Contracts

Question 1

Consideration

Answer 1

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Consideration is an essential element for the formation of a contract. It may consist of a promise to perform a desired act or a promise to refrain from doing an act that one is legally entitled to do. In a bilateral contract—an agreement by which both parties exchange mutual promises—each promise is regarded as sufficient consideration for the other. In a unilateral contract, an agreement by which one party makes a promise in exchange for the other’s performance, the performance is consideration for the promise, while the promise is consideration for the performance.

Question 2

Bargain for Consideration

Answer 2

This theory states that a promise or performance that is bargained in exchange for a promise is a consideration for the promise. This theory underlies all bilateral contracts. Bargain theory of consideration was developed from classical contract theory which constitutes a wholly executory contract. Bargain theory of consideration was found by some lawyers in the notion that a contract is a bargain in which the consideration is the price of the bargain. Connected to this is the supposed rule that nothing can be treated as a consideration unless it is seen by the parties as the ‘price’ of the bargain.

Question 3

Promisory estoppial

Answer 3

promisory estoppial
(I) promise was made;
(ii) it was the reasonable expectation of the promisor to induce action or forbearance on the part of the promisee;
(iii) the promisee reasonably relied on the promise and took action to his detriment; and
(iv) such promise is binding because in-justice can be avoided only by enforcement of the promise.

Question 4

Sec 90 definition

Answer 4

§ 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 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.
(2)  A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.
COMMENTS & ILLUSTRATIONS

Comment:

a.  Relation to other rules.  Obligations and remedies based on reliance are not peculiar to the law of contracts. This Section is often referred to in terms of "promissory estoppel," a phrase suggesting an extension of the doctrine of estoppel. Estoppel prevents a person from showing the truth contrary to a representation of fact made by him after another has relied on the representation. See Restatement, Second, Agency § 8B; Restatement, Second, Torts §§ 872, 894. Reliance is also a significant feature of numerous rules in the law of negligence, deceit and restitution. See, e.g., Restatement, Second, Agency §§ 354, 378; Restatement, Second, Torts §§ 323, 537; Restatement of Restitution § 55. In some cases those rules and this Section overlap; in others they provide analogies useful in determining the extent to which enforcement is necessary to avoid injustice.

It is fairly arguable that the enforcement of informal contracts in the action of assumpsit rested historically on justifiable reliance on a promise. Certainly reliance is one of the main bases for enforcement of the half-completed exchange, and the probability of reliance lends support to the enforcement of the executory exchange. See Comments to §§ 72, 75. This Section thus states a basic principle which often renders inquiry unnecessary as to the precise scope of the policy of enforcing bargains. Sections 87-89 state particular applications of the same principle to promises ancillary to bargains, and it also applies in a wide variety of non-commercial situations. See, e.g., § 94.

Question 5

What kind of damages are most often awarded in a section 90 case?

Answer 5

Expectation damages

Question 6

When do courts use section 90?

Answer 6

Courts use this when there is no contract, courts will use contract analysis, only when there is no contract will they go to section 90