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Theories of Obligation

Consideration – the predominant theory a. Informs us that the parties entered into an agreement b. Court is able to determine what was in the contract and whether the person who made the promise intended for the promise to be enforced 2. A bargained for exchange 3. The exchange must be sufficient but need not be adequate a. Sufficient – promisor and promisee must get and give a something i. Both parties must act 1. Gratuitous promise does not equal consideration ii. See also Mutuality of Obligation b. What is a something i. A return promise (bilateral contract) ii. Performance (unilateral contract) c. Need not be adequate i. Peppercorn theory 4. Bargained for requires reciprocal inducement a. The promise need not inquire as to the promisor’s motivation 5. The bargain is one where each party incurs a legal detriment a. Legal benefit to promisor = legal detriment to promisee i. We might not be able to tell what the benefit was but the court doesn’t care – we assume the benefit is that the promisor got whatever he wanted b. Legal detriment i. Doing or promising to do (or forbearing) something one was not legally obligated to do c. Preexisting duty rule i. One who promises to do something that he was already legally obligated to do = no legal detriment 6. There must be mutual obligation a. Both parties must be bound or neither party is bound b. Can be saved on good faith i. What appears to be non-mutual can be upheld if one can infer that the parties intended an implied promise c. Satisfaction clause – where contracts make duty of performance of one of the parties conditional upon his satisfaction, the contract may still be given effect i. Objective test – if satisfaction of commercial value or quality is required then dissatisfaction cannot be claimed arbitrarily or unreasonably – reasonable person standard ii. Good faith test – if satisfaction of fancy, taste or judgment is required then dissatisfaction must be restrained by good faith d. Mutuality does not require equivalence, only that each party has an obligation under the contract 7. Bargained for exchange vs. condition for a gift a. Fact sensitive inquiry i. Condition: move here, you can stay in my empty house ii. Consideration: move here because I need a house and pet sitter while I go away, you can stay here without paying rent b. Will the happening of the condition benefit the promisor? c. Where the promisee has incurred some detriment on the faith of the promise the court is less likely to view it as a condition/gratuitous promise 8. Remedies available

Cover is a manifestation of mitigation of damages 2. Value of performance is the value to the non-breaching party 2. Damages for non-acceptance of buyer is difference between the market price at the time and place for tender and the unpaid contract plus incidental damages – if this is inadequate to put seller in as good a position as performance. UCC and cover costs a. Recovery for mental distress – where the contract breached is a personal agreement involving matters of mental concern damages for emotional suffering are recoverable (Stewart rule) 3. Calculation for damages ceases at the point of the breach 4. expenses. Other issues for awarding expectancy damages for failed performance 1. then the measure of damages is profit which the seller would have made from full performance plus consequential damages allowance for costs incurred and credit for resale d. Damages for incomplete performance where cost of performance greatly exceeds diminution in value resulting from the breach 1. Incidental damages – include any commercially reasonable charges. commissions in connection with stopping delivery and return or resale of goods iii. Damages for incomplete performance where the non-breaching party is the buyer and does not cover = difference between the market price at the time the buyer learned of the breach and the .a. Rejection of cost performance rule – where the economic benefit which would result from full performance of the work is grossly disproportionate to the cost of performance then the damages recoverable are limited to diminution in value resulting to the premises because of non-performance (P gets greater benefit from breach than could be gained from full performance) ii. Damages for non-delivery by seller = difference between the market price when the buyer learned of the breach and the contract price with any incidental or consequential damages b. Damages for incomplete performance where non-breaching party subsequently covers with a new contract 1. Cost performance rule – where the performance is incomplete. the loss in value will ordinarily be measured by the cost to complete 2. Rule – the non-breaching party will be able to recover the difference between the original contract and the cover contract from the breaching party to the degree that the replacement contract covers the same work as the original contract (P can only recover what it has cost him to complete the same work as called for in the original contract) 3. After breach the buyer may cover by making in good faith and without unreasonable delay any reasonable purchase or contract to purchase goods in substitution – buyer may recover difference between cost of cover price and original contract plus any consequential damages c. Lost expectancy damages – puts P in the position they would be in had there been full performance i.

