contract outline

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CONTENT Page Proverbs, Definitions 1 Coolidge, Bargain 3 Neo Classical Economics, Reliance 4 Restitution, Objective Theory 5 Misunderstanding 6 Offer & Acceptance, Justice Tongues 4 Factors in Offer 7 Acceptance Mailbox Rule 8 Revocation, Irrevocable Offers 9 Indefiniteness, Jurisprudence 10 Consideration 12 Pre-Existing Duty Rule 13 Illusory Promises 14 Nominal Consideration, Disfavored Terms 15 Reasonable Reliance 16 Franchising 17 Dayton Malleable, Expected and Reasonable Reliance 19 Promises Made in Recognition of Past Benefits 20 Brief Review, Codified Rules 21 Afrikan Proverbs Struggle to farm, gifts cannot sustain your needs. I pointed out to you the moon and the stars and all you saw was the tip of my finger. No one may be an elder before being a child. One who bathes willingly in cold water does not feel the cold. Wisdom is like a baobab tree - no one person may embrace it alone. Water that has been begged for does not quench the thirst. The teeth are smiling, but is the heart? The small spotted cat mistook the leopard for a relative. Unless you know the road you’ve come down, you cannot know where you’re going. One who has not traveled widely thinks his mother is the only (and best) cook. No matter how long wood floats in water, it will never become a crocodile. Definitions Laws - Laws are theoretical expressions describing methods by which those in power within a particular society can bring their own sense of morality to bear on those whose behavior comes into conflict with that moral sense. laws function to synthesize ideas from the past with understanding from the present to effect a balance in power facilitating the resolution of disputes and provision of safety within the status quo. Voluntary Choice exists in situations where a society provides a diversity of options to its members and those who trade with its members on a relatively equitable basis. Without equity, the choice must be considered to be less than voluntary. K’s I – UDC-DCSL Prof. Samuel Jefferson. Fall 2007 Text: Contracting Law by Kastley, Post & [Hom / Ota] [3 rd / 4 th edition] outline by Nick Clark 1

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CONTRACT

CONTENTPage

Proverbs, Definitions1

Coolidge, Bargain3

Neo Classical Economics, Reliance4

Restitution, Objective Theory5

Misunderstanding6

Offer & Acceptance, Justice Tongues 4 Factors in Offer7

Acceptance Mailbox Rule8

Revocation, Irrevocable Offers9

Indefiniteness, Jurisprudence10

Consideration12

Pre-Existing Duty Rule13

Illusory Promises14

Nominal Consideration, Disfavored Terms15

Reasonable Reliance16

Franchising17

Dayton Malleable, Expected and Reasonable Reliance19

Promises Made in Recognition of Past Benefits20

Brief Review, Codified Rules21

Afrikan ProverbsStruggle to farm, gifts cannot sustain your needs.

I pointed out to you the moon and the stars and all you saw was the tip of my finger.

No one may be an elder before being a child.

One who bathes willingly in cold water does not feel the cold.

Wisdom is like a baobab tree - no one person may embrace it alone.

Water that has been begged for does not quench the thirst.

The teeth are smiling, but is the heart?

The small spotted cat mistook the leopard for a relative.

Unless you know the road youve come down, you cannot know where youre going.One who has not traveled widely thinks his mother is the only (and best) cook.

No matter how long wood floats in water, it will never become a crocodile.DefinitionsLaws - Laws are theoretical expressions describing methods by which those in power within a particular society can bring their own sense of morality to bear on those whose behavior comes into conflict with that moral sense.

laws function to synthesize ideas from the past with understanding from the present to effect a

balance in power facilitating the resolution of disputes and provision of safety within the

status quo.

Voluntary Choice exists in situations where a society provides a diversity of options to its members and those who trade with its members on a relatively equitable basis. Without equity, the choice must be considered to be less than voluntary.

Overlooked by K - Those not parties to the K itself but affected by it. Those disempowered and mislead to believe that a K is equitable where parties have equal choice (as equal choice can't exist where power is unequal).CONTRACT

RESTATEMENT 1: Promise where breach remediable by law OR performance of which

law recognizes as duty.

PJ: Meeting of the MindsJUSTICE

Justice is whatever the judge says it is see Coolidge

Equal empowerment maintains power disparity

gives dominant group opportunity to deride disempowered group

disempowered require unequal justice.

Where regulation of power is justice, who is regulating?

MARKET: The idea of choice as it is sold to us; the point at which exchange occurs; The opportunity for buying and selling goods or services. Situations by which the scope of one's power determines the range of one's choices. RISK is inherent in a market and in any exchange.

Money or another manifestation of one's relative power within a society enables one to

choose from a certain set of options whereby one may define his or her life.

Exchange holds implicit RISK of being taken advantage of.

A way for society to allocate RISK

Free Market -> ability to choose K and dictate terms.

Price and value the ONLY considerations

Free Market essential to free society & vice-versa

if FM impossible, is individual freedom possible?

Do others acquire a benefit from being allowed to enter a market without being taxed?

If so, is this a form of unjust enrichment?

Should this prevent someones entry?

some dont realize they believe they have nothing to contribute.

POWER The relative ability to influence people and dictate the range of choices which determine the character of the people in one's society. The ability to get what you want; a position to manifest and manipulate; possession of a controlling influence stemming from possession (in some form) of a resource or resources denied to society at large.

Power => LEGALITY.

Resources.

Both ABILITY & STATE OF BEING (e.g. being alive is a kind of power)

KNOWLEDGE is necessary but not sufficient to achieve power.

TYPOLOGY OF POWER (power & exercise thereof not inherently bad or good)

Types progressively less obvious, more difficult to resist, less effort to exert.

Force: Power by physical manipulation

Coercion: Power by threat of force

Influence: Power by fear without explicit threat

`

Competent and Legitimate Authority: Power by reaction to credential

Manipulation: Power subtly applied subject does not recognize.

COMMON LAW: Codified in the Restatement of Contracts. Typically governs transactions in realty or services, unless statute imposes an exception.

UCC Formed by the American Law Institute and the National Conference of Commissioners for Uniform State Laws: Karl Llewellyn: Vicious heritage of regularly viewing parties to a K as single individuals (outside of cultural context) Contributions to the K those who create and contribute to the conditions which yield the K and its particular terms but are not themselves parties.

Article 2 governs ALL SALES of GOODS

Goods are moveable, not real property. Goods include animals.

Consideration that is valid under Common Law is also valid under the UCC.

UCC or COMMON LAW?

Where any of the items transacted are non-goods, CL should govern, but:

TESTS

MAJ: Ps PREDOMINANT PURPOSE in entering K: goods / non-goods?

Determines set of laws applicable to entire K.

MIN: GRAVAMEN of ACTION: Is Ps suit primarily over goods / non-goods?

Determines set of laws applicable to this suit ONLY.

Personal property transferred WITH real property CAN be goods under UCC 2-105.

Use appropriate test above.UNCCISG 67 nations, governs transactions of GOODS between residents of ratifying nations (contracting states) in international trade when both parties know the other is a member of a contracting state, and

exchange is not for goods intended for personal / family / household use.

unless seller has no reason to know goods so intended

CISG regards as goods moveable property yet to be constructed.

CISG contains no provision to look beyond parties to customers to determine proxy.

CISG uses LAST SHOT RULE, not mirror image rule.

Where offeror doesnt object to new terms, they govern.

