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Contracts
Wayne State University Law School
Abramowicz, Sarah

Abramowicz
Fall 2009
“the issue is…the rule is….here we have….therefore…, next.”
Chapter 1. Bases for Enforcing Promises
The Restatement of Contracts, Second, 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.

Section 1. Enforceable Promises – An Introduction: pp. 1-8
A promise if enforceable if it is supported by consideration and consideration is a bargained for    exchange (§71).

Restatement 17: you need consideration, 71: must be bargained for.

A.    Elements of consideration:
a.      Bargained for exchange between the parties
b.      That which is bargained for must be considered of “legal value”, that is, it must constitute a benefit to the promisor or a detriment to the promise.
c.       Bargain: Is sought by promisor and the promise induced the detriment and the detriment induced the promise.
d.      Economic benefit not required to the promisor; could be peace of mind.
e.       Gift; If either of the parties intended to make a gift, they were not bargaining for consideration, and so it is not a bargained for exchange.
f.       Token (Peppercorn) consideration: a small amount if only a token (devoid of value) so not legally significant; this indicates gift and not bargained for consideration
g.      Small value if consideration if
i.      Bargained for
ii.      NOT if said you can but my house for $1 (pretense of an exchange)
Why make a promise enforceable on hinge of consideration?
a.      Evidentiary function (that there was a promise)
b.      Cautionary function (so people stop and think before they make an exchange)
c.       Channeling function (promise vs. unenforceable promise)

Hawkins v. McGee
Supreme Court: Facts-Hawkins burns his hand, removal of a considerable amount of scar tissue from the palm of plaintiff’s right hand and the put the skin in the chest. Hand turned out to be hairy and still burned. Appeal to lead to this case was b/c there wasn’t enough legal claim for Hawkins’ claim.
Legal claim for Hawkins: Dr. McGee Breached his contractual promise, Was there a promise by Dr McGee to make an enforceable promise? MADE 2 PROMISES:
1) Went to defendant’s office and defendant’s answer to “How long will the boy be in the hospital” was “three or four days not over four..ect”
-could only be considered and expression of opinion           
-no contractual liability upon the defendant
2) Defendant “I will guarantee to make the hand a hundred per cent perfect hand or a hundred percent good hand”
-this would establish the given of a warrantee
-convinced them through statement-persuasion to let doctor do it
-do have enough to make contract promise, boy was reluctant, 2 facts on top of quote       makes it a contract. Not just “guarantee”
-What’s difference between 1&2: wording “guarantee”
-wording, nature of transaction, contract of Dr.’s motive
DEFENDANT argues: No reasonable man would think it gives the intention of “into any contractual relation whatsoever.”…”expression in strong language…result of the operation”.
Issue- If Plaintiff founded claim on certain “interpretation” and if that interpretation “could possibly have the meaning”
Evidence to support Plaintiff of Contract:
-defendant wanted chance to “experiment on skin grafting” with little previous experience, dr. wanted to do it.
Narrow version of issue/rule- Dr’s statements to a pt can be construed as a contract. But only if promise of results is very clear.
Broader issue/rule- What makes a statement a promise? Factors of case. Difference between mere opinion and an enforceable promise?


Bayliner Marine Corp. v. Crow
Parties-crow, Defendant-Bayliner
Facts-1) Dealer’s manual said max speed is 30mp/h-Had disclaimer w. 600 lbs weight in boat w certain type of propeller.
2)Broucer- statement “this boat has the performance you need to get to offshore” (related to speed). Max speed it got was 13mp/h & with engine modification got to be 24mp/h. July 1990-rep said manual was wrong about max speed.
1)      Express warranty of merchantability, Warranty is a seller’s promise that the thing being sold is as represented or promised. The promise being breached is “That the boat would attain 30 mph”.
2)      Issue: Did Bayliner promise that the boat sold to Crow would attain speeds of 30 mph?
A.    According to Crow, Bayliner made it promise that it would go 30 mph by prop matrixes and broacher.
a.       UCC 2-313(1): (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
b.      COURT: Prop matrixes do NOT make a “affirmation of fact” creating a warranty under UCC 2-323(1)(a).
i.      Daughtrey v. Ashe: Jeweler’s statements on appraisal that a particular diamond was “vvs quality” was held to constitute a warranty (promise) that the diamond were of that quality (under UCC 2-313(1)(a).
ii.      This Case: Prop matrixes were not related to the particular boat Crow purchased, or to a substantially similar one
a.       Different sized propellers
b.      Heavier equipment
B.     According to Crow, the Broucher was a “description of goods” creating a warranty under UCC 2-313(1) (b).
a.       “[A] statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.”
b.      COURT: Statement in broacher is just the manufactures opinion, therefore, did not make a warranty. 
i.      Reasoning: Doesn’t describe a specific feature of the boat
ii.      Mere “puffery”
3)      Crow lost. He cannot return boat.

