25

Contracts – Professor Neth- Week 1: 8/25- 8/29
CASE BRIEF: Bailey v. West
Chapter 1: The Importance of a Promise Page: 13-18

Section 2: What is a Promise?
NAME: Bailey v. West, (Supreme Court of Rhode Island, 1969)
Parties: Plaintiff= Bailey alleges West is indebted to him for the reasonable value
of his services regarding the feeding/care/maintenance of a race horse
named “Bascom’s Folly” from May 3, 1962 through July 3, 1966
Defendant= West
FACTS:
⇒ In late April, 1962, West and his horse trainer went to Belmont Park in New York
to buy race horses
⇒ On April 27, 1962, West purchased “Bascom’s Folly” from a Dr. Strauss
⇒ West arranged to have the horse shipped to Suffolk Downs in East Boston, MA
⇒ Upon the horse’s arrival, West’s trainer discovered that the horse was lame,
notified West, who ordered him to ship the horse by van to the seller (Dr. Strauss)
at Belmont Park
⇒ The seller (Dr. Strauss) refused to accept delivery at Belmont on May 3, 1962
⇒ The van driver, Kelly, called defendant’s trainer and asked for further instructions
⇒ Kelly brought “Bascom’s Folly” to the plaintiff’s farm (Bailey) where the horse
remained until July 3, 1966, when it was sold by Bailey to a third party
⇒ While “Bascom’s Folly” was at Bailey’s horse farm, Bailey sent bills for its fed
and board to West at regular intervals
Testimonial Facts:
⇒ According testimony from the defendant at trial, the first bill was received by him
two or three months after “Bascom’s Folly” was under plaintiff’s care and that he
immediately returned the bill to plaintiff with notation that he was not the owner
of the horse, nor was it sent to plaintiff’s farm at his request
⇒ Bailey testified that he sent bills monthly and that the first notice he received from
West disclaiming ownership was “***maybe after a month or two of so***” after
the horse was left on plaintiff’s farm
⇒ Trial judge found that defendant’s trainer had informed Kelly during their phone
conversation on May 3, 1962 that “***he would have to do whatever he wanted
to do with the horse, that he wouldn’t be on any farm at the defendant’s
expense***” Yet plaintiff was not aware of the phone conversation when Kelly
showed up with “Bascom’s Folly” on his farm
PROCEDURE:
• Case was tried before a justice of the superior court sitting without a jury (bench
trial)
• Resulted in a decision for the plaintiff for the cost of boarding the horse for the
first five months, plus expenses from trimming the horse’s hoofs
• Trial justice ruled there was a contract “implied in fact” between plaintiff and
defendant to board “Bascom’s Folly” which continued until P received
notification otherwise from D
• Case brought to the Supreme Court of Rhode Island on the plaintiff’s appeal and
defendant’s cross-appeal
Cross-appeal: An appeal by the appellee, usu. heard at the same time as the appellant’s
appeal
ISSUE:
1. Whether the trial judge erred in finding a contract “implied in fact” between the
parties”
HOLDING: Yes
REASONING:
Implied-in-fact contract: A contract that the parties presumably intended as their tacit
understanding, as inferred from their conduct and other circumstances
• The source of the obligation in a contract “implied in fact” (as in express
contracts) is in the intention of the parties
• Court holds that there was no mutual agreement and “intent to promise” between
the plaintiff and defendant that established a contract “implied in fact” for
defendant to pay plaintiff for the boarding of the horse
i. From the time Kelly, a carrier who is NOT an agent of West, (it would be
different if Kelly was an agent, acting on behalf of West) delivered horse
to him, plaintiff knew there was a dispute as to its ownership- *His actions
indicated he did not know with who, if anyone, he had a contract- he asked
Kelly about ownership and was told that “Dr. Strauss made a deal and
that’s all I know,” and sent bills to both defendant and Dr Strauss (the
original seller)
ii. Testimony in record that prior to the assertion of the claim in this law suit,
neither defendant nor trainer had had any business transactions with
plaintiff, had never used his farm to board horses. Since there was no prior
dealing, it would not be reasonable for West’s silence to be construed as
consent.
iii. Evidence that the horse, when found to be lame, was shipped by
defendant’s trainer to the seller (Dr. Strauss) at Belmont Park, NOT
plaintiff’s farm. Record shows that plaintiff acknowledged receipt of the
horse by signing a uniform livestock bill of lading, which indicated that
the horse in question had been sent by defendant’s trainer to Dr. Strauss,
not plaintiff’s farm (pg. 16)
*Defendant argues that even assuming the trial justice was affirming defendant’s liability
on a quasi-contractual theory, the justice’s decision is still unsupported by competent
evidence
Quasi-contract=implied-in-law recovery: Not actually a contract, it’s a remedy that
allows the plaintiff to recover a benefit conferred on the defendant, an obligation
imposed by law in order to bring about justice and equity
*Has no reference to intentions or expressions of the parties
* Neither promise nor privity is necessary

*The act or acts must be voluntary= the P will be allowed to recover in quasi-contract
only if her breach is not “willful.” If the plaintiff’s breach is willful, in certain
jurisdictions she cannot recover anything at all. A willful breach is one which is
intentional, rather than accidental or negligent.
Essential elements of a quasi-contract: benefit conferred upon defendant by plaintiff,
appreciation by defendant of such benefit, and acceptance and retention by defendant
of such benefit… (pg. 16)
Was the plaintiff acting as a “volunteer” at the time he accepted the horse? “if a
performance is rendered by one person without any request by another, it is very
unlikely that this person will be under a legal duty to pay compensation” 1 A Corbin,
Contracts Sec. 234.
Restatement of Restitution, Sec. 2 (1937) Principle: “A person who officiously confers a
benefit upon another is not entitled to restitution therefor”
DISPOSITION:
• Plaintiff’s appeal denied and dismissed,
• Defendant’s cross-appeal is sustained, and the cause is remanded to the superior
court for entry of judgment for the defendant
DEFINITIONS/ PERSONAL NOTES:
Contract: An agreement that the law will enforce in some way (must contain at least one
promise, i.e., a commitment to do something in the future)
as defined in 2nd Restatement of Contracts: “A contract is a promise or 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” (pg. 1)
Promise, “a manifestation of intention to act or refrain from acting in a specified way, so
made as to justify a promisee that a commitment has been made” (pg. 1)
-Contract law is essentially common law (judge-made, not statutory). Except, in every
state but Louisiana, the sales of goods are governed by a statute- Article 2 of the Uniform
Commercial Code (UCC). If the UCC is silent on a particular question, the common law
of the state will control
Promissory estoppel: The principle that a promise made without consideration may
nonetheless be enforced to prevent injustice if the promisor should have reasonably
expected the promisee to rely on the promise and if the promisee did actually rely on the
promise to his or her detriment
Consideration: Something (such as an act, a forbearance, or a return promise) bargained
for and received by a promisor from a promisee; that which motivates someone to do
something, esp. in a legal act. Consideration is necessary for an agreement to be
enforceable
CLASS NOTES, 8/26:

(While briefing, use names rather than P and D)
Bailey v. West:
• West’s trainer is an agent of West- Someone who acts on behalf of him. While
Kelly is not an agent of West
• Situation in which the horse is used as collateral:
• At a hospital, they don’t have a lean over your body- Mechanics have a lean over
a car- While an Bailey does not necessarily have a lean over horse
• If West has no underlying obligation to pay Bailey, he can get the horse whenever
he chooses (There’s no promise to enforce)
• If Bailey sells the horse, who gets the profits? West gets the profits (if there was
no abandonment of the horse) “If Bailey sells the horse for $2,000 and charges
$400 for care, who gets the money? West gets $2,000 and doesn’t owe Bailey fees
for maintaining Bascom’s Folly)
• Thief cannot pass good title (if a thief steals your painting on the wall, sells it to a
museum, you can get the painting back from the museum)
• Implied promise- usually implied through behavior and circumstance. Each party
has an assumption of what the relationship is
• Hypo: If your lawn is untended and a 16 year old voluntarily mows it and sends
you a bill, you’re not responsible for paying the bill. No implied obligation, no
detriment or destruction of value at stake, while in the boat situation, there’s a loss
of value at stake…
• Hypo: Boat in the harbor, storm is coming, your boat is worth $15,000, and
someone voluntarily ropes the boat in and saves it from being destroyed. Can the
boat owner be charged? Can we say that there’s an implied contract/obligation in
this circumstance? Society wants to encourage volunteers in this situation.
Governed by ancient maritime law, there would be an implied contract to save the
boat to encourage people in a certain way. Maritime law says the savior is
afforded a “reasonable amount” for his/her act
• When a judge decides a case, what’s the just result in this case? If we decide in
this case for the P, what is that going to do for the world?
• Depends if there’s a legal obligation to keep horse alive/ save the boat/ have your
lawn kept up
• Hypo: Boat’s out in the bay and owner is in Texas. The guy on the boat is about to
save the boat and says “your boat is about to sink, I can save it. Would you like
me to save it” you say yes, he says it’ll be “$9,500” to save it.
• Hypo: Skiing, you see someone who has broken their leg and they’re going to die
if they don’t get to the hospital in time. They ask for help, and you ask how much
they’re willing to pay to be rescued…
-This type of bargaining: most people won’t make a deal unless it’s to their
advantage
• Normal determination of unjust enrichment is to recover the lower price between
coast of benefit and cost of horse/car/boat, etc.

