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Contracts
University of Connecticut School of Law
Siegelman, Peter

 
CONTRACTS
SIEGELMAN
FALL 2013
 
 
BASIC PRINCIPLES OF CONTRACT LAW
 
Definition of Contract: Restatement § 1
 
Promise [p.9-14]  
Hawkins v. McGee (SC of N.H.1929, ‘hairy hand’ case)
●     Question of contract existence submitted to jury
●     Holding:
●     Default remedy rule: Expectation damages
○     no pain & suffering; court assumes all pain he felt is what he would have felt, was part of the consideration for letting doctor practice experimentation
●     promises only enforceable if bargained for
 
Unilateral Contract: offeror makes promise in exchange for an act/performance
Bilateral Contract: offeror seeking promise of future performance; parties exchange mutual promises
 
CONSIDERATION & BARGAINS [p.15-25]  
Restatement § 17 Bargain ⇒ formation of a K requires a bargain in which there is a manifestation of mutual assent and a consideration
 
Restatement § 71-81: Consideration ⇒ 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
●     Requires
○     a performance (or promise of future performance) AND
○     that the performance be ‘bargained for’
■     essentially ‘buying’ something with your promise
●     can be future promise, $, etc.
 
Restatement § 74: Promise to Forbear
●     Involves surrendering a claim/defense which proves to be invalid; not good consideration unless
○     claim/defense is doubtful b/c of uncertainty as to facts or law; or
○     surrendering party believes the claim/defense may be fairly determined to be valid
●     execution of written instruments must be bargained for if it results in surrendering a claim
 
Cases:
Hamer v. Sidway (Ct. App. NY, 1891)
●     uncle allegedly promising nephew money
●     executory promise: promise to be executed in the future
●     D’s argument: No consideration; promisee benefitted
●     Holding: Doesn’t matter if it benefitted, he restricted his lawful freedom, consideration valid b/c both parties gave up something to get other to fulfill bargain
 
Langer v. Superior Steel Corp. (SC of Penn., 1932)
●     Facts: pension granted upon satisfaction of competition clause
●     Issue: Whether letter created a gratuitous promise (w/ condition) or enforceable K
●     Holding: By accepting the money, D impliedly accepted the conditions imposed, thus restrained from doing that which he had a right to do (find employment elsewhere); good consideration
 
In Re Green (Fed. Dist. NY, 1930)
●     Mistress trying to get $; motive which led bankrupt man to make agreement on which claim is based was past illicit cohabitation
●     Holding: No consideration
○     $1 ‘consideration’ cannot support 100,000 executory promise
○     claimant not released from any ‘lawful’ claim; release from imaginary claims not valuable consideration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gifts and Conditional Promises [p.27-32] ●     Conditional nature of promise does not guarantee consideration b/c promisee’s satisfaction of condition might not induce promisor’s promise
○     promisor might not be bargaining for fulfillment of the condition
■     Ex: requiring an address to mail a $1,000 gift; giving address not consideration
●     Kirksey: conditions may indicate the manner by which a promisee may collect a promised gift
●     Allegheny College: condition might restrict scope of a gift promise without inducing the promise
 
1.    Gifts
 
Nudum Pactum: promise to give a gift; law doesn’t enforce
 
Hard to make a gift binding for future
●     can either give it now, put it in will (can change when still alive), rely on social norms (public promise)
 
Mills v. Wyman (SC Mass 1825)
●     ruled for D; $ promised to caretaker of D’s son was only a thank-you gift
●     Holding: Moral obligation is not sufficient legal consideration
○     probably not valid anymore (necessity argument?)
 
2.  Gifts with Conditions v. Bargains
●     context of why person needs condition fulfilled usually important
 
Kirksey v. Kirksey (SC of Ala, 1845)
●     Facts: Widow invited down to Alabama by brother in law to live on land.
●     Issue: Is a gratuitous promise enforceable where a party has relied on that promise and suffered loss and inconvenience?
○     P must argue D is trying to buy their presence; trying to induce them
○     D saying that land to P is gift and P must to there to make use of it
●     Holding: No. Loss and inconvenience of moving 60 miles to D is not sufficient consideration to support promise
○     D’s promise was a mere gratuity
●     Today: Promissory estoppel would allow enforcement b/c it’s a consideration s

did not explicitly say he was going to use reasonable efforts, it is implied that he has these obligations; valid K; ruling for P (Cardozo implying best-efforts clause)
○     Justifications for finding an implied promise
■     exclusive representation: no profits for her unless goods sold
■     contract incites his ability to place stuff
■     splitting 50% of profits
■     provides an accounting of profits
●     TODAY: If this involved goods (moveable things), U.C.C. 2-306: Best-Efforts Default Rule
○     (1): terms denoting quantities are in good faith and must not be unreasonably disproportionate to any stated estimate or comparable prior output/requirements
○     (2) unless otherwise agreed, any agreement between seller or buyer for exclusive dealing of a kind of good imposes an obligation on seller to use best efforts to supply goods and buyer on best efforts to promote their sale
 
Rehm-Zeiher Co. v. F.G. Walker Co. (Ct. App. of KT, 1913)
●     Issue: Is a K enforceable if its execution is within the sole discretion of one of the parties?
○     Appellant/buyer of whiskey (Rehm) is released from K if they, for ‘any unforeseen reason’ find they cannot use goods
●     Holding: Appellants trying to enforce a K that was never at any time binding upon them
○     whiskey sold had fixed rates
■     if price of good goes up, seller wants to breach b/c they can profit more on market
■     if price of good goes down, buyer wants to breach b/c they can buy for cheaper on the market
○     vagueness of ‘unforeseen reasons’ meant conduct wasn’t binding to them; illusory promise
○     TODAY: U.C.C. 2-306(1):  ‘requirements’ means ‘requirements in good faith’
■     concerns the reasons behind why you chose to buy as much as you did
●     bad faith: buying to sell again & compete with original seller
●     good faith: wanting more b/c of price increase is legit business reason