Section 3. Consideration as a Basis for Enforcement
(A) Fundamentals of Consideration: pp. 29-46
Not all promises should be legally enforceable, only the ones in which a promise was given in       exchange for consieration. 
“Quid pro quo”- An action or a thing that is exchanged for another action or thing of more or less equal value. 

Hamer v. Sidway
A.    Facts: At family celebration, uncle (William Story, Sr.) promises nephew (William Story, 2d):
if you refrain from drinking, using tobacco, swearing, and playing cards or billiards for money until you reach the age of 21, then I will pay you $5,000
Nephew agrees, and refrains from these activities until reaching the age of 21
Uncle dies without paying; nephew sues his estate
B.     Issue: Was there an enforceable contract where uncle promised pay his nephew $5,000 in exchange for giving up smoking, drinking, etc.?
C.     D’s argument: No K, because no consideration for the uncle’s promise.
a.       There no consideration, according to D because:
i.       Promisee benefited, not harmed, by his performance (gi

n fact doubtful because of uncertainty as to the facts or the law, or
(b) the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid.
*Is refraining from pursuing an invalid legal claim consideration?
•         Fiege:                          Yes, if good faith AND reasonable
•         Restatement 74:         Yes, if good faith OR reasonable

(B) The Requirement of an Exchange – Action in the Past: pp. 46-56

Actions in the past not consideration, but a few exceptions:
Feinberg v Pfeiffer Co.
A.    Facts-Plaintiff is former employee of the Defendant Corporation. There was an alleged contract in which Defendant agreed to pay Plaintiff the sum of $200 per/month for life upon her retirement. Mr. Lippmen’s son in law called her of the news, and said could retire anytime. She retired a year and a half after that and they began paying her the sum during retirement until Mr Harris was president (after Mr. Lippman’s widow left position)
B.     Issues: Does Pfeiffer have a contractual obligation to pay Feinberg $200/month for life?
C.     Rule: Promise based on past service is NOT consideration.
a.       P argues she continued to work after promise to pay benefits, so that was her consideration.
i.      COURT: No, because NO exchange, her continuing to work was no sought be the promisor or given by the promise in exchange for the promise to pay benefits.
1.      She could have quit anytime.
2.      No such thing as PAST consideration!
b.      P argues she gave consideration by her change of position, retirement, and abandonment of her job
i.      Yes did give consideration. Consideration can be either a benefit to the promisor or a loss or determent to the promise. 
c. Therefore, Freigberg prevails because as a result of Defendant’s promise, she had a “loss of position” SHE LOST SOMETHING>

Exacertion to Past Action not consideration:
a.       Promise to pay debt no longer enforceable bc. statute of limitations.
i.      Adopted by Restatement § 82
ii.      Promise can be inferred (see R2d § 82 (2)(a) and (b))
b.      Promise to pay debt discharged in bankruptcy.
iii.      Adopted by Restatement § 83
iv.      Promise needs to be express (R2d § 83)
c.       Promise to keep promise made as a minor
ii.       
Exception for consideration: Moral Obligation:
Old rule: Mills v Wyman
Facts- 25 year old Levi Wyman fell ill and Daniel Mills care for him and expenses had been acquired because of it. Levi Wyman dies. His father, Mr. Wyman, wrote him and said he would pay him back. Mr. Wyman decided