Professional Documents
Culture Documents
PROMISE CONSIDERATION
A promise is the manifestation of intent to act To constitute consideration, a performance or
or refrain from acting in a specified way promise must be bargained for, i.e. sought in
exchange for another performance or a return
A promise or performance must offer some promise
legal detriment, i.e. something of value or
some form of freedom Each party has the duty to bargain in good
faith
DETRIMENTAL RELIANCE
In some instances, detrimental reliance acts in
place of consideration.
UNENFORCEABLE
DISCRETIONARY
ENFORCEABLE
Conditional & Illusory
Promises
An agreement that depends
on the wish, will, or Vague & Indefinite Terms
pleasure of one of the
parties will not be enforced. Six Ways of Interpreting a Term: Satisfaction Clauses
Two Categories:
The Courts use these to determine (1) Objective test: Reasonable
INTENT person standard, where
(1) Language of the K “satisfaction” can be asserted to
(2) Dictionary something measurable
(3) Prior Negotiations Between the (2) Subjective test: Good faith
No Commitment Parties
One party cannot convert standard, where “satisfaction” is
(4) Trade Usage determined by the fancy, taste, or
what both parties knew to be (5) Standards Incorporated by
a joke into a serious judgment of the parties
Reference
transaction simply by (6) The Conduct of the Parties
claiming it to be so.
Other relevant factors:
There must be a meeting of Evidence; Subject Matter
the minds.
Exclusivity:
Good Faith & Reasonable Efforts
Implied Promises = A promise may be
lacking, and yet the whole K may be
“instinct with an obligation, imperfectly
expressed.” In these situations the
court reads in the promise through
good faith and reasonable efforts by
both parties.
Defenses to K
Formation
An unjustified failure to perform an
absolute duty
Rule: Enforceability depends upon the (1) degree of inequality and the (2) social necessity of the
contract.
Unconscionability:
Occurs where there is an absence of meaningful choice on one party, together with contract terms
unreasonably favorable to another party. Must be a necessary act of life, not a luxury or hobby.
Rule: Where the element of unconscionability is present at the time a K is formed, the K is unenforceable. K
must be with the reasonable expectations of the weaker party [substantive] to be enforceable. Conduct is
also considered [procedural].
NOTE: Both substantive and procedural unconscionability must be shown for a K to be unenforceable.
Defenses to K
Formation (Continued)
An unjustified failure to perform an absolute duty
(VI). Mistake
If the expressions of the parties are capable of two different and equally reasonable interpretations, and
neither one negligently misled the other, there is no contract. Parties are bound by the reasonable
meaning of what they said.
Mutual Mistake:
The Court offers NO REMEDY for cases of mutual mistake.
Latent Ambiguity = A problem that was hidden before a certain event that is essential to the contract.
Parole Evidence (Extrinsic Evidence) = Can be used to clear up a latent ambiguity. Think chicken/cotton
shipping case.
Was the mistake as tothe mistake as to a basic assumption or essential term of the contract?
(1) Was
a basic assumption?Yes = K is voidable; No = K is enforceable.
• Yes = Contract
(2) If is
liability can be determined the courts consider:
voidable (i) Element of Risk for each party
• No = Contract (ii) Fraud of Quasi-Fraud
enforceable: (iii) Negligence
Unilateral Mistake:
(1) General Unilateral = When through fraud or mistake one party is misled, the K must be revised on the
Did the other partyside of the injured party. If the other party knew or had reason to know of the mistake and did not
know or have reasondisclose it, the K is unenforceable.
to know of the(2) Scribner’s Error = If the parties have agreed to terms, and only the written document is defective, a
mistake? meeting of minds has occurred and the contract is enforceable on original understood terms.
NOTE: Contract is voidable if one party does not bear risk of mistake. Also note that risk is allocated
depending on fairness; the court will also see whether risk has been allocated in the contract itself.
Contract is voidable under
R153
Basic Remedies
Compensatory Damages
When a person makes a promise, the promisor undertakes
the promised performance or a sum or money that will
place the promisee in the same position as they would
have been had the promise been performed.
Expectation Reliance
Positive: What the injured party would Negative: Returns the injured party to
have made in profit had the K been before the K was made.
performed.
