I. Promisory Liability
A. Consideration R.2d §82-94
1. To have a contract, must have mutual assent and consideration R.2d §17 – “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. What’s required to show consideration? R.2d §71
a) Bargained for
b) Reciprocal inducement
(1) An act other than a promise
(2) A forebearance
(3) The creation, modification, or destruction of a legal obligation
3. Reciprocal Inducement
a) Partial inducement is enough!
b) No gratuitous promises constitute consideration
(1) Good feeling ain’t good enough.
(2) Kirksey v. Kirksey – plaintiff was the widow of defendant’s brother – defendant wrote a letter offering her a place to stay on his land. After she went there, he kicked her off. Held to be no reciprocal inducement. (Could have one on reliance?)
(3) Langer v. Superior Steel – plaintiff had retired from the steel company and get a letter promising him $100 a month for the rest of his life as long as he did not work for any other company. He took the money and did not work – they discontinued the payments after 4 years. Court held it to be a contract, because the not working was consideration; there was reciprocal inducement.
(4) Promises can move between gift and exchange up to the point of performance. Example: Guy who gave niece a rare book as a gift, then she gave him an antique penny. When he wrote a letter acknowledging “the book in exchange for the penny” he turned the gifts into an exchange. Then, when he did not give the book, he had breached.
c) Forbearance does count as consideration
(1) Fiege v. Boehm – the man believing himself to be the father of a woman’s bastard child paid child support in return for her forbearance to sue him in court. When he found out he was not the father, he stopped paying. Court held that, if she believed in good faith that he was the father, and he believed that he was the father, then the contract was valid with forbearance as the consideration.
(2) R.2d §74(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 of the law, or b)the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid.”
4. Adequacy of Consideration
a) Traditional and the
were not other workers, before demanding more money. Company would not pay it when they got back.
b) Classical theory – had to be new consideration R.2d §73
(1) Tenants can’t renegotiate a lease by threatening not to pay.
(2) They could negotiate by negotiating forbearance for going into bankruptcy
c) Modern theory – the new consideration can be nominal
(1) Tenant could negotiate paying at a different day of the month or different location.
d) Modern: Modifications to the contract are usually ok to constitute new consideration §89,
(1) When the circumstances were not foreseen at the time of the contracting
(2) When the two parties agree
(3) To the extend that justice requires – policy considerations are important.
(4) Example: Angel v. Murray – garbage collector who has to collect for whole city, over 10 years – city grew unexpectedly quickly and he asked for more money.
e) UCC §2-209 is even more liberal – whenever parties agree to modify, but tey really adopt the need for good faith.