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Contract LLM
Temple University School of Law
Levy-Tatum, Jennifer W.

Levy-Tatum_Contracts LLM_Fall_2016

The Concept of Promises & Measuring Damages in Contracts

Contractual Promises v. Gratuitous Promises: Glannon pg. 176.

Hawkins v. McGee, S. Ct. of NH, 1929,” hairy hand case”: P gave a %100 guarantee with the intention that D should accept it. (Contractual promise). Text pg. 10.
Mills v. Wyman, S. J. Ct. of MA 1825, {Helped his son}, D promises to pay P the expenses spent on his son after he got sick & died under the care of P. (Gratuitous Promise = Gifts not complete until delivered), {Moral Obligation is Only between Family Members}. Text pg. 19.

Intro. to Measuring Damages/Remedies in Contracts:

Expectation Damages: (what was received v. what was promised) The Basic rule is to put P in the position he would have been in if the contract had been fully performed.
Reliance (what P suffered?)
Restitution (what P spent?)
Specific Performance.
Punitive Damages (to punish or make an example of the wrongdoer).

: Pain & Suffering damages are usually not compensable in contracts.

Formation of Contracts

Consideration {Must Be Bargained For} see Glannon Ch. 12, 13, 14.

(1)-1 Consideration CAN be:

Unilateral (detriment/benefit), Bilateral (bargain for exchange).

Refraining from Drinking & Gambling: Hamer v. Sidway, Ct. of App. NY 1891, P refrained from drinking for $5,000. Performance can serve as consideration even if it was of questionable value to the promisor, as long as it’s bargained for. Text pg. 16.
Refraining from Seeking Employment in Exchange of not working for a competitive co.: Langer v. Superior Steel Corp, Superior Ct. of PA 1932, retirement Compensation. Text pg. 21.

Reaffirmation of preexisting obligation.

Mills v. Wyman, “Expressed promises on preexisting obligations are good consideration, they are not a promise to pay something for nothing (naked promises). Text pg. 19.

Conditional Promise. See Glannon pg. 211.

Allegheny College v. National Bank of Jamestown, Ct. of App. NY 1927, {Charity to College}, implied bilateral consideration, Lady give P $5,000, in the condition that all provisions of her will are sit and the college shall name a scholarship in her name.

Implied Consideration: (Exclusive dealing) Text pg.35 & Glannon pg. 228.

Wood v. Lucy, Ct. of App. NY 1917, {Marketer & Designer}, P promise to pay %50 of profits and render accounts monthly was a promise to use reasonable efforts to bring profits. (Implied consideration).

(1)-2 Consideration CANNOT be:

Moral Obligation – Family members. Mills v. Wyman, father had no legal obligation.
Past Consideration. In re Greene US D. Ct. 1930, prior to any agreement. Text pg. 23.
Sham Consideration. In re Greene, unpaid in fact nominal value ($1) is not consideration.
Peppercorn Consideration. In re Greene, paid nominal value ($1) is not consideration.
Illicit Consideration. (Illegal consideration).In re Greene, illicit cohabitation.
Release of Unlawful Claims. In re Greene.
Collection of a Promised Gift. (Gratuitous Promise). Kirskey v. Kirskey S. Ct. of Alabama 1845, {Widow}, “if you come and see me, I will let you have a place to raise your family”.
Illusory Promise. See Glannon pg. 225.

Strong v. Sheffield, Ct. of App. NY 1895, {Promissory Note}in order to consider forbearance to sue as sufficient consideration it has to be for a definite, absolute, or reasonable time, forbearance for a little or some time is not consideration. Text pg. 34.
Rehm-Zeiher Co. v. Walker, Ct. of App. KT 1913, {Whiskey Case}, neither of the two parties was actually obliged to do anything. Text pg.37.
Mattei v. Hopper, S. Ct. of CA 1985, {Real Estate-Satisfaction Contract}, are not illusory, because satisfaction is determined according to a reasonable commercial standard.

Mutual Assent: (Offer & Acceptance)

It’s a meeting of the minds determined by manifest intent of the parties. They are judged by observable words and actions. Legally enforceable obligations of contracts have a voluntary nature. Mutual Assent measured by objectively reasonable understanding (what is said and done) Glannon pg. 29 & Text pg. 43.

Embry v. Mckittrick Co. {Re-Employment}, P had an objective reasonable understanding that the president of D re-employed him for another year. Text pg. 44.
L

cceptance)

Employee didn’t rely on the reward upon acting;
Notice of acceptance wasn’t required; and
Reward was an offer regardless of indefinite amount.

Leonaard v. Pepsico. (Objective reasonable standard)

It’s a funny commercial;
It was not definite;
It was not reasonable; and
It referred to a catalog and the later didn’t include the reward.

Harris v. Time Inc. (Free plastic watch):

The junk mail said open and will give you a watch;
It is an offer to be accepted by an act; however

It has an absurd value and it’s a waste of courts’ resources.

The offer is destined for one of two fates: (2)-2 Acceptance, or (2)-3 Termination

(2)-2 Acceptance:

Manifestation of assent to the terms made by the offeree in the way required by the offeror. Def. includes two elements:

Must manifest willingness to be bound in a contractual relationship.
Must reflect the terms of the offer in the way provided by offeror. “Mirror Image Rule”

Counteroffer is accepting with additional or different terms is not an effective acceptance.

Acceptance with changes that doesn’t affect the assent is effective acceptance.

If an offer doesn’t include method of acceptance the law provide a number of rules:

An offer may seek acceptance through:

A promise to preform – Bilateral Contracts; or
A performance – Unilateral Contracts. (Only one promise).

An offer may prescribe the time, place, or manner of acceptance or only provide suggestions for that the offeree may accept in any reasonable way.
An offer may require acceptance in particular words or acts. In the absence of such, the offeree may accept in any medium reasonable way.