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

Dawson Spring 2017 Outline
Exam not case oriented, Dawson focuses on rules(mainly ICC) and issues
PART I: WHICH PROMISES DO WE ENFORCE AND WHY?
 
DONATIVE PROMISES
DOUGHERTY v. SALT (Promissory note for $3000 to 8 year old boy from Aunt)
Ruling: No-Consideration requires a return promise or action; the note was a voluntary gift.
RULES:
Requirement of exchange (Restatements 71):
For consideration, a performance or return promise must be bargained for.
A performance or return promise is bargained for if it is sought by promisor (making promise) in exchange for his promise and is given by promise in exchange for that promise
Performance can be an act other than a promise, forbearance (declining a legal right) or some sort of legal relation.
Law is concerned with the external manifestation rather than the undisclosed mental state: it is enough that one party manifests an intention to induce the other's response and to be induced by it and that the other responds accordingly
Adequacy of Consideration (Restatements 79):
If the requirement of consideration is met there is no additional requirement
Bargain (Restatements 3)
Agreement to exchange:
 
Promise for performance
 
SCHNELL v. NELL (Nominal Consideration-One cent for $600 in will)
Issue: Does the will represent legally sufficient consideration imposing a legal obligation for Schnell to pay at his wife’s request?
Holding: No-The promise of one cent doesn’t support the promise-nominal consideration.
Consider Restatements- Promisor (Schnell) did not seek anything and therefore there was no bargain or consideration (nominal consideration doesn’t count).
 
RULE: A voluntary gift is NOT a binding agreement unless there is consideration—nominal consideration is to be taken into account by the court to determine if it is just a pretense of a bargain or actual consideration.
CONSIDERATION: THE BARGAIN PRINCIPLE
Restatements 17: Requirement of a Bargain
Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.
Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules states in 82-94.
HAMER v. SIDWAY (Uncle offering nephew $5000 for refraining from smoking, drinking, gambling, etc.)
Issue: Is forbearance of legal conduct sufficient consideration to create an enforceable contract?
Holding: Yes-Restatements states that a forbearance can be used as an act of consideration. Young man refrained from legal rights in order to earn $5000 from uncle and therefore his forbearance constitutes sufficient consideration. Promisor sought a forbearance from nephew in exchange for his promise ($$$). Sufficient consideration.
BATSAKIS v. DEMOTSIS (Man lending person in Greece 500,000 Drachmae ($25.00) for $2000.00 plus interest; both parties signed document stating Demotsis received $2000.00 instead of 500,000 Drachmae)
Issue: Does the inadequacy of the consideration render a contract unenforceable?
Holding: No- You get what you bargain for. Promisor (Batsakis) offered 500,000 Drachmae in exchange for Promisee (Demotsis) paying $2000.00 plus interest.
Back to restatement 71: Promisor promised $ in exchange for a performance/returned promise ($2000.00). It was sought by the promisor and therefore can be defined as consideration for an enforceable contract.
 
RULE: Forbearance of a legal right can be used as an act of consideration. Also, consideration DOES NOT have to be equivalent to take effect.
 
RULES:
*Contracts w/o Consideration* (deals w/ whether a contract is enforceable)
Restatements 90:
A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or third party and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.
 
Estoppel in pais: restraint that comes out of a person’s statement of facts. If party B relies on a statement, party A is estopped (prevented) from denying that statement.
Promissory estoppel: Based on a promise. If party B relied on A’s promise, party A is estopped from pleading lack of consideration.
Three justifications
Induced action is consideration
Induced action works as estoppel
Implied promise=consideration
 
KIRKSEY v. KIRKSEY (Man asks deceased brother’s wife to come with children and move to his land. He provides land for two plus years then tells them they must go)
Issue: Is a gratuitous promise (person promising something w/o consideration in return) enforceable where a party has reasonably relied on that promise and has suffered loss?
Holding: No-the contract was not enforceable even with a loss. Promise was a gratuity and not enforceable due to a lack of consideration.
 
OTHER: This case may not have been ruled correctly. It seems as though there was consideration based on the reliance of woman on brother-in-law’s offer.
 
FEINBERG v. PFIEFFER Co. (company’s board of directors promises woman $200 pension upon retiring; new management does not want to pay the pension anymore-claims gratuity)
Issue: 1. Is past performance valid consideration?  2. Is a gratuitous promise enforceable if promisee relies upon it?
Holding: 1. No. 2. Yes. Retirement from a lucrative position is reliance upon defendant’s promise to pay the pension. There is consideration. Substantial evidence she would not have retired without the pension.   Promisor didn’t seek anything and past consideration does not count; but it’s still enforceable.
OTHER: Problem of at-will doctrine in this and other cases. In at-will employment, employee can quit at any time and employer can terminate employee at any time. No evidence that if no pension was offered that she could work another day at the company anyway.
 