Rule of certainty and foreseeability – damages must be foreseeable by the breaching party a. Where there is a contract price it is easy to calculate lost profits 2. Sub-rule – where correcting the defect would be economically wasteful the owner will ordinarily be limited to the diminished market value of the structure (unless it involves safety – then the cost to correct will be recoverable) . In order to award lost profits there must be a reasonable way to calculate lost profits a. vii. v. Employer must show that the other employment was comparable or substantially similar to that which the employee was deprived – failure to seek employment of different or inferior kind may not be resorted to in order to mitigate damages b. Courts won’t hold non-breaching party to mitigation of damages where the only (or least damaging) alternative is to accept another contract from the breaching party Expectancy and efficient breach – still a breach but interests of nonbreaching party are fully compensated and the breaching party is still better off than had it performed Damages for defective performance 1. contract price minus expenses saved by the non-breaching party (buyer) Recovery for lost profits 1. General damages – those that everyone suffers from breach 2. Natural and probable result of breach b. Volume sale – to people who have an unlimited supply of standard priced goods a. Special/consequential damages – those that are unusual.iv. and particular to a certain party 3. Rule – where performance is defective the proper measure of damages should be the cost to correct the defect a. vi. idiosyncratic. New business rule – harder to prove because no past history Recovery for consequential damages 1. Rule – when a contract is breached the non-breaching party has an affirmative duty to take reasonable steps to mitigate his damages 2. Wrongful discharge – measure of recovery by a wrongfully terminated employee = the amount of salary agreed upon for the period of service minus the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned a. Consequence of special facts and circumstances relating to the specific transaction they are not recoverable unless at the time of contracting the breaching party had reason to know of these special facts and circumstances and thus they were foreseeable Expectancy recovery and mitigation of damages 1. viii.

Liquidated damages clause is deemed a penalty if it is void iii. if the contract would have been fully performed iv. Land is always unique ii. Rule – the promisee may recover his outlay in reliance subject to the privilege of the promisor to reduce it by as much as he can show that the promisee would have lost. Recovery of overhead in reliance measure of recovery 1. Harm that is caused is one that is incapable of or very difficult to estimate 2. Family heirlooms. Where effectively crafted. Specific performance where damages not available – applicable where damages won’t compensate you for the breach i. Courts will not order specific performance if it is impossible to make sure performance happens vi. Reliance and losing contracts 1. Sometimes in an agreement with consideration we won’t be able to tell what expectancy would have been – in that case reliance is an appropriate measure of damages 1. Liquidated damages may be awarded in absence of actual damages in some jurisdictions c. Specific performance is the entire remedy – can’t get damages too! Promissory Estoppel 1. iv.b. P can recover any expenses incurred between the signing of the agreement and the breach of the agreement that are proven iii. If liquidated damages clause much higher than actual damages then might use actual damages to show the unreasonableness of the forecast – but this challenges the necessity for having a liquidated damages clause in the first place ii. We are not going to put the non-breaching party in a better position than they would have been in had there been full performance 2. Amount stipulated is a reasonable forecast of the just compensation for the harm (if it’s the same no matter how big or small the breach then on its face its unreasonable) a. liquidated damages are the only damages that can be recovered 1. Only going to award reliance if the reliance damages are foreseeable to the breaching party ii. Reliance damages as an alternative remedy where there is a breach of contract with consideration – puts P in the position she was in before the contract was entered into i. Contracts with liquidated damages clauses – parties to a contract may negotiate specific damages to be paid in event of breach i. Courts will not order a particular individual to do something (no specific performance for personal service contracts) but can order him not to do something v. Can only get overhead where an alternate contract could have been obtained d. Anything weird iii. Buyer must demonstrate that the item is unique vii. etc. Restatement § 90 – promise reasonably inducing definite and substantial action .

Reliance as a substitute for consideration that creates a contract i. Rule – to recover on a theory of promissory estoppel the promise giving rise to the cause of action need not be so comprehensive in scope as to meet the requirements of an offer that would ripen into a contract if accepted by the promisee d. The amount awarded to P for D’s unjust enrichment must also take into account any benefit to P . Preliminary contract negotiations – where one party encourages the other to engage in activities that would facilitate entering into a contract but which would be detrimental to such a party if the transaction is not in fact consummated (Red Owl) i. Expectancy available where reliance creates a contract b. Restitution may lead to recovery for gratuitous promises 5. Restatement: a person who has been unjustly enriched at the expense of another is required to make restitution to the other 2. Almost never leads to the formation of a contract 3. Reliance requires you were doing something you wouldn’t have otherwise been doing without the promise d. 2 theories of reliance a. If you can’t tell expectancy recovery. Common situations of promissory estoppel a. Letters of intent f. Red Owl – here there was clearly no contract only contract negotiations and we can’t tell based on P’s reliance what the contract terms would have been but we can award reliance measure of damages 3. Reliance: available where reliance doesn’t create a contract i. Intra-family promises e. Reliance does not require the same mutuality component as consideration 2. You can tell what the contract would have been ii. Reliance that does not create a contract but estops the promisor from denying a promise was made i. A contract has not been fully executed but one party has acted b. Remedy a. It must be foreseeable that the promise will induce action b. then you don’t have enough to say there’s a contract b. Ps are often the breaching party 4.a. Indefinite contracts – there exists a contract but the terms are too vague to actually be enforced i. Benefit conferred b. Where the promisee has failed to bind the promisor to a legally sufficient contract but has acted in reliance upon a promise to his detriment the promisee is entitled to recover reliance damages measured by the detriment sustained c. Person must have relied to his detriment – adverse consequences such that justice cries out for enforcement c. There must be both unjustness and enrichment a. Offers that become irrevocable 4. Rule – one who by his acts or language leads another to do something he would not otherwise have done shall not subject that person to loss or injury Unjust Enrichment 1. Unjust for the recipient to keep the benefit conferred i.

Rules: 1. No contract but a benefit conferred b. Most often see restitution damages where a. Where the contract is to labor from day to day for a certain period the party for whom the labor is done accepts it day to day even though the full period of time may never be completed there is necessarily an acceptance of what was already done – party accepting the labor will have to pay for the work done iv. Behavior of the party doesn’t look gratuitous ii. Don’t have to sue under contract because the other party has breached it – “with the breach falls the rest of the contract” . General rule – courts will allow D to retain a benefit without compensating P where the benefit was given gratuitously without expectation of payment a. Where work has been done upon one’s land the benefit cannot be returned and acceptance of the benefit cannot be implied from retention of the possession of the land 3. Overcoming the characterization as a gratuitous promise i. Remedy – restitution: P awarded the value of any benefit conferred on D 1. But the court is still going to look at the contract to dictate recovery vi. Ex: where P paid $1070 of $1500 purchase price to D and where D then resold for $1300 P is entitled only to the difference in original purchase price and cover purchase price ($200) and D recovered the remaining $870 vii. Example: someone agrees to send you 20 books then only sends you 10 – they have breached the contract but if you don’t send them back you have accepted the benefit and must pay 2. Land contract that does not meet statute of frauds can still be used to show that it was not gratuitous v. Even where there is a contract. Use a contract that although not enforceable demonstrates not gratuitous 1. Where one retains good received in part performance of a contract a promise to pay for them is ordinarily implied since he has the option either to pay for or return them a. The court will still try to protect the non-breaching party first in any unjust enrichment case 1. Ex: if the court finds that the breaching party can recover for the value of services conferred the non-breaching party can sue for damages first and the value of any benefit conferred by the breaching party will be deducted from the non-breaching party’s award 2. Sometimes restitution can afford P a recovery for a gratuitous promise 1. the non-breaching party may choose to sue under a quantum meruit theory 1.ii. It will be difficult to obtain restitution where the court is unable to value the unjust benefit iii. Losing contract situation where P is the non-breaching party i.

Rule – breach of a contract amounting to a failure to perform in accordance with its terms does not constitute a tort and the aggrieved party must proceed in contract b. Attorney/client 4. Restitution is not available where there has been full performance a. P saves man’s life and is crippled as a result. the neglect of the duty is a tort and in such an instance P may elect to sue for breach of contract or in tort i. Rule – where the promisee cares for. Restitution = first choice when you are in a losing contract situation 2. improves. Prior obligation – the benefit to the man and the injury to P was sufficient prior obligation for the man’s agreement to pay Tort 1. As a result the contract is no longer a ceiling on recovery ii.1. Principal/agent 2. Services that are beneficial and not intended to be gratuitous 3. Where the breach of the contract is an independent tort 2. Promissory Fraud – the promisor did not intend at the time of promising to perform her promise b. Extent to which the other person’s property has increased in value as a result of the work 3. Legal duty? 1. Humanitarian acts are not material ii. Any duty imposed by common law ii. The man pays P for his efforts until he dies but then his executor (D) refuses to continue to pay. Rule – when a contract imposes a legal duty on a party which duty exists apart from the specific contract. Statutory enactment or legislature 2. What it would cost to get someone else to do the work b. Past Consideration) 1. How do we value what has to be given back? (options) a. Contract and tort merge where the content of the contract is set by tort a. Physician/patient . Cant sue in restitution for a losing contract if no breach occurred Promises for Benefit Received (Moral Obligation. Benefit received is material 1. Something he would have requested if he could have iii. The court found this promise enforceable for 3 reasons: i. Situations where the non-breaching party can get punitive damages a. Common examples of where legal duties implied in contract 1. Bailor/bailee 3. even without the promisor’s request it is sufficient consideration for the promisor’s subsequent agreement to pay when there was a material benefit received a. Rule – a moral obligation is sufficient consideration for an express promise in cases where at some time or other a good or valuable consideration existed 3. and preserves the property. Saving a man’s life is always material 2. The subsequent promise to pay operates as an acceptance of the benefit conferred 2. Promise for payment/exchange is made after the benefit has been conferred on the promising party a.

The seller has reason to know of this particular purpose 3. Performance of skilled services (architectural. Very fact sensitive – must demonstrate 1. Implied warranty of merchantability i. Rule – buyer does not have to rely on the warranty to prevail in breach of warranty b. Affirmation of fact vs. Created by affirmation of fact. Means that the goods will pass without objection in the trade and are fit for the ordinary purpose for which such goods are used c. Example: your neighbor wants to borrow your lawnmower to use as a golf cart motor iv. Applies to transactions between anybody iii. Express warranty i. mechanical) Statutory Warranty 1. description of the goods or any sample or model that has become part of the basis of the bargain for the sale of goods but any statement purporting to be the seller’s opinion of commendation of the goods does not create a warranty 1.5. But the court is never going to allow a statement of safety to be treated as puffing – always going to be treated as affirmation of fact 2. and the burden is on the seller to demonstrate that the bargain does not rest at all on that representation c. Rule – a warranty statement made by a seller is presumptively part of the basis of the bargain. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods there is an implied warranty that the goods shall be fit for such purpose ii. Factors indicating an opinion statement i. The buyer has a particular purpose in mind for the goods 2. Usually comes up in unusual situations 1. engineering. promise. Basis of the bargain test a. The buyer relies on the seller’s skill or judgment to furnish goods suitable for the purpose . Reveals the goods are experimental c. Exists in all sales by a seller who is a merchant with respect to the goods of that kind – accompanies all products sold ii. Rule – statements made during the course of negotiation of contract are presumptively affirmations of fact unless it can be demonstrated that the buyer could only have reasonable considered the statement to be one of opinion b. Lacks specificity ii. 3 kinds of warranties that can arise out of the sale of goods a. statement of opinion a. he might sufficiently prove that the statement was not relied upon for part of the bargain b. Implied warranty of fitness for a particular purpose i. Rule – where the seller demonstrates that the buyer has knowledge of the true condition prior to the making of the contract. Made in equivocal manner iii.

Definite and substantial character of the action or forbearance in relation to the remedy sought 3. Charge a personal representative. Reliance 3. These requirements are in addition to finding a bargain i. acceptance. An agreement made in consideration of marriage d. Exception: Rule – where the leading object of the promisor is to serve some interest of his own. and object of the promisor – was the promise mainly desired for the promisor’s benefit? c.4. Full performance a. Exception: Restatement: if reliance then the contract will be enforceable notwithstanding the statute of frauds if injustice can be avoided by enforcements of the promise – the following circumstances are significant: 1. and consideration c. Based on the totality of the circumstances surrounding the transaction. A special promise to answer for the debt. Leading object/main purpose rule 2. Time is measured from the time of the making of the agreement. purpose. Within the statute of frauds but covered by an exception 1. The seller must know or have reason to know that the buyer is relying on his skill and judgment Statute of Frauds What is it? 1. default. Example: a writing to satisfy the statute of frauds does not dispense with P’s obligation to prove offer. it is not within the statute of frauds 1. In writing ii. An agreement is either i. Availability and adequacy of other remedies 2. An agreement that by its terms is not to be performed within a year from the date it is made i. not from the date performance is scheduled to begin ii. Promise not to be performed within one year may be removed from statute of frauds if one party has fully performed iii. Within the statute of frauds ii. or misdoings of another i. upon any special promise to answer for damages out of the own personal representative’s estate b. An agreement for the leasing of real property for longer than 1 year or for the sale of real property or of an interest therein e. Traditional transactions to which it applies? a. notwithstanding the effect to discharge the debt of another. The reasonableness of the action or forbearance 5. For certain classes of contacts we require that the contract be i. Not within the statute of frauds 2. The extent to which the action or forbearance was foreseeable by the promisor . Signed by the party against whom enforcement is being sought (usually D) b. what was the intent. A formal requirement for the enforceability of agreements a. Extent to which the action or forbearance corroborates evidence of the making and terms of the promise 4.

There will be a contract and it will be the contract that the party that does not know thinks it is Offer 1. An agreement that by its terms is not to be performed during the lifetime of the promisor 3. Example: a price quote plus surrounding circumstances may lead a reasonable person to believe there was an offer 3. Rule – where a party knows that there is a mistake in the offer they do not have the power to accept the offer b. There is no manifestation of mutual assent if the parties attach materially different meanings to their manifestations and i. That party does not know of any different meaning attached by the other and the other knows the meaning attached by the 1st party ii.Note: close to § 90 but the requirement of consideration via reliance is more easily displaced than the requirement of writing f. There must be a meeting of the minds – both parties must agree to the same thing in the same sense a. Court will look at whether the offeror’s conduct and words would warrant a reasonable person to believe that the offeror intended a real agreement 3. Each party knows or each party has reason to know the meaning attached by the other b. Effect of misunderstanding – Restatement § 20 a. Neither party knows or has reason to know the meaning attached by the other (Peerless) ii. Contract for sale of goods for price of $500 or more is not enforceable unless there is a writing to indicate contract for sale has been made  Offer and Acceptance Primary concern – what did the parties intend? 1. Effectbind the party with superior knowledge 1. Law imputes to a person an intention corresponding to the reasonable meaning of his words and acts – it is immaterial what is his real but unexpressed state of mind ii. Sometimes the contract won’t be enough i. Party is bound by objective manifestation of intent i. So then – courts will hear evidence as to what the parties meant i. That party has no reason to know of any different meaning attached by the other and the other has reason to know the meaning attached by the 1st party iii. If something is not an offer it might be… . Where there is no offer there can be no acceptance a. Best way to determine party intent? – Look at the contract! a. If the mistake is not made known to P until after he has already relied on the mistake (post-acceptance) then the mistake can no longer be corrected by the offeror 4. UCC Requirements a. Objective manifestation may be undercut by actual knowledge of a party’s intent 2. The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if i. An offer generates the power of acceptance 2. Where the offer contains a mistake a. Peerless case (buyer didn’t know there were 2 ships named Peerless) b.

What acceptance does an offer call for? a. Partial performance can operate as acceptance (buying materials to begin work) but the offeror must know that you have begun performance in order for it to operate as acceptance 2. How to distinguish between offer and counteroffer? 1. But the offeree must be made known the mode of acceptance c. acceptance by original party who invited offers iv. $100 = acceptance b. Acceptance with conditions – can be . Offers to enter into a unilateral contract a. Improper acceptance = no acceptance i. Rule – silence doesn’t satisfy acceptance unless the offeror had stated that assent may be manifested by silence. Rule – the test for whether a binding obligation may originate in advertisements addressed to the general public is whether the facts show that some performance was promised in positive terms in return for something requested Acceptance 1. Rule – if the offeror prescribes an exclusive manner of acceptance an attempt on the part of the offeree to accept the offer in a different manner does not bind the offeror in the absence of a meeting of the minds on the altered type of acceptance ii. Invitation to receive an offer i. Does the offer call for performance or return promise? 1. An offer can be revoked at any time before acceptance unless it’s an option contract 6. If offeree begins performance instead of return promise then it is acceptance if the offeror was aware of said performance b. $95 = counteroffer b. The offeror is the master of the offer and can specify the terms of acceptance i. In case of doubt – presumed that an offer calls for a return promise by the offeree to perform what the offer requests rather than actual performance (presume bilateral contract) 2. or may if there is some industry standard (book of the month club) iv. Rule – if the offer requests a return promise and the offeree without making the promise actually does or tenders what he was requested to promise to do there is a contract is such performance is tendered within the time allowable for accepting by making a promise iii. Even if something says it’s a price quotation. Rule – generally where goods are advertised for sale at a certain price. it is not an offer and no contract is formed – such an advertisement is merely an invitation to bargain rather than an offer b. where it calls for immediate acceptance that language suggests that it is a present offer that will close the contract when immediately accepted 2. Response – offer by another party (response is the offer) iii. Then. Offers vs. Offeree must communicate his acceptance to the offeror before any contractual obligation comes into the being – intent is not sufficient i. Where the offer does not specify how acceptance is to occur it must be in any manner and by any medium reasonable in the circumstances d. Advertisements a. Doesn’t generate the power to accept ii.a. $100 or best offer a. Nothing 5. In order to accept a unilateral offer you must perform 7.

Rule – offer must be accepted within reasonable amount of time 1. Offer to enter into a unilateral contract – where the offer invites acceptance by performance an option contract is created when . Rule for conversational offers – an offer made by one to another in a face to face conversation is deemed to continue only to the close of the conversation and cannot be accepted thereafter unless the surrounding circumstances indicate that the offer is intended to continue beyond the immediate conversation d. An offer can be revoked at any time before acceptance 1. Rejection by the offeree b. Acceptance – where the person conveys they would accept even if the other person denies the grant of conditions then it is still an acceptance i. Generally revocation must be received before the offeree’s power of acceptance is terminated a. Counteroffer – where conditions are so powerful such that the seller doesn’t think that the buyer will buy without them i. Exception: reward type cases where offer and revocation are via publication – where the person who performs doesn’t see the revocation publication the revocation is still effective ii. Offer is made when it is received by the offeree b. Acceptance must be clearly independent of the condition b. Exception: option contract 1. Lapse of time i. Amount paid for option has little to no significance – impossible to put a value on options so we let the parties value it 3. Question of law in commercial transactions that happen in the same way day after day and where the time taken is so clearly reasonable or unreasonable that there is no doubt as to the proper answer 4. Counteroffer creates the power of acceptance in the original offeror 3. Mailbox rule: a. Saying you have until a certain date to respond is in absence of consideration just a bare promise 3. An option contract is a contract in which an offeror has made an enforceable promise not to revoke the offer 2. Question of fact where the answer is dependent on many circumstances which do not continually recur 3. An offeree’s power of acceptance is terminated when the offeree receives from the offer a manifestation of an intention not to enter into the proposed contract 2. An offeree’s power of acceptance may be terminated by a. Measured from the offeree’s position – what time would be thought satisfactory to the offeror by a reasonable man in the offeree’s position 2. But offeror can protect himself by putting in the offer that it is not effective until receipt of the acceptance ii. Acceptance occurs when it is placed in the mail i. Revocation of the offer (by offeror) i.a. Counteroffer by the offeree c.

you can let in evidence if it shows ambiguityit gives the contract meaning a. An acceptance under an option contract is not operative until received by the offeror b. Reliance as consideration for an option contract a. Once performance has begun the offeror can’t make full performance impossible but if offeree does not complete through no fault of the offeror the offeree can’t recover c. Parol Evidence Rule – oral evidence is not admissible to change written terms of an agreement (or evidence outside the contract itself) – however. problems with assent Substantive Problems – content of the contract Duress 1. Burgess approach – same mailbox rule as usual 4. Right to revoke before full performance is lost in the name of fairness b. Mailbox rule for option contracts – 2 approaches a. The ambiguity makes the court decide that there is no way to tell so therefore there is no contract Policing Problems Procedural Problems – nature of consent. Test – has the person complaining been constrained to do what he otherwise would not have done? 2.the offeree begins performance (beginning of performance operates as consideration) a. Worms v. Rule – threat to refuse performance of a contract is not duress 4. Restatement approach: i. But if offeror doesn’t know performance has begun he can still withdraw 4. Rule – there must be some compulsion/coercion which controls the conduct of the party making the payment – some threatened exercise of power or authority over his person or property which can be avoided only by making the payment 3. An offer which the offeror should reasonably expect to induce reliance before acceptance (and does) is binding as an option contract to the extent necessary to avoid injustice 5. Rule – where the source of duress is not from one of the parties but from state of circumstances defense of duress is not available .

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