The U.C.C. Code “applies to transactions in goods” (i.e. “moveable things”). Employment, service, real estate, labor, etc. are NOT goods
(1) Do we have a promise or a performance? A performance is the achievement of the results. If yes, then you want to talk about bargain theory. Next, was the promisor seeking something that is given because the promise was made? And did she carry out that performance in exchange for that promise made? If the act is such that knowledge of it will not quickly come to the promisor, the promisee is bound to give him notice of his acceptance within a reasonable amount of time after completing performance. Notice is required for bilateral contracts.
OR… (2) Did he make an offer? Remember, an offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it…. On the exam, you will be presented with an ODD CONDITION that might lead you to believe that it is a bargain. Before answering the question, explain bargain theory (§71) and then apply it to the particular situation at hand.
Where two parties make a contract where promises are exchanged as the consideration, the promises must be mutual in obligation. In other words, for the contract to bind either party, both must have assumed some legal obligations. Without this mutuality of obligation, the agreement lacks consideration and no enforceable contract has been created. Or, if one of the promises leaves a party free to perform or to withdraw from the agreement at his own unrestricted pleasure, the promise is deemed illusory and it provides no consideration.
To determine if notification of acceptance was given, look at what the offer is asking for in its language communicated. For example, the court interpreted “upon agreement” to be notice that could be expressed or implied. When unambiguous conduct is used to communicate notice of acceptance, we would have to distinguish between acts that are “mere preparation” from acts that are “doing/performing the work.” The commencement of the performance must make it clear to the offeror that the offeree has started to work on his job.
OR, (3) was that promise merely gratuitous? If we have a gratuitous promise, then you want to talk about reliance (§90). (2) Is that promise enforceable?
Section 45 states that to create an option contract the beginning of performance must be part of the actual performance invited in order to preclude revocation.
Fundamentals of Consideration: (Pg. 22 to 39)
Consideration may be a benefit granted to the promisor or a detriment suffered by the promisee and must be bargained for in exchange for the original promise.
Restatement Second §71: Requirement of Exchange
(1) In order to have consideration, a performance/promise must be bargained for (did the promisee carry out the promise/performance because of the promise that was made by the promisor?)
(2) The promisor seeks the performance/return promise from the promisee in exchange for his promise and this return promise is given by the promisee in exchange for that promise made
(3) The performance may consist of
a) An act other than a performance
b) A forbearance (e.g.
misee; or
(b) Equivalence in values exchanged; or
(c) “Mutuality of Obligation”
Fiege v. Boehm (Bastard Father was a Lie)
Facts: Boehm alleged that Fiege had sexual intercourse with her even though they were not married, she became pregnant. Defendant agreed to pay for all her medical and miscellaneous expenses upon the condition that she would refrain from instituting bastardly proceedings against him. Blood tests confirmed that Boehm was not the father of her child.
Rule: Forbearance to sue on a lawful claim provides sufficient consideration for a promise if the forbearing party had an honest, legal and non-frivolous intention to litigate which he believed at the time to be well-founded. There must be, at the time of the agreement, a reasonable basis of support for the claim made that is later found out to be false.
Analysis: The forbearance to sue on a valid claim forms the prerequisite consideration necessary to support a promise if there is an honest and non-frivolous belief in a bona fide claim and there is an objective reasonable basis to support the claim. Forbearance to sue on any lawful action provides consideration for a promise made if the forbearing party had an honest, non-frivolous intention to prosecute the litigation which he believed to be well-founded.
