Contracts Outline

Doctrine of Consideration
 
Foundational concept of contracts theory: something must be exchanged
 
1.      Limits of Contracts
 
·         a K is a promise or a 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.
 
Rule: Contract is unenforceable if it is contrary to law, public policy, or morals.
 
è Parenthood by K is not the law; the law will not enforce Ks of an extremely personal nature. In Re: Marriage of Witten; T.F. v. B.L.
 
 
Rule: Oral agreement between husband and wife not considered a marital contract; neither are certain contracts meant to be performed perpetually.
 
è “Agreements between parties which do not result in Ks” … “the arrangements which are made between husband and wife”. Balfour
 
Rule: Law cannot entangle in matters of religion, so courts can only enforce secular aspects of religious agreements.
 
d.      Radin’s Market-inalienability
                                                              i.      human desire for non-commodification certain things that are central to our understanding of being humans
                                                            ii.      can’t have market for infants, organs
                                                          iii.      If rich father wants to pay for kidney for daughter, and poor woman wants to sell, then why not?
 
2.      Donative Promises, Form, and Reliance
 
a.      Simple Donative Promises
 
·         No legal obligation created in a donative promise, which is a voluntary promise to make a gift in the future.
 
                                                              i.      Rule: In classical contract law, only bargain if there is CD, though relied upon, agreement was not enforceable because of lack of CD.
 
è sister-in-law relies on promise and moved in, then kicked out; no reliance principle, so no K. Kirksey
 
 
 
                                                              i.      Rule: Modern K law: Reasonable reliance now enables promise to be enforceable
 
è Woman relied on retirement promise to retire: relied upon, thus K binding. Feinberg
 
 
BUT
 
è Man makes annual visits to see if pmts continue, going to retire anyway, no reliance = no K. Hayes.
 
 
                                                            ii.      Rule: Promise to make gift not enforceable as such; no CD.
 
è note to boy stating value received, when in reality not, is not sufficient consideration to enforce aunt’s verbal promise of gift. Dougherty.
 
 
                                                          iii.      Conditional promise
 
1.      Conditional bargain promise: performance of condition is price of promise; K
 
2.      Conditional donative promise: performance of condition a means to make the gift (e.g., walk around the corner and buy yourself a coat); no K
 
b.      Nominal Consideration
 
                                                              i.      Rule: Nominal or moral consideration not sufficient CD to make contract enforceable—must be something of value.
 
è 1cent for $600, no K. Schnell.
 
Nominal considerations can be valid, but fraud and duress suspected. 
 
c.       Reliance
 
                                                              i.      Promissory Estoppel [RS90]  
A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third 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.
 
                                                            ii.      Three factor test
1.      Reasonableness of reliance by promisee
2.      Foreseeability to promisor
3.      Prevention of injustice
 
                                                          iii.      Examples:
 
B promises to pay A pension of $ 200 per month when A retires. A retires and forbears to work elsewhere for several years while B pays the pension.
 
è B’s promise is binding. Feinberg
 
 
Barcardi
Volatile liquor market in Indiana; P relied