Enforcability

Question 1

Restatement § 17 Requirement of a Bargain

Answer 1

(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is mutual assent and a consideration.
(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§ 82- 94.

Question 2

Restatement § 17 Requirement of a Bargain Sufficient Consideration

A owes B $50. In exchange for A’s payment of the debt B makes a promise.

Answer 2

Under the rule stated in § 73, B’s promise is without consideration.

Question 3

Restatement § 71 Requirement of Exchange; Types of Exchange

Consideration

Answer 3

(1) To constitute consideration, a performance or a return promise must be bargained for.
(2) A performance or return promise is bargained for if the promisor wants it in exchange for his promise and the promisee gives it 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 4

Restatement § 71 Requirement of Exchange; Types of Exchange Bargained For

A offers to buy a book owned by B and to pay B $10 in exchange therefor. B accepts the offer and delivers the book to A.

Answer 4

The transfer and delivery of the book constitute a performance and are consideration for A’s promise. This is so even though A at the time he makes the offer secretly intends to pay B $10 whether or not he gets the book, or even though B at the time he accepts secretly intends not to collect the $10.

Question 5

Restatement § 71 Requirement of Exchange; Types of Exchange Bargained For

A receives a gift from B of a book worth $10. Subsequently A promises to pay B the value of the book.

Answer 5

There is no consideration for A’s promise. This is so even though B at the time he makes the gift secretly hopes that A will pay him for it. As to the enforcement of such promises, see § 86.

Question 6

Restatement § 71 Requirement of Exchange; Types of Exchange Bargained For

A promises to make a gift of $10 to B. In reliance on the promise B buys a book from C and promises to pay C $10 for it.

Answer 6

There is no consideration for A’s promise. As to the enforcement of such promises, see § 90.

Question 7

Restatement § 71 Requirement of Exchange; Types of Exchange Bargained For

A desires to make a binding promise to give $1000 to his son B. Being advised that a gratuitous promise is not binding, A writes out and signs a false recital that B has sold him a car for $1000 and a promise to pay that amount.

Answer 7

There is no consideration for A’s promise.

Question 8

Restatement § 71 Requirement of Exchange; Types of Exchange

A desires to make a binding promise to give $1000 to his son B. Being advised that a gratuitous promise is not binding, A offers to buy from B for $1000 a book worth less than $1. B accepts the offer knowing that the purchase of the book is a mere pretense.

Answer 8

There is no consideration for A’s promise to pay $1000.

Question 9

Restatement § 71 Requirement of Exchange; Types of Exchange Mixture of Bargain and Gift

A offers to buy a book owned by B and to pay B $10 in exchange therefor.

Answer 9

B’s transfer and delivery of the book are consideration for A’s promise even though both parties know that such books regularly sell for $5 and that part of A’s motive in making the offer is to make a gift to B.

Question 10

Restatement § 71 Requirement of Exchange; Types of Exchange Mixture of Bargain and Gift

A owns land worth $10,000 which is subject to a mortgage to secure a debt of $5,000. A promises to make a gift of the land to his son B and to pay off the mortgage, and later gives B a deed subject to the mortgage.

Answer 10

B’s acceptance of the deed is not consideration for A’s promise to pay the mortgage debt.

Question 11

Restatement § 71 Requirement of Exchange; Types of Exchange Mixture of Bargain and Gift

A and B agree that A will advance $1000 to B as a gratuitous loan.

Answer 11

B’s promise to accept the loan is not consideration for A’s promise to make it. But the loan when made is consideration for B’s promise to repay.

Question 12

Restatement § 71 Requirement of Exchange; Types of Exchange Types of Consideration

A promises B, his nephew aged 16, that A will pay B $1000 when B becomes 21 if B does not smoke before then.

Answer 12

B’s forbearance to smoke is a performance and if bargained for is consideration for A’s promise.

Question 13

Restatement § 71 Requirement of Exchange; Types of Exchange Types of Consideration

A says to B, the owner of a garage, “I will pay you $100 if you will make my car run properly.”

Answer 13

The production of this result is consideration for A’s promise.

Question 14

Restatement § 71 Requirement of Exchange; Types of Exchange Types of Consideration

A has B’s horse in his possession. B writes to A, “If you will promise me $100 for the horse, he is yours.” A promptly replies making the requested promise. The property in the horse at once passes to A.

Answer 14

The change in ownership is consideration for A’s promise.