UETA: All parties agree to transact electronically

electronically=by means creating electronic record (e.g. fax, email, etc.)

NOT telephone, unless a recording of conversation is made.

Jury as finder of fact=community involvement in interpreting socially relevant nature of reality. Social reality fills necessary gaps in narrative to come nearer to objective truth.

------------------------------------------------------------------------------------------------------------H.J. Coolidge v. Puaaiki and Kea 11

Private ownership system in Hawaii meant European ownership.

Markets:

Labor,

Pineapples

sugar.

Few cases against plantation owners despite conditions.

No effort to inform workers of rights,

no attempt to assert enforcement of employment Ks against plantation owners.

Workers had no means to hire lawyers.

Courts rarely acknowledged counterclaims against plantation owners.

System lasted until 1940.

This case saw K claims of this sort moved from criminal to civil court

still enforceable by criminal penalties.

Civil suit assumes workers able to negotiate details of their K

Ks terms are indefinite:

Mrs. C. can be an appropriate agent?

Mr. C. subject to penalties of K though absent?

K appeared differently in translation

Hawaiian version mentioned farming,

English mentioned general labor.

Laborers controlled in part by notion that without jobs they had nothing

Supposition of equality of choice in employment Ks permits inequality of power.

Notion that labor can be sold a buried cultural prejudice.

B. Three Principles of Contract Law

1. The Bargain Principle - Agreements create mutual obligations. deal is a deal

Controversy:

coercion, duress, or inequality of power and resources (rare or prev.?)

nature and significance of individual action and interpersonal obligation.

Why are PROMISES more obligatory when expressed as DEALS?

Both sides committed, get something out of it

reliance on deal, make sacrifices in anticipation of arranged outcome

some make a living on deals

`

commerce crucial to economy. where unreliable would collapse

freedom to exchange (nonexistent) essential to individual freedom.

Kirksey v. Kirksey

Offer to let sister-in-law stay on land a mere gratuity,

not enforceable w/o exchange.

act of moving insufficient Cons (natural consequence of willing relocation?)

O. Henry (William Sydney Porter), The Gift of the Magi

Both experienced forbearance in order to secure gifts: bargained for exchange.

Gifts given to one another are gratuities.

John Elemans, The Gift Economy

Japanese economy - Desire to bestow gift of flawless labor upon employer a

market economy informed by different values: less distinction between market / non-

market exchanges. US scrutinize gifts within business / hiring transactions as

potentially distorting objectivity.

Distinction between MARKET / NON-MARKET transactions is culturally

specific.

Neo-Classical Economics and Contract Law

Assumptions

People act in their own interests

In the pursuit of self interest, people act rationally

People have access to knowledge necessary for rational action

People and resources are freely moveable

No restrictions bar entry to / exit from the market.

The current distribution of wealth and resources is taken as a given

NCE creates values of:

Rational actions in self interest yields a net good for society

current dist. of edu, econ resources must represent perfect information.

People as objects: freedom of movement disregards social need to remain.

Competition & results; free exit / entry essential to competition.

Current allocation fair, equitable OR no fair, eq way to reallocate possible.

2. Reliance:

Elements:

Promise.

Reasonably foreseeable reliance on that promise

Demonstrable loss on the basis of that dependence.

Trust, Responsibility, Injury

RELIANCE: CORRECTIVE / RESTORATIVE; BARGAIN: DISTRIBUTIVE

People rely on one another indicates TRUST

Trust at social, personal levels present in most human endeavors.

Concern, both soc., pers. trust waning in US

Where no trust, reliance on others a burden

Reliance only where no alternative

those without power, resources to not rely.

Imposing needs on others not admirable.

Dont rely when no-one accepts burden of reliance

REASONABLE reliance to be valued, rewarded

Promissory Estoppel = most direct legal expression of RELIANCE principle.

Laurie Kuribayashi, Freeway Poem

Reliance is necessary ties us to society, where we attempt to isolate ourselves.

Reliance can cause anxiety uncertainty; necessity of FAITH

Difficulty of trusting while asserting self against dependency.

Shared notion of REASONABLE RELIANCE

Andrew Ricketts v. Katie Scothorn

Grandfathers promise caused her to forgo employment disadvantage.

Estoppel

where one says I will, estopp him from saying I wont

applies in situations where RELIANCE foreseeable

RESTATEMENT 90: Your promise REASONABLY induces

action of forbearance, and does, promise binding IF injustice can

ONLY be avoided by enforcement of the promise.3. Restitution: Unjust Enrichment and the Duty to Right Other Wrongs

Restores you to where you WERE, not where you WOULD BE.

Elements:

Benefit Conferred

Retained

Conferred w/ expectation of compensation.

DUTY to repair your wrongs. liability apart from specific agreement / market exchange

Unjust Enrichment

Constructive trust

Replevin

conversion

Reconciles BARGAIN and RELIANCE: parties would have created a K if they could have

Alasdair MacIntyre, A Disquieting Suggestion

Post-science society as metaphor for our POST-MORAL society.

Morality as poorly reconstructed informs RESTITUTION principles.

Executor of the Estate of Enoch F. Sceva v. Fanny True 46

Circumstances impute a meeting of the minds where no explicit agreement occurs.

But, not without capacity to form K.

Howard E. Bailey v. Richard E. West

RESTATEMENT of RESTITUTION 2: Officiousness is not actionable as duty.

Enid Bagnold, National Velvet 56

A horse is in this book, and Contracting Law too!?!

Lyle Dews v. Halliburton Industries, Inc. 59

Dews unjustly enriched by actions of K-ing companies, failure of K with Massey.

Law imputes Quasi K: legal fiction for unjust enrichment.

Chapter Two Contract FormationThe Objective Theory of Interpretation

Governs FORMATION, INTERPRETATION, PERFORMANCE

Gives Weight to Informal Agreements

Dont need contract agreement promise

Objective theory advantages and criticisms

Easy to evaluate evidence without need to determine subjective frame of reference.

Objective theory rewards conformity of words and actions to the norm.

Punishes those who do not fit the norm.

suggestion: incorporate Reliance: eg, where one relies on communication,

enforce using the test of a reasonable person.

Variations of the Reasonable Person:

Universal observer Brooks

allows evidence only from express conduct, words.

Positioned observer Embry

allows words, actions, history & circumstances of communication

Socially Situated 1330

allows words, acts, history, circumstances, practices within the

parties trades / communities and experiences in negotiations.

Favored by 3rd world nations, esp w/ subjugators.

Criticized as inviting lampooning of others points of view

Why stereotype? Attempt to combat bias w/in Objective.

Reminds cts difference important, Obj reaffirms prejudices.

Assumes that an objective standard exists or ought to exist

Determining Relevance of words and conduct to reasonableness of K;

Common industry practices

Nature of relationship between parties.

Charles R. Embry v. Hargadine, McKittrick Dry Goods Company

Intent only determined on what is REASONABLY evident from words and actions.

Unreasonable to see Ds answer to Ps query as other than assent to employ.

Smith v Hughes: K based on conduct, not internal intent.

Arthur Miller, The Death of a Salesman 68

Culture of the industry / workplace

Failure of communication, subjectivity

United Steelworkers of America, Local 1330 v. United States Steel 70

If clearly implied plants will remain open if profitable.

Reasonable worker could only understand hard work MIGHT save plants.

WARN act results from this case and others similar.

