Also known as: nature of the transaction
Written by attorneys — see sources below.
An attribute of a contractual arrangement consisting of its essential character, subject matter, and surrounding circumstances. Courts examine this attribute to decide whether a party possesses capacity to incur even voidable contractual duties or whether special rules govern the arrangement.
Charlotte, under a limited financial conservatorship, signed a margin trading agreement at a reception after consuming cocktails. The conservator seeks to avoid the agreement. The court examines the nature of the transaction, including its complexity and Charlotte's documented condition, to determine that she lacked capacity to incur even voidable duties.
AeroSupply mailed SkyRegion a proposal to sell jet engines without stating an expiration date. SkyRegion accepted nearly five months later after regulatory approvals. The court looks to the nature of the transaction, including rapid market changes in aerospace, and concludes the power of acceptance had ended.
An unmarried cohabitant conferred benefits on the other by contributing to household expenses and property improvements over years. After separation the contributor sues. The court considers the nature of the domestic arrangement to decide whether recovery under quasi-contract principles is available.
Sue Ann Evans Watts commenced this action in 1982 against James Watts in the circuit court for Dane County. The amended complaint alleged that the parties met in 1967 when she was 19, living with her parents, and working full time as a nurse’s aide. Shortly after they met, the defendant persuaded her to move into an apartment he paid for and to quit her job, indicating he would provide for her. Early in 1969 the parties began living together in a marriage-like relationship, holding themselves out to the public as husband and wife. The plaintiff assumed the defendant’s surname. She gave birth to two children who also received his surname. The parties filed joint income tax returns and maintained joint bank accounts asserting that they were husband and wife. The defendant insured the plaintiff as his wife on his medical insurance policy. He also took out a life insurance policy on her as his wife, naming himself as the beneficiary. The parties purchased real and personal property as husband and wife. The plaintiff executed documents and obligated herself on promissory notes to lending institutions as the defendant’s wife. During their relationship, the plaintiff contributed childcare and homemaking services, including cleaning, cooking, laundering, shopping, running errands, and maintaining the grounds surrounding the parties’ home. She served as hostess for the defendant for social and business-related events. The amended complaint further asserts that periodically, between 1969 and 1975, the plaintiff cooked and cleaned for the defendant and his employees while his business, a landscaping service, was building and landscaping a golf course. From 1973 to 1976, the plaintiff worked 20-25 hours per week at the defendant’s office, performing duties as a receptionist, typist, and assistant bookkeeper. From 1976 to 1981, the plaintiff worked 40-60 hours per week at a business she started with the defendant’s sister-in-law, then continued and managed herself after the dissolution of that partnership. The plaintiff further alleges that in 1981 the defendant made their relationship so intolerable that she was forced to move from their home and their relationship was irretrievably broken. Subsequently, the defendant barred the plaintiff from returning to her business. The plaintiff alleges that during the parties’ relationship, and because of her domestic and business contributions, the business and personal wealth of the couple increased. Furthermore, the plaintiff alleges that she never received any compensation for these contributions to the relationship. The defendant indicated to the plaintiff both orally and through his conduct that he considered her to be his wife and that she would share equally in the increased wealth. The plaintiff asserts that since the breakdown of the relationship, the defendant has refused to share equally with her the wealth accumulated through their joint efforts. He has also refused to compensate her in any way for her contributions to the relationship. The circuit court dismissed the amended complaint, pursuant to sec. 802.06(2)(f), Stats. 1985-86, for failure to state a claim upon which relief may be granted. This court took jurisdiction of the appeal upon certification by the court of appeals under sec. (Rule) 809.61, Stats. 1985-86.
View caseA shareholder accumulated stock in a target company and filed required disclosures. The court evaluates the nature of the stock accumulation transaction to determine whether the filings satisfied obligations under securities rules.
Fairleigh S. Dickinson, Jr., son of one of BD's founders, served as chief executive from 1948 until 1973 and chairman until April 1977. After conflicts with CEO Wesley Howe and COO Marvin Asnes, the board removed Dickinson as chairman on April 20, 1977, giving him the title of Honorary Chairman. Dickinson, whose family held roughly 5% of BD shares, met with Salomon Brothers on April 21, 1977, to explore selling his stock to a company interested in acquiring BD. He engaged Salomon and, days later, Eberstadt to locate such a buyer. Between April and December 1977 the firms contacted Avon, American Home Products, Monsanto, Hoffman-LaRoche, Schering-Plough and Squibb, representing that Dickinson's, Dunning's, Lufkin's and Chemical Fund's shares would be available. In late November 1977 Salomon introduced Sun Company to BD as a diversification candidate. Sun's corporate development committee studied the company and, after meetings in December 1977 and early January 1978, the executive committee authorized a $350 million expenditure to acquire up to 34% of BD. On January 14 and 15, 1978, Salomon and Eberstadt offered Dickinson, his daughter Ann Dickinson Turner and J.H. Fitzgerald Dunning the chance to sell at $45 per share or $40 with a most-favored-nation clause. On January 16, after the NYSE close, solicitors contacted institutions and several individuals using prepared scripts that stressed confidentiality, a 20% minimum condition and a one-hour response deadline. Institutions accepting the offer sold more than six million shares. By January 18 Sun had taken physical possession of the certificates and proxies, securing roughly 34% of BD's outstanding stock. Sun filed its Schedule 13D on January 19; Dickinson, Turner and Dunning filed theirs the same day or shortly thereafter. BD launched a lobbying and media campaign urging investigation. The SEC commenced an enforcement action; BD, its officers and shareholders filed suit; and five class actions were consolidated with the Commission's case. A bifurcated liability trial began November 13, 1978, and concluded December 8, 1978.
