Contracts Outline

Contracts Class Notes
 
Is it necessary for the maker of a promise to actually intend to e legally bound to perform in order for the promisee to enforce the promise? We will first consider the issue of intent.
Is there anything else necessary for enforcement? We will study three grounds
Consideration (Private Autonomy?). Giving something in exchange.
Reliance on the promise (Promissory Estoppel).
In history reliance was all that we needed for a promise.
HYPO: Uncle comes in store niece is working and says “none of females in family have worked and don’t like the fact that you work, so makes a promissory note to her for $50,000”-Niece takes it and decides to quit her job.
Niece didn’t bargain for the exchange, but she did rely on it to her detriment.    
Under bargained for exchange not enforceable
Unjust Enrichment (Restitution).
HYPO: Sitting at home big truck drives up and you see them begin to mow the lawn and do yard work and comes back later and does it again-you don’t say anything.   
No bargained for exchange
9-2-04
Intention to be bound: the objective theory of contract
The primary concept in the following materials, mutual assent, reflects the common law’s devotion to the freedom of contract model.
Mutual assent-meeting of the minds
The notion of “freedom of contract” is premised on the classical theorist’s conception of law.
Contract law involves the private sphere. The object of contract is the fulfillment of the expectation of the individual parties.
Contract is voluntary (consensual) association between parties
Mutual assent is the expression of the individuals’ will to bind themselves in mutual responsibility.
If contractual liability results because of judges’ reliance on public policy or community norms, in this an expression of individual freedom or private autonomy?
Contract formation based on community norms is the antithesis of and expression of individual freedom and the notion that contracts law falls within the private sphere.
Mutual assent is a central concept of contract law.
The objective theory of contract
If in fact contract law stresses expression of commitment as a basis for enforceable legal obligations, wouldn’t mutual assent call for an actual meeting of the minds?
How do you know when mutual assent occurs?
Does the notion that mutual assent is based on objective theory of contract move contract law into the public sphere?
Contract must be reasonable to the reasonable person.
Standard is now that it has moved form the private into the public sphere.
Is the following statement by justice homes consistent with the classical theorist belief in private autonomy? “The law ha nothing to do with the actual state of the parties minds. In contract, as elsewhere, it must go by externals and judge parties by their conduct.”
Ray v. William G. Eurice & Bros, Inc.
Dispute is that Eurice brothers wanted to be able to do things their way with out someone looking over their shoulder through the entire process. 
Maryland rules would apply because of the location. Even if ignorant in terms of the writing and you sign it you are liable.
Do you have to know what a contract says, or is singing it enough?
Singing is enough unless fraud, duress, or mistake
Meeting of minds isn’t requirement for a valid contract-if both not assenting to the same thing no contract
Rule: One who has capacity to understand a contract and fails to read, have read to him, etc., will be responsible for the contract, unless duress, fraud, or mistake.-Eurice has been builder for a long time and has substantial knowledge.
FHA loan based on 5 page specifications-Eurice thought he was signing the 3 pages, but the above rule applies
All facts point to the 5 page document
Objective theory in subjective theory out
Signing of the document represents the objective theory which represents assent.
 
 
9-16-04
Promissory Estoppel
1.      We have said more than once in this course that the 1st Restatement reflects classical contract law doctrine.
2.      1st Restatement included § 90. The provision follows pg 82
a.       Page 82
b.      For a brief moment, let separate this provision into its various elements
                                                     i.      A promise-must determine if the promise is thereàrule itself can be guidelines
                                                   ii.      Which the promisor should reasonably expect to induce action or forbearance
                                                  iii.      Of a definite and substantial character on the part of the promisee
1.      forbearance or reliance is of substantial cost to the promisee
                                                 iv.      And which does induce such a action or forbearance is binding
                                                   v.      If injustice can be avoided only by enforcement of the promiseàonly way to remedy to induce the promise
3.      Professor Grant Gilmore in his notable article, “The Death of Contract,” stated that the inclusion of § 90 into the First Restatement Marked the death of contract
a.       He declared that when both §§ 90 and 75 were adopted into the 1st Restatement it proved that the whole document was schizophrenic. The Restatement was schizophrenic because the bargain for theory of consideration reflected in then § 75 was antithetical to the liability based on unbargained for reliance found in § 90. These sections were as “antithetical as antimatter would be to the universe we know.” As matter and antimatter could not exist in the same universe §§ 75 and 90 could not exist in the same universe of contract law, “one must swallow up the other.” Why would Gilmore say this?
                                                     i.      Felt this made doctrine of consideration invalid
                                                   ii.      Enforcing a promise that didn’t express any action on part of promisee who didn’t really ask for any promise in the 1st place
                                                  iii.      Consideration (no reliance) is going to apply and enforce a much broader array of promises then promissory estoppelàPromissory estoppel is easier to prove then consideration because just needs to be promise and relianceàno inducement
                                                 iv.      Promissory estoppel narrows the scope of the doctrine. Must rely on the promise by an action on your part causes a detriment to the promisee-has to be reasonably expected-must be connection to promisee (reliance)
                                                   v.       
b.      The 2nd Restatement version of § 90 provides
                                                     i.      A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a 3rd person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
1.      Added 3rd party which broadened the 1st restatementàwhich allows 3rd party to recover
c.       HYPO
                                                     i.      Uncle said your mother did not have to work this hard; here’s is a note for $10,000. You should not have to work
                                                   ii.      Niece quits her job in reliance on the uncle’s promise
1.      a promise
2.      which the promisor should reasonably expect to induce action or forbearance by promisee or 3rd party
3.      which does induce action or forbearance
4.      injustice can be avoided only by enforcement of the promise
a.       it would appear that the system of contract law would apply equally as well to transactions between family members
                                                  iii.      most promises in the context of family relationship my be motivated by feelings of affection rather than by the expectation or return or a quid pro guo
 
10-5-04
Promissory Liability
Mutual Assent
Offer/Acceptance
Consideration
Promises within family
Reliance
Promissory Estoppel
Charitable Subscriptions
Promises within Commercial Context
Restitution
Benefit Conferred
No promise
Benefit Conferred + promise
Offer/Acceptance
King v. Trustees of Boston University
What did the role of donative intent play in either charitable subscriptions or consideration?
What must you first establish in promissory estoppel or consideration?
There was a promise
Did the letter constitute a promise?
The court concluded that the letter constitutes a promise or how did the tie back donative intent with promise?
Court looked at two things, the bailee/bailor relationship could have allowed a fact finder to be a security of promise to give a gift in the future of bailed property
Pg 96àIf you place it in the custody, you establish intent
P argues that this amounts to a will but this does not prevent you from making contract liability
An express or implied intent to make a promise
Reliance or consideration
Indexing the papers and maintaining their care
If established bailee/bailor relationship how can this be reliance?
How can the very thing they were required to do also be the reliance that they are saying under promissory estoppel?
Becomes reliance because they were maintaining care of the papers
Charitable subscription did more then would be expected of a bailee/bailor relationship, but where is the consideration?
Where in the opinion is the consideration?
Pg 98, it seems that an actual benefit to the promisor, or an actual loss or disadvantage to the promisee, will be sufficient consideration to uphold a promise deliberately made.
Detriment to promisoràperformance of BU went beyond what is required by the bailment
Benefit to promiseeàSafety of the papers
 
Promises in a commercial context
 
With regard to charitable organizations, does it mean they do not engage in commercial transactions?
UCC applies to transactions and goods
Look at contracts in terms of UCC
Segregates transactions in goods (article 2 or UCC would control), and service contract