Basis for a Remedy:
A. Benefit to promisor OR detriment to promisee
i. a purely gratuitous promise cannot be enforced as a contract.
1. no legal detriment in undertaking to use a gift for its designated purposes… no right to the money (or other gift) in the first place so nothing given up by promising to use it a certain way.
ii. Detriment to promisee:
1. property, money, or some legal right has been given up
2. Detriment may even be something that benefits or furthers the interest of the sufferer.
3. can be an immediate act (giving or doing something), a forbearance (refraining from something), or partial or complete abandonment of a right.
a. Forbearance of a claim: must be legitimately in dispute, or claimant must honestly believe it has merit, even if it doesn’t. (no giving up false claims for nuisance payment)
b. can also be a promise to act, forbear, or abandon a right in the future.
a. Waiver of a legal right is sufficient consideration Hammer v. Sidway; doesn’t matter if it doesn’t benefit the promisee.
b. The court does not inquire into the adequacy of consideration
5. pre-existing duty:
a. one does not suffer a detriment by doing what one is already obliged to do, or by forbearing what one is already forbidden to do. Alaska Packers
b. Pre-existing duty must be owed to the promisor, not to somebody else. (promise not to drink even though you’re underage; pre-existing duty to the state, but not to the uncle; still is consideration.)
c. Ex: buyer agrees to buy skis for $100; seller wants to change price to $150 because it’s more fair; already obligated to deliver the skis, so didn’t offer consideration (detriment) for the increased price from the buyer. (even if buyer had agreed)
d. Ex: a debtor agrees to let the borrower have more time or pay less. There is no additional consideration received for that promise. The borrower has pre-existing duty to pay the full amount now.
e. Unexpected burden on the promisee could negate the need for additional consideration. (in the debtor example, if a sudden burst in the market caused him to go out of business it may justify the use of unforeseen economic difficulties. However, economic adversity is commonly foreseeable.)
f. Any additional consideration is sufficient (throw in a used pair of thermal underwear for the increased price.)
g. This can be used especially when the additional agreement was coerced.
B. UCC 2-209: “good faith test” (no additional consideration needed)
iii. Benefit to promisor:
1. not necessary for consideration
2. the promisses’s detriment doesn’t always transfer into a tangible, valuable benefit for the promisor.
A. Ex: A gives $100 in return for B’s promise to stop smoking.
3. it’s good as long as promisor got what he bargained for.
2. Bargained-for exchange
i. The detriment is in exchange for the promise, not just coincidental
1. Restatement 71(2):
3. A performance or 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 the promise.
ii. Gifts: (not bargained-for)
1. look out for conditional gifts (I’ll give you 20k if you enroll in law school)
2. Family agreements have a rebuttable presumption of being a gift.
iii. Ex: “if you walk to my car, I’ll give you the skis on the rack.”
1. the act of walking to the car is the detriment
2. but this detriment seems incidental to the promise
3. Common experience suggests that the parties didn’t see it as the price for the skis, but simply as the act needed to take delivery of the gift.
4. the apparent purpose is to give a gift
iv. Past Consideration
1. Each party’s detriment must induce and be induced by the other’s. So if the promisee suffered the detriment before the promise was made, we can’t say the detriment was in exchange for the promise.
2. Past consideration is not consideration: Feinberg v. Pfeiffer
3. look to promissory estoppel
4. for moral obligation, restitution
v. False of nominal consideration:
1. false consideration:
2. nominal consideration: “Peppercorns”
a. restatement: if nominal consideration is only to mask a gift it’s no good.
vi. Conditional Promises
1. can be consideration as
i. Still giving up something (The 30 days) – not illusory (UCC requires reasonable notification or the happening of an event.)
e. At-Will Employment
xi. Requirements/Output Contracts:
A. Requirements: the buyer promises to buy (and the seller to sell) all that the buyer needs.
B. Output: the buyer promises to buy (and the seller to sell) all that the seller can produce.
C. UCC 2.306(1) implies an obligation of good faith in these dealings
i. If there is a stated estimate, it must be reasonably related to it.
xii. gifts/gratuitous promises: not enforceable unless benefits the promisor or was bargained-for.
xiii. Peppercorns: some courts won’t find consideration if it’s only a mask for a gift.
III. Offer and Acceptance
i. Gives the other party power to create K (gives the offeree power of acceptance)
a. Intent to be bound on acceptance (as opposed to mere discussion with further approval needed from offeror)
iii. Options after offer (for offeree):
c. counteroffer (rejection + new offer)
a. time expressed; or
b. reasonable time
i. if in each other’s presence, by the time they part.
b. revocation by offeror
a. can take back any time before acceptance.
b. Direct revocation:
i. Effective when received by offeree.
ii. Offeror tells Offeree or offeree hears of it from reliable source.
c. Indirect revocation:
i. Power to accept is terminated if offeree finds out that offeror has taken action inconsistent with intent to be bound. (Selling to someone else.) Must be clear.
d. Option Contracts and Firm Offers:
i. An option is a promise to keep the offer open for a stated period of time.