Contracts with Professor Davis
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 Kirkse
– 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 executor to resist payment on the ground that the promise was w/o consideration”
b. Leaving job of 40 yrs upon offer of a steady pension FeinbergvPfeiffer
c. Guy relied on a promise of anonymity in talking to paper CohenvCowles
Ct Sets forth a test: Should a promise be enforced in order to prevent an injustice?