-Costs: of Bailey? Stall/Feed?
• If there’s cause of action, Bailey could have recovered the amount of money lost
from losing out on a customer (the horse stall was taken up by Bascom’s Folly
instead of a paying client’s horse)
• “Usual and customary fee” determined by what Bailey charges of the industry as a
whole?
CLASS NOTES, 8/27:
Grosso v. Miramax Films (2004) – Implied v. Explicit contract
Theories of recovery:
K (contract) with C (consideration)
Promissary estoppel
Implied Contract
Explicit Contract
Quasi-contract=Implied-in-law contract= Constructive contract: Not actually a contract,

treating the situation as if there was a contract
In Bailey v. West, if there’s no benefit (arguably no benefit to West, since he stated he
didn’t even want the horse) there’s no appreciation
If West does not prevent the benefit from occurring, he has appreciated the benefit
Restitution (over-arching term, includes quasi-contract)
Unjust enrichment-
Recent Case in California: U.S. v Amber resources- lease agreement of drilling within 5
years (with option for extension). Wanted to rescind the contract and get all their money
back on the theory of restitution. Did the oil company get it back? Yes, on the basis of
unjust enrichment. The party getting the money didn’t do what they were supposed to do.
While money was spent of exploration, they did not receive the money back because
there was no benefit conferred to the U.S.
CLASS NOTES, 8/28: Bolin farms, Simeone case
Review Bailey v. West case:
Two theories of recovery:

1.) Contract, either expressed of implied (In Bailey, we found neither). If we would have
found an expressed of implied contract, the remedy would have been whatever the
contract called for (K of reason/ Usual and Customary fee)
Theory will tell you what the remedy is…

K: Remedy:
-Expressed K of Reason/ Usual and Customary fee
-Implied
P.E., Promissary Estoppel
Restitution/ Unjust enrichment/ Implied-in-law contract/ Quasi-contract,

Remedy=Marginal costs, lesser of the benefit incurred or the detriment incurred (might
include opportunity costs
Can make claims of Justice or claims of policy (have to do with the impact of the claim
on behavior, and on the world)
Precedent/ Statute (applicable by reasoning or analogy)
Consideration and promise: 2003 Ohio case, Hollis (towing co.) v. Green – No
consideration for the promise, therefore there is no promise.
CASE BRIEF: Bolin Farms v. American Cotton Shippers Association
Chapter 1: The Importance of Promise Pp.: 18-21

Sec. 2: What is a Promise?
NAME: Bolin Farms v. American Cotton Shippers Association (U.S

District Court, 1974)
FACTS:
⇒ 11 cotton farmers (plaintiffs) entered “forward” sales contracts (contracts were
negotiated prior to planting) with American Cotton Shippers Association
(defendant purchasers), by which they agreed to sell and deliver the cotton at a
fixed price regardless of what the price might be at harvest time. Meanwhile,
price of cotton unexpectedly at least doubled the price agreed upon. Complaints
seek a declaration that the contracts are null and void (so that plaintiffs can sell for
a higher price than they bargained for). Sued before the breach, before delivery.
PROCEDURE: Summary judgment motions were filed by the farmers.
ISSUE: Whether the “forward” cotton sales contracts should be judged lawful and valid,
despite changed circumstances/unforeseeable events?
HOLDING: Yes.
REASONING:
The contracts are valid b/c they were entered into between a willing buyer and a willing
seller, both adult (experienced cotton farmers and experienced cotton buyers who are
capable of protecting their own interests) in an open and competitive market. Each
plaintiff cotton farmer was experienced, had been producers for several years, and were
familiar with forward sale contract procedure (know forward selling can be risky business)
DISPOSITION: Judgment entered in favor of the purchasers, the plaintiffs were

ordered to deliver the cotton as provided for in the contracts
*Vel non: A term used by the courts in reference to the existence or nonexistence of an
issue for determination; for example: "We come to the merits vel non of this appeal,"
means "we come to the merits, or not, of this appeal," and refers to the possibility that the
appeal lacks merit.
Unconscionability: principal judicial weapon against unfair contracts, the idea that a
contract may be unenforceable because it is shockingly unfair (no UCC definition)
Case Notes: Contract law is state law

Cover (a type of remedy)
CASE BRIEF: Simeone v. Simeone
NAME: Simeone v. Simeone (Supreme Court of PA, 1990)
FACTS:
Catherine (P) was an unemployed nurse and she was engaged to Frederick (D), a
neurosurgeon. During the months leading up to the wedding, the parties had several
discussions about D’s desire to have a pre-nuptial agreement. During this period, P does
not consult counsel. On the eve of their wedding, D and his attorney presented P with a
prenuptial agreement that limited D’s maximum separation or divorce payment to $25K.
P signed the agreement without apparent distress. The parties separate in 1982, and D
makes a total of $25,000 of alimony payments, then stops. P sues for more alimony,
arguing that the pre-nuptial payments should not be enforced b/c the limit on payments to
her in the agreement was unreasonable and she was not adequately informed of her
statutory rights to alimony before signing/ she had not understood the nature of alimony
pendente lite (alimony pending the resolution of the dispute) when she relinquished it in
the agreement. D claims that he has already paid payments to P sufficient under their
prenuptial agreement.
PROCEDURE: In 1985, Catherine filed a claim for alimony during litigation. Court of
Common Pleas of Philadelphia County upheld the validity of the prenuptial agreement.
Superior Court affirmed (1988). Court granted appeal because uncertainty was expressed
by the Superior Cort regarding the meaning of decision in Estate of Geyer (1987)
ISSUE: Whether the contract (prenuptial agreement) between P and D valid and
enforceable?
Whether the approach of Geyer should be discarded?
HOLDING: Yes, yes
REASONING:
⇒ According to the court, the law has advanced to recognize the equal status of men
and women in our society: no more paternalistic approach, which allowed the
court to consider the reasonableness of the bargain. If courts are permitted to
inquire into the reasonableness of the bargain, the functioning and reliability of
prenuptial agreements is severely undermined. Parties would not have entered
such agreements, and indeed might not have entered their marriages, if they did
not expect their agreements to be strictly enforced…”
⇒ The agreement will only be enforced if D made “full and fair” disclosure of his
financial position prior to the agreement (if he did, the fact that the final draft was
not presented to P until just before the wedding I irrelevant, given that P had
months to get independent legal advice which the transaction was being
discussed.
A prenuptial is just like any of contract: Accordingly, contracting parties are normally
bound by their agreements, without regard to whether the terms were read and fully
understood and irrespective of whether the agreements embodied reasonable or good
bargains:
Rule: Failure to read a contract does not warrant avoidance or nullification of its
provisions (Standard Venetian Blind Co. v. American Empire
Insurance Co., 1983)
Rule: “Once a person enters into a written agreement he builds around himself a stone
wall, from which he cannot escape by merely asserting he had not
understood what he was signing” (Bollinger v. Central PA Quarry
Stripping & Construction Co., 1967)
Rule: “One is legally bound to know the terms of the contract entered” (Montgomery v.
Levy, 1962)
DISPOSITION: Affirmed
Concurring:
Dissent:
CLASS NOTES, 9/02:
Simeone v. Simeone: Catherine (P), claims that the pre-nuptial was unreasonable, she was
under duress when she signed it, lack of independent legal counsel, change of situation
(inflation, law, non-monetary relationship, societal norms regarding women in the legal
system, children, D’s earnings) Prof. Neth states that none of these are justification for
voiding the contract, yet a K to marry/ Pre-nup is very different than the sales K in Bolin
Farms for cotton.
Bolin Farms: P claims that the K was unfair, and that there was asymmetry of knowledge
(at least one side knows something that the other side does not know)
K to Marry
Pre-nup/Anti-nup
Post-marriage K
Divorce/Separation K
Rights of Survival
CASE BRIEF: Kirksey v. Kirksey
Chapter 2: The Bases of Contract Liability Pp.: 31-33

Sec. 1: The Consideration Requirement
(B) When is an Act or Promise Bargained for and Given in Exchange?
NAME: Kirksey v. Kirksey (Supreme Court of Alabama, 1845)
FACTS:
The plaintiff (Sister Antillico), the wife of the defendant’s brother, had been a widow “for
some time” and had several children. Defendant wrote Sister Antillico a letter that
advised her to sell her land and her other possessions and offered her (and her children) a
place to live on his property. Within a month or two after receiving the letter, Sister
Antillico abandoned her residence and moved with her family to the defendant’s
residence. There, D “put her in comfortable houses, gave her land to cultivate for two
years, after which he put her in a “not comfortable” house in the woods, and then
required her to leave.
PROCEDURE: Trial court awarded her $200. D appeals.
ISSUE: Whether the promise between brother-in-law and Sister Antillico was a mere
gratuity, and therefore unenforceable on the grounds that there was
no consideration?
HOLDING: Yes
REASONING:
Ruled in favor of the brother-in-law because there was no consideration for his promise to
provide her with a land on which to live. Although moving onto his land was a necessary
condition of his promise, he was no bargaining with her for her to move. His promise was
nothing more than a promise to make a gift of a place to live with the national condition
associated with it that she would have to move to his house in order to have the place.
DISPOSITION: Judgment for the plaintiff awarding $200 of relief was reversed.
Dissent: States that “the loss and inconvenience, which the P experienced in breaking up,
and moving sixty miles to the defendant’s, a sufficient consideration to support the
promise, to furnish her with a house, and land to cultivate, until she would raise her
family”
In class case notes on Kirksey:

Consideration cannot be illegal (bargain for sex), while marriage can be consideration.
Can companionship be sufficient consideration?
Mechanism of “promise with a seal” enforced contracts that lacked consideration- no
longer common practice.
If the contract was enforceable, what would the remedy be? How would you measure the
harm done to her? His promise allotted her the reasonable time to “raise [her] family”-
but at what point is her family “raised”? This could be answered by social norms.
Must prove damages with a reasonable degree of certainty, also the option of specific
performance.
If she would have stayed where she was, she would have eventually owned the property
she was on. For breach of a standard contract, reliance damages are available. Easier to
calculate.
In some traditions, it is an obligation for the brother to care for the deceased brother’s
widow.
If you promise a gift, it’s a contract. If you give someone a gift, they own it.
CLASS NOTES, 9/03:

Under common law of contracts, seller is not obliged to disclose anything to the buyer.
Exception: Pre-nuptial agreements require full and fair disclosure of financial
positions of the parties, at the time the contract is entered into. Entering into marriage by
contract is treated differently- it’s a different creature.
Claim that a contract is unfair

Unconscionable
a.) unfair at the time of K(substantive)
b.) defect in formation (procedural)
In Simeone, the contract was not unfair at the time of entering K, and there was no defect
in formation.
Determination of child support is made independently of the prenuptial agreement.
K to Marry – Used to be enforceable (by means of monetary consequences) but have not
been enforced for some time.
Pre-nuptial K – Used to be unenforceable (Court thought it encouraged divorce), and are

not enforceable. Prenuptial agreement deals with two topics: 1.) Divorce and 2.) death
Post-marriage K- by and large not enforceable
Separation or divorce K – Enforceable, Review of the substance and approved if it met

certain standards that offered sufficient support to separated parties.
State controls marriage- Parties enter a marriage with help of an outside authority, exit a
marriage with approval of outside authority.
Marriage: Status, religious significance, and a contract.

