Contracts Outline V1

(1) Bargained for Offer
(2) Acceptance
(3) Consideration

A "meeting of the minds."

• Cōnsentiō: ("feel together; agree")
• Con: ("together")
• Sentiō: ("sense; perceive; feel")
• ad idem ("to the same thing")

"to the same thing"

If two parties to a contract understand the terms & conditions in the same manner, then it is said that the parties are "ad idem" on the terms & conditions.

• Agreement to be performed in the future
• Any property or service
• At least one service will be performed after we make the deal
• Some promises not performed in the future

Everything happens immediately

Giving up a legal right to sue for harm that you have already suffered

Giving up a legal right to sue for harm that might happen in the future

• Consideration: Contract
• Reliance: Promissory Estoppel
• Unjust Enrichment: Restitution/Promissory Restitution

Yes, Unless B knows or has reason to know of the mistake, A is bound to fulfill the K.

B's bound to take what A intended, rather than mistake. Consideration is about intent and what a reasonable person would consider.

Ex: A says "\$100 for the cow" but B knows A meant horse, it's a contract for the horse.

• Yes, if B knows of A's mistake and accepts anyways, B bound to take what A intended, rather than mistake.

• Consideration is about intent.
• R2§ 20

Subjective Theory is about what the parties meant, rather than what they did

Objective Theory uses a RP test to interpret intention from the conduct

(1) To constitute consideration, a performance or a return promise must be bargained for.
(2) Qualifies as being bargained for if it is sought by the promisor in exchange for his promise.
(3) Performance may be (a) an act (b) a forbearance (restraintiving up something) (c) creation, modification, or destruction of a legal relation
(4) May be given to or given by a 3rd party

No, a Unilateral Mistake doesn't negate the contract.

Something bargained for.

Yes, it's possible to get out of or fix a contract by arguing that there's a "mutual mistake".

If it's sought by the promisor in exchange for his promise, then it qualifies as being bargained for.

Where the principal approves the agent's previous acts after the formation of the contract
• Binds principal even if agent didn't have actual authority

Yes, it's illusory b/c there is no definiteness to the min/max.

(a) an act
(b) a forbearance (restraintiving up something)
(c) creation, modification, or destruction of a legal relation

• If promisor reserves a choice in performance, has words like "choose to" or shall," it's not a promise.
• Words of promise which make performance optional does not constitute a promise
• Promise is consideration if it can't be kept w/out action or forbearance which would be consideration if it alone were bargained for.

No, words of promise which make performance optional with the "promisor" aren't a promise.

Words of promise which make performance optional with the "promisor" don't constitute a promise.

Appears to offer something, but it's optional.

It's not a promise if the promisor reserves a choice in performance, has words like "choose to" or shall,"

If consideration is met, court does not care about:
(a) gain, advantage, or benefit to the promisor or the loss, disadvantage, or detriment to promisee
(b) equivalence in the value of things exchanged
(c) "mutuality of obligation"

• Ordinarily, courts won't question adequacy of exchange, except in cases of fraud, pretended exchange, gross inadequacy

(a) gain, advantage, or benefit to the promisor or the loss, disadvantage, or detriment to promisee

(b) equivalence in the value of things exchanged

(c) "mutuality of obligation"

• Must be bargained for.
• Can be an act, forbearance, or creation, modification, or destruction of legal relation.
• Performanceeturn promise may be given or given by third party.

By whole or part,
in written or oral,
or by other acts,
or forbearance.

• Consideration is based on intent.

• A statement of consideration is not consideration.

• If someone wants something, but it seems worthless, it's still consideration from the person who gives it up.

Yes, even though the moment of formation cannot be determined.

Pro-Contract:
• Greater Promisee's conduct is a Benefit to Promisor
• Greater Promisee's conduct is a Detriment to Promisee

Pro-Conditional Gift:
• Greater Detriment to Promisor
• Greater Benefit to Promisee

The greater the Promisee's conduct is a Benefit to the Promisor.

The greater the Promisee's conduct is a Detriment to the Promisee.

The greater the Detriment to the Promisor.

The greater the Benefit to the Promisee.

Must have both elements from both parties

(1) Legal Detriment: giving up or promising to give up any legal right.
(2) Inducement: "if/then structure".

"if/then structure"

Authority granted to an agent in clear, direct, and definite terms by means of the agent's written contract.

Principal specifically says that an agent may enter certain contracts or perform certain actions.

Authority that is created not by an explicit oral or written agreement but by implication.

In agency law, implied authority (of the agent) can be conferred by custom, inferred from the position the agent occupies, or implied by virtue of being reasonably necessary to carry out express authority.