WARN prescribes warning periods before plant closures, other protections.

rarely enforced workers ignorance of closures benefits corp

Sue Doro, Blue Collar Goodbyes 74

Social environment informing layoffs.

Mary Lou Brooks v. Terry V. Steffes, Personal Representative

Contracts are implied in fact where a reasonable person would expect compensation

Steffes expressed desire to pay Brooks

Not unreasonable for member of the household to expect payment for services.

Patricia Williams, Alchemical Notes: Reconstructing Ideals from Deconstructed Rights

Significant similarities in words and actions.

Significant differences in backgrounds and NEED for particular mode of expression.

Bridging such gaps requires listening at a very deep level to the uncensored

voices of others.

Necessity of subjective information to effective objective test.

Subjectivity

Objectivity is dominant culture subjectivity.

K where Meeting of the Minds both parties understand terms as same principles.

Test: ask What did you think?

2. An Alternative Theory of Interpretation: The Doctrine of Misunderstanding 91

Requires attention to parties actual meaning REASONABLE person would find both

interpretations equally valid.

Governs FORMATION, maybe interpretation, not performance

Restatement (Second) 20. EFFECT OF MISUNDERSTANDING

(1) There is no manifestation of mutual assent to an exchange if the parties attach

materially different meanings to their manifestations and

(a) neither party knows or has reason to know the meaning attached by

the other; or

(b) each party knows or each party has reason to know the meaning

attached by the other.

(2) The manifestations of the parties are operative in accordance with the

meaning attached to them by one of the parties if

(a) that party does not know of any different meaning attached by the

other, and the other knows the meaning attached by the first party; or

(b) that party has no reason to know of any different meaning attached by

the other, and the other has reason to know the meaning attached by the

first party.

Konic International Corporation v. Spokane Computer Services, Inc. 92

No K where both parties arrive at equally reasonable interp of term (56-20).

Peerless: Both parties thought something different, no K

RESTATEMENT 20

Bud Abbott & Lou Costello, Whos on First? 95

Words frequently mean different things to different people. Lou and Bud have no K.

Herlinda Marie Acedo v. State of Arizona,Department of Public Welfare 98

Though MISUNDERSTANDING would invalidate K, public policy trumps.

Holman: Adoption policy centered on benefit to child. Cant recover once placed.

litigation takes long enough benefit to the child of return dissolves

social stigma against parents who give up children

Ahmad Izadi v. Machado (Gus) Ford, Inc. 103

Ambiguous print ad treated as offer.

Not what offeror meant, what REASONABLE person would have thought

RESTATEMENT 20(2)(a) only REASONABLE understanding of doc enforced.B. Offer and Acceptance: The Mechanics of Contract Formation 107

OFFER: Manifestation of willingness to enter into exchange conditional on acceptance.

RESTATEMENT 24 An offer is the manifestation of willingness to enter into a

bargain, so made as to justify another person in understanding that his assent to

that bargain is invited and will conclude it.

ACCEPTANCE: Manifestation of willingness to enter into the exchange as offered.

Offer and acceptance oversimplify: Karl Llewellyn.

Criticism has led to changes allowing details

Trade Practices

History of relationships b/t parties

functions of relationships

Polarity of acceptance: once acceptance, K exists. Nuances of acceptance irrelevant.

UCC 2 addresses: 2-204(b): agreement to make K for sale found w/o knowing time

of sale.Michael M. Normile and Wawie Kurniawan v.Hazel Elizabeth Miller 108

Offeror is master of offer, can revoke at any time. Normile did not sign before

another buyer.J. W. Southworth v. Joseph C. Oliver and Arlene G. Oliver 112

Positioned reasonable peson test to determine presence of an offer.

A communication a reasonable recipient would interpret as an offer is likely an offer.

Definiteness of wording

surrounding exchanges by parties.

Justice Tongues four factors:

(1) words / conduct reasonably indicating present willingness to commit

(2) Number of people to whom the communication is addressed

(3) Detailed regarding the terms of the K.

(4)Community practice / circumstances affecting reasonable interpretation.John D.R. Leonard v. Pepsico, Inc. 119

Positioned reasonable person test to determine presence of offer.

RESTATEMENT 29: Ads not offers to sell: invitations to negotiate.

Exceptions:

limitation on # of offerees

Words of commitment.

Lefkowitz v Great Minneapolis: coat ad=offer where explicit, limited, not negotiable.

Carlill v Carbolic: reward=offer: unilateral K; promise in exchange for performance

Barnes v Treece: punchboard reward enforceable.

Newman v Schiff: Call in show offer, but performance didnt meet terms.

James v Turilli: Jesse James alive: reward to prove wrong. Enforced.

Williston 4.7 Offer? How reasonable is belief communication is intended as offer?2. The Assent Invited: Acceptance 131

Offer grants offeree POWER OF ACCEPTANCE

Panhandle Eastern Pipe Line Co. v. Nowlin Smith, Jr. 131

Corbin 86: exception to mirror image rule: modification clarifies implicit point.

Corbin 88: Unreasonable Method Of Acceptance unlikely to be upheld by court.

The Manner of Acceptance 133

Mirror image rule w/ Implicit Point exception

UCC 2-206: Offer invites acceptance by any means reasonable under circumstances

Beard Implement Co. v. Krusa 134

As explicit terms indicated purchase order invalid w/o dealer signature, no K.

Theodore B. Russell v. Texas Co. 138

RESTATEMENT 72(2): exercise of dominion is acceptance.

Continued use of land by Texaco was acceptance of explicit terms

Silence can be acceptance where

parties agree that silence can be acceptance

past dealings have established practice where silence is acceptance

Offeree gains / retains benefits of offered K.

Bilateral K: Promise for a promise.

Both sides are Promisors.

Unilateral K: Promise for performance.

Mailbox rule: Restatement 63, 66, 40

Offer effective when received

Acceptance effective when dispatched

Rejection and revocation effective when received

When Offeree sends BOTH acceptance and rejection:SENTToRECEIVED= / K

R, AA,R=K

R, AR,AK

A, Reither order=K

;RISK of mistake in transmission is on offeror:

eg: meant 70 but telegram says 80offer is 80

UNLESS obvious error

eg: meant 10010, offeree cant

pay 10 if it clearly should be 100.Jennifer Harms v. Northland Ford Dealers and Moccasin Creek Country Club 140

Contest is offer for unilateral K - binds offeror to promise when offeree performs.

Grove v Charbonneau Buick: Golf contest acceptance despite inconsistency.

WAIVER: volitional relinquishment of existing legal or K right.

ESTOPPEL: words/ acts inconsistent w/ rights leading into detrimental reliance.3. The Content of an Acceptance 143

Mirror Image Rule: Acceptance a mirror image of the offer.

addition of implied term makes explicit an otherwise implicit term.

addition grumbles w/o altering enforceable terms.

often not applied, but used as a technicality to escape K if necessary.

Battle of the Forms: Separate standard forms for offer & acceptance contain conflicting terms.

If parties agree K has been formed regardless, UCC 2-207 applies.

Conflicting terms replaced with standard language from UCC.

Additional terms are proposals for addition to K.

Terms become part of K -- UNLESS

offer specifically limits acceptance to terms of offer.

material alteration of the K would result

objection to additional terms given in reasonable time.

Flender Corporation v. Tippins International, Inc. 144

UCC2-207 applied. Knocked out provision for Vienna arbitration.

