable laws and regulations but one; (3) the
only "misconduct" in which the lessee might be said to have engaged
was to sign an apparently lawful agreement drafted by the lessor; (4) there was
no evidence that the required clause was omitted by any reason but
inadvertence; (5) the lessee had signed a covenant to obey all laws pertaining
to the premises; (6) soon after being notified of the absence of the inflation
adjustment clause, the lessee expressed its belief that it was in fact bound to
pay the required adjustments; (7) the statute did not appear designed to punish
conduct regarded as malum in se by effecting a forfeiture; (8) the statutory
purpose of protecting the lessor could be accomplished by imposing on the
lessee the obligation to pay the required adjustments; and (9) the record
rather clearly showed that the absence of an inflation adjustment clause was
not a genuine point of controversy between the lessor and lessee, but was one
of a series of technical grounds on which the lessor sought to evict the lessee
in order to accommodate another prospective tenant. A.S.C.A. §
37.2020.
Merely recommending that an individual retain a lawyer cannot single handedly transform an unenforceable settlement in an enforceable one. Samoa Products, Inc. v. A`asa, 17 A.S.R.2d 66.
The court will not enforce claimed
partnership gains derived while the parties were in violation of the
An agreement to violate or inhibit licensing laws is clearly illegal and contrary to public policy. A.S.C.A. §§ 27.0201 et seq. Papali`i v. Pen, 18 A.S.R.2d 82.
A promise to perform an illegal
act is unenforceable. Rakshan v.
A contract entered into by a
government official lacking authority, or failing to follow proper procedures,
is void. Rakshan v.
§ 3(2) Unfairness, Fraud and Unconscionability
A party cannot be relieved of his contractual obligations simply for having made a bad bargain. Development Bank v. Ilalio, 5 A.S.R.2d 1.
When a party signed a promissory note on which the line indicating the amount was left blank, with the understanding that he was agreeing to assume liability for the fair market value of a truck, and where promisee bank later filled in an amount two-and-one-half times greater than that fair market value, the note was voidable either for fraud or for mutual mistake, depending on whether the bank officials knew or did not know of the promisor's understanding. Development Bank v. Ilalio, 5 A.S.R.2d 1.
If a contract or any of its terms is unconscionable, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable provisions, or so limit the application of the unconscionable provisions as to avoid any unconscionable result. Restatement of Contracts 2d § 208. Development Bank v. Ilalio, 5 A.S.R.2d 1.
A radical disparity between the contract price of a good or service and its fair market value, while not alone sufficient to void the contract, raises doubts about whether the transaction was free from fraud and coercion. I Development Bank v. Ilalio, 5 A.S.R.2d 1.
The legal importance of an unfair bargaining process diminishes when the considerations given and received by the weaker party approach what they would have been had the process been above board. Development Bank v. Ilalio, 5 A.S.R.2d 1.
A contract is ordinarily rendered unenforceable on the ground of unconscionability only when both its substance and the bargaining process leading up to it are unconscionable. Development Bank v. Ilalio, 5 A.S.R.2d 1.
A contract unenforceable for fraud or unconscionability cannot become enforceable simply because the institution on whose behalf the contract was made no longer employs the individuals whose misdealings tainted the contract. Development Bank v. Ilalio, 5 A.S.R.2d 1.
A proffered "settlement" of an already litigated claim, purporting to "adjust" boundaries established by the court, has no effect when it (1) was never judicially approved; (2) resulted from negotiations between a licensed legal practitioner and an adverse party represented by counsel in the absence of the latter party's counsel; (3) clearly results in disadvantage to the latter party; (4) was renounced by the latter party soon thereafter; and (5) bears a close resemblance to an earlier "settlement" asserted in court by the legal practitioner, the existence of which the adverse party denied immediately after having consulted his attorney. Te'o v. Sotoa, 5 A.S.R.2d 90.
In order for a contract to be legally unenforceable under the doctrine of unconscionability it is not necessary that the court find facts sufficient to sustain a defense of duress or of failure of consideration; rather, unconscionability is a distinct equitable defense that can be established by some combination of such indicia as grossly inadequate consideration, inequality of bargaining power, sharp practice, and the absence of a real bargaining process even when none of these indicia standing alone would be sufficient to void the contract. Development Bank v. Ilalio, 5 A.S.R.2d 110.
A contracting party who
materially and fraudulently alters a writing which is either sufficient or
necessary evidence of the contract thereby loses any rights under that
contract, even if he has conferred a benefit on the other party. Hardy v.
A contracting party who failed to show that the other party knew or should have known of circumstances making his conduct unreasonable had failed to carry his burden of proof. R.P. Porter International, Inc., v. Pacific International Engineering, Ltd., 11 A.S.R.2d 124.
