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Wayne State University Law School
Findlater, Janet

Contracts I

Bases for Enforcing Promises:
Consideration as a Basis for Enforcement: REST: 71, 74, 76, 81 As a general rule, a contract will not be enforceable unless it is supported by consideration consideration. 
(A) Fundamentals of Consideration: pp. 22-39: A promise is supported by consideration if 1. the promisee gives up something of value, or does/forbears from doing something; AND 2. the promise/performance is bargained for, which means that the promisor made his promise in exchange for the promisee giving up something, and the promisee gave up what he did seeking what the promisor was offering. Consideration may be any benefit to the promisor or ay detriment to the promisee. A waiver of any legal right at the request of another party is a sufficient consideration for a promise. The promise and the consideration must purport to be the motive for each other, in whole or at least in part. It is not enough that the promise induces the detriment, or that the detriment induces the promise if the other half is wanting. You must WANT what you are getting out of the bargain for it to be consideration, if you are seeking something else by making the promise, there will not be sufficient consideration (Peppercorn). For consideration to be sufficient when threatening a civil suit, the claim must be bona fide (the person threatening it must ACTUALLY believe it) AND it must have a reasonable basis for support. Sufficiency of consideration: A court will generally not look to see if the consideration is adequate, because if there is no fraud, or misrepresentation, then an informed decision by a party “that what it is receiving is worth what it is giving may not later be second-guessed by that party, nor may the party ask a court to engage in such post-hoc revisionism.
(B) The Requirement of Exchange: Action in the Past: pp. 39-50: Generally, past services are not valid consideration for a promise. There must be a mutuality of obligation for there to be a valid contract, and there are two problems with a past act: it was not bargained for and there is no CURRENT obligation. The past act can not be consideration because for something to be consideration, IT MUST BE DONE AS CONSIDERATION for the promise, and not for something else. The act must be done seeking the promise. Although, an exception is when there is a MORAL OBLIGATION (Webb v. McGowin), which is when a past act by the (future) promisee confers a benefit to the (future) promisor, in the book it was “cares for, improves, and preserves the property of the promisor”. Also, Rest 86 deals with past acts. In such a case, there is no obligation to do anything on the promisor’s part, BUT when they make the promise with the moral obligation, AS LONG AS HE HAS RECEIVED A BENEFIT, then there is sufficient consideration. The promisor SHOULD pay the promisee for the benefit, and the promise to do so after the fact is an admission that he should, and therefore many court will see this as a binding agreement. 
(C) The Requirement of Bargain: pp. 50-66: For there to be a bargain, the promisor must promise something in order to receive something he is seeking. The promisee, in exchange for the promise by the promisor, must give up something because he is seeking the promise that has been offered. ”–Gratuitous promises are not enforceable, due to lack of consideration, even though there may be conditions to the gifts, they are not generally a benefit to the promisor. If the condition is a benefit to the promisor, then it is adequate consideration, and it is binding (Hamer v. Sidway). At-will employees: Such employees have no set term for employment, and can be fired when ever,

tract, as soon as the promises are made, even though no benefit has been conferred, there is a binding contract. Right-duty relationship: the promisor has a duty to fulfill his promise, the promisee has a right to have the promise fulfilled. In a bilateral contract, both sides have a duty and a right. Therefore, no side can just walk away because they have a duty to the other side. –Conditional promises: A conditional promise occurs if a promisor promises to do something for the promisee when a certain condition occurs. Ex: the reward – the sheriff promised to pay the reward, on the condition that someone returns the escapee. Also, insurance – an insured person pays the policy premiums in exchange for the insurance company’s promise to pay for the damage that occurs IF there is an accident, however the company is not obliged to fulfill its promise UNLESS the condition (damage) occurs. Remember: As provided in Rest. 75, “a promise that is bargained for is consideration if the promised performance would be consideration.” An important thing to note: n bilateral contracts, there is not always a specific date for when the promised performance must be completed. To protect your interest, it would be advisable to make your promise conditional on performance by the other party. That way, you do not have to perform unless, or until they do. Consideration for a promise is to be tested by the agreement, and not what actually occurred under the agreement. So if a