Order of Operations:
1. Was there mutual assent?
2. Basis for enforcement
b. Promissory estoppels
i. Should you do mutual assent or just focus on promissory estoppels?
1. Focus more on PE
3. Defense (he is intrigued by defenses)
a. Statue of frauds
4. Terms of the K (a lot of people leave this out—it is practically very important)
a. Parol evidence rule
d. Promises and conditions (which leads into the next point)
5. Performance and Breach
6. Ramifications of breach
A. Bargain Constitutes Consideration
i. Equal not required- parties to a bargain are the best judges of its desirability
1. But gross disparity is evidence of incapacity, fraud, duress, etc
2. Unconscionability: one party exploited the others ignorance
ii. Nominal consideration for donative promise
1. Generally: doesn’t make promise enforceable
iii. It can take the form of money, physical objects, services, or a forbearance of action (unless forbearance is invalid).
§ 17 Requirement of a Bargain
1. 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.
2. Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§82-94.
§71. Requirements of Exchange; Types of Exchange
1) To constitute consideration, a performance or a return promise must be bargained for.
2) A performance or return promise is bargained for it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
3) Performance may consist of
a. An act other than a promise, b) a forbearance, or c) the creation, modification, or destruction of a legal relation
4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promise or by some other person.
§72. Exchange of Promise for Performance (Unilateral)
Except §§73, 74: Any performance which is bargained for is consideration
§75. Exchange of Promise for a Promise (Bilateral)
Except §§76, 77, a promise, which is bargained for, is consideration if, but only if, the promised performance would be consideration.
§79. Adequacy of Consideration; Mutuality of Obligation
If the requirement of consideration is met, there is no additional requirement of
a) A gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promise; or
b) Equivalence in the values exchanged; or
c) Mutuality or obligation.
iv. Hamer v. Sidway: (Man promised nephew $5k to stay out of trouble)
· A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.
· It is enough that something is promised, done, forborne, or suffered by the party to whom the promise is made as consideration for the promise made to him.
§ 74 Settlement of Claims; Dyer: He believed the claim he agreed not to make was a valid claim and therefore his surrendering the claim is consideration.
1. Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless
a. The claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or
b. The forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid.
2. 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.
B. Illusory and non-illusory promises
i. Mutuality of obligation required in bilateral contracts
ii. Illusory Promise not consideration- contingent on what promisor might later desire to do—unenforceable.
1. i.e.: “I will buy all the chairs I desire”
iii. conditional promise not illusory: promisor has limited his future options because if the condition does occur, the promisor must perfrom
iv. Implied promises not illusory:
1. Although a party does not seem to have made a promise, if it can be implied then it is consideration
2. Lucy Lady Duff gave exclusive right to market products and services and then breached but claiming there wasn’t conisderation: Cardozo: Implied that marketer was to use reasonable efforts to market
3. UCC2-306 (codifies the rule in Lady Duff: a lawful agreement for exclusive dealing in goods imposes an obligation by t
ffer to do paving at low price
· D argues it was revocable
· No consideration
· No bilateral contract
· Issue: did P’s reliance make d’s offer irrevocable?
o §90—induced action…
o D’s bid did not mention revocability
o d had reason to expect p to relay, and he wanted him to (reliance)
· Judgment affirmed, D to pay difference in his bid and the next lowest bid taken
a. § 90. Promise Reasonably Inducing Action or Forbearance (tort based theory)
1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise or a third person 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.
2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.
Southern California Acoustics v. C.V. Holder, 71 Cal2d 719
· Subcontractor makes bid to contractor
· subC reads in trade paper that they got the job…so doesn’t make other bids
· Con then asks school if it can trade out subC and they agree
· D wants to stop the trade out (writ of mandamus to compel school to rescind its consent)
· D: argues §90 promissary estoppels
· But there must be a promise that induced action…
· No promise made by P to D, P just assumed from the paper….not enough
iii. Relied-Upon Donative Promises (gifts)—
b. If reliance was reasonable/foreseeable the promise is legally enforceable
c. Get reliance damages
d. Charitable donation—enforceable even without reliance
· However, Congregation Kadima Toras-Moshe v. Deleo didn’t enforce a charitable subscription because it lacked consideration and didn’t induce action or forbrearance.
Devecmon V. Shaw, 69 Md. 199
· Nephew goes on euro trip
· Uncle promised to cover $
N wants to collect from his execut