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Contracts
St. Louis University School of Law
Baxter, Teri Dobbins

HOW TO STRUCTURE YOUR FINAL EXAM ANSWER
–          The exam starts off with a conclusion
–          Before you start writing, think through the entire answer.
o       It helps you figure out what is important and what isn’t
o       Is there an offer and acceptance and consideration, it may be that they are not in contention
o       The only real issue is consideration
o       Thinking it through will allow you for more time for the accurate things
–          The conclusion should not be so definite. It is most likely that the answer will be equivocal. (Probably yes, or probably no.)
–          If you are going to rely on a rule, identify the source of the rule and identify all of the essential elements.
o       You are more likely to go more into detail when you identify all of the elements and provide an analysis on all of them. 
o       Some of them will not be discussed because they are not in contention
–          Noting both sides of the argument
–          Address each sides argument per issue,
–          You do need to focus on any good strong counterargument that they would provide.
–          The student gives cites to authority for any proper statement of law. If you are writing and you only have one cite then you have done something wrong. You won’t need to cite to both of them because sometimes they overlap. 
–          Any authority is useful. But the case is the better way to adopt the rule. The cases are going to give you the best analogy. 
GENERAL ISSUES IN CONTRACTS
Types of Contracts
–          Actual/ Expressed Contract: The terms of the contract are in written or spoken words.
–          Implied Contract: The terms of a contract are implied based on an action by the parties.  
–          Quasi-Contract: A class of obligations which are imposed or created by law without regard to the assent of the party bound, on the ground that they are dictated by reason and justice (restitution, unjust enrichment). The classic case of this is Cotnam v. Wisdom- the person was unconscious and a doctor came to render aid. 
 
Damages
–          Expectancy Damages: the benefit of the bargain of being put in the position that the person would have been in if the contract had been performed
–          Reliance Damages: this measure involves placing the person in the position they were in had the contract not been made. This is the middle amount of damages recoverable. 
–          Restitution Damages: For unjust enrichment cases. This is the out of pocket expenses paid to the defendant.   
 
CHAPTER 1: BASIS FOR ENFORCING PROMISES
I.        Consideration as a Basis for Enforcement (Consideration, Reliance (promissory estoppel) and Restitution)
a.       TEST FOR CONSIDERATION: IS THERE A BARGAINED FOR EXCHANGE
b.      Restatement Sd 71- To constitute consideration, a performance or return promise must be bargained for
                                                              i.      Bargained for
1.      A performance or return promise is bargained for if it is sought by the promisor in exchange for his or her promise and is given by the promisee in exchange for that promise. 
2.      The performance may consist of
a.       An act other than a promise, or
b.      A forbearance, or
c.       The creation, modification, or destruction of a legal relation. 
-Peppercorn consideration is not consideration
-The language of in consideration used does not necessarily mean that there is consideration
c.       Performance as Consideration
                                                              i.      Hamer v. Sidway – the uncle promised to pay his nephew if he didn’t drink or smoke.
1.      Rule: Any suspension or forbearance of a legal right at the request of another is sufficient consideration to sustain a promise.
                                                            ii.      Webb v. McGowin-P suffered permanent disability because by preventing D from suffering bodily harm or death while performing a job function prescribed by his employer. D promised to pay P for the rest of his life as compensation for saving his life and due to P’s permanent disability. Payment was stopped following the D’s death; P sued his estate
1.      Rule: Where the promisee cares for, improves and preserves the property of the promisor, though done without his request, it is sufficient consideration for the promisor’s subsequent promise to pay for the service.  (MORAL OBLIGATION + MATERIAL BENEFIT ON PART OF PROMISOR = CONSIDERATION)  
d.      Performance not seen as Consideration
                                                              i.      Mills v. Wyman-Dad promised to pay a man who took care of his sick kid. (past performance)
1.      Rule: Past performance is not consideration because the guy took care of the defendant’s son without a promise, and he made the promise after the performance. There was no material benefit here to the father, so he was not obligated to pay.
                                                            ii.      Feinberg v. Pfeiffer- D had promised to pay a set amount in pension per month upon P’s retirement, b/c of her past work, setting no conditions requiring performance of P to receive the payments.
1.      Rule: Past performance does not count as consideration. Her past performance was not sought in exchange for the promise, nor was it given for the promise, there was no bargain.
2.      She did not continue to work because of the promise/bargain and she could quit at any time. 
e.       Promises as Consideration
                                                              i.      Fiege v. Boehm-Contract had sufficient consideration because P did not exercise P’s right to prosecute for bastard proceedings in exchange for D’s promise to pay. P made the claim in good faith and there was no proof of fraud or unfairness. 
1.      Rule: Forbearance to sue for a lawful claim or demand is sufficient consideration for a promise to pay for the forbearance if the party forbearing had an honest intention to prosecute litigation which he believed to be well founded.  
                                                            ii.      Wood v. Lucy Lady Duff Gordon- Not illusory because P had a obligation
1.      Rule: For an agreement to be enforceable merely requires that there be an attempt on the part of the parties to fufill the terms of the agreement. So long as P did make attempts to fufill the agreement-in this case by trying to market D’s name –then the promise given value and the terms are enforceable.   
                                                          iii.      Mattei v. Hopper- a term in the contract “satisfactory to the purchaser” is not illusory if determined in good faith, (look at this later)
1.      Rule: A promise conditional upon the promisors satisfaction is not illusory since it means more than that validity of the performance is to depend on the arbitrary choice of the promissory. His expression of dissatisfaction is not conclusive. That may show only that he has become dissatisfied with the contract. He must be dissatisfied with the performance, a performance of the contract, and his dissatisfaction must be genuine. 
a.       There is the good faith test-goes to personal taste
b.      The reasonable person test-how society as a whole would see something.
                                                          iv.      Deposit receipts are binding and enforceable contracts 
f.       Promises not Recognized as Consideration
                                                              i.      Gratuitous Promises- aren’t enforceable because of no consideration
1.      Kirksey v. Kirksey-P received a letter from D, brother in law, stating that if P came to see D, D would take care of P, P left residence and moved where D resided, after a couple of years, D evicted P from his land. 
a.       Rule: A gratuitous promise cannot be enforced.   
b.      He wasn’t seeking for her to give up where she was. He just told her that if she did, she would have a place to stay. He was not actually seeking performance
                                                            ii.      Illusory Promise (one party has absolute discretion in the contract)
1.      Strong v. Sheffield- promissory note case
a.       Rule: an illusory promise is not enforceable, since one party had absolute discretion and there was a lack of mutuality between the two parties, the co

