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Contracts
South Texas College of Law Houston
Carlson, Richard R.

Contracts Exam Outline

SLIDES SET I, Introduction and Consideration
I. What is a Contract:
a. It is a promise, or a set of promises for which the law gives a remedy.
b. It is also a performance which the law recognizes as a duty
c. A contract requires a promise by one or more parties
i. When one or both parties cannot execute simultaneously
II. Breach and Punishment? Possible Remedies
a. Courts do not punish for a breach of contract
i. Breach is not immoral
ii. Can sometimes be Efficient
1. “Efficient Breach”- Theory of making economic benefit choices with taking the possible legal consequences of their decisions.
b. Remedies – For breach, relieving the promissee
i. Expectation Interest – (Largest) Received “the benefit of the bargain”, put the promisee in the position if the promise had been performed. Includes profit.
ii. Reliance Interest – (Middle) puts promissee in the position if the contract had never been made. Any expenses that were incurred in performing or have lost opportunities to make other contracts. The promissee’s injury consists of being worse off than if the promise had not been made.
iii. Restitution interest – Require the promisor to return any benefit given by the promisee
1. Reasons why not to give The Usual Measure of Damages
a. Usual Measure: Expectations
i. Sometimes the figure is too high in relation to the contract cost
ii. Strain on the imagination – too speculative
iii. Strain on Medical Community
iv. Non – Commercial Trade
c. Other Notes:
i. Disgorgement in Non-Contract Cases – Disgorgement of Profits is common in non contract cases. Profits from illegal behavior are repaid with interest to the victim of the crime. This prevents any benefit from the illegal behavior.
1. Not in contract, because ruins “efficient breach” and it is supposed to be return of benefits to the p’s expense.
ii. The Case of the Faithless Fiduciary – Constructive Trust – a simple swift remedy and it is tailored to deter those from breaking contract. Any profits from the action are given to the injured party. This way the plaintiff does not face any punitive damage and there is no resulting profit from the breach

Slide 2 – CONSIDERATION
I. Introduction/Definition
a. Not all promise should be enforced, which ones will be be?
b. Ones w/ Consideration
c. Traditional View – Consideration was a “bargain” an exchange of promises or goods
d. Modern View – It is any thing that makes a contract enforceable
II. Consideration, Types
a. Promise in exchange for a promise – bilateral contract
b. Promise in exchange for good – unilateral contract
c. Goods for Goods – No contract
III. Identifying Consideration
a. Benefit/Detriment approach – Was there a benefit to the promisor, and was there a detriment to the promissee.
i. Modern Approach – Examine if the exchange or bargain was the motivating factor for the other
ii. Hammer v. Sidway
1. Uncle promised nephew 5,000 dollars to abstain from drinking and smoking for 3 years. Consideration?
2. Was this a bilateral or unilateral contract?
a. Unilateral, uncle promised nephew 5,000 and nephew acted by not drinking or smoking. Important because if Nephew had promised he could have been liable.
b. Was there a benefit to the Promisor (uncle)? Peace of mind or family reputation
c. Was there a detriment to the promissee? Abstaining from legal activities
d. Modern Approach – Was the forbearance the objective motive (was it in exchange for the promise) YES
3. Consideration does not take into account
a. Real Value of benefit or loss
b. Or subjective intent (just fly on the wall)
b. Bargain Theory of Consideration – an exchange of promises, acts, or both in which each party views what she gives as the price of what she gets

issee AND the circumstances negated negotiations then there is consideration
3. Ex. A find B’s escaped bull and feeds and cares for it. B’s subsequent promise to pay compensation is binding.
4. Restatement §86: (1) enforcement necessary to prevent injustice; (2) not a gift; and (3) promise not disproportionate to benefit
F. Finding Bargaining Exchange: What is and Isn’t
a. Bargains v. Conditional Gifts
i. Ex. Kirksey, widows brother in law promises “If you will come down and see me, I will give you a place to live.
ii. Along the way she incurs cost and detriment – Is this consideration and a bargain????
iii. No, Brother did not promise her a place to live in “exchange” for a visit. He was doing her a favor
iv. Her visit was just a condition of receiving the GIFT
1. Also look at daughter is promised if she meets her estranged father than he will buy her a ring. Her walking to Tiffany’s is not consideration it is just a condition to receive her gift
b. In determining bargains from pre-conditions
i. Ask whether the condition is of benefit to the promisor, was it something actively desired. If so it was probably bargained for.

SLIDE 3 THE BARGAINING PROCESS
I. Mutual Assent – A meeting of the minds
a. For a contract to be formed, the parties must reach “mutual assent.” They must both intend to contract, and they must agree on at least the main terms of the deal.
II. Subjective View of Contracts – (not popular) look to what the parties thought at the time of the signing.