A. Grounds for Enforcing Promises
Introduction
MSA (1-16)
Restatement, Second, of Contracts, §§ 1, 2, 4
For a contract, there must be a promise; express contract: may be oral or written and consists of an offer, acceptance, and bargained-for consideration;
What is a K?
RS §1: “A K 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.”
How are K’s made?
RS §4: “A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.”
Obligations (private: not mandated by the state); species of contract:
Promise (this course)
Benefit (quasi-contract; law of restitution; giving something back that would be unfair to keep; losing your wallet; I have an obligation to give it back to u just b/c it is yours); as a legal construct u make a promise; it is a legal fictions; why operate in this way? Once u call it contract, the legal apparatus can take care of the situation;
Harm (tort)
Restitution: residual to contract; if there is a contract, you don’t go into restitution; even if there is no contract, contract can be supreme to restitution; the absence of contract, you could have extracted an impress promise, sorry, no restitution for you;
If you cannot recover on contract, you can recover on quasi-contract: clearly WRONG You cannot have at the same time contract and restitution; the restitution renders recovery b/c there is urgency and no opportunity to enter in contract; if there is a contract, which I do not like, I can’t sue you in quasi-contract…
Usually when there was no inability to contract; before you clean my windshield, ask me if I were willing to pay;
Helps us make sure that the service provider will be paid; clarity
Certainty as to what u need to pay
Encourages people to enter into contracts (if you want to charge me, ask for my consent; don’t leave outlines in my pendeflex and expect I’d pay); incentive to enter into contract;
Benefit, intent to charge, and inability to get into contract: law of restitution;
You cannot have at the same time contract and restitution; the restitution renders recovery b/c there is urgency and no opportunity to enter in contract; if there is a contract, which I do not like, I can’t sue you in quasi-contract…
1. Consideration
MSA (36-50)
Restatement § 17; Requirement of a Bargain
§ 71, 72, 79
Mutual inducement! § 71
Managing to make the other person do something;
§ 71.For consideration, a performance or a return promise must be bargained for, that is, a performance or return of promise must be sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise;
Performance may be:
Act other than a promise
A forbearance, or
The creation, modification, or destruction of a legal relation;
According to RS §71(1), consideration can be:
Return promise (a bilateral K), or
Actual performance (an unilateral K).
Bargained for: in the typical bargain, the consideration and the promise bear a reciprocal relation of motive or inducement; the consideration induces the making of the promise and the promise induces the furnishing of the consideration;
Law concerned with the external manifestation rather than the undisclosed mental state: it is enough that one party manifests an intention to induce the other’s response and to be induced by it and that the other responds in accordance with the inducement;
But both the promise must induce the conduct of the promise and the conduct of the promise must induce the making of the promise;
A mere pretense of bargain does not suffice, as where there is a false recital of consideration or where the purported consideration is merely nominal;
There are contracts in which 1 party gives valuable consideration, another gives much smaller value, but the law refuses to scrutinize the adequacy of the value;
In nominal consideration, the court scrutinizes; it is the difference b/w no bargain vs. dead bargain; one-sided gift with a false misleading consideration (nominal) vs. a deal, inducement;
Kirksey: the question would be: did he try to induce her; yes; whether or not he benefited, it does not matter; there was consideration, i.e. it was enforceable, i.e. brother benefited in legal sense ( is your conclusion);
Don’t use benefit/detriment test!