CLASS NOTES, 9/04:
Issue of high divorce rates: public policy then tries to make it harder for parties to get
divorced. Example- In Louisiana, a regular marriage option and a covenant marriage,
which says that you can only divorce on three grounds- as long as spouses have lived
apart for at least 6 months, committed adultery, sentenced to life in prison.
Outside of marriage- contracts between two people can give you many rights similar to
marriage contract, but only goes so far.
Page 21- excuse of breach contract by reason of changed circumstances

-If by virtue of an act of God/nature a party if left unable to fulfill the contract’s
obligations, a party is excused in the breach of contract (as after Katrina, after the storm
many people could not fulfill their contracts). Other than that, changed circumstances do
not generally excuse breach of contract or allow parties to be relieved of contract.
CASE BRIEF: Hamer v. Sidway

NAME: Hamer v. Sidway (Court of Appeals of New York, 1891)
FACTS:
⇒ D is the executor of uncle, William Story Sr.. William Story Sr., uncle of William
story the 2nd
⇒ The Uncle promised to pay his nephew, William Story 2nd $5,000 if he refrained
from “drinking, using tobacco, swearing, and playing cards or billiards for
money” until P turned 21 years old. *Executor= a person that carries out the
directions of a will, represents the deceased person’s estate- typically responsible
for distributing property to beneficiaries, arranges for payments of debts of the
estate, etc.
⇒ The nephew performed his end of the bargain, and on his 21st birthday wrote to
his Uncle to inform him he was entitled to his $5,000
⇒ Instead of giving his nephew the money, Uncle promised the money to him, on
interest
⇒ D’s estate refused to pay, claiming that P was the only party to the bargain that
benefited.
PROCEDURE: P wins at trial court for breach of contract. Intermediate appellate court
reversed and found for D. P appealed.
ISSUE: Whether P’s actions constituted sufficient consideration even where it only
benefited P?
HOLDING: Yes. P’s actions constituted sufficient consideration even where it

only benefited P.
REASONING:
Rule: Any suspension or forbearance of a legal right at the request of another is sufficient
consideration to sustain a promise.
Rule: Consideration does not mean that one party to a contract has to profit so much as it
might mean that one party may abandon or limit a legal right in the present in return for
what is promised. In those situations, the bargain agreed upon will be an enforceable
contract- as opposed to an unenforceable promise.
Since P gave up his legal right to do certain things on the belief that D would pay him
$5,000, D’s promise will be enforced as a binding contract
DISPOSITION: Intermediate appellate decision reversed. Trial court’s original

decision in favor of P affirmed.
CLASS NOTES on Hamer v. Sidway, 9/08:

The uncle made first promise: 1) he would pay his nephew $5,000 if his nephew upheld
his end of the deal. 2) The uncle promised “this money on interest” in a letter, written
once the nephew upheld his end of the deal.
Consideration must be 1) must be bargained for 2) bargained for if it is made in exchange

for a promise. Restatement 71
Uncle made a unilateral promise to his nephew, upheld if the nephew acted on behalf of
his end of the bargain… If not, the uncle would not have to pay the $5,000.
*Unilateral (a promise followed by a behavior to fulfill the terms of the promise) v.
bilateral promises
gratuitous promise v. gift (if you give a gift, there’s no promise to enforce)
Consider a similar situation with the terms of abstaining from cocaine (illegal substance)
whereas the nephew is not giving up a legal right…
Why wouldn’t “we” want this promise to be enforceable?
-Maybe people would be encouraged to do illegal things and be rewarded from
abstaining? Questionable…
If you want something, and you got it- then there’s consideration (according to Prof.
Neth)- you get something that you wouldn’t have otherwise gotten. Clear that the benefit
does not have to be an economic benefit.
Gift
Promise –Contracts or promissory estoppel
Will –Neither a gift nor promise- it’s a direction. Does not require any consideration
Consider non-economic benefits: A bargain may be present even though the promisor
does not receive any economic benefit from the transaction.
-In this case, where an uncle promises his nephew $5,000 if the latter will refrain
from smoking, drinking, gambling, etc. until the nephew turned 21 years old. The court
held that the uncle’s promise was “bargained for,” and therefore supported by
consideration. While the uncle did not derive an economic benefit from his nephew’s
abstinence, he was clearly attempting to obtain something he regarded as desirable- being
his nephew’s health, morality, etc., and was therefore bargaining.
The “detriment” element: The nephew’s detriment is sufficient to constitute

consideration even though it involves no economic disadvantage to the person involved,
and even if, it aids him morally, physically, or spiritually. As long as the party has
circumscribed his freedom of action, he has incurred sufficient detriment. Nephew’s
forbearance was the kind of “detriment” sufficient to constitute consideration for Uncle’
promise. The uncle “benefited” by nephew’s forbearance (desired his nephew’s health,
morality, etc.) and the benefit was sufficient to satisfy the “detriment” requirement.
Sufficient consideration:
*Consideration means not so much that one party is profiting as that the other abandons
some legal right in the present or limits his legal freedom of action in the future as an
inducement for the promise of the first.
*Any damage, or suspension, or forbearance of a right is sufficient to sustain a promise
CASE BRIEF: Langer v. Superior Steel Corp.

NAME: Langer v. Superior Steel Corp. (Superior Court of Pennsylvania,

1932)
FACTS: Defendant company promised to pay Mr. Langer, an employee $100 per
month for the rest of his life after his retirement if he agreed not to work in any
competitive occupation. After 4 years, D company stopped paying Mr. Langer the
monthly payment. Mr. Langer sued for breach of contract.
PROCEDURE: Trial court held in favor of D in breach of contract case. P appeals the
trial court’s judgment
ISSUE: Whether there was consideration to form a contract between the parties in that
Mr. Langer refrained from seeking other employment with competitive company? By
doing so, has Mr. Langer sustained any detriment? Was Mr. Langer’s forbearance
sufficient to support a good consideration?
HOLDING: Yes, yes, yes.
REASONING:
DISPOSITION: Judgment is reversed, and the D is given permission to file and affidavit
of defense to the merits of Mr. Langer’s claims.
Notes:
Unilateral contract- there is no remedy against Mr. Langer, he is not obligated to abstain
from working at a competitor’s business.
If you receive no benefit, it doesn’t always matter if there’s a bargain- if you change
someone’s behavior in some way.
Equitable estoppel, rests upon a statement of a present fact v. Promissory estoppel, relies
on a promise to do something in the future
Kirksey: Family members, might suggest the promise is a gratuity.

Consideration requirements allow ppl to make casual promises/offers out of friendliness
without legal obligations…”mere gratuity”
CASE BRIEF: Jara v. Suprema Meats, Inc.

NAME: Jara v. Suprema Meats, Inc. (California Court of Appeals, 2004)
FACTS:
Jara, Jr. (D) had a phone conversation with his father, Jara, Sr. (P) discussing what
compensation he and Rodriguez (as majority shareholders of the corporation) should be
paid. Parties agreed that the compensation should be $800 per week and if more money
was to be “pulled out” they would all agree “how much money that’s going to be.” This
agreement was recorded in the annual financial statement of the corporation: “before
payment [of compensation] may be made, it must be approved by all current shareholder-
directors”
PROCEDURE: Trial court held in favor of D in breach of contract case. P appeals the
trial court’s judgment
ISSUE: Whether there was sufficient consideration to form a contract between the parties
in that Mr. Langer refrained from seeking other employment with competitive company?
By doing so, has Mr. Langer sustained any detriment? Was Mr. Langer’s forbearance
sufficient to support a good consideration?
HOLDING: Yes, yes, yes.
REASONING:
DISPOSITION:
CASE BRIEF: Thomas v. Thomas

Ch. 2: The Bases of Contract Liability Pp: 46
(C) Mixed Motives and Nominal Consideration
NAME: Thomas v. Thomas (Queen’s Bench, 1842)
FACTS:
o Oral promise was made (in the presence of two witnesses) by John Thomas the day
before he died that it was his will that his wife should have either the house in
which he lived and all that it contained, OR an additional sum of 100 pounds
(These provisions were not expressed in his written will).
o The 2 “exec- Cutors,” his brothers, satisfied those wishes by giving John’s widow
possession of the home on 2 conditions- express agreement stated, “provided
nevertheless, and it is hereby further agreed and declared, that the said Eleanor
Thomas, or her assigns, shall and will, at all times during which she shall have
possession of the said dwelling house, etc., pay the sum of 1 pound yearly toward
the ground rent and shall keep the aid dwelling house and premises in good and
tenable repair.”
o After one executor died, the remaining one refused to execute a conveyance
tendered to him – he turned the plaintiff out of possession.
PROCEDURE:
ISSUE:
HOLDING:
REASONING:
Bargained-for language “she can stay, provided that…” and a benefit to the promisor (in
exchange for her money and keeping the house in good upkeep”
The motive was NOT a benefit
DISPOSITION:
The court reviewed an oral promise made by a man on his death bed which ran contrary
to the terms of his will. The executors gave effect to those wishes by putting the spouse
of the deceased plaintiff in possession of the home.
It was held that there was not valid consideration to make the promise enforceable. They
stated that "A pious respect for the wishes of the testator does not in any way move from
the plaintiff. Motive is not the same thing as consideration. Consideration means
something which is of some value in the eye of the law, moving from the plaintiff.
Notes on mixed motives:

One motive behind the executor’s promise was a desire to honor the deathbed wishes of
their brother.
CLASS NOTES, 9/10:
Problem: the case of the lessee’s well

Lease (which is a contract) between Stone and Oil co. Oil gets a well, if it’s not good
enough for Oil, then Oil must renew the well.
Another K, between Stone and Oil to split the cost of renewing the well.
Oil promises to give back share.
Nominal consideration- not typically bargained for.
Mixed motives and agreed exchange problem:

His first promise was merely gratuitous- he made a statement at the dinner table that he
would give her the book worth $5,000 for Christmas. Consideration required a detriment
to the promisee (none here) and something bargained for by the promisee (nothing
bargained –for)
He expressed interest in her pennies (one valued at $500, one valued at $1,000). In
writing, “In consideration of one penny, receipt of which is hereby acknowledged, I
promise to give my niece Pauline my first edition of….” In this promise, promisee gave
something up of value (being the penny valued at either $500 or $1000) and the promisee
receives the value- this is in exchange for the Langdell book, valued at $5,000. There was
consideration, promise is enforceable. He sold it for $7,500 to Harvard.
Since he sold the book, she is not bound to the agreement. Bilateral contract…
*Someone can have a contract with more than one person to sell the same object/thing.
In this case, Pauline has the option to
Consideration is furnished by promise
Adequacy of values exchanged

