I. INTRODUCTION ELEMENTS OF CONTRACT LAW
To constitute consideration a performance or returned promise must be bargained for.
Congregation v. DeLeo
FACTS: D was on death bed and made an oral promise to donate $25M and did not complete the promise before death.
RULE- An oral promise to donate money is unenforceable. A gratuitous promise to do or give something to another w/o any benefit occurring to the promisor lacks the element of consideration and therefore no contract has been entered. (warm fuzzy feelings is not consideration)
The mere incorporation of $25M into P’s budget was insufficient to create estoppel. P merely adjusted a budget and there was no change in position due to their reliance on the promise. Just the lost heightened expectations and that alone is not sufficient reliance.
D did not ask or realize that a library was going to built in his name so it could not have induced him promise to give the money
A promise not made to induce any return action or forbearance does not have consideration
Hope or expectation is not valid reliance for PE
Consideration (exchange through promises)-Consideration is traditionally defined as a benefit received by the promisor or detriment (act or forbearance of an act that you have a legal right to do) incurred by the promisee. The presence of consideration distinguishes a bargain from a gift.
a bargained for exchange; the promise induces a detriment, and the detriment induces a promise-both must exist.
(1) To constitute consideration, a performance or a return promise must be BARGAINED for.
(2) Performance/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 (reciprocal promises/mutual inducement)
(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 some other person or some other promisee
II. GROUNDS FOR ENFORCING PROMISES
A. EXCHANGE THROUGH BARGAIN
– is an exchange of a bargained for promise.
– Consideration: A promise is supported by consideration if 2 requirements are met:
1. The promisee gave up something of value, or circumscribed her liberty in some way. (legal detriment requirement) and
2. The promisor made his promise as part of a bargain; that is, he made is promise in exchange for the promisee’s giving of value or circumscribing of liberty.
Note: Mutuality of consideration necessary, If either party to a contract has not given consideration, the agreement is unenforceable unless it falls under one of the exceptions.
Hamer v. Sidway (1891-p.205)
FACTS: D, uncle, promised P, nephew (minor), $5,000 performance was refraining from drinking, smoking, etc. until he turned 21 – held for plaintiff.
RULE: Forbearance (refraining from doing something that one has the legal right to do) from
ACTS: Father gave his retard daughter some land after he gave his daughter land (P), she gave him $1 after he handed the deed over to her as a present. He promised to pay mortgage, but didn’t. Daughter sues administrator (D).
RULE: mere love and affection do not constitute sufficient consideration to compel performance of an entirely executory contract. (Love and affection/warm fuzzy feelings are not adequate for consideration.)
REASON: Although P paid her father the sum of $1, it is obvious that the grantor’s motivation for the conveyance was his love for P. Fisher’s feelings and P’s payment of $1 were not adequate consideration. Judgment for Bertha was reversed.
Bastakis v. Demotsis (war time Greece, 500,000 Drac (value of $25 for 2,000)) (1949, p. 216)
FACTS: Batsakis, P, loaned Demotsis, D, 500,000 drachmae (which, at the time had a total value of $25 in US) in return for D’s promise to repay $2,000 in US money.
RULE: Mere inadequacy of consideration will not void a contract. Only where the consideration for a contract has no value whatsoever will the contract be voided.
REASON: Here, the trial court placed a value on the consideration – the drachmae – by deeming it to be worth $750. Thus, the trial court felt that there was consideration of value for the original transaction.