Question 15

Restatement § 71 Requirement of Exchange; Types of Exchange Types of Consideration

A promises to pay B $1,000 if B will make an offer to C to sell C certain land for $25,000 and will leave the offer open for 24 hours. B makes the requested offer and forbears to revoke it for 24 hours, but C does not accept.

Answer 15

The creation of a power of acceptance in C is consideration for A’s promise.

Question 16

Restatement § 71 Requirement of Exchange; Types of Exchange Types of Consideration

A mails a written order to B, offering to buy specified machinery on specified terms. The order provides “Ship at once.”

Answer 16

B’s prompt shipment or promise to ship is consideration for A’s promise to pay the price.

Question 17

Restatement § 71 Requirement of Exchange; Types of Exchange Consideration Moving from or to a Third Person

A promises B to guarantee payment of a bill of goods if B sells the goods to C.

Answer 17

Selling the goods to C is consideration for A’s promise.

Question 18

Restatement § 71 Requirement of Exchange; Types of Exchange Consideration Moving from or to a Third Person

A makes a promissory note payable to B in return for a payment by B to C.

Answer 18

The payment is consideration for the note.

Question 19

Restatement § 71 Requirement of Exchange; Types of Exchange Consideration Moving from or to a Third Person

A, at C’s request and in exchange for $1 paid by C, promises B to give him a book.

Answer 19

The payment is consideration for A’s promise.

Question 20

Restatement § 71 Requirement of Exchange; Types of Exchange Consideration Moving from or to a Third Person

A promises B to pay B $1, in exchange for C’s promise to A to give A a book.

Answer 20

The promises are consideration for one another.

Question 21

Restatement § 71 Requirement of Exchange; Types of Exchange Consideration Moving from or to a Third Person

A promises to pay $1,000 to B, a bank, in exchange for the delivery of a car by C to A’s son D.

Answer 21

The delivery of the car is consideration for A’s promise.

Question 22

Restatement § 79 Adequacy of Consideration; Mutuality of Obligation

Answer 22

If the requirement of consideration is met, there is no additional requirement of

(a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or
(b) equivalence in the values exchanged; or
(c) “mutuality of obligation.”

Question 23

Restatement § 79 Adequacy of Consideration; Mutuality of Obligation Pretended Exchange

In consideration of one cent received, A promises to pay $600 in three yearly installments of $200 each.

Answer 23

The one cent is merely nominal and is not consideration for A’s promise.

Question 24

Restatement § 81 Consideration as Motive or Inducing Cause

Answer 24

(1) What is bargained for does not have to cause the making of a promise to be consideration for the promise.
(2) A promise does not have to cause a performance or return promise to be consideration for the promise.

Question 25

Restatement § 73 Performance of Legal Duty

Not Consideration

Answer 25

Performance of a legal duty is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.

Question 26

Restatement § 74 Settlement of Claims

Answer 26

(1) Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless
(a) the claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or
(b) the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid.
(2) The execution of a written instrument surrendering a claim or defense by one who is under no duty to execute it is consideration if the execution of the written instrument is bargained for even though he is not asserting the claim or defense and believes that no valid claim or defense exists.

Question 27

Restatement § 95 Requirements for Sealed Contract or Written Contract or Instrument Absence of Statute

Answer 27

(1) In the absence of statute a promise is binding without consideration if
(a) it is in writing and sealed; and
(b) the document containing the promise is delivered; and
(c) the promisor and promisee are named in the document or so described as to be capable of identification when it is delivered.

Question 28

Restatement § 95 Requirements for Sealed Contract or Written Contract or Instrument Presence of Statute

Answer 28

(2) When a statute provides in effect that a written contract or instrument is binding without consideration or that lack of consideration is an affirmative defense to an action on a written contract or instrument, in order to be subject to the statute a promise must either
(a) be expressed in a document signed or otherwise assented to by the promisor and delivered; or
(b) be expressed in a writing or writings to which both promisor and promisee manifest assent.

Question 29

Restatement § 86 Promise to Pay a Debt Barred by the Statute of Limitations (for prior contract)

Answer 29

(1) Except as stated in § 93, if a promisor promises to pay a debt from a prior contract, the promise is binding as long as the promise was once enforcable and either still is or would be except for the effect of a statute of limitations. This does not apply to judgements.
(2) The following facts operate as such a promise as that stated in Subsection (1) unless other circumstances indicate a different intention:
(a) The promisor voluntarily admits the debt to the person its owed to;
(b) A voluntary transfer of money, a negotiable instrument, or other thing to the obligee if made as interest thereon, or part payment thereof or collateral security therefor by the obligor, or by an agent of the obligor whose authority so to act was not given irrevocably before the antecedent duty was barred;
(c) A promise to the obligee of such an antecedent duty as is described in Subsection (1) not to plead the Statute of Limitations as a defense to an action thereon.
(3) An executor, administrator, trustee or guardian who makes such a promise as that stated in Subsection (1) cannot by so doing impose a duty upon the estate which he represents. Nor will he be personally bound unless he was bound by the antecedent duty.