Step-Saver Data Systems, Inc. v. Wyse Technology and The Software Link, Inc. 149

Box-top terms additions would materially alter K, thus not part of K.William S. Klocek v. Gateway, Inc., et al. 158

2-207 invalidate arbitration clause of inside-box agreement.

5 days insufficient time.4. Revocation of the Offer Prior to Acceptance 164

Master of offer

Offeror can revoke offer at any time, regardless of indicating otherwise.

1) Rejection / counteroffer

2) Revocation

3) lapse after reasonable or specified time.

4) Death of offeror / offeree

George Dickinson v. John Dodds 164

Offeror free to revoke / K with another despite language of exclusivity.State of Washington v. Richard Lee Wheeler 167

Wheeler didnt rely on plea to detriment; can revoke - no prom. estoppel.

No const. right to plea bargain no due process violation

not accepted=not K. Irrevocable offers

1) Option K RESTATEMENT 87

a)Separate consideration in writing for irrevocability

b)Made irrevocable by statute

2) Offer to sell rent goods to be kept open for reasonable or stated time UCC 2-205

3) Offer requires full performance and performance begun. RESTATEMENT 45

Offeror cant revoke, but not bound to pay until performance complete

UNLESS: offeror made offeree unable to complete performance.

But, if offeree

1) Has choice to select promise or performance AND

2) Elects to accept by performance AND

3) Has reason to know offeror has no way of knowing performance

begun in reasonable time w/ reasonable certainty:

Then Offerors obligation (firm K) discharged UNLESS:

a) offeree uses Reasonable Diligence to notify

offeror performance has begun OR

b) Offeror otherwise learns of performance w/in

reasonable time OR

c) Offer itself indicates offeree need not notify

offeror when performance begins.

4) Offer forseeably and reasonably relied upon. RESTATEMENT 87(2)Marchiondo v Scheck (external)

Partial performance on unilateral K is binding conditional on full performanceDrennan v. Star Paving Company 173

Promissory estoppel held SP to promise - injustice only avoidable by enforcement

Indefinite Agreements 176

Though technically indefiniteness invalidates K, common law has followed the UCCs lead.

If K provides sufficient means to determine indefinite term, K. (eg market rate).

Did parties intend to be bound at time K was formed?

If so, court can supply reasonable term to complete the K.

UNLESS term is too indefinite to reach a reasonable and just

compromise then no K.

George A. Varney v. Isaac E. Ditmars 177

Fair and reasonable share of profits too indefinite a concept to be enforced.

Cobble Hill Nursing Home, Inc. v. Henry and Warren Corp. 180

Where no mechanism specified to determine price, indefiniteness invalidates K.

health dept regulations sufficient to objectively fix reasonable purchase price

Oglebay Norton Co. v. Armco, Inc. 186

UCC 2-305: where price not settled, reasonable price at time of delivery.D. A Brief History of Jurisprudence 191

Natural Law: just laws are imminent in nature (discovered, not created, in course of

resolving conflicts

Meaning of law cannot be understood outside of moral principles.

Primary Figures: Socrates; William Blackstone

Approach: Socratic; Catholic Cannon Law

Values: Reason (natural reason)

Positivism: posited laws made in accordance with social values

If a law accords with social norms, it is just regardless of whether it would broadly

be thought to be so

Laws are rules which provide order, and nothing more.

Jeremy Bentham, John Austin, John Stuart Mill, Oliver Wendell Holmes

Formalism: (a form of Positivism): The justice of laws a question for legislature, not judges

Laws are the principles on which societies base generally the resolution of specific

disputes, after being appropriately narraowed by litigation and judgment.

Judges shouldnt make moral determinations

apply societys moral authority as set out in laws

Christopher Columbus Langdell

Case method learning law by authority of appellate court opinions.

Vulnerability of High Formalism

not concerned with whether cases reflected litigation as a whole;

whether litigation reflected disputes generally;

whether judges/ juries affected by issues other than legal doctrines;

effects of laws upon society generally.

Legal Realist Movement 1930s-40s.

Law should be understood & determined according to actual practices in law

offices & police stations (and not from high-Fallutin treatises).

All law is made by people and is subject to human foibles.

Oliver Wendell Holmes a notable precursor

Harvard Legal Process School

Hart and Sacks

Reaction to Nazism/ other forms of fascism as consequence of Realism commingled

with formalist positivism.

Rationality restraint, fairness through black letter distribution of institutional power

Rights to notice, hearing and explanation of courts disposition

Neutral Principles related to Process, but distinct

rests on general, neutral reasons respecting all issues of a case

Herbert Wechsler: decreased NP & LP credibility by attacking Warren cts

holdings on race issues.

A more ostensibly palatable formalism w/ equally unjust results?

Analytic Jurisprudence-Debate about nature of law, post-war

What is law?

When are laws valid?

How do laws relate to morality?

Fundamental Rights Jurisprudence

Herbert Wechsler, H.L.A. Harts

human dignity and welfare and the achievement of justice, principles that to this

school outweigh the values

human dignity and welfare and the achievement of justice, principles that to this

school outweigh the values

Thomas Grey, Kenneth Karst, Frank Michelman; Michael Perry, David A.J. Richards,

Laurence Tribe, Ronald Dworkin.

defended Warren Courts interest in individual rights (e.g. to challenge government,

to free expression, to civil liberties, to be protected from police aggression) against

charge that such decisions had insufficient support in Constitution.

would deny being natural law advocates, but continue Lon Fullers attack on

positivism.

After Realist Revolution American law taught within Legal Process framework

Law and Economics Movement & Legal Choice Theory

60s, 70s. law assessed via economic theory

Favors markets and limited government

Posner: Law to maximize social wealth even if harmful to some

Public Choice scholarship

microeconomics in govt, politics, social behavior

Politicians self interested advancing thru rational

behavior.

Law and Society Movement (Law and [Sociology / Psychology / Anthropology / etc])

L&S catchall society for other Law Ands

Efforts to utilize learning of scholarly disciplines to shape laws and definitions

Social sciences used in litigation

To determine facts

To make law

To assess reasonable behavior, true claims, impact of remedies

to select jurors favorable to cause via psych profile

to seek new venue via research showing prejudice

Critical Legal Studies

System suffers from:

indeterminacy of legal doctrine

exclusivity through mystification of law enhances power of lawyers at

expense of others

doctrine, procedure veil political aspects of law

neutrality as veil to defense of those who dominate.

Feminist Jurisprudence

Objective Viewpoint favored men, promoted version of reality inaccurate

when applied to women and other out groups

1) Liberal Equality: rights, equality thru application of liberal values

2) Sexual Difference Model: justice thru recognizing, emphasizing

significance of sexual differences

3) dominance model: have no agency as result of dominance

Criticized as further marginalizing, disempowering

4) postmodern / anti-essentialist: all forms of marginalization

interplay. Every perspective socially situated.

Critical Race Theory

Race is a social construct - Judicial conclusions are the result of

institutionalized prejudice in the legal system - workings of power.

Civic Republicanism: Whats best via civic virtue, not by personal preference altruistic

Postmodernism, Pragmatism, Related Concepts

1) Post Structuralism: linguistic structure affects understanding of reality and texts.

2) neo-pragmatism: social construction of knowledge / language to name a thing is

to know it -John Dewey.A. The Consideration Doctrine 209

A return promise for performance that is bargained for. Promise not enforceable without

consideration unless based on past benefit, reliance, or some other alternative means.

