I. Definition of a Contract
a. R § 1 – a contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
b. (Farnsworth) Contract – a certain promise, or a set of promises that the law will enforce or at least recognize in some way.
II. Fundamental Assumptions – made by courts for enforcing promises
a. Relief of promisees to redress breach NOT punishment of promisors to compel performance
b. (specific)Relief protects the promisees expectation and tries to put them in the same position had the promise been performed.
c. (not main assumption) Provide for substitution relief (money damages) not specific ( relief)
III. Interests which could be protected by enforcement (giving a remedy)
a. Expectation – put the promisee in the position had the contract been performed
– Naval – gets money for breach of contract of paper back sales for month of September. Comparing sept to aug. for remedy.
b. Reliance – put promisee back in position as if the contract had not occurred.
– Sullivan – boched nose job gets entertainer money for surgeries, pain and suffering, and worsening of nose
c. Restitution – Put promisor back in same position before the contract was made. Keeping others from becoming unjustly enriched
General Rule – Pain and suffering is not compensable
– Restatement § 355 – punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.
The Basis for Enforcing Promises
a. R § 17 – Formation of a contract requires
1. a bargain (for which there is)
a. a manifestation of mutual assent to the exchange, and
b. a consideration.
* §82-94 show the exceptions, when there is no bargain, but still a contract
b. Consideration – R § 71 – a performance or return promise is bargained for – if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
– Feinberg – no bargain because secretary never gave anything in exchange before quitting. Performance to work after the benefits was not sought in the exchange, so there was no consideration.
– Mills – promise to pay is not bargain for taking care of son of rich man, because there was no bargain by promise. Nothing given in exchange for fathers money.
– Kirksey – no consideration in an offer for sister in law to move down to house. Only an offer. Brother in law did not seek the return promise.
– Lucy – promise to convey for promise to pay, but zehmer wants to give to son. Contract because promises were bargained for, and no alternatives mentioned, and Zehmers refusal came too late.
§ 17(3) – Performance is an
1. act, other than a promise
2. forbearance, or
– Hamer – kid forbears from social ills. Forebearance enough for consideration
– (forebearance from claim or defense is different) Fiege – woman forebears from filing false bastardy claim – made in good faith, so valid contract – R § 74 (b) – forebarence to assert a claim(an invalid claim) is not consideration unless the forbearing party believes that it is a valid claim, or the claim is doubtful because of uncertainty of facts/law. Also different for written forebearance of claims.
3. creation, modification, or destruction of a legal relation.
ii. Promises may be given or received by another person.
§ 79 – If there is consideration, requirements of gain, equivalence, or mutuality of obligation are not needed. (Deal can be bad, there are no requirements after consideration, just sough exchange)
§ 81 – Promise does not have to induce the bargain, it can still be consideration for another promise. (Motive can be different for the promise, and still be consideration)
a. Reliance – R § 90 – A promise can be enforced if it expected to induce action, does induce such action and injustice can only be avoided by enforcement of the promise. Charitable subscription or marriage settlements are binding without proof of induced action. (There is a reliance interest in gift giving, and this can be enforced if it causes large change in plans, and this change is foreseeable, and would not have occurred ‘but for’ the gift. If no reliance though, gift will not be enforced)
b. *Considered the doctrine of promissory estoppel, which allows for recovery of reliance, but not expectation.
– Rickets – grandfather intended to induce Rickets to quit her job, and she did so because of this, so he is estopped from denying her payimet of $2,000 per year, plus interest.(expectation)
– Feinberg – Offer for retirement induced Feinberg to retire, she did retire because of it, so there was a contract without a bargain/consideration.
– D&G Stout v. Barcardi – D&G Stout was reliant on Bacardi’s offer to continue to sell to, so they were induced, did so because of inducement, so valid contract by word.
c. Restitution – R § 86 (doctrine of unjust enrichment) – when promise is made for a benefit received by the promisor, then contract is valid to the extent necessary to prevent injustice. Not valid for gifts or if relief is disproportionate.
i. Expectation – the restitution can be weighed if the promisee expects to be compensated for the benefit given to the promisor.