Contracts

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What is nominal consideration?

"Nominal" is meant to mean "phony". In other words, nominal consideration is "in name only", not real consideration.

I find you unconscious on the sidewalk and take you to a hospital, incurring $1,000 in expenses in the expectation of repayment. You recover, and feeling properly grateful, promise to pay me $5,000. Your feelings of gratitude being transient, you then change your mind and refuse to pay. I sue you. What should I recover?

$1,000 on a theory of restitution. For the same reason as in Mills v. Wyman, there is no contract. You made the promise after you received the benefit, so you could not have bargained for the benefit. The past consideration is no consideration. But here there is no reason to deny restitution, for I conferred a benefit on you that was not a gift and was not officious (forced on you against your will). It would be unjust to allow you to retain the benefit. However, we measure restitution by the value of the benefit conferred, not by the amount of the promise, so I should recover $1,000 and not $5,000.

Assume there is a contract between Rich Uncle and Niece when Rich Uncle says to Niece, "If you go to college, I'll give you $10,000" and Niece goes to college. Niece goes to college at a cost of $8,000. How much does she recover in damages from Rich Uncle?

$10,000 Our general rule for damages is that the non-breaching party recovers the expectancy, the amount that would put them in the position they would have been in had the contract been performed. Here, the amount would put Niece where she would have been if Rich Uncle had performed $10,000. (different for reliance damages which would be 8,000 (promissory estoppel)

Murphy, who was in Hawaii, telephoned McIntosh, who was in California, and offered him a job for six months as a car salesman for $35,000. McIntosh dropped everything and moved to Hawaii at a cost of $15,000 and started work. Shortly after he started work, Murphy fired him, paid him for the work that was done, and said, "HA HA! Our contract is not enforceable because of the statute of frauds." Does McIntosh have a claim here? If so what should McIntosh get in damages?

$15,000 on a theory of reliance (promissory estoppel) There was no enforceable contract, but Restatement § 90 is satisfied because there was a promise, the promisor (Murphy) should have known it would induce action by the promisee (McIntosh), and it did induce action by the promisee. The courts generally limit the remedy to the amount of reliance. IN this case, McIntosh's reliance was $15,000 (the cost it took him to move)

A doctor walking down the street finds John, an adult, unconscious and bleeding. The doctor takes John to the hospital and incurs the reasonable expense of $2,000 in caring for him. John regains consciousness and says, "Doctor, I am so grateful to you for saving my life that I promise to pay you $5,000." Gratitude being fleeting, after he recovers, John tells the doctor, "Ha Ha! I'm not going to pay you anything." What is Doctor entitled to and on what theory?

$2,000 on a restitution theory. A reasonable person in the shoes of the defendant would have requested the services if he was in a position to do so, so it would be unjust to allow him to retain the benefit without paying for it. This kind of restitution is often called "implied in law contract" or "quasi contract." The court is in effect saying that if there were a contract between them, John would have to pay the doctor. But since there is no contract, it is really restitution.

An option contract can be formed how? Hint - 3 ways specific to restatements and 1 applying to UCC

(1) by the offeree rendering partial performance or tender when the offer anticipates acceptance by performance only, Restatement § 45 (2) by a writing signed by the offeror which recites a purported consideration and proposes a fair exchange, Restatement § 87(1)(a) (3) by statute, including a firm offer under U.C.C. § 2-205, and (4) by detrimental reliance, Restatement § 87(2).

Freida Farmer offers to sell 100 bushels of apples to Merideth's Markets at $5 per bushel. Who can accept this offer? a. Merideth's Markets. b. Sarah's Stores, a competitor of Merideth's Markets who heard about the offer of apples through an employee. c. Carey Consolidator, a large company that has entered into an agreement to buy Merideth's Markets. d. Molly who will inherit Merideth's Markets if Merideth dies.

(a.) Only Merideth's Markets can accept the offer.

Mr. Rochester, in writing, offers to sell Jane his collection of Bronte novels for $400, and in exchange for $5, promises Jane to keep the offer open for 10 days. Would the nominal nature of the $5 consideration paid here prevent the formation of an option contract?

No.

Shazza offers her services as a journalist, but states "if Jones Publishing desires to accept this offer, the acceptance must bear the signatures of all members of the Executive Publishing Board." Jones Publishing sends its acceptance which is signed by only the Chairman of the Executive Publishing Board. Acceptance?

No.

What restatement pertains to Counter-Offers? Generally, what does it say?

A counter-offer proposes an offer on the same subject matter and also rejects the original offer. Restatement § 39

What section of the restatement is the "exercise of dominion" found and what does it mean?

Although acceptance by silence is exceptional, what if the offeree actually exercises dominion over goods that are delivered without request? Although silence does not typically constitute acceptance, an offeree who receives goods and exercises dominion over them will be deemed to have accepted the goods even though the offeree does not intend to accept. See Restatement § 69

Historically, what is an impediment to the formation of an accord?

The Pre-Existing Duty Rule

What is the Pre-Existing Duty Rule ?

The Pre-Existing Duty Rule states that if a party merely promises to do what it is already bound to do, then this promise cannot be consideration for a return promise. The promisee did not get anything more or anything different than the promisor was already bound to give.

Additional terms contained in an acceptance under 2-207(1) become proposals for addition to the contract unless merchants are involved. True or false?

True . Remember, the provisions under (2) that allow additional terms to become part of a contract in a Battle of the Forms situation only apply to contracts between merchants. Otherwise, when one party (or both) is not a merchant, the terms are merely proposals.

A mere pretense of bargain will not create consideration if there is really a gift involved True or False

True.

Acceptance must be made in the manner invited or required by the offer? True or false?

True.

Acceptance must occur while the offer is still open? True or false?

True.

Whether an exchange is bargained for is determined on an objective basis. True or False

True.

A rejection of an offer terminates that power of acceptance? True or false?

True. Restatement § 38.

A mere pretense of bargain will not be sufficient consideration, as where there is a false recital of consideration or where the purported consideration is merely nominal such that the transaction is really gratuitous. True or False?

True. A mere pretense of bargain will not be sufficient, as where there is a false recital of consideration or where the purported consideration is merely nominal such that the transaction is really gratuitous. In those situations, there is no consideration and the agreement is not enforced absent some rationale to enforce the promise without consideration.

Recovery under the material benefit rule may be limited if the value of the later promise is disproportionate to the benefit received. True or False

True. Recovery under the material benefit rule may be limited if the value of the later promise is disproportionate to the benefit received. Restatement § 86

The promisee does not need to inquire into the intent of the promisor and the motive is immaterial absent a showing that both parties know the consideration is merely a pretense. True or False?

True. The promisee does not need to inquire into the intent of the promisor and the motive is immaterial absent a showing that both parties knew the consideration is merely a pretense.

Under UCC § 2-207(1) a "definite and seasonable expression of acceptance" is an acceptance in fact unless a proviso is present. True or false?

True. UCC § 2-207 reverses the common law mirror image rule and allows contracts to form even when an additional or different term is used.

A mere pretense of bargain will not create consideration if there is really only past consideration involved. True or False?

True. A mere pretense of bargain will not create consideration if there is only past consideration or moral obligation involved. See Restatement § 71. The promisee does not need to inquire into the intent of the promisor, though, and the motive is immaterial absent a showing that both parties knew the consideration is merely a pretense. See Restatement § 81

In return for A's promise to supply pens, B promises to buy all the pens B requires for a year for $10 each. Consideration?

Yes.

Is there consideration for A's promise of the pen in this fact situation: In return for A's promise of a pen, B promises to either pay $5 or $10 for it.

Yes.

Knights offered to paint the roses red for the Queen at $1 per rose. The Queen replied, "I accept your offer to paint the roses red at $1 per tree branch." Presuming there is not a "misunderstanding," would there be a contract if Knights says nothing, but does paint the Queen's roses red and Queen cheers as they do so? You might want to take a look at Restatement § 30 before answering.

Yes.

Larry, a grocer, says to Bob, a store customer: "That bag of vegetables you are holding is yours if you promise to pay me $ 5 for it." Is this an offer here by Larry?

Yes.

Paula Prospecter, who is a destitute claimant to an Alaskan gold mine, promises to pay Fran Financier $10,000 if Paula succeeds in reclaiming her mine, in return for Fran Financier's payment of $50 to help Paula to go to Alaska and try. Is there consideration here?

Yes.

Skipper, the owner of the boat named "S.S. Minnow," says to Gilligan, "I will pay you $1000 if you will make my boat run properly." Is there consideration?

Yes.

Lynette, a busy mom of four children, is hosting a Halloween party and offers to buy a handmade pumpkin centerpiece made by her friend Bree, who runs a catering business, and to pay Bree $50 in exchange for the centerpiece. Bree accepts the offer and delivers the centerpiece to Lynette. Would there be consideration if Bree (at the time she accepts) secretly intends not to collect the $50 from her friend Lynette because she does not want to take "charity"? Yes or no?

Yes. There would be consideration even if Bree (at the time she accepts) secretly intends not to collect the $50 from Lynette. Again, the key here is the external manifestation, not the subjective intent. It is enough that Lynette manifests an intent to induce the deal with Bree and Bree responds in accordance with Lynette's inducement. See Restatement § 71

A states to B, "If you paint my house, I will pay you $500." In response to A's offer, B begins to paint A's house. Is this an option contract?

Yes. §45

A writes to B, his son, "if you come to Ohio and take care of me for the rest of my life, I'll leave you the house. If you don't like the deal you can quit at any time." B moves and begins to care for A. Is this an option contract?

Yes. §45

After losing his valuable Rolex watch, A offers a reward to anyone who finds it. In response to this offer, B begins to search for the watch and finds it. Is this an option contract?

Yes. §45

When is a contract NOT a bar to restitution?

In certain cases a plaintiff can sue in restitution even when there is a contract with the defendant. This occurs when the defendant has materially breached the contract. In that situation, the plaintiff's duties under the contract are discharged and the plaintiff is no longer suing "on the contract."

Does a contract require a bargain?

Yes

Is there consideration for A's promise of the pen in this fact situation: In return for A's promise of a pen, B promises to buy it for $10 if he is satisfied with the way it feels when he writes with it.

Yes, as long as B acts in good faith. When satisfaction is measured subjectively, the person does not have unfettered discretion to perform or not. He must exercise that discretion in good faith. In other words, if B refused to purchase the pen because he said he was not satisfied with it, the question at trial would be whether he acted in good faith. For example, his motives might be scrutinized -- was he honestly dissatisfied with the pen, or did he have some other reason for escaping from the deal? That obligation to act in good faith is enough to give B a commitment so that his promise to purchase the pen subject to his satisfaction is not illusory.

Thad promises to pay Eva $500 and Eva promises to give Thad the book, Corbin on Contracts, and a personal letter written to Eva by Corbin, which is a collector's item. Is there consideration for the multiple promises?

Yes, because the $500 is sufficient consideration for both the book and the letter. One promise (the $500) is sufficient to constitute consideration for any number of promises (book and letter). Each part does not have to have independent consideration to be enforceable consideration for the whole.

A offers to sell Blackacre to B. The next day in exchange for B's promise to paint A's barn, A promises not to revoke the sale offer for 10 days. Is this an option contract?

Yes.

To recover in restitution where there is no contract, the plaintiff must show: 1. _____________________________ 2. _____________________________

1. That plaintiff conferred a benefit on the defendant; and 2. That it would be unjust to allow the defendant to retain the benefit. A plaintiff who succeeds in showing both of these requirements is entitled to the REASONABLE VALUE of the benefit conferred. Reasonable value can be measured in a variety of ways.

In an accord/substituted contract issue which facts should you look for?

