Contracts: Fall 2004- Barnes
8 short questions in 2 ½ hours
Chapter 1: Bases for Enforcing Promises
I. The Meaning of Enforce
1. Contract- a promise or set of promises that the law offers a remedy in a breach or recognizes as a duty. Section 1 Restatement Torts. The law is concerned with relief of promises to redress breach not with punishment of promisors to compel performance.
2. Efficient Breach- when breaching promise profits everyone
3. Pareto Superior- when a reallocation of resources leaves one party better off w/o making some other unit worse off.
4. Constructive Trust- This keeps D from profiting from a breach of promise by disgourging him of his profits.
5. Specific performance- forcing person who breached contract to actually perform the contract. Very rare, but used in real estate.
6. Punitive Damages- very rare, usually only in tort
7. Assumsit- promise incurs detriment in reliance of promise, must get money for loss.
8. The Bargaining Process- Offer, Acceptance, Consideration
B. Three Remedies for a Breach of Contract (Sullivan)
1. expectancy- put P in place would have been had promise been kept. Difference btw what promised and what got. No recovery for fees expected to pay. Detriment must have been caused by breach. US v. Berkley.
2. Restitution- Put D back in same place. Give P what gave D.
3. Reliance- Give P back everything he expended and put back in the place the P occupied before the contract.
C. Types of Contracts
1. Express Contract (assent agreement)
2. Implied Contract (no current assent, but past assent and no current objection.) Comes in play in restitution, Section 90
3. Quasi(constructive)-Contract- (there is a duty that equals and agreement for restitution).
*In Cotnam there is a quasi contract b/c there was no assent, no past
relationship, but there was a duty on the part of the MD that equaled
a contract. Restitution requires contemplation on the part of the giver
II. Consideration as a Basis for Enforcement
A. (“Sought”/Bargain/Consideration)- The Bargaining Process
1. §71 Requirement of Exchange; Types of Exchange
(1) To constitute consideration, a performance or a retu
C. Exceptions to §71
1. §86-past consideration (Webb v. McGowin, Moral obligation); promisor must have been unjustly enriched and the value must be proportionate.
2. §87(2)- offer induces action/forbearance (CAB v. Ingram Employment)
3. §90- (promissory estoppel) promise induces action or forbearance (Strong v. Sheffield, promissory note). Must be to prevent injustice. Charitable subscriptions and marriage settlements are binding w/o the promise inducing action/forbearance. Ex. D and G Stout v. Bacardi.
b. reasonably expected (objective)
c. induces action or forbearance
d. does in fact happen
e. injustice if not enforced
D. Miscellanious Rules
1. §79- Peppercorn rule: So long as the promise or performance given as consideration has value to the promisor or promise, it does not matter if it is not actually valuable or is a bad bargain.