Contracts-Bodie-Fall 2014
PROMISES
Restatement § 2 Promise – A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.
Restatement § 1 Contract – A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty
Restatement § 3 Agreement – An agreement is a manifestation of mutual assent on the part of two or more persons.
Restatement § 3 Bargain – A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.
UCC 2-105 Goods – Means all things that are movable at the time of identification to a contract for sale other than the money in which the price is to be paid. “GOODS” also include unborn animals and growing crops
Damages – Intended compensation for a breach, measured in the terms of the contract.
Hawkins v. McGee
Alleged Contract:
§ Hawkins had scar tissue removed from hand by Dr. McGee and had permanent damage to his hand
§ “Guaranteed that his hand would be perfect after the operation”
Rule:
§ Warranty is part of the contract (He is entitled to the hand he was promised)
§ Because there is a contract, he is entitled to what he was promised.
§ Oral Promise – performance needs to be specific and clear.
CONSIDERATION
1. CONSIDERATION
Restatement § 17 Requirement for a bargain – The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.
A performance or promise [something of value] in most contracts it will be tangible (money)
§ Legal Requirement that there be some exchange
§ A gift promise IS NOT enforceable
3 COMMON CONSIDERATION ERRORS
1. Benefit/ Detriment Confusion
a. E.g., I promise Sara $200 which means I am giving Sara the BENEFIT of receiving $200 and I am suffering the detriment of losing $200.
b. Each party must suffer a detriment or provide a benefit (No consideration otherwise)
2. Need for a Bargain
a. If there is no bargain for exchange, there is no consideration
b. E.g., I lease an apartment and the lease says no pets and I don’t read and I have an iguana = Consideration because the lease was the bargain.
3. Peppercorn vs. Nominal Consideration
a. Cannot be taken seriously when you are only paying $1 in exchange for hundreds or thousands of dollars
b. However, it is all situational.
Hamer v. Sidway (1981)
Alleged Contract:
§ Story Sr. made an offer if the nephew quit smoking, drinking and gambling he would get $5,000.
Rule:
§ Story II refrained from doing something that he had every legal right to do.
§ He fully performed the conditions and there was consideration for the promise and a contract.
Mills v. Wyman (1825)
Alleged Contract:
§ The father of the child that died wrote a letter thanking for the plaintiff’s services and promised to pay them for their services
Rule:
§ Because he promised to pay for something previously completed there is no consideration for the PAST
Langer v. Superior Steel Corp. (1932)
Alleged Contract:
§ Employer promises to give pension of $100 a month as long as he lives as long as he doesn’t go work for a competitor
Rule:
§ This was not a gift because the letter asks the plaintiff to stop doing something that he had the legal right to do.
In Re Greene (1930)
Alleged Contract:
§ Defendant said he would make his mistress the beneficiary, pay her rent for 4 years and pay her $1,000 a month in exchange for just $1.
Rule:
§ Prior intimate relations is consideration (past consideration)
§ This was nominal consideration (gift not consideration)
§ “Unless actual consideration is present, there is not a legally enforceable contract”.
Kirksey v. Kirksey (1845)
Alleged Contract:
§ Brother-in-law invites widowed sister-in-law to his land and he would give her a house to raise her family “until they grew up”
Rule:
§ He gifted the land to her, and it was unclear whether she worked the farmland but he never asked her to.
§ There was absolutely no bargain. (Conditional gift is not a promise)
Allegheny College v. Chautauqua County Bank of Jamestown (1927)
Alleged Contract:
§
ion or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise
ELEMENTS:
1. Promise (Hawkins v. McGee)
2. Foreseeable (Reasonable) Reliance – at time promise is made, it has to be the person making promise that thinks it is reasonable for the promisee
3. Actual Reliance – After the fact, did the promisee actually change his/her behavior.
4. Injury – Implied (there has to be some kind of damage, you could have relied on something but there was no actual damage)
5. Injustice – injustice can be avoided if the promise is enforced
Rickets v. Scothorn
Equitable estoppel: once you say or act as if something is true, you have to stick with it.
Alleged Contract:
§ She changed her behavior because of the promise the grandfather made, but then he died.
Rule:
§ She is worse than she would have been.
§ Promise + Reliance & Injury has to be a reliance injury (expectation vs. reliance)
Maryland National Bank v. United Jewish Appeal Federation
Alleged Contract:
§ Organizations changing their behavior in reliance on the donation
Rule:
§ Giving out money before they get it. Recognition that it is not reasonable to rely on promises until UJA receives the money.
Feinberg v. Pfeiffer Co.
Alleged Contract:
§ Past consideration, company increased her salary and offered her $200 pension per month until she died as a gift. She could have quit the next day. Rewarding her for her service.
Rule:
§ There was a promise, there was reasonable (foreseeable) reliance, she actually relied, her injury was not getting $200 and she quit work and she wouldn’t have if she weren’t receiving that money.