In Hamer v. Sidway, what definition of consideration did the court use, the
“bargained for” concept or the “either or” concept? The court ruled that it was
“bargained for”
If “bargained for” was used, was there equivalency of exchange? Depends how
you look at it- not necessarily. The exchanged considerations came in different
forms (withholding legal right in exhange for obtaining something desirable, the
nephew’s health/morality.
Did the promisor gain a pecuniary advantage? No.
Did he derive any “benefit” from the transaction at all, or is enforcement
predicated solely upon “detriment” to the promisee? Enforcement is based on the
“detriment” suffered by the promisee. If the promisee acts by withholding his
legal right to smoke/drink etc., the promisor obtains something he regarded as
desirable- being his nephew’s health, morality, etc., and was therefore bargaining.
CASE BRIEF: Browning v. Johnson

(D) Limits of the Consideration Doctrine
(1) Adequacy of Values Exchanged
NAME: Browning v. Johnson (Supreme Court of Washington, 1967)
FACTS:
o Browning and Johnson entered into a contract of sale, where Browning was to sell
his practice and equipment to Johnson.
o Before the contract’s effective date, Browning changed his mind about selling and
sought to be released from the contractual obligations.
o Johnson was reluctant at first, but upon Browning’s promise to pay Johnson
$40,000 if Johnson would give up the contract of sale, the parties entered a
contract canceling the contract of sale.
o Browning later regretted this bargain too and some months later filed an action for
declaratory judgment and restitution
Appellant seller challenged the order from the trial court which entered judgment in favor
of respondent buyer and enforced a contract canceling the parties' sale contract, finding
that it was supported by "adequate" consideration. The seller contended that his promise
to pay the buyer in exchange for the buyer's promise to cancel the sale contract was
unsupported by consideration
PROCEDURE: Trial court concluded that the canceled sale contract lacked mutuality
and had been too indefinite in its terms for enforcement. Regardless, concluded that the
contract canceling the sale of contract was supported by “adequate consideration.”
Browning appealed from that decision.
The trial court held that the contract canceling the sale contract was supported by
"adequate" consideration. On appeal, the court affirmed.
ISSUE: Whether Dr. Browning is to be bound by his promise?
HOLDING: Yes
REASONING: The court found that the issue was whether there was "sufficient"
consideration to support the promise as opposed to whether there was "adequate"
consideration. The court held that the seller's promise was supported by sufficient
consideration and the case did not require the court to consider the relative values of the
things exchanged. The requirement of sufficient consideration for the unilateral contract
was met by the detriment incurred by the seller in exchange for the buyer's act of giving
up the contract of sale.
Courts are reluctant to inquire into the "adequacy" of consideration, that is, into the
comparative value of the promises and acts exchanged. The court must apply the rule
followed in the State of Washington that parties who are competent to contract will not be
relieved from a bad bargain they make unless the consideration is so inadequate as to be
constructively fraudulent
Adequacy" of consideration, into which courts seldom inquire, is to be distinguished

from the legal "sufficiency" of any particular consideration. The latter phrase is
concerned not with comparative value but with that which will support a promise.
Anything that fulfills the requirements of consideration will support a promise whatever
may be the comparative value of the consideration, and of the thing promised. The
relative values of a promise and the consideration for it, do not affect the sufficiency of
consideration
A unilateral contract is one in which a promise is given in exchange for an act or

forbearance
Sale of goods: covers transactions involving the purchase and sale of goods, including
breach, damages, and rules of law originating prior to the adoption of, or otherwise not
covered by, the Uniform Commercial Code
According to Prof. Neth: Really no issue here- Make initial promise, make 2nd promise
to change the deal by eliminating the deal. Yes there’s consideration…
What if they add to the contract: yes that’s fine… As long as the new modification is
supported by consideration. The modification (promise) there’s no reason why you can’t
bargain
Fraud: intentional misrepresentation that the other party relies on when making the
bargain.
Bargained-for language “she can stay, provided that…” and a benefit to the promisor (in
exchange for her money and keeping the house in good upkeep”
The motive was NOT a benefit
CASE BRIEF: Apfel v. Prudential-Bache Securities, Inc.

NAME: Apfel v. Prudential-Bache Securities, Inc. (Court of Appeals of

New York, 1993)
FACTS:
o D Prudential seeks to avoid an agreement to purchase plaintiff (banker and a
lawyer)idea for issuing and selling municipal bonds.
Appellant seller challenged the order from the trial court which entered judgment in favor
of respondent buyer and enforced a contract canceling the parties' sale contract, finding
that it was supported by "adequate" consideration. The seller contended that his promise
to pay the buyer in exchange for the buyer's promise to cancel the sale contract was
unsupported by consideration
PROCEDURE: Trial court concluded that the canceled sale contract lacked mutuality
and had been too indefinite in its terms for enforcement. Regardless, concluded that the
contract canceling the sale of contract was supported by “adequate consideration.”
Browning appealed from that decision.
The trial court held that the contract canceling the sale contract was supported by
"adequate" consideration. On appeal, the court affirmed.
ISSUE: Whether Dr. Browning is to be bound by his promise?
HOLDING: Yes
REASONING:
As long as there was value for Prudential, there was consideration- the
comparative value is irrelevant.
CASE BRIEF: Jones v. Star Credit Corp.

NAME: Jones v. Star Credit Corp. (Supreme Court of New York, 1969)
FACTS:
o Ps, who are on welfare, agreed to purchase a home freezer unit for $900 from D, a
door-to-door salesperson representing Your Shop At Home Service, Inc.
o Various credit-related charges (credit life insurance, credit property insurance,
sales tax, etc.) add another several hundred dollars to the purchase price
($1,234.80)
o The Ps paid over $600 toward the purchase price, while the evidence indicates that
the freezer had a max. retail value of roughly $300
o
PROCEDURE:
ISSUE: Whether the sale of a freezer unit having a retail value of $300 or $900
($1,439.69 including credit charges and $18 sales tax) is considered
unconscionable as a mater of law (within the meaning of Sec. 2-302 of the
Uniform Commercial Code)?
HOLDING: Yes, the contract is unconscionable.
REASONING:
Sec. 2-302 of UCC: authorizes court to find, as a matter of law, that a contract or clause
of contract was “unconscionable at the time it was made.”
The principle “I one of the prevention of oppression and unfair surprise.”
Principally due to the disparity between the $300 reasonable retail value and the $900
(before credit charges) price.
Another factor is the “very limited financial resources of the purchaser, known to the D at
the time of sale…”
“The meaningfulness of choice essential to entering a contract can be negated by a gross
inequality of bargaining power”
Public policy goals at head: While it’s important to recognize the importance of
preserving integrity of agreements, there is concern for the uneducated and often illiterate
individual who’s the victim of gross inequality of bargaining power, usually poorest
members of the community. Concern for the protection of consumers’ protection from
being taken advantage of when entering contracts.
DISPOSITION: Since the Ps already paid more than $600, they may keep the freezer
without further charge.
*Fraud is not present- not necessary under the statute.
Unconscionability: Where the value of the things exchanged by the parties is grossly
unequal, the court will not inquire into the “adequacy of the consideration,” they’ll hold
that the agreement is void because it is unconscionable. Unconscionability provides that
“if the court as a matter of law finds the contract or any clause of the contract to have
been unconscionable at the time it was made the court may refuse to enforce the
contract…”
Important to note- the voiding of a contract for unconscionability has nothing to do with
the consideration doctrine.
Contract will be found unconscionable when it is so shockingly unfair that the court
decides that it should not be enforced- idea dates back hundreds of years.
⇒ Used mostly by consumers (courts presume that where K is between
businesspeople, each is capable of protecting his own interests)
⇒ Decision as to whether a contract is unconscionable is made by “the
court,” meaning the judge, not the jury
Procedural unconscionability: refers to fact that one party was induced to enter the
contract without having any meaningful choice. Through oppressive clauses tucked away
in the boilerplate, high-pressure salespeople misleading illiterate consumers, so that no
bargaining is possible…indication of a lack of real assent.
How meaningful is the assent/agreement? To what extent is it meaningful that Jones has
agreed to a certain price? If Jones can’t read, then there’s no assent…
Substantive unconscionability: if it is unduly unfair and one-sided- usually involves an
excessive price, or an unfair modification of either the seller’s of buyer’s remedies
What constitutes excessive price? The courts have no agreed on any well-defined test
for determining whether a particular price is excessive enough to warrant
unconscionability. Most cases that have held a price to be unconscionably excessive
involved prices that were two to three times the approximate “market price” at which
similar goods were sold in the same areas.
$300 max. retail value

$900 Cash price
$1,234.80 Total payments
$619.88 paid
$819.81 One
One of the very few cases that, using the unconscionability clause in a case involving
personal property (non-real estate)
Your at home signs the consumer up, and then assigns the purchase to Star Credit, inc.
Walker Thomas case
Same issue played out again and again in subprime lending crisis- Houses are real
estate, not personal property- so the UCC does not apply. The Restatement DOES
apply to the contracts
Morales v. Sun Contractors

M couldn’t read English when he was given the contract. There was an translator to
explain the conditions, but he didn’t do a thorough job
Restatements 2nd, 208
Judge decided the contract was enforceable- He has a translator and agreed to the
conditions.
Dissent: Feuntes
CASE BRIEF: In re Greene

