Ch. 1: Introduction/The Importance of Promise
1. Introduction
A. Contract= every issue respecting the legal enforcement of a promise
B. Restatement 2nd Defines Contract: “a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in someway recognizes as a duty.”
2. What is a Promise?
A. Promise: a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promise in understanding that a commitment has been made.
– Result of a contract is a legal relationship involving rights and duties of a person.
B. (Bailey v. West: plaintiff boarded horse—Bascom’s Folly at farm, held an implied contract never existed between the plaintiff and defendant that would entail repayment for costs)
a. Implied contracts do occur and are every bit as enforceable as express contract, but hard to prove.
b. Elements of Quasi-Contract:
a. Benefit conferred upon D by P
b. Appreciation by D of benefit
c. Acceptance and retention of benefit by D that it would inequitable to retain the benefit without payment.
c. Courts are generally hesitant to bind people in contracts when unwilling, however, when contract is obvious, Courts are hesitant to let parties out of the deal.
C. (Bolin Farms v. American Cotton Shippers Assoc.: cotton farmers had forward contract for sale cotton, when harvested worth 300-400% more, didn’t want to honor contract, court held a party cannot be released from an explicit, fair contract if market becomes unforeseeably more advantageous for that party.)
a. Parties responsible to know risks (any possibly foreseeable)
b. Excuses by “changed circumstances”: in earlier cases, judges held no excuse, but later cases there is a degree of mitigation of strict rule (2nd semester—mistake)
c. Changes of circumstances are foreseeable=no excuse.
3. Theories of Promissory Liability
A. Formalism v. Realism: different theories on importance of consent after requiring consent for an agreed exchange:
a. Formalism: form of rule, prefers rules over standards, just enforce agreements parties make—nothing more. (no contextual interpretation beyond contract’s explicit terms)
i. Offers permanence and stability.
b. Realism: more modern thought; prefer flexible standards, want flexibility so that justice can be found in the context; idea we are imperfect and situations where parties couldn’t have foreseen everything—try fix/resolve.
i. Awful to enforce; prefer substance over form and standard rules; more attention equitable factors.
– Judges will be in one school of thought, and will have to persuade if want different decision.
– Generally don’t discuss policy in exam answers (this probably okay tho)
B. What promises ought to be legally binding?:
a. Importance of Consideration: consideration is required to make a promise or contract enforceable.
Ch. 2 Contract Liability
1. The Consideration Requirement:
A. Consideration:
i. Benefit/Detriment: encompasses dual notion of consideration: involves both a benefit to the promisor and a detriment to the promisee.
ii. Restatement defines Consideration:
1. To constitute consideration, a performance or a return promise must be bargained for.
2. A performance or a return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
3. The performance may consist of: (a) an act other than a promise, (b) a forbearance (not act), or (c) the 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 of by some other person.
a. Types of enforceable promises or contracts, each involving where something is added to the promise to make it legally binding:
a. Promise plus consideration (section 1)
b. Promise plus recognition or an antecedent benefit (section 2)
c. Promise plus unbargained for reliance (section 3)
d. Promise plus form.
– Statute of Frauds may require a promise/agreement otherwise enforceable in a signed writing or record.
B. Bargained for and Given in Exchange:
a. Bargain= exchange of promises, acts, or both, in which each party views what she gives as the price of what she gets—can include not only promises and acts, but promises forebear and actual forbearance from performing acts one is legally entitled to perform.
i. General rule: a bargain=consideration, i.e. a bargained-for promise is enforceable.
ii. What Constitutes a Bargained for Exchange:
1. Takes more tha
ct/agreement enforceable by law—no bargaining!)
i. 2 important lessons:
1. Definiteness of promise doesn’t make it enforceable (even if written down and person intended to carry out when they said it)
i. What makes it enforceable is being able to find consideration: here promise not bargained for!!
2. Don’t get in business with family.
f. Pennsy v. American Ash: (notes case): court held that D’s promise induced the P to take title of defective aggrite and this detriment was the inducement for D to offer free aggrite for the project.
i. Parties need not bargain over the exact terms of the agreement – the promise and the consideration must be in the relation of reciprocal conventional inducement each for the other.
C. Mixed Motives and Nominal Consideration (relevance of form)
– Consideration: bargain for exchange and either/or benefit to the promisor, detriment to the promisee (Typically in commercial contract, there exists both—each side giving something and getting benefit=ex. work/pay)
a. Restatement: the fact that what is bargained for does not itself induce the making of a promise does not prevent it from being consideration for the promise.
b. Thomas v. Thomas: (wife of deceased husband allowed live in house by testators/brothers for the rent of a pound a year and duty keep the house in good and tenable repair; court held her payment of a pound a year was not only a good consideration, but a valuable consideration that creates a binding contract—regardless of motives/intentions of the promisors of agreement)
i. Motive doesn’t Matter
ii. Case introduces problem of mixed motives into ideas consideration:
1. Court’s reasoning=distinguishes motive from consideration, here there was an express agreement with a sufficient legal consideration, and is independent of the moral feeling that caused the executors to enter into such a contract.