Rule: Wasted expenditure can be
Rule: The law is meant to place recovered when it is wasted by reason of
compensate the injured party for the the defendant’s breach of K. If one party
benefits he would have gained in the knows expenses exist as a result of their
contract, not to place the injured party in a agreement to K, but breaches anyway, that
better position than they would have been party is liable for the expenses of the
in had they performed the K. injured party.
Punitive Damages
• Almost never recoverable for
breach of contract.
• Only if compensatory damages are
inadequate.
• Exist to punish/deter the
SPECIFIC RELIEF: Granted when legal
wrongdoer, considered
remedy is inadequate.
inappropriate for contract cases.
(UCC 2-719)
Construction:
KP - Cost of Completion (expectation) Sale of Goods:
Or KRate for completed part + Lost Profit Seller: K Price – Market Price
(reliance) Buyer: Cover Price – Kprice
Employment K Mitigation
• Employee has to show that he was actively looking for another job after employment contract
was breached.
• Must prove there was no other comparable employment.
o The employee’s rejection of or failure to seek other available employment of a
different or inferior kind may NOT be resorted to in order to mitigate damages.
(Shirley McLain)
• Can collect excess damages with the difference between salaries for both jobs. (Employee)
• Money needs to comparable, type of work, seniority (how much input you’ll have),
reputation, location and skill set.
Employement:
Employer: Replacement K – Breached K
Employee: KPrice – 2nd Job Earnings (Mitigation)
Limits on
Legal Limits
Promise If a contract is immoral, unfair, or illegal, then it is
For a K to be enforceable: unenforceable and against public policy:
• No violation of public policy • Illegal on face
• No criminal activity • Illegal in performance
• Illegal in procurement
The illegality must be of a substantial degree to prove no K.
Parent-to-Child
Spousal
(Some states have a palimony rule)
Property rights established in a pre-nuptial agreement are enforceable
Spousal support waivers and pre-nuptial agreements are not in violation of public
policy and are not per se unenforceable. Judicial discretion is applied to determine
enforceability of K
Unmarried cohabitants can sue only under Quantum Meruit because no marriage K
exists. Occurs if one party retains an unreasonable amount of property that was gained
by the efforts of both parties.
Consideration
§ 71 Restatement
(1) For consideration, a performance or promise must be bargained for.
An unbargained for promise, unless While the law does not question the
enforceable for some other reason, will be adequacy of consideration, there must
a gift promise and will not be be value to the buyer.
enforceable. Novel ideas are not required.
There are no additional requirements of:
Prior to delivery of the gift, the promise can - A gain
be withdrawn. - Equivalent value
- Mutuality of obligation
A discretionary policy also has an
obligation to act in good faith, and this is In an exclusivity K, parties must act in
consideration. good faith for consideration to be
adequate. Parties must have valid
business reasons for varying a
requirements K.
Past Consideration:
No valid consideration is bargained for because a promise is made in return for a detriment already
suffered by the promisee. To be valid, there must exist new consideration.
Moral Obligation:
Is sufficient consideration for an express promise only so far as there exists another good or valuable
consideration at some point
Exceptions:
- Debts (1) barred by the statute of limitations; (2) incurred by infants; (3) bankruptcy debts
- Where one party has received a material benefit (such as life or a hand)
Consideration
(Continued)
If the plaintiff believes in good faith that they could have brought
a claim but did not file suit in exchange for something else, that
good faith agreement will be enforced.
DETRIMENTAL RELIANCE:
In some instances, if one party relied on the promise of another
party and thus did or did not do something because of that
promise, the promise is enforceable even though it did not have
bargained for consideration
Unbargained-For Reliance:
(1) Must be reasonable
(2) Must be foreseeable
A promise to do something one is already obligated to do, or forbearing to do what they are not legally entitled to
do. There is no contract in cases of pre-existing duty because there is no bargained for exchange of
consideration. One party must already do something.
Contract Modification:
(1) New Consideration. Any change in an existing K must have new consideration to support it. In such a case,
the K is continued, not ended. (= more compensation for more hours worked)
(2) Mythical Intermediate K. Employment K’s. (a) Old K (b) is terminated by consent of both parties (c) and a new
K is executed in its place. The mutual promise to terminate is consideration (Intermediate K), and to re-contract
is again consideration. Usually occurs in one moment. (= pay raise for same work hours).