Consideration

Question 1

Bilateral Agreement Contracts

Answer 1

Berstein Holding: Court held that since the seller had reserved the right to fulfill the order because the seller had made no promise.

In a bilateral agreement then both promises must be binding or not promise is binding.

Question 2

Unilateral Agreement Contracts

Answer 2

Unilateral cancellation clauses may render a contract unenforceable but only if the cancellation right is unrestricted. If the unilateral cancellation clause has restrictions, even if not expressly mentioned in the contract, then it may be enforceable.

Question 3

When can promises become binding?

Answer 3

Promissory estoppel/detrimental reliance. If someone makes a promise to you and you reasonably rely on it then the promisor is obligated to fulfill the promise.

Question 4

Gratuitous Promise

Answer 4

Kirksey v. Kirksey. When you just give something out of kindness and you don’t get a benefit then it’s not a valid contract even if there was “offer and acceptance”

The consideration itself is supposed to be the reason why you got into the contract. In Kirksey the offer was not consideration because the reason why was for kindness not for any benefit of the promisor.

Question 5

Promissory Estoppel: Promise Reasonably Inducing Definite and Substantial Action

Answer 5

Fried v. Fisher, Feinberg v. Pfeiffer

• Rely on it
• Reasonable rely on it
• Injustice can be avoided by enforcing it (factors analysis, subjective test).

Original Restatement: Restate (First) of Contracts, section 90: A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.

Restatement (Second) of Contracts § 90: Promise Reasonably Inducing Action or Forbearance

1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of 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
2) A charitable subscription or a marriage settlement is bindign under Subsection (1) without proof that the promise induced action or forbearance.

In second restatement, they removed the phrase … “of a definite and substantial character “. they removed this because with it maintained then it reduces the power of promissory estoppel.

Promissory estoppel is a catch-all. With second restatement, then you don’t have to show a measure of your loss and estoppel is improved.