NAME: In re Greene (District Court, S.D. New York, 1930)
FACTS:
o The claimant, an unmarried woman filed proof of claim in the sum of $375,700
based on an alleged contract
o The claimant, an unmarried woman, and the debtor, a married man, had intimate
relations for several years- committed illegal act of living in adultery with each
other.
o During this time,
o The mistress claimed that the debtor had promised to marry her as soon as his wife
divorced him – illegal
o After their intimate relations ended- they came up with a sealed written agreement
o The debtor promised to 1.) pay her $ 1,000 a month during their joint lives, 2.) to
assign her a $100,000 life insurance policy on his life (the debtor was to pay
$100,000 to claimant in case the policy should lapse for nonpayment on
premiums) and 3.) to pay her rent for 4 years on an apartment she leased.
o Consideration for these payments on claimant’s behalf was $1 and “other good
and valuable considerations”
o Debtor made payments for roughly 2 years and stopped.
PROCEDURE:
o The referee in bankruptcy held that the mistress' claim was valid based on the
agreement and the trustee's objections were dismissed.
o The trustee petitioned for review of the referee’s order, which was granted.
o On review, the court held that the entire claim was void and that the damages
allowed for failure to pay the mistress $ 1,000 a month were excessive.
ISSUE: Did the agreement between mistress and debtor have consideration?
HOLDING: The court reversed the referee's order and issued an order declaring the
agreement between the mistress and the debtor invalid for lack of consideration
REASONING: The court found that the agreement was invalid for lack of consideration
because
Past illicit intercourse was not sufficient consideration. There was no consideration for
the debtor's promises beyond past cohabitation. * Past consideration is not consideration
recognized by the law…
⇒ The $1 paid by the mistress was nominal and could not support an executory
promise to pay hundreds of thousands of dollars.
⇒ A contract for future illicit cohabitation is unlawful. There is consideration present
in such a case, but the law strikes the agreement down as immoral
⇒ A promise to pay a woman on account of cohabitation which has ceased is void,
not for illegality, but for want of consideration. The consideration in such a case is
past. The mere fact that past cohabitation is the motive for the promise will not of
itself invalidate it, but the promise in such a case, to be valid, must be supported
by some consideration other than past intercourse.
*What impact will this case have on people in the future?
*Restatement 86, Promise for a benefit previously received – binding to the extent
necessary to prevent injustice. We don’t apply this law to this woman…
*IF you were the lawyer for the woman and negotiating the deal with Mr. Greene- could
you have shaped the deal in a way to make it enforceable? Or is it impossible to give your
client legally enforceable rights? If they both want it to be enforceable? He’ll ask this for
all the cases without consideration.
-Stress that she relied on his promises in not getting a job?- she gave up her reputation?
Referee: A person appointed by a court to perform certain offices in the progress of a case
pending in the court of his appointment, sometimes trying the issues or part of the issues
and reporting findings of fact, at other times trying the case and rendering a decision
therein.
Pre-existing duty rule: If a party does or promises to do what she is already legally
obligated to do, or if she forbears or promises to forbear from doing something which she
is not legally entitled to do, she has not incurred the kind of “detriment” necessary for her
performance or forbearance to constitute consideration
There are exceptions and limitations to this rule:
Forbearance from bringing suit: It was explained above that if the existence or amount
of a monetary claim is in reasonable and bona fide dispute, a settlement will not be
invalid for lack of consideration.
1. Valid claim surrendered: if a plaintiff promises to waive a valid claim, all
courts are in agreement that this promise is “detriment” to the P, and
constitutes consideration for the D’s promise to pay a settlement
2. Surrender of invalid claim: If, on the other hand, the claim surrendered by
the P (or potential p) is invalid (or of uncertain validity), courts are not in
agreement as to whether that surrender is “detriment” giving rise to
consideration for the D’s promise to pay a settlement.
a. Majority view: Most modern courts would probably hold that for the surrender
of an objectively invalid claim to constitute consideration for a settlement, the P

must, at the time of settlement, have had a bona fide subjective belief that the
claim was valid, and this belief must not have been unreasonable.
P, an unmarried woman, becomes pregnant. Before the child is born, she tells D
that he is the father, and D agrees to pay the expenses of having the child in return
for P’s promise not to bring a paternity suit. After the child is born, D reneges, P
brings a paternity suit, and the trial court finds that, on the basis of blood tests, D
cannot possibly be the father. In a separate suit on the alleged agreement, D
claims that since the claim given up by P (the claim of D’s paternity) is now
known to be invalid, the agreement relinquishing it is unenforceable under the
pre-existing duty rule.
Held: the agreement is enforceable. To be so, P was to establish both that she had,
at the time of the agreement, a bona fide belief that D was really the father, and
that a reasonable person in her position might have had such a belief. P’s
testimony, and the other facts, support both of these findings.
CASE BRIEF: Fiege v. Boehm

NAME: Fiege v. Boehm (Court of Appeals of Maryland, 1956)
FACTS:
o The defendant Louis Fiege promised to make payments to the unmarried Hilda
Boehm (plaintiff) for the costs associated with the birth of her child and also to
provide support payments for the child after its birth- the payment agreements
were made before the child was born
o The plaintiff Hilda Boehm, an unmarried woman, became pregnant.

o Before the child is born, she tells the defendant, Louis Fiege, who she’s had sexual
relations with, that he is the father.
o According to Boehm’s testimony, Louis Fiege acknowledged on numerous
occasions that he was the father of her child
o Also before its birth, Fiege agreed to pay all of Boehm’s medical expenses and to
compensate her for the loss of her salary caused by the child’s birth, and to pay
$10 per week for its support until it reached 21 years old”
o This set of promises was made upon the condition that she would refrain from
prosecuting him for bastardy (file a paternity suit).
o After the child’s birth and the promise to make payments, blood tests revealed that
Fiege was not the father.
o Fiege only paid Boehm $480- she demanded that he pay her the further sum of
$2,415.80- the balance due under the agreement.

o Fiege contends that even if he did enter into the contract as alleged, it was not
enforceable, b/c P’s forbearance was not based on a valid claim, therefore the
contract was without consideration
o The defendant claimed there was no consideration for his promise because the
right relinquished by the plaintiff to sue for paternity was groundless and thus
without value.
PROCEDURE:
⇒ Plaintiff filed a breach of contract action to recover the expenses incident to the
birth of and to provide support for defendant's illegitimate child. A jury found in
favor of plaintiff Boehm.
o D filed a motion for judgment notwithstanding the verdict or a new trial. D
appealed from the Superior Court of Baltimore City (Maryland), which overruled
defendant's motion for judgment notwithstanding the verdict or a new trial in
plaintiff's action for breach of contract to recover the expenses incident to the
birth of and to provide support for defendant's illegitimate child.
ISSUE: Whether forbearance to assert an invalid claim by one who has an honest and
reasonable belief in its validity is sufficient consideration for a contract?
HOLDING: Yes.
REASONING:
For an objectively invalid claim to constitute consideration for a settlement, the P must, at
the time of settlement, have had a bona fide subjective belief that the claim was valid,
and this belief must not have been unreasonable
Court rule that so long as the original claim of paternity was in good faith, and was not
“frivolous, vexatious, or unlawful,” the defendant’s promise would be enforced. The fact
that the plaintiff’s good faith belief turned out to be mistaken did not matter, so long as
the claim was not completely baseless.
P and D entered into an agreement whereupon defendant would pay the expenses related
to the birth of and to provide support for defendant's illegitimate child. Blood tests later
revealed that defendant could not have been the father. On appeal, the court affirmed the
denial of defendant's motion since there was no proof of fraud or unfairness. The promise
of plaintiff that she would not institute bastardy proceedings against defendant was
sufficient consideration for his promise to pay for the child's support, even though it was
not certain whether defendant was the father.
DISPOSITION: Judgment affirmed, with costs.
Roughly 85% of cases that make it to court get settled-

*Blackmail compared to this case, where you don’t really know/there’s a small that that
it’s not his child.
Levine v. Blumenthal -not supported by any new consideration
o During the depths of the economic depression, the operator of a women’s clothing
store negotiated a $25 per month reduction in the rent payable to his landlord, and
was allowed to pay the reduced rate until business improved.
o When the tenant could not manage to pay the reduced rent, he quit the lease and
the landlord sued to recover all of the rent due under the terms of the original
contact.
o Because the landlord’s promise to accept less rent was not supported by any new
consideration, the modification was unenforceable and the landlord was entitled
to recover based on the terms of the original lease. Had a pre-existing duty to
fulfill.
“Any consideration for the new undertaking, however insignificant, satisfies this rule…
For instance, an undertaking to pay part of the rent before maturity, or at a place other
than where the obligor was legally bound to pay, or to pay in property, regardless of its
value….has been held to constitute a sufficient consideration”
The most obvious way to handle this would be for X to agree to perform the contact one
day earlier than originally agreed. This is a new and different obligation.
Same problem can arise where an employer promises something extra, for work an
employee has already promised to perform.
When an effort to modify a contract has failed, either due to the absence of a writing or
because a lack of consideration, court ma find a term in the contact has been “waived.” A
waiver is a voluntary relinquishment of a known right.
**How does this relate to In re Greene, how could you make In re Greene enforceable?
The two rules, how do they affect Fiege v. Boehm, which one’s better?
CASE BRIEF: Levine v. Blumenthal
Ch. 2: The Bases of Contract Liability

(2) The Pre-existing Duty Rule
NAME: Levine v. Blumenthal (Supreme Court of New Jersey, 1936)
FACTS:
o During the depths of the economic depression…
o The defendants, Blumenthal, were operators of a women’s clothing store.

o The defendants entered into a two-year lease with a rent increase the 2nd year and
an option for renewal, with their landlord Levine, the plaintiff.- $2,100 for the first
year, $2,400 for the second year, payable in equal monthly installments.
o Before the expiration of the first year, the defendants notified Levine that business
was so bad that it was impossible for them to pay any increase in rent.
o The two parties negotiated a $25 per month reduction in the rent payable to
Levine, through an oral agreement
o Levine allowed them to pay the reduced rate until business improved.
o When Blumenthal could not manage to pay the reduced rent, he did not renew the
lease and left the premise leaving the last month’s rent unpaid.
o The landlord sued to recover all of the rent due under the terms of the original
contact – the unpaid balance of the rent, $25 per month for 11 months, and $200
for the last month.
PROCEDURE:
• In the district court, P brought a successful action to recover the unpaid balance of
the rent for the second year- judge found that the oral agreement was not
supported by “a lawful consideration”
• On appeal, the court held that plaintiff's agreement to accept lower payments
created no legal obligation where it was not supported by valid consideration.
ISSUE: Did the agreement between mistress and debtor have consideration?
REASONING:
⇒ A subsequent agreement, to impose the obligation of a contract, must rest upon a
new and independent consideration.
⇒ A promise to do what the promisor is already legally bound to do is an unreal
consideration
⇒ The test for consideration of a supplemental agreement is whether there is an
additional consideration adequate to support an ordinary contract, and consists of

something which the debtor was not legally bound to do or give.
DISPOSITION: Judgment affirmed, with costs
Levine sues for the old promise, Blumenthal says that they were operating under the
NEW contract. There was no consideration…
How to make exchange in In re Greene

*Fraudulent conveyance
Executed gift-
Trust- convey the property to the trustee
CASE BRIEF: Alaska Packers Ass’n v. Domenico
Ch. 2: The Bases of Contract Liability

NAME: Alaska Packers Ass’n v. Domenico (United States Court of
Appeals, 1902)
FACTS:
⇒ The appellees, Domenico, a group of workmen, signed contracts to work on
appellant Alaska Packers Association’s ship during the salmon fishing season as
the ship goes from San Francisco to Alaska and back
⇒ The contracts specified fixed rates of payment –some workers were to receive
$50 and some $60 for the season, while all were to be paid “two cents for each red
salmon” that they caught
⇒ After arriving in Alaska, the men stopped working and demanded $100 instead of
the lesser sums in the original contracts
⇒ They stated that they would not perform the duties expressed in the contract,
unless the superintendant agreed to increase their salary.
⇒ The evidence shows that the superintedant informed them that he had no authority
to modify the contract, and could not get them to continue working
⇒ Since the superintendant could not get replacement men, he eventually yielded to
the workers demands
⇒ In so doing, he substituted $100 for the previously agreed to rates, in a document
which the workers signed.
⇒ The Ps start working again…
⇒ After arriving back in San Francisco, Alaska Packers refuses to pay the extra
money, and some of the workers sue, alleging that the company had contracted to
pay them higher wages
PROCEDURE: Appellant company challenges judgment of the district court

ISSUE:
REASONING: Held for defendant Alaska Packers.

