Strasser Contracts Outline
1. A Promise
a. A commitment or an undertaking that some event will or will not occur in the future; can be made by using express words or implied by conduct or some form of words and conduct; R §§2,4
2. Hawkins v. McGee (hairy-hand case)
a. Has a reasonable expectation to get what was promised in contract
b. Damages (expectation; recovering what expected from contract)
i. Purpose of awarding damages for breach of contract is to put the plaintiff in as good a position as he would have been in had the defendant kept his contract
ii. Restatements §§1-5
Bargained for Exchange
a. Did a guy promise something for (i) a performance; (ii) a promise; and was it bargained-for
a. Mutual Assent (Offer and Acceptance)
a. Means not so much that one party is profiting as that the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of the first
i. Elements (any of the following); detriment in some way to the promising person
1. A forbearance
2. Immediate act
3. Partial or complete abandonment of an intangible right
6. R §17: Requirement of a Bargain
7. R §§ 71, 72: Considerations
8. R §75: Exchange of a Promise
9. R §79: Adequacy of Consideration; Mutuality of Obligation
10. Congregation Kadimah Toras-Moshe v. Deleo
a. An oral promise to donate money is unenforceable because there is no consideration
11. Schnell v. Nell
a. Issue: Will the consideration of one cent, which is intended to be merely nominal, support a contract?
b. Rule: A contract is unenforceable for lack of consideration where the consideration given by one party is only nominal and intended to be so
i. No nominal consideration; merely a pretense of a bargain
12. Hamer v. Sidway
a. Facts: Uncle told nephew to refrain from drinking, smoking, etc. until 21 and he will receive $5k, dies but then doesn’t pay.
b. Issue: Is forbearance, or an intentional negative act, on the part of a promise at the behest of the promisor sufficient consideration to support a contract?
c. Rule: Forbearance is valuable consideration; uncle bargained and nephew gave up a legal right
13. Batsakis v. Demotsis
a. Court will not step in and intervene just because there is a bad deal
b. Woman needed loan and loaner risked never being repaid
c. Court judges sufficiency of the consideration not the accuracy of the consideration
14. Newman & Snell’s State Bank v. Hunter
a. Woman wanted to pay off husbands loan after he died; for paying the loan, bank was going to give her stock from his stock which was insolvent; there was no value
b. In order for a contract to be valid, valuable consideration must be exchanged between the two parties
c. She gave something of value and got nothing of value in return
15. Dyer v. National By-Products, Inc.
16. RSC § 74 (Settlement of Claims)
a. Forbearance in good faith from pursuing a claim is sufficient consideration; doesn’t matter if you can’t bring a claim
i. Had a right to bring a claim (even though not a valid claim) and he forbore from doing this
b. Rule: Settlement of an unfounded claim asserted in good faith constitutes valuable consideration for settlement agreements.
c. as a matter of policy, the law favors compromise and such policy would be defeated if a party could second-guess his settlement and litigate the validity of the compromise
d. that the forbearing party assert the claim in good faith sufficiently protects the policy of law that favors settlement of controversies
17. Lake Land Employment Group of Akron v. Columber
a. Employees forbearance from firing employee served as consideration for signing noncompetition agreement; merely a renegotiation of terms; at-will employment situation
i. If not an at-will employment situation would have been illusory promise
1. An apparent promise that is so qualified, or in respect of which such wide discretion is reserved, that the apparent promisor actually makes no binding commitment at all
2. An illusory promise renders a contract unenforceable
18. Wood v. Lucy, Lady Duff-Gordon
a. Facts: D contracted P to have the exclusive right endorse and market designs by D, but D broke the contract by endorsing designs without P’s knowledge.
b. Issues: If a promise may be implied from the writing even though it is imperfectly expressed, is there a valid contract?
c. His use of best efforts to endorse her designs was valid consideration
i. Looking at intent of the parties to determine whether it is an illusory promise; what point of making exclusivity deal? Would not make money if did not put best foot forward
d. Rule: While an express promise may be lacking, the whole writing may be instinct with an obligation – an implied promise – imperfectly expressed so as to form a valid contract.