   Look for consideration and restitution first, then look for reliance (and unjust enrichment)
b.      Recovery based on the principle of preventing unjust enrichment
c.       The defendant has to have benefited unjustly
                                                              i.      Restatement Sd 370- A party is entitled to restitution under the rules stated in this restatement only to the extent that he has conferred a benefit on the other party by way of part performance or reliance.
d.      Cotnam v. Wisdom-P operated on deceased D after an accident without obtaining consent due to D being unconscious; D died. P sued D’s estate to recover payment for the medical services rendered. The doctors received a judgment and the defendant’s estate appealed. (unlike mills and mcgowin)   
                                                              i.      Rule: an insane person, an idiot, or a person utterly bereft of all sense and    reason by the sudden stroke of an accident or disease may be held liable, in assumpsit, for necessaries furnished to him in good faith while in that unfortunate and helpless condition.
e.       Callano v. Oakwood Park Homes Corp.- P was contacted by Pendergrast (deceased) to install landscaping on a property he was building; Pendergast died and the purchase of the property was cancelled with D the builder; D sold property to another buyer with landscaping already completed. P sued D for unjust enrichment due to the increase in the value of the home with the landscaping. 
                                                              i.      Rule: to recover on the theory of unjust enrichment, the plaintiffs must prove that the defendant was enriched, received a benefit and that retention of the benefit without payment therefore would be unjust. (Here it is not unjust to retain the benefit without paying for it because there is another way to pay for the service; D may go after P’s estate). 
1.      Quasi-contract cases involve either some direct relationship between the parties or a mistake on the part of the person conferring the benefit. 
2.      In the instant case, P entered into an express contract with Pendergast and looked to him for payment. They had no dealings with defendant, and did not expect him to pay. Under the existing circumstances it would be inequitable to hold defendant liable. 
3.      P may therefore go and sue Pendergasts estate    
f.       Pyeatte v. Pyeatte-P was D’s spouse, they agreed P would pay D’s way through school so long as he would pay for her. D graduated and divorced P; P sued for breach of contract. 
                                                              i.      Unjust enrichment is generally not applicable in marital disputes. But where one partner has taken steps which benefit the other entirely, restitution may be justified. Where both spouses perform the usual activities of marriage, when divorced there can be no restitution for the performance of these activities. When however, the facts, demonstrate an agreement between the spouses and extraordinary or unilateral effort by one spouse which inures solely to the benefit of the other by the time of dissolution, the remedy of restitution is appropriate. 
                                                            ii.      If they were unmarried they may have gotten more.  
 
CHAPTER 2: CONTRACT FORMATION