Contracts Outline

Outline for Contracts I
 
Elements of a contract (simplified): offer, acceptance, and consideration.
Assent is the basis of what a contract is.
Manifestation of assent occurs when you have an offer and acceptance.
Restatement 2nd 1:
A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
            (2 elements: promise and remedy (enforcement mechanism).)
 
I. Bases for Enforcing Promises
1. Consideration as a Basis for Enforcement
A. Fundamentals of Consideration
Restatement 2nd 71:
            Contract Defined
(1)  To constitute consideration, a performance or a return promise must be bargained for.(2)  A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.(3)  The performance may consist of
(a)  an act other than a promise, or
(b)  a forbearance, or
(c)  the creation, modification, or destruction of a legal relation.
(4)  The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.
            (Sham transaction: was consideration bargained for, or a gift?)
Restatement 2nd 79 (summarized):
Adequacy of Consideration; Mutuality of Obligation
If there is consideration, there is no additional requirement of (a) benefit/detriment, (b) equivalence in values exchanged, or (c) “mutuality of obligation.”
Restatement 2nd 81(summarized):
            Consideration as Motive or Inducing Cause
Bargained for consideration does not have to be itself the inducement or motivation for the exchange.
Restatement 2nd 74:
            Settlement of Claims
(1)  Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless
(a)  the claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or(b)  the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid.
(2)  The execution of a written instrument surrendering a claim or defense by one who is under no duty to execute it is consideration if the execution of the written instrument is bargained for even though he is not asserting the claim or defense and believes that no valid claim or defense exists.
Comment e.: Execution of release or quit-claim deed.  Subsection (2) provides for the situation where the party who would be subject to a claim or defense, if one existed, wants assurance of its non-existence. Although surrender of a non-existent claim by one who knows he has no claim is not consideration for a promise, the execution of an instrument of surrender may be consideration if there is no improper pressure or deception. See § 79.
B. The Requirement of Exchange: Action in the Past
Restatement 2nd 86:
            Promise for Benefit Received
(1)  A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.
(2)  A promise is not binding under Subsection (1)
(a)  if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or
(b)  to the extent that its value is disproportionate to the benefit.
(Exceptions under common law rule (bankruptcy, statutory limitations, or promise made in infancy) are incorporated into Rest. 86.)
C. The Requirement of Bargain
Restatement 2nd 24:
Offer Defined
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
Restatement 2nd 51:
            Effect of Part Performance Without Knowledge of Offer
Unless the offeror manifests a contrary intention, an offeree who learns of an offer after he has rendered part of the performance requested by the offer may accept by completing the requested performance.
D. Promises as Consideration
Restatement 2nd 2:
            Promise; Promisor; Promisee; Beneficiary
Restatement 2nd 75:
            Exchange of Promise for Promise
Except as stated in §§ 76 and 77, a promise which is bargained for is consideration if, but only if, the promised performance would be consideration.
Restatement 2nd 76:
            Conditional Promise
(1)  A conditional promise is not consideration if the promisor knows at the time of making the promise that the condition cannot occur.(2)  A promise conditional on a performance by the promisor is a promise of alternative performances within § 77 unless occurrence of the condition is also promised.
Restatement 2nd 77:
            Illusory and Alternative Promises
A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless
(a)  each of the alternative performances would have been consideration if it alone had been bargained for; or(b)  one of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternatives which would not have been consideration.
Restatement 2nd 228:
            Satisfaction of the Obligor as a Condition
When it is a condition of an obligor’s duty that he be satisfied with respect to the obligee’s performance or with respect to something else, and it is practicable to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied.
(Common law: good faith subjective standard. Rest. 228: reasonableness objective standard (e.g., bring in witness).)
[UCC 1-304:
Every contract or duty within the UCC imposes an obligation of good faith in its performance and enforcement.] UCC 2-306:
(1) Requirement contract means such actual output or requirements as may occur in good faith; requirement term not allowed if unreasonably disproportionate to estimate in contract or to prior output or requirements [thus, look to prior history of dealings].
(2) Agreement for exclusive dealing imposes an implied obligation by the seller to use best efforts to su