Restatement 71(1) a performance/ return promise must be bargained for.

(2) bargained = sought by promisor for promise, given by promisee for

promise.

(3) Performance may consist of

(a) an act

(b) a forbearance, or

(c) creation, modification, destruction of legal relation.

(4) The performance or return promise may be given to promisor or other

person. May be given by the promisee or by some other person.Emerging Use of Consideration to Implement Fairness & Other Public Policies 215

Grant Gilmore The Death of Contract

K deeply political, artificial, but potentially useful

traditional K theory said no-one should be liable to anyone ever

lasseiz faire economic theory, e.g.

A system encouraging everyone to do their own thing encourages the rich &

powerful to become more so.

Fuller: understand Consideration in terms of ends it serves, not in terms of abstract theory.

Mark Wessman survey: most cases decided on Cons. really used Cons as excuse to

avoid unfair exchange / implement some policy goal.

Serious risk that courts will use this power deceptively to benefit some

groups, burden others.2. A Return Promise or Performance 217

1) any promise / performance adequate (courts wont weigh adequacy)

2) pre-existing duty rule promise to do something already obligated to is no Cons.

3) Illusory promises sounds like a promise but isnt

4) Mutuality of obligation: widely rejected, esp. by Restatement.a. Any Promise, Regardless of Value: Courts Wont Weigh Adequacy of Consideration 217

Freedom of K: individuals free to ascribe own value and exchange freely.

Rule weak,

where one party clearly vulnerable.

Inequality of bargaining power great

K conflicts w/ Public Policy

Unusually One-SidedHamer v. Sidway 218

Consideration NOT void where promisor not benefited

Valuable consideration may be some right, interest, profit, benefit accruing to one

party, or may be forbearance, loss, detriment or responsibility given suffered or

undertaken by the other party.NoteConsideration and the Market: Not weighing the adequacy of consideration shields

courts from having to make decisions on the basis of these market inequalities.

Privilege: Confidence and entitlement.

Subordination: Unseen and Disbelieved vs. Closely scrutinized

Sociologists, Economists: Life choices, markets predictable according to Race, Class,

Gender, Ethnicity:

Cost Based Discrimination: Seller assumes buyer will take more time / resources

for credit issues and service needs.

Revenue Based Discrimination: Seller acts as if buyer willing to pay higher price

Poor pay more than rich for comparable goods, housing, services

pay more than for

Clothing

Dry Cleaning

Hair Cutting

Cars

People of color pay more than whites

Poverty. Race, Sex bases for exclusion from markets.

Poor Neighborhoods:

Higher insurance

Security Costs

Theft Losses

Lower Labor Costs

Isolation from wider markets

Competition limited

Racial, Class hostility

Discrimination in Credit Industry

Lack of Police Protection

Lack of Information

Inconscionability the exception to refusal to weigh adequacy.Berry v Gulf Coast Wings, Inc. d/b/a Hooters (external)

Consideration in selling more beer, not leaving Hooters valid, not Pre-Existing.

May otherwise have quit, sold ordinary volume of beer.

Employers consideration was offer of New [Toyota / toy Yoda]

Court enforces clear and definite content of offer based on words, actions, not intent.

Lucy v ZehmerJoking offer as valid as it is believableMyrna Greenfield, Alternative Trade: Giving Coffee a New Flavor 223

Principles of Alternative Trade:

1) Direct Trade: ATOs buy directly from CoOps or other ATOs. Producers and

ATOs are equal trading partners. Free sharing of info, help each other reach goals.

2) Fair Price: ATOs and producers set price by mutual agreement. Producers meet

costs, make some profit. ATOs able to market products at competitive prices

(premium for organics).

3) Credit: ATOs attempt to provide credit to producers prepay or commit to

purchase whenever possible.

4) Democratic Management: Equitable profit sharing within producer groups.

Workers have voice in how to run. ATOs accountable to staff.

5) Public Information: ATOs inform consumers about producers & necessity of

alternative trade. Full financial disclosure of corporate records is standard practice.

Looks for producer partners w/ greatest need, sustainable ag, & w/ established

economic development plan.b. The Pre-Existing Duty RuleA First Look 226

A promise that one is already obligated to fulfill is not valid consideration.Angela White v. Village of Homewood and Village of Homewood Fire and Police Commission 227

Where an agreement to be tested for employability contains an exculpatory agreement

between parties whose power dynamic is significantly one-sided, is that exculpatory

agreement vald?

1) Not enforceable when against state public policy

a) between employer / employee

b) between public and those charged w/ public service (e.g. common

carriers, public utilities)

c) disparity in power shows P has no reasonable alternative

2) Something in social relationship btw parties militates against upholding.Profile: Engine Company Number Three All-Women Firefighting Crew in San Diego 230

Jeepers, theyre all women.c. May Sound Like a Promise, but Isnt: Illusory Promises,Mutuality of Obligation 232

Restatement 77 Illusory Promises: Words making promissory indications but reserving alternate optional performance are NOT consideration UNLESS

a) Each alternative would be consideration if bargained for individually

b) one / more alternatives = Cons & substantial certainty non-Cons options will be

eliminated before choice is made.Agnes Maszewski v. John Piskadlo 234

Live together in harmony rest of lifetimes, neither shall have right to dispossess other, but

neither shall be inhibited from leaving of own volition

No valid K where consideration based on Illusory consideration, pre-existing duty, no

mutuality.

Dissent: Cons. was not leaving. Terms of K dont have to state nature of Cons.

K didnt necessitate violation of adultery law - Cunningham v Weatherford: cant

presume improper intent where 76 y/o paying young $20k for live in care.John Prine, Hello in There 237

Loneliness of age: Mazewskis vulnerability to promise as a lonely old lady.Lawrence v. Ingham County Health Department Family Planning/ Pre-Natal Clinic 238

Where one partys promise is unenforceable by law (governmental immunity) can the

agreement, absent mutuality of assent be said to contain valid consideration?

Mutuality unnecessary except where lack of it would leave one party w/o valid consideration.

Agreement to follow medical advice not legally enforceable, not valid cons.

Dissent: Adequacy an issue for fact finder should go to court, not be summarily dismissed.NoteOn Sovereign Immunity and Public Health Care 244

Traditionally govts waive K immunity. Paulette Childress White, Getting the Facts of Life 244

Claiming welfare is trying, humiliating, dangerous, imposes inquires into personal life.3. The Consideration Must Be Bargained-For 251

Seek w/ return promise/performance not necessarily actual inducement if sufficient

e.g. Painter sells painting for $500, but actually seeks increased notoriety.a. Bargained-For Means Induced By the Return Promise or Performance and Vice-Versa 252

Kirkseys forbearance not bargained for inducement brother in law sought.b. A Distinction: Bargained versus Gift with a Condition 252

Two categories, unclearly definedLanger v. Superior Steel Corporation 252

Is a statement requesting offeree to refrain from activity in order to continue receiving a

benefit valid consideration?

A K has consideration where an agreement is bargained for in exchange for a promise,

regardless of whether there is actual loss or detriment to promisee or benefit to promisor.

York v Cyclops:Consideration may be obligatory on one end and optional on the other

Langers ability to cease performance would simply mean Superiors cessation.

