CONTRACTS
Professor J.J. White, Fall 2003
Monday, Dec. 15, 8:00 AM – 1:00 PM, Hutchins 220 (520/03, 31060, E15918)
I. The Bargain Theory of Contract
A. Consideration
1. There must be a reciprocal promise for an executory (not yet performed) contract to be enforceable.
2. Consideration indicates the intent of the parties to be bound.
3. Consideration must be bargained for to be valid. R. 71.
4. If the requirement of consideration is met, there is no additional requirement of gain to the promisor or loss to the promise, equivalence in the values exchanged, or “mutuality of obligation.” R. 79.
5. Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless (a) the claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or (b) the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid. R. 74.
6. There does not have to be performance to make a bargain, i.e. output contract.
7. Option contracts
a. Restatement 87: An option is binding if it “is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange of fair terms within a reasonable time.”
b. UCC 2-205: A “firm offer” is “an offer by a merchant to buy or sell goods in a signed writing”; it is not revocable for lack of consideration; it must be “for a reasonable time” not to exceed three months.
c. CISG: “an offer cannot be revoked if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable.”
8. Default position of employment contr
oppel: When one party knowingly misrepresents material facts that are then predictably relied upon by the other party, the misrepresenting party is “estopped” (precluded) from asserting facts that contradict its misrepresentations.
2. Promissory estoppel: “A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and which doees induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” Restatement 90.
Evolution of doctrine of reliance not reflected in section 90: anticipatable reliance no longer need be “definite and substantial,”