1. There is a duty arising either from a tort or from a contract that is partially executed; that is, it has been performed by one of the parties. The party who has performed is a creditor. 2. The parties enter into a contract that discharges the duty of the debtor. 3. The debtor agrees to give the creditor some performance (or promise)

In order for an acceptance to constitute a manifestation of assent, what 3 criteria generally must be met?

1. There must be commitment. 2. The commitment must not be conditional. 3. The commitment must be on the terms proposed without variation. Restatement § 50

A binding option may be created by establishing there is a contract to keep the offer open through having: 1. 2. 3.

1. an offer and a promise not to revoke the offer or to keep the offer open. 2. An acceptance of the promise to keep the offer open, and 3. Consideration, i.e. some bargained-for-exchange, for the promise to keep the offer open.

What restatement pertains to Rejection? Generally, what does it say?

A rejection of an offer terminates that power of acceptance. Restatement § 38

Identify all the methods for forming an option contract: A. By detrimental reliance B. By an offer that states that it is to be held open C. By statute, including a firm offer under the Uniform Commercial Code D. By a writing signed by the offeror which recites a purported consideration and proposes a fair exchange E. By the offeree beginning to perform under an offer that looks to acceptance by performance only

A. By detrimental reliance C. By statute, including a firm offer under the UCC D. By a writing signed by the offeror which recites a purported consideration and proposes a fair exchange E. By the offeree beginning to perform under an offer that looks to acceptance by performance only

Suppose I give you a present. Then I decide that I don't like you anymore and try to take my present back. I want to get my present back on a restitution theory. Which elements of a claim in restitution are satisfied: A. Plaintiff conferred a benefit on the defendant. B. It would be unjust to allow the defendant to retain the benefit.

A. Plaintiff conferred a benefit on the defendant. The second element was not satisfied because the enrichment was not unjust because I freely gave you the present and intended for you to receive the present .

Suppose Mary sells Ted a sailboat for $10,000. Mary then learns that the market value of the boat is $25,000. Mary sues Ted in restitution. Which elements of a claim in restitution are satisfied? A. Plaintiff conferred a benefit on the defendant B. It would be unjust to allow the defendant to retain the benefit

A. Plaintiff conferred a benefit on the defendant. The second element was not satisfied. Mary and Ted had a contract, and unless there is some formation problem, it is not considered unjust for a party to retain the benefit of its bargain. Freedom of contract includes the freedom to make bad contracts.

Seller agreed to sell a Ted Williams autographed baseball to Buyer for $400. After Seller delivered the baseball, Buyer regretted making the contract. Seller agreed with Buyer to lower the price to $350 and Buyer paid Seller $350. Is this a modification or accord? Or both?

Accord The contract was performed by Seller but not by Buyer. When the Seller then agreed to accept some performance from Buyer in order to discharge Buyer's duty, all the elements of Accord are satisfied. The agreement was made after Seller delivered the baseball. There cannot be a modification after one party has fully performed.

Driver hits Pedestrian, slightly injuring Pedestrian. They enter into a contract in which Pedestrian gives up all claims against Driver in return for Driver's payment of $5,000 Is this an example of: A. Accord B. Substituted Contract C. Mutual Rescession D. Modification

Accord. The Driver and Pedestrian have entered into an accord under which Pedestrian will give up the claim in exchange for Driver's performance of paying $5,000.

Definition of Accord

An accord is a contract in which a creditor agrees with the debtor to accept performance of something less than payment of the full amount of the debt in return for the creditor's agreement to discharge the debt.

Who can accept an offer?

An offer can only be accepted by the person or persons to whom it is addressed. That, is a third party may not accept an offer not directed to her.

Statutes and Firm Offers Under the UCC

An offer is also binding as an option contract if the offer is made irrevocable by statute. Restatement §87. While the most common of these are firm offers under§ 2-205 of the U.C.C. and public project bidding rules

An offer must be communicated to who in order to be an offer?

An offer must be communicated to the offer in order to be an offer.

On August 7, a father executed a will leaving his home to one of his three sons, Rex. On August 15, the father orally tells his sons, Andre, Kelly and Rex, that he will leave the home to all three in equal shares if they make substantial, specified improvements to the home. The sons began the work on the home, installing a new roof and windows. Before all of the desired work was completed, father died. Rex, Andre and Kelly continued with the work on the father's property after his death, completing all work three months after his death and claim ownership to part of the home. Rex, however, claims he was entitled to the home under the will. Who is correct?

Andre and Kelly because their completing the work was their acceptance.

Scope of Article 2

Article 2 of the Uniform Commercial Code applies to "transactions in goods." This generally means contracts involving the sale of goods. So whenever your facts indicate that the contract involves the sale of goods, you should use the rules of UCC Article 2. Since the UCC Article 2 is statutory law, it is binding as law and will take precedence over case law.

At common law, how are problems that are created by any "battle of the forms" resolved?

At common law, the problems created by any battle of the forms are resolved straightforwardly. The expression of acceptance (commitment manifesting assent to the bargain offered) must be on the terms proposed by the offeror without any variation. This is called the "mirror image rule."

Ralph told his wife Alice before he died that he wanted to leave Rose $10,000 and Loretta $3000 (both are Ralph's sisters). Ralph asks Alice to make the payments. Ralph dies. Under a trust executed by Alice and Ralph years earlier, Alice inherits everything. Alice does not pay Rose or Loretta. Later, Alice confesses to Rose and Loretta that Ralph had asked her to give them money, but that she had not done it. Alice promises to pay them and asks if they would accept $50 per month. Alice stops the payments after eight months. In a suit brought by Rose and Loretta against Alice, the Court is likely to find: A.In favor of Alice, because her agreement to pay the sisters was an informal promise. B.In favor of Alice, because her promise was not supported by consideration. C.In favor of Rose and Loretta, because Alice promised. D.In favor of Rose and Loretta, because Alice was morally obligated to make the payments.

B. In favor of Alice because her promise was not supported by consideration. Alice's promise might be described as a promise to make a gift or gratuitous promise.

Angelina is renting a great apartment from Sam whereby she has an option to purchase the apartment after two years for $300,000. Angelina misinterpreted the provision and attempted to exercise the option after one year. Sam would not allow her to exercise the option at that time. Then, when the two years had passed, Angelina again attempted to exercise the option. Can she?

Because Angelina had a valid option, her attempt to purchase the apartment after one year would not be a counter-offer that terminates the power of acceptance in this case. Although, the lessee misinterpreted the lease and attempted to exercise the option in a manner that was held to be erroneous, the lessee also later, but within the time covered by the option, accepted properly. The lessee's acceptance was effective, despite the earlier, erroneous attempted acceptance.

A Metropolis city ordinance provides that a standing reward of $1000 will be paid for information leading to the arrest and conviction of Lex Luthor. Superman not only furnishes such information, but he even brings Lex Luthor to the Metropolis authorities. Is Superman entitled to the reward?

Because this is a city reward, rather than a private one, Superman can collect the reward whether or not he knew of it. This problem is based on Restatement § 23 Rewards offered by governmental bodies are treated differently, however, and an offer is made to individuals who respond without knowledge of the offer. See Restatement § 23, comment c.

Donald Budget was the owner and chief executive officer of the Budget Towers in downtown New York. Late one afternoon, Budget was in the film studio while April Avicius was in the studio where a kitchen had been set up for her to do cooking demonstrations for a new Budge television program. For the past two years, April had been employed by Budget for monthly programs. As April was looking into Budget's office, she suddenly noticed Budget suffering a seizure. As Budget began convulsing and losing consciousness, April broke through the glass window separating the film studio from the kitchen. April revived Budget and kept him from serious injury. April then summoned an ambulance which transported Budget to the hospital where he received prompt medical care. Although April was credited with saving Budget's life, April was less fortunate. In the process of breaking the window to gain entry, April cut her arm quite severely, resulting in loss of use of the arm. After recovering from his seizure, Donald Budget wrote the following letter to April Avicius: "Dear April: In appreciation for saving my life, I will pay all your medical bills incurred for your arm. In addition, beginning next week I'm going to pay you a monthly stipend of $1,000 for the rest of your life. This stipend will be added to your monthly salary for the cooking demonstrations (which, as you know, is presently $20,000). Also, in the event you are unable to resume your job doing the cooking demonstrations, you may continue working for the Budget Towers directing the programming for a new chef at the same salary level. /s/ Donald Budget" After receiving this letter, April notified Donald that she was deeply thankful and appreciative of his generosity. Since April was unable to resume her cooking demonstration duties, she was reassigned and started working as director of programming for the new chef (Julia). Donald Budget paid April Avicius' medical expenses. Later, April, who was unable to resume her cooking demonstration duties, was reassigned as director for the new cooking program. After the first month at her new position, April was paid her regular salary of $20,000 plus the additional $1,000 stipend. However, the following month April received only her $20,000 salary but was not paid the $1,000 stipend. When April requested the additional amount, Donald Budget refused to pay, saying he changed his mind. Under the majority rule, if April brings a contract action against Budget to recover for the unpaid stipend, which of the following is Budget's best defense? A. April's reliance, if any, on Donald's promise to pay the monthly stipend was not reasonably justified. B. April's regular $20,000 salary and new position at the studios were adequate compensation for services rendered. C. Donald's promise to pay the monthly stipend was nudum pactum (bare promise) in that it did not by its terms purport to bargain for or induce April's decision to return to work. D. None of the above.

C. Donald's promise to pay the monthly stipend was nudum pactum (bare promise) in that it did not by its terms purport to bargain for or induce April's decision to return to work. In this case we are not applying the "material benefit" rule, so in order for April to prevail she would need to demonstrate a bargained-for-exchange. See Restatement § 71. The problem here for April is that classic bargained-for-exchange contemplates that the granting of the consideration induces the making of the promise. Here, April had already provided the emergency help to Donald Budget when he made his promise to her. That would make this a case of past consideration, not one of bargained-for-exchange. Further, the facts do not indicate that Budget's promise induced April to return to work.

Donald Budget was the owner and chief executive officer of the Budget Towers in downtown New York. Late one afternoon, Budget was in the film studio while April Avicius was in the studio where a kitchen had been set up for her to do cooking demonstrations for a new Budge television program. For the past two years, April had been employed by Budget for monthly programs. As April was looking into Budget's office, she suddenly noticed Budget suffering a seizure. As Budget began convulsing and losing consciousness, April broke through the glass window separating the film studio from the kitchen. April revived Budget and kept him from serious injury. April then summoned an ambulance which transported Budget to the hospital where he received prompt medical care. Although April was credited with saving Budget's life, April was less fortunate. In the process of breaking the window to gain entry, April cut her arm quite severely, resulting in loss of use of the arm. After recovering from his seizure, Donald Budget wrote the following letter to April Avicius: "Dear April: In appreciation for saving my life, I will pay all your medical bills incurred for your arm. In addition, beginning next week I'm going to pay you a monthly stipend of $1,000 for the rest of your life. This stipend will be added to your monthly salary for the cooking demonstrations (which, as you know, is presently $20,000). Also, in the event you are unable to resume your job doing the cooking demonstrations, you may continue working for the Budget Towers directing the programming for a new chef at the same salary level. /s/ Donald Budget" After receiving this letter, April notified Donald that she was deeply thankful and appreciative of his generosity. Since April was unable to resume her cooking demonstration duties, she was reassigned and started working as director of programming for the new chef (Julia). After April was released from the hospital, she sent Donald her medical bills. When Donald saw that April's hospital expenses totaled over $40,000, he had a change of heart and repudiated his promise to pay April's medical bills. April, who didn't have any medical insurance, brings an action against Donald to recover for breach of contract. If this jurisdiction follows the rule of Webb and Restatement § 86, which of the following contract principles would afford April her best chance of recovery: A. Bargained for Exchange B. Promissory Estoppel C. Moral obligation as a substitute for consideration

C. Moral obligation as a substitute for consideration Restatement § 86 This fact situation is similar to Webb, so if the "material benefit" rule applies, then that would seem to help April here. While moral obligation in many cases does not help a plaintiff, application of the rule would help April here. April would succeed under the material benefit rule because Budget promised to pay her medical bills and give her a job with an extra stipend after she conferred a benefit on him by saving his life. Budget's promise would be binding to prevent injustice, which would seem to be the case here.