Fraud is generally defined as
anything calculated to deceive. It may be a single act or combination of
circumstances, the suppression of truth or the suggestion of what is false,
direct falsehood or innuendo, by speech or by silence.
To constitute fraud, the false or
misleading act or omission must be designed to induce another party to
act in reliance on the truth of the statement.
A party who did not read a contract
may nonetheless be granted relief when he or she was induced by
misrepresentation.
Three elements must be found to
establish a showing of duress in contract: one side involuntarily accepted the
terms of another; circumstances permitted no other alternative; and such
circumstances were the result of coercive acts of the opposite party.
Blue Pac. Management Corp. v.
Although reformation of a deed may be in order if, for example, the fact that the deeded land was outside the grantor’s individually land was a mistake, reformation is not available where overriding factors are present. An overriding factor includes the procurement of the grantor’s signature through fraud. Mailo v. Aumavae, 30 A.S.R.2d 175.
The traditional elements of actual fraud in contract or tort are (1) a false representation or concealment of a material fact, (2) made with knowledge of its falsity, (3) with the intent to induce the person to whom it is made to act upon it, and (4) such person acted in reliance upon the representation (5) to his damage. Mailo v. Aumavae, 30 A.S.R.2d 175.
If the fraud goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, mutual assent is lacking, and the agreement is void. Mailo v. Aumavae, 30 A.S.R.2d 175.
A mortgagee cannot obtain reformation of a deed that is void by reason of fraud and is not protected as a bona fide encumbrancer, even though it acted in good faith. Mailo v. Aumavae, 30 A.S.R.2d 175.
Absent special circumstances, a party may attack a contract on the grounds of fraud only when he has exercised due diligence in protecting himself from that fraud. ASPA v. NPI, 31 A.S.R.2d 201.
§ 3(3) Mistake and Impossibility
Petition to modify the property settlement provision in a divorce decree on the ground of mistake was denied where the provision was part of a final divorce decree that had settled the property rights of the parties for at least ten years. Mahoney v. Mahoney, 16 A.S.R.2d 109.
When a party disputed an assertion
that a written insurance contract was the product of mutual mistake and so did
not reflect the actual terms of the policy, a factual dispute precluding
summary judgment existed.
Reformation involves rewriting a contract in order to reflect the actual intent of both parties, and an insurance contract may be reformed after a loss has occurred. However, reformation is not appropriate to enforce terms to which the defendant never assented, but is used only to correct a mistake in writing to conform to the actual agreement of the parties. Plaza Department Store v. Duchnak, 26 A.S.R.2d 106.
If a genuine mistake results in an erroneous calculation of damages, such mistake provides an escape from an otherwise binding accord. Kent Samoa Inc. v. Shimasaki, 29 A.S.R.2d 44.
A mutual mistake of fact occurs
when the parties to an agreement have a common intention, but the written
contract erroneously fails to reflect their intention due to a mistake on the
part of both parties in writing the agreement. Accordingly, in order for
the affirmative defense of mutual mistake to be sustained, defendant must raise
fact issues showing that both parties were acting under the same misunderstanding
of the same material fact.
A party is not ordinarily allowed
to avoid a contract due to a mistake as to the contents of the contract.
However, where the writing does not reflect the agreement previously made and
the term was not omitted by agreement, the court will grant reformation for
mutual mistake despite the negligence involved in failing to read the document,
the parol evidence rule, and the Statute of Frauds.
Generally, where the failure to read the contract is induced by carelessness alone, no grounds exist for reformation or rescission. ASPA v. NPI, 31 A.S.R.2d 201.
§ 4 Ratification and Repudiation
Party who accepts benefits accruing under contract removes defects in contract by implied ratification. Steffany v. Scanlan, 3 A.S.R. 456.
Repudiation of a contract must be unequivocal and absolute, and petition for injunction by lessor to prevent ship from going out to sea before insurance is procured is not such repudiation. Steffany v. Scanlan, 3 A.S.R. 456.
Renunciation of contract is not successful unless other party unequivocally accepts renunciation, and continued performance under the contract is not such acceptance. Steffany v. Scanlan, 3 A.S.R. 456.
Where lessor withdrew petition for injunction, he was withdrawing any alleged repudiation of contract, thus obligating adverse party to perform under contract. Steffany v. Scanlan, 3 A.S.R. 456.
When lessor withdraws his repudiation of lease, he obligates lessee to perform his commitments under lease. Scanlan v. Steffany, 3 A.S.R. 583.
Lessor who accepts benefits accruing under lease cures any defect by implied ratification. 3 A.S.R. 583.
When lessees accept benefits of lease, they are estopped from denying validity of lease. Scanlan v. Steffany, 3 A.S.R. 583.
When a party signs an instrument without
reading it, the party may not avoid enforcement of a contract on the ground
that he or she did not read the instrument or did not understand its
contents.
