Contracts Outline

Contracts, is about enforcing agreements that people have entered with each other!
 
Ways to Make Promise Enforceable
 
Consideration – §71
§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 Acts
·         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)
Gratuitous Promises
·         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
Illusory Promise
·         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