Question 30

Restatement § 86 Promise to Pay a Debt Barred by the Statute of Limitations

A owes B $100 and the claim is not yet barred by the Statute of Limitations. A promises B in a signed writing to pay the debt.

Answer 30

The promise is binding, and the Statute of Limitations will not bar the claim for the statutory period after the making of the new promise.

Question 31

Restatement § 86 Promise to Pay a Debt Barred by the Statute of Limitations

A owes B three debts of $500 each. All of the debts are barred by the Statute of Limitations. A writes to B, “I promise to pay you one of those $500 debts which I owe; the other two I shall not pay.”

Answer 31

A’s promise of $500 is binding.

Question 32

Restatement § 86 Promise to Pay a Debt Barred by the Statute of Limitations 2a

A owes B $500 and with reference to some dispute between them B brings a suit in equity in which he charges that A owes him this sum. In his answer A admits that he owes the money as alleged.

Answer 32

This admission does not impose a new obligation upon A whether the Statute of Limitations has or has not completely run on the original obligation when the admission was made.

Question 33

Restatement § 86 Promise to Pay a Debt Barred by the Statute of Limitations 2a

A owes B $500, and writes B, “I admit that I owe you $500, but I am unable to pay it.”

Answer 33

A’s letter imposes no duty upon him.

Question 34

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

Prior contracts

Answer 34

(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 35

Restatement § 82 Promise to Pay Indebtedness; Effect on the Statute of Limitations Historical note: Types of Indebtedness

A owes B $100 and the claim is not yet barred by the statute of limitations. A promises B in a signed writing to pay the debt.

Answer 35

The promise is binding, and the statute of limitations will not bar the claim for the statutory period after the making of the new promise.

Question 36

Restatement § 82 Promise to Pay Indebtedness; Effect on the Statute of Limitations Historical Note: Types of Indebtedness

A owes B three debts of $500 each. All of the debts are barred by the statute of limitations. A writes to B, “I promise to pay you one of those $500 debts which I owe; the other two I shall not pay.”

Answer 36

A’s promise of $500 is binding.

Question 37

Restatement § 82 Promise to Pay Indebtedness; Effect on the Statute of Limitations Historical Note: Types of Indebtedness

A is indebted to B on a judgment, which is barred by a twelve-year statute of limitations, and makes a written promise to B to pay the debt.

Answer 37

The subsequent promise does not revive the judgment, but may be the basis of an action.

Question 38

Restatement § 82 Promise to Pay Indebtedness; Effect on the Statute of Limitations Promise not to Plead the Statute of Limitations

A owes B $500, and writes B “I cannot pay you now, but I will never set up the statute of limitations against your claim.” B delays bringing an action to collect his claim until more than the statutory period from the time of A’s promise not to set up the statute has expired.

Answer 38

A may then successfully assert the bar of the statute.

Question 39

Restatement § 83 Promise to Pay Indebtedness Discharged in Bankruptcy

Answer 39

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 40

Restatement § 83 Promise to Pay Indebtedness Discharged in Bankruptcy Rationale

A owes B $100 and is about to go into bankruptcy. Immediately before filing his petition he promises B to pay the debt in spite of any discharge that he may get in bankruptcy.

Answer 40

The promise is not binding but would have been binding if it had been made after the petition in bankruptcy was filed.

Question 41

Restatement § 83 Promise to Pay Indebtedness Discharged in Bankruptcy Rationale

A owes B $100, and the debt is discharged in A’s bankruptcy. Thereafter A promises in writing to pay the debt “as soon as I sell the mill.” Two years later A sells the mill.

Answer 41

B can recover the debt from A by an action brought within the period fixed by the statute of limitations after the sale. If the subsequent promise were oral, B would be limited in most States to an action within the statutory period after the original debt became due.

Question 42

Restatement § 89 Modification of Executory Contract

Answer 42

A promise modifying a duty under a contract not fully performed on either side is binding

(a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or
(b) to the extent provided by statute; or
(c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.

