Supp. To § 1.2 Legal Obligation Defined

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(A) The following cases cite this section:

(1) Johnson v. Scandia Assocs., 717 N.E.2d 24 (Ind. 1999) . The Supreme Court of Indiana faced an array of decisions by lower Indiana courts granting tenants a right of action against landlords pursuant to the warranty of habitability. The specific issue was whether an implied warranty of habitability in leased residential premises should be recognized as a matter of law. The Supreme Court decided that ''the warranty is not universally imposed by law, but derives from the agreement between the tenant and the landlord and may be express or implied.''

(2) New Welton Homes v. Eckman, 830 N.E.2d 32 (Ind. 2005) . The parties entered into a contract for the purchase and installation of a modular home. The contract included a warranty requiring any claims for breach to be brought within one year. Two years after the home was completed, foundation damage occurred to the house after substantial rains. The purchasers sued the seller for breach of contract and argued that the discovery rule was applicable for determining when the cause of action accrued to extend the statute of limitations stated in the contract. Relying on Corbin, the court noted that a contract expresses the legal relationship between the parties. Indiana law generally holds that contracts which shorten the time to commence suit are valid. The court noted that the purchasers' proposal to apply the discovery rule to contract law was based on tort principles. It explained that the distinction between contract and tort is that tort liability is imposed by law and contract liability is the product of an agreement of the parties. The court noted that there was no ambiguity in the contractual provisions including the limitation. Thus, the action was time-barred. This case is also noted in Section 1.3 of this supplement.

This case is also noted in § 1.3 of this supplement.

Supp. To § 1.3 Definition of the Term ''Contract''

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(A) The following cases cite this section:

(1) Johnson v. Scandia Assocs., 717 N.E.2d 24 (Ind. 1999) . This case is fully discussed in § 1.2 of this supplement.

(2) New Welton Homes v. Eckman, 830 N.W.2d 32 (Ind. 2005) . The court cited Corbin for the general principle that a contract expresses the legal relationship between parties manifested by their assent. This case is also discussed at Section 1.2 of this supplement.

Supplement to Notes in Main Volume

4. Cherokee Nation v. Leavitt, 2005 U.S. LEXIS 2199 (Mar. 1, 2005) . The issue before the United States Supreme Court was the proper definition of ''contract'' as used in the Indian Self-Determination and Education Assistance Act (Act), 88 Stat. 2203, which authorizes the government to enter into contracts with Indian tribes to supply federally funded services such as tribal health services. The government failed to pay for such services, arguing that it was legally bound to do so only if Congress appropriated sufficient funds. The government characterized the arrangements with the tribes as if they had the same status as government agencies that have no legal entitlement to receive promised amounts from Congress. The tribes countered that their contracts with the government were ordinary procurement contracts which, the government conceded, would be enforceable. The court found that the language of the Act strongly suggested that Congress intended to treat promises made pursuant to the Act as ordinary contractual promises. The Act uses the term ''contract'' 426 times, sets forth a ''sample'' contract and states that if the government refuses to pay, contractors are entitled to ''money damages.'' Quoting the definition of ''contract'' in the Restatement, Second, of Contracts, Section 1, the court found that definition apt in describing the ''contract'' to which the Act referred. The government relied on language in the Act stating that the provision of funds is ''subject to the availability of appropriations'' and the government is not required to reduce funding for other projects serving a tribe to make fund available to another tribe. The court rejected this argument on the footing that in ordinary procurement contracts, if an unrestricted appropriation is sufficient to fund the contract, the contractor is entitled to payment even if the agency has allocated the funds to another purpose. The undisputed facts indicated that other unrestricted funds were available herein to pay the contractors. The court recognized that government agencies may sometimes find that they must spend unrestricted funds to satisfy needs they deem more important than fulfilling contractual obligations. The government, however, should avoid these situations, e.g., by seeking additional funds from Congress or, at least recognizing the contractor's right to seek damages when the government breaches the contract. The court reversed the decision of the Tenth Circuit and affirmed the judgment of the Federal Circuit in favor of the tribes.