⇒ Consent to the workers demand, under the circumstances was without
consideration.
⇒ By agreeing to work on the way back to San Francisco, the plaintiffs were simply
agreeing to do what they were already bound to do under the contract.
⇒ Furthermore, the Ps conduct was coercive.
Exortion?
Workers used their situational bargaining power – Case treated like a case of duress. Neth
argues it’s a case involving labor and management and not so much duress
Hypo:
Under 1st K: $60 + $2 per fish
2nd K: Fishermen wanted $100 + $2, agreed that they would not be paid for more than X
fish total. Now that the fishermen have another duty, that benefits Alaska Packers, there is
consideration.
Austin got its bargaining power through circumstances that they were not responsible.
War, government K between Loral, they took advantage of the situation.
There are a lot of situations where one side has much more bargaining power than the
other- do we want to impose a limit?
Unconcionability? Skier had no ability to assent and the bargain breached was
unreasonable.
Simeone: That judge should examine the K on the basis of whether or not it’s fair. If it
wasn’t duress, it was certainly coming close to duress.
CASE BRIEF: Angel v. Murray

NAME: Angel v. Murray (Supreme Court of Rhode Island, 1974)
Parties: P= Alfred Angel and other citizens

D= John E. Murray, Director of Finance of the City of Newport,
the city of Newport, and James Maher
FACTS:
⇒ Maher has history of entering a series of five-year contracts with the city of
Newport to collect garbage, since 1946.
⇒ Maher enters into contract for a period of five years to collect garbage for the city
of Newport starting on July 1, 1964 and ending on June 30, 1969.
⇒ Contract provided that Maher would receive $137,000 per year in return for
collecting and removed all waste materials within the city
⇒ Testimony indicates that the contract has been predicated on the fact that since
1946 (initial contract), there had been an average increase of 20 to 25 new
dwelling units per year.
⇒ Maher twice requests and additional $10,000 per year from the city council, on
the grounds that his operating costs have substantially increased due to an
unanticipated/unexpected increase of 400 new dwelling units.
⇒ After public meeting of the city council where Maher explained the reasons for
his request, the city council agreed to pay him an additional $10,000 for the year
ending in June, 1968.
⇒ Maher made similar request again in Just of 1968 for the same reasons, and city
council again agreed to pay an additional $10,000 for the year ending in June,
1969.
⇒ After the additional payments are made, a citizen sues to have the additional
payment refunded to the city.
PROCEDURE:
- In trial court/Superior Court, plaintiffs, citizens, file a civil action alleging that
Maher had illegally been paid the sum of $20,000 by Murray, brought action so
that defendant Maher be ordered to repay the city $20,000.
- In trial court, case was heard by a justice without a jury, who entered a judgment
ordering Maher to repay the sum of $20,000 to the city of Newport.
Violation of the law because (1) additional payments had not been
recommended in writing to the city council by the city manager; and (2)
he found that Maher was not entitled to extra compensation b/c the
original contract already required him to college all refuse generated
within the city, therefore including the additional 400 units, thereby he had
a pre-existing duty.
- Maher appeals in Supreme Court
Civil action seeking recovery of $20,000 paid by City of Newport to a defendant pursuant
to modified contract to collect refuse, before Supreme Court on appeal from judgment
entered in Superior Court following nonjury trial before Carrellas, J.
Defendants appealed the civil judgment of the Superior Court finding that additional
payments under a contract were illegal and ordering defendants to repay the money.
ISSUE: Whether the additional payments were illegal because they were not supported
by consideration?
HOLDING: No
REASONING:
The modification is enforceable. The modification was fair and equitable, voluntarily
entered into, and motivated by events which were not anticipated at the time the original
contact was created.
DISPOSITION: The Supreme Court reversed, holding that the city charter did not
prohibit city from amending a contract, and the amendment was voluntary, made during
the existence of the contract, and in response to unanticipated, substantial increases in
refuse.
Pre-existing Duty Rule:

General Rule in 2 party cases: Most courts hold that where one person promises another
that he will do what he is already legally obligated to do for that other person, this
promise is not a “detriment” sufficient to satisfy the consideration requirement.
 A key reason for this rule is that courts want to deter “hold-up” behavior,
where one party attempts to take unfair advantage of the other by
threatening not to live up to his obligations.
*Restatement View: The 2nd Restatement is in accord with the majority of courts, in
holding that an agreement to do what one is already legally obligated to do is not
consideration.
 “Performance of a legal duty owed to a promisor which is neither doubtful
nor the subject of honest dispute is not consideration…” (Rest. 2d, Sec.
73)
o Unforeseen circumstances: However, Rest. 2d Sec. 89(a) makes a
modification binding if it is “fair and equitable in view of
circumstances not anticipated by the parties when the contract was
made” (See Angel v. Murray)
Doesn’t seem to be consideration- just merely doing what you already promised to do in
Angel
If Austin would have brought up concern of the high price of steel, the dramatic increase
in steel was not anticipated and is making it hard to make the components. Austin could
have asked for more, and had Loral agreed to, maybe it would have been enforceable. But
that would be on the assumption that the price asked for was reasonable.
Problem on
The city council did not have to approve the requested price- they could have said too
bad, deal with the unanticipated circumstances.
When you make a K for the long-term, you have to take into account the possibility of
change. Could have gone the other way, with LESS dwelling units (due to a storm, ppl
moving, etc.)
They knew (just as in Bolin farmers) that the number of dwelling units could have
fluctuated
The fact that there was a change of circumstances is foreseeable. Just not this dramatic of
a change-
City could sue Maher if he refused to pick up the trash from the 400 dwellings.
City could get the trash picked up for the price
Duress:
Where the aggrieved party, who is accurately informed and primed to resist a proposed
deal, is told by the defendant “unless you agree to this bargain, I will see that X happens.”
Because X is presumably less pleasant that contracting, the aggrieved party, in the typical
case, agrees to the bargain (which, by the way, may be perfectly fair) and later claims that
the “apparent” assent was coerced.
One’s “free will” was overcome by the threat and, therefore, the bargain is not
enforceable
Ways of committing duress: (1) Violence or threats of it; (2) Imprisonment or threats of it
(3) Wrongful taking or keeping of a party’s property, or threats to do so; (4) Threats to
breach a contract or to commit other wrongful acts
CASE BRIEF: Austin Instrument, Inc. v. Loral Corp.
Ch. 5: Avoidance of Contracts

Sec. 2 Defects in Bargaining Process
(C) Duress and Undue Influence
NAME: Austin Instrument, Inc. v. Loral Corp. (Court of Appeals of New

York, 1971)
FACTS:
o Defendant Loral Corp. had a government contract to produce $6 million worth of
radar sets for the Navy- contract called for staggered monthly deliveries, and
liquidated damages clause
o Loral solicited bids for some 40 precision gear parts needed to produce the radar
sets, consequently sub-contracted with plaintiff Austin Instrument to supply 23 of
the parts.
o After Austin Instrument began delivery of these parts, Loral entered a second
contract with the Navy for more sets.
o Like before, Loral went about soliciting bids
o Austin bid on all 40 components, but a representative from Loral informed
Austin’s president that his company would be awarded the subcontract only for the
items on which it was a low bidder.
o In response, Austin told Loral that unless it receives a sub-contract for all 40 of
the gear parts, and an increased price under the first contract, Austin will stop
making deliveries under the first contract.
o Austin stopped deliveries.
o Loral checked with all the sub-contractors on its approved list, but none could
make deliveries under the first contract in time to meet the requirements of their
contract with the Navy.
o Loral faced substantial penalties, “substantial liquidated damages”- if it did not
complete its underlying contract and faced losing future business
o In desperation, therefore, Loral agreed to Austin’s demands.
o After the last of the deliveries under both contracts, Loral stopped making any
more payments, and said that it would sue to get back the excess amounts paid
o Austin sued first (for the balance due), and Loral counter-claims for these excesses
o Austin instituted action against Loral to recover an amount in excess of $17,750,
the money due on the 2nd subcontract- the difference between the price they earlier
agreed on and the 2nd contract- the increase in price on the 2nd contract
o On the same day, Loral filed an action against Austin claiming damages of
$22,250- the sum of the price increases under the first subcontract- on the ground
of economic duress
PROCEDURE:
 Appellate Division of the Supreme Court found for plaintiff subcontractor in
appellant contractor's claim for economic duress.
ISSUE: Whether Loral can collect damages on the ground of economic duress?
HOLDING: Yes
REASONING:
Rule: A contract is voidable on the ground of duress when it is established that the part
making the claim was forced to agree to it by means of a wrongful threat precluding the
exercise of his free will.
 Duress = “any wrongful act of threat which overcomes the free will of a party”
 “If a party’s manifestation of assent is induced by an improper threat by the other
party that leaves the victim no reasonable alternative, the contract is voidable by
the victim” Rest. 2d, Sec. 175
 The existence of economic duress is demonstrated by proof that “immediate

possession of needful goods is threatened”/proof that one party to a contract has
threatened to breach the agreement by withholding goods unless the other party
agrees to some further demand
i.) Satisfied by the fact that Austin’s threat to stop deliveries unless the prices
were increased- deprived Loral of its free will.
PLUS
It must also appear that the threatened party could not obtain the goods from another
source of supply- Loral has burden of proof that it could not obtain the parts elsewhere
within a reasonable time- It met this burden, as the 10 manufacturers whom Loral
contacted on its list of “approved vendors” for precision gears were not able to commence
delivery soon enough.
*Unreasonable to hold that Loral should have gone to other vendors that it was either
unfamiliar or dissatisfied with to get the needed parts.
Loral’s claim should not be held insufficiently supported because it did not request and
extension from the Government
D agreed to the modification and the second contract only under “economic duress,” and
is therefore entitled to damages. To prove such duress, D needed to show that it could not
have gotten the goods elsewhere, but this showing was made here.
DISPOSITION: Reversed, remanded to trial court for a computation of its damages

