Contracts Outline

Contracts – Robertson – Fall 2010

Contracts – a contact is a promise or set of promises, for the breach of which the law gives remedy, or the performance of which the law in some way recognizes as a duty

Promise – is a manifestation of intention to act or refrain from acting in a certain way – now or for something in the future (can be oral written , or inferred through conduct)

Unilateral Contract – contracts in which only one party makes a promise in the form of an offer, which calls for the other to render some sort of performance as acceptance.

Bilateral Contract – contract in which both parties make mutual promises to each other.

* Promisee can NEVER be in breach in a Unilateral contract – (why contracts today are Bilateral)

I. Three Principles of Contract Remedies:

1. RELIANCE – put PROMISEE in as good as position had the contract NOT been made

2. RESTITUTION – put PROMISOR in as good as position had the contract NOT been made

3. EXPECTATION – put aggrieved PARTY in position had the contract BEEN made

CONSIDERATION

A. Classical Rule

1. Benefit to Promisor OR Detriment to Promisee AND

2. The benefit / detriment resulted from or was induced by the promise

B. Bargain Theory

1. Performance sought by promisor in exchange for the promise AND

2. Performance given by the promisee in exchange for the promise

· Performance may consist of

1. An act other than the promise OR

2. A forbearance OR

3. The creation, modification, or destruction of a legal relation

“Peppercorn theory.”

Inadequate consideration may be evidence of Fraud, Duress, or Undue Influence / Sham

Return promise

II. MORAL OBLIGATION ( when you DON’T have CONSIDERATION)

(Past Conduct / Promissory Restitution) (Peter’s saving David’s life)

A. Traditional Rule (Mills — Son dies in care of stranger father later says he’ll repay)

i. Promises made of a “moral obligation” arising out of a benefit previously received is NOT enforceable (b/c performance occurring before a promise cannot be consideration for the promise; it could not have been given in exchange for the promise)

a. 3 EXCEPTIONS (you ARE liable under these exceptions –b/c otherwise would not have to pay the debts)

1. A promise to pay a debt that is no longer legally enforceable bc of the running of the statue of limitations

2. A promise to pay discharged debts in banckruptcy court (if you make the promise to repay after the proceeding have started)

3. A promise by an adult to pay for a debt when he was a child (could have avoided debt bc he was a kid and chooses to pay instead)

B. Webb v. McGowin Rule (guy ends up crippled after saving mans life)

i. A person who has received a material benefit from another and then promises to pay for the benefit IS liable to perform his promise

ii. There was also consideration (det. to promisee / benefit to promisor)

C. Promissory Restitution §86

i. 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

ii. A promise is NOT binding when:

a. the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; OR

i. Kirksey v. Kirksey

b. to the extent that its value is disproportionate to the benefit

D. Broadnax v. Ledbetter “Rewards” § 81

i. Idea of conventional reciprocal inducement – difficult to prove one motivation

ii. As long as Broadnax didn’t complete the contract (turning him in) – Broadnax can wait until the promise is made and then turn him in to get the reward

III.ILLUSORY PROMISES

An illusory promise is one in which the promisor gives the illusion of making a va