The third element to determine whether an expression is in fact an offer is whether it was ______ ______ _____ ______ ?

Communicated to the offeree The third element to determine whether an expression in fact is an offer is whether it was communicated to the offeree. Restatement § 23. In fact, failure of the offeror to communicate the offer to the offeree may indicate that no offer exists in the circumstances

Professor Pam is a sociologist doing a study on the impact of hunger on homeless people. When she passes a homeless person, Ted, she promises that if Ted walks over to the college where she teaches (about a half mile) and fills out a survey she will buy him lunch at the college cafeteria. Consideration or Incidental Detriment?

Consideration. The condition to the lunch at the college cafeteria (the act of walking over to the college and doing the survey) is now something Professor Pam is bargaining for. Therefore, it is a true condition to receiving the lunch that would change the nature of the gift into an enforceable promise.

Jen and her sister, Virginia, are estranged. Jen has tried to get her sister to meet with her several times unsuccessfully. Jen promises the Gap gift certificate for some new clothes and Virginia meets her sister for lunch. Consideration or Incidental Detriment?

Consideration. The condition to the gift of the Gap gift certificate (the act of coming to lunch) is exactly what Jen is bargaining for (a lunch with her estranged sister). Therefore, it is a true condition to receiving the Gap gift certificate that would change the nature of the gift into an enforceable promise.

Lucy and Henry are friends and Lucy has long wanted Henry to move from his home in Hawaii to Rhode Island where she lives. Henry's ship (which is also his home) is destroyed in a typhoon that hits the Island of Hawaii. Lucy promises that Henry can come and live in a townhome that she owns in Newport, Rhode Island if he packs up his belongings and moves to Rhode Island. Consideration or Incidental Detriment?

Consideration. The condition to the use of the townhome (the act of coming to Rhode Island) is what Lucy is bargaining for since she wants Henry to move to Rhode Island. Therefore, it is now a true condition to receiving the usage of the townhome that would change the nature of the gift into an enforceable promise.

Perry White advertises in the Daily Bugle newspaper that he will pay a $10,000 reward to anyone who will give him information proving the identity of Superman within one year. Is the offer good as to Lex Luthor, who sees a copy of this advertisement in a Madrid newspaper, correctly translated into Spanish?

Correct. There would be an offer to Lex Luther, even though he did not see the ad in the Daily Planet. An offer may be communicated to Lex Luthor directly or through an agent, but the test is whether the offer was made in a way to justify him in in the belief that it was made to him. Restatement § 23

What is the second element to determine whether an expression is an offer?

Definiteness or Certainty. The second element to determine whether an expression is an offer is definiteness or certainty. Even though the parties may intend to form a contract, if the terms of their purported agreement are not reasonably certain, no contract will result. §33 If the terms proposed in an offer are not reasonably certain, an acceptance of the "offer" cannot form a contract. As with other areas of contract formation, it is a question of intent. Thus, all of the circumstances surrounding the transaction must be examined. Many older cases found indefiniteness to be fatal. Modern courts are far more willing to supply omitted terms if they are satisfied that the parties did intend to enter into a contract.

Abbie publishes an offer of reward to whoever will give her information as to the whereabouts of her cat. There is no indication that Abbie intends to pay more than once. Any person learning of the offer has power to accept and the giving of the information by one still allows others to still accept. True or false?

False Any person learning of the offer has power to accept,but the giving of the information by one person terminates the power of every other person to accept. Here, the offer is addressed to any person who gives information about the cat, so it is directed to an unlimited number of persons. Since Abbie only intends to pay once, however, we can presume that the first acceptance will terminate the ability of others to accept afterwards.

Gift promises are enforceable when the promisor truly intends to make a gift. True or False?

False.

Where the parties know that a transaction involves both a bargain and a gift promise, only the bargain portion is enforceable. True or False?

False.

Parties may bargain for a return promise, but not for a specific performance. True or False?

False. The consideration for a promise might be a performance by the promisee, which we call "unilateral" contracts because there is only one promise involved. Typically, however, the bargain involves one promise by the promisor in exchange for a return promise by the promisor (express or implied), which we call "bilateral" contracts because there are two promises involved.

Anyone can respond to an offer by providing the proper manner of acceptance. True or false?

False. An offer can only be accepted by the person or persons to whom it is addressed. That is, a third party may not accept an offer not directed to her. (Not sure we used this statute in class) § 29 To Whom an Offer Is Addressed. (1) The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance. (2) An offer may create a power of acceptance in a specified person or in one or more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance.

Promises based on past consideration are enforceable when the promisor truly intends to make the promise. True or False?

False. One category of promise lacking the exchange element is those based on past consideration or moral obligation. Whether the promisor truly intended to promise is not relevant.

Charitable giving and subscriptions are never enforceable. True or False?

False. ome courts have used the doctrine of promissory estoppel (discussed in other CALI lessons) as a means of enforcing charitable promises. See Restatement § 90

Acceptance cannot be made by the offeree remaining silent in response to the offer? True or false?

False. Although the general rule is that acceptance is not made by the offeree remaining silent in response to the offer, exceptional circumstances do exist that may amount to acceptance in some cases. See Restatement § 69

Consideration is based on a "will theory," under which a promise is enforceable because the promisor has "willed" to be bound by the promise. True or False?

False. Great! Although the "will theory" was prevalent in the nineteenth century, the notion ultimately became one based on bargain.

When the promisor makes a promise to the promisee after receiving a benefit from the promisee, such promise is always enforceable. True or False?

False. When the promisor makes a promise to the promisee after receiving a benefit from the promisee, such promise is not always enforceable. The material benefit rule is a minority rule, so it doesn't always apply. Moreover, the justice must also be served through enforcement of the promise and the value of the promise cannot be disproportionate to the benefit. Restatement § 86

Fancy Florist offers to Gladis Grower, a grower of exotic flowers, a "blanket arrangement" to buy "flowers grown by you" at stated prices. As contemplated, Gladis procures 1,000 specialty flower bulbs, plants them, and begins growing them for sale to Fancy as "Gladis' Gladiolas." Thereafter Fancy Florist revokes the offer. Gladis claims that she has an option contract. Who is correct? Fancy Florist or Gladis Grower?

Gladis Grower. Substantial and foreseeable reliance on the offer will create an option contract to the extent necessary to avoid injustice. §87(2).

Mary Maternal wants her children to watch educational television. When her local PBS station begins its annual drive to support children's television programming, Mary pledges $200. What is it that Mary appears to have bargained for?

Here, Mary seems to be bargaining for the local PBS station to continue offering children's programming. If so, this would seem to be sufficient consideration to support her promise for the $200 (with a return promise of the PBS station implied to continue the programming).

Knowledge of the Offer

In addition to being a person who can accept an offer, an effective acceptance must also be made by a person having knowledge of an offer.

When Harry met Sally, they signed a contract for Harry to sell 10 hula-hoop making machines to Sally, who planned to manufacture and sell hula-hoops. Prior to delivery, but after signing the contract, Sally spent $3,000 laying a concrete floor for the machines in her factory. Harry then refused to sell the machines to Sally and Sally sued Harry for breach of contract. In court, Sally could not prove with reasonable certainty what her profits would have been from manufacturing and selling hula-hoops. Harry, however, could prove that the hula-hoop market entered a downward spiral and that Sally would have lost $2,000 if the machines had been delivered. Sally should recover:

In those circumstances, the buyer can recover the $3,000 expended in reliance, but that amount is subject to the offset of $2,000 that the seller can prove would have been lost by performance, so the net result is that the buyer recovers $1,000. §90: Promise Reasonably Inducing Action or Forbearance

Professor Pam wants to do a good deed so when she passes a homeless person, Ted, she promises that if Ted walks over to the college where she teaches (about a half mile) she will buy him lunch at the college cafeteria. Consideration or Incidental Detriment?

Incidental Detriment. The incidental condition to the lunch at the college cafeteria (the act of walking over to the college) is not something Professor Pam is bargaining for. Remember, she just wants to do a good deed. Therefore, it is incidental and not a true condition to receiving the lunch that would change the nature of the gift into an enforceable promise supported by consideration.

Henry Roth's ship (which is also his home) is destroyed in a typhoon that hits the Island of Hawaii where he lives. Lucy promises that Henry can come and live in a townhome that she owns in Newport, Rhode Island if he packs up his belongings and moves to Rhode Island. Consideration or Incidental Detriment?

Incidental Detriment. The incidental condition to the use of the townhome (the act of coming to Rhode Island) is not what Lucy is bargaining for. Therefore, it is incidental and not a true condition to receiving the usage of the townhome that would change the nature of the gift into an enforceable promise supported by consideration.

What is the first element of an "offer"?

Manifestation of present intent

Paveco submits its bid for $250,000 to the Hawaii Department of Road Works related to a request for bids for some paving and asphalt work on a new public project. Paveco obtains other work projects and no longer wants to pursue the Hawaii Road Works project. Can Paveco withdraw its bid? Yes, no or maybe?

Maybe. This is the best answer. Here, we don't know for sure whether Hawaii has an applicable statute that would prevent Paveco from withdrawing its bid, though it is likely since it is a public works project. Additionally, we don't know whether the bids have been opened yet. If they have not, then Paveco can likely withdraw its bid. If the bids are opened, then it is likely that a firm offer by Paveco exists that is irrevocable by statute.

Seller agreed to sell a Ted Williams autographed baseball to Buyer for $400. Buyer then regretted making the contract and Seller agreed with Buyer to lower the price to $350. The parties exchanged the baseball for the $350. Is this a modification or accord? Or both?

Modification Where the parties had an original contract and changed the duties before the agreement was executed, all the elements of Modification are satisfied. §89

Seller agreed to sell a Ted Williams autographed baseball to Buyer for $450. The parties then discovered that Ted Williams had died and merchandise signed by him went up in value. Seller asked Buyer if Buyer would pay $550 for the baseball and Buyer agreed. The parties exchanged the baseball for the $550. Is this a modification or accord? Or both?

Modification Where the parties had an original contract and changed the duties before the agreement was executed, all the elements of Modification are satisfied. §89

Contractor and Owner agree that Contractor will build a porch on Owner's house by June 1 for $10,000. After construction has started, Contractor has trouble getting the necessary supplies and asks Owner if Contractor can have until July 1 to complete the job; Owner agrees. Is this an example of: A. Accord B. Substituted Contract C. Mutual Rescession D. Modification

Modification. The Contractor and Owner have an original agreement that they modified when they changed the completion date from June 1st to July 1st.

Sometime when expectation damages are hard to prove to a reasonable certainty, the court will look to what?

Money spent in reliance on the contract.

A leases Blackacre to B for 5 years. After executing the lease, A writes to B, "I hereby grant B an option to extend the lease". Is this an option contract?

No.

Husband and wife have been married for a year and have no children. They enter into a separation agreement in which each gives up all property, support, and estate claims against the other. Is this an example of: A. Accord B. Substituted Contract C. Mutual Rescission D. Modification

Mutual Rescission. the Husband and Wife have mutually rescinded their duties to each other.

Is there consideration for A's promise of the pen in this fact situation: "In return for A's promise of a pen, B promises to either buy it for $10 or not buy it." Consideration?