Agent has the authority to enter contracts implicit to the structure of their agreement

• Directors and C-suite
• Doesn't include unusual or exotic contracts

(1) Promise
(2) Foreseeability
(2) Reliance that's reasonable, detrimental, and foreseeable
(3) Enforcement necessary to avoid injustice

Transactions or Promises between family tend to look like a gift

Assurance that they will or won't do something.

• Must be sufficiently definite (issue of content)
• Implied promise is OK under RP test.

Changes position as a result of a promise either action or inaction

Elements: action, inaction, forbearance

(1) Reasonableness of promisee's reliance.
(2) Extent or degree of reliance.
(3) Formality of promise. (writing, oral, explicit, specific, etc.)
(4) To what extent does the reliance benefit promisor?
(5) Other morally relevant factors.

(1) Where promisor should reasonably foresee that a promise will induce action by a promisee, then the promise is binding.

(2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance

• B/c it's not large enough benefit to promisor, there's no promissory estoppel
• Benefit Detriment used to aid in RP-Test b/c it's more important test and shows a gift b/c it looks like a gift to a grieving widow of his brother.
• Reliance on land & work isn't sufficient consideration.

Contract in which agreement between parties has been inferred in whole or in part from their conduct.

• Ex. - You walk into a dry cleaner, say, "How are you doing?" The other party says, "Great!" They hand you a ticket and you leave.
• Contract implied is that they'll clean your clothes and you'll pay for services.

• Not a contract; another term for unjust enrichment; quasi contract; restitution; constructive contract; contracts implied-in-law are not contracts;

• A legal fiction imposed by law to allow the enforcement of a contract remedy where justice alone warrants such a remedy b/c of parties' conduct, special relationships, or one would be unjustly enriched.

• Latin for "As much as he deserves"
• Unjust enrichment damages awarded in a quasi-contract case
• Value of Services performed

Latin for "as much as they were worth".
Unjust enrichment damages awarded in a quasi-contract case
• value of Goods received

• N sued W for child support for a child that wasn't his; court ruled N relied on W b/c of his promise to provide, acting as child's father, calling himself the father.

• Gratuitous promise
• Promissory Estoppel
• Remedy crafted

• Going to office not consideration, was condition for gratuitous pensions.
• RULE 1: Past consideration isn't consideration
• Sub-Rule: Morality isn't consideration, no legal duty.
• RULE 3: Motive isn't consideration.
• Sub-Rule: Motive is relevant if there is an "if-then" structure.

• Absent fraud, duress, or mutual mistake, if they read and sign a written document and have capacity to understand it, or, if they don't read it or have it read to them, signs it, is bound by signature.
• Mistake of one party doesn't invalidate contracts.

• Court ruled there was no consideration—not suing wasn't detriment, didn't sue b/c out of town, not b/c of promise.
• For inducement, must be "if, then" structure

• The "if, then" structure

• Simply a promise to make a gift, but not a contractual promise

• Not enforceable since there is an absence of consideration; no bargaining in giving gifts

• Dougherty's aunt wrote a promise "for value received"
• Courts ruled that this statement wasn't consideration, so no promise;
• Consideration must be bargained for
• Gift promises aren't generally enforceable

• B loaned D a sum of \$25 to be repaid at a sum of \$2,000 plus interest;
• Courts held since the two parties willingly entered contract,
• Consideration was adequate b/c not their nature to determine value/adequacy (R2§ 79)
• Inadequate consideration can still be consideration
• K wasn't sham

• Nephew sells right to receive the \$ to a 3rd party
• Court found that forbearance of a legal right was consideration and ordered the money to be paid.

(1) Suppose employees had said, "we agree to provide consulting services"
(2) Suppose employees agreed to release claims they could have against the company, agreement not to sue, etc.
• Weaker, but still possible because you're waiving a legal right to sue the company

• Immateriality of motive or cause...
• What is bargained for can be a consideration even if it doesn't induce making of promise.
• Although promise doesn't induce performance, performance can be consideration.

• Promise: clear and unambiguous when B told her they'd work with her
• Reliance: huge in not making other efforts to save home
• Foreseeable: B was offering a better deal than bankruptcy so of course B foresaw she'd rely
• Injustice: lost her home
• Injustice extent: giving up bankruptcy rights, fraud, benefit to B was foreclosing on home

Court held although there wasn't consideration or reliance, charitable donations are generally enforced as contracts.

Side Note: Prom Est was dicta

• Traditionally, promises were unenforceable b/c no sufficient consideration.
• Modern view makes exceptions to general rule by applying doctrine of PE.
• Pledge Enforceable though charity gives nothing in exchange.
• Policy: Don't give charities exceptions under the law.

• Bilateral & Unilateral
• Express & implied
• Executory & Executed
• Formal & Informal

• Unilateral mistake (mistake of only one party) doesn't negate the contract
• A Bilateral or "Mutual mistake" can lead to ending or fixing a contract