I) BASES for ENFORCING PROMISES
A) Consideration as a Basis for Enforcement
(i) Expectation Interest – Promisee is as if the promise is fulfilled. (expected contract)
(ii) Reliance Interest – Promisee is as if the promise had not been made (no contract); Promisee worse for relying on the promise.
(iii)Restitution Interest – Promisor is as if the promise had not been made (no contract); If the promisee relied on the promise but also conferred a benefit to the promisor.
1) Fundamentals of Consideration
(a) Old View Theory – Detriment (Forbearance) to promisee/Benefit to promisor.
(i) Forbearance of illegal act – not consideration
(ii) Forbearance not bargained for – not consideration
(iii)Hamer v. Sidway – I promise X if you forbear from Y for Z amount of time
(iv) The withholding of a negative act (forbearance) can be sufficient consideration
(v) Feige v. Bohm – I promise X if you promise not Y; The promise only need to be grounded in GOOD FAITH, not necessarily be true (child support/ bastardry).
(b) Promise for Promise – Bound at the time of promise (bilateral contract)
(c) Promise for Performance – No party is bound until conditions fulfilled (unilateral contract)
(d) RESTATEMENT (second) §79
(i) Consideration: Performance or Return Promise, (act, forbearance, or creation modification or destruction of legal relationship) must be bargained for.
-Bargained for Exchange Theory: Consideration is sought for by the promisor in exchange for his promise and given by the promisee in exchange for that promise.
*Bargained for exchange is all that is needed for a Contract – if it is in “GOOD FAITH”
(e) Peppercorns– Insignificant exchanges to seem as consideration (not consideration).
2) Action in the Past
(a) Not Consideration – impossible for past action to be sought or given
¨ Feinberg v. Pfeiffer Co. – Pension given by employer for good past service. Continued performance not sought. Gift only, no consideration
¨ Mills v.Wyman – Father promises to pay for
ract presented a week after hired; signed under threat of termination
(ii) Bjorkhom- Contract signed 3 weeks after hired
(iii)Goostree – Not informed of contract during hiring, but signed without dispute.
¨ “At will” – Forbearance from firing is consideration
¨ Employee must be informed of the covenant during employment negotiations or soon after or the covenant is not freely bargained.
¨ Court: Length of employment is sufficient consideration because they were not fired. It constitutes Substantial Performance of employment for plaintiff. If they were to fire defendant immediately after signing, it would be peppercorn consideration because there was no substantial performance.
¨ Compliance Theory – Alternative to Consideration
· Dissent – Contracts imposed under implied threat to terminate. Duress