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Contracts
St. Louis University School of Law
Baker, Marcy Peek

Contracts Outline

v Enforcing Promises: Bases of Legal Obligation
· Intention to Be Bound: Objective Theory of Contracts
1. Ray v. Eurice Bros.
a. The only intent of the parties to a K which is essential, is an intent to say the words and do the acts which constitute their manifestation of assent
b. Objective theory of Ks
c. Definition of a K – Promise or set of promises for which the breach of which the law/court will grant a remedy OR the performance of which the law in some way recognizes a duty
d. Promise – assurance that something will happen in the future
e. Pepsi commercial – not offer b/c reasonable person wouldn’t believe could buy jet for that few points – ct could’ve come out in different way – u would have to argue both sides
f. Types of Ks
i. Express – words (true K)
ii. Implied In Fact – conduct (true K)
iii. Quasi K – unjust enrichment – remedy is restitution
g. No K in in situations where the parties lack intent — If the objective manifestations of the parties show that they did not intend for their promise to have legal consequences and to be legally enforceable then the promise will not be a K
i. Joking Around – P must prove BOTH that he believed D to be serious AND that he had reason to believe that D was serious
· Enforcing Exchange Transactions: Doctrine of Consideration
1. Hamer v. Sidway
a. Abandoment of a legal right is sufficient consideration
b. Detriment doesn’t mean harm – is means giving up a legal right
c. Test for consideration: benefit/detriment
2. Baehr v. Penn-O-Tex Oil – R: §71
a. If there is no forbearance of legal right by one part because of the assumption of obligation of the other party, there is no consideration
b. promise to pay rent wasn’t given in exchange for any performance – no inducement
c. test for consideration: bargain for exchange
3. Dougherty v. Salt
a. Promise to give an executory gift to be given in the future is not enforceable b/c there is no consideration
b. Merely citing consideration doesn’t make it consideration
c. It matters not from whom the consideration moves or to who it goes
d. Policy: actors involved in donative transactions are often emotionally involved – an informal donative promise is more likely to be uncalculated that deliberative
e. Ways to get around consideration: executed gift, testamentary gift, or trust
4. Batsakis v. Demotsis
a. Inadequacy of consideration will not void a K
5. Plowman v. Indian Refining Co.
a. For ratification of a K, there must be proof of knowledge of all material facts of the K by a recognized authority in addition to fulfillment of the K
b. A moral obligation does not constitute consideration unless it is a legal duty
c. An imposed condition does not constitute consideration if a reasonable person would understand that the performance was not requested as the exchange for the promise
d. There is no consideration for past consideration due to a lack of mutual inducement in the bargain for exchange theory
e. W/ a conditional gratuitous offer, the happening of the condition will be not only of no benefit to the promisor but is obviously merely for the purpose of enabling the promisee to receive a gift
f. Agency – pgs 71-73 in textbook
· Protection of Promisee Reliance: Doctrine of Promissory Estoppel
Ø Promises Within the Family
1. Wright v. Newman
a. PE
b. Remedies: (options: 1: enforce the promise, 2: $ for reliance interest[$ spent b/c you relied on promise – puts promisee back in position she was before promise was made], 3: restitution – unjust enrichment)
c. Factors: reasonableness of promisee’s reliance, definite and substantial character of promise, formality w/ which promise is made, and extent to which other policies are relevant (i.e. unjust enrichment)
Ø Charitable Subscriptions
1. Allegheny College v. National Chautauqua County Bank
a. A bilateral agreement may exist though one of the mutual promises be a promise implied in fact (an inference from conduct as opposed to an inference from words)
b. See R 90(2)
c. Cts have generally refused to adopt R but have been sympathetic to claims of charitable organizations to enforce pledges
d. 1. Restatement Section 90(2) does not require proof of reliance for charitable subscriptions (or marriage settlements). In other words, under 90(2) one need only show a promise that the promisor reasonably should have expected to induce action/forbearance on the part of the charity and a showing that injustice wil

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i. Restitution basis of liability: a person who has been unjustly enriched as the expense of another is required to make restitution to the other – two elements that are central to restitutionary recovery: enrichment under circumstances where the retention of benefits would be unjust
2. Watts v. Watts
a. Notes start here: Services rendered by family members to each other are presumed to be gratuitous
b. Determining family depends on facts, not just kinship
c. Presumption that services rendered gratutitously overcome by: 1) an express K, 2) express or implied K w/ clear and convincing evidence (clear and convincing more demanding than preponderance of the evidence), and 3) extraordinarily burdensome circumstances under which services rendered; some cts don’t require presumption to be overcome
2. Mills v. Wyman
a. There must be some preexisting obligation to pay to form the basis for an effective promise
b. Promises to pay a debt that is barred is sufficient b/c it is a revival of an obligation which existed before but had been dispensed w/ for public convenience
c. Moral obligation is sufficient consideration when there was a past legal obligation to pay that for some reason became unenforceable and there is a later promise to pay
d. See R section 82 and 83 and 85
e. R says promise must be express
f. Types of prior legal obligations: debts discharged in bankruptcy, debts incurred by infants and debts barred by the statute of limitations
g. Three ways to revive prior legal obligation: express, acknowledgment, partial payment
3. Webb v. McGowin
Where the promisee cares for, improves and preserves the property of the promisor, though done w/o his request, it is sufficient consideration for the promisor’s subsequent agreement to pay for the service, b/c of the