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Contracts
University of Florida School of Law
Dawson, George L.

 
Contract Law Outline
Professor Dawson Fall 2013
 
Fundamentals: Which Promises Do we Enforce and Why
 
A. Contracts Defined
 
§1 Contract Defined:
A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty
·         Promisor: makes the promise
·         Promisee: to whom a promise is made
 
B. Consideration
a.      Consideration is required in every contract in order to make a contract enforceable
b.     Consideration: something (such as an act, forbearance, or return promise) bargained for and received by a promisor from a promisee, that which motivates someone to do something
c.      Requirement that either side of the contract gives something up, surrenders something of value
d.     If you accept something, as long as it is sought, it is consideration even if the values are disproportionate
 
Requirement of Exchange: Requirement of consideration
·         Must be a bargain between a promisor and a promisee for something (such as an act, forbearance, or return promise) that which motivates someone to do something
·         Any performance that is bargained for is consideration (§72)
·         If you have consideration you don’t need anything else (§79)
 
Requirement of a bargain
·         Contract requires a bargain in which there is (1) a manifestation of mutual assent and (2) consideration
·         Under certain exceptions you can have a contract without consideration
 
§17 Requirement of a Bargain
§71 Requirement of Exchange; Types of Exchange (Requirements of Consideration)
§72 Exchange of Promise for Performance
§79 Adequacy of Consideration; Mutuality of Obligation
 
 
 
 
 
B. Donative Promises
a.      Simple Donative promises are one-sided promises to make gifts. The promisee is not obligated to do anything in order to receive the gift, therefore it lacks consideration and is not a contract
b.     Dougherty v. Salt
a.       Aunt wrote promissory note to give boy $3,000
b.      A promise with no consideration is a executor promise and is unenforceable
c.       Aunt sought nothing=no consideration=no contract
e.       Conditional donative promise: gift if you fulfill the condition
a.       i.e. If you pick out a car that’s less than $15,000, I’ll buy it for your birthday
b.      Not an enforceable contract because parties view performance of the condition as the necessary means to make the gift, not as the price of the gift
c.       Promisor was not seeking anything
f.        Conditional bargain promise
a.       Parties view performance of condition as price of promise
b.      i.e. Mow the lawn and I will pay you $25
c.       Enforceable contract because parties view the condition as the price of the promise
g.       Nominal consideration
a.       The exchange must include something of value. If it doesn’t then it is nominal consideration
b.      Fake consideration
c.       The key here is that something has to be sought
d.      A transaction is said to involve nominal consideration when it has the form of a bargain, but not the substance of a bargain, because it is clear that the promisor did not view what she got as the price of her promise—it was not sought
e.       Schnell v. Nell
                                                               i.      Schnell’s wanted him to give 3 people $200 when she died, the exchange was one penny for $200
                                                             ii.      In Schnell v. Nell the promisor, Schnell, did not view one cent as the price of his promise to pay $600
                                                           iii.      If he sought that one cent you could argue it was a bargain, but I don’t really think he was seeking anything here
 
 
 
 
 
 
 
 
 
 
 
C. Promissory Estoppel=Reliance
a.       Essential function is to provide relief for justifiable reliance on a promise given without consideration (EXCEPTION to consideration)
b.      Reliance-you relied on my promise to your detriment
a.       Promisee did rely on the promise
b.      Reliance was reasonable under the circumstances
c.       As a result of the reliance the promisee suffered a substantial economic detriment
d.      Injustice can only be avoided by performing the contract
c.       Promissory estoppel=there is no contract but we don’t think it’s fair so we are going to make you do it
d.      Reliance and promissory estoppel are the same thing
e.       You have to do something in reliance on my promise and they know you’re going to do that
a.       Reasonable person should have know you were going to rely on it
b.      Reasonably expect to induce action
f.        Because promissory estoppel allows for the enforcement of a promise without consideration, it is sometimes viewed as a substitute for consideration
g.       If injustice can be avoided ONLY by enforcement
h.      Feinberg v. Pfeiffer Co.  
a.       Company promised to pay plaintiff $200 for the rest of her life when she retired so she did
i.         Equitable estoppel (estoppel in pais): estop a person from asserting a right when, by deliberate words or conduct, he or she have misled the other party into the justifiable belief that the right does not exist or would not be asserted
a.       Involves a balancing of equities between the parties
b.      One party made a representation of fact, and the other party relied on it, the doctrine of estoppel says that the party was estopped from denying that the fact existed
 
§90 Promise Reasonably Inducing Action or Forbearance
 
 
 
 
 
 
 
 
 
 
 
 
 
D. Unconscionability
a.      This operates as a way the court can refuse to enforce the promise or parts of the promise (yeah there was a bargain, but we are not going to enforce it)
b.     One side doesn’t really have a choice
c.      Absence of meaningful choice by the one party resulting in contract terms unreasonably favorable to the other
d.     The key is not whether one party is more powerful, sophisticated or knowledgeable than the other, but whether it abused its power
e.      Williams v. Walker-Thomas Furniture Co.
a.      P bought stereo and furniture from the D and defaulted so it was repossessed
b.     She didn’t have a meaningful choice in this case
f.        Procedural unconscionability- unfair bargaining
a.      Flaws in the bargaining process: age, intelligence, business acumen and experience, relative bargaining power, whether terms were explained to the weaker part, whether alterations in the printed terms were possible, whether there was alternative sources of supply for the goods in question
b.     Focuses on the bargaining behavior of the party alleged

gree but now there is no consideration for the new bargain
b.     If you threw in socks then there would be consideration for the second bargain
d.     Courts can use the preexisting duty rule when a party threatens to take advantage of the others dependence on his performance by threatening to breach unless they promise to increase payment or other return performance, used to void unfair modification
e.      Lingenfelder v. Wainwright Brewery Co.
a.      Contract for construction of a brewery
b.     Architect refused to continue working unless given a contract for refrigeration
c.      There is no new contract only the D giving the P extra money for what he was already obligated to do=no consideration
f.        Angel v. Murray
a.      Garbage collector asked for more money due to more houses
b.     Court held that an unexpected circumstance a valid ground to modify a contract, even without additional consideration
g.      Modification may be enforced without consideration in two situations
a.      Reliance
b.     Supervening difficulties: adjustment due to unforeseen difficulties
h.     The UCC removes the issue of consideration from contract modification and focuses instead on whether the modification was in good faith
a.      Rejects the legal-duty rule and replaces it with good faith
i.        Recessions
a.      You both decide to tear it up and start a new one
b.     If you rescind the contract you have no preexisting legal duty rule because that old contract is gone
c.      Substitute contract: a new contract for the same preexisting legal duty
                                                              i.       Discharges the original contract and duty, breach of the substitute contract does not a give a right to enforce the original
d.     Accord and satisfaction
                                                              i.      You have an existing contract and the parties want to do away with it. So the parties enter into a parallel agreement and one party promises to do something different than was in first contract and says I’ll accept as satisfaction of the first contract. Before the person does anything it is known as an accord and only after the performance do we have satisfaction.
                                                           ii.      Before the satisfaction you have two contracts both of which can be sued on
                                                         iii.      Modern approach; if there is any ambiguity as to the amount owed or things aren’t black and white the court will uphold the settlement
                                                         iv.      Today, we recognize that the modification of contracts is a good thing