No Consideration.

Harry owns a house-cleaning service company. Owen Homeowner, after seeing an advertisement for Harry's services, sends Harry a fax offering to Harry's company the cleaning work for $150 per week. Harry sends Owen a return fax that states, "Your order is accepted, subject to my having enough staff to send out to your home. " Is this an acceptance?

No because a purported acceptance that adds conditions to the terms of the offer is not good acceptance. Additionally, Harry has only made a conditional promise to Owen, one that it is different from that for which the offeror bargained.

In consideration of $1 paid by Beatrice, Lisa Marie executes and delivers to Beatrice a written option agreement giving Beatrice the right to buy Graceland for $10,000 if Beatrice gives notice of intention to buy within 120 days. Beatrice knows, but Lisa Marie does not, that Graceland actually is worth $10,000,000 because of the ability to use it as a tourist attraction. Is the $1 adequate consideration to support the option contract here?

No, because a small consideration is not adequate consideration if the transaction is not fair. It does matter whether the terms of $10,000 for property worth $10,000,000 is fair! One would doubt that this is a fair transaction on these facts. Therefore, a small consideration would not be adequate to support the option contract. See also, Restatement § 87

John has always admired the Ted Williams autographed baseball on Mary's mantle and Mary knew he wanted it. One day, Mary wrote to John, "I'll sell you my Ted Williams autographed baseball for $400." By an amazing coincidence that happens only in law school hypotheticals, at the same time John wrote to Mary, "I'll buy your Ted Williams autographed baseball for $400." Does this exchange of correspondence create a contract?

No, because each promise was not given in exchange for the other. It is true that each party promised the other something of value, but recall that to constitute consideration, the return promise must be "sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise". Here, John's promise was not given in exchange for Mary's promise. It couldn't have been, because he did not know about her promise when he sent his letter.

Assume that B has been requiring about 1000 - 1200 pens a year for three years. In the fourth year, the market price of pens goes up to $12. B suddenly says he requires 2000 pens at the contract price of $10. Is B entitled to them?

No, because the amount is disproportionate to B's prior requirements in the contract.

Abby loans her friend Brandon, a 19 year old college student, $200 to see him through the end of the semester. After Brandon dies in a car accident, his mother, Carrie promises to pay Abby $200. Is this an enforceable promise? Which statute does it pertain to?

No, this is NOT an enforceable promise. See Restatement § 71. Although Carrie might be happy that Abby has helped her son, Carrie is under no obligation to provide even necessaries for her son who is a college student. These cases are very much like the case of Mills where the father may have felt morally obliged to reimburse the good Samaritan, but his promise to do so was not enforceable.

Brandon, a 19 year old college student, is short on money at the end of the semester. Abby, a friend, goes to Kroger Supermarket and buys him $200 worth of groceries. Brandon gets straight A's that semester and personally credits Abby for helping to see him through to the end. When Carrie, Brandon's mother, who is quite pleased with Brandon's grades, finds out about the groceries given by Abby, Carrie promises to pay Abby $200. Is this an enforceable promise? Which statute does it pertain to?

Miss Rita McFarland of Hardin, Montana, was looking out the window when she saw a couple of men loading steers into a pickup truck. Not recognizing them as anyone she knew in this small town, Rita called the sheriff, who arrested them as cattle rustlers. When the Montana Sheep and Cattleman's Association heard the story, they called Rita and told her, "Miss McFarland, you are entitled to collect our standing reward of $1,000 for information leading to the arrest of cattle rustlers." Surprised, Rita responded, "Reward? My heavens! I didn't know there was a reward!" Does the Montana Sheep and Cattleman's Association have to pay Miss McFarland the reward?

No. As we have seen, in order to have a contract, the performance or return promise must be "given by the promisee in exchange for that promise." Here, Miss McFarland (the promisee) could not have given her performance in exchange for the promise made by the offeror (the Sheep and Cattleman's Association), because she did not know about the promise.

Perry White advertises in the Daily Bugle newspaper that he will pay a $10,000 reward to anyone who will give him information proving the identity of Superman within one year. Lex Luthor provides the information within one year to Perry White, but does so in ignorance of the offer. Can Lex Luthor collect the reward?

No. Lex Luthor did not know of the reward and would not be able to collect on it. This problem is based on Restatement § 23

Perry White advertises in the Daily Bugle newspaper that he will pay a $10,000 reward to Superman if he reveals his identity to Perry White within one year. Lex Luthor knows who Superman really is and provides the information within one year to Perry White. Can Lex Luthor collect the $10,000 reward?

No. Perry White addressed the offer to Superman only and it was not directed to Lex Luthor so he would not be able to collect on it.

Stonestreet leased to Southern Oil Company a lot for a gas station for a term of ten years with an option to purchase during the term of the lease at a cost of $50,000. As part of the lease, Stonestreet agreed to furnish Southern Oil with water for the station so long as he was able to do so with his present water supply. When the water later failed, Stonestreet and Southern engaged Fisher to drill a well on the gas station premises, each paying half of the cost. Southern Oil later agreed that if it exercised the option to buy the gas station premises, it would repay to Stonestreet his half of the well cost ($3290). Stonestreet did not make any promises in return for this agreement. Later, when Southern Oil exercised the option to purchase the premises, Stonestreet demanded the $3290. Southern Oil refused to pay Stonestreet anything more than $50,000. Must Southern Oil pay the additional $3290?

No. Stonestreet's half of the well price was gratuitous

In the famous case of Mills v. Wyman, 20 Mass. (3 Pick.) 207 (1825), Mills found Wyman's 25-year old son in a destitute condition after a sea voyage. Mills spent an unspecified sum of money (let's call it $300) caring for the son in the expectation of being reimbursed. Wyman was so grateful to Mills that he sent Mills a letter in which he promised to pay him the $300. Then, as the court said, feelings of gratitude being transient, he changed his mind and refused to pay the money, leading Mills to sue Wyman. Does Mills have a good legal claim against Wyman?

No. The problem in this case is often referred to as "past consideration," which is another way that a promise may fail to be consideration. Suppose a person says to you, "I am so grateful to you for what you have done, that I promise you something," The thing that you did is not consideration because it was not bargained for. It logically can't have been bargained for, because the promisor already had it when he made his promise. Therefore, he was not bargaining to get it. Past consideration is no consideration.

Pricella Proud offers the Proud Cafe for sale. Polly Purchaser wants to buy the Cafe and has her attorney send a letter stating that "Polly is . . . ready to proceed with this transaction" and asking to "know the exact dollar amount that you expect to receive." Is this an acceptance?

No. There must be an expression of commitment that is unequivocal and unconditional.

Tommy agrees to sell to Chuckie a specific tract of land to put the play set on for $10,000, $4,000 in cash and $6,000 on mortgage. Tommy further agrees to obtain the mortgage loan for Chuckie or, if unable to do so, to lend Chuckie the amount, but the terms of loan are not stated, although Tommy manifests an intent to conclude a binding agreement. Is there an offer here? Is it sufficiently definite?

No. he contract is too indefinite to support a decree of specific performance against Tommy, but Chuckie may obtain such a decree if he offers to pay the full price in cash. This problem is based on Restatement § 33

No. $50 would not be nominal here, though it is small. The key to determining whether even a nominal consideration is enforceable rests in whether there is a bargained for exchange. If Paula cannot go to Alaska without the $50, she very well may have entered into even this apparently lop-sided exchange. In the case of Embola v. Tuppela, the Supreme Court of Washington found that this promise was enforceable and did not lack consideration because it was an investment that might not pay off if the claimant did not recover the mine.

The Chief promises to give Agent Maxwell Smart a gold watch as a retirement present. Later, when Agent Smart struggles during the encounter with the KAOS robot, the Chief reconsiders and refuses to deliver it. Agent Smart is angry at the Chief and demands the watch. Must the Chief deliver the watch? Yes or No? Which of the following reasons apply? A. The Chief's promise is not supported by consideration. B. There was no exchange. C. The Chief received nothing in return.

No. A B and C all apply

Adrian, at Claire's request, promises to give Jules the book, Wind in the Willows. Is there consideration to support a contract? Yes? No?

No. Adrian has promised to give Jules the book at Claire's request, but Adrian has not received anything in exchange for her promise. Claire's consideration has moved to Jules (a third party), which is fine. However, the agreement must have consideration on both sides. In this case, Adrian's promise is gratuitous only. The problem would be different if Adrian made the promise at Claire's request and in exchange for $5 paid by Claire.

No. Full contractual enforcement is not always appropriate in reliance cases. There is nothing unusual here to justify specific performance. Gladis could assert her rights as an aggrieved seller. §87

Suppose you come home from vacation and find that I have painted your house, which really needed painting. I demand the reasonable value of the painting, which is $5,000. Do you have to pay me on a restitution theory? Yes or No.

No. I did confer a benefit on you but the enrichment was not unjust because I conferred the benefit officiously, without your requesting it.

Betty has been accepted to medical school and registers for classes. When hearing the news, Aunt (who is quite wealthy) promises Betty $1,000 if Betty goes to medical school. Is there an offer here by Aunt?

No. If the circumstances give Betty reason to know that Aunt is not undertaking to pay Betty to go to medical school but is promising a gratuity, there is no offer by Aunt. See Restatement § 24

Scott comes home and finds that Landscaper has put new turf on his lawn, which admittedly badly needed it. Landscaper demands $1,000 for the job, which is the reasonable value of the lawn. Would you have to award restitution to the Landscaper? Yes or No.

No. It is true that Scott was enriched by getting the benefit of the lawn, but do we want to encourage people like Landscaper to go around conferring benefits and then trying to collect for them? As a matter of policy, restitution is not available when the benefit was conferred "officiously", that is, without the person wanting it.

John says to Mary, "I promise to give you a present on your birthday." Mary responds, "That is very kind of you. I promise to give you a present on your birthday, too." John then gives Mary a present on her birthday. Does Mary have a legal obligation to give John a present on his birthday?

No. John made a "gift promise" to Mary. That is, he promised her something without requesting any return promise or performance. Mary then made a "gift promise" to John. She may have made the promise because he made his promise, but he did not make his promise because she made her promise. Therefore, the promises were not made in exchange for each other and there is no binding contract. Without a binding contract, Mary has no legal obligation.

Mrs. Darcy owns a Jaguar car worth $30,000 which is subject to a loan of $10,000. Mrs. Darcy promises to make a gift of the car to her son, Mark, and to pay off the loan. Later, Mrs. Darcy gives Mark the car subject to the loan, but does not pay off the mortgage. Can Mark enforce the promise by his mother, Mrs. Darcy, to pay off the loan?

No. Mark cannot enforce his mother's promise to pay off the car because it is a gift promise. There is no consideration for her promise. This is true even though the gift of the car subject to the loan imposes a burden on Mark as he will not have clear title to the car. See Restatement § 71

Mr. Rochester, in writing, offers to sell Jane his collection of Bronte novels for $400, and in exchange for $5, promises Jane to keep the offer open for 10 days. the collection of novels actually contains several rare, original print books worth $500,000. Jane knows this, but Mr. Rochester does not. Is there an option contract here?

No. Nominal consideration is generally held to be sufficient. That is courts will not inquire as to the sufficiently or adequacy of consideration. A different rule prevails for option contracts, though. As described in the Restatement, nominal consideration is insufficient to support an option contract when the exchange is not on fair terms. Here, $5 to establish an option to purchase a $500,000 collection of rare original print books for a mere $400 would not likely be enough consideration.

