Lucy v. Zehmer (1954) CB 1; Notes 1
Rule: Oral agreements may serve as enforceable contracts even so much as to force specific performance.
Facts: At the D’s restaurant, P offered D $50G for his farm. This was not the first time that P attempted to purchase the property. Apparently D was joking when he agreed that he would sell it, but P that that he was serious. D wrote out a “title” on the back of a guest check and had his wife sing it. He told his wife that it was a joke but P did not hear that. P attempted to give him $5 to seal the deal, but D refused.
Issue: Was an actual contract formed during this conversation?
Holding: Yes. A valid contract was formed between the two parties. The acts of the party show intent that the contract should be enforced. Specific performance was ordered here, since damages would not be adequate and usually damages are not in property cases because property is unique.
Intoxication: In order to claim that a contract is invalid because of intoxication, the person must show that they were induced by the other party or that the consideration was inadequate or that the transaction departed form the normal pattern of similar transitions in order for the contract to be considered invalid.
Mental Illness: Mental illness can render a contract invalid. If the person is under 18, then the contract may be considered invalid.
Objective Theory of Contracts: As long as you are given the external appearance of agreeing and the reasonable person would believe that you are making an agreement, then the agreement is valid.
Northern Indiana Public Service Co. v. Carbon County Coal Co. (1986) CB 14; Notes 3
Rule: Not force majeure, frustration, or impracticability excuse NIPSCO to breach the contract. Carbon is not entitled to specific performance because of waste.
Facts: NIPSCO signed a contract with Carbon, a company that owned a coal mine, which stated that Carbon would sell NIPSCO over a million tons of coal every year for 20 years at a price of $24 a ton, subject to various provisions for escalation which had risen to $44 a ton. The contract had a floor for which the price of coal would be placed but it lacked a ceiling. Therefore the price could rise, and the burden would be on NIPSCO. Indiana Public Service Commission regulated NIPSCO’s rates. In 1983, it directed NIPSCO to make a good faith effort to find, and wherever possible buy from utilities that would sell electricity to it at prices lower than its costs of internal generation and decided letting them spread the costs to their rate payers. NIPSCO was unable to pay for the coal at a cost less than their own generation costs, so NIPSCO decided to stop accepting coal, claiming that it should be excused from its obligation under force majeure because it was something that they could not control because they were under the Service Commission.
Issues: 1(3) Whether NIPSCO’s breach of contract was excused by virtue of the force majeure clause; 2(4) When the doctrines of frustration of impracticability may excuse NIPSCO’s breach; 3(5) Whether Carbon was entitled to specific performance of the contract.
Held: No. NIPSCO is not excused and there should be no specific performance.
BARGAIN THEORY OF CONTRACT
Consideration
A performance or returned promise must be bargain for. It is bargained for when there is some form of exchange. The performance may consist of (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of legal relation.
Formal contract: one that is legally enforceable not, because of its content or because of the circumstances in which it was given, but chiefly because of way in which it was made.
Hamer v. Sidway (1891) CB 35; Notes 7
Rule: A valuable consideration occurs when one party benefits in come way while the other party has some forbearance.
Facts: Story agreed to pay 5G to his nephew William if he refrained from alcohol and stuff until his 21st birthday. The nephew did so and feels that his uncles estate owes him the 5G. The D contends that the contract was without consideration to support it and therefore invalid. D contends that it lacks consideration because the promisor did not benefit from anything and was in the nephews best interest.
Issue: Whether by virtue of a contract the uncle became indebted to his nephew on his 21st birthday.
Held: Yes. Boy should get the 5G. It is enough that something is done, promised, forborne of suffered by the party to whom the promise is made as consideration for the promise made to him.
Unilateral contract – when a promise is given in exchange for a future act. He does not want a promise but rather an act. (Ex. Reward for catching an escaped prisoner.)
Bilateral contract – the exchange of a promise for a promise, with each promise serving as consideration for the other. (This is the way the court reads this case.)
Lake
grade of oil contracted for result in such a detriment to it as would constitute a consideration for the promise of the P to purchase?
Held: Yes. P had other alternatives. P gave up their legal right by not making the right oil. Therefore a sufficient consideration had been met.
Mutuality: The state of exchanging something. Today is usually just an aspect of consideration.
Harrington v. Taylor (1945) CB 52; Notes 10
Rule: A humanitarian act that is voluntarily performed is not such consideration that would entitle recovery.
Facts: D had assaulted his wife and his wife then took refuse in the home of the P. The next day, the D came to Ps house and the D and his wife got in an argument and while D was down, the wife grabbed an axe and was about to strike the head of D off, when P came along and tried to stop her but instead, she ended up chopping off Ps fingers. D orally promised to pay for Ps damages, and only ended up paying a small sum.
Issue: Whether there was a consideration recognized by our law as sufficient to support the promise.
Held: No. A humanitarian act of this kind, voluntarily performed, is not such consideration as would entitle her to recover.
Moral Consideration – if the promisor acts from a strong sense of duty toward the promisee
· Courts have found moral obligation sufficient at times.
Past Consideration – if the promisor is seeking to recompense the promisee for a benefit previously conferred.
Board of Control of Eastern Michigan University v. Burgess (1973) CB 54
Rule: A person can revoke their offer as long as it is before the other party accepts.
Facts: D signed a document, which granted P the option to purchase D’s home within 60 days. The document was signed and $1 was given. Then the P gave written notice that it wanted to buy the house and on the closing date, the D rejects the P’s price. D claimed that the option was void for want of cons
