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Outline for Contracts

Outline for Contracts

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Published by Grant Burchfield

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Published by: Grant Burchfield on Dec 02, 2010
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Topical Outline for Contracts IT
YPES
 
OF
C
ONTACTS
(From BarBri)
I.
E
XPRESS
C
ONTRACT
 
 – Promises are communicated by language, there is a bargained for exchange. (e.g., I will agree to do this for you if you agree to give me this…)
II.
I
MPLIED
C
ONTRACT
 
 – Parties’ conduct indicates that they assented to be bound. (e.g., personfills their gas tank at a fuel station. There is a contract for the sale and purchase of gasimplied in the person’s performance of filling their tank.)
III.
Q
UASI
-C
ONTRACT
(Not a contract at all)
 – One party is unjustly enriched at the expense of another party so that the enriched party must pay restitution to the other party equal to theunjust enrichment. (e.g., a person agrees to build a house for another party which then dieswhile only part of the house had been completed. P can recover the benefit conferred on Deven though they are unable to sue on the contract.)
(S
ECTION
1) C
ONSIDERATION
Chapter 1 – Basis for Enforcement of a Promise
I.
T
HE
M
EANING
 
OF
“E
NFORCE
” [Three Interests of Recovery for Breach of Promise]
United States Naval Institute v. Charter Communications,
U.S. App. Ct. 2
nd
Circ. (1991)(936 F.2d 692) p. 2
 
D and P had a licensing agreement for publishing a book in which D would be the soledistributor of the paperback edition of the book set for a specific release date; D shippedearly; P sought injunction to stop D but court refused; D’s early release was realized; P sued:P can recover damages due to breach of contract and loss of sales in its hardback edition dueto D’s early release.
 
Rule:
Damages for breach of contract are appropriate when used to compensate the injured party for the loss caused by the breach; such damages are generally measured by the plaintiff’s actual loss. The focus in determining recovery should be on P’s loss, not on D’sgain.
D is responsible for the loss of sales that P would likely have made during that month. Pcannot recover award of profits because they could not prove a case for copyrightinfringement.
The Economics of Remedies
 Sullivan v. O’Connor,
(Mass. 1973) (296 N.E.2d 183) p. 8
D promised to perform a nose job on P over the course of 2 operations; P was a professional entertainer and her appearance increased her value as such; P underwent 3surgeries during which her appearance was worsened and could not be improved throughfurther surgery; P can recover damages.
 
Rule:
Since P relied on D for a promised result, P should be awarded damages based on areliance interest. P suffered an unfixable detriment in reliance upon D’s promise.
 
Note (A.B.):
Calculation of P’s damages based on restitution interest:
▪ Reliance damages
– gives plaintiff what plaintiff had before the contract or the promisewas made.
 P can recover for her loss in value of appearance because of the surgeries.
▪ Restitution damages
– gives plaintiff back what plaintiff gave to defendant.
 Not enoughcompensation for what P lost.
Brett A. Hueffmeier Contracts I Outline, SLU, Teri Dobbins, Fall 2006 1
 
▪ Expectancy damages
– gives plaintiff the value of what plaintiff expected to receive fromthe contract.
Expectancy, Reliance, and Restitution Interest,
 pp. 14-15
 
(See Problem on p. 16 – Damage Illustration)SUBTOPICS:Specific Performance for Breach of Contract, p. 17Punitive Damages for Breach of Contract, pp. 17-18Arbitration, pp. 19-20Contract Remedies in Practice, pp. 21-22
II.
C
ONSIDERATION
 
