CONTRACTS OUTLINE I.
A.Consideration- “bargain for an exchange”
(a) The promisee must incur legal detriment-benefit to the promisor & detriment to the promisee.
(b) Detriment must induce the promise
(c) Promise must induce the detriment
Note: detriment -In general, term means loss or harm; in contracts it is that which a person gives up in exchange for a promise by the other party.
3. Types of consideration
3.Promise for a promise
1. Consideration stoppers
i. Prior duty- mom promises son $ for his cooperation. NO consideration because this is a prior duty.
ii. Past consideration- I am going to give you $ for naming your child after me. This is unenforceable because of past consideration.
iii. No gift- A gift to another is not consideration because the gift giver does not benefit. No bargaining.
Promissory Estoppel- Non-bargained for detriment.
(a) Promise must be clear.
(b) Promisor must have intended to induce reliance on the part of the promisee and such reliance must have occurred to the promisee’s detriment. For example, by taking part in the promise and the fact that it was broken I sufferd a loss.
(c) The promise must be enforced to avoid injustice to the promisee.
Is an equitable doctrine that a person shall not be allowed to profit or enrich himself inequitably at another’s expense.
Moral Obligation- some states do not accept moral obligation.
Three-prong test. For action which are arising from moral obligation. No consideration was established.
2.detriment to the pltff
3.not doing would cause injustice.
I. Moral Obligation. WHEN PAST CONSIDERATION IS ACTIONABLE
i. Repromise- I make a deal with X and I promise to pay him for his detriment but fail to do so. He then comes back to me and askes for his payment and I repromise. This is actionable past consideration.
ii. Bankruptcy-I declair bank and get the debt removed. But I promise to eventually pay it back. If I don’t this may be actionable past consideration.
iii. statutes of limitation
Assent alone in modification cases.
1.Modifications of judgments.
Foakes v. Beer
This case shows that a modification on judgment may not be altered. But, in Sugarhouse v. Anderson, we see that a modification was possible because the D had shown reliance on the new agreement.
2.Modifications of Contracts.
Courts should enforce agreements modifying contracts when unexpected or unanticipated difficulties arise during the course of the performance of a contract, even though there is no consideration for the modification, as long as the parties agree.
Modifications obtained by extortion will not be enforceable.
Four prong rule for modification.
2.Fair and equitable
ome right or advantage. It maybe expressed or implied. Rights are not waivable, conditions are.
A wavier of a material part of the agreement exchange is ineffective (i.e. unenforceable) a modification without consideration, without mutual assent.
Executory Waiver, being in the nature of a promise or contract, must be supported by consideration in order to be enforceable. But a waiver, partaking of the principle of an election, like an election needs no consideration and cannot be retracted. It partakes of the nature of an executed transaction.
Election waiver- A waiver after failure of condition is often referred to as an election.
Example: I start a contract with X and it is intended to last a year. Under the contract I have several conditions in which X must adhere to. Day 90, I have implied waiver to a condition. On day 180, I retract my waiver, which I have the option to do, and restate the condition with consideration. The rest of the contract will be executory in nature and must be performed strictly on the X’s part. But from the time I waived the condition to the time I retracted, I cannot say that this period was executory.