I. Requirements of an enforceable contract:
A. Basis for Enforcement
1. Consideration, requires:
i. A good enough thing, which may be (Restatement 2nd Section 71)
(1) Promise of future at will employment is good enough when followed by employment for a substantial period of time, with the benefits that flow from it. CABvIngram
(2) Promise depending on a condition:
· Insurance (requires something bad to happen before the insurance has to pay)
· Promise to buy land depending on the obtaining “satisfactory” leases is not illusive. MatteivHopper
– There are 2 types of satisfactory clauses:
(1) commercial utility: obj reasonable standard
(2) personal tastes: must decide in good faith
(3) May use a 3rd person (architect)
– Purchaser does not have full freedom
(3) Promise to endorse the debt of another StrongvSheffield
(4) Promise to provide “required amount” is valid and not illusory because amount must be determined in good faith and an ongoing business provides a basis for estimating needs. EasternvGolf
(5) Agreement to set forth best efforts is consideration.
· Exclusivity agreements imply best efforts even if not clearly stated because of the obligations presented. WoodvLucy
(1) Material benefit previously received.
· A later promise to repay for medical bills due to injuries incurred while saving someone’s life has consideration, even if the person did not ask to be saved. WebbvMcGowen
(1) Forbearance of a detrimental right (smoking, drinking) IS good enough. Hamer v Sidway
– detriment or benefit does not affect consideration
(2) Forbearance to assert an invalid claim is consideration if at the time reasonably believed in good faith that a claim existed (look at info avail at time of promise). (one party promised not to sue potential father of child if he paid, he later turned out not to be the father: enforceable) Fiege v Boehm
· Restatement (Second) Section 74
ii. Bargain: for a contract to be enforceable both parties must be seeking something.
a. Promise of a Gift (Gratuitous Promise) is not enforceable. But, once a gift is made it is considered complete and you cannot ask for it back.
– Reasoning: law protects promises made in daily life that entity might not necessarily intend to keep.
(1) Saying “I want you to do well” is not enough to show bargain because there is nothing sought in the promise. Kirksey v Kirksey
b. Actions necessary (Condition) to receive a gratuitous promise:
(1) Moving across the country to live in a family member’s house is not consideration when living there is a gift. Kirksey v Kirksey
c. Mere pretense not valid: thing must be wanted
d. Previous work cannot be consideration because nothing is sought.
e. An unwanted thing of value is not consideration. The party must want it. We therefore must look at the intention of the parties.
(1) Work performed after a contract saying the person can leave whenever they want is not consideration because the employer is not trying to make the other stay. Feinberg v Pfeiffer
(2) A father’s promise to buy his daughter a Tiffany ring if she meets him for lunch may or may not be enforceable. It depends on whether it is a mere gift or he offers it in exchange for her showing up.
iii. EXCEPTIONS/ Special Cases
(1) Handbook: Unilateral changes by employer are enforceable because of importance of treating all employees the same. Certain changes in discharge policies require reasonable notice.
(2) Reward Offers: under the Common law they are not enforceable if the person just “lucks out” w/o seeking to win the reward. Some statutes make rewards binding.
iv. Not good enough things:
a. Promise of an existing duty
b. Illusory promises: promises that do not limit the promissor in an way; there is an unrestricted termination right
(1) Promise not to collect on a debt “until I want/need it”. StrongvSheffiel
– It does not matter that the person did not collect for two years.
c. Bad faith forbearance to assert a claim
2. Previous Substantial Benefit received
i. Restatement 90: A promise which the promisor reasonably expected to induce an action or forebearance and where such reliance occurs may be enforced to the extent necessary to do justice.
ii. Succesful Reliance cases:
a. Grandpa promised her 2000 + int if she quit her job and she did RickettvScothorn
(1) Having intentionally influenced the plaintiff to alter her position for the worse on the faith of the note being paid when due, it would be grossly inequitable to permit the maker or his execut
act as made would be unconscionable
(4) Other party had can be restored to status quo
3. Acceptance: means of acceptance set forth by offeror
i. Acceptance invited by Performance
a. Must give complete performance. Notice is required only if the oferor is not likely to find out.
b. As a general rule, an acceptance of an offer made ought to be notified to the offeror, in order that the two minds may come together
c. Offeror may dispense w/ requirement of notice by expressly or impliedly stating in offer that performing is enough.
(1) Here, beginning of performance constitutes acceptance and notice
d. If oferor knows of intention to accept, notice rqrmt is satisfied
e. Even in a situation where notice is not required: “of the act is of such kind that knowledge of it will not quickly come to he promisor, the promise is bound to give him notice of his acceptance within a reasonable time after doing that which constitutes acceptance.”
(1) Brother living out of state asks friend to help brother get a loan.
f. Preparations to perform are not acceptance
g. Performance constitutes acceptance of ALL terms, may not choose
ii. Acceptance invited by means of a Promise
a. Have to render the promise AND give notice.
b. Own promise must be communicated in a reasonable amount of time
c. Restatement 60: When a specific form of acceptance (notice) is required, it becomes the only way to accept. Providing a permitted form of acceptance invites acceptance by any other reasonable means.
d. Automated acceptances do not constitute true acceptance.
(1) Home Office Approval Clauses: form brought by salesman and signed by “client” becomes the offer, which needs to be accepted by the home office. Language “becomes a contract upon acceptance and subsequent approval” dispenses with notice requirement.