Fall 2014 CONTRACTS OUTLINE
Professor Su
Textbook: Contract Law and Theory, 5th Edition, Robert Scott
CHAPTER TWO: ENFORCING PROMISES
A. Consideration Doctrine: Exchange between parties to a contract must take place to satisfy requirement of consideration. Need bargain for exchange and legal value (something measurable, not “love”).
[1] Bargain vs. Gift
1. Hamer v. Sidway (gift):
F: Uncle promises nephew p to give him $5K if he refrained from drinking, etc…until age 21 and agreed to give p money when p was able to be responsible for it. Uncle died without paying him, estate says no consideration.
R: Consideration because one abandons some legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first.
Kirksey v. Kirksey: Brother in law D has Widow p move to his land, p gives up her land and moves 60 miles, D later makes p leave his property. H: In order to enforce a promise as contract there must be some form of consideration
St. Peter v. Pioneer Theatre:
F: p attends lottery at theatre, but isn’t patron of theatre. p wins, but D refuses arguing no consideration because pdidn’t pay anything and if there was consideration, there was illegal lottery
R: When a promisor makes a promise contingent on another performing an act…an affirmative act by a promisee constituted consideration.
In Re Greene: D gave monthly payments to lover p in exchange for $1, D stopped payments. H: Must be actual consideration.
[2] Adequacy of Consideration
Batsakis v. Demotsis: p loaned money to p during war time in Greece, equivalent of $25 for $2000 in return
R: Inadequacy of consideration alone will not void K, need fraud, duress, or misrepresentation.
Adequacy Doctrine: any nominal value could serve as consideration for a bargain
Nominality Doctrine: disparity in value with or without other circumstances sometimes indicates purported consideration was not bargained for but was mere formality, such nominal consideration will not suffice to make promise legally enforceable
Wolford v. Powers: Before dying D promised to pay for p’s child schooling and to live well. Consideration to D was for child to be named after D and for family to take care of other small duties for D; adequate consideration
Mutuality of Obligation: One promise exchanged for another (Bi-Lateral contract). Both parties bound, or neither is bound
B. Promissory Estoppel
[1] §90 of Restatement; if a person suffers from reliance or promise then it is ok for judge to reward person what is due.
[2] If promisee changes position substantially by acting or not acting in reliance upon a gratuitous promise then promise can be enforced even though essential elements of contract not present
(a) Must have promisor, promisee, and substantial detriment
(b) Promisor is affected only by reliance which he foresee
(c) Remedy generally specific perf. or expectancy damages
(d) Context of promise is important factor in Estoppel cases
[3] Congregation Kadimah v. Deleo: D promised congregation money, however died before payment. No written agreement. No clear reliance, they just planned on possibly naming the thing after him.
R: An oral donative promise will not be enforced if not in writing or not explicitly relied upon. No proof that promise created detriment, no legal benefit to promisor nor did promisor state what donation was for
Alleghany College: They set up a scholarship in her name so it was okay.
[4] Milligan v. Mueller (charitable)
R: Allowed oral promises for charitable subscriptions (unless they fall under statute of frauds.)
[5] Haase v. Cordoza (Interfamilial Contexts): D promised husband on deathbed to give money to his sister p. Told sister p she would, didn’t.
R: Interfamilial promises must be accompanied by consideration.
[6] Ricketts v. Scothorn (Interfamilial): Grandfather issued promissory note for p granddaughter saying she wouldn’t have to work again. She quits job; Grandfather dies before note paid off.
R: A promise is enforceable without consideration if promisee suffers a detriment from relying on promise
[7] Feinberg v. Pfeiffer (Employment Promises): D Employer promised retirement package to p employee, who doesn’t receive retirement
R: Promise inducing action or forbearance is binding if injustice can be avoided only by enforcement
[8] Hayes v. Plantations Steel (Employment Promises): p announces intent to retire, then company given pension plan. D corp buys company and refuses.
R: Promise must induce reasonable reliance by p in order for promissory estoppel to apply. Promise was found not to induce reliance because p had planned on retiring before the promise was made
Chapter 3: The Bargain Context
OFFER AND ACCEPTANCE
[1] Subjective and Objective Tests of Mutual Assent
a Restatement Second §17 – before contractual obligations can be created, both parties to a contract must agree to the terms. – manifestation of mutual assent.
b Two tests for determining mutual assent – difficult to determine
i The subjective test or “actual intent”
o Requires that there be, in fact, a meeting of the minds between parties to a contract before a contract is legally binding.
ii The objective test – Fairness
o Relies on
terms thereof made by the offeree in a manner invited or required by the offer.”
b Methods of Acceptance
i Ever-Tite Roofing. v. Green: D hired p to do re-roofing, p sent trucks to begin work, but D forbade them from doing work.
o R: Withdrawal: An offer may be withdrawn before its acceptance and that no obligation is incurred thereby.
o R: The contract was accepted by p by commencement of performance of the work contracted to be done.
ii Ciaramella v. Reader’s Digest: K that says “not binding until signed” is enforceable even though against default.
o R: If the parties intend not to be bound until the agreement is set forth in writing and signed, they will not be bound until then, partial performance, whether all of the terms of the agreement have been agreed upon, whether the agreement at issue is that type of K that is usually committed to writing.
c The Mailbox Rule – Restatement Second §63: Acceptance of an offer by mail takes effect as soon as the acceptance is mailed, even if never reaches the offeror.
4 Revocation of Offers: Once an offer is made, it remains open a reasonable time so the offeree can respond. The offeror may revoke his offer without incurring liability, provided the offeree has not already manifest acceptance.
a Mailbox: Revocation of an offer does not become effective until the offeree actually receives the letter communicating withdrawal.
b Irrevocable Offers: It is possible to create offers that cannot be revoked for a specific period of time. Ex. Option contracts and certain firm offers and construction bids can be irrevocable.
i Option Contract: one party pays another to make an offer by the latter irrevocable. Paying to keep an offer open.
ii Where the sale of goods is involved a merchant’s “firm offer” is treated as the equivalent of an option contract IF the offer is in a signed writing in which the merchant gives assurances that the offer will be held open.
iii Pavel v. A.S: D subcontractor sent bid to p. p was still soliciting other bids. D tries to rescind offer because of mistake. Was no reliance on D because p was still soliciting other offers.
