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Contracts
Wayne State University Law School
Findlater, Janet

Ways to Make A Promise Enforceable
Consideration
Offer and acceptance (Was there a bargain?)
Silence is not an acceptance (Except R2d §69 offeree takes benefit, intends to accept, previous dealings)
Moral Obligation Arising From a Past Act R2d §86
Was it based on past act?
Was there a material benefit to the promisor?
Would not enforcing the promise create an injustice?
Reliance R2d §90 (Promissory Estoppel)
Was it a gratuitous promise?
Would not enforcing the promise create an injustice?
Option Contract or Firm Offer
Is there a signed writing by the offeror with consideration?
Is there a unilateral promise with partial performance tendered? (R2d §45)
Was there reliance of substantial character on the offer? (R2d §87(2))
Has the offeree mailed his acceptance? (R2d §63 Mailbox Rule Creates Option)
Was a firm offer made for sale of goods as dictated by UCC §2-205?
Offer made by a merchant in a signed writing
A merchant deals in goods of the kind and by occupation has knowledge or skills about the goods or has knowledge of the practices
Assurance by the terms that the offer will be held open for a fixed or reasonable time
Time cannot exceed three month even if stated as a fixed time
An offer made on an offeree’s form must be separately signed by the offeror
Bases For Enforcing Promises
Fundamentals of Consideration
Consideration has to be something in the FUTURE
–          Ex: No consideration if “uncle tells kid you been a good kid for 10 yrs here is $1000”
Hamer v. Sidway [27] (Benefit/Detriment Not Necessary For Consideration)
Facts: Defendant offers plaintiff $5000 to forbear legal rights until his 21st birthday. Defendant performs and is seeking payment.
Rules/Held: Benefit to the promisor and detriment to the promisee is no longer necessary. Forbearance of a legal right constitutes valid consideration. The promise is enforceable.
R2d §71 Requirements of Exchange; Types of Exchange [191] To constitute consideration, a performance or return promise must be bargained for.
A 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.
The performance may consist of
an act other than a promise, or
a forbearance, or
the creation, modification, or destruction of a legal relation.
The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

Lakota v. Newton
“If don’t drink for a year, $100”
o    Defendant objected on the grounds that plaintiffs declaration did not allege a valid and sufficient consideration for the agreement of the defendant.
o    Outcome:
§ Demurrer was Overruled

Talbott v. Stemmons
“If no more tobacco or cigar, grandma will give $500 upon death and if he breaks it, he has to return money by doubling it”
o    The abandonment of the use was sufficient consideration to uphold a promise.