Ps loyalty a benefit to D valid Cons

Also WOULD be enforceable under PE detrimental reliance.Note 255

Restatement 79 Expressly rejects mutuality of obligation. Mutuality no longer enforced.c. Dont Tell Me Its Bargained-For!Nominal Consideration Is Not Sufficient 255In re Greene 256

No other consideration than $1 cited or shown. Nominal thus not valid. Seal presumptive,

not evidence.Notes 258

Restatement 71 comment d: Sham / nominal consideration not satisfactory.4. Public Policy and Disfavored Contract Terms 259

Where benefited party is in dominant social position.

Focus on inequality of power more important than it used to be.

Mark Wessman: disfavored terms are more burdensome; require additional / special consideration

to be enforceable.

Job security terms

covenant not to competeJerry M. Worley v. Wyoming Bottling Company, Inc.,d/b/a Coca-Cola of Casper 260

Can an oral promise create a for-cause employment K where previously at-will?

At-Will presumption can be overcome by K implied in fact, or express K.

Interp of terms of oral K a question of Law only when shown w/o conflict in evidence.

Offer of permanent employment must have addtl Cons or explicit language termination can

only be for cause

Intent to quit absent job security

mutuality of obligation species of forbidden inquiry into adequacy

violation of personnel policies pretext for termination

Q of fact: cant be decided in summary judgmentNoteOn the At-Will Employment Doctrine 263

Job = access to social status, personal achievement, opportunity, POWER.

Employees in most industrialized nations have job security: only US has laws disfavoring.

Some exceptions:

High paid executives

12.8% US workers in unions

Protected by Labor Relations Act.

Civil Service Statutes protect Govt workers.

but most US workers no such protections

At-will limited where firing would conflict w/ public policy esp in CA.

Some states promise of employment not binding w/o consideration

Some states binding regardless of consideration.

Some states enforceable via promissory estoppel

Federal & State Civil Rights Statutes protect specific classes.

Montana Wrongful Discharge from Employment Act requires Cause for termination.

Puerto Rico requires Good Cause for terminating an employee.

Model Employment Termination Act adopted by National Conference of

Commissioners on Uniform State Laws

requires good cause

Not adopted by any state.

Arguments against For Cause

a) If you do a good job you wont be terminated anyway, unless your

employer falls on financial difficulties.

b) employer owns business and can hire / fire how he pleases.

Robert Fitzpatrick: At Will inconsistent w/ fair treatment of individual employee (bottom

line). Employers best defense consistent treatment of employees, termination for Good

Cause.

Peter F Drucker: Jobs as property. Nexus of rights Should not be taken without due process

right to review / appeal requires abolition of fixed age retirement.

Japan: Short of bankruptcy, businesses run primarily FOR employees.

right to job precedent over outside creditors, legal owners

Europe: No layoffs: buyouts w/ redundancy payments

can be equivalent of full salary / wage for rest of employees life.

Claim to redundancy payments survives employers bankruptcy

extends to other assets of employing firm.

US: Pensions have some protections of property.

Take precedence over all but govt tax in bankruptcy.

Up to 30% of firms net worth.Richard E. Freeman v. The Duluth Clinic, Ltd. 267

Where one signs an employment covenant believing that it will not be binding unless others

also sign, is it binding when those others do not sign, and are in now way penalized for their

failure to do so?

Consideration must be bargained for.

AMA discourages restrictive covenants: detrimental to wide provision of quality healthcare.

No consideration: those not signing were not disadvantaged by their non-forbearance.

Dissent: Mutuality of promises has always been adequate Cons.

To avoid arbitration had to void K, but P upheld K 4 times during argument.Chapter 4 Alternatives to Bargain Model: Promises Reasonably Relied Upon, Promises Made in Recognition of Past Benefit, Other Promises Enforceable without Consideration 271A. Promises Reasonably Relied Upon: Restatement (Second), Section 90 271

Promissory Estoppel completely rejected in Virginia

In some jurisdictions, promissory estoppel is only a defense.

New York does not enforce promissory estoppel in employment disputes.

Existence as exception reflects desire to maintain bargain-based model of K law.

Ricketts v Scothorn

Simpson College v Tuttle: Promissory notes typically enforced when given as

endowments to colleges and institutions.

Where note promises support of objects referred to, promisor may still enter want

of consideration defense

If promisee enters into engagements, spends b/c of promise, suffers loss,

injury if note not paid, donor estopped from arguing want of consideration.

1) When is it reasonable to rely on promises which are unclear, ambiguous?

-When broad power disparity leaves you little choice, promisor unlikely to make

statement w/o expecting reliance.

2) When should a promisor reasonably expect a person to rely on his promise?

-When made definitively; when reliance catastrophic if promise unfulfilled (above)1. The Promise 272

Most jurisdictions havent chosen between standards for the promise:

1) must be as definite & committed as for Offer (Bank of Standish)

2) can be less definite than for Offer (e.g. Hoffman v Red Owl)

3) more definite, clear commitment than Offer.(Abbington,)

Vital importance of relationship between farmers and banksJohn Steinbeck, The Grapes of Wrath 273

Bank monster machine imposes impossible standards: cant rotate crops, cant grow on soil

depleted by cotton.

When the monster stops growing, it dies, it cant stay one size.

Being born here, having killed for the land is ownership, more than is a note in a bank.

Nobody likes the bank or what it does, but they do it all the same.

Change in relationship btw farmers and land as Steinbeck describes disconnectedness.

Strong sentiment in favor of family farms in rural areas, largely indifferent in urban.State Bank of Standish v. Robert N. and Kathleen Curry 278

Where one party assures another theres no reason to worry about your future in the industry,

I will support you, does this constitute a clear and definite promise on which reliance would

be reasonable?

1st Natl Bank of Logansport v Logan Mfg. Co. 577 NE2d 949 lender should expect &

anticipate a promise to lend money would induce a borrower to rely by making preparations

and ceasing to look for the money elsewhere.

Existence of a promise is a finding of fact

Restatement 2 Promise = manifestation of intention to act or refrain from acting in a given

way, so as to justify a promise in understanding that a commitment has been made.

Nature of relationship btw parties, clarity of representation, circumstances important in

determining whether manifestation rises to level of a promise.

Past dealing in itself is insufficient to establish that renewal will be indefinite. Offer and

promise judged w/ same strictness.

To be sufficiently clear must include amt of loan, interest rate and method of repayment.

Currys past dealings had established these.

Dissent: Currys accumulated debt .$160k.

Bank requested acctg form corrections, did not receive.

Currys previous tax return recorded losses of $72k. NoteOn Farming in the United States 288

Btw 1935 and 1992, approx 4.6M farmers lost their farms.

Most family farms lost to other families larger farms.

Minority owned farms declined 91% from 1954 to 1987

$10B / yr direct subsidies to farmers

Indirect subs. include:

crops bought by Comm. Credit Corp: decrease supply, increase retail price.

low interest non recourse loans-debtor not liable past value of crop collateral

Dairy buyouts as in instant case.

Total subsidies estimated at around $30B.

Most goes to wealthiest farmers

Vegetables not subsidized.

Subsidies result in over cultivation.

Freedom to farm act ends subsidies in 2003 for all but dairy, peanuts.Notes 290

Reliance Principle encourages development of tools for analyzing POWER DYNAMIC

power dynamic determines trust, reasonable reliance, responsibility

Joseph Hoffman v. Red Owl Stores, Inc. 291

Where reliance on a promise of an investments sufficiency to open a franchise leads one to detrimental reliance, can he claim relief under Restatement 90 in a jurisdiction that doesnt acknowledge 90s validity?

