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

Elements of a Contract                                                                                                                                      
        Assent
1.       Offer – R(S) § 24
AND
2.       Acceptance – R(S) § 50(1)
 
·         An ad is not generally an offer
·         Silence not usually acceptance
·         Offeror can terminate an offer any time before it has been accepted
·         Death of offeror or offeree terminates power of acceptance except in option contracts
 
        Consideration – definition R(S) § 71
1.       Bargained for exchange
OR
2.       Substitute: 
a.       Reliance – R(S)§90
b.      Restitution (Unjust enrichment) – when there is NO contract
 
*        Forbearance from a legal act is consideration – RLC § 75
*        Action in the past is not consideration
o        Exception: moral obligation e.g. saving a life
*        An unsolicited action is not consideration
*        Illusory Promises are not consideration (one party is free to withdraw)
 
        No Defenses
1.       Lack of Capacity
2.       Overreaching
3.       Unfairness
4.       Unconscionability
 
Types of Contract                                                                                                                                                 
1.       Bilateral = promise for a promise
*        Notice usually necessary for acceptance
2.       Unilateral = promise for performance; when
a.       When offeror clearly indicates that performance is the only manner of acceptance
b.      Where there is an offer to the public clearly contemplating acceptance by performance
*        Notice not usually necessary for acceptance
 
Performance & Breach                                                                                                                                       
1.       Express Conditions – strict compliance
2.       Implied Conditions – substantial performance
a.       Substantial Performance
b.      Material Breach
c.       Excuse
                                                              i.      Commercial Impracticability
                                                            ii.      Frustration of Purpose
 
I.                    Bases for Enforcing Promises
A.                  Consideration as a Basis for Enforcement
1.                   Fundamentals of Consideration
Restatement (Second) § 71
(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. 
 
Restatement (Second) § 79
(1)    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 promisee.
 
a)                  Hamer v. Sidway: Forbearance from a legal right is consideration
(1)                Uncle promises nephew money if he refrains from drinking, swearing, smoking and gambling (nephew had legal right to do all of these at the time)
(2)                Forbearance of a legal right is consideration
(3)                “…a waiver of legal right at the request of another party is a sufficient consideration…”
(4)                “Any…suspension or forbearance of a right, will be sufficient to sustain a promise.”
(5)                RLC § 75
(a)                Consideration for a promise is a forbearance
b)                  Gratuitous Promises
(1)                Gratuitous promise is not binding without consideration
c)                   Peppercorns
(1)                A peppercorn is a trifling value often used to feign consideration
d)                  Fiege v. Boehm: Forbearance from a legal right
(1)                Father promised mother child support in exchange for her not bringing a bastardy case
(2)                She is forbearing from something she has a legal right to do so it is consideration
(3)                However, he is not the father. As long as she had a reasonable basis for believing he is the father then forbearing from her legal right to bring the claim is consideration
2.                   Action in the Past
a)                  Past services are not valid consideration for a promise
b)                  Feinberg v. Pfeiffer Co.: action in the past not consideration
(1)                D promised P that it would pay her $ each month and she could retire at any time. Consideration? 
(2)                Is anything sought from or given by Feinberg? No. No consideration. 
(3)                Her past service is not consideration as it is not sought by D or given by P at this time. 
 
c)                   Mills v. Wyman: action in the past not consideration
(1)                Mills cared for Wyman’s sick son for 2 months and Wyman promised to pay him
(2)                No consideration b/c action in the past. 
d)                  Webb v. McGowin: action in the past, moral obligation
(1)                Webb saved McGowin’s life & injured himself in doing so
(2)                McGowin promised to pay him $ ea mo.
(3)                Action in the past, but material benefit conferred & moral obligation. 
(4)                Difference between Mills & Webb: In Mills the material benefit went to the son, not the P, in Webb the material benefit went to D
(5)                Alternative theory explaining this outcome would be Restitution
e)                  Technical Defenses
(1)                Would it have been fair to defend McGowin using the R(S) as a defense? Only if done in good faith; can defend against moral obligation if done in good faith. 
3.                   Requirement of a Bargain
a)                  Kirksey v. Kirksey: induced action or gratuity
(1)                D tells P if she moves to Alabama, he will give her a house
(2)                Is D trying to induce P to move to Alabama (consideration) or just trying to give her a house (gratuity)?
(3)                Court finds it’s a mere gratuity. Hard case, could have gone either way. 

ck in the position they would be in if the contract had not been made
 
2.                   Ricketts v. Scothorn: reliance
a)                  Grandpa Ricketts promises Katie Scothorn $2k/yr. & she quits her job
b)                  No consideration b/c quitting the job was an unsolicited action
c)                   Reliance as substitution for consideration
d)                  Katie gets expectation interest b/c case decided under 1st Restatement, now 2nd Restatement says reliance interest
 
3.                   Promissory Estoppel
a)                  Promissory estoppel is the principle that a promise made without consideration may nonetheless be enforced to prevent injustice is the promisor should have reasonably expected the promisee to rely on the promise and if the promisee did actually rely on the promise to his detriment
b)                  Promissory estoppel is on reliances on promise, Equitable estoppel is on reliances of fact
(1)                Katie relied on Grandpa’s promise; homeowner relied on developer’s fact statement that the surrounding land is residentially zoned
c)                   4 categories of promissory estoppel:
(1)                Family promises
(2)                Promises to convey land
(3)                Promises coupled with gratuitous bailments
(4)                Charitable subscriptions
4.                   Feinberg v. Pfeiffer Co. cont.: no reliance
a)                  No consideration in Feinberg because past action is not consideration, but does a reliance theory work?
b)                  Did Feinberg rely on the money? No, he was going to retire anyway so no reliance.
C.                  Restitution as an Alternative Basis for Recovery
Restitution:
Restitution
 
Used when there is no contract. Unjust Enrichment: A benefit was conferred and it would be unjust not to compensate.
                Not gratuitous/volunteer, not officious intermeddler
1.                   Cotnam v. Wisdom: unjust enrichment
a)                  Dr. Wisdom performed medical services when Cotnam was hit by a car
b)                  Dr. Wisdom should have been compensated on a restitution theory
c)                   If I had performed CPR on someone it would be a gift because I do not expect to be compensated, Dr. Wisdom is a professional performing services
2.                  
Quasi-contract
 
Callano v. Oakwood Park Homes Corp.- Quasi-contract
Calla