C°: (1) a benefit to Pr (2) or detriment to Pe, (3) which is bargained for to induce the exchange of the promises.
· Examples of Consideration
1. Forgoing right—Forgoing a lawful right, is ample consideration.
2. Mistaken Fact—Consideration exists when a party forgoes a right that they [honestly and reasonably believed] they had at the time the contract was made.
1. F promised to support the child as long as B did not bring paternity suit. B did not sue. F was not the father of the child.
· Limitation of Consideration
1. Past performance—Past performance is not sufficient Consideration because it was not bargained for to induce the exchange of promises- Feinberg v. Pfeiffer
Illusory promises: A promise which gives the Pr an alternative to not change his position is an illusory promise and is not sufficient consideration. (Promise to not cash your check until I need the money)
1. Satisfaction Clauses: A satisfaction clause is not an unrestricted clause to rescind, Pr is held to a good faith standard to uphold purpose of the K. -Mattei v. Hopper
2. Requirement Contracts: UCC 2-306(1): A requirement contract is supported by consideration when seller’s output or buyer’s requirement is made by a good faith estimate, or absent an estimate, any normal or otherwise comparable prior output. -Eastern v. Gulf
1. Express Limitation: no quantity unreasonably disproportionate will be considered
3. Implied agreement: UCC 2-306(2): Contracts for exclusive dealing in the kind of goods impose, [unless otherwise agreed] an obligation by the seller to use “best efforts” to promote their sales.-Wood v. Lucy
Requirement of Bargain: Benefit to the Pr or detriment to the Pe must be done to induce the exchange for the promise.
· Examples of benefit/detriment limited:
1. Rewards: a Pe is not entitled to a reward if the Pe performed the terms of the agreement, but did not know about the offer when he completed performance.
2. Gratuitous promises: “If you come and see me… I will give you a home.” –Kirksey v. Kirksey
3. Non-Competition @ At-Will Employment: The presentation of a non-competition agreement by an employer to an at-will employee is a proposal to renegotiate the terms of the parties at-will employment.-Lake Land v. Columber
1. Handbook can be a unilateral agreement to save drafting new K’s
2. At-will non-competition agreements are much better taken if it is presented before the employment starts, or if there is something else given… i.e. a raise, or promotion.
Reliance in lieu of Consideration- Restatement §90
Reasonable Detrimental Reliance: Promisee (1) relied on the promise to his detriment, (2) the promisor should have reasonable expected Pe to rely on the promise, (3) remedy is limited to what justice requires.
1. Employment: Employee relies on employer who promises to take care of her when she retires.-Feinberg v. Pfeifer
2. Journalism: Cowles relied on newspaper to keep confidential his name. Fired as a result-Cohen v. Cowles
3. Family: None of my grandchildren need to work, neither will you.-Ricketts v. Scothorn
4. Business: Buyer promises to stay with you, Seller does not sell company.-D&G v. Bacardi
1. Limits to this reliance: indefinite (how long do I have to stay), business (not reasonable to rely)
5. Reliance on Bargain: When there has been reliance on the bargaining process to ones detriment, that person can claim a reliance interest
6. Construction Contracts: a general contractor, relying on the bid of a sub-contractor, has (1) an option to use that subcontractor and (2) has a reliance interest that the subcontractor cannot back out of the bid.
Moral Obligation in lieu of Consideration- Restatement §86
Moral Obligation: generally moral o
ation for negotiation. –Owen v. Tunison
2. Words must give complete power to bind: “will you sell us Bumper Hall? Telegraph lowest cash price”… “Lowest price for Bumper hall 900”- Harvey v. Facey
3. Multiple offers for 1 item: if the Oe knows that there are others in contention (invitation to negotiate), if the Oe believes there is no one else (it could be an offer)- Southworth
4. Advertisements unless “First Come First Serve”: Generally advertisements do not give the power to close the deal unless it gives a quantity, time… “First Come First Serve” –Lefkowitz v. Gen. Spls.
Definiteness: Always a viable reason to object to an offer such as (1) price, (2) terms, (3) place/time of delivery, (4) time of taking possession of property, (5) time of commencement.
Natural response will be: Gap fillers and reasonableness will suffice to fill indefinite terms.
EXCEPTION: FOR QUANTITY.
Option Contract: Offer which is irrevocable for a specified amount of time.
1. Option must be supported by C°: a promise to keep an option open requires support by C°. –Dickenson v. Dodd
2. Performance of Unilateral K: An Option Contract is created when partial performance of a unilateral contract is performed. –Reward & Bridge example
Firm Offer- UCC 2-205
Firm Offer: An offer by a merchant to buy or sell goods in a (1) signed writing which by its terms (2) gives assurance that it will be held open for the time stated, (3) not to exceed 3 months; if no time is stated, a reasonable time.