Fieg v. Boehm [34] (Good Faith Belief)(unilateral contract)
Facts: Appellant, believing he was the father of appellee’s child, promised to pay child support to the appellee who, also believing appellant was the father, promised not to bring bastardy proceedings against him.
Rule/Held: Forbearance of a good faith legal claimconstitutes valid consideration, even if the good faith belief turns out to be incorrect.
The Requirement of Exchange Action in the Past
Fienberg v. Pfeiffer Co [39] (Past Acts Not Consideration)
Facts: Defendant promised to pay plaintiff a specified monthly amount upon her retirement from defendant’s employ because of her many years of loyal service. Past service ≠ valid consideration, BUT Reliance on a gratuitous promise can be a substitute for consideration
Rules/Held: Generally, past acts are not performance for determining consideration.
Mills v. Wyman [44] (Past Acts Not Consideration)(Moral Obligation)
Facts: Plaintiff cared for defendant’s dying son on a sea voyage. After all of plaintiff’s expenses had been incurred, defendant promised to pay them. Defendant decided not to pay.
1.       Gratuitous promise that wasn’t enforceable
2.       Even under § 86, this promise wouldn’t be enforceable
3.       P wasn’t seeking anything when he made his promise to D
Rules/Held: Generally, past acts are not performance for determining consideration. It is only when the party making the promise gains something or to whom it is made loses something, that law gives the promise validity.
Webb v. McGowin [45] (Moral Obligation From Past Act)
Facts: Appellant clearing wooden blocks off a second floor, seeing appellee below, followed one of the blocks over so that it would not hit the appellee. Appellant was permanently injured. Appellee promised weekly compensation for the rest of appellant’s life. Shortly after appellee died, his estate refused to continue payment.
–          If P made a K with D ahead of time to save his life, D’s promise would be enforceable. D got a benefit, \ this is enforceable
–          Seems like the court stretched to prevent an injustice.
Rule/Held: Moral obligationis asufficient consideration to support a subsequent promise to pay where promisor has received a material benefit or promisee has been injured, although there was no original duty or liability resting on ton the promisor.
R2d §86 Promise for Benefit Received [197] A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. UNLESS
Unjust enrichment or
b.       Disproportionate value of benefit (e.g. a million dollars for saving me from a paper cut)
A promise is not binding under Subsection (1)
if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or
to the extent that its value is disproportionate to the benefit.
Requirements of the Bargain
Kirksey v. Kirksey [50] (Gratuitous Promises Have No Consideration)
Facts: Defendant, brother-in-law of plaintiff, upon hearing of his brother’s death, promised plaintiff a place to raise her family if she came down to see him. Two years after relocating, defendant required plaintiff to leave. Moving wasn’t consideration, it was a condition that D had to complete to fulfill the gratuitous performance.
o    Ex: “Walk to the corner and I’ll buy you a coat” = a condition, not consideration.
Rules/Held: The promise on the part of the defendant was a mere gratuity and a gift because it was not made seeking the performance; there is no contract.
R2d §71 Illustration 6 [193] Illustration: A offers to buy book for $10 but worth $5, motive to make a gift to B.
Rule:If a promise appears to be a gift,it will be considered a gift, but if a promise appears to be a gift and a bargain, it will be considered a bargain.

At-will Employment
Either an employer or an employee in a Pure At Will employment

been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternatives which would not have been consideration.
Strong v. Sheffield [69] (Illusory Promises Have No Consideration)
Facts: Dpromised to be a surety of husband’s past due debt to plaintiff. Plaintiff agreed to hold off on collection ‘until such time as I want my money, I will make a demand on you (D) for it’. The creditor waited 2 yrs and D stated she did not get a promise b/c he could have immediately collected on the note. Promise to not collect money was illusory because promisor’s freedom of action was not limited in any way.
Rules/Held: It would have been no violation of the promise if plaintiff had immediately brought suit to recover. There was no agreement to forebear collection for a fixed time or for a reasonable time, but for such time as the plaintiff should elect. There is no consideration. (A promise is illusory if it does not limit the actions of the promising party; the party can either perform or not).
Mattei v. Hopper [72] (Satisfaction Clauses Are Not Illusory Promises)
Facts: D offered to sell P land. P agreed to buy land if could find a satisfactory number of leases for his shopping center development. D now claims she is not bound to sell because the P’s promise was illusory.
·         Limit on action: leasee was required to act in good faith
o    Can’t get out of the lease b/c he is dissatisfied.
Rules/Held: The contract was neither illusory or lacking in mutuality because the parties chose to include a provision in their contract making plaintiff’s performance dependant on his satisfaction with the leases to be obtained by him. (The finding of sufficient leases was a condition, which dictated when performance must be rendered. It sufficiently limited the actions of the plaintiff. The promise was not illusory; there is a contract).
Wood v. Lucy, Lady Duff-Gordon [83] (Implied Promise; Good Bilateral From Two Bad Unilaterals)(Can’t walk away from illusory promise)
Facts: D promised exclusive rights to market and distribute products with her endorsement. P promised to market and distribute the products and split the profits. D claims promise is illusory because the D is not obligated to actually perform. Also claims that she should be able to walk away b/c he could have walked away.
Rules/Held: The P had the means and intent to fulfill his end of the bargain when the agreement was made. An implied promise was made to market and distribute the goods; the promise is not illusory. (The court used an implied promise to make a bad bilateral contract into a good one. The court can find an implied promise as long as the other elements are there; consideration, bargain, etc).