Term
| What is the general rule of contract damages? |
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Definition
| The injured party may recover from the party in breach a dollar sum sufficient to put him in as good a position as he would have occupied had the contract been performed in full |
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Term
| What are expectation damages? |
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Definition
The difference between the contract price and the market value of the goods at the contract date.
(The injured party is required to mitigate damages by accepting the best price then available in the market) |
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Term
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Definition
The receipt by the promisor of "something of value" from the promisee.
(This distinguishes promises that merit enforcement by legal means from those that don't) |
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Term
| Section 17 of the Restatement - Formation of a contract |
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Definition
| Except where special rules apply, the formation of a contract requires (1) a bargain to which the contracting parties give assent, and (2) a consideration, which can take the form of either a return promise or an actual performance |
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Term
| What is a bilateral contract? |
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Definition
| A contract involving an exchange of promises (i.e. seller promises to deliver goods in 30 days and in return buyer promises to pay seller $100 when the goods are delivered) |
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Term
| What is a unilateral contract? |
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Definition
| A contract involving an exchange of a promise for a performance (i.e. C promises to pay D $10 if D mows C's lawn; D is not asked to say "I promise" but to just go ahead and mow; C's promise to pay becomes binding if and when service is rendered by D..or at least commenced) |
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Term
| Section 19 of Restatement - promise |
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Definition
A promise may be expressed "in acts" (without words)
The commencement of performance may by itself create a "return promise" that is sufficient to create a bilateral contract. |
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Term
| What is the general rule for promises to make a gift? |
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Definition
| A promise to make a gift in the future is not enforceable (i.e. parents promise to buy child a car upon his graduation) |
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Term
| What rule came from Hamer v. Sidway? |
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Definition
Surrendering one's freedom of action is sufficient consideration for a promise (performance can be a forbearance rather than an affirmative act)
The uncle promising the nephew $5k if the nephew stopped smoking and drinking was in fact a bargained-for consideration of sorts (the uncle received the benefit of the nephew behaving well) |
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Term
| What rule came from Ricketts v. Scothorn? |
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Definition
Ordinarily a mere promise to make a gift in the future is not enforceable, but where a donee, relying in good faith on the donor's promise, is led thereby to spend money, incur debts or take some other costly and irreversible step, the donor may be estopped on grounds of equity and fairness from asserting lack of consideration.
(The grandfather gave granddaughter a demand note for $2k with APR 6%. Grandfather hoped for granddaughter to quit her job and live off the interest, which she did. Quitting her job was not a requirement of condition of the gift, but she did so anyway) |
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Term
| Section 90 of Restatement - promissory estoppel |
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Definition
- A promise which is expected by the promisor to induce the promisee to take some action, and which does induce such action, is binding and enforceable if necessary to avoid injustice.
- Reliance by the promisee may thus be sufficient to create an enforcement right against the promisor, even though the transaction does not involve a bargain between the parties and even though the promisor receives no consideration |
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Term
A promises to pay B, her niece, $10,000 if B, now employed as a bartender, will quit her job and go to law school, payment to be made on graduation day. A, a lawyer herself, thinks law is a nobler profession than tending bar and wants B to continue in the family tradition.
B goes to law school and graduates, but A refuses to pay the money. Is A's promise enforceable? |
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Definition
| Yes, because as in Hamer v. Sidway, there was a bargain and a consideration |
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Term
A is told that B is sick of tending bar and wishes to go to law school but will have to borrow heavily to meet expenses. Eager to forward B's ambition, A promises that when B graduates she, A, will pay off B's student loans up to a limit of $10,000.
B goes to law school and A refuses to pay. Is A's promise enforceable? |
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Definition
| Yes, because, as in Ricketts, A's promise should reasonably have been expected to induce, and did induce, action on B's part that involved a significant cost |
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Term
A, glad that B wants to give up bartending and go to law school, promises to give B $10,000 as a graduation present.
B goes to law school and A does not pay. Is A's promise enforceable? |
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Definition
| No, because A merely promised B a gratuity and was always free to change her mind. |
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Term
| What is the rule for damages in promissory estoppel? |
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Definition
| The remedy may be limited; the promisee's recovery may be less in amount than the customary measure of expectation damages |
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Term
| Does promissory estoppel apply to the voluntary payment of retirement benefits to employees? |
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Definition
| Courts are divided on this. In Feinberg v. Pfeiffer, the pension was held to be enforeceable. In Pitts v. McGraw Edison, the promise to make continued payments after termination of his employment was held to be gratuitous. |
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Term
| What was the rule from Mattei v. Hopper? |
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Definition
| The determination of whether the leases were or were not satisfactory lay within the sole judgement of the plaintiff, but that the exercise of judgement was subject to a "good faith" obligation on the plaintiff's part which made his promise to purchase the seller's property enforceable even though conditional. |
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Term
| True or False: A person who performs unrequested services for another acquires a right to compensation or restitution because the performance entailed a cost to the former and a benefit to the latter. |
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Definition
| False. If you do someone a favor, you cannot convert your generosity into an enforceable contract claim. |
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Term
| Can a doctor who gives emergency medical treatment to an unconscious accident victim recover the fair value of his professional services from the victim? |
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Definition
| Yes, this is an exception the general past consideration rule because the doctor is assumed to be responding to the victim's request for help. |
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Term
| What was the rule from Mills v. Wyman? |
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Definition
If the beneficiary of a voluntary service subsequently promises to compensate the volunteer for the benefit received, and then fails to do so, this is not a binding because there is no consideration for the promise to pay.
