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University of Connecticut School of Law
Strasser, Kurt A.

Contracts Outline – Prof. Strasser – Fall 2012
·         Ch 1: Promises
o   Hawkins v. McGee: 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.
·         Ch 2: The Justification Principal
o   Bargain for Exchange
§  No sufficient consideration à No bargain for exchange à No enforceability
·         Congregation v Deleo: Not an enforceable promise because there is no bargain.  Deleo received nothing for his promise to donate money.  No promise for a promise OR promise for performance.  No bargain so no consideration.
·         Schnell v Nell: 1 cent is not consideration.  No consideration so no bargain.  The 1 cent is only nominal and intended to be so.  Of no value.
§  Bad bargain is still a bargain
·         Hamer v Sidway: Forbearance is consideration.  Uncle got satisfaction is knowing nephew was doing the right thing, and nephew would get 5k
·         Batsakis v Demotsis: A lousy bargain is still a bargain.  (mere inadequacy of consideration will not void a contract – here the devalued currency had some value, so the contract cannot be voided)
§  Bit of an exception à Widows and Orphans? à Bad bargain?  à Emotions?
·         Newman v Hunter: Really bad bargain, so court said no bargain.  In order for a contract to be valid, valuable consideration must be exchanged between the two parties.
o   All bank did was give up was worthless note.
o   Court maybe did not enforce it because of special consideration to orphans/widows.
o   When the P surrendered the something of no value to the D, it parted with nothing of value, and D received nothing of value, the P suffered no loss and the D received no benefit; the weight of authority is behind D, but it is clear that the transaction was without consideration
§  Claim settlement rule
·         Dwyer v National By-Products: When a claim is forebear in good faith, then sufficient consideration, even if claim is actually worthless.
o   Section 74 of Restatement
§  Employment and noncompeting agreements
·         Lake Land v Columber – Forbearance on the part of an at-will employer from discharging an at-will employee serves as consideration to support a noncompetition agreement.
o   When accompanied by raises, or other tangible benefits, and for a significant amount of time
§  Illusory Contract
·         Wood v Lucy – An implied promise.  Promise to use reasonable efforts was not expressly stated, but it was implied so the transaction would work as intended.
o   A contract can be valid if the promise is implied.
§  How law changed over time: Modification of pre-existing duty rule & how it’s changed
·         Levine v Blumenthal: A pre existing duty to do something is not consideration. 
o   Cannot change the terms of the contract without sufficient consideration.  Must end original contract and make new contract.
o   “Hold up” game à not raised in the case, but present.
·         Gross Valentino v Clarke
o   Falls under the UCC for sales of goods.
o   Proof of consideration not necessary to modify a contract.
o   UCC Rule:  You don’t need consideration to modify a contract if it meets good faith.
o   Justifiable reason for raising cost so looks less like hold up game.
·         Angel v Murray à not under UCC because not for the sale of goods.
o   Purpose of PEDR is to avoid hold up game
§  Here, no coercion or duress, so there can be an exception
·         Must have change in circumstances AND fair and equitable
o   UCC 2209 and Restatement 89
o   Reliance on a Promise / Promissory Estoppel à use as backup for b/ex.  Can have b/ex of reliance. à Restatement 90
§  Garwood Packaging v Allen à investment bankers working for a company relied on the promise of another company to create a business.  Investment bankers knew the ways of business well and shouldn’t have relied on the promise.
·         If something that shouldn’t have been seen as promise or not reasonably a promise, then no promise.      
·         Promissory estoppel doesn’t protect all reliance.
§  Feinberg v Pfeiffer – company gifted employee $200/month for life then tried to take it back when a new President came.
·         No valid consideration for the promise because past performance is not consideration
·         But there was reliance on the promise
o   Because it would be unjust, promissory estoppel says enforce the promise even though no b/ex.
·         Reliance on the promise created enforceable contract.
§  Drennan v Star Pavingà subcontract bid was revoked and contractor sued for lost money.
·         Reliance on the bid by the contractor makes this an enforceable promise. (Restatement 90)
·         For promissory estoppel to apply, there must be:
o   Clear and definite offer
o   Reasonable expectation that the offer will induce reliance
o   Actual and reasonable reliance by the offeree
o   Detriment which can only be avoided by enforcement of the offer.
§  First National Bank v Logan Mfg. àBank manager promised to close a loan for P that would allow them to buy business.  Loan was never closed by the bank.
·         Bank is required to prevent injustice by paying “reliance damages”
·         Has all the elements of promissory estoppel.  P relied on the promise of the bank, so they should get reliance damages.
·         Different from Garwood because in Garwood they had explicit business knowledge, but not here.
§  Re

fer to sell.
o   Part performance by the offeree of an offer of a unilateral contract results in a contract with a condition.  OPTION CONTRACT – Restatement 45
§  Condition is full performance by offeree
§  Acceptance       
·         Davis v Jacoby à Court must decide if bilateral or unilateral contract and if bilateral, then when was acceptance?
o   Promise makes sense here, so bilateral contract.
o   Contract obligations survive death..
·         Auto Glass v Hanover à P did not accept the offer of D set forth in the pricing letters, therefore they did not enter into a unilateral contract.
o   To accept, they would have to submit invoices that were the correct price, but they did not do this, therefore, no acceptance.
·         Cole-McIntyre v Holloway à rare exception to general rule that silence is not acceptance.
o   Not informing the store of rejection constituted acceptance because of the ample opportunities to notify them, time elapsed, and the perishable nature of the goods.
Is it acceptance?
Promisee makes a promise
Performance begins and the promisor breaches
Performance begins and then the promisee stops performing
Offer Requires
Contract – bilateral
No contract
No contract
No contract – Asking for one thing, offering something different.  Offeror decides what is done as acceptance
Option Contract – Restatement S45
Option Contract – No performance owed.  Offeror doesn't have to do anything until full performance
Doesn't say I want a promise or performance
Contract – Restatement S32
Contract – Restatement S32 and S62
Contract – Restatement S32 and S62
§  Formation under the UCC – UCC 2-207
·         Pro CD v Zeidenberg à Shrink-wrap contract
o   Enforceable contract.  D had to agree to terms and could have returned it if he didn’t agree.
·         Empire Machinery v Litton à
o   Conduct can sometimes constitute acceptance, it becomes a jury question.
o   Did D actions lead a reasonable business man to believe the contract had been accepted?