Where recitals in a contract are ambiguous, operating parts of contract will control, and where recitals are inconsistent with operating parts, latter will control. Haleck v. Tiumalu, 3 A.S.R. 380.
Notations on lease that do not constitute modification of terms and are in accordance with intentions of parties do not invalidate lease nor reflect on honesty of party making notations. Steffany v. Scanlan, 3 A.S.R. 456.
Conduct of parties is entitled to great weight in determining interpretation of contract. Steffany v. Scanlan, 3 A.S.R. 456.
When parties clearly intend to
make a contract but do not specify some important term, the court must imply or
infer a term from all the circumstances. Samoa Products v.
When a merchant extended credit
in the amount of several thousands of dollars, accepted several part payments
and extended further credit, the circumstances suggested that the parties
intended the debt to be paid in periodic payments rather than on demand.
Samoa Products v.
Parol evidence is admissible to show that an agreement reached by the parties was incorrectly reduced to writing because of fraud or mutual mistake, or that there was no agreement at all for one of these reasons. Development Bank v. Ilalio, 5 A.S.R.2d 1.
The common law of contracts applies in American Samoa unless it conflicts with a territorial statute or is unsuitable to local conditions. A.S.C.A. § 1.0201. Development Bank v. Ilalio, 5 A.S.R.2d 1.
Contract by which defendant agreed to "waive the statute of limitations and other waiveable defenses" in exchange for plaintiff's temporary forbearance to sue should be construed as a waiver of technical defenses to the enforcement of a just debt but not of substantive defenses concerning the validity of the underlying contract. Development Bank v. Ilalio, 5 A.S.R.2d 110.
Documents purporting to be settlements of prior disputes are customarily given stricter judicial scrutiny than contracts involving more palpable consideration, especially when the party drafting and pressing for the settlement is a business entity experienced in such transactions, the other party has no such experience and is unrepresented by counsel, the more experienced party employed threats or promises to encourage the other party to sign the document with little or no deliberation, and the consideration given by the more experienced party was relatively trivial. Development Bank v. Ilalio, 5 A.S.R.2d 110.
If the parties to an employment contract have neither fixed a definite term of employment nor created any contractual obstacle to the right of discretionary discharge, then the contract is for employment at will and the employer may discharge the employee without incurring liability. Palelei v. Star Kist Samoa, Inc., 5 A.S.R.2d 162.
The "at will" employment rule is a rule of contractual interpretation rather than a substantive right of employers; it means simply that without evidence of negotiation or agreement on duration or terms of employment, courts will assume the parties intended the contract to be terminable at will by either party. Palelei v. Star Kist Samoa, Inc., 5 A.S.R.2d 162.
Where a writing purporting to be a guaranty of indebtedness omitted an essential term but the circumstances clearly indicated that the parties intended to make a binding contract and that the writing did not embody the whole agreement, the court could look to other documents signed by the parties and other surrounding circumstances to determine the parties' intention with regard to the missing term. Development Bank v. Pritchard, 6 A.S.R.2d 125.
In an international transaction between two corporations represented by sophisticated businessmen, the burden of determining whether the product complied with regulations in buyer's locality was on the buyer. Meridian Breckwoldt Samoa, Ltd., v. Max Haleck, Inc., 7 A.S.R.2d 95.
Court should construe and enforce conveyance in accordance with the apparent intent of the conveyor despite technical flaws in the conveyancing documents. Roberts v. Sesepasara, 7 A.S.R.2d 139.
Trial court's conclusion that a loan guaranty from which the name of the principal debtor had been omitted was intended to secure particular loans was supported by substantial evidence where circumstances surrounding the execution of the guaranty demonstrated the intent of the parties. Pritchard v. Amerika Samoa Bank, 8 A.S.R.2d 157.
Argument that a written guaranty contract which omitted the name of the principal debtor was missing an essential term and thus was unenforceable as a matter of law was without merit, where the intention of the parties with regard to the missing term appeared from other evidence. Pritchard v. Amerika Samoa Bank, 8 A.S.R.2d 157.
Contract was not ambiguous, and thus rules governing the resolution of ambiguous terms did not apply, where court found that the intent of the parties was clear but there was a clerical error in reducing the contract terms to writing. Pritchard v. Amerika Samoa Bank, 8 A.S.R.2d 157.
Terms of air carriage contract which were inconsistent with Warsaw Convention were void, because the contract itself so provided and also because treaty obligations are the supreme law of the land and therefore supersede private contracts. U.S. Const. art. VI. American Samoa Gov't ex rel. Langford v. Hawaiian Airlines, Inc., 10 A.S.R.2d 1.
Airline's disclaimer of liability for "valuable items" such as video equipment is unenforceable in light of Warsaw Convention clause that nullifies contractual provisions "tending to relieve the carrier of liability or to fix a lower limit" than that allowed by the Convention. Warsaw Convention art. 23. American Samoa Gov't ex rel. Langford v. Hawaiian Airlines, Inc., 10 A.S.R.2d 1.
