What is a Contract?
Contract Defined –
§1 – A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
-Written v. Oral – Although the word “contract” often refers to a written document, a writing is not always necessary to create a contract.
Oral / Inferred: An agreement may be binding on both parties even though it is oral. It may even be simply inferred from conduct. – §4
Some contracts, must be written under the Statute of Frauds.
Promise; Promisor; Promisee; Beneficiary – §2
-A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made
-The person manifesting that intention is the promisor
-The person to whom the manifestation is addressed is the promisee
-Where performance will benefit a person other than the promisee, that person is a beneficiary
-Not all promises are legally enforceable
-You may be morally or socially obliged to keep a promise, but not legally
-You do not need to say the word “promise” to make it a promise
Sources of Contract Law
UCC – In most aspects, contracts are governered by common law, but in every state except Louisiana the sale of goods are governed by statute that is roughly the same as all states, called the UCC.
-Common Law: If the UCC is silent as to a particular question, the case law controls.
Restatement: In order to organize and summarize common law, the ALI published it in 1932.
-It is not a binding source of law—not a statute. No one has enacted it in total.
What is a Promise?
Hawkins v. McGee (pg 2) (1929) – Hairy Hand Case – P burned hand D said:
Back to work in 4 Days
Guarantee 100% healthy hand
CT: 1) was just an expression of an opinion and a prediction. 2) is an explicit claim, the word “guarantee” is the key difference. He also have a MOTIVE to make enforceable promise because
a) the boy was reluctant to have surgery and
b) the doctor wanted to experiment
àDoctor’s statements to a patient can be construed as a contract to provide certain results, but only if intent to promise certain results is very clear
Similar Note Cases:
-Anglin v. Kleeman (pg 3) – D told P “could give you a stronger kneeàlanguage of specificity comparable to opinion or prediction
-Guilmet v. Campbell (pg 3) – D told P you can “throw pill box away”—not a conditional statement, there is an enforceable promise
Promises Involving the Sale of Goods – UCC
Bayliner Marine Corp. v. Crow (pg 5) (1999) – Seller sold Crow boat that didn’t go fast enough to get to fishing spots
-Prop Matrixes: is not an affirmation of fact (UCC 2-313(1)(a)) creating a warranty.
It wasn’t the same boat or the same equipment.
-Brochure: is not a description of goods (UCC 2-313-(1)(b))
It was merely the seller’s opinion and doesn’t describe a specific feature or characteristic of the boat
Similar Note Cases
-Daughtrey v. Ash – Jeweler’s written statement on appraisal that a ring was of a specific quality. It wasn’t actually that quality. Uses the same rule to demonstrate that it IS IN FACT an enforceable promise (it creates a warranty in UCC).
Consideration as a Basis for Enforcement
Promise + Consideration = Contract
Consideration Defined: There is no verbal definition of consideration on which all authorities and courts agree.
Generally, however, consideration is a benefit received by the promissory or detriment incurred by the promisee. The fact that a compromise is bargained for is generally sufficient to make it enforceable—value is irrelevant (§79).
The promisee gives up something of value, or circumscribes his liberty in some way (legal detriment)
The legal detriment aspect is important in business-related contracts where it is not clear that one party
on at all.
Feinberg v. Pfeiffer Co. (pg 46) – Contract specifically written explaining pension “in consideration” for 37 years of work.
-There is no bargain, promise based on past services is without consideration.
(P later won on reliance argument, however)
Past Actions and Moral Consideration – Past Approach
Mills v. Wyman (pg 50) – P cared for D’s dying son, D promises to pay expenses back. D didn’t pay, P sues. Does moral obligation to pay amount in past constitute consideration?
-No. “Moral obligation is generally not sufficient consideration for an express promise. The execution of such a promise is left to the conscience of the promisor.”
The law will only make it valid if promisor gains something, or the promisee loses something.
Exceptions where it would form consideration (adopted §82):
1. Promise to pay a debt no longer enforceable b/c of statute of limitations
2. Promise to pay debt discharged in bankruptcy (§83)
3. Promise to keep promise made as minor.
Past Actions and Moral Consideration – Modern Approach
Webb v. McGowin (pg 52) – Modern Approach, Moral Obligation from Past—Material Benefit + Material Detriment Test. P (Webb) was about to drop a heavy weight on the floor below him, saw McGowin (D) there, and, to avoid harm to him, P fell with the weight and sustained permanent injuries to himself in the process. McGowin promised monthly sum for life, and made payments for 8 years. Is moral consideration sufficient?
-Yes, “when the promisor receives a material benefit, and the promisee suffers a