Question 43

Restatement § 89 Modification of Executory Contract Performance of Legal Duty By a written contract

A agrees to excavate a cellar for B for a stated price. Solid rock is unexpectedly encountered and A so notifies B. A and B then orally agree that A will remove the rock at a unit price which is reasonable but nine times that used in computing the original price, and A completes the job.

Answer 43

B is bound to pay the increased amount.

Question 44

Restatement § 89 Modification of Executory Contract Performance of Legal Duty

A contracts to manufacture and sell to B 100,000 castings for lawn mowers at 50 cents each. After partial delivery and after B has contracted to sell a substantial number of lawn mowers at a fixed price, A notifies B that increased metal costs require that the price be increased to 75 cents. Substitute castings are available at 55 cents, but only after several months delay. B protests but is forced to agree to the new price to keep its plant in operation.

Answer 44

The modification is not binding.

Question 45

UCC 2-209 Modification, Rescission and Waiver

Answer 45

(1) An agreement modifying a contract within this Article needs no consideration to be binding.

Question 46

Restatement § 90 Promise Reasonably Inducing Action or Forbearance

Answer 46

(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 so 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.

Question 47

Restatement § 90 Promise Reasonably Inducing Action or Forbearance Character of Reliance Protected

A promises B not to foreclose, for a specified time, a mortgage which A holds on B’s land. B thereafter makes improvements on the land.

Answer 47

A’s promise is binding and may be enforced by denial of foreclosure before the time has elapsed.

Question 48

Restatement § 90 Promise Reasonably Inducing Action or Forbearance Character of Reliance Protected

A sues B in a municipal court for damages for personal injuries caused by B’s negligence. After the one year statute of limitations has run, B requests A to discontinue the action and start again in the superior court where the action can be consolidated with other actions against B arising out of the same accident. A does so.

Answer 48

B’s implied promise that no harm to A will result bars B from asserting the statute of limitations as a defense.

Question 49

Restatement § 90 Promise Reasonably Inducing Action or Forbearance Character of Reliance Protected

A has been employed by B for 40 years. B promises to pay A a pension of $200 per month when A retires. A retires and forbears to work elsewhere for several years while B pays the pension.

Answer 49

B’s promise is binding.

Question 50

Restatement § 374 Restitution in Favor of Party in Breach

(Unjust Enrichment)

Answer 50

(1) Subject to the rule stated in Subsection (2), if a party justifiably refuses to perform on the ground that his remaining duties of performance have been discharged by the other party’s breach, the party in breach is entitled to restitution for any benefit that he has conferred if it is more than the injured party lost becausde of the breach.
(2) To the extent that, under the manifested assent of the parties, a party’s performance is to be retained in the case of breach, that party is not entitled to restitution if the value of the performance as liquidated damages is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss.

Question 51

Restatement 374 Restitution in Favor of Party in Breach Measurement of Benefit

A contracts to sell land to B for $100,000, which B promises to pay in $10,000 installments before transfer of title. After B has paid $30,000 he fails to pay the remaining installments and A sells the land to another buyer for $95,000.

Answer 51

B can recover $30,000 from A in restitution less $5,000 damages for B’s breach of contract, or $25,000. If A does not sell the land to another buyer and obtains a decree of specific performance against B, B has no right to restitution.

Question 52

Restatement 374 Restitution in Favor of Party in Breach Measurement of Benefit

A contracts to make repairs to B’s building in return for B’s promise to pay $10,000 on completion of the work. After spending $8,000 on the job, A fails to complete it because of insolvency. B has the work completed by another builder for $4,000, increasing the value of the building to him by a total of $9,000, but he loses $500 in rent because of the delay.

Answer 52

A can recover $5,000 from B in restitution less $500 in damages for the loss caused by the breach, or $4,500.

Question 53

Restatement 374 Restitution in Favor of Party in Breach Measurement of Benefit

A contracts to make repairs to B’s building in return for B’s promise to pay $10,000 on completion of the work. A makes repairs costing him $8,000 but inadvertently fails to follow the specifications in such material respects that there is no substantial performance. The defects cannot be corrected without the destruction of large parts of the building, but the work confers a benefit on B by increasing the value of the building to him by $4,000.

Answer 53

A can recover $4,000 from B in restitution.

Question 54

Restatement 374 Restitution in Favor of Party in Breach Measurement of Benefit

A contracts to make repairs to B’s building in return for B’s promise to pay $10,000 on completion of the work. A makes repairs costing him $8,000 but inadvertently fails to follow the specifications in such material respects that there is no substantial performance. The defects do not require destruction of large parts of the building and can be corrected for $4,000, which will confer a benefit on B by increasing the value of the building to him by a total of $9,000.

Answer 54

A can recover $5,000 from B in restitution.

Question 55

Restatement 374 Restitution in Favor of Party in Breach Measurement of Benefit

A contracts to tutor B’s son for six months in preparation for an examination, in return for which B promises to pay A $2,000 at the end of that time. After A has worked for three months, he leaves to take another job and B is unable to find a suitable replacement.

Answer 55

In the absence of any reliable basis for measuring the benefit to B from A’s part performance, restitution will be denied.

Question 56

Restatement 374 Restitution in Favor of Party in Breach Exception for Money Paid

A contracts to sell land to B for $100,000, which B promises to pay in $10,000 installments before transfer of title. After B has paid $30,000 he fails to pay the remaining installments and A sells the land to another buyer for $95,000. The contract provides that on default by B, A has the right to retain the first $10,000 installment paid by B.

Answer 56

If $10,000 is a reasonable amount, B can recover only $20,000 from A in restitution.

Question 57

Restatement 374 Restitution in Favor of Party in Breach Exception for Money

A contracts to sell land to B for $100,000, which B promises to pay in $10,000 installments before transfer of title. After B has paid $30,000 he fails to pay the remaining installments and A sells the land to another buyer for $95,000. The contract provides that on default by B, A has the right to retain any installments paid by B.

Answer 57

The provision is not valid, and B can still recover $30,000 from A in restitution less $5,000 damages for B’s breach of contract, or $25,000.

Question 58

Restatement § 370 Requirement That Benefit Be Conferred

A, who holds a mortgage on B’s house, makes a contract with B under which A promises not to foreclose the mortgage for a year. In reliance on this promise, B invests money that he would have used to pay the mortgage in improving other land that he owns. A repudiates the contract and forecloses.

Answer 58

B cannot get restitution based on the improvements since making them conferred no benefit on A.

Question 59

Restatement § 370 Requirement That Benefit Be Conferred

A contracts to sell B a machine for $100,000. After A has spent $40,000 on the manufacture of the machine but before its completion, B repudiates the contract.

Answer 59

A cannot get restitution of the $40,000 because no benefit was conferred on B.

Question 60

Restatement § 370 Requirement That Benefit Be Conferred

Answer 60

A party is entitled to restitution under the rules stated in this Restatement only to the extent that he has conferred a benefit on the other party by way of part performance or reliance.

Question 61

Restatement § 370 Requirement That Benefit Be Conferred

A contracts to work full time for B as a bookkeeper. In breach of this contract, A uses portions of the time that he should spend working for B in keeping books for C, who pays him an additional salary. B sues A for breach of contract.

Answer 61

B cannot recover from A the amount of the salary paid by C because it was not a benefit conferred by B.

Question 62

Restatement § 370 Requirement That Benefit Be Conferred

A promises to deposit $100,000 to B’s credit in the X Bank in return for B’s promise to render services. A deposits the $100,000, the X Bank fails, and B refuses to perform.

Answer 62

A can get restitution of the $100,000 because a benefit was to that extent conferred on B even though it was lost by B when the X Bank failed.

Question 63

Restatement § 370 Requirement That Benefit Be Conferred

A, a social worker, promises B to render personal services to C in return for B’s promise to educate A’s children. B repudiates the contract after A has rendered part of the services.

Answer 63

A can get restitution from B for the services, even though they were not rendered to B, because they conferred a benefit on B.

Question 64

Equitable Estoppel

Answer 64

Bars a party from asserting a claim or defense where that party’s representations or conduct induced another party’s action or inaction. (Ricketts v. Scothorn - grandfather promised money to grandfather)

1. There must be a representation or concealment of material facts
2. These facts must be known to the party estopped at the time of this said conduct
3. The truth concerning these facts must not be known to the other party
4. The conduct must be done with the intention that it will be acted upon by the other party
5. The conduct must be relied upon by the other party, and
6. The other party must in fact act upon it in such a manner as to change his position for the worse.

Question 65

Promissory Estoppel

Answer 65

1. There must have been a promise
2. The promisor must have reason to believe there would be reliance on the promise
3. The promise must have induced such reliance
4. Circumstances must be those in which injustice can only be avoided by enforcement.