Contract Foundations Flashcards
Contract (Restatement)
A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty
Promise (Restatement)
(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.
(2) The person manifesting the intention is the promisor.
(3) The person to whom the manifestation is addressed is the promisee.
(4) Where performance will benefit a person other than the promisee, that person is a beneficiary.
Contract (UCC)
The total legal obligation which results from the parties’ agreement.
Restatement § 179 Bases of Public Policies Against Enforcement
A public policy against the enforcement of promises or other terms may be derived by the court from
(a) legislation relevant to such a policy, or
(b) the need to protect some aspect of the public welfare, as is the case for the judicial policies against, for example,
(i) restraint of trade (§§ 186- 188),
(ii) impairment of family relations (§§ 189- 191), and
(iii) interference with other protected interests (§§ 192- 196, 356).
Restatement § 179 Development of the Judicial Role
A and B make a written agreement that contains a term providing that “no prior negotiations shall be used to interpret this agreement.” Prior negotiations would otherwise be admissible to establish the meaning of the writing (§ 214(c)).
If the court decides that the term would unreasonably deprive it of relevant evidence that would enable it to resolve an ambiguity in the agreement and thereby hamper it in the fair administration of justice, it will hold that the term is unenforceable on grounds of public policy.
Restatement § 179 Modern Role of Legislation
A induces B to make an agreement to buy goods on credit from A by bribing B’s purchasing agent. A delivers the goods to B. A state statute makes such bribery a crime and gives B a civil action to recover the amount of the bribe against A.
Although the statute already provides for a civil sanction, a court may decide that B’s promise to pay the price is unenforceable on grounds of public policy.
Restatement § 179 When Refusal to Enforce May Frustrate Policy
A, a corporation, makes an agreement to do work for B, a city. C, an official of B, is also a principal shareholder of A, and a statute prohibits the making of such agreements and subjects those who make them to penalties. A’s performance of the agreement is defective.
Since the statute was enacted to protect a class of persons to which B belongs against a class to which A belongs, enforcement of A’s promise is not precluded on grounds of public policy and B can recover damages from A for breach of contract.
Restatement § 179 Restatement § 179 When Refusal to Enforce May Frustrate Policy
A, an insurance company, issues a policy of fire insurance to B on his house. The policy differs from that required by a state statute prescribing a standard fire policy. B’s house is destroyed by fire.
Since the statute was enacted to protect a class of persons to which B belongs against a class to which A belongs, enforcement of A’s promise is not precluded on grounds of public policy and B can recover the insurance proceeds from A. .
Restatement § 179 Restatement § 179 When Refusal to Enforce May Frustrate Policy
A employs B to work in his factory and promises to pay him double for the overtime if B works ten hours a day instead of the usual eight. A state statute, designed to protect the health of workers in such factories, provides a maximum period of employment of eight hours a day and makes violation a crime for both employer and employee. B works ten hours a day but A refuses to pay him extra for the overtime.
A court may decide that the statute was enacted to protect a class of persons to which B belongs against a class to which A belongs and that therefore enforcement of A’s promise is not precluded on grounds of public policy.
Restatement § 179 When Refusal to Enforce May Frustrate Policy
A, a bank, invests in a real estate mortgage. A statute prohibits it from making such investments and subjects it to penalties for doing so.
Since otherwise the creditors and shareholders of the bank, for whose protection the statute was enacted, would be injured, enforcement of the mortgage debt is not precluded on grounds of public policy and the bank may recover on the debt and foreclose the mortgage
Gardner Promise
A promise is an assertion that someone other than the speaker possesses, by force of that assertion, some power over the future which he did not previously possess.