The court opts to adopt 90

promise need not be comprehensive as Offer: read 90 by its letter.

Injustice requirement requires policy decision by court.Gillian K. Hadfield, Problematic Relations: Franchising & the Law of Incomplete Contracts 297

Continuing relationship in which for provides licensed privilege to do business plus

assistance in organizing, training, merchandizing, and management in return for a

consideration from fee.

based on concept that $ to be made creating, perpetuating business

opportunities for others.

chain of small businesses bound by image and policies of a parent corp.

Giving up the inalienable right to mismanage your own business.

Changes dynamic of ownership / control in employment.

Typical employment arrangement: Employer all ownership & control

Contractor Relationship: Ker and client each have some resources and control.

Franchise: Franchisor controls, Franchisee owns

Most Fees use personal savings as initial investment

Some land owned by Fee, some leased to fee by for (McD)

Costs:

Fee pays For an up front freanchise fee for privilege of paying for their shit.

Royalties

Service fees

price markup

location

commission from suppliers

Major hardships:

Fee has ultimate control over use of corp. branding

Fors sometimes opportunistically abuse power.

Structural center is a conflict of interests:

fee - maximize profits w/out expense unrelated to compensation

for sell more franchises and increase royalty revenue

Startup costs sunk value of fise much less if sold to transfer $ to another biz

For keeps biz going w/out allowing fee to recover sunk cost opportunism.

Some for request for fee to do more advertising opportunistic, some legitimate

Many ambiguities in Fise relationship not clear from K of Fise

In Franchise K

Frequency of payment

Expected training levels

Advertising responsibilities

supplies forthcoming

sales made

royalties paid

distances btw outlets

Ambiguities Not In Franchise K

how $ promotions?

how often are outlets required to refurbish?

what measures to boost sales can be required

Reliance Relationship superiority and inexperience

mutuality of exchange in fise exchange btw equals

Reliance relationship created by fors superiority, fees inexperience

For wont change K. Wont let it be examined until after 2 deposits.

No compromise, negotiation, change in K whatsoever: sign or dont

offer to negotiate = weakness on pt of for.

strength part of what fee is purchasing.

Attracts inexperience-fors advice, assistance more valuable to ignorant fee

Intimacy & Interdependence

A relationship btw unequals

Family terminology, wedding terminologyNote 306

Red Owl never explicitly promised Hoffman fise: represented assured

Formal fise agreements characterized by indefiniteness: open-ended representations

part of nature of a relationship.

Hoffman: reliance itself evidence of commitment.

Drennan v Paving Star: Reasonable reliance resulting in foreseeable prejudicial

change in position affords a compelling basis for implying a subsidiary promise not

to revoke a bilateral K.

an agreement to agree can be enforced by PE.Dayton Malleable Clears $5 Million Capital Outlay 306

DM to spend $10M upgrading plant. Employees agreed to help improve divisions financial

condition thereby maintaining operations at Columbus facility extend current labor K one

year w/o raises. Union will assist in creating new productivity standards.Abbington v. Dayton Malleable, Inc. 307

Did D make a promise on which P could reasonably rely to detriment, and if so, is it possible

to litigate PE on oral evidence where a written K btw the parties covers the same matter?

Local 1330: PE Recognizes the possibility of the formation of a K by action or forbearance

on the part of the party or a second party based upon a promise made by the first party under

circumstances where the action of forbearance of the second party should reasonably have

been expected to produce the detrimental results to the second party that they did produce.

For some reason the statements by DMI at the tent meeting do not constitute promises, nor do

press releasesNotes 311

Abbington reliance reasonable only on clear and unambiguous (clear & definite Bank of

Standish) manifestation of willingness to commit to arrangement -Restatement

Ladehoff: If we are to convert this plant we would not shut down we would continue to operate with little interruption 561 F.Supp at 1307

Social situation: history of communication w/ DMI, recent plant closures elsewhere.

1)If you were a DMI employee, would you have relied on Ladehoffs assurance?

-Would not have much choice see question on when ambiguous promises are

reasonable to rely upon. or Would not have trusted, but would have relied.

2) Would I have trusted Ladehoff on choices facing board & consequences of each?

-No, not entirely, but would have little choice but to rely.

3)Could one argue that enforcement of non-closure unnecessary to avoid injustice?

- 1000% increase in executive salaries shows injustice at expense of workers.

Other means of averting this injustice not clear.

Plant left as deteriorating waste. Shifted costs of ceasing operation to community.

In the US it is never just to require a business to lose money

Employer=owner, employee owner: informs employment decisions.

Argument for Job as Property right

Beerman&Singer: Baseline Qs In Legal Reasoning: jobs as property rightBarbara Kingsolver, Why I Am a Danger to the Public 317

Union busting culture scabs make empowerment of collective bargaining worthless

Vicki treats co. as force of nature her overt frustration is for the scabs.

Workers can negotiate individually until it is clear that this will do no good.

Sometimes as in Abbington union nothing more than a tool to pacify workers.

Can be an important tool to check power of companies

health care

8 hour day

weekends

Vicki undergoes a lot to support the strike despite scabbing making it more futile.

Duty to grampa: put on a railcar like a cow for being a wobbly and a Mexican.

and to all who fought bled & died for good of workers everywhere2. Expected & Reasonable Reliance: Action or Forbearance by Promisee or a Third Person 320

Jo Laverne Alden v. Elvis Presley 320

Can a promise be enforced against a decedent by PE where the estates refusal preceded the

promisees forbearance?

P must show detrimental reliance and a loss suffered as a result of that reliance.

Settlement K not binding until approved by the court.

Reliance on promise where refused by estate is unreasonableElvis Presley and Vera Matson, Love Me Tender 324

This song is written by Ken Darby. He, Otis Blackwell and Arthur Crudup signed away their

rights to be the credited authors of songs made famous by Presley.Guy Kinoshita v. Canadian Pacific Airlines, Ltd. and D.W. Merrell Ronald K. Nakashima v. Canadian Pacific Airlines, Ltd.and D.W. Merrell 324

our written employment arrangements constitute an enforceable K

Where the discharge of an employee violates a clear mandate of public policy, his employer

should be liable in tort

Offer Acceptance Consideration necessary to make policies in employment manual part of

original employment K / employment K as modified by parties

Not necessary to know / have read terms: Instinct with an Obligation

Employers issue manuals chiefly to Create atmosphere of fair treatment & Job security

Expect, demand employee compliance

Employees justifiably rely, justifiably expect employers to do same.

Failure of unions to organize indicates reliance on policies.B. Promises Made in Recognition of Past Benefits 330

Mills v. Wyman 330

Can a promise to pay for services provided prior to the formation of that promise have

sufficient consideration by those prior services?

A moral obligation is sufficient consideration to support an express promise. There must be

some pre-existing obligation which has become inoperative by positive law to form a basis

for an effective promise.

Though a moral obligation exists, the law does not enforce it.NoteOn the Moral Consideration Doctrine 333

Prior consideration valid where parties would have formed a K but couldnt by statute

eg, one is a minor who will soon be of age, can create K when of age

Serves public policy: natural lawJoe Webb v. Floyd McGowin 334

Can an estate be made to continue promised periodic payment based on prior consideration?

Moral obligation can be sufficient Cons where promissor has received a material benefit.

