[Contract] Outline - Part I (to be updated)

I. Introduction

II. Bargain Theory for Enforcing Promises and the Requirement of an Agreement

 A. The Bargain Theory of  Consideration

  1. Bargained-for Exchange versus Gift Promise

    - In a bargained-for exchange, the promisor requires something from the promisee in return for the promise. The price of the promise is called "consideration."

    - Maughs v. Proter - If the donor of the gift actually delivered the gift, the donor cannot get it back. 

    - Restatement (Second) of Contracts sec. 71(2): A performance or return promise is bargained for if it sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

    - Allegheny College v. National Chautauqua County Bank of Jamestown - When the college accepted the $1000 it assumed the duty to perpetuate the name of the founder of the memorial and that was sufficient in itself to give validity to the subscription within the rules that define consideration for a promise of that order.

  2. The Promisor's Motive

    - Contract law measures the promisor's motive objectively (the reasonable person standard).

    - a promisor's motive of obtaining something in return for the promise simply has to be one of the reason. Restatement (Second) of Contracts sec. 81: The fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise.

    - Baehr v. Penn-O-Tex Oil Corp. - Not only must a reasonable person believe that one of the promisor's motives was to extract consideration from the promisee, but a reasonable person must believe that the promise actually induces the promisee to deliver that consideration.

  3. What Must Be Extracted

    - To constitute consideration, the promisor must bargain for either a return promise or a performance. Restatement (Second) of Contracts sec. 81(1).

    - A promisor can extract a performance as consideration for the promise. Restatement (2nd) sec. 71(1)&(2).

    - The Restatement (2nd) sets forth the kinds of performances that constitute consideration including "acts" and "forbearances."

    - Hamer v. Sidway - The court stated that "'[c]onsideration' 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." Based on this definition, the court held that Nephew's forbearance constituted consideration regardless of whether it benefitted Uncle. 

  4. Forbearance to Sue as Consideration

    - Springstead v. Nees - Forbearance from pursuing a valid claim constituted adequate consideration. Invalid claims are unenforceable due to public policy.

    - In cases in which you reasonably and honestly thought you had a valid claim, Contract law calls your claim "colorable" or "doubtful" and treats your forbearance to sue as good consideration. Springstead. 

    - Only require "reasonable" OR "honest." Restatement (2nd).

  5. The Policies Behind Enforcing Bargained-for Exchanges

    - Lon Fuller's Consideration and Form - Formal and substantive grounds for enforcing bargained-for exchanges. Formal grounds, which have to do with the "circumstances surrounding" the making of a promise, include the "evidentiary," "cautionary," and "channeling" functions of consideration. Exchange transactions are more important than gift promises and therefore require all of the resources of the law.

  6. Adequacy of Consideration
    - Mattei v. Hopper - Whether a problem is couched in terms of mutuality of obligation or the illusory nature of a promise, the underlying issue is the same - consideration.
    - Restatement (2nd) - If the requirement of consideration is met, there is no additional requirement of equivalence in the values exchanged.
    - Doctrines such as unconscionability, duress, and misrepresentation, authorize courts to strike contracts.

  7. Mutuality of Obligation and Illusory Promises
    - De Los Santos v. Great Western Sugar Company - De Los Santos was a trucking company that "agreed" to transport in its trucks "such tonnage of beets as may be loaded" by Great Western from Great Western's supply of beets. The court concluded that Great Western had the right to terminate De Los Santos for lack of mutuality of obligation.

  8. Preexisting Duty Doctrine and Accord and Satisfaction

  9. Promise for Benefit Received

  10. Summary

 B. The Requirement of an Agreement

  1. The Objective Test of Assent

  2. Offer and Acceptance

   a. Offer

   b. Acceptance

  3. The Offeror Has the Power to Prescribe the Terms of the Offer

  4. Offers for Unilateral and Bilateral Contracts

  5. Duration of Offers

   a. Rejection or Counter-Offer

   b. Lapse of Time

   c. Revocation

   d. Bars to Revocation - Option Contracts

   e. Bars to Revocation - Beginning Performance of Unilateral Contracts

   f. Bars to Revocation - Offers for Bilateral Contracts

  6. Bargaining at a Distance

   a. Communication via the Mail or Telegram (The Old Stuff)

   b. Electronic Offer and Acceptance

  7. Limitations of Agreement Law

   a. The Legal Significance of Business Draft Agreements

   b. The Requirement of Certainty in Business Agreements

   c. Form Contracts between Sellers and Buyers of Goods

   d. Rolling Contracts