Frank Abbott, a senior partner in the law firm of Abbott and Abbott, provides a letter of employment and hands it to Darcy. The letter states that "This contract is not binding until accepted by signature of the managing partner of Abbott and Abbott. " Darcy signs the letter and hands it back to Frank Abbott, who also signs. Acceptance?

No. Only Abbott has signed the letter. Her signature would not be an acceptance of the letter, as the letter stated that there would only be a contract once the Managing Partner signed the letter. §30: Form of Acceptance Invited

Niece has decided to go to law school. Rich Uncle says to Niece, "I hear you are going to law school. I'll give you $10,000." Niece goes to law school. Rich Uncle says, Ha Ha! I'm not going to pay you." Has a contract been formed that Rich Uncle breached?

No. Rich Uncle did not induce Niece to go to law school. She was going to go anyway. Another way of saying this is that Rich Uncle did not "bargain" for Niece's performance. Therefore she gave him nothing in return for his promise. Without a bargained-for consideration, the promise is not enforceable.

Ohner told Roofer: "The roof on my barn was damaged in last week's storm. If you will repair the roof by the end of the week I will pay you $2000." Upon receiving Ohner's letter, Roofer begins to repair the roof. Can Roofer quit working without liability?

No. Roofer's beginning to work on the roof operates as a return promise to complete performance. Therefore, if Roofer quits work, Roofer would be breaching his promise to complete the job; so he would be liable for the damages flowing from that breach. Restatement §62(1): Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance.

Jake (who just turned 18) gives guitar lessons to Anna Coleman, the seventeen year old daughter of Tess Coleman, intending to give her 20 such lessons and to charge Tess for the price. Tess never asked Jake to give Anna the lessons, but allows the lessons to continue to the end, not knowing that Jake intends to be paid. Tess believes that Jake, the boyfriend of Anna, is providing the lessons for free. Acceptance?

No. Tess Coleman did not know that Jake expected payment for his services. Again, the general rule is that acceptance is not ordinarily had by silence. The rule of regarding services rendered would not operate here where Tess had no knowledge that the services were for payment. As the Restatement § 69 comment b provides, even the right to restitution in this case is limited.

A owes B $1000 due to be paid on June 1. B offers to accept $750 on May 1. A raises the money and comes to B's home and states, "I have come to pay my debt." B replies, "I revoke." Is this an option contract?

No. The debtor presenting himself at the door and announcing that he had come to pay the debt amounted to mere preparation to perform. Only an actual tender of the money might have made the offer irrevocable. Preparations to perform may, however, constitute justifiable reliance sufficient to make the offeror's promise binding under §87(2)

A contractor agreed with a homeowner to dig a swimming pool to a depth of 10 feet for $10,000, payable one month after completion. After the contractor finished the job, the homeowner said he did not have enough cash to pay. The homeowner offered the contractor $9,000 payable two weeks after completion to discharge the debt and the contractor agreed. Does the Pre-Exisiting Duty Rule bar enforcement of the homeowner's promise?

No. The homeowner is agreeing to do something the homeowner was not already bound to do (paying in 2 weeks instead of a month). Sine the law does not inquire into the adequacy of consideration, if the contractor thinks it is worth $1,000 to get paid 2 weeks early, we leave the parties to their bargain.

Roberts executed a promissory note for $250 in favor of McGruder, a fortuneteller, in exchange for McGruder's promise to cure Roberts during his last sickness prior to death by conjuring and incantations. Robert died a few weeks after giving the note. Is there consideration here?

No. There is no consideration here because (at least in one court's opinion) conjuring has no value and no one in their right mind would make such a bargain. In the case of Cooper v. Livingston, the court stated: "Our conclusion is that "conjuring" over a sick man "to make him well" is not a valid consideration for a promissory note; and that no man with a healthy mind would voluntarily give a note for $250, with interest at two per cent. a month, for the services of a conjurer, who proposes to cure a lingering disease by conjury or incantations."

Bon Ami entered into an agreement with Soule, a business consultant, whereby Soule promised to provide advice leading to an increase in Bon Ami's profits. In exchange, Bon Ami promised to pay one-half of any resultant increase in profits to Soule. Soule advised Bon Ami to increase the price of a product by a specified amount, and that profits would rise substantially with no fall-off in demand. Bon Ami followed this advice with good results. Is there consideration here?

No. There is no consideration here because the idea was obvious and a common concept. In the case of Soule v. Bon Ami, the court found the contract was unenforceable due to lack of consideration. The court stated: "No person can by contract monopolize an idea that is common and general to the whole world." *I personally think this could go either way*

Thomas desires to make a binding promise to give $1000 to his son Dorian. Being advised that a gratuitous promise is not binding, Thomas offers to buy from Dorian for $1000 a book worth less than $1. Dorian accepts the offer knowing that the purchase of the book is a mere pretense. Is there consideration for Thomas' promise to give $1000 to Dorian?

No. There is no consideration here for Thomas' promise to give Dorian the $1000 because the book is a mere pretense here and not actually bargained for. This problem is based on Restatement § 71

Thomas desires to make a binding promise to give $1000 to his son Dorian. Being advised that a gratuitous promise is not binding, Thomas writes out and signs a false recital that Dorian has sold him a car for $1000 and a promise to pay that amount. Is this promise supported by consideration?

No. There is no consideration here for Thomas' promise to give Dorian the $1000 because the recital of the car was merely a sham. This problem is based on Restatement § 71

Suppose I send cash through the mail to my daughter. It gets delivered to you by mistake, and you keep it. Can I recover it from you on a contract theory? Yes or No?

No. There is no contract between us.

Hillary and Spencer enter into a written contract for the sale of Hillary's house for $200,000. Spencer then pays a title insurance company $500 to check the title, which is the first step in the purchase. Hillary then breaches the contract and refuses to sell the house. Spencer demands that Hillary pay him the $500. Would you award restitution to Spencer? Yes or No.

No. This is a tough one. Focus on restitution as a remedy that forces the party who was unjustly enriched to disgorge the benefit that they received. Here, although Spencer is out the money, it did not enrich Hillary.

Nancy, knowing that her friend George is out of work and needs a job, applies for a position at a company where they live in Texas that otherwise might have considered George. Feeling badly, Nancy promises to pay George's moving expenses when the only job he can find is in Alaska. Would this promise be enforceable if Restatement § 86 applies?

No. This problem is not enforceable under the material benefit rule because Nancy did not receive a benefit from George, so it just doesn't satisfy the rule. See Restatement § 86

Take a close look at the rule of U.C.C. § 2-205 . Does it bind a offeror who signs a firm offer on a form provided by the other party? Yes or No?

No. U.C.C. § 2-205 provides protection against the inadvertent signing of a firm offer when contained in a form prepared by the offeree by requiring that such a clause be separately authenticated.

Miss Rita McFarland of Hardin, Montana, was looking out the window when she saw a couple of men loading steers into a pickup truck. Not recognizing them as anyone she knew in this small town, Rita called the sheriff, who arrested them as cattle rustlers. When the Montana Sheep and Cattleman's Association heard the story, they called Rita and told her, "Miss McFarland, you are entitled to collect our standing reward of $1,000 for information leading to the arrest of cattle rustlers." Surprised, Rita responded, "Reward? My heavens! I didn't know there was a reward!" Assume that the sheriff of Big Horn County knew about the reward offer and sought the reward from the Montana Sheep and Cattleman's Association. Is there an enforceable contract between the parties?

No. a promise or performance one is already legally obligated to give cannot be consideration. As you can see from our analysis, such a promise or performance would not be consideration as contemplated by the Restatement because it is deemed to be given because of the legal duty, and not because of the offeror's promise. Applying the above concept to our facts, we can see that the sheriff has a duty under the terms of his employment to arrest bad guys like cattle rustlers. Therefore, there is no consideration because he is already under a legal obligation to render the performance. He may have been motivated to do it by the reward, but contract law does not care.

Professor Martin loses her laptop computer and cannot remember where she put it. Professor Martin offers a reward of $50 to anyone finding her laptop. Student, not knowing of the offer of the reward, finds the laptop in the library and returns it to Professor Martin. Acceptance?

No. the letters have crossed in the mail and neither can be considered an acceptance since they were not given in response to an offer of the other that was known to them.

John made a written offer to Mary to sell his house for $100,000. Which of the clauses below would make the offer irrevocable due to the formation of an option contract? A. It is good for 30 days. B. It will remain open for 30 days. C. That John must have Mary's acceptance within 30 days. D. It is irrevocable for 30 days. E. The offer is firm for 30 days. F. None of the above clauses would make the offer irrevocable.

None of these clauses would make the offer irrevocable. An offer is revocable even though it expressly states the contrary, because of the doctrine that an informal agreement is binding as a bargain only if supported by consideration. U.C.C. Article 2 does not apply, because this does not involve the sale of goods. So, U.C.C. § 2-205 would not make this a firm offer, even when made by a merchant.

Promoter promised to promote Linda, an aspiring country and western singer. The contract called for Linda to make two records and for Promoter to produce and promote those two records. Linda paid Promoter a fee of $2,500. Promoter failed to produce and promote the records. It seems unfair for Linda to receive nothing where she did not breach the contract (Promoter did), and she was harmed by that breach. Is there some way to avoid giving Linda nothing? Can Linda get specific performance, compelling Promoter to perform the services? Probably yes? Probably not?

Probably not. This is a service contract. Courts rarely award specific performance of service contracts. The strength of specific performance is that it does give the person what they were promised. The weakness is that it does so at the cost of the court's supervision, including use of its contempt powers, which the court is reluctant to get involved with. The court will determine that the remedy at law is adequate, that is, money damages will give her what she was promised. Of course, as we are seeing, money damages may be problematic because of the problem of certainty.

What is meant by the term "Battle of the Forms" ?

Problems with the mirror image rule arise when the parties use pre-printed forms for the offer and the acceptance that contain different terms. Typically, the terms on pre-printed forms are extensive and often printed in small type on the reverse side of the forms. The buyer's form will have terms that favor the buyer. The seller's form will have different terms in its favor. An acknowledgment sent by one of the parties may have different terms as well! The parties may not read the form of the other, yet believe they have planned an exchange and made a contract. However, they have not yet come to an agreement, since they have yet to negotiate the terms on the back of their forms. The problem of the differing terms on forms is called "the battle of the forms."

What is a gratuitous promise and are gratuitous promises supported by consideration?

Promises made that do not have any EXCHANGE element all. Because of the absence of the "bargained-for-exchange", these promises are not supported by consideration. The most common of these are gratuitous (gift) promises.

Promissory Estoppel Summary

Promissory = the adjective form of promise Estoppel = means that one is barred from denying a certain fact or state of facts because of some subsequent conduct. Putting these together, it appears to mean that because of the promisee's reliance on the promise, the promisor is barred from claiming that the promise is not enforceable. (easier to think of as "reliance on a promise" ?)

Restitution

RESTITUTION To recover money in restitution, you must show: (1) that you conferred a benefit on the defendant, AND (2) that it would be unjust to allow the defendant to retain that benefit. If you succeed in showing (1) and (2), you are entitled to the reasonable value of the benefit conferred. Reasonable value can be measured in a variety of ways, as we will see.

The terms of an offer must be ____ ____ ?

Reasonably Certain

What is meant by "prior conduct" as it relates to "acceptance" - what is the restatement section this pertains to?

Remember, it is exceptional for silence to constitute acceptance. Sometimes, though, the prior conduct of the offeree that gives the offeror reason to believe that silence is an acceptable method of acceptance may be sufficient to bind the offeree who is silent. See Restatement § 69

Larry Landlord leases a home to Sarah Student for the 3 years that she is in law school. Larry later gives Sarah an "option" to buy the home for $195,500 within three years. With Larry's approval, Sarah makes permanent improvements to the home, installing skylights, a pool, landscaping and a new roof, using her own labor and expending many thousand dollars. Toward the end of the three years, Larry revokes the option, demanding $250,000 for the home. Sarah gives written notice to Larry of acceptance in accordance with the terms of the option for $195,000. Larry refuses to sell her the home, claiming the price is now $250,000. Who's correct? Larry or Sarah?

