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Contracts
Wayne State University Law School
Findlater, Janet

OUTLINE
CONTRACTS – FALL

Questions to ask when starting an exam question
Does the UCC apply?
(Does the Statute of Frauds apply?)
Is there an offer? (or gratuitous promise?)(Consideration or reliance?)
What is the offer looking for – promise or performance?
Is there an acceptance?
Is this offer revocable?
If it is revocable, was it revoked?
Is there any other reason why the contract will not be enforceable? (Policing the bargain)

I.                    UCC §1-103
Rule:     Applies to transactions of movable goods (all things that are movable) §2-105(1)
UCC overrules common law (RST)

II.                 Contract – RST §1
o        A promise or a set of promises for the breach of which the law gives a remedy
o        A legally enforceable promise
o        Promise is an assurance or undertaking, however expressed, that something will or will not be done in the future
§         Enforceable
§         Gratuitous
§         Gift promises w/ conditions
o        Bilateral – a promise seeking a promise
o        Unilateral – a promise seeking a performance

III.               Agreement

The bargain of parties in fact as found in their language or by implication from other circumstances including:
Course of dealing
Usage of trade
Course of performance
Rule:     The provisions of this Act determine whether an agt has legal consequences, otherwise by law of K (§1-103)

IV.              Basis for Enforcing Promises
Rule:
An expression of an intention to do or not do something. A promise binds a person in honor, conscience, or law, and it may be written or oral.
Types
1.        Enforceable
2.        Gratuitous
3.        Gift promises w/ conditions
Enforceable (binding) Pr’s:
1.        Consideration (offers)
2.       
Not offers
Moral Obligation – material benefit
3.        Reliance
4.        Handbook promises – public policy


A.     Consideration as a Basis for Enforcement

A benefit received by the promisor or a detriment incurred by the promisee. Performance or a return promise must be bargained for. The promisor is making the promise to get something and the reason the promisee is promising or performing is the reason the promise is given. That which is bargained fore must be considered of legal value.

Rule:
·         The thing of value each party to a contract agrees to give in exchange for what he receives
·         Judged by the agreement, not action under the agreement
Motive: RST §81
·         The fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise
·         The fact that a promise does not of itself induce a perfo

dway (pg. 27) – The uncle promised to pay 5k if the nephew abstained from the big five. There was no consideration – no k. This is benefit/detriment theory. The uncle wanted forbearance – performance. Uncle “bargained” for nephew’s legal rights.
Rule: a promisee’s abstention from legal but harmful conduct constitutes legal and sufficient consideration for a promise to pay money. Don’t need to be harmed or worse off all you need is a limit on your legal rights. All you need is one or the other a benefit or a detriment.

2.         Forbearance as sufficient consideration
Fiege v. Boehm (pg. 34) – Boehm dated Fiege and became pregnant. Fiege promised to pay for expenses if Boehm agreed not to bring suit. Fiege found out child was not his. 
Rule: Forbearance to sue, although based on an invalid claim, is sufficient (good and valuable) consideration to make a promise to pay binding. Boehm acted in good faith and under a reasonable belief. 

RST §71 – forbearance is sufficient consideration
RST §74 – claim is upheld even if invalid when the forbearing party was acting in good faith – honest reasonable belief