CLASS NOTES, Austin:

K#1 for 23 parts, money in return
K#2 23 parts, money in return + 40 parts, in return for money
2nd K: Austin promised to produce all 40 gears required under the 2nd contract between the
Navy and Loral.
In the two sets of promises, there was no issue of consideration. They both had
consideration
Hypo: K#3 Loral looks for someone to supply the parts, only 3 people can make the gears
and one of them is currently on strike and the other 2 have other contracts so they can’t
provide for Loral.
Loral approaches the company on strike. We’ll pay you three times what we’d pay
otherwise, you can use that to settle labor dispute. Is Loral subject to duress in that case?
Hypo: Mountainside, last skier is coming down and you have a broken leg you’re going to
die. Last skier says sure I’ll take you down, that’ll be a million dollars. I don’t have a
million, but I’ll give you all I have – Economic duress. Not an enforceable contract- Don’t
have to pay a million, but do you have to pay anything?
Restitution is the lesser of the cost of the benefit- the cost to the promisee or the benefit to
the promisor. But that doesn’t seem adequate…
Our law has been reluctant to recognize duress as a reason for breach of K. Austin is a rare
case, but a pretty extreme cause
Suppose you’re a counselor for Loral: Loral insists on upholding Austin to their deliveries
under the first contract. Expectancy damages = liquidated damages, future Ks missed out
on with Navy. Difficult to calcuate the “right” amount of damages.
Go to Court and tell the judge Austin refuses to deliver, we’re under the gun with this
contract with the Navy- please issue an injunction that they must deliver the parts.
Immediate hearing required, must prove your case. The court might issue an injunction…
Then they would not be in the same type of economic duress.
Alaska packers says to seaman, you want to not work except for more money? To hell
with you, the ship comes back empty. Damages: what you would have earned if they
would have gone fishing. But from season to season, they catch different amount of fish.
Could have used a comparative approach, figured out the yields for that season.
-Same position as Austin, in terms of able to sue to recover for nonperformance
Remedy: Usually, the remedy for duress is restitutionary in nature. That is, the party
claiming it is allowed to recover an amount sufficient to undo the unjust enrichment that
the other party has obtained. Thus, in Austin Instrument, D might have been able to
recover the increased price in the first contract, and everything beyond a fair and
reasonable price on the 2nd contract (less, of course, the amount owed on that contract)
Problem: Case of the Dissatisfied Entertainer

 The Plaintiff Ajax and defendant Bond entered written contract whereby Ajax, a
professional entertainer was to perform at Bond’s resort hotel for a week for the
price of $20,000
 Ajax got popular, demanded $50,000 from Ajax to perform
 Initially Bond refused to renegotiate, but when Ajax said he would not appear
unless the price was raised, Bond gave in to a price increase.
 Bond wrote up new K, with the sole modification that compensation would be
35,000 instead of $20,000 to perform the same duty.
 Ajax performed, Bond refused to pay for than $20,000
 Ajax sued for the full amount of $35,000
Mutual consent?
The 2nd Restatement is in accord with the majority of courts, in holding that an agreement
to do what one is already legally obligated to do is not consideration.
 “Performance of a legal duty owed to a promisor which is neither
doubtful nor the subject of honest dispute is not consideration, but a
similar performance is consideration if it differs from what was required
by the duty in a way which reflects more than a pretense of bargain…”
(Rest. 2d, Sec. 73)
-Ajax’s duty of performance did not differ from the 1st K
Unforeseen circumstances: However, Rest. 2d Sec. 89(a) makes a modification binding if
it is “fair and equitable in view of circumstances not anticipated by the parties when the
contract was made” (See Angel v. Murray)
You did not bind yourself to do anything you weren’t already legally obligated to do, so
the return promise to pay $35,000 can’t be binding…
No extra duty was assumed to constitute the required “detriment”
If Ajax didn’t show up, there’s no way to find out how much he would have made. Who
knows how many tickets they would have sold? How much beer/food did you not sell?
Might lose your reputation within the community and lose business?
Yet the legal remedy is inadequate because if you can’t prove what you would have
made, you cannot recover the money.
If Ajax appears and is the big star, the venue then becomes important and you can get
other stars.
If you mutually agree to release each other of obligations, neither are contractually bound
(there was consideration, each step has consideration)
What if you were bond and tore up the K…

Ovation?
The other way around: OJ Simpson, had a number of different contracts where he did
advertising with a number of companies- after his wife died, the companies no longer
wanted him as part of their advertising campaign. There is normally a “bad behavior”
clause that allows the parties to negotiate a new deal.
If there is not “bad behavior” clause, if the deal is “equitable and fair” and circumstances
are unanticipated, they can usually negotiate a deal.
Suppose instead of having renegotiation take place, at noon on the day of the concert
after all the tickets were sold and advertisements were paid for- the artist says that he’ll
walk out and not perform unless they contract for a higher, but equitable and fair, price.
Case of economic duress, the performer has overwhelming bargaining power, but if the
demand and renegotiation is fair and equitable, shouldn’t it be upheld? Doesn’t it deprive
Bond of his free will?
2209 of Restatements (Second), arg. 2 applies to Austin

Comment 2: Modification agreement must meet test of good faith of both parties.
(1) Mutuality of Obligation

-Within our legal system, a contractual obligation is not easily imposed on an
unwilling party. Ex.- One may refuse to negotiate, or explicitly state that one will
not agree to any bargain unless the other party agrees to a particular term, OR
When one expressly states that she will have no duty of performance unless a
specified event first occurs, an enforceable K subject to an express condition has
been created.
Complication: when the final agreement of parties or some rule of law permits
one of them to withdraw sometime after performance begins, for reasons totally
or partially within his/her control
*Requirement that each side furnish consideration: For K to be binding, each of the
contracting parties must undergo a “detriment” which was bargained for by the other
-Essence of mutuality-of-consideration defense is the D saying “Because you
never bound yourself to do anything, I shouldn’t be bound, either”
*Problem of mutuality only arises in bilateral contracts, i.e., contracts where each party
makes a promise to the other
If Modification Excuse
No change No No
Anticipated change No No (Bolin Farms)

*Restatement 89 wouldn’t apply, requires an “unanticipated” change
Unanticipated, but not extreme Yes No
Unanticipated, extreme Yes, if both agree Yes
*You can modify contract for sale of goods, needs no consideration to be binding. 2209
Restatement not a statute, rather an attempt to restate the law.
If the trash collector in Angel v. Murray said I want more money for picking up the
unanticipated rise in dwellings/trash, and the city council said too bad, then he’d have to
pick up the trash for the same price.
CASE BRIEF: Rehm-Zeiher Co. v. F.G. Walker Co.
Ch. 2: The Bases of Contract Liability Pp. 93-95


(3) Mutuality of Obligation (Restatement says there is no such
thing as mutuality of obligation, what you’re really talking about is consideration)
NAME: Rehm-Zeiher Co. v. F.G. Walker Co. (Court of Appeals of

Kentucky, 1913)
FACTS:
 The plaintiff Rehm-Zeiher Co., a whiskey retailer and defendant F.G. Walker Co.,
a whiskey distiller, entered into a multi-year contract for the purchase and sale of
whiskey at pre-established prices and designated quantities.
 The contract provided that the Rehm-Zeiher could purchase any number of cases
per year up to a prescribed limit.
 Up to 2,000 cases of old Walker delivered during the years 1909, up to 3,000
cases to be delivered during the year 1910, up to 4,000 cases to be delivered
during the year 1911, and up to 5,000 cases to be delivered during the year 1912
 Arrangement stipulated that if Walker’s whiskey was lost in a fire, then they are
excused from selling
 Also, if for any “foreseeable reason,” Rehm-Zeir found that they could not use the
full amount of whiskey set forth in the contract, Walker agreed to release them
from the contract
 During the first two years, Rehm-Zeir only asked for a fraction of the
contractually designated amounts.
 In the third year (1911) Rehm-Zeir demanded the full year’s allotment of whiskey,
which Walker refused to deliver because of increased price.
 The distiller deliver about one-fourth of the demand.
 Rehm-Zeiher argued that the contract was an enforceable mutual agreement.
PROCEDURE:
 Rehm-Zeir filed a breach of contract against Walker to recover damages after the
distiller failed to sell 2,596 of the 4,000 cases to be delivered in 1911 under the
contract.
 Trial court entered a directed verdict in favor of Walker, declaring the contract
was lacking in mutuality of obligation.
 The P Rehm-Zeiher appeals.
ISSUE:
 Whether K was lacking in mutuality, and therefore could not be made the subject
of an action for its breach by either party- No consideration
 Does a contract that allows one party to act with unbridled discretion lack
mutuality of obligation?
HOLDING: Yes, K was lacking in mutuality and therefore could not be made subject for
its breach
REASONING: The court affirmed the directed verdict that was entered in favor of the
distiller. The court held that the wholesaler's action was not cognizable because the
contract lacked mutuality of obligation.
 The court stated that contracts that were valid must be mutual and binding upon
both parties.
 The court found that the mutuality was lacking because the contract was not
binding for Rehm-Zeir, and that it was not enforceable by Walker
Lacking in mutuality of obligation: “unforeseen reason” that would excuse Rehm-Zeiher

from only taking so much whisky as it desired to take was left to their own discretion: the
K places no limit on “unforeseen reason,”
The Walker Co. was not obligated to furnish any whiskey in 1909, 1910, and 1911, nor
was the Rehm-Zeiher Co. obliged to take any, and the fact that the Walker Co. voluntarily
chose to furnish some did not deny to it the privilege of refusing at its election to furnish
the remainder of the whisky.
Ruled that Rehm-Zeiher Co. is seeking to enforce a K that was never binding on them.
DISPOSITION: Judgment of the lower court was correct, affirmed.
A requirements contract, wherein A agrees to furnish all of B’s needs in a certain item, is
not lacking in mutuality, as B may require A to furnish all of the items B needs, and A
may require B to take from A al of the items B needs.
However, if K allows B to take only so much as B desires, there is no such mutuality of

obligation. P qualified its obligation to take with the completely unqualified “unforeseen
reason” This qualification left the amount P would take entirely up to its own discretion.
***If D had brought suit in any year to compel P to take the full amount specified in K,
it’s clear that P could have avoided liability. D was not obligated to furnish any whiskey,
nor was P obligated to take any.
NOTES:
The distiller couldn’t provide probably because the market price of whiskey went up.
Rehm-Zeihr could buy from other whiskey companies- they bought from multiple
companies and that was legit.
CASE BRIEF: McMichael v. Price


