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Contracts
University of Kansas School of Law
Drahozal, Christopher R.

Contracts
 
I.                   Consideration – bargain for exchange; first requirement for a contract (second requirement Assent)
a.      Restatement 71(1)
b.      Restatement 71(2)  – the modern definition of consideration
(1)   To constitute consideration, a performance or a return promise must be bargained for
(2)   A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and given by the promisee in exchange for that promise.
                                                              i.      Hamer v. Sidway – forbearance is enough for consideration
1.      Forbearance considerations exceptions: activity not lawful, no legal right (underage drinking hypo), if the activity isn’t bargained for. 
2.      You don’t need Benefit/Detriment theory
c.       Consideration can bargain for either promise or performance
                                                              i.      Unilateral Contract – promise in exchange of performance
                                                            ii.      Bilateral Contract – promise in exchange for a return promise
d.      Promises to make gifts (gratuitous promises) are not enforceable.
e.      Peppercorns (sham considerations) are not consideration
                                                              i.      A peppercorn is something that has no real value. Its purpose is to create the illusion of consideration
                                                            ii.      Ex: I will give you $50,000 – and to create consideration give me that sock.
f.        There must be good faith; a reasonable belief. 
                                                              i.      Feige v. Boehm
1.      P was pregnant and the father was not the husband. D sought her forbearance from paternity proceedings in exchange for support. Turns out he was not the father, but because when the agreement was made P actually thought he was; the agreement is upheld.
2.      Passes the criteria for consideration
3.      An element of the bargain theory is the bargain for exchange must be made in good faith. Good faith is subjective.
4.      Also there must be a reasonableness associated with the good faith. If there is no way he could be the father than there is not reasonable belief. This is the objective standard.  
II.                Not Consideration – Past Action, Unsolicited Action & Illusory Promise
a.      Past Action
                                           

              iii.      Tiffany Case
1.       Dad says to estranged daughter, come and meet me and I will buy you this Tiffany ring. She does, and he doesn’t buy the ring. Court finds that he has to buy the ring based on the language of the action.
                                                          iv.      CAB v. Ingram
1.      Goosetree – signed day after started work, court found that it was part of the hiring process.
2.      Ingram – signed under threat of termination. The consideration is the forbearance from firing.
3.      Bjorkholm – signed three weeks after he started work, and there was also no direct threat to fire although court said it may have been implied.
If they would have fired him 10 minutes later, there forbearance would have been a peppercorn and there wouldn’t have been consideration. It was a sham and a pretense of a bargain for exchange. Under the bargain theory, the continued work and promotions cannot be consideration because they were not sought by the promisor.