Basics

Question 1

Promissory Liability

Answer 1

Contracts are legally enforceable promises that can give rise to liability. Measure by an objective standard. Factors: specificity of the statement, context of statement, nature of defect, parties’ knowledge and sophistication, language employed by seller.

Question 2

Consideration

Answer 2

Any action, forbearance, or promise as an inducement for a promise made that involves a legal detriment or a change in the legal position of the promisee constitutes sufficient consideration.

Question 3

Requirement of Exchange

Answer 3

To constitute consideration a performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

Question 4

Requirement of Bargain

Answer 4

To constitute consideration, a performance or a return promise must be bargained for.

Question 5

Promises as Consideration

Answer 5

“A promise that is bargained for is consideration if the promised performance would be consideration.” Restatement (2d) s. 75, comment; Mutual promises at the time are not essential unless the promisee understood that the promisor was not bound, except on condition that the other party entered an immediate and reciprocal obligation to do the thing requested.

Question 6

Rights and duties in unilateral contracts

Answer 6

Promise on one side only; promisor: duty, promisee: right; no mutuality required.

Question 7

Rights and duties in bilateral contracts

Answer 7

A promise on both sides; promisor: duty AND right, promisee: right AND duty; where promises are exchanged for promises, there must be a mutuality in obligation (sometimes referred to as mutuality).

Question 8

Illusory promise

Answer 8

Words of promise which by their terms make performance entirely optional with the “promisor” do not constitute a promise.

Question 9

Termination Clauses as Illusory Promises

Answer 9

If a termination clause gives a party the power to terminate at will, at any time, for any reason, the promise is illusory. If the clause restricts the right of termination in some way, not illusory

Question 10

Termination Clauses under UCC

Answer 10

Requires “reasonable notification” for termination, except on the happening of an agreed event.

Question 11

Conditional Promises

Answer 11

A promise that will become due only if a particular event, called a condition, occurs. A promise creates a duty; a condition postpones that duty.

Question 12

Express Conditions

Answer 12

One that’s clearly stated. Ex. You pay $1,000 to an insurance company in exchange for the company’s promise to pay out $100,000 if your house has serious fire damage.

Question 13

Implied Conditions

Answer 13

Courts can impose a condition by implication, even if the contract does not provide any. Ex. constructive condition of exchange—one party’s duty to perform is not triggered until the other party has performed.

Question 14

Implied Promises, Common Law

Answer 14

A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct. Restatement (2d) Contracts 4; Promises can be inferred from conduct or from the circumstances of the transaction.

Question 15

Implied Promises, Sale of Goods

Answer 15

A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

Question 16

General Obligation of Good Faith and Fair Dealing

Answer 16

Implied in every contract as a matter of law.

Question 17

General Obligation of Good Faith and Fair Dealing, Common Law

Answer 17

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

Question 18

General Obligation of Good Faith and Fair Dealing, Sale of Goods

Answer 18

Every contract or duty within the UCC imposes an obligation of good faith in its performance and enforcement.

Question 19

Promissory Estoppel (Reliance)

Answer 19

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

Question 20

Elements of Promissory Estoppel

Answer 20

Actual Inducement: The promise must have, in fact, induced the promisee’s action or forbearance; Justification: The promisee’s response must have been a justifiable reaction to the promise.; Avoiding Injustice: The promisee must have suffered some actual harm by relying on the promise, not merely not receiving the promised benefit.

Question 21

Restitution

Answer 21

Liability in restitution derives from the receipt of a benefit whose retention without payment would result in the unjust enrichment of the defendant at the expense of the claimant.

Question 22

Unjust enrichment

Answer 22

Gains produced through another’s loss

Question 23

The Officious Intermeddler

Answer 23

Absent circumstances that justify a claimant’s intervention, there is no liability in restitution for an unrequested benefit voluntarily conferred.

Question 24

Quasi-contract

Answer 24

A ground for recovering money in an action at common law, when the claim is not based on a true contract but seeking redress for unjust enrichment; also called “constructive contract” or “contract implied by law”; With regular contracts, the contract defines the duty; with quasi-contracts, the duty defines the contract

Question 25

Quasi-Contract Liability

Answer 25

(1) Some type of enrichment was conferred on the receiver.
(2) The receiver’s retention of that enrichment is equitable or unjust.
(3) There is not another path to remedy.

Question 26

Quasi-contract liability and contractor’s claims/mechanics liens

Answer 26

Subcontractors, after performing and not receiving payment, have no contractual right to payment or right to restitution from owner, but every state has a Mechanics Liens Law that which allows laborers, suppliers, contractors, and others that make improvement on real property to assert a lien on the property to secure payment.

Question 27

Quasi-contract liability and emergency medical services

Answer 27

Restitution for services provided to protect health or property is available only when “circumstances justify the decision to intervene without request.” Restatement (3d) 21(1)

Question 28

Restitution Between Spouses

Answer 28

Restitution claims between spouses typically fail because the services of each are presumed to be gratuitous gifts. A lot of jurisdictions extend this “gift presumption” to other family relationships.

Question 29

Restitution Between Cohabitants

Answer 29

If there was a relationship that included a sexual relationship between the cohabitants, restitution claims fail on public policy grounds. Restitution has been granted when the sexual relationship is completely separate from the benefits bestowed.

Question 30

Bilateral Contract

Answer 30

A promise by one party in exchange for a promise to perform by another party.

Question 31

Unilateral Contract

Answer 31

A contract that is formed when one party makes a promise in exchange for the action of another party, and the other party performs that act.