Contracts

Question 1

Collateral estoppel

Answer 1

Affirmative defense barring a party from relitigating an issue from earlier litigation (Bailey v. West, 1)

Question 2

Equitable Estoppel

Answer 2

A doctrine preventing one party from misleading another by preventing the misleader from correcting their deceptions after the other party has already relied on them/acted in a certain way because of them. (2)

Question 3

Promissory Estoppel

Answer 3

“a promise for 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” (Langer v. Superior Steel Corp. (1932), 2)

Question 4

Implied contract

Answer 4

There can be no implied contract if a contract was expressly rejected (discussion of Bailey v. West (1969), 1)

Question 5

Law of restitution

Answer 5

Benefit based obligations are governed by the law of restitution which selectively compels payment to professional service providers who render benefits in exigent circumstances when there is no time to contract (discussion of Bailey v. West, 1)

Question 6

Private Autonomy

Answer 6

Benefit of contracts/conceptual basis for contract law - individuals have power to voluntarily change their legal relations (1)

Question 7

Reliance

Answer 7

breach in promise may injure someone expecting it to be fulfilled who acted accordingly - this loss could be measured directly by looking to what the promisee expended in relying on the promise or contractually by looking to the value of the promised performance

Question 8

§ 1. Contract Defined:

Answer 8

promise recognized by law as generating duty
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.

Question 9

§ 2. Promise; Promisor; Promisee; Beneficiary:

Answer 9

promisor makes promise to promisee to benefit beneficiary
(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.

Question 10

§ 4. How a Promise May Be Made:

Answer 10

: oral or written words and/or inferred from conduct

A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.

Question 11

Bailey v. West (1969):

Answer 11

there can be no contract without both parties intending to be bound
The defendant refused to take in a horse he bought when he realized it was lame, so his servant brought it to the plaintiff’s farm. The plaintiff sued for the cost of boarding it but the court held that there was no mutual agreement or consent between the parties. The plaintiff was acting as a volunteer when he accepted the horse without promise of payment, and despite arguing that there was an implied or quasi contract, he actively sought payment from multiple parties, demonstrating that he knew the defendant had not intended to be bound.

Question 12

Note: legal basis of contracts

Answer 12

Note: legal basis of contracts – promises
Obligations can be based on three grounds, each of which has its own body of law – (1) promises, governed by the law of contracts; (2) harm, governed by the law of torts, and; (3) benefits, governed by the law of restitution

Question 13

§ 71. Requirement Of Exchange; Types Of Exchange:

Answer 13

: to constitute consideration, action, forbearance, or change in legal relation must be performed or promised in exchange for promise

(1) To constitute consideration, a performance or a return promise must be bargained for.
(2) 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.
(3) The performance may consist of
(a) an act other than a promise, or
(b) a forbearance, or
(c) the creation, modification, or destruction of a legal relation.
(4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

Question 14

Kirksey v. Kirksey (1845):

Answer 14

gratuitous promises are not enforceable for want of consideration
A widow’s brother-in-law told her he would give her a place to raise her family if she came down to live with her and kicked her out after a while. The court held his promise was gratuitous and unenforceable because she promised him nothing in exchange even though it was conditioned on her moving. A good test of whether a promise is gratuitous is whether or not actions induced by the conditions benefitted the promisor. Another test is whether the condition is related to the gift – in this case, the brother-in-law’s ability to house the widow was based on her moving.

Question 15

Hamer v. Sidway (1891):

Answer 15

Forbearance constitutes consideration.
An uncle promised his nephew that if he would refrain from dinking, using tobacco, swearing and playing cards or billiards for money until he was 21, he’d pay him 5k. The nephew sued for the money after his death and the court held that his refraining from actions he had a legal right to take counted as consideration even though there was no clear benefit to the uncle. The uncle intended to and successfully compelled his nephew’s forbearance. Benefit to the promisor cannot be required of promises because it is difficult to predict what actions will benefit them at the time of contracting – it is enough that they bargained for and achieved an action or inaction on the part of the promisee.

Question 16

Langer v. Superior Steel Corp (1932):

Answer 16

A promise has consideration if the promisor benefits from the promisee’s act or forbearance.
The defendant told their employee, the plaintiff, they would pay him $100 per month during his retirement as long as he did not work for one of their competitors. They paid him for four years and he sued when they stopped. The court held that their request was more than a condition on a gratuitous promise because of the benefit they derived from keeping their former employee’s expertise from their competitors.

