Contracts 1 - FCSL

Hamer v. Sidway

- Uncle becomes indebted to nephew after uncle promises nephew $5,000 if he can refrain from drinking, using tobacco, swearing and playing cards or billiards for money until age 21 - Nephew fulfills promise to refrain - Nephew gives the right to receive the money to receive the money to Louisa Hamer. - Uncle Dies - Sidway, executor for the Estate of the Uncle refuses to pay Hamer - Executor argues there was no consideration given in exchange for the promise to pay $5,000 - Court disagrees and says the action of refraining from a legal right is consideration

Niece is getting married. Before the wedding, an uncle sends a signed note to his niece stating, "Since you are getting married, I promise to transfer ownership of my beach house to you so that you both have a place to live." After the marriage, the uncle refuses to transfer ownership of the house to his niece. Which of the following is a correct statement? 1. By getting married, the niece waived a legal right; therefore, consideration exists since she suffered a detriment. 2. Getting married does not waive a legal right; therefore, there is no detriment and no consideration. 3. We need more facts. There must be a benefit to the promisor for consideration to exist; therefore, we must determine whether having his niece get married was a benefit to the uncle. 4. The uncle's promise to give his niece the house was not bargained for.

4. The uncle's promise to give his niece the house was not bargained for.

Wright v. Newman

-Plaintiff is seeking child support from defendant. Defendant is not the biological father of the plaintiff's son. However, for ten years, defendant held himself out to be the child's father -Where a promise of parental support is made and detrimentally relied upon it is enforceable under promissory estoppel

Why is past consideration usually unenforceable? 1. Because the detriment induced the promise. 2. Because the detriment did not induce the promise. 3. Because the promise induced the detriment. 4. Because the promise did not induce the detriment.

Because the promise did not induce the detriment.

An on-duty police officer has a duty to serve and protect the public at large. What type of duty is this? 1. Public Duty of a Private Person 2. Public Duty of a Public Official 3. Preexisting Contractual Duty

Public Duty of a Public Official

A witness at a trial has a duty to tell the truth. What type of duty is this? 1. A newly formed contractual duty 2. Preexisting contractual duty 3. Public duty of a private person 4. Public duty of a public official

Public duty of a private person

Alaska Packers' Association v. Domenico

A contract modification is not enforceable without new consideration

Officious Intermeddler Doctrine

A person who confers a benefit on another without request or without a legal obligation, and is therefore not entitled to compensation from the recipient.

quasi-contract (implied-in-law contract)

An equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. The doctrine is intended to prevent unjust enrichment and unjust detriment.

Margaret and Dennis are friends, and their birthdays fall in the same week. On Sunday, they talk. Margaret promises Dennis to give him a new bicycle on his birthday, which is on Monday. Dennis promises Margaret to give her a new television on her birthday, which is on Tuesday. Based on the facts above, which of the following best describes the enforceability of these promises? 1. The promises are enforceable since the plain and ordinary meaning of the language shows these to be reciprocal promises. 2. The promises are enforceable because both Dennis and Margaret will incur a detriment by spending money for the presents. 3. Both promises are unenforceable because there is no bargain. 4. This is a unilateral contract that forms on Monday when Margaret performs by actually giving Dennis a new bicycle.

Both promises are unenforceable because there is no bargain

Contract Modification

Changes in the contract terms while the contract is ongoing. When this occurs, companies determine whether a new contract (and performance obligations) results or whether it is a modification of the existing contract.

when does a unilateral contract form?

Contract forms when promisee performs!!! promisees performance completed --> then a contract is formed

Plowman v. Indian Refining Co.

D promised to pay monthly sum to each of 18 Ps, long time employees. After change in management, payments were stopped. 1. Act of walking to the office was not consideration, was a mere condition imposed upon them in obtaining gratuitous pensions. 2. Consideration cannot be based on past performance. 3. Moral duties don't impose legal duties. This constituted a gratuitous arrangement without consideration and was not a valid contract.

Adequacy continuum (4 types)

Equal exchange (no issue) Unequal (no requirement for equal) Gross inadequacy (if shocking they check) Nominal (consideration is nominal if it is the pretense of a bargain)

Hilda promises Gertrude to sew Gertrude's wedding dress. Which legal label correctly identifies Gertrude? 1. Gertrude is the promisor because she is the person to whom the promise is made. 2. Gertrude is the promisee because she is the person to whom the promise is made.

Gertrude is the promisee because she is the person to whom the promise is made.

Preexisting Legal Duty

If you already have a legal duty to do something, promising to do it is NOT consideration.