Since deregulation of the airline industry, baggage liability limitations no longer are tariffs having the force and effect of law but are contractual terms whose construction and enforcement depends on applicable law. American Samoa Gov't ex rel. Uikirifi v. Hawaiian Airlines, Inc., 10 A.S.R.2d 31.
Deregulation of airlines does not leave terri¬torial court free to look only to the territorial law of contracts in deciding cases relating to lost baggage, since detailed federal regulations apply to baggage liability and since even in areas not expressly regulated the continued federal interest in air transportation suggests that federal common law should provide the rule of decision. American Samoa Gov't ex rel. Uikirifi v. Hawaiian Airlines, Inc., 10 A.S.R.2d 31.
Promulgation by the Civil Aeronautics Board of regulations allowing airlines to limit the amount of their liability for lost baggage does not indicate regulatory approval of attempts by airlines to exclude all liability for entire classes of goods. American Samoa Gov't ex rel. Uikirifi v. Hawaiian Airlines, Inc., 10 A.S.R.2d 31.
In choosing between reasonable interpretations of a contract, court would opt for that construction which operates against the draftsman. Restatement (Second) of Contracts § 206. American Samoa Gov't ex rel. Uikirifi v. Hawaiian Airlines, Inc., 10 A.S.R.2d 31.
Provision of airline's contract of carriage that airline would accept as baggage personal property for the "wear, use, comfort, or convenience" of passenger does not relieve the airline of liability for its loss of business goods accepted as baggage, since (1) the positive does not always imply the negative; and (2) having accepted business goods for transportation, the defendant should not be heard to say that it takes no responsibility for that which it has carried. American Samoa Gov't ex rel. Uikirifi v. Hawaiian Airlines, Inc., 10 A.S.R.2d 31.
Provision of airline's contract of carriage, disclaiming liability for damage to certain items caused solely by the fragile nature of such items, implied that the contract did not exclude all liability for loss of "business goods" carried as baggage, since some of the listed items could only be carried for "business purposes." American Samoa Gov't ex rel. Uikirifi v. Hawaiian Airlines, Inc., 10 A.S.R.2d 31.
Airlines seeking to incorporate by reference baggage liability limitations must provide to their passengers "conspicuous" notice that terms incorporated by reference are part of the contract and that such terms include baggage liability limitations. 14 C.F.R. Part 253. American Samoa Gov't ex rel. Uikirifi v. Hawaiian Airlines, Inc., 10 A.S.R.2d 31.
The term "f.o.b." in a contract for the sale of goods is presumed to mean that the seller is obliged to load the goods "free on board" the conveyance by which they will be transported to the buyer, and the presumption was not rebutted by a party's assertion of an alternative meaning. R.P. Porter International, Inc., v. Pacific International Engineering, Ltd., 11 A.S.R.2d 124.
Where the Government had drafted a lease document inadvertently omitting a provision required by statute for periodic adjustment of the rent, and the lessee had no objection to such a provision, the lease would be reformed or construed to include the required provision rather than declared invalid. A.S.C.A. § 37.2020. American Samoa Gov't v. Samoa Aviation, Inc., 11 A.S.R.2d 144.
Statute requiring that a specified provision shall be included in every contract of a particular class thereafter made is one that prescribes the legal operation of contracts, not one that affects factual interpretation; the provision must be given effect even though the parties know nothing of the statute and do not include the provision, and even though they know of it and expressly agree upon the exact contrary. American Samoa Gov't v. Samoa Aviation, Inc. (Mem), 13 A.S.R.2d 65.
Courts have consistently treated statutes requiring that certain provisions shall be included in certain contracts not to invalidate nonconforming contracts, but to make them conform by operation of law; in effect, the courts read the words, "No contract shall omit provision X" to mean "Every contract shall include provision X." American Samoa Gov't v. Samoa Aviation, Inc. (Mem), 13 A.S.R.2d 65.
Contracts falling afoul of the "No contract shall be entered into unless" formula should be treated as a special instance of the contract that is partly illegal but in some respects enforceable. American Samoa Gov't v. Samoa Aviation, Inc. (Mem), 13 A.S.R.2d 65.
Court can excise the illegal portions of a contract and enforce the remainder, with or without compensating adjustments in the contractual obligations of the parties, or may modify an illegal term to make it conform to the law. American Samoa Gov't v. Samoa Aviation, Inc. (Mem), 13 A.S.R.2d 65.