Sarah. Sarah installed skylights, a pool, landscaping and a new roof. She also used her own money to do so and expended many thousands of dollars. Lastly, Larry approved the improvements to the home. All of these facts support Sarah's claim that an option contract was created under §87(2). Substantial and foreseeable reliance on the offer will create an option contract in these situations to the extent necessary to avoid injustice. The next issue would become what type of remedy would be appropriate.

Which restatement section is "Offeree's intention that silence be acceptance" found? What does it mean?

Sometimes, an offer itself will state that the offeree's silence is acceptance. Although the offeror's conduct in such situations does not deprive the offeree of her right to remain silent, the offeree may decide to accept through silence. See Restatement § 69

A contract calls for Seller to sell 10,000 widgets to Buyer for $10,000. On inspecting the widgets, Buyer claims that a number of them are defective. Buyer offers to give up the claim if Seller will accept Buyer's promissory note in the amount of $9,000 for the widgets and Seller agrees. Is this an example of: A. Accord B. Substituted Contract C. Mutual Rescession D. Modification

Substituted Contract. The Seller and the Buyer have entered into a substituted contract under which Buyer gives up the claim in exchange for Buyer's promise to pay $9,000

What is the rule on consideration "moving from or to another person" ?

The controlling rule provides that "It matters not from whom the consideration moves or to whom it goes. If it is bargained for and given in exchange for the promise, the promise is not gratuitous." Restatement § 71

Adelaide promises to pay Lucian $1,000 if Lucian will make an offer to Colette to sell Colette certain land for $25,000 and will leave the offer open for 24 hours. Lucian makes the requested offer to Colette and forbears to revoke it for 24 hours, but Colette does not accept the offer for the land. What is the consideration for Adelaide's promise?

The creation of a power of acceptance in Colette is consideration for Adelaide's promise. Here, the creation of a power of acceptance in Colette is consideration for Adelaide's promise. Adelaide has promised the $1000. The requested bargain is for Lucian to make the offer to Colette and hold the offer open for at least 24 hours. The making of the offer creates a power of acceptance in Colette, which is the bargain here. See Restatement § 71

What is the general rule regarding "silence as acceptance" and what section in the restatement can it be found?

The general rule is that acceptance is not made by the offeree remaining silent in response to the offer. See Restatement § 69 That is, typically, an offeror cannot foist a contract on an offeree by forcing the offeree act to reject the offer. Restatement § 69, comment a. The receipt of an unsolicited offer does not create an obligation on the offeree to respond or face acceptance by silence. Id. However, exceptional circumstances do exist and conduct of the offeree may amount to acceptance in some cases such as: 1) taking the benefit of the offer; 2) prior conduct of the offeree giving the offeror reason to believe that silence would be acceptance; 3) exercise of dominion over goods; or 4) where the offer states that the offer may be accepted by silence and the offeree remains silent with the intention of accepting. Remember to look to the particular circumstances of the offeree's conduct.

Promoter promised to promote Linda, an aspiring country and western singer. The contract called for Linda to make two records and for Promoter to produce and promote those two records. Linda paid Promoter a fee of $2,500. Promoter failed to produce and promote the records. The question is what to give Linda as a remedy. Can Linda prove to a reasonable certainty the following items she lost when Promoter did not perform as promised? Choose all that apply: A. She would have paid out $2,500 B. She would have earned royalties from the sale of two records. C. She would have had the thrill of having two records out. D. She would have had some possibility of future success of putting out the records.

The only thing that is reasonably certain in dollar amount is the $2,500 she would have paid out. It is very difficult to establish to a reasonable certainty the royalties that would have been earned on a record that was never produced.

Restitution and Reliance Compared

There is an important difference between reliance and restitution. Reliance means giving back what was spent in reliance--bringing the plaintiff back to where he or she would have been had there been no contract. Restitution means giving back what the plaintiff gave the defendant. This means the reliance measure will award expenses paid to third parties but restitution will not. Restitution is sometimes referred to as "unjust enrichment". You can only recover the amount by which the defendant was enriched. When a contract is in the picture, the legal situation regarding restitution is more complicated, as the following questions show.

After Anna Feinberg worked for Pfeiffer Co. for 35 years, the company promised her that it would pay her $200 per month for the remainder of her life when she retired. Two years later, she retired. The company made the payments for five years, after which the company decided it would stop making payments. Feinberg comes to you for advice. On what theory do you think she could recover and why?

These facts are based on Feinberg v. Pfeiffer Co ., 322 S.W.2d 163 (Mo. Ct. App. 1959). Is Feinberg entitled to a remedy for breach of contract? No. There is no contract because the Company did not bargain for anything from Feinberg. So there is no consideration. The promise thus appears to be an unenforceable gift promise. Does Feinberg have a claim under Restatement § 90? Probably. There is a promise. It was reasonable for the Company to expect that the promise would induce the action and it did induce the action. Injustice can be avoided by enforcing the promise. At her age, it will be difficult for Feinberg to re-enter the work force. Should the remedy be limited? The usual rule is that reliance damages are measured by the extent of the reliance. Here, it is clear that Feinberg substantially changed her position because of the promise, but it is hard to measure that change of position in dollar terms. It would therefore be just to measure the damages by the expectancy, the $200 per month that she was promised.

Acceptance must be a manifestation of assent by the offer to the terms of the offer. True or false?

True. An acceptance is merely the offeree's manifestation of assent to the terms of the offer stated by the offeree. Restatement § 50. An effective acceptance requires three things: 1. A manifestation of assent by the offeree to the terms of the offer; 2. The acceptance must be made in the manner invited or required by the offer; and 3. The acceptance must occur while the offer is still open, i.e., if the offer has already been revoked, the acceptance is not effective to create a contract. Restatement § 50.

Courts have concluded that the proviso language is not easily invoked and a party wanting to use it must track the "expressly made conditional" language. True or false?

True. Courts have made it difficult for parties to invoke the proviso unless they use language that clearly indicates this intention.

Fresh Feet offers $ 100 to anyone who gets blisters running the Boston Marathon after using their special shoe inserts. Beverly Bostonian, Carl Colorado and Duly Dallas use it as directed. Each has made a contract independent of the others, and is entitled to the $ 100 if he or she later gets blisters while running the Boston Marathon. True or false?

True. Each has made a contract independent of the others, and is entitled to the $ 100 if he or she later gets blisters while running the Boston Marathon. Here, the offer is directed to a number of persons and each can accept.

Whether an exchange is bargained for is determined on an objective basis. True or False?

True. Like mutual assent, the law is concerned with the external manifestation rather than the undisclosed mental state. See Restatement § 71

Whether an exchange is bargained for is determined on a objective basis. True or False?

True. The existence of a bargained for exchange is determined based on the objective standard.

In the event that a contract is not formed under UCC § 2-207(1) based on the writings of the parties, the code provides an alternate route for contract formation under (3) based on conduct of the parties. True or false?

True. There are two ways to form a contract under UCC § 2-207. First, based on the writings of the parties under (1). Second, based on conduct of the parties under (3).

Fifth Boston Bank issues a letter of credit for Sam Smith promising to repay anyone who makes advances to Sam Smith, up to the amount of $10,000, the amounts advanced to be noted on the letter of credit. This creates a power of acceptance in anyone to whom the letter is presented, but only if the notation is made and only so long as the noted amounts do not exceed the maximum. True or false?

True. This creates a power of acceptance in anyone to whom the letter is presented, but only if the notation is made and only so long as the noted amounts do not exceed the maximum. Here, the offer is directed to a limited number of persons, that is, those to whom the letter is presented.

A voidable promise may become enforceable if there is a later promise to pay. True or False?

True. This one is true. A voidable promise may become enforceable if there is a later promise to pay. A good example of this is transactions with minors that are later reaffirmed. These promises truly are based on the past consideration of the original transaction. Of course, even past consideration is only good here where the original transaction was supported by good consideration.

When the promisor makes a gift promise to the promisee that requires the promisee to act in some way that is purely incidental to receiving the benefit, there is no consideration. True or False?

True. When the promisor makes a gift promise to the promisee that requires the promisee to act in some way that is purely incidental to receiving the benefit, there is no consideration

Terms of Contracts formed under UCC § 2-207(1).

UCC § 2-207(2) provides that if a contract is formed under subsection (1) then "[t]he additional terms are to be construed as proposals for addition to the contract." When the contract is "between merchants" additional terms become part of a contract formed under (1) automatically, unless: (1) the offer expressly limits the offeree's acceptance to the terms of the offer; (2) the terms of the acceptance are material alterations (look for surprise or hardship); or (3) the offeror has already given its notification of objection to the terms or the objection is given within a reasonable time after notice of the terms is received.

Contracts under UCC § 2-207(3).

UCC § 2-207(3) provides an alternate path for parties to form contracts when a contract based on the writings under (1) has failed. The path is through conduct of the parties showing intent to contract (typically sending the goods and the other party accepting the goods). In such cases, the terms are those on which the parties agree, plus gap fillers from the UCC.

Formation of Contracts under UCC § 2-207(1)

Under UCC § 2-207(1) a "definite and seasonable expression of acceptance" is an acceptance in fact unless a proviso is present. The proviso language can typically only be invoked by a party using language that states that its acceptance is "expressly made conditional" on the offeror's assent to the additional or different terms.

Unilateral contract. Father's August 15 statement proposes a unilateral contract. This analysis turns on what father was wanting from his sons, a promise or performance. Here, the father was wanting the sons to actually fix his house. The Father wanted his home repaired, not just a promise to do so in exchange for the leaving of the house to the sons.

Exceptions: When Contract is NOT a bar to Restitution.

When the defendant has substantially breached the contract: one can ignore the contract if the other side substantially breached it. The usual rationale given here is this: if the defendant has breached--substantially (i.e., very badly) breached the contract under which the defendant has benefited, then it is far less clear that the defendant's enrichment is not unjust.

Which restatement section contains "Taking the benefit of the offer" found and what is its general meaning?

Where the offeree allows the offeror to confer a benefit on the offeree knowing that the offeror expects payment therefore. Restatement § 69

Alice's Cafe, having received a letter from Hatter offering for Alice's Cafe to put on a tea party for Hatter and 6 of his friends for a certain sum, sent a letter to Hatter, "Your offer is accepted, please execute the enclosed Service Agreement, including the Terms and Conditions of events at Alice's Cafe, and send payment in full 30 days prior to the party." Would there be a contract if Hatter signs the Service Agreement and sends the signed Service Agreement with payment in full as dictated by Alice's Cafe?

Yes. A. There is a contract because the last shot rule provides that there is a resulting contract. The resulting contract is on the terms of the party who sends the last counteroffer, which is then accepted by the other party. This statement explains the operation of the last shot rule. Alice has the last shot when she sends the Service Agreement and letter to Hatter. Hatter does not make a counter-offer, but instead, accepts on Alice's terms. B. There is a contract because when Alice's Cafe sent Hatter the letter with the Service Agreement it was an offer, which Hatter accepted when he signed and paid the deposit as requested. The mirror image rule operates such that the letter from Alice's Cafe would be a counter-offer (a new offer itself) since it was not the mirror image of the original offer put forth by Hatter. Hatter's response manifested assent to the offer. C. There is a contract because Hatter's acceptance was the mirror image of the offer of Alice's Cafe. The mirror image rule operates such that the letter from Alice's Cafe would be a counter-offer (a new offer itself) since it was not the mirror image of the original offer put forth by Hatter. Hatter's response manifested assent to the offer on the same terms (a mirror image) as those offered.

George's Restaurant is in need of repairs after a brawl broke out between Cleaver and Darcy and offers the work to London Construction, stating "This offer may be accepted by return mail." Pamela, the owner of London Construction immediately takes the acceptance over to George's Restaurant personally. Acceptance?

Yes. In this situation, even though the offeror has added an express requirement to the offer, the language may be understood to mean that the acceptance must arrive in the same time as return mail would take. Here, personal delivery would even be faster than return mail.

Is an "accord" considered a contract?

Yes. Since an accord is a contract, it requires offer, acceptance and consideration.

Dick offers to sell to Bruce all electronic equipment which Bruce shall need in his security business during the ensuing year. Is this a sufficiently definite offer?

Yes. The quantity to be sold is sufficiently definite to provide a basis for remedy, since the promises are interpreted to refer to B's actual good faith requirements.

Is there an offer in the following expression? Perry White advertises in the Daily Bugle newspaper that he will pay a $10,000 reward to anyone who will give him information proving the identity of Superman within one year.

Yes. The three elements of offer are present here: intent to offer, definiteness and communication. An expression made to the public through a newspaper can be an offer. This problem is based on Restatement § 23

Lynette, a busy mom of four children, is hosting a Halloween party and offers to buy a handmade pumpkin centerpiece made by her friend Bree, who runs a catering business, and to pay Bree $50 in exchange for the centerpiece. Bree accepts the offer and delivers the centerpiece to Lynette. Would there be consideration if Lynette secretly intends to give Bree the $50 whether or not she gets the centerpiece in return? For instance, Bree might really need the money because her husband, Orson, is in jail. Yes or No?

Yes. There is consideration here even though Lynette at the time she makes the offer secretly intends to pay Bree $50 whether or not she gets the centerpiece. Lynette's subjective intent is not controlling here with respect to establishing the bargained for exchange. See Restatement § 81 (1). 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. (2). The fact that a promise does not of itself induce a performance or return promise does not prevent the performance or return promise from being consideration for the promise.

Clark offers to White to construct a building made of steel according to stated plans and specifications in exchange for $3,000,000. It is also provided that the character of the window fastenings shall be subject to further agreement of the parties. Is this a sufficiently definite offer?

Yes. Unless a contrary intention is manifested, the indefiniteness of the agreement with reference to this matter will not prevent the formation of a contract. This problem is based on Restatement § 33

Steve makes an offer to Fred for the sale of his stamp collection for $500 and adds: "This offer will remain open for a week." Fred sees Steve the next day and asks "I'm really not sure about $500 for the stamps, won't you take less?". Steve says he'll think about it. Later in the week Fred says "I accept your offer to purchase your stamp collection for $500." Is there a contract here?

Yes. An inquiry regarding the possibility of different terms, a request for a better offer, or a comment upon the terms of the offer, is ordinarily not a rejection of the original offer

Thad owes Eva $25. Thad promises to pay Eva $500 and $25 in addition, and Eva promises to give Thad the book, Corbin on Contracts. Is there consideration for the multiple promises?

Yes. Eva's promise is binding, although Thad's payment of the $25 which he owed would not of itself have been consideration.

Tawny borrowed Sterling's special extended edition DVD of the movie "Return of the King," which she now has in her possession. Sterling, a college student in need of money, writes to Tawny, "If you will promise to pay me $25 for the DVD, 'Return of the King' is yours." Tawny, who has been wanting to purchase a copy of the DVD, which is in short supply, promptly replies "I promise to pay you $25 for the DVD." After Tawny makes this response, can she keep "Return of the King"?

Yes. After Tawny makes her response promising the $25, she owns "Return of the King." The interest in the DVD at once passes to her. The change in ownership of the DVD is consideration for Tawny's promise even though possession has not changed. See Restatement § 71

Landlord offers to lease a condo to Peter Parker for one year or to sell the condo to Law Student outright in exchange for Parker's promise to make specified payments for the condo. Is this a sufficiently definite offer?

Yes. Although the terms of leases and conveyances vary, the promises are interpreted as providing for documents in the form in common local use, and are sufficiently definite to form contracts. This problem is based on Restatement § 33

Must an option contract be supported by consideration? Yes or no and why?

Yes. An option contract must be supported by consideration. However, the law does not necessarily look for a bargain, especially when the option contract is found in writing. A consideration that may be nominal, such as the recitation of 1 dollar paid, is typically sufficient to make an offer irrevocable as an option contract. Courts do not typically inquire as to the adequacy of consideration (the amount paid for the option contract), especially when it is a short term option for fair terms. See Restatement § 87

Let's try one more. Suppose the sheriff of Musselshell County is visiting a friend in Hardin, which, you recall, is in Big Horn County. The sheriff of Musselshell County knew about the reward and he provided information that led to the arrest of the cattle rustlers. Can he recover from the Montana Sheep and Cattleman's Association?

Yes. Applying the pre-existing duty rule to our facts, we can see that the sheriff of Musselshell County has no duty to arrest rustlers in Big Horn County; it is out of his jurisdiction. Since he has no legal duty in Big Horn County, and he knew of the reward, there is no reason he should not recover the reward.

Daniel offered to buy Bridgette's book, which she authored, for $65, and Bridgette agreed. However, both parties knew that the book was only worth $5. Would there be consideration if Daniel's motive in making the bargain with Bridgette is to make a gift to her? Yes or No.

Yes. Even if Daniel and Bridgette knew that the transaction for the book involved both a bargain and a promise, the bargain portion furnished consideration for the whole transaction. See Restatement 71.

Jack offers to sell custom rocking chairs to Callahan & Sons Furniture and delivers the rocking chairs to the Callahan & Sons warehouse. Callahan & Sons retains the rocking chairs in silence. However, one week later, Callahan & Sons takes the rocking chairs and sells them to Peter. Is Callahan & Sons obligated to pay Jack for the rocking chairs?

Yes. Exercise of dominion will result in acceptance even where the offeree is originally silent in response to the offer. §69

Angelina is renting a great apartment from Sam whereby she has an option to purchase the apartment after two years for $300,000. Such option to be exercised prior to the third year. When the two years had passed, Angelina told Sam that she would not be exercising the option. Sam, knowing the apartment would need repairs, made appointments for new ceramic tile to be installed and the apartment repainted in the coming months. Later that week, Angelina told Sam that she changed her mind and wanted to exercise the option. Can she exercise the option?

Yes. Here Angelina's rejection would not terminate the power of acceptance because Sam's preliminary arrangements did not create such a change of position as to justify the imposition of an estoppel. Ryder v. Wescoat, 535 S.W.2d 269 (Mo. App. 1976), just before an option was due to expire, the holder of the option told the owner of real property that he would not exercise the option to purchase. The owner made preliminary arrangements to have certain work done on the land. Afterwards, but still in the period of the option, the offeree exercised the option. The court held that the earlier rejection would not terminate the power of acceptance where only preliminary arrangements were made as they did not amount to a sufficient change of position to justify estoppel.

Faith and Grace enter into a contract under which Faith buys shares in Grace's company for $10,000. An administrative agency then rules that Grace's sale of shares was illegal. Faith demands her $10,000 back. Should faith be given restitution? Yes or No.

Yes. Here we have a contract but the contract is "rescinded" on the grounds of illegality. When a contract is rescinded, restitution may require each party to disgorge to the other the value of any benefits they received under the contract.

On May 1, Bath Toys Inc. sends Big Co. a purchase order for 1,000 rubber ducks at a price of $5 each. The purchase order stated that it would not be withdrawn. Assuming the purchase was signed, would a revocation by Bath Toys Inc. on Aug. 10th be effective?

Yes. If no time is stated in the firm offer it is irrevocable for a reasonable time, not to exceed 3 months maximum. U.C.C. 2-205. In this case, the offer would be irrevocable after 3 months, and then would become revocable. U.C.C. 2-205. Note the statute says 3 months, not 90 days. Here, the 3 months were up on August 1. So, the offer was revocable on August 10th, even if this was a firm offer. Of course, if it was not a firm offer, it could have been revoked at any time.

Prue offers to buy a book on Salem witches owned by Phoebe and to pay Phoebe $20 in exchange for the book. Phoebe accepts the offer and delivers the book to Prue. Is there consideration here?

Yes. In order for there to be consideration we are looking for "something" sought in exchange for "something" else. Here, the $20 for the book. See Restatement § 71: Requirement of Exchange; Types of Exchange

In consideration of $1 paid by Beatrice, Lisa Marie executes and delivers to Beatrice a written option agreement giving Beatrice the right to buy Graceland for $ 10,000,000 if Beatrice gives notice of intention to buy within 120 days. The price and terms of sale are fair. Is the $1 adequate consideration to support the option contract here if the $1 is not actually paid?

Yes. In such cases, even where the small consideration is not actually paid, the consideration is still binding. The rationale here is that where the parties have executed a written agreement, the law should not allow the agreement to be contradicted by possibly false testimony regarding the payment of the $1 consideration.

Thad promises to pay Eva $500 in exchange for the following promises: a promise by Eva to give Thad the book, Corbin on Contracts; a promise by Sally to tutor Kevin in Contracts; and a promise by Fred to forgive a debt for $100 owing to Fred by Sam. Is there consideration for the multiple promises?

Yes. One promise is sufficient to constitute consideration for any number of promises. Whether one part of the agreement would not have been consideration is not sufficient to prevent the whole from being enforceable consideration. See Restatement § 80. Second, that it does not matter from whom the consideration moves or to whom it ultimately reaches. The key is still whether there is a bargained for exchange (i.e. not gratuitous).

Niece can't decide whether or not to go to college. Rich Uncle says to Niece, "If you go to college, I'll give you $10,000." Niece goes to college. Rich Uncle says, "Ha Ha! I'm not going to pay you." Has a contract been formed that Rich Uncle breached?

Yes. Rich Uncle has made an offer to be accepted by performance. When Niece gave the requested performance, a contract was formed. Rich Uncle breached the contract by not paying. §90: Promise Reasonably Inducing Definite and Substantial Action

Ohner told Roofer: "The roof on my barn was damaged in last week's storm. If you will repair the roof by the end of the week I will pay you $2000. (signed by ohner)" Upon receiving Ohner's letter, Roofer begins to repair the roof. Has a binding contract formed? Why?

Yes. Roofer's beginning to work was the beginning of acceptance by performance and Roofer's beginning to work operated as a promise to complete the project, creating a bilateral contract.

Amelie promises to Loren that she will guarantee payment of a bill for 1000 jasmine plants if Loren sells the jasmine plants to Harlan. Loren sells the jasmine plants to Harlan. Selling the jasmine plants to Harlan is consideration for Amelie's promise even though the consideration benefits someone other than the promisor (Amelie). Is there consideration to support a contract? Yes? No?

Yes. Selling the jasmine plants to Harlan is consideration for Amelie's promise even though the consideration benefits someone other than the promisor (Amelie). See Restatement § 71

Jake (who just turned 18) gives guitar lessons to Anna Coleman, the seventeen year old daughter of Tess Coleman, intending to give her 20 such lessons and to charge Tess for the price. Tess never asked Jake to give Anna the lessons, but allows the lessons to continue to the end, knowing that Jake intends to be paid. Has Tess accepted?

Yes. Tess knew that Jake was providing the guitar lessons to Anna with the expectation of payment. Tess could have intervened to prevent any misunderstanding, but instead allowed the services to continue knowing that Jake expected payment. Therefore, there would be acceptance here, even though Tess was silent. See Restatement § 69

A contractor agreed with a homeowner to dig a swimming pool to a depth of 10 feet for $10,000, payable one month after completion. After the contractor finished the job, the homeowner said he did not have enough cash to pay. The homeowner offered the contractor $9,000 payable one month after completion to discharge the debt and the contractor agreed. Does the Pre-Exisiting Duty Rule bar enforcement of the homeowner's promise?

Yes. The contractor agreed to accept $9000 to discharge a $10,000 debt. But the homeowner merely promised to do what he was already bound to do - pay $9000, which is obviously part of $10,000. There is no consideration for the contractor giving up the $1000. §73: Performance of a legal duty: "Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of a bargain.

In consideration of $1 paid by Beatrice, Lisa Marie executes and delivers to Beatrice a written option agreement giving Beatrice the right to buy Graceland for $10,000,000 if Beatrice gives notice of intention to buy within 120 days. The price and terms of sale are fair. Is the $1 adequate consideration to support the option contract here?

Yes. The key here is that the facts state that the transaction was a fair exchange. Even a very small consideration is adequate to support an option contract under these circumstances. See also, Restatement § 87

Jennifer promises to give Steve $200 in exchange for Steve giving her a rare 1 cent coin that is a collector's item. Is there consideration here?

Yes. The promise of 1 cent for the rare coin really might induce someone to promise $200 because it is a collector's item.

Mr. Rochester, in writing, offers to sell Jane his collection of Bronte novels for $400, and in exchange for $5, promises Jane to keep the offer open for 10 days. Is there an option contract in this situation?

Yes. There is an option contract supported by consideration (i.e. the $5 in exchange for a promise not to revoke).

On April 9, Good became entitled to a legacy under a trust in the amount of about $2600. On June 20, Good needed money and sold the interest in the legacy to Murphy for $500. Is there consideration here?

Yes. There is consideration here even though Good may have made a bad deal. It certainly had some value for him to get the money right away (apparently, according to the case, to purchase drugs).

Would there be consideration if Prue secretly intends to give Phoebe the $20 whether or not she gets the book in return?

Yes. There is consideration here even though Prue at the time she makes the offer secretly intends to pay Phoebe $20 whether or not she gets the book. Prue's subjective intent is not controlling here with respect to establishing the bargained for exchange. See Restatement § 81, comment b. The objective person would believe that the book was sought in exchange for the $20.

An envelope from Time magazine came in the mail addressed to a three-year old containing a statement on the face of the envelope, ''I'll give you this versatile new calculator watch free Just for Opening this Envelope Before Feb. 15.'' The mother of the child opened the envelope for her son. Is there consideration here?

Yes. There is consideration here even though the mere opening of an envelope may seem without value. the opening of the envelope, with consequent exposure to Time's sales pitch -- may have been relatively insignificant to the plaintiffs, but it was of great value to Time. At a time when our homes are bombarded daily by direct mail advertisements and solicitations, the name of the game for the advertiser or solicitor is to get the recipient to open the envelope. Some advertisers, like Time in the present case, will resort to ruse or trick to achieve this goal. From Time's perspective, the opening of the envelope was "valuable consideration" in every sense of that phrase.

Ida Spaulding entered into a written agreement to sell the good will in her deceased husband's dental practice to Frank Benenati for $4,000. The contract also provided that Benenati would have the right, for six years, to lease the office premises of the deceased dentist, and that payments were to be made in monthly installments. When Benenati defaulted in his payments, Spaulding commenced an action for breach of contract. Benenati asserts that there was no consideration because good will is not a saleable asset. Is Benenati correct?

Yes. There is no consideration if the good will arises in a professional business that depends upon the personal skill of and confidence in a particular person. "Good will" cannot be consideration under any circumstances because of the speculative nature of its value.

Adrian promises to Claire to pay Claire $5, in exchange for Lea's promise to give Adrian a book, Wind in the Willows. Lea promises to give Adrian the book. Is there consideration to support a contract? Yes? No?

Yes. the promises are consideration for one another. Adrian has promised to pay Claire the $5 and Lea has promised to give Adrian the book. It does not matter that Claire (the promisee) has not made a promise because Lea (a third party) made the promise instead. See Restatement § 71

Zeidenberg purchases computer software from ProCD that has a plastic wrapping on the outside of the box. Inside the box, ProCD has inserted a license agreement that limits the manner in which Zeidenberg can use the software. Zeidenberg opens the box and uses the software. Has Zeidenberg accepted the terms that were inside the box that he couldn't read before he purchased the software? Would there be an acceptance under these circumstances?

Yes. There would be an acceptance on these facts. In the case of ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996), the Seventh Circuit held that customers who buy and use computer software are bound by the terms inside the box of software, reasoning that the customers had an opportunity to read the terms and could have returned the software if they did not want to be bound by them.

On October 18, Brunswick called Poel and Arnold to discuss an order for rubber. On October 19, Poel and Arnold sent Brunswick the following letter: Gentlemen: As per telephonic conversation with you today, this is to confirm having your order of $2.42 per pound for 12 tons Upriver Fine Para Rubber, for shipment either from Brazil or Liverpool, in equal monthly parts January to June. Thanking you for the order we remain, Very truly yours, POEL and ARNOLD Brunswick sent Poel and Arnold the following purchase order on October 22: No. 25409 This number must appear on Invoices and Cases. Please deliver at once the following, and send invoice with goods. About 12 tons Upriver Fine Para Rubber at $2.42 per lb. Equal monthly shipments January to June. CONDITIONS ON WHICH ABOVE ORDER IS GIVEN Goods on this order must be delivered when specified. In case you cannot comply, advise us by return mail stating earliest date of delivery you can make, and await our further orders. The acceptance of this order which in any event you must promptly acknowledge will be considered by us as a guarantee on your part of prompt delivery within the specified time. Terms F. O. B. Was a contract formed?

Yes. This contract is governed by UCC-2-207(1) which permits an acceptance or written confirmation to be effective even though additional or different terms are used. Under common law, the purchase order of Brunswick is not the same as the letter sent by Poel and Arnold, so no contract would result. However, the additional terms do not prevent formation of a contract under § 2-207(1). Therefore, a contract has likely arisen here.

Yes. This problem involves a commitment to make a will made by the father to a number of specified person whose identity is known to the offeror (the sons).

Prof. Martin's precious Shetland sheepdog, Ginger Spice, who is under the care of a house sitter while Prof. Martin is off on vacation with her children at Disney World, escapes through a hole in the fence at her home. Nancy Neighbor finds little Ginger Spice and cares for her for two weeks until Prof. Martin returns. Prof. Martin, happy to have her doggie safe, promises to pay Nancy $100 for the care of Ginger Spice. Would this promise be enforceable if Restatement § 86 applies?

Yes. This promise is enforceable under the material benefit rule. Here, Prof. Martin has received a benefit from Nancy through the watching of little Ginger Spice. As such, the later promise is enforced. Further, this may be considered an emergency type of service to Prof. Martin when Ginger Spice escapes unexpectedly. See Restatement § 86

Jackson is employed by Susan to paint her home while she is on vacation with her daughter, Julie. Jackson mistakenly paints the vacant house next door owned by Mike. Mike, feeling badly and liking the paint job, later promises to pay Jackson the value of the painting. Would this promise be enforceable if Restatement § 86 applies?

Yes. This promise is enforceable under the material benefit rule. Mike has received a benefit from Jackson for which he has promised to pay. The trouble here might naturally be the justice as the painting of Mike's home was accidental. Often a person conferring a benefit is entitled to restitution regardless of any promise, but might be denied to avoid any prejudice to the recipient, here Mike. Where the recipient makes a later promise, though, the risk of prejudice is not considerable, so the promise is enforced. See Restatement § 86

Suppose I send cash through the mail to my daughter. It gets delivered to you by mistake, and you keep it. Can I recover it from you on a restitution theory? Yes or No?

Yes. To recover in restitution, plaintiff must show: 1. that plaintiff conferred a benefit on the defendant; and 2. that it would be unjust to allow the defendant to retain the benefit.

Is there consideration for A's promise of the pen in this fact situation: In return for A's promise of a pen, B promises to buy it for $10 if he is satisfied with its mechanical condition.

Yes. When a person's performance is subject to his or her satisfaction, it is useful to determine whether the satisfaction is measured objectively or subjectively. If it is objective satisfaction, then it is a matter of mechanical fitness or operative utility -- something that can be measured. If it is subjective satisfaction, then it is a matter of personal taste or judgment -- something that is up to each person.

Annette submits to Barbara at Barbara's request a plan for advertising Barbara's new cookbook, expecting payment only if her plan is adopted. Barbara decides to hire Stu, Annette's former assistant, and rejects Annette's advertising plan without giving it fair consideration. Barbara, feeling badly, later promises to pay Annette for the plan anyway. Would this promise be enforceable if Restatement § 86 applies?

Yes. his promise is enforceable. Barbara received a benefit from Annette for which she promised to pay. Whether Barbara eventually uses the advertising plan does not matter. Although Annette's plan might seem like a gift to Barbara, it was given with the intention of later compensation. See Restatement § 86

Farmer's prize cow wanders off during the winter and is cared for by Neighbor. In the spring, Farmer discovers the whereabouts of the cow and Neighbor demands $100 for its care, which is the reasonable value of the care. Would you have to award restitution to the Neighbor? Yes or No.

Yes. restitution is not available when the benefit was conferred "officiously," that is, without the person wanting it. But here the law would say that a reasonable person in the shoes of Farmer would have asked for this benefit if it had been offered to him. Even though there is no contract, the law will "imply" a promise to pay the reasonable value of the benefit. This remedy is often called "implied in law contract" or "quasi-contract."

What is the general meaning of acceptance and the statute?

acceptance is merely the offeree's manifestation of assent to the terms of the offer stated by the offeree. §50 An effective acceptance requires three things: 1. A manifestation of assent by the offeree to the terms of the offer; 2. The acceptance must be made in the manner invited or required by the offer; and 3. The acceptance must occur while the offer is still open, i.e., if the offer has already been revoked, the acceptance is not effective to create a contract.

Gary Graduate desires to be well known at his alma mater. Gary promises to make a $1 million donation to Western Cal Law School. Western Cal promises to name new law school building after Gary. What has Gary bargained for from the law school?

it appears that Gary is bargaining for Western Cal's naming of the new law school after him. If so, this would seem to be sufficient consideration to support his promise for the $1 million.

What does UCC 2-205 say, generally, regarding revocability of an offer?

§ 2-205. Article 2 of the U.C.C. applies to transactions for the sale of goods. Section 2-205 provides that an offer by a merchant (a person dealing in goods of the kind) to buy or sell goods in a SIGNED writing which gives assurances that it will be held open is not revocable for lack of consideration. U.C.C. § 2-205. If no time is stated in the firm offer it is irrevocable for a reasonable time, not to exceed three months maximum. U.C.C. § 2-205.

What is the "Material Benefit Rule " ? What restatement? Is this a minority or majority rule? Which case did we cover in class that gave rise to this rule?

§ 86 Promise for Benefit Received In the well known case of Webb v. McGowin, 168 So. 196 (1935, McGowin, an owner of a lumber mill, was saved from death or severe injury by the actions of Webb, an employee. Webb was badly injured when he fell from an upper level of the lumber mill to save McGowin. McGowin promised to pay $15 every two weeks to Webb for life. McGowin paid Webb, but the executors of his estate stopped payments after his death. The Supreme Court of Alabama concluded that ''moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit, although there was no original duty or liability resting on the promisor." Id. at 198. Although the rule of Webb, often called the "material benefit" rule is a minority rule, Restatement § 86

What is a bargain? Which restatement pertains to bargain?

§71 A bargain occurs when there is a promise sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise

Contracts

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