Doctrine of consideration Flashcards
(35 cards)
Is a gratuitous promise enforceable where a party has reasonably relied on that promise and has suffered loss and inconvenience?
No. A gratuitous promise is not enforceable even if a party has reasonably relied on that promise and has suffered loss and inconvenience.
Kirksey v. Kirksey, 8 Ala. 131 (1845).
Facts Kirksey (D) was the brother of Antillico Kirksey’s (P) deceased husband. The defendant offered Kirksey a home on his property and Kirksey accepted. She moved sixty miles and lived in the defendant’s home for two years. He later forced her to relocate to a remote location on the property and eventually demanded that she leave altogether.
Kirksey sued for breach of contract on the grounds that her costs in relocating to the defendant’s property were sufficient consideration to enforce his promise to provide her with a home. The court entered a judgment in favor of the plaintiff for $200 and defendant appealed.
Issue
Is a gratuitous promise enforceable where a party has reasonably relied on that promise and has suffered loss and inconvenience?
Holding and Rule
No. A gratuitous promise is not enforceable even if a party has reasonably relied on that promise and has suffered loss and inconvenience.
The court held that the promise was a mere gratuity and not enforceable for lack of consideration.
Disposition
Judgment reversed.
Dissent (Ormond)
Kirksey’s loss and inconvenience were sufficient consideration to render the defendant’s promise enforceable.
Notes
Contract offers are to be interpreted according to a manifestation of contractual intent. This is determined by considering what a reasonable person standing in the promisee’s shoes would perceive to have been said. Today, the doctrine of promissory estoppel would allow enforcement of the contract because Kirksey reasonably relied upon defendant’s promise to her detriment. Promissory estoppel is a consideration substitute and is not consideration; it must therefore be considered only when consideration is not present.
What is a conditional donative promise
the condition is a way for the performance of the conduct. In comparison to a conditional bargain promise, in which the condition is actually a price for the conduct of the promise.
Holding in Kirksey v. Kirksey
Kirksey v. Kirksey
A brother-in-law, wrote to the widow of his brother, living sixty miles distant, that if she would come and see him, he would let her have a place to raise her family. Shortly after, she broke up and removed to the residence of her brother-in-law, who for two years furnished her with a comfortable residence, and then required her to give it up: Held, that the promise was a mere gratuity, and that an action would not lie for a violation of it.
Equitable estoppel
Equitable estoppel often is said to require a misstatement of fact and foreseeable reliance on the misstatement . So, for example, if A states to B that X is a fact, B relies upon that statement, and B sues A in an action where the truth of X is relevant, A is prevented - estopped - from introducing evidence that X is not true. As a consequence, a legal claim or defense that turns on a misstated and relied-upon fact will succeed.
Is misstatement of intent or a misstatement regarding a future event is a basis for equitable estoppel?
Is misstatement of intent or a misstatement regarding a future event is a basis for equitable estoppel?
No
Promissory estoppel
Restatement first, §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.
The court explained that there are three theoretical justifications for promissory estoppel:
(i) theory of act for promise in that the induced action or forbearance is the consideration for the promise (Underwood);
(ii) theory of promissory estoppel wherein the induced action or forbearance works an estoppel against the promissor (Sheidly); and
(iii) the theory of bilateral contract: when the induced action or forbearance is commenced, a promise to complete is implied and an enforceable bilateral contract is formed, the implied promise being the consideration for the original promise.
Equitable estoppel vs. promissory estoppel
First, promissory estoppel is based on a promise while equitable estoppel generally is not.
Second, there is no pretense that promissory estoppel “operates always as a shield, never as a sword … and it does not of itself create new right.
Reliance is a legal basis for enforcing a promise in US law. Reliance is treated as consideration itself or as a substitute for consideration. The promisor can only deny that there was reliance or that the other elements of the doctrine of promissory estoppel are not satisfied.
Is past performance valid consideration to render a promise enforceable?
Is a gratuitous promise enforceable if the promisee justifiably relies on the promise?
No. Past performance is not valid consideration to render a contract enforceable.
Yes. A gratuitous promise is enforceable if the promisee justifiably relies on the promise.
Feinberg v. Pfeiffer Co.
Issue: Must a promise induce reasonable reliance by the promisee in order for promissory estoppel to apply?
Holding and Rule: Yes. A promise must induce reasonable reliance upon it in order for promissory estoppel to apply. The defendant’s promise was given as a token of appreciation and without consideration from the plaintiff. The promise did not induce reliance by Hayes because he had decided to retire from his employment before any promise that he would receive a pension was made. The promise did not induce his action or forbearance and Plantations Steel’s promise did not shape his thinking.
Disposition: Reversed.
Notes: At trial the court analyzed the consideration and contract issues before it ever began to consider whether promissory estoppel applied.
Issue: Can a nominal sum of money or prior acts or love and affection act as legal consideration sufficient to create an enforceable contract?
Schnell v. Nell
Holding and Rule: No. The alleged contract set forth three distinct forms of consideration upon which the contract was to be formed: the promise to pay one cent, the love and affection of his deceased wife, and the desire to leave a bequest to the three beneficiaries. The court held that the consideration of one cent was not sufficient to render Schnell’s promise enforceable. While inadequacy of consideration will not vitiate an agreement, that doctrine does not apply to a mere unequal exchange of money. The exchange would have been valid if the cent had been at item of indeterminate value because it was unique or different or sentimental.
The also held that D had no legal obligation to honor his wife’s bequests and his promise to pay them was not legally binding. A moral consideration only will not support a contract. As for the promise by the beneficiaries not to pursue further claims arising from the will, the court held that valid consideration for his promise did not exist because any such claims would have been legally groundless. If a claim is legally groundless, a promise upon a compromise of it is not legally binding.
Does UCC applies to contract between individual
No, UCC only applies to Merchants.
Quasi-contract: unjust enrichment
It’s a lot like contract, it a very important foundation of the US contract law. It is unjust enrichment action.
Sometime the plaintiff prefers not to sue for breach of contract (because the contract is unfavorable for the plaintiff), he instead sue for the value of the unjust enrichment of the defendant.
Damages award in the US
Damages award is just an invitation for another round of settlement negotiation.
Overview of offer, power of acceptance and bargain
Offer is what triggers the offeree power of acceptance, allows the parties to have a bargain.
An expression of the presence existing willness to enter into a bargain, an offer is expressed in such a way that a reasonable person standing in the shoes of the offeree would believe that she acts or does something to make it clear that she is accepting that offer.
There are 2 elements of offer:
(i) there has to be an intent of the offeror;
(ii) definite terms (should differentiate from an offer to an offer to negotiate): make clear to subject of the proposed bargain, the quantities involved (there are exception for prices if goods are listed on market)
Unilateral contract
an exchange of a promise for an act (it has to be an act)
Mutual assent
For a contract to be formed, there has to be a meeting of minds, that called mutual assent (including a reliance on a reasonable interpretation of the manifested intentions (e.g., undisclosed thoughts).
Dectriment
Any loss or harm suffered by a person or property;
Contract: The relinquishment of some legal right that promisee would have otherwise been entitled to exercise.
“A promisee or an act may be a detriment although on balance the promisor is making a good bargain. Thus a promise to pay $10K for a RR worth $12K is non the less a detriment, and a good consideration for a promise to deliver the car.”
An advertisement is not an offer, unless …?
Exception:
(i) the circumstances clearly make it clear of the intention to make a bargain.
(ii) the Ad invites specific action without further communication (take action without the need of communication going back and forth, directive to do a particular thing to get the bargain); and
(iii) over-acceptance is unlikely.
Termination of offeree’s power of acception
(i) expiration or lapse of offer
“reasonable time” depends on (i) nature of the subject matter, (ii) changes of the price fluctuation, (iii) mode of communication, (iv) business custom (Restatement 41)
(ii) rejection of an offer;
(iii) counteroffer
(iv) conditional or qualified acceptance
(v) termination by revocation
(v) termination by operation of law
Last shot rule
The court will treat the last form assent between the marchants as the counteroffer and if the party receiving that form still performs, that counteroffer will be deemed accepted.
Mirror-image rule
Historically, an acceptance has to mirror the terms of the offer. Any deviation will make a counteroffer.
Motion for summary judgment
In the US, trial are to determine the fact.
Motion for summary judgment: either party can go to court and request not to have a trial because there is no dispute as to the fact.
Statute of fraud?
The statute of frauds refers to the requirement that certain kinds of contracts be memorialized in a signed writing with sufficient content to evidence the contract.
This can be remembered by using the mnemonic “MY LEGS”: Marriage, contracts for more than one Year, Land, Executor (or Estate), Goods ($500 or more), Surety.
Condition of an acceptance to an offer: …. [conclusion from Andente]
A response to an offer must be unequivocal in two ways:
(i) The response must accept the offer on its terms;
(ii) The response has to be clear an unambiguous. A letter accompanying with the signed contract, suggesting that the buyer would also want furniture to be included, is considered by the court to be ambiguous enough to allow a reluctant owner to back out from the transaction.