(Woman took care of 25 yo son who died shortly thereafter. Woman asked father of 25 yo to compensate her for medical expenses. Father agreed to compensate her but then reneged. Father not bound by promise to pay.) |
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Term
| What was the rule from Webb v. McGowin? |
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Definition
Moral obligation may support a promise in the absence of consideration, but only if the promisor has materially benefited by the promisee's sacrifice.
"Material benefit" plus "moral obligation" added up to "valid consideration"
(Plaintiff saved McGowin's life but as a result sustained crippling injuries. McGowin promised to, and did, compensate Webb on a weekly basis. After McGowin's death, his estate stopped payments. McGowin's estate determined to be bound.) |
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Term
| Section 86 of Restatement - past consideration |
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Definition
| A promise made in recognition of a benefit previously received is binding to the extent necessary to prevent injustice UNLESS the benefit was conferred as a gift or for other reasons the promisor has not been unjustly enriched |
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Term
| When, at common law, may an offeror revoke his offer? |
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Definition
| At any time prior to the offeree's acceptance |
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Term
| True or False: An offeror is free to terminate an offeree's power by exercising his power of termination. |
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Definition
| True, except as limited by promissory estoppel (and sometimes statute). |
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Term
| What is the overriding legal requirement of parties apart from the need for offer and acceptance? |
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Definition
| That the parties evidence by some discernible means their intention actually to be bound by the terms of their agreement ("a manifestation of mutual assent" - Restatement 17) |
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Term
| How can a party manifest assent? |
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Definition
| By an oral expression of agreement, a written document, or simply by commencement of the performance that the offer calls for. |
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Term
| What was the rule in Lucy v. Zehmar? |
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Definition
Because the plaintiff reasonably believed the defendant to be serious in his offer, and because the language of the contract was plain and unmistakeable, the parties' mutual promises were enforceable despite the defendant's "undisclosed intention" to regard the offer as a joke.
(Zehmar argued that when he offered to sell his farm to Lucy, he was (a) drunk and (b) meant it only as a joke. Zehmar wrote the contract on the back of a napkin and Lucy scrambled to come up with the money the very next day. The court found Zehmar's offer binding.) |
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Term
| What rule came out of the Peerless case? |
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Definition
Without a consensus ad idem (agreement on the same thing), there can be no agreement to which the parties can be bound.
(Neither party knew or had reason to know of the other parties intention) |
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Term
| Do the words "I am eager to sell Blackacre but would not take less than $1,000 for it. Please let me know promptly if you are interested" constitute an offer? |
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Definition
Depends on the circumstances:
- If the two partied have been bargainin gover Blackacre for the past six months, steadily trading proposals and counter-proposals in an effort to find a mutually acceptable price, then "would not take less" might well be taken as an offer.
- If there has been no prior bargaining, the words "would not take less than" are probably intended to be understood as the minimum selling price, rather than the figure the seller is prepared to accept as final. |
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Term
| Do quotations of prices by a supplier of goods constitute an offer that can thus be "accepted" and converted into a binding contract? |
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Definition
No. Generally, it is the order itself that constistutes the "offer" and the purchaser who plays the role as offeror. Even when prices are quotes in response to a specific inquiry, it is normally understood that orders are solicited subject to available stocks or to change of price without notice.
(As opposed to the Fairmount Glass case, in which the quotations of price were followed by the words "for immediate acceptance" and thus held to be an offer) |
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Term
| What constitutes acceptance of an offer? |
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Definition
| The answer depends on the requirements of the offer itself. The offeror is the master of his offer, and as such can dictate the form and manner of acceptance (in addition to other parts of the offer like price, quantity, etc.) |
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Term
| How can a person accept an offer? |
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Definition
Normally, acceptance is stated in appropriate language, whether written or oral.
However, sometimes the accepting offeree may skip the formality of verbal expression and proceed directly to perform the act that the offer calls for (this happens especially where the offer is a routine or reoccurring event; also when the offer language appears to contemplate performance itself as acceptance) |
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Term
| True or False: An offer with no time-limit will remain open indefinitely (unless revoked). |
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Definition
| False. An offer with no time limit will remain open for a reasonable time (unless revoked). |
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Term
| When are unilateral offers revokable? (Restatement Section 45) |
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Definition
Until commencement of performance. Performance commenced in response to a unilateral contract offer is treated as conferring an option contract on the offeree - a right to complete the performance if he chooses to do so. The offeree is not bound to complete the performance, however.
(If X tells Y he will give him $20 to find and return his lost cat, X is essentially making a two-fold offer: (a) to pay Y if he finds and returns the cat and (b) to treat the offer as irrevocable if Y begins the search) |
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Term
| What were the rules from Dickerson v. Dodds? |
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Definition
- Offers must be presumed to be revocable unless a fee or premium is paid to the offeror.
- Adding a deadline for acceptance means that the offer expires automatically on the date named, not that the offer is irrevocable up until that date
- Once there is an offer, revocation has to be made known to the offeree in order to prevent further wasteful expenditure on his part |
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