Contracts Outline
Contract Defined:A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
Restatements on what a promise is
Section 2
1. A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.
2. The person manifesting the intention is the promisor
3. The person to whom the manifestation is addressed is the promisee
4. Where performance will benefit a person other than the promisee, that person is a beneficiary
Objective Theory of Contracts
-If a reasonable person would think that there was a contract, then there was.
-Absent fraud, duress or mutual mistake, a party is bound to a signed document. (Ray v Eurice – document was signed without having read it)
-If there is fraud, there is no contract. (Park 100 v Kartes – said lease agreement, but it actually wasn’t)
-Elements of Fraud: 1) a material misrepresentation of past or existing fact by the party to be charged, which: 2) was false, 3) was made with knowledge or in reckless ignorance of the falsity, 4) was relied upon by the complaining party, 5) proximately caused the complaining party injury.
-Unconscionability: unfair contract
-Mutual Mistake: If the mistake is mutual, both parties can get out of the contract
-Subjective Theory of Contracts: did I intend to be bound by signing this contract? This is irrelevant, what matters is what an objective person would think.
Consideration
-Bargain for Exchange Theory: Negotiations resulting in a voluntary assumption by one party of an obligation in exchange for an act or forbearance by another party. If I……..then you…….
-Has come to dominate consideration
-Restatements Section 71
-1. To have consideration, a performance/return promise must be bargained for.
-2. Performance/return promise is bargained for if a performance/return promise is:
A. sought by the promisor in exchange for his promise AND
B. is given by the promisee in exchange for that promise
-3. Performance may be any of the following:
A. an act other than a promise
B. a forbearance
C. creation, modification, or destruction of a legal relation
-4. The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.
-Benefit/Detriment Theory: Detriment to promisee or benefit to promisor.
-Restatements Section 79
If the requirement of consideration is met, then there is no additional requirement for:
-a gain, advantage, or benefit to the promisor, or a loss, disadvantage, or detriment to the promisee, or
-equivalence in the values exchanged; or
-mutuality of obligation
-Affixing a seal
f you give something to someone for free and say that they have to pick it up around the corner it is merely a condition, not consideration (Plowman v Indian Refining Co. – they said that having to go to the office to pick up the check was consideration, but it was not)
-Illusory consideration: something that might happen
Section 77
A promise is not consideration if the promisor reserves a choice of alternative performance unless:
a) the alternative performances would have been consideration if it alone had been bargained for
B) one of the alternatives would have been consideration and there is a substantial possibility that before the promisor executes his choice events may eliminate the alternatives which would not have been consideration
Section 81
1) The fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise
2) The fact that a promise does not of itself induce a performance or return promise does not prevent it from being consideration for the promise
Promissory Estoppel
Four Elements of Promissory Estoppel:
