Drahozal Fall 2004
I. Basis for Enforcing Promises
RS 71 (1) consideration is a bargain for exchange
(2) To be bargained for it must be sought by promisor in exchange for promise and is given by the promisee in exchange for that promise.
– May seek performance or return promise
– Must be lawful right to act? (Hammer) under bargain theory you may have an argument that it does not matter whether or not forbearance was from a lawful act or not.
– Compare benefit/detriment approach Not important on exam!
Implications of bargain theory:
– Gifts are not legally enforceable, there is no consideration
– Peppercorns- giving a token amount in order to bind a promise, these are no longer enforceable., in addition to bargained for exchange need reasonable and good faith belief in claim (Fiege v. Bohem)
1. Fundamentals of Consideration:
o Consideration for a promise is (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation, or (d) a return promise bargained for and given in exchange of the promise (p.43).
o Important to look at inducement!!!
Hamer v. Sidway:
– “If you refrain from drinking, using tobacco, swearing, and playing cards or billiards for money until you are 21, I will pay you $5,000”
– Promise for performance (unilateral)
– Under old benefit and detriment theory the defense (executor) argues there was no consideration because by refraining from these things the nephew himself was benefiting, there was no benefit to the uncle and no detriment to the nephew.
– Court holds that forbearance is the issue; the nephew forbore from something he had a legal right to do, that is consideration.
– RULING: Forbearance from lawful vices, forbearance from a lawful course of action, and forbearance from any course of action can serve as consideration for a promise to pay (these are 3 different ways we can look at the case to apply it to future situations)
– Change from benefit and detriment theory saying it does not matter if it’s good or bad for party, it only matters that a forbearance exists, this is now called the bargain theory of consideration.
Fiege v. Bohem:
– Fiege is purported father and he promises to pay medical expenses, lost salary and child support to Bohem. In return s
igation which is non binding
– Reflects the traditional common law view that a promise made in recognition of a “moral obligation” arising out of a benefit previously received is not enforceable. A benefit conferred before a promise is made can hardly be said to have been given in exchange for the promise.
Exception to Past Action: Moral Obligation
Webb v. McGowin:
– RULING: Alternative theory: moral obligation for benefit previously received is binding to the extent necessary to prevent injustice.
– Differs from Mills because person who benefited from promise, rather than father made promise. Also the person who was benefited lives rather than Wyman who ends up dying.
– Here courts say yes to consideration while the drafters of the restatement would say no, this is an exception to the bargain theory, it’s more of a moral obligation
– You can put a price on life, doctors do.
– Alternative theory restitution (see below)