e. Rationale: **In determining the intention of the parties, the promise had a value and the P has duties: to pay the D one-half of the profits and revenues resulting from the exclusive agency and to render accounts monthly was a promise to use reasonable efforts to bring profits and revenues into existence
f. If UCC applied, Sec. 2-306: in any contract where there is a sale of goods, there is an implied promise on the other side to use best efforts to fulfill their end of the bargain
i. but this is not a sale of goods, so oh well, UCC DOES NOT apply
19. Levine v. Blumenthal
a. PRE-EXISTING DUTY RULE
b. pre-existing duty rule: an agreement modifying a contract is not supported by consideration if one of the parties to the agreement does or promises to do something that he is legally obligated to do or refrains or promises to refrain from doing something he is not legally privileged to do
c. primary duty of this rule is to prevent the “hold-up game”
d. “hold-up game” – when the parties agree to a contract but one party demands more once the other party has no choice but to agree to more
e. First Step: very consistent rule; if someone has a pre-existing duty to do something, then it is not proper consideration
20. R §73: Performance of Legal Duty
21. Levine v. Blumenthal: A promise to do what the promisor is already legally bound to do is invalid consideration and does not support a contract.
a. Contract to pay $2.1k first month and $2.4k; couldn’t pay; landlord allowed to pay less equal to first month rent;
b. Performance of legal duty owed to promisor is not consideration
22. Gross Valentino Printing Co. v. Clark
a. UCC § 2-209(1): no Pre-existing duty rule at all when goods are covered by UCC
23. UCC §2-209: Modification, Rescission and Waiver
a. Facts: P sued D for breach of contract after the parties had entered into an agreement for printing magazines at a certain price which was later increased.
b. Issue: Are the transactions at i
rement benefit did not induce action of retiring
5. R §45: Option Contract
6. UCC §2-205: Firm Offers
a. Offer that cannot be revoked for lack of consideration (brief)
7. (Also R §90 again)
8. Drennan v. Star Paving Co.
a. Facts: P sued subcontractor to recover damages when D could not perform the paving work at the price quoted in its subcontracting bid; uses bid to make larger to school
b. Issue: Does reasonable reliance on a promise bind the offeror if there is not consideration? In other words, did P’s reliance make the D’s offer irrevocable?
c. Rule: Reasonable reliance binds the offeror even if there is no consideration and P’s reliance make D’s offer irrevocable
d. Option contract: subcontractors bid was an option contract
i. Only unilateral contracts can be option contracts: the act of acceptance is also the act of performance (option and unilateral info may not be relevant here according to the fruitcake next to me)
9. First National Bank of Logansport v. Logan Mfg. Co.
a. Bank executive wants to bring business to town; brings in manufacturing company and says will provide loans if start building; didn’t have power to give loans; started building but loans weren’t approved
b. Example of damages; get reliance damages
c. Get everything spent money; but don’t get expectation damages because can’t prove profits in future
Unjust Enrichment (Quasi-Contract)
10. Enrichment occurs whenever something of value is received, even if it does not directly enlarge the recipient’s net worth
a. If the claimant intended to bargain for it, and did not impose it on the recipient; intent; was there supposed to be a bargain or was it a gift (which would mean not unjust enrichment) or was it imposed
i. Reasonable man standard
12. Unjust Enrichment Formula
a. Was a benefit conferred?; Was the benefit a gift?; Would it be unjust and inequitable to not repay?
13. Mills v. Wyman
14. RSC § 82, 83, 85 (exceptions to when past consideration unenforceability rule; not applicable in Mills)
a. Facts: Grown son of defendant took ill upon return from overseas and plaintiff cared for him, but the son died. Plaintiff acted as Good Samaritan and his actions were not undertaken by request of defendant. Father of son then wrote to plaintiff promising to pay expenses, but reneged on this pledge.
b. Issue: Is moral obligation deemed consideration or a substitute for consideration?
c. Rule: A moral obligation is not sufficient consideration for a promise in this case.
d. Rationale: a verbal promise, without consideration, cannot be enforced by action
e. Services already rendered at the time the promise was made are NOT consideration b/c the promise is not made for the purpose of getting the service or to induce the other party to perform
f. Past acts/considerations are not enforceable considerations