Does not require original duty / liability

Express promise to pay raises presumption services rendered by requestNote 336

Grant Gillmore: Webb v McGowan will grow like Jacks beanstalk. Lena Harrington v. Lee Walter Taylor 337

Does saving ones life from an angry battered spouse constitute sufficient consideration for a

subsequent promise to pay for injuries sustained during the act?

Prior consideration is no consideration.

A humanitarian act performed voluntarily is not sufficient for legal recovery.Notes 337

Restatement 86 Promise for benefit received:

1)Promise recognizing past benefit is binding to extent necessary to prevent injustice

2) UNLESS

a) promisee conferred benefit as gift / promisee not unjustly enriched

b) value is disproportionate to benefit.

NY Gen. Obligations Law Art. 5 5-1105: Binding w/ past Cons if valid otherwise & writtenAn Alternative to Restatement (Second) Section 86: 338

A serious promise made in recognition of a benefit received by the promisor or rendered by the promisee in the past is not unenforceable by reason of lack of considerationRealty Associates of Sedona v. Valley National Bank of Arizona Transamerica Title Insurance Company, and Katherine L. Peterson 339

Where a second agreement would invalidate a first, can the first be enforced when it appears

to be based in prior consideration?

Restatement 86, comment G: statutory agreement authorizing broker to sell is void unless

in writing. Written, signed sales agreement binding

Consideration a benefit to promisor or detriment to promisee.

Listing agreement must be read w/ purchase K signed on same day

AZ law: read contemporaneous instruments together for nature of transaction.

Intended to apply to sale (executed on same day)Notes 342

1) How often are promises made on the basis of past benefit in commercial settings?

2) Was Blackburns promise to pay Associates for work done in the past in his self interest?

Right thing to do? Just?

3) Are values of restitution in conflict with those of bargain?C. Review of Bases of Liability in Contract and Restitution 343

a) Bargained for exchange

b) Promissory Estoppel

c) Promise in Recognition of Past Benefit

d) Promise Under Seal

But: UCC 1-107, 2-205

e) Restitution

1) No explicit promise necessary

2) Unjust Enrichment

3) Breach of Fiduciary Duty

4) Violation of Statutory Duty

5) Constructive Trust

6) ReplevinWilliam Edwin Van Brunt III v. Robert Rauschenberg 344

Breach of K

1)agreement,

2)due performance by P,

3)breach by D

4)damage suffered by P.

K by unmarried living together as valid as not living together (if sex not part of Cons.).

Promise to transfer real property must be in writing

Promise to pay debt must be in writing to be enforced by creditor, need not by debtor.

Statute of Limitations 6 years on Breach of K claims

Work prepared on behalf of an employer becomes property of the employer.

Immediate and superior right of possession.

Constructive trust: where property acquired so that title holder may not in good conscience

retain the beneficial interest.

1)Confidential / fiduciary relationship

2) promise / agreement express / implied

3) transfer in reliance upon such promise / agreement

4)unjust enrichment resulting therefrom.

a) D unjustly enriched

b) enrichment at Ps expense

c) Ds retention of benefit would be unjust

P didnt demonstrate confidential relationship necessary for creation of constructive trust. Services of a type ordinarily rendered gratuitously?RESTATEMENT OF CONTRACTS 2d1. CONTRACT DEFINEDA contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

2. PROMISE; PROMISOR; PROMISEE...(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

(2) The person manifesting the intention is the promisor.

(3) The person to whom the manifestation is addressed is the promisee. 17. Requirement Of A Bargain

(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.

(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in 82- 94.

20. EFFECT OF MISUNDERSTANDING(1) There is no manifestation of mutual assent to an exchange if the parties attach materially

different meanings to their manifestations and

(a) neither party knows or has reason to know the meaning attached by the other; or

(b) each party knows or each party has reason to know the meaning attached by the

other.

24. OFFER DEFINEDAn offer is the manifestation of willingness to enter into a bargain, so made as to justify

another person in understanding that his assent to that bargain is invited and will conclude it. 29. To Whom An Offer Is Addressed(1) The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance.(2) An offer may create a power of acceptance in a specified person or in one or more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance. 40. Time When Rejection Or Counter-Offer Terminates The Power Of Acceptance

Rejection or counter-offer by mail or telegram does not terminate the power of acceptance until received by the offeror, but limits the power so that a letter or telegram of acceptance started after the sending of an otherwise effective rejection or counter-offer is only a counter-offer unless the acceptance is received by the offeror before he receives the rejection or counter-offer.

45 -- Option Contract Created by Part Performance or Tender(1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.(2) The offeror's duty of performance under any option contract so crated is conditional on completion or tender of the invited performance in accordance with the terms of the offer. 63. Time When Acceptance Takes EffectUnless the offer provides otherwise,

(a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but

(b) an acceptance under an option contract is not operative until received by the offeror. 66. Acceptance Must Be Properly DispatchedAn acceptance sent by mail or otherwise from a distance is not operative when dispatched, unless it is properly addressed and such other precautions taken as are ordinarily observed to insure safe transmission of similar messages.71 -- Requirement of Exchange; Types of Exchange

(1) To constitute consideration, a performance or a return promise must be bargained for.

(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

(3) The performance may consist of

(a) an act other than a promise, or

(b) a forbearance, or

(c) the creation, modification, or destruction of a legal relation.

(4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.79 -- Adequacy of Consideration; Mutuality of Obligation

If the requirement of consideration is met, there is no additional requirement of

(a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; --or-(b) equivalence in the values exchanged or

(c) mutuality of obligation 86. Promise For Benefit Received(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.(2) A promise is not binding under Subsection (1)

(a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or

(b) to the extent that its value is disproportionate to the benefit.

87. Option Contract

(1) An offer is binding as an option contract if it

(a) is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or

(b) is made irrevocable by statute.

(2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.90 -- Promise Reasonably Inducing Action or Forbearance(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.(2) A charitable subscription or a marriage settlement is binding under subsection (1) without proof that the promise induced action or forbearance.

205. Duty Of Good Faith And Fair Dealing

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.RESTATEMENT OF RESTITUTION

2. Officious Conferring Of A BenefitA person who officiously confers a benefit upon another is not entitled to restitution therefor.

UCC 2-103. Definitions and Index of Definitions. (1)(b)"Good faith" in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.2-201(19)

"Good faith" means honesty in fact in the conduct or transaction concerned. 2-204. Formation in General.(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. 2-205. Firm OffersAn offer by a merchant to buy or sell goods in a signed writing which by its terms give assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

2-206. Offer and Acceptance in Formation of Contract.(1) Unless otherwise unambiguously indicated by the language or circumstances

(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

(b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

2-207. Additional Terms in Acceptance or Confirmation.(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer;

(b) they materially alter it; or

(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

2-305. Open Price Term.(1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if

(a) nothing is said as to price; or

(b) the price is left to be agreed by the parties and they fail to agree; or

(c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.

(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.

(3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account. 2-601. Buyer's Rights on Improper Delivery.

Subject to the provisions of this Article on breach in installment contracts (Section 2-612) and unless otherwise agreed under the sections on contractual limitations of remedy (Sections 2-718 and 2-719), if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may

(a) reject the whole; or

(b) accept the whole; or

(c) accept any commercial unit or units and reject the rest.PAGE 6Ks I UDC-DCSL Prof. Samuel Jefferson. Fall 2007Text: Contracting Law by Kastley, Post & [Hom / Ota] [3rd / 4th edition]

outline by Nick Clark