Batsakis v. Demotsis

Inadequacy of consideration will not void a contract there was a contract! adequacy principle example

Robinson v Detriot News

Leaving one job to go to this new one that was promised training. The detriment she incurred was that she took a job that was unsecure , she moved cities and her employment history is going to be marked badly

UCC Modification

NO consideration needed for modification IF the modification is done in GOOD FAITH and there is MUTUAL ASSENT.

Frankie wanted to propose to his girlfriend Wanda but needed to raise cash quickly to purchase an engagement ring that cost $3,750. To raise the cash, Frankie posted an ad on the Internet offering to sell a Louis XVI antique desk that he inherited from his grandfather for $4,000. Frankie knew that the desk was worth $10,000. The desk sold almost immediately to an interior decorator. Frankie then purchased the diamond ring and proposed to Wanda. After Wanda learned that Frankie sold his most expensive possession for less than half of its value, she told him, "Frankie, I like you a lot, but I am not going to marry someone who does not know the value of money. This relationship is over." Frankie returned the ring to get his money back and then filed a lawsuit to rescind the contract for the sale of the desk. Will Frankie be successful? 1. Yes, because the consideration for the desk was nominal. 2. Yes, because at less than half the actual value, the consideration was grossly inadequate. 3. No, because there was a bargained for exchange of something of legal value 4. Yes, because Frankie sold the desk out of love for Wanda and moral consideration will not enforce a contract.

No, because there was a bargained for exchange of something of legal value

At a family party, Uncle Bill promises to give Nephew Willy $5,000 when he reaches the age of 21. Is there consideration for the promise? 1. Yes. There is a bargained for exchange for something of legal value. 2. No, because family members cannot form contracts. 3. Yes, as long as Uncle Bill was not so intoxicated when he made the promise that he could not have manifested the necessary intent to establish that a promise was made. 4. No, because this is a gratuitous promise.

No, because this is a gratuitous promise.

Husband forgot Wife's birthday and did not buy her a present. Wife is angry. Husband promises to buy her a diamond ring, and she forgives him. Is there consideration for the promise? Choose the best answer. 1. Yes, because the wife gave up a legal right to be angry. 2. Yes, because Husband bargained for her happiness by promising a diamond ring. 3. No. This is a gratuitous promise. 4. No, because spouses do not have a legal obligation to give each other anything of value.

No. This is a gratuitous promise.

A buyer and seller enter into a contract for the sale of a privately owned island in the Mississippi with the closing on August 1. Seller has a duty to transfer title to the island at closing. What type of duty is this? 1.A gratuitous promise 2. Preexisting contractual duty 3. Public duty of a private person 4. Public duty of a public official

Preexisting contractual duty

Watts v. Watts

Rule: Unmarried cohabitants may each be entitled to a share of the wealth jointly accumulated during the cohabitation. unjust enrichment

Past Consideration

Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain.

Which of the following does not fit the legal definition of a promise? 1. Employer says to Employee, "I promise to give you a year-end bonus of $1,000." Frank says to Francis, "I promise to marry you." One roommate says to the other, "I promise to wash the dishes." Television meteorologist says to audience, "I promise that it will not rain this weekend."

Television meteorologist says to audience, "I promise that it will not rain this weekend."

On September 1, Seller promises to Buyer that he will deliver 1,000 gallons of premium gasoline to Buyer on November 1 for the price of $4 per gallon. In return, Buyer promises to pay $4,000 for the 1,000 gallons upon delivery on November 1. Both promises are in writing. During October, the price of gas rises considerably so that Seller could now get $5 a gallon for the gas. Before November 1, Seller tells Buyer that he is revoking his promise to sell gas according to the terms of his promise. Which of the following is a correct statement? 1. The consideration for Seller's promise would be the performance of Buyer by tendering $4,000 on November 1 2. The consideration for Seller's promise is Buyer's promise to purchase 1,000 gallons of gas for $4,000 on November 1. 3. The promises of both Seller and Buyer are independent of each other, and either party may revoke prior to November 1 if they give reasonable notice. 4.There is no consideration for Seller's promise to sell 1,000 gallons for $4,000 on November 1.

The consideration for Seller's promise is Buyer's promise to purchase 1,000 gallons of gas for $4,000 on November 1.

Failure of Consideration

The refusal or inability of a contracting party to perform its side of a bargain. party may rescind a contract for failure of consideration (COVID EX)

On Monday, Charles promises his spouse and kids that he will take them to the beach on Saturday. On Saturday, however, Charles says he is too tired and does not want to go to the beach. Which of the following is a correct statement? 1. Since Charles waives a legal right by taking his family to the beach, he suffers a detriment and therefore the promise should be enforced. 2. Charles incurs a benefit in terms of enjoyment by taking his family to the beach; therefore, the promise is enforceable. 3. There is no consideration for Charles's promise. 4. There is a rebuttable presumption that family promises are contractual.

