Contracts Quiz 3

K formula

K = (O + A) + C - D

Consideration

The thing used to induce another’s promise or performance. It is what you give up to get the other person to bind themselves. It is what you GIVE, never what you get. Inducement of this must be mutual, if not, you have a gift, not a bargain

Bargain Model

• Ks should be enforced when parties agree to exchange 1 valuable thing for another

• values: fairness, reliance, and efficiency

• theory of enforcement: doctrine of consideration (valuable thing is bargained for, not given)

Elements under R2dK sec 71

• return promise/perfornance

• bargained for (by both parties > mutual inducement)

benefit-detriment theory

• est by hamer v sidway

• benefit to promisor and detriment to promisee

gratuitous promises

• Promises made without consideration or exchange of value, typically unenforceable in contract law.

• est by Kirksey v. Kirksey - mere gratuities are unenforceable for lack of consideration

conditional gifts

“this may be true even though the terms of gift imposes a burden on the donee as well as the donor…in such cases the distinction btwn bargain and gift may be a fine one, depending on the motives manifested by the parties”

illusory promises

a promise that is unenforceable due to indefiniteness or lack of mutuality, where only one side is bound to perform. The promise is normally a statement that seems to be an offer or agreement, but is so vague, ambiguous or conditional that it does not actually obligate the promisor to do anything at all

• est in wood v. lucy

peppercorn theory

• cts typ don’t determine the adequacy of value

• it (generally) doesn’t matter if they don’t have the same market value

• it doesn’t need to be equally valuable or be immensely valuable, just a peppercorn will do

• est in Batsakis v. Demotsis and Barfield v. Commerce Bank

past consideration

a promisee is based on past benefit > new promise that the new could not have induced or “bargained for” the past act

moral obligation/consideration

a promise made based on moral duty but not necessarily a legal obligation

nominal consideration

“sham” or “mere pretense” of a bargain which can include a false recital of consideration or consideration that is in “name only”

consideration and forbearance of invalid claims

surrender of a legal claim that turns out to be worthless

promissory estoppel

P can recover when there is no support for existence of a contract or when expectation damages are difficult to calculate

promissory estoppel requires…

• a clear promise or assertion, certain and definite

• upon which promisee reasonably relies

• promisee takes action of forbearance to her detriment based on this reliance such that failure to enforce the promise will result in injustice

restitution is NOT available if…

• a party officiously confers a benefit upon another, or

• a party has conferred a gratuitous benefit w/out expectation of compensation

a court may order restitution if…

• P has conferred benefit on D

• D has knowledge or appreciation of benefit

• D has accepted or retained benefit conferred

• circumstances are such that it would be inequitable for the D to retain benefit without paying fair value for it

unjust enrichment

• based in quasi contract theory, aka contract implied in law

• allows for recovery based on principles of equity and in interest of justice

• remedy permits cts to effectively disgorge D from benefit he unfairly received and return that benefit or value to its P

quantum meruit

• reasonable value of work or services actually performed, owed regardless of whether a price was ever agreed on

• measure of recovery

• prevents unjust enrichment

implied in law

• legal fiction of a promise/agreement to prevent unjust enrichment

• diff from implied in fact

• prevents unjust enrichment

implied in fact

inferring from K that all K elements are there

implied in law

no assent, but benefit was still received and retained

elements of unjust enrichment

1. benefit conferred

2. benefit kept

3. benefit not a gift

4. officiousness (not acting officiously)

(KNOC - K: kept benefit, N: (benefit is) not a gift, O: officiousness, C: conferred benefit)

irrevocable when…

U - unilateral

O - option K

M - merchant firm offer (UCC 2-205)

E - estoppel (promissory)

merchant firm offer (UCC 2-205)

U - UCC

S - signed

A - assurance (amnt of time they’re giving u, max 3 months)

W - written

britton v. turner

• quantum meruit

• held that if an employee voluntarily breaches a contract for labor by failing to continue the agreed employment, the employee is entitled under quantum meruit to the reasonable value of the services provided, unless the contract specifically provides otherwise.

batsakis v. demotsis

• est peppercorn theory

• held that although a valid contract requires all parties to provide consideration, mere inadequacy of consideration will not void a contract

kirksey v. kirksey

• ex of gratuitous promise

• held that a promise to provide free land for a residence that is fulfilled for a finite amount of time and then revoked is gratuitous and thus unenforceable despite inducing the promisee to move residences in reliance on the promise.

cotnam v. wisdom

• implied in law

• If there is no agreement on which the court may enforce a contract between parties, as when physicians render services to persons who are unable to contract due to their condition, the court may use the legal fiction of a quasi-contract to require payment for those services.

schnell v. nell

• nominal or moral obligation

• held that a promise to make a gift for nominal consideration or out of moral obligation is unenforceable for lack of consideration.

mills v. wyman

• moral consideration

• held that a promise based on a moral obligation but made without legal consideration does not constitute an enforceable contract unless it is tied to a preexisting legal obligation.

webb v. mcgowin

• material benefit rule

• held that a moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material and substantial benefit.

material benefit rule

a promise made after receiving a material benefit is legally binding to the extent necessary to prevent injustice, even though it lacks traditional, bargained-for consideration (webb v. mcgowin)

fienberg v. pfeiffer

a gratuitous (and thus unenforceable) promise is nevertheless transformed into a binging and enforceable contract if the promisee reasonably and detrimentally relies on the promise

allegheny v. natl chautauqua county bank of jamestown

• concept of donative promises or executory gifts

• a party’s acceptance of a portion of pledged donation constitutes sufficient consideration to enforce the promise to pay the remainder of the donation

schnell v. nell

a promise to make a gift for nominal consideration or out of moral obligation is unenforceable for lack of consideration

mills v. wyman

a promise based on moral obligation but made without legal consideration does not constitute an enforceable contract unless it is tied to a preexisting legal obligation

james baird co. v. gimbel bros

promissory estoppel, P can recover when there is no support for existence of a K or when expectation damages are difficult to calculate

brittin v. turner

if an employee voluntarily breaches a contract for labor by failing to continue the agreed employment, the employee is entitled under quantum meruit to the reasonable value of the services, unless K specifically provides otherwise

cotnam v. wisdom

prevents unjust enrichment

UCC Firm Offer Rule

if the offeror can reasonably notify everyone who might accept the offer, revocation is not effective as to a particular offeree unless it has been communicated to that offeree

dickinson v. dobbs

an offer may be revoked by the offeror without an express or actual statement of revocation communicated to the offeree provided there has been no meeting of the minds and the offeree is aware of conduct by the offeror demonstrating intent to revoke the offer

bailey v. west

• implied in fact

• mutual assent is required