Contracts, is about enforcing agreements that people have entered with each other!
Ways to Make Promise Enforceable
Consideration – §71
Requirement of Exchange; Types of Exchange
· Does not look at sufficiency or adequacy of consideration, unless individual accepts in exchange of something as pretense to make agreement binding ($1 book)
· §71 replaces old CL version of Benefit/Detriment Theory of Consideration (Hammer v. Sidway)
o Benefit to promisor OR
o Detriment to promise
· Unilateral – seeks performance in return for promise
· Bilateral – seeks promise in return for promise
Process of Bargaining
· 1) Any performance or return promise which is bargained for is consideration
· 2) 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
· A promise is a commitment to do or NOT do something in the future
· Promise could be expressed or implied (Wood v. Lucy)
· §71 3) Performance may consist of:
o Act other than promise
o Forbearance (Hammer v. Sidway)
o Creation, modification, or destruction of legal right
· Questions to ask
o Was something given in exchange for promise?
o Was the promise bargained for?
· Forbearance to assert invalid claim can be consideration if there is good-faith believe in it’s validity (Fiege; RST §74)
· Past act is not consideration, b/c benefit previously received cannot be said to be given in exchange for something (Traditional CL view Mills; Fienberg)
· Gift promises are not enforceable b/c promise must be supported by bargained for consideration (Kirksey-only right side of Bargain Theory)
o Exception: Reliance
· An illusory promise is a covenant cloaked in promissory terms but actually containing no commitment by the promisor (“as long as it’s in my best interests”)
· Promise is illusory if it does not limit freedom of action by promisor (Strong)
· Satisfaction Clause in good-faith doesn’t render contract illusory; though not much of limit, there is some limit; court won’t look at sufficiency / adequacy (Mattei)
· If a termination clause gives a party the power to terminate at any time at will, the promise will be held to be illusory.
Promissory Estoppel §90
· Promissory Estoppel – substitute for consideration rendering a gratuitous promise enforceable as a K
· A promise made without consideration may be enforced to prevent injustice if the promisor shoul
All Offers are promises
· All Consideration Promises are Offers
· Gratuitous/past act promises are not offers.
· By Definition: Whenever you have an Offer and Acceptance you have Consideration
· Elements of an offer
o Language of commitment
o Essential terms (more definite more likely an offer; price, quantity)
· Offer can only be accepted by person the offeror has invited to furnish the consideration (Boulton)
· Statement of lowest price is not offer (Owen)
· Quotes are not offers
· Use of the word “Quote” doesn’t necessarily mean it’s not an offer. (Fairmount Glass)
· Ads are generally not offers (protects co’s from supply/demand probs)
· Merchandise on a shelf with the price is an offer.
· If an ad is clear, definite, and explicit, and leaves nothing for negotiation it can be considered as an offer. (Leftkowitz)
· Courts won’t imply “first come first serve” or reasonable qty, the ad must explicitly state it.