Lease agreement omitting inflation adjustment clause required by statute would be enforced, after modification to include such a clause, where: (1) the statute did not provide that contracts omitting the required term should be absolutely void; (2) the contract complied with all applicable laws and regulations but one; (3) the only "misconduct" in which the lessee might be said to have engaged was to sign an apparently lawful agreement drafted by the lessor; (4) there was no evidence that the required clause was omitted by any reason but inadvertence; (5) the lessee had signed a covenant to obey all laws pertaining to the premises; (6) soon after being notified of the absence of the inflation adjustment clause, the lessee expressed its belief that it was in fact bound to pay the required adjustments; (7) the statute did not appear designed to punish conduct regarded as malum in se by effecting a forfeiture; (8) the statutory purpose of protecting the lessor could be accomplished by imposing on the lessee the obligation to pay the required adjustments; and (9) the record rather clearly showed that the absence of an inflation adjustment clause was not a genuine point of controversy between the lessor and lessee, but was one of a series of technical grounds on which the lessor sought to evict the lessee in order to accommodate another prospective tenant. A.S.C.A. § 37.2020. American Samoa Gov't v. Samoa Aviation, Inc. (Mem), 13 A.S.R.2d 65.
Lease drafted by lessees' attorney, and agreed to by lessor who was unrepresented by counsel, which failed to specify most terms generally included in a contract of lease and which allowed the lessee to deduct credits from the rent in an amount which was neither agreed upon nor determinable by reference to the agreement, may have been too indefinite to constitute a legally binding contract. Fealofa`i v. Reid, 14 A.S.R.2d 57.
Auto rental contract expressly prohibiting all drivers except the party signing the contract does not conclusively prove that other drivers are not covered by the owner's omnibus insurance clause, since the facts may show that the owner gave implied permission regardless of the contractual prohibition. Mauga v. National Pacific Insurance, 15 A.S.R.2d 35.
Petition to modify the property settlement agreement in a divorce decree on the ground of mistake was denied where the language of the agreement unambiguously stated that one party would pay a fixed sum to another and did not condition such payment on the successful sale of the property in question. Mahoney v. Mahoney, 16 A.S.R.2d 109.
Where auto insurance policy excluded coverage for damages incurred while the vehicle was operated by a person under the influence of intoxicating liquor or any drug, but continued coverage provided on behalf of "any other person or party" who proves he did not consent to the vehicle being driven by the intoxicated driver, "any other person or party" refers to third party beneficiaries rather than the insured. Thompson v. National Pacific Insurance, 16 A.S.R.2d 114.
Where auto insurance policy excluded coverage for damages incurred while the vehicle was operated by a person under the influence, but continued coverage provided on behalf of third party beneficiaries who did not consent to the vehicle being driven by the intoxicated driver, defendant insurance company was granted summary judgment against plaintiff insured who had not consented to his intoxicated brother driving the vehicle, since the exception to the exclusionary clause did not apply where the indemnity and/or insurance was provided on behalf of the insured. Thompson v. National Pacific Insurance, 16 A.S.R.2d 114.
A lease which contains an ambiguous renewal option will be interpreted to give lessee the option to renew, rather than lessor, where renewal term and rent were fixed at the outset. Sala v. Tuika, 18 A.S.R.2d 29.
When three companies may otherwise be entitled to be treated as separate entities for most purposes but found it to their advantage to treat themselves as a single enterprise, the court treated them as a single entity in construing a contract. EW Truck & Equipment Co. v. Coulter, 19 A.S.R.2d 61.
Because American Samoa's Workmen's Compensation Act disallows compromise contracts between the employer and employee, the employer's liability for workmen's compensation benefits, fixed and guaranteed under the Act, may not be altered by way of contract. A.S.C.A. §§ 32.0554(b), 32.0672. Patau v. Rosendahl Corp., 19 A.S.R.2d 80.
Under the terms of a "c.i.f." contract, the seller pays for shipping costs and also for an insurance policy that will protect the buyer against damage during shipping; the title and the risk of loss or damage to the goods shift to the buyer upon delivery of the goods to the carrier and of the bill of lading and the insurance certificate to the buyer. U.C.C. § 2-401. Ghiselli Bros. v. Ryan Inc., 19 A.S.R.2d 128.
Words used in an exclusionary clause in an insurance policy are to be given the meaning that common speech imports. Thompson v. National Pacific Insurance, 20 A.S.R.2d 85.
A court will not rewrite the terms of a contract if the parties' intent is evident. Thompson v. National Pacific Insurance, 20 A.S.R.2d 85.
The terms of a seaman's contract were adjudicated as being those contained in his payroll form when the contract reflected the parties' negotiations by telephone and when the claimed parol variation would be essentially gratuitous on the captain's part. Zuguin v. M/V Captain M.J. Souza, 23 A.S.R.2d 7.
A domestic relationship between parties to a contract taints claims of arms length dealing for purposes of determining the existence or meaning of the agreement. Transpac Corp. v. Drabble, 25 A.S.R.2d 66.
The court should not fabricate an agreement based on reasonable inferences, where the parties have either failed to agree or have yet to agree. Transpac Corp. v. Drabble, 25 A.S.R.2d 66.
An insurance policy is a contract and the same rules of construction applicable to other contracts are applicable to insurance policies. If an insurance contract is unambiguous, the vast majority of U.S. jurisdictions require that a court follow the prescriptions of the policy as written, and need look no further in resolving any disputes. Asifoa v. National Pacific Insurance, 26 A.S.R. 2d 23.
Once an insurance policy is found to be ambiguous, further inquiry is generally allowed by the court. Asifoa v. National Pacific Insurance, 26 A.S.R. 2d 23.
Endorsements are forms added to basic policies to address a situation's particular coverage needs. Endorsements become part of an insurance contract and must be construed with it. Asifoa v. National Pacific Insurance, 26 A.S.R. 2d 23.
If there is a conflict between the terms of the endorsement and those in the body of the main policy, then the endorsement prevails, particularly when it favors the insured. Asifoa v. National Pacific Insurance, 26 A.S.R. 2d 23.
An insurance policy is to be read from the viewpoint of a layperson. Asifoa v. National Pacific Insurance, 26 A.S.R. 2d 23.
When a conflict exists between the endorsement and the body of a policy, the conflict is resolved in favor of the endorsement. Asifoa v. National Pacific Insurance Co., 26 A.S.R.2d 99.
A court cannot inquire into the intent of either party unless the policy is ambiguous. Asifoa v. National Pacific Insurance Co., 26 A.S.R.2d 99.
An insurance policy is a contract, and the same rules of construction applicable to other contracts are applicable to insurance policies. Plaza Department Store v. Duchnak, 26 A.S.R.2d 106.
A court may inquire into the circumstances surrounding an insurance policy if that policy is found to be ambiguous. Plaza Department Store v. Duchnak, 26 A.S.R.2d 106.
Reformation involves rewriting a contract in order to reflect the actual intent of both parties, and an insurance contract may be reformed after a loss has occurred. However, reformation is not appropriate to enforce terms to which the defendant never assented, but is used only to correct a mistake in writing to conform to the actual agreement of the parties. Plaza Department Store v. Duchnak, 26 A.S.R.2d 106.
Reformation is an extraordinary remedy, and courts have in general exercised it with caution. However, courts have reformed insurance contracts in regard to the amount of coverage provided. Plaza Department Store v. Duchnak, 26 A.S.R.2d 106.
The existence of an accord and satisfaction becomes a question of law when both sides allege the same set of facts, but offer opposing applications of the law to those facts. Kent Samoa v. Shimasaki, 27 A.S.R.2d 140.
A vehicle owner's policy of liability insurance must insure the person named therein and any other person who uses the vehicle or vehicles with the express or implied permission of the named insured. A.S.C.A. § 22.2003. Maifea v. National Pacific Insurance Co., 27 A.S.R.2d 104.
Where company policy gives only three persons permission to drive a company vehicle, and defendant is not one of those persons, defendant does not have "express" permission to drive the vehicle. Maifea v. National Pacific Insurance Co., 27 A.S.R.2d 104.
An implied-in-law condition of a contract between a bank and a depositor is that the bank will refrain from charging the depositor's account without authority from the depositor. Any payments which are not authorized by the depositor as a creditor of the bank are made with the bank's own funds, and not with those of the depositor. American Samoa Gov't Employees Federal Credit Union v. Sele, 28 A.S.R.2d 21.
Actions to recover bank deposits evidenced by entries in a depositor's account passbook are governed by statutes relating to actions on oral contracts, and not on written contracts, unless the passbook is signed by an authorized bank employee and contains a definite promise to pay. Passi v. Amerika Samoa Bank, 28 A.S.R.2d 130.
Ambiguous terms in a form contract will be construed most strongly against the party who framed and prepared them. Kent Samoa Inc. v. Shimasaki, 29 A.S.R.2d 44.
A strong presumption prevails against construction of contract terms in a way that permits one party to exercise unbridled discretion to the detriment of the other. Kent Samoa Inc. v. Shimasaki, 29 A.S.R.2d 44.
Extrinsic evidence regarding a contract term is prohibited if it directly contradicts the terms of the written agreement. Blue Pac. Management Corp. v. Prescott, 30 A.S.R.2d 149.
§ 5(2) The Uniform Commercial Code
Since the Fono has declined to adopt the Uniform Commercial Code (UCC), the court should not attempt to do so by judicial fiat. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
In a situation where the Uniform Customs and Practice for Documentary Credits (UCP) controls but is silent or ambiguous concerning a particular issue, analogous UCC provisions that are consistent with the UCP may apply. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
While the UCC does not of its own force apply in American Samoa, some rules embodied in widely adopted uniform codes which restate generally accepted principles of law may apply. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
Letter of credit exists independently of the obligations of the underlying contract and must be paid when the required documents are presented, regardless of the transactions between the buyer and seller. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
Letter of credit transactions contain three separate contracts: 1) between the bank who agrees to issue the letter and its customer; 2) between the customer and the beneficiary who agree to use a letter; and 3) between the issuing bank that promises to pay conforming drafts against the letter and the beneficiary. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
Independence of a letter of credit from its underlying transactions preserves its usefulness as a commercial device and reflects a policy decision that disputes regarding the underlying facts should be resolved after the letter is paid. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
UCC provision reducing damages for wrongful dishonor of a letter of credit by any amount realized by resale or other use or disposition of the subject matter of the transaction does not apply to situations such as guaranty letters of credit. UCC § 5-115. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
UCC provision reducing damages for wrongful dishonor of a letter of credit by the amount realized by resale or other use or disposition of the subject matter of the transaction did not apply to a letter governed by the Uniform Customs and Practice for Documentary Credits (UCP) where: 1) the UCP was unambiguous (though not explicit) regarding damages since it clearly implied that the dishonoring party was liable for the face amount of the letter; 2) the UCC provision was not an apparent rule of general law since no cases construed it to reduce damages below the face amount of the letter; and 3) reducing damages below the face amount would reduce the commercial utility of such letters since disputes concerning the fact and amount of resale could obscure the exact amount owed and hinder prompt payment. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
UCC provision reducing damages for wrongful dishonor of a letter of credit by the amount realized by resale or other use or disposition of the subject matter of the transaction would not apply to a letter governed by the UCP which may not have identified the goods in enough detail to enable the court to trace their resale without referring to the underlying contracts. UCC § 5-115. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
Letter of credit requiring only a beneficiary's signed statement and a notice of default of invoice rather than an attached copy of the invoice for the goods for which it guaranteed payment might not be governed by UCC provision reducing damages for wrongful dishonor of a letter of credit by the amount realized by resale of the subject matter of the transaction, since the letter might not identify the goods sufficiently to enable the court to trace their resale without referring to the underlying contracts. UCC § 5-115. Pacific Reliant Industries, Inc. v. Amerika Samoa Bank, 16 A.S.R.2d 57.
Failure of one party to contract to meet other’s hopes and expectations re production and credit terms does not constitute breach of contract. Jt. Holdings & Tr. Ltd. v. P.J. Brennan, Inc., of Samoa, 4 A.S.R. 812.
When bank making home improvement loan contrived to make disbursements to third party contractor far in excess of fair value of materials and services provided and without borrower's knowledge, bank had committed breach of contract and fraud and could recover only the fair value of what borrower actually received. Development Bank v. Lava, 5 A.S.R.2d 24.
Where equipment lease provided that rent was payable when lessees were paid on their construction contract, and where lessees had received only partial payment on their contract and had made a substantial part payment of the equipment rent, evidence preponderated against the conclusion that lessees were in default on the equipment lease. Anderson v. Sinagege R.M. Utu Enterprises, 8 A.S.R.2d 139.
Where lease was ambiguous as to time on which rental payments were due, lessees made part payment, and lessor's manager then wrote a letter thanking lessees for the payment, reiterating lessor's intention to extend the lease after the expiration of its original term, and stating that lessor was looking forward to doing further business with lessees, but seven days later lessor seized the leased equipment on the ground that lessees were in default, court would find that lessees were not in default. Anderson v. Sinagege R.M. Utu Enterprises, 8 A.S.R.2d 139.
Where lease provided that landlord could not arbitrarily and unreasonably deny tenants the right to sublease, prohibition by landlord of all subleasing on the ground that landlord rather than tenants should have the advantage of the higher rents available from sublessees was a breach of the lease. Development Bank of American Samoa v. Ron Pritchard Ground Services, Inc., 8 A.S.R.2d 190.
Where lease provided that tenant would have a right to renew at the expiration of the term of the lease, letter from landlord saying that no leases would be renewed since landlord was trying to sell the building was a breach of the lease. Development Bank of American Samoa v. Ron Pritchard Ground Services, Inc., 8 A.S.R.2d 190.
Where contract specified no time during which the goods were to be delivered, vendee had the burden of proving that vendor's delivery schedule violated an implied term of the contract. R.P. Porter International, Inc., v. Pacific International Engineering, Ltd., 11 A.S.R.2d 124.
Statute regulating height of truck loads was enacted to protect innocent bystanders, and court would not trivialize this protection by redressing the failure of one contracting party to compensate another for systematic overloading of trucks in violation of the statute. A.S.C.A. § 22.0331. R.P. Porter International, Inc., v. Pacific International Engineering, Ltd., 11 A.S.R.2d 124.
Even if vendor committed breach of contract by failing to deliver the goods within a reasonable time, vendee who obtained substitute goods at a price lower than the contract price was not damaged by the breach. R.P. Porter International, Inc., v. Pacific International Engineering, Ltd., 11 A.S.R.2d 124.
When lessors, by not paying their lawful debt to the bank that held the mortgage on the leased premises, caused a writ of execution to be issued against the premises, they breached the covenant of quiet enjoyment which is an essential element of every leasehold agreement. Development Bank v. Sam Scanlan, Inc. (Mem.), 12 A.S.R.2d 74.
Contractor who agreed to use materials "of the highest quality," and who subsequently allowed buyers to choose from a variety of materials without any suggestion that the materials they chose would result in an increase in the contract price, either knew or should have known that the buyers would understand "highest quality" materials to include the particular materials they were being shown; the contract was therefore enforceable in accordance with the buyers' understanding that the contract price included the materials they selected. Restatement of Contracts (Second) § 20(2). Hardco Inc. v. Lutali, 14 A.S.R.2d 1.
Under the Uniform Customs and Practice for Documentary Credits ("UCP"), a bank asked to pay a letter of credit has a reasonable time to examine the documents, but if it decides not to pay, must promptly notify the presenter or beneficiary of the discrepancies on which refusal is based and whether it is holding documents for the presenter or returning them. UCP arts. 16(c), 16(d). Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
UCP provisions requiring a bank which refuses to pay a letter of credit to promptly notify the presenter of the grounds for refusal promote the cure of documentary deficiencies before the letter of credit expires. Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
Issuing bank which has not promptly notified a party presenting a letter of credit of deficiencies in the documents and whether it is holding them for presenter or returning them may not use such deficiencies as a basis for refusing to pay the letter of credit. Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
"Reasonable time" to examine documents under the UCP is three banking days. Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
Notice to a presenter stating that a letter of credit was being refused but not specifying discrepancies in the documents or what was being done with the documents is inadequate notice under UCP. Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
UCP provisions are designed to deter banks issuing letters of credit from failing to timely assert any deficiencies in the related documents. UCP arts. 16(c), 16(d), and 16(e). Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
UCP provisions are meant to ensure that stalling and waffling of banks issuing letters of credit does not blunt the effectiveness of such important tools of international commerce. UCP arts. 16(c), 16(d), and 16(e). Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
UCP art. 16(d) requires a bank which refuses to pay a letter of credit to notify the party which actually submitted the documents of its refusal; it does not divest the party in whose favor the letter was issued of its rights under the UCP. UCP art. 16(d). Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
Customer for whose benefit a bank issued a letter of credit can waive any nonconformities in the related documents. Pacific Reliant Industies, Inc., v. Amerika Samoa Bank, 14 A.S.R.2d 41.
Defendant could not unilaterally withhold a percentage of the commissions payable to plaintiff on his sales of insurance policies in order to recoup commissions defendant paid on lapsed or cancelled policies, where the contract did not so specify. Mauga v. Pioneer Pacific Financial Services, Inc., 16 A.S.R.2d 16
Lessor's acceptance from the lessee of the very performance envisaged by the renewal option, while at the same time acquiescing in the lessee's continuing possession of the demised premises, constitutes a waiver by the lessors of their right to refuse renewal of the lease by reason of lessee's breach or non-performance. Sala v. Tuika, 18 A.S.R.2d 29.
If each party to a contract does things which, assuming no breach by the other party, would amount to a breach of the contract, the first breach is usually deemed to excuse what otherwise would have been the subsequent breach by the other party. EW Truck & Equipment Co. v. Coulter, 19 A.S.R.2d 61.
When each party breaches a contract before finding out about the other party's independent breach, and in the absence of any dimension of malice or wilfulness in either party's breach, the most appropriate remedy is to give each party the benefit of the bargain to which it agreed and was entitled. EW Truck & Equipment Co. v. Coulter, 19 A.S.R.2d 61.
Where there is a fundamental variance between what the court finds to be promised performance, and performance made, there is a breach of contract. C.B.T. Lumber, Inc. v. Pacific Reliant Industries, Inc., 20 A.S.R.2d 26.
A plaintiff in a breach of contract action has a duty to mitigate damages. C.B.T. Lumber, Inc. v. Pacific Reliant Industries, Inc., 20 A.S.R.2d 26.
Common Carrier's failure to aid customers in locating missing packages is not the kind of behavior that voids a contract. Amerika Samoa Bank v. United Parcel Service, 25 A.S.R.2d 159.
In a conflict of law situation, the law of the forum with the most significant relationship to the transaction and the parties will be applied in contract situations. Pal Air Int’l, Inc. v. Porter, 30 A.S.R.2d 104.
In determining which forum has the most significant relationship to a transaction and the parties for determination of what law to apply in a contract action, five factors are of primary consideration: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties. Pal Air Int’l, Inc. v. Porter, 30 A.S.R.2d 104.
In the absence of evidence to the contrary, the place of performance of a contract is considered to be the place of contracting. Pal