Module 6 Flashcards
What is promissory estoppel?
The enforcing of a promise injuriously relied on by a promisee
What is a donative promise?
A promise to make a gift
Will an informal, unrelied on, gratuitous promise be enforced?
Generally no
What is a gratuitous promise?
In business when a party gratuitously agrees to raise or lower the contract price to reflect changing market conditions. This is not a gift, and the promisor is not entitled to restitution after performing
What is assumpsit?
When a promisor had undertaken to do something and had done it carelessly to the detriment of the promisee