NAME: McMichael v. Price (Supreme Court of Oklahoma, 1936)
FACTS:
 Plaintiff Price was just starting a sand selling business, with a lot of experience
selling sand.
 Price entered a contract with McMichael, the defendant, in which he agreed to
“purchase and accept” all the sand of a specified quality from McMichael that he
can sell- The sand had to be at least equal in quality and comparable with sand
grades sold by other companies in the town
 Contract provided that Price would purchased the sand for a fixed price- being
60% of the prevailing market price for sand.
 The sand was to be shipped out on a monthly basis, lasting 10 years.
 McMichael then refused to provide the sand, saying that the contract was a
revocable offer and is not binding because it lacks mutuality/consideration.
 McMichael alleged that Price breached contract by refusing to pay for sand
shipped each month
 Price sued for breach of contract to recover damages-
PROCEDURE:
 Price filed action against defendant to recover damages for breach of a contract.
 Case was tried to a jury and a verdict was returned in favor of Price for $7,512.51
 Trial court ordered a remittitur of $2,500
 Trial court rendered judgment on verdict of $5,012.51
 McMichael appeals
A remittitur is a ruling by a judge (usually upon motion to reduce or throw out a jury
verdict) lowering the amount of damages granted by a jury in a civil case. Usually, this is
because the amount awarded exceeded the amount demanded; however, the term is
sometimes used for a reduction in awarded damages even when the amount awarded did
not exceed the amount demanded, but is otherwise considered excessive.
ISSUE:
 Where P is just entering a business and has no requirements as of yet but D agrees
to sell to P all of Ps requirements, is there mutuality of obligation?
HOLDING: Yes. Judgment affirmed.
REASONING:
(a) Price had no business and might have escaped liability to buy from McMichael by not
engaging in the sand business. But the contract was drafted on the assumption that P
was in business, would have requirements, and would buy these requirements from D
(b) This is sufficient consideration to support D’s promise; there is mutuality and a valid
contract
DISPOSITION: The court affirmed, finding the contract was mutually binding upon the
parties
Also held that the finding by the jury in favor of plaintiff regarding defendant's claim that
plaintiff did not correctly pay for the sand was supported by competent evidence.
Like Hamer, you can the choice to sell sand, you’ve given up your right to buy sand from
others if you
Price had no right to buy from other companies
Neth says that Rehm-Zeiher had sufficient consideration – if anything, no mutual

obligation- but mutual obligation is not recognized by the 2d. Restatements
CASE BRIEF: Wood v. Lucy, Lady Duff-Gordon


Exclusive contract: reasonable efforts implied
NAME: Wood v. Lucy (Court of Appeals of New York, 1917)
FACTS:
⇒ The defendant, Lucy, is in the fashion industry- the clothing she designs is
popular, so that clothing takes on a greater value when issued in her name- her
name was a valuable commodity at the time.
⇒ Wood (P) was employed by Lucy, and given an “exclusive right” by contract to
place Lucy’s endorsement on the deigns of other companies/people that sell
clothing- This right was subject to her approval.
⇒ He was also given the exclusive right and to place Lucy’s own designs on sale and
to license others to sell them.
⇒ Contract provided that Lucy was to receive one-half of “all profits and revenues”
from any contracts made by Wood
⇒ K was to last at least one year, thereafter from year to year unless terminated by
notice of 90 days.
⇒ The contract indicated that Lucy had an organization capable of performing the
contract, but it did not expressly indicate that Lucy would perform.
⇒ Lucy put her endorsement on the clothes of a competitor without Wood’s
knowledge, and without giving him a share of the profits.
⇒ In light of this, Wood sued Lucy for breach of the contract
⇒ Lucy syas that the contract lacks the elements of a contract, and that Wood
does not bind himself to anything.
PROCEDURE:
 The intermediate appellate court reversed the trial court’s denial of Lucy’s
motion for judgment on the pleadings.
 From a dismissal of the complaint, Wood appeals
ISSUE:
Where P did not specifically promise to use reasonable efforts to promote D’s goods, and
all compensation to D under the contract is to come from such efforts, is there a valid
promise by P?
HOLDING: Yes. Judgment reversed.
REASONING:
a.) A promise that Wood would use reasonable efforts to promote D’s goods is fairly
implied here. The circumstances of the contract make such an implication reasonable: it
was an exclusive dealing contract Lucy awarded to Wood; any return to Lucy was to come
from Wood’s profits. Meaning, if Lucy was to get anything at all, Wood had to perform.
DISPOSITION: Reversed.
CASE BRIEF: Omni Group, Inc. v. Seattle-First National Bank

“Satisfaction” as a condition precedent
NAME: Omni Group, Inc. v. Seattle-First National Bank
FACTS:
Omni Group, Inc (P), a real estate development corporation, contracted to purchase
property from the Clarks (D) through the Royal Realty Co. Royal was directed by Clarks
to obtain further consideration in the nature of Omni’s agreement to make certain
improvements on adjacent land not being offered for sale. Royal did not communicate
additional terms to Omni.
The earnest money agreement specified that the sale was subject to P’ receiving a
feasibility report. If the report was satisfactory to P, P had to notify the Clarks of P’s
acceptance. Otherwise, the transaction was null and void. After some negotiation about
terms and price, P agreed to certain additional terms proposed by the Clarks.
Later, however, the Clarks refused to proceed with the sale.
PROCEDURE:
 Omni Group sued to enforce the earnest money agreement
 The trial court held that Omni Group’s promise was illusory and entered judgment
for the Clarks.
 Omni Group appeals
ISSUE: Does a condition precedent to a promisor’s duty that the promisor be “satisfied”
with some aspect of the deal render the promise illusory?
HOLDING: No. Judgment reversed.
REASONING:
(1) An illusory promise cannot constitute consideration for a contract, but a promise given
in exchange for a promise is not illusory merely because it is dependent on a condition
precedent. The language in the condition precedent here required Omni Group to obtain
a feasibility report, and then to be satisfied by it before acceptance was required. This
condition is governed by a duty of good faith; it is not illusory
(2) The satisfaction requirement may be objective or subjective. In either case, satisfaction
is a question of fact, so the promise is not illusory. There may be numerous factors to
assess in evaluating such a report for satisfaction, but the promisor’s duty to exercise
judgment in good faith is an adequate consideration to support the contract. Omni does
not have unfettered discretion to avoid the contract; it can only cancel by failing to give
notice if the report is not satisfactory.

25

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

25

Uploaded by

Copyright:

Available Formats

Contracts – Professor Neth- Week 1: 8/25- 8/29

CASE BRIEF: Bailey v. West

Chapter 1: The Importance of a Promise Page: 13-18

NAME: Bailey v. West, (Supreme Court of Rhode Island, 1969)

* Neither promise nor privity is necessary

CLASS NOTES, 8/26:

coast of benefit and cost of horse/car/boat, etc.

Grosso v. Miramax Films (2004) – Implied v. Explicit contract

Quasi-contract=Implied-in-law contract= Constructive contract: Not actually a contract,

CLASS NOTES, 8/28: Bolin farms, Simeone case

Review Bailey v. West case:

Two theories of recovery:

Theory will tell you what the remedy is…

P.E., Promissary Estoppel

Restitution/ Unjust enrichment/ Implied-in-law contract/ Quasi-contract,

Precedent/ Statute (applicable by reasoning or analogy)

CASE BRIEF: Bolin Farms v. American Cotton Shippers Association

Chapter 1: The Importance of Promise Pp.: 18-21

NAME: Bolin Farms v. American Cotton Shippers Association (U.S

PROCEDURE: Summary judgment motions were filed by the farmers.

DISPOSITION: Judgment entered in favor of the purchasers, the plaintiffs were

Case Notes: Contract law is state law

CASE BRIEF: Simeone v. Simeone

NAME: Simeone v. Simeone (Supreme Court of PA, 1990)

HOLDING: Yes, yes

CLASS NOTES, 9/02:

CASE BRIEF: Kirksey v. Kirksey

Chapter 2: The Bases of Contract Liability Pp.: 31-33

NAME: Kirksey v. Kirksey (Supreme Court of Alabama, 1845)

PROCEDURE: Trial court awarded her $200. D appeals.

In class case notes on Kirksey:

longer common practice.

CLASS NOTES, 9/03:

Claim that a contract is unfair

Determination of child support is made independently of the prenuptial agreement.

Pre-nuptial K – Used to be unenforceable (Court thought it encouraged divorce), and are

Post-marriage K- by and large not enforceable

Separation or divorce K – Enforceable, Review of the substance and approved if it met

Marriage: Status, religious significance, and a contract.

CLASS NOTES, 9/04:

Page 21- excuse of breach contract by reason of changed circumstances

CASE BRIEF: Hamer v. Sidway

Chapter 2: The Bases of Contract Liability Pp.: 31-33

NAME: Hamer v. Sidway (Court of Appeals of New York, 1891)

HOLDING: Yes. P’s actions constituted sufficient consideration even where it

$5,000, D’s promise will be enforced as a binding contract

DISPOSITION: Intermediate appellate decision reversed. Trial court’s original

CLASS NOTES on Hamer v. Sidway, 9/08:

Consideration must be 1) must be bargained for 2) bargained for if it is made in exchange

The “detriment” element: The nephew’s detriment is sufficient to constitute

CASE BRIEF: Langer v. Superior Steel Corp.

Chapter 2: The Bases of Contract Liability Pp.: 31-33

NAME: Langer v. Superior Steel Corp. (Superior Court of Pennsylvania,

HOLDING: Yes, yes, yes.

someone’s behavior in some way.

Kirksey: Family members, might suggest the promise is a gratuity.

CASE BRIEF: Jara v. Suprema Meats, Inc.

Chapter 2: The Bases of Contract Liability Pp.: 31-33

NAME: Jara v. Suprema Meats, Inc. (California Court of Appeals, 2004)

HOLDING: Yes, yes, yes.

CASE BRIEF: Thomas v. Thomas

NAME: Thomas v. Thomas (Queen’s Bench, 1842)

Notes on mixed motives: