Contract and Promise Essay

Submitted By Iva-Gaylord
Words: 2377
Pages: 10

I. Theories of Obligation (and associated remedies)
a. Agreement with Consideration (expectancy)
b. Promissory Estoppel (reliance)
c. Unjust Enrichment (restitution)
II. Agreement with Consideration – a (1) bargained-for exchange of (2) consideration (3) entered into by two or more competent parties
a. Elements
i. Bargained-for exchange – a trade of a promise for a promise, a promise for a performance, or a performance for a performance
1. Both parties must be competent, mature, and able to understand the obligation and/or responsibilities they are assuming (Dougherty)
2. Both parties must be aware that there is a negotiation in process (Baehr)
3. Lack of any form of negotiation implies that there is no consideration (Dougherty) ii. Consideration – an act(s) or item(s) that is promised or given in exchange for another act(s) or item(s)
1. Parties are free to set the value of their own consideration (Hardesty)
2. Forms of consideration (Restatement 25)
a. Act – a performance
b. Promise
i. Unilateral – one party offers a future promise upon the other meeting its condition of item or performance ii. Bilateral – both parties offer future promises to each other
c. Forbearance – voluntary abstinence to a legal right (Hamer)
i. Must be bargained for (Baehr, Neuhoff) ii. Not valid if forbearer had no legal claim or right to that which is forbore (Springstead)
d. Creation, modification, or termination of a legal relationship iii. Competent parties – being of sound mind and maturity sufficient to appreciate the obligation and/or responsibility being assumed
1. Agreements are void if at least one of the parties is not competent (Hardesty)
2. Parties are free to set the value for their own consideration and cannot later withdraw from performance because they believe that their own consideration was inadequate (Hardesty)
3. Agreements are void if there is:
a. Fraud
b. Duress
c. Misrepresentation
d. Mistake
b. Defenses
i. Gift
1. Unbargained for conferral of benefit that is not enforceable (Dougherty)
2. EXCEPTION: Conditional gift
a. A gift that a party promises to give if its condition is met
b. The condition must be beneficial to the promisor (Maughs) ii. Illusory Contract – an agreement that gives one party sole discretion over its execution
1. No mutuality of obligation (De Los Santos)
2. EXCEPTION: Good faith
a. Exclusivity – where the parties have sole obligation to the other (Woods), since neither party benefits if one does not perform
b. Reliance – where one party relied on the other party’s promise to constrain its own discretion in the agreement to enter into it (Weiner)
c. Subjective satisfaction
i. acceptableness of the agreement relies on one party’s discretion if the performance or product is good enough ii. determination must be in good faith
d. Objective satisfaction
i. acceptableness of the agreement relies on the commercial value or quality, fitness or mechanical utility ii. determination measured via reasonable person standard iii. Pre-Existing Duty – consideration is invalid if promisee was going to perform the action for some reason other than for the initial promise iv. Statute of Frauds – without a written form of a promise, contract, or agreement, actions for the following cannot be maintained or recover damages:
1. UCC items that are more than $500
2. Charging a person for agreements made in consideration of marriage
3. Charging a person on agreements that authorize agents or brokers to purchase real estate
4. Charges against the estate on agreements which cannot be completed before decedent died
5. *Charging person for promises to answer for the debt or obligations of another, unless answering that debt furthered the promisor’s own leading object:
a. When the leading object of the promisor is to subserve some interest or purpose of his own, his promise can be upheld
b. Promise cannot be upheld if the leading object is to become a guarantor for a third party…