View caseA buyer injured by a defective wheel purchased from a dealer sues the manufacturer. The court examines the nature of the manufacturing and distribution transaction to decide whether lack of direct privity bars recovery.
The defendant Buick Motor Company manufactured automobiles and purchased ready-made wheels from the Imperial Wheel Company of Flint, Michigan. The Imperial company had furnished the defendant with eighty thousand wheels, none of which had proved defective prior to this incident. The defendant sold one such automobile to a firm of automobile dealers in Schenectady, who in turn sold the car to the plaintiff. While the plaintiff was driving the automobile at a speed of only eight miles an hour, a wheel collapsed because it was made of defective wood whose spokes crumbled into fragments. The plaintiff was thrown out and injured. The wheel had been bought from the outside manufacturer rather than produced by the defendant. Evidence showed that the defects could have been discovered by reasonable inspection, which the defendant omitted. There was no claim that the defendant knew of the defect and willfully concealed it. The car was designed to go fifty miles an hour. It had seats for three persons. The plaintiff commenced an action for negligence against the defendant. The case was tried to a jury. The New York Court of Appeals affirmed the judgment with costs.
View caseA consumer purchased a car under a contract containing a broad warranty disclaimer. The court assesses the nature of the consumer transaction, including unequal bargaining power, to determine whether the disclaimer is enforceable as written.
In May 1955, Claus H. Henningsen purchased a new 1955 Plymouth Plaza Club Sedan from Bloomfield Motors, Inc., an authorized De Soto and Plymouth dealer for Chrysler Corporation. Mr. Henningsen intended the car as a Mother's Day gift for his wife, Helen Henningsen, and communicated that intention to the dealer. He alone signed a one-page printed purchase-order form. The reverse side contained, in fine six-point script type, a warranty clause limiting the manufacturer's obligation to replacement of defective parts within ninety days or four thousand miles and disclaiming all other warranties, express or implied. The front of the form contained two even smaller paragraphs directing attention to the back-side conditions. The form was a standardized document prepared by the manufacturer and used by all its dealers. No one called the fine-print provisions to Mr. Henningsen's attention, and he did not read them. The car was delivered on May 9, 1955, after the dealer performed the items listed in Chrysler's New Car Preparation Service Guide. On May 19, 1955, while Mrs. Henningsen was driving north on Route 36 in Highlands, New Jersey, at twenty to twenty-two miles per hour on a smooth, paved highway, she heard a loud noise from the front of the car. The steering wheel spun in her hands and the vehicle veered sharply into a highway sign and brick wall. The car had been driven only 468 miles, had required no servicing, and had exhibited no unusual behavior before the accident. An insurance appraiser with eleven years of experience examined the wrecked vehicle and concluded that something in the steering mechanism from the wheel down to the front wheels had broken or dropped off. Plaintiffs also presented expert testimony that the steering failure resulted from a latent manufacturing defect that could not have been discovered by reasonable inspection. The negligence counts against both defendants were dismissed at trial. The case was submitted to the jury solely on the implied-warranty claims. The jury returned verdicts for both plaintiffs against Chrysler Corporation and Bloomfield Motors, Inc. Defendants appealed and plaintiffs cross-appealed from the dismissal of the negligence claim. The Supreme Court of New Jersey certified the matter directly before consideration by the Appellate Division.
View caseCapacity to incur even voidable contractual duties may be partial and can depend on the nature of the transaction and other circumstances. A court therefore examines the character and context of the particular deal when deciding whether a party lacked capacity.
Supporting sources
Yes. When equipment is purchased solely to provide cash and immediately leased back on loan-like terms with the original owner retaining all burdens of ownership, the arrangement functions as secured financing rather than a transaction in goods. General contract and secured-transactions principles therefore apply instead of sales rules.
Supporting sources
When an offer states no expiration date, the offeree's power of acceptance ends after a reasonable time. Reasonableness turns on the nature of the transaction, including market volatility and the subject matter. In a rapidly changing industry a delay of several months will ordinarily exceed a reasonable time.
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A court-ordered conservatorship limiting financial authority can render a person unable to incur even voidable duties on transactions within its scope. The limited nature of the conservatorship and the character of the particular deal are both relevant to the capacity determination.
Supporting sources
…upon the affirmative intention of the parties. It is a child of the law; it annexes itself to the contract because of the very nature of the transaction. Minneapolis Steel & Machinery Co. v. Casey Land Agency , 51 N. D. 832, 201 N. W. 172 (Sup. Ct. 1924). The judicial process has recognized a right to recover damages for personal…