AS
 
A
B
ASIS
 
FOR 
E
NFORCEMENT
, p. 22Restatement (Second) § 71
 p. 219(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 exchangefor 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. Itmay be given by the promisee or by some other person.
Restatement (Second) § 74
p. 221(1) Forbearance of the ability to assert a right, or surrender of a claim or defense, which proves to be invalid is not consideration unless(a) the claim or defense is doubtful due to the uncertainty of the facts or the law, or (b) the forbearing or surrendering party believes the claim or defense may be fairly deemedvalid(2) The execution of a written instrument surrendering a claim or defense by one who is under noduty to execute it is consideration if the execution thereof is bargained for even though he is notasserting the claim or defense and believes that no valid claim or defense exists.
(A)Fundamentals of Consideration, p. 22Family Contracts: A Typical Category, pp. 26-27
 Hamer v. Sidway,
 N.Y. App. Ct. (1891) (27 N.E. 256; 124 N.Y. 538) p.
27
► D promised to pay P, his nephew, if he refrained from smoking, drinking etc. until Pturned 21; P complied; D’s estate refused to pay; D breached and P could recover (there was a bargained for exchange)
Rule:
Any suspension or forbearance of a legal right at the request of another is sufficientconsideration to sustain a promise.
Consideration does not mean that one party to a contract has to profit so much as it mightmean that one party may abandon or limit a legal right in the present or limits his legalfreedom of action in the future as an inducement for the promise of the first. In thosesituations, the bargain agreed upon will be an enforceable contract – as opposed to anunenforceable promise. (
best statement of consideration
)
Since P gave up his legal right to do certain things on the belief that D would pay, D’s promise will be enforced as a binding contract.
Brett A. Hueffmeier Contracts I Outline, SLU, Teri Dobbins, Fall 2006 2
 
(See notes fm. 9/5)Consideration and Pretenses (A.B.): (See p. 33)
A court will not inquire into sufficiency of consideration as long as the promise is not a pretense.
Peppercorn theory
– no pretense to a promise will satisfy the consideration element or make anunenforceable promise enforceable.
Gratuitous promise
– such as a promise to make a gift, generally not enforceable if there is noconsideration.
Promise or Performance,(Note 4)
 p. 32
Gratuitous Promises: An Introduction, pp. 32-33
Fiege v. Boehm,
Maryland App. Ct. (1956) (210 Md. 352; 123 A.2d 316) p. 34► P agreed not to bring bastardy proceedings against D in exchange for the promise that Dwould pay a certain amount in support etc.; D made payments until got a blood testsuggesting the child was not his; D brought bastardy proceedings and sued for breach: P canrecover even though the child was not D’s.
Rule:
Forbearance to sue for a lawful claim or demand is sufficient consideration for a promise to pay for the forbearance if the party forbearing had an honest intention to prosecutelitigation which is not frivolous, vexatious, or unlawful, and which he believed to be wellfounded.
Contract had sufficient consideration because P did not exercise P’s right to prosecute for  bastardy in exchange for D’s promise to pay. P made the claim in good faith and there wasno proof of fraud or unfairness.
Note (A.B.):
It’s possible for P to have suits against other men as long as they are in goodfaith – P or any other man should just not enter into agreement until knew for certainty the paternity.
(See notes fm. 9/5)(B)The Requirement of Exchange: Action in the Past, p. 39 [Promise for performancepreviously done without reliance on the promise]Restatement (Second) § 86 (Promise for Benefit Received),
p. 227(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.
Feinberg v. Pfeiffer Co.,
Mo. App. Ct. (1959) (322 S.W.2d 163) p. 39 [for considerationargument] & 91 [reliance argument]► D had passed resolution promising to pay a set amount in pension per month upon Pretirement, setting no conditions requiring performance of P to receive the payments: Ct.ruled there was not consideration based on past performance but that there was reliance because she retired at the time she did in part because she would be able to receive the pension
 Mills v. Wyman,
(Mass. 1825) (3 Pick. 207) p. 44► D promised to pay P for medical care given to his son which was already given: not validconsideration because there was no bargained for exchange before the treatment was given
Rule:
 
Brett A. Hueffmeier Contracts I Outline, SLU, Teri Dobbins, Fall 2006 3

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