Contract Exam – Enforceable Promises

Objective Intent vs. Subjective Intent Facts: Buyer suing for enforcement of contract for sale of land that Seller claimed was only entered into as a joke while drunk. Court: If a party's words and acts, judged by a reasonable standard, manifest an intention to agree, it is immaterial what may be the real but unexpressed state of his mind

The Role of the Courts Facts: Contract for fixed amount of paper per month lacked a definite specificity as to the length of the pricing period (price could be set by supplied maximum). Important issue in this case whether the court should supply a missing term to the contract. Cardozo: If a crucial term is missing then there is no contract (sees this as an agreement to agree and therefore no enforceable) -- formal sense of a contract Thinks courts shouldn't fill in the blanks in contracts at all. Dissent (Alce): Apply rule of reason, if parties intended to be bound, then there is enough for a contract Thinks a court should supply reasonable terms when the parties don't reach an agreement on a term in a contract that is otherwise legally sound (shouldn't be able to weasel out on a technicality)

(UCC) - Formation in General All that is needed for a contract is (1) an intent to be bound and (2) a reasonably certain basis for relief

A bargain is an exchange of promises, acts, or both, in which each party views what he gives as the price of what he gets. This bargained-for price may include not only promises and acts, but also promises to forbear and actual forbearance from performing acts one is legally entitled to perform.

Traditional Formula: there is consideration where there is a benefit to the promisor or detriment to the promisee

1. Cautionary (informs that this promise is serious) 2. Evidentiary 3. Channeling (tells you what body of rules apply, i.e. contract law)

Unilateral Contract and Consideration Facts: Uncle promised money to nephew if he refrained from drinking, smoking, and gambling until he was 21. In this case the forbearance of the nephew of a legal right is the legal detriment bargained for.

Employment at-will ≠ contract Facts: Non-competition agreement entered after employee was hired. Employer sued for breach of agreement and the employee argued that the agreement was not enforceable because of a lack of consideration. Majority: claims that continued employment was sufficient consideration to make the non-competition agreement binding Minority (and Alce): Continued at-will employment does not constitute adequate consideration because there is no benefit to the employee (same situation as before) and no detriment to the employer Note: Alce thinks it would have been different if some additional thing was given such as a hat or the employees were fired first then rehired with this agreement in place.

Minimal Detriment Adequate for Consideration Facts: Dispute between Buyer of Oil and Seller over clause in contract that allowed seller to cancel any unshipped portion of order if they discontinued making the grade oil Buyer desired. Issue was whether there was sufficient consideration. Holding: Any limitation on one party's freedom of action may be the type of detriment sufficient to constitute consideration (i.e. not much is needed)

Option Contracts and Nominal Consideration Facts: Option contract for purchase of home, no consideration actually given for option even though there was an acknowledgment of receipt of consideration in the contract. Issue was whether the option was void for want of consideration. Court: A written acknowledgment of receipt of consideration merely creates a rebuttable presumption that consideration has, in fact, passed. Mere recital that there is consideration is not sufficient; Consideration must actually be given. If the consideration is merely nominal (i.e. just a pretense), there is not a bargain. (However, if it is what the promisor really wanted then it could be the product of a bargain)

Non-bargained for Action ≠ Consideration Facts: Employer issued a job advertisement, Employee answered saying he was seeking a permanent position. Employee left his previous position to start the new one. Employee sued for breach of contract when Employer fired him. Issue was whether Employee's giving up previous job constituted consideration for the permanent employment promise. Court: The mere giving up of a job by one who decides to accept a contract for alleged life employment is but an incident necessary on his part to place himself in a position to accept and perform the contract; it is not consideration for a contract of life employment (i.e. these actions were not bargained for)

(1) Promise must be clear and definite (first restatement -- though Murray thinks still required in reality) 2. Reliance must be foreseeable 3. There must be actual reliance 4. Preventing manifest injustice

Facts: Grandfather promised granddaughter a sum of money so she could be financially independent and no longer need to work. Granddaughter quit her job, Grandfather died without paying balance on promissory note. Issue is whether granddaughter, who acted in reasonable reliance on the note, could recover despite there being no consideration. Court: Court found for the granddaughter. (Alce) This really was promissory estoppel, but it hadn't developed yet, so the court just treats it as equitable estoppel.

Facts: Cohen leaked information to newspapers on promises of anonymity, editors of newspapers overruled these promises and revealed Cohen's name in article, Cohen immediately lost job. Court: Cohen reasonably relied on the promise by the reporters, and thus an action for promissory estoppel lies (Alce: this case could also be analyzed using consideration)

Facts: Negotiations for a franchise which Midwest relied upon, but was cancelled by Orion. There was a provision in pre-agreement that Midwest should not take any action in reliance on negotiations until they received written confirmation (private S/F provision) Court: Midwest reasonably relied on the statements made by Orion's agent and promissory estoppel can lie despite the writing requirement.

A π can recover in restitution or quasi-contract if he can show that: (1) he conferred a benefit on the ∆ (2) he conferred the benefit with the expectation that he would be paid its value (i.e. not volunteer performance) (3) The ∆ knew or had reason to know of the π's expectation; and (4) The ∆ would be unjustly enriched if her were allowed to retain the benefit without paying its value

Facts: Caring for horse whose ownership was in controversy with no explicit contract, π attempted to recover cost of care. Court: Because π was aware of the ownership controversy, it is clear that there was never an \"intent to contract\" Question: whether the parties would have contracted for such a benefit if they could have negotiated beforehand (if they would have contracted, then one will be implied in law) (Alce) There must be some reason why there couldn't have been an agreement (e.g. doctor giving life-saving treatment to someone who is unconscious on the street)