Contract law session 6 & 7
What are the requirements of a contracts cause for the contract to be valid?
Cause has to be lawful, existent, and possible.
What is the reasoning behind the concept of "cause" in contracts?
Criteria to distinguish binding from non-binding agreements.
How can deed's change the legality of promises?
in common law you can't have promises be enforced but if it's included in the deed then it is consideration
What are the requirements for promissory estoppels?
- pre-existing contractual duty - promisee acted in reliance to its own detriment (detrimental reliance) - clear promise that the promisor will not enforce his rights - unfair for the promisor to go back on its promise - can only prevent the enforcement of an existing right but cannot create a new one (shield but not sword) — not in the US
What are the parameters for "consideration" in a contract?
1. It must be sufficient but not necessarily adequate 2. Past consideration is not good consideration 3. an existing duty is not a consideration 4. No partial payments
Explain the case of the video club and what it's an example of.
A case where a guy living in a very small village agreed to rent 2,000 tapes to create a video club with only 1,000 people. The court stated that the contract was null because at the moment of its formation, what is agreed in return for the benefit of the person undertaking an obligation is illusory or derisory. Example of using invalid cause to create balance in contracts where one person has been cheated by the other person
What is the meaning of "cause" in a contract?
The intention/goal that the parties pursue with the contract.
What are the two levels of "cause" in contracts?
Abstract level (objective cause) and concrete level (subjective cause). Both taken into account by courts
What is an example of past consideration?
An act carried out before a promise is given. e.g. Dog is missing and found but before it can be notified to the owner the owner puts out a reward for the finding of the dog. This is past consideration and the owner is not bound to pay the finder of the dog.
What is the difference between the objective cause of a bilateral agreement and a unilateral promise?
Bilateral agreements always have an identical objective cause (counter-performance), while unilateral promises have the intention to supply or provide something without demanding anything in return (no consideration under EU law).
What are the ways of avoiding consideration?
Deeds Promissory estoppels (doctrina actos propios)
What are some examples of illegal cause in a contract?
False cause (error or inexistence), impossible cause and illegal cause.
Who abolished the concept of "cause"?
France in the grand reform of french contract law in 2016 and the Netherlands
In which legal systems is the concept of "cause" still applicable?
French law-based legal systems, such as Spain, Belgium, Italy, Romania or Quebec (but not France since the reform in 2016).
What is a "deed" in the context of consideration?
It is a legal document with some formal requirements to be
What is "objective cause" in a contract?
It is the intention that the parties follow objectively, which means what is outwardly apparent to an objective party.
What is "subjective cause" in a contract?
It is the specific intention that the parties have with a contract, which varies in each case.
Why was the concept of "cause" abolished in some countries?
Lack of clarity (what are the limits) and overlap with other doctrines such as formation and mistake.
What is the an example of false cause?
Manuel agreed to support economically the raising of a child he believed to be his based on what the mother told him, but the child was not his. The court found that there was no cause for the contract to be enforced.
Can an existing duty be a consideration?
No.
What is an example of an existing duty?
Performance of a public or contractual duty. e.g. you don't need to be paid as a witness you are performing a duty or you can't pay an ambulance or police officer for emergency medical are or protection because they are already obliged to do that in their occupation
What was the solution to abolitioning cause in certain legal systems?
Replaced by specific provisions, such as art 1162 CC "a contract cannot derogate from public policy or article 1169 and 1170 seen above".
Where did the concept of "cause" originate?
Roman law and canonist law.
What is the difference between "sufficient" and "adequate" consideration?
Sufficient consideration meets the minimum requirements for validity, while adequate consideration is proportional to the value of what is being exchanged. e.g. if you buy a house for an agreed price of 1 Euros — it is sufficient but not adequate (severely undervalued)
What is meant by "no partial payments" as a requirement for consideration
The creditor can go back on his promised to accept partial payment, unless there is consideration for example a company asks for credit but can't pay it back because of financial issues
Do courts take both levels of "cause" into account when deciding a case?
Yes.