Consideration is only at issue when there is an outstanding promise to be enforced; does NOT affect the validity of an executed promise; even if sth given as gift, once transfer is completed, it is an executed gift and it is too late to claim that no consideration was received;
At issue when apparently commercial promises are made for an unclear or questionable exchange and apparently gratuitous promises have strings attached to them;
Consideration must be bargained for; question to ask is: did the promisor promise something in order to induce the promisee to do or not to do something? When the promise and the promisor have bargained; the promisor gave it to get sth in return; When there is mutual inducement , consideration! U make a promise to induce the other one to do or not do sth; ; it does not matter if it costly, beneficial, detrimental, etc, what matters is that the promise was made to induce s.o. to do sth; mutual inducement; Rest. 2nd § 79 (if consideration, there is no additional requirement of loss or disadvantage to the promisee); benefit to the promisor not needed either; plays only evidentiary role; by benefit is only meant that he got what he bargained for;
Inducement: different from reward
legal detriment inferred when there was bargain, whenever a party obliges himself through a bargain to perform in a certain manner, even if the performance is not detrimental in the ordinary sense of the word; the fact that a promise is bargained for is generally sufficient to make it enforceable; a waiver of any legal freedom is consideration when it was induced by a promise (Hamer); understood this way, a detriment can even benefit or advance the interests if the sufferer; might be act, forbearance, or partial or complete abandonment of an intangible right; future promise to do so also counts;
Rest. 2nd § 71: performance or return promise must be bargained for to constitute consideration;
Inducement is gleaned from the manifestation of intent rather than from probing the party’s actual state of mind; (inducement v. condition of the gift); it is not what one party understood: it is what a reasonable person in his position would have understood);
The gift, donation promises do not have consideration; they are not enforceable; (Kirksey); Policy: gift-giving: not formal as legal enforcement(Kirksey)
In family relations and intimate relations, courts unwilling to find bargain and enforce promises (Kirksey; yet, Hamer consideration found); gift has no meaning if it is forced; informal realm; emotional benefits would be squandered if it is enforced legally; if the promise is fulfilled, and law enforces gifts (promise by a friend for nothing in return), makes it uncertain whether the person reacted b/c of good will or the law;
intimate relationships;
Formal functions of consideration (same as formalities):
Implied-in-fact contract: a contract inferred from the acts, conduct or circumstances surrounding a transacti
ts of the bargain: what is he getting? Get to know his nephews; have her work his land; he needed more people to come work with him so that he can expand the land;
The court failed to recognize this bargain; in the context of family relationship not recognizable bargain;
the judge thinks that the promise had to be enforced; it is unfair; inconvenience suffered by the sister-in-law;
we don’t want people making promises to make a gift sued;
Hamer v. Sidway
B’s forbrearance to smoke is a performance which was bargained for and hence there is consideration;
16 birthday: if you get by 21 without smoking, drinking, etc;
Holding: the consideration was the surrender of his legal freedom; this was the detriment in the legal sense; a waiver of any freedom is consideration;
It is enough that sth is promised, done, forborne, or suffered by the party to whom the promise is made as consideration for the promise made to him;
Promisor: the uncle; promisee: the nephew;
If the N said : I will quit smoking, drinking, etc, and then Uncles says: I will give u $ 5000, no consideration; here the uncle is not trying to induce Nephew; here, uncle is trying just to reward him; uncle’s promise not made to induce N;
Uncle wanted a greater incentive for the nephew to live up to his promise; so, there is inducement; in hypo from class (n says I will quit; uncle: if u do that, I will give u…different); would this court have ruled differently on the Kirksey case;
Langer v. Superior Steel
Do not compete, and I will give u a pension of $100.
inducement: managing to make the other person not work for the competition by offering him pension in return;
Bogigian v. Bogigian
LOOK UP THIS CASE AGAIN!
Hazel did not get anything in return, according to the majority;
She avoided liability on the house she would have been liable jointly for payments on the house; dissent says this is enough for consideration;
Majority says that the release was not supported by consideration; she did not bargain for exchange;
She says she did not realize that she was giving release to David; David failed to establish that the release was made with the intent that David act upon it;
Subjective view; did she actually view it as a necessary inducement?
2. Formality
Formality is not essential to consideration; nor does formality supply consideration where the element of exchange is absent;
Principle functions:
Evidentiary (to provide evidence of the existence and terms of a contract);
Cautionary(make the parties aware that they have made a serious legal commitment); cautions the promisor that a legal duty is being assumed
Channeling (provide an objective basis for a court to determine that the promise is contractual, rather than a mere generous impulse or a tentative or informal expression of intent);
Deterrent function;
o Restatement (Second) § 71 cmt. b – first time American law recognized that formalities no longer mattered that much
MSA (52-55, 72-75)
3. Reliance
MSA (128-145)
Restatement § 90