Sample Essay on Dr. MLK Jr. donating works to BU. (what was bargained for? What did each parties do?)
Did Dr. King's promise to deposit the papers induce the promise of BU? BU will argue that the letter established that so long as BU, as bailee (a holder of property without legal rights), attended the papers with “scrupulous care,” Dr. King, as bailor, would release them from liability for “any such materials . . . damaged or lost while in [its] custody.” Further, BU will argue that certain actions of BU, including indexing of the papers, went beyond the obligations BU assumed as a mere bailee to attend the papers with “scrupulous care” and constituted consideration for the promises Dr. King included in the letter to transfer ownership of all bailed papers to BU at some future date or at his death. BU will assert that the letter (as supported by Dr. King's speech and the actions taken by BU) contemplated a performance by BU in caring for the papers such that BU would ultimately own them upon Dr. King's death. Therefore, BU can establish a sufficient consideration to uphold a promise deliberately made by Dr. King. Whether the consideration received by BU is equal in value to the papers promised to be transferred is not to be material to the validity of a promises.   Mrs. King will assert that Dr. King had made a mere statement of intent to act in the future and that there had been no consideration. Mrs. King will assert that the performance of BU was not clearly requested by Dr. King and that the depositing of the papers was only for a period of time at his discretion. Any promise to transfer the papers upon his death would be without consideration because BU did not provide any consideration that was requested by Dr. King expressly. Therefore, the estate of Dr. King should own the papers. 
On the whole, it appears that the facts support the position of BU, especially the actions taken by both BU and Dr. King after the papers were deposited. However, this would be a question ultimately to be resolved by a jury.
MILLS v. WYMAN (P Mills, cared for the son of D Wyman when he was ill. After son died, D promised to compensate P for the care P provided his son. P is bringing action to recover the compensation promised by D)
Issue: Is D’s promise enforceable?
Holding: Past consideration and moral obligation alone are insufficient consideration to make a promise enforceable.
WEBB v. McGOWIN (P brings suit against D for payments that D promised to P after P suffered serious bodily harm in preventing a block from falling on D.)
Issue: If promisee cares for, improves, and preserves the property of promisor, though done without his request, is it a sufficient c

es make MORE than illusory promises.
UCC 2-306:
(1): A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
(2): A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.
Good faith in sales of goods
OFFICE PAVILION S. FLORIDA, INC. v. ASAL PRODS., INC.( the parties had a contract for keyboards, which obligated one party to purchase a minimum of 1,000 keyboards a year. There was also a provision for the purchase of chairs, however, there was no minimum quantity term for the chairs. The Court noted that it is a fundamental principle of contract law that a promise must be supported by consideration to be enforceable. An in a contract where parties exchange promises of performance, “if either of those promises is illusory or unenforceable then there is no consideration for the other promise.” Holding: ASAL’s acceptance involved no promised performance and therefore did not constitute consideration to support the contract modification for the chairs.  Also no quantity for the amount of chairs purchased was specified, making contract unenforceable under Florida law.
WOOD V. LUCY, LADY DUFF-GORDON (D was a fashionable woman and designer capable of increasing the sales of certain goods by her endorsement. D entered into an exclusive agreement with the P allowing him to place her endorsement and market D’s designs and keep half of the profits. P claimed she broke the contract by placing endorsements without his knowledge and keeping all the profits too herself.) Issue: Whether the contract lacks mutuality because it does not expressly bind or require the P to actually place endorsements or market D’s designs. Held: Mutuality or a return promise may be implied from the circumstances surrounding the contract
Restatements 82-94: No consideration required
ISSUES IN BARGAIN PRINCIPLE: LEGAL DUTY, MODIFICATION
Legal-Duty Rule: A promise is not consideration in a bargain in which a party only promises to perform an act he is already obliged to perform—it is unenforceable.
Restatements 73: Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is NOT consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of a bargain.
 
Restatements 74: Settlement of Claims
Forbearance to assert or the surrender of a claim or defense which provesto be invalid is not consideration unless (no claim here in LIGENFELDER so 74 doesn’t apply)
The claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or
The forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid.
The execution of a written instrument surrendering a claim or defense by one who is under no duty to execute it is consideration if the execution of the written instrument is bargained for even though he is not asserting the claim or defense and believes that no valid claim or defense exists.