There is no consideration for Charles's promise.

Nominal Consideration

Token amount in a written contract where either the parties cannot or do not wish to state the amount promisor intends to give a gift (return consideration is not a real bargain)

When will a court not enforce a promise because the consideration is inadequate? 1. When the consideration is gross and unfair. 2. When the consideration is unreasonable. 3. When the consideration is $1. 4. When the consideration suggests the pretense of a bargain.

When the consideration is gross and unfair.

Harry, a politician who is married, goes on a date with Aimee, who is not his wife. They both get very drunk and check into a hotel. Two months later, Aimee claims she is pregnant with Harry's child. Because they were so drunk, Harry is not entirely sure but he thinks that they never had sexual intercourse. Aimee honestly believes that Harry might be the father. Aimee threatens to bring a paternity suit against Harry, and she has the legal right to do so. The publicity would ruin Harry's marriage and his career as a politician. To avoid that possibility, Harry promises to pay Aimee's medical expenses for the birth and $1,000 a month until the child comes of age. In return, Aimee promises not to bring a paternity suit. Genetic testing later shows that Harry is not the father of the child. Is there consideration for Harry's promise? 1. No. Harry should not have to pay because he is not the father. 2. No. There is no detriment to Aimee since it was later discovered she would not win the paternity suit. 3. Yes. Aimee gave up a legal right to bring a paternity suit against Harry that was reasonably based on the facts. 4. Yes, because Harry has a moral obligation given that he was dating someone while married.

Yes. Aimee gave up a legal right to bring a paternity suit against Harry that was reasonably based on the facts.

consideration needs 2 things:

a bargained for exchange AND legal value

Conditional gifts- conditions: event:

a condition is an EVENT that MUST OCCUR to TRIGGER some LEGAL EFFECT OR OUTCOME an event is the uncertain occurrence of something that is not within the control of the promisor

Legal value element of consideration requires: 1. a detriment to either the promisor or promisee plus a benefit to either the promisor or promisee . a benefit to the promisee or a detriment to the promisor. a detriment to the promisee and a benefit to the promisor. a detriment to the promisee or a benefit to the promisor.

a detriment to the promisee or a benefit to the promisor.

Conditional Gift

a gift that can be accepted or demanded only after a certain condition has been met a conditional gift pairs the concept of gratuitous promise and a condition, the occurrence of the condition activates the gratuitous promise

An executory gift is 1. a gift already given. 2. a gift that has been executed. 3. any bequest made by virtue of a will that the executor has distributed to those who inherited. 4. a gift that has not been given.

a gift that has not been given.

Restitution is not available if:

a party officiously confers a benefit upon another, or a party has conferred a gratuitous benefit without expectation of compensation

Saving lives and property

a physician may get compensation for rendering medical service in an emergency without prior consideration but an ordinary person would not

IMPLIED IN FACT IS NOT RESTITUTION

actual contract w/ actual consideration

In a unilateral contract the consideration for a promise is: a reciprocal promise actual performance

actual performance

A requirements contract is a type of contract where the buyer agrees to purchase 1. all of the goods that a supplier is able and willing to produce. 2. all of the goods the buyer needs from one particular supplier.

all of the goods the buyer needs from one particular supplier.

executed gift is a gift given/not given?

already given

consideration sub-issues (5 things)

conditional gift adequacy illusory promise moral consideration past consideration

ineffective contract

consideration fails; one party conferred a benefit to another under the failed or unfailed contract then one side could be unjustly enriched and there should be restoration of the benefit

when does a bilateral contract form?

contract forms at exchange of promises!!! promisor makes promise AND promisee makes return promise (then action completed after contract formation)

Option Contract

contract to hold an offer to make a contract open for a fixed period of time

nominal consideration: motive of promisor

did the DETRIMENT of (something of little value) INDUCE THE PROMISE (of something of greater value)

nominal consideration: motive of promisee

did the PROMISE (of something of greater value) INDUCE THE DETRIMENT of (something of little value)

detriment requirements

did the person stop doing something they had a legal right to AND/OR did the person start doing something

A moral obligation 1. always creates a legal obligation. 2. does not normally create a legal obligation but may be relevant as an independent basis to prevent unfairness or unjust enrichment.

does not normally create a legal obligation but may be relevant as an independent basis to prevent unfairness or unjust enrichment.

