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Contracts
University of California, Davis School of Law
Joo, Thomas W.

CONTRACTS OUTLINE- JOO 2007

What is a contract?

Restatement 2nd of Contracts: a promise or set of promises that the law will enforce.
An agreement involves more than one party; whereas a promise can be one sided
Private Ordering: the price by private parties (not the government)

Uniform Commercial Code (UCC): this is the law (special body of rules) that deals with the law of contracts for the sale of goods [not necessarily merchants] -certain parts of the UCC apply only to merhcants
-must be a movable good (so limits property)
-applies to consumer transactions as well

Hybrid [good and service]: look at what the K’s fundamental purpose is

Movable goods (UCC), Services or Real Estate (Common Law)

ASK: Does this apply to goods? YES: use UCC, if not then apply Common Law (services, real estate)

ENFORCEABILITY: these are the four bases for enforcing promises (in order of strength)

Consideration
Substitutes for Consideration

Reasonable Detrimental Reliance (Promissory Estoppel)
Moral Obligation

Absence of a promise: quasi contract

1. CONSIDERATION
Consideration (C): A’s promise to B is supported by consideration.

A benefit to promisor (A got what they bargained for) OR a detriment to promisee (B) AND
Bargained for in exchange for A’s promise [bargain is simply an agreement]

YES:

Hamer v. Sidway: The uncle promised the nephew that “if he gave up smoking, he would pay him $5000”

i. The uncle tries to argue that the nephew didn’t give up anything (thus there was no detriment) but the nephew gave up a legal right.
ii. Restatement 2d §79 (a) “If the requirement of consideration is met, there is no additional requirement of…a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee”

Fiege v. Boehm: F promises to support B’s child. F finds out that he is not the father, and he stops paying. The question in whether the promise is enforceable. This is similar to Hamer, in that the plaintiff gave up a legal right to sue for child support)

NO:

Feinberg v. Pfeiffer: Feinberg worked at the company and was promised a pension. When the owner died, the company stopped paying. The question is was there consideration for the promise for the pension:

i. There was no consideration because (while there was a detriment) it was not bargained for, there was no exchanged on behalf of Feinberg.
ii. Past service (her 37 years) nor the 2 years after she worked when the promise was given, was not consideration because there was no exchange or mutual reciprocal inducement.

Promise as Consideration:

For a promise to constitute consideration, the promise mus

ets the oil at the lower price (expectational damages) because of the fact that the oil shortage might prevent airplanes.
Promise as consideration

YES

Wood v. Lucy: Lucy promises to give Wood the exclusive right to her name, but she then places her name on other designs without paying Wood. Wood’s return promise was an implied promise to market (based on good faith).

This was not written down, so the court decides that this implied promise exists.
Lucy made the promise but then argued that there is no consideration because she didn’t get anything in the return (which the court doesn’t think is logical)
Promise as consideration

Exceptions:

Bankruptcy: if you owe someone money, go bankrupt, the debt is discharged. If you come out of bankruptcy and promise to pay it back, then the promise is enforceable.
Lend money to X, X doesn’t pay, statute of limitations runs, then X promises to pay, then enforceable
Children cannot make enforceable promises. However, once the child is an adult and promises to pay (this would be enforceable)