Contracts Outline
I. Elements of a contract
a. Mutual assent on sufficient terms
b. Consideration
c. Capacity
d. Legal Purpose
e. (Signed writing) not always necessary
II. General Theories of Obligation: Consideration
a. Definition of Consideration
i. Consideration for a promise is:
1. an act other than a promise, or
2. a forbearance, or
3. the creation, modification, or destruction of a legal relation, or
4. a return promise
b. Bargained for principal
i. Hardesty v. Smith
1. if something of want is bargained for, and a price reached, there is consideration
2. it is not the court’s responsibility to determine whether a bargained for price is fair or not
ii. The promisor must manifest an intention to induce the performance or return promise and to be induced by it, and the promisee must manifest an intention to induce the making of the promise and to be induced by it
iii. The fact that someone bargains for something they really don’t want does not prevent it from being consideration
c. Quid pro quo
i. Something for something
ii. Dougherty v. Salt
1. Promise of a gift is not consideration
2. Promise to pay for services done in the past are not consideration
d. Condition of a promise as consideration
i. Maughs v. Porter
1. In order to determine whether words of condition are consideration for a promise, it is reasonable to determine whether the condition is of benefit to the promisor
e. Forbearance of a right as consideration
i. Hamer v. Sidway
1. If the promisee forbears a legal right to something, like drinking and smoking in this case, then there is consideration
f. Promise for a promise as consideration
i. Springstead v. Nees
1. Parties have to have a legal right to that which they are forbearing in order for it to forbearance of a right
ii. Dyer v. National By-Products
1. Forbearance of an unfounded claim acted in good faith can be consideration
2. Compromise of a doubtful right acted in good faith is sufficient consideration for a promise
3. In this case, the plaintiff promised his employer not to sue for an accident if he could work for the rest of his life for him. It was proven that the plaintiff did not have a legal right to sue his employer for damages arising from an accident, but he had a “good faith” belief t
ficient consideration for a return promise
j. Restatement (Second) of Contracts
i. If the requirement of consideration is met, there is no additional requirement of equivalence in the values exchanged
ii. If a contract or tem thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result
1. If the owner of a $10,000 car offers to trade it for a worthless wristwatch, the courts probably will not enforce this contract
2. Courts may decide there was no bargain in fact and that the stated consideration was a mere pretense
k. Ad Hoc
i. A promise is enforceable once it has been received. Up until that time, it is unenforceable
III. Obligation arising from justified reliance – promissory estoppel
a. Elements of Promissory Estoppel (1st Restatement of Contracts)
A promise