A court may not limit the remedy under the promissory estoppel theory and must award the expectation interest. 1. True 2. False

false

A gratuitous promise always creates a contractual duty, the breach of which results in a remedy. 1. True 2. False

false

To establish that promissory estoppel exists, a party must prove that the promisee was unreasonable in taking action based on the promise. 1. True 2. False

false

Dougherty v. Salt

gift promises are generally not enforceable no bargained for exchange

Promissory Estoppel

gratuitous promise might be enforced if promisee has reasonably relied to their detriment on a promisor's promise by taking some sort of action or forbearance which was reasonably foreseeable to the promisor

Requirements contracts are not illusory because 1. the seller must sell all that he makes. 2. if the buyer purchases anything, it must be from the seller who is a party to the requirements contract.

if the buyer purchases anything, it must be from the seller who is a party to the requirements contract.

Restitution

invoked under a theory where one party has a conferred a benefit on another party and it would be unjust to retain the benefit without compensating the other party

requirements contract (PULL contract)

make as many as you need, but buyer has to buy all asked for and only buys from them agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires.

3 elements of a promise

manifestation of inention to act or refrain from action (forbearance) so made as to justify a promisee in understanding that a commitment has been made

The predominate purpose test relates to 1. contracts for the sale of land. 2. contracts for the sale of goods. 3. contracts for the sale of services. 4. mixed goods and services contracts.

mixed goods and services contracts.

Elements of a Contract

mutual assent (offer and acceptance), consideration

want (or lack) of consideration

no contract formed because the promise lacked consideration

an executory gift is a gift given/not given?

not yet given

3 things a contract requires

offer acceptance of the offer consideration

Quasi Contract ; court may order restitution if:

plaintiff CONFERRED A BENEFIT defendant has KNOWLEDGE OF APPRECIAITON defendant has accepted or RETAINED THE BENEFIT conferred and circumstances are such that it would be INEQUITABLE for the defendant to RETAIN THE BENEFIT without paying fair value for it

family scenario

presumption exists that services rendered by family members are meant to be gratuitous

unilateral contract

promise in exchange for a performance ONLY ONE PARTY MAKES A PROMISE

bilateral contract

promise in exchange for a promise

Gratuitous promise

promise made without consideration and is unenforceable as a contract

bargained for exchange is established by:

promise must induce the detriment AND detriment must induce the promise

Illusory Promise

promise that imposes no obligation on the promisor buyer hasn't committed yet, looks like a commitment but not quite

3 causes of action for recovery

promise with consideration (actual contract) promissory estoppel (no bargained for exchange, but detriment) restitution (one party is unjustly enriched at the expense of others)

alternatives to consideration

promissory estoppel restitution

types of legal duty

public duties of public officials public duties of private parties contractual duties

2 types of restitution

quasi-contract / implied in law (both parties are obligated to act justly given the circumstances, even if there is no contract in writing) promissory restitution (supports the enforcement of a promise based on past consideration or moral obligation)

Gratuitous Benefit

rule: a gift that has already been given w/o expectation of compensation cannot be withdrawn

To determine whether there was a bargained for exchange, courts look at the 1. motive of the promisor only. 2. the motives of both the promisor and the promisee.

the motives of both the promisor and the promisee.

The condition results in a legal detriment to the promisee if 1. the promisee has waived a legal right in performing the condition. 2. the condition is not within the control of either party.

the promisee has waived a legal right in performing the condition.

Pennsy Supply v. American Ash

there was consideration because they had to transport the AggRite as well as transport it + do the work out of their own time and transportation

Output contracts (PUSH contract)

they make as much as possible and the buyer must buy all of their product and only purchase from them

Fill in the blank with the answer that best reflects the promise rule. A promise occurs when a party manifests an intention _____________ so made as to justify a promisee in understanding that a commitment has been made: to perform a specific action to not perform a specific action to either perform or not perform a specific action all of the above

to either perform or not perform a specific action

Illusionary contract

token consideration, has no legal value, not a binding contract

A contract modification is enforceable if the performance of the preexisting legal duty includes an additional or a different type of consideration provided that the change reflects more than a pretense of a bargain. 1. True 2. False

true

An illusory promise is not a promise at all since the purported promisor is not committing to an action or forbearance. 1. True 2. False

true

In order to fit within the legal definition of a condition, the event must be within the control of one of the parties. 1. True 2. False

true

The reasonable expectation element principally refers to whether the promisor could foresee that the promises would take the action or forbearance. 1. True 2. False

true

Framework of promissory estoppel (5 questions)

was there a promise should the promisor have reasonably expected the promisee to induce action or forbearance did the promisee take action (or forbearance) in reliance on the promise can injustice be avoided by enforcing the promise should the remedy by limited

unjust enrichment

when party A confers a benefit upon party B without party A receiving the proper restitution required by law

moral obligation

will not serve as consideration, but it may be relevant as an independent basis to prevent unfairness or unjust enrichment