Question 17

In re Edwin Farnham Greene (1930):

Answer 17

past benefit and intention to be legally bound are insufficient to constitute consideration.
A married guy promised his mistress money in exchange for $1 (dismissed as nominal), “other good and valuable. Consideration (dismissed as vague), release from a promise to marry her (dismissed as gratuitous and illegal), immunity from paying fees on a property he bought her (dismissed because he had no such obligation to begin with), in light of their past relationship (dismissed – no ex-post consideration), and stated explicitly his intention to be bound on a contract with a seal. Seals are no longer valid in New York (and most places) and intention to be bound is not actionable without consideration. The court held that there was no enforceable promise.

Question 18

3 situations in which the law will enforce promises to pay made after services were already rendered –

Answer 18

3 situations in which the law will enforce promises to pay made after services were already rendered – 1. Express promises can renew debts discharged in bankruptcy, 2. Dead debt can be renewed with implied or express promises or partial payment, and 3. When enforcement is required to prevent injustice (minority rule)

1. a debt discharged because of bankruptcy can be revived only through an express promise - § 83
2. an unenforceable debt can be revived through an express promise, implied promise or partial payment § 82 First Hawaiian Bank v. Jack Zuckerkorn (1981)
3. when enforcement of the promise is required to prevent injustice § 86 Joe Webb v. N. Floyd and Joseph F. McGowin (1935) (minority)

Question 19

§ 82 Promise to Pay Indebtedness; Effect on the Statute of Limitations:

Answer 19

promises – including acknowledgement, partial payment, or renunciation of the statute of limitation – to pay all or part of preexisting debt will renew the debt if it is otherwise enforceable or was before the statute of limitations ran

(1) A promise to pay all or part of an antecedent contractual or quasi-contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for the effect of a statute of limitations.
(2) The following facts operate as such a promise unless other facts indicate a different intention:
(a) A voluntary acknowledgment to the obligee, admitting the present existence of the antecedent indebtedness; or
(b) A voluntary transfer of money, a negotiable instrument, or other thing by the obligor to the obligee, made as interest on or part payment of or collateral security for the antecedent indebtedness; or
(c) A statement to the obligee that the statute of limitations will not be pleaded as a defense.

Question 20

§ 83 Promise to Pay Indebtedness Discharged in Bankruptcy:

Answer 20

only express promises to pay all or part of debts discharged in bankruptcy are binding
An express promise to pay all or part of an indebtedness of the promisor, discharged or dischargeable in bankruptcy proceedings begun before the promise is made, is binding.

Question 21

§ 86 Promise for Benefit Received:

Answer 21

only binding to the extent necessary to prevent injustice

(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.
(2) A promise is not binding under Subsection (1)
(a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or
(b) to the extent that its value is disproportionate to the benefit.

Question 22

First Hawaiian Bank v. Zuckerkorn (1981):

Answer 22

a new promise to pay debt binds the debtor to pay for a new limitations period if made after the first has passed.
Defendant-appellant Zuckerkorn allegedly agreed to conditions on a new credit card requiring he acknowledge and make additional payments on dead debt. The court held that the new line of credit constituted new consideration for his renewed promise and that his agreeing to those conditions acknowledged the old debt, thus serving as prima facie evidence of his renewed promise.

Question 23

Webb v. Floyd and McGowin (1935)

Answer 23

(minority rule): material benefits can constitute consideration ex post.
Without any inducement or time to bargain, Webb sacrificed his own safety to save McGowin from an injury and became permanently disabled himself. McGowin promised to pay him a lifelong pension and did until his death, when his estate stopped the payment. The court held that the sacrifice and subsequent lifelong impairment was sufficient legal consideration, that the services were not gratuitous, and a concurrent opinion added that law ought not be separated from justice.

Question 24

Mills v. Wyman (1825):

Answer 24

Mills v. Wyman (1825): promises made in recognition of past benefits are not enforceable for want of consideration.
An estranged father’s promise to pay for his son’s care after his son’s death is not enforceable. The son’s caregiver undertook to treat him on a voluntary basis and his father’s promise ex post lacked consideration because you cannot induce someone to take past action – it was a gratuitous promise. He may have been morally obligated to pay, but there was no legal obligation.

Question 25

Caveat emptor

Answer 25

buyer beware

Question 26

Rescission

Answer 26

the revocation, cancellation, or repeal of a law, order, or agreement

Question 27

Reformation

Answer 27

equitable remedy by which court will modify written agreement to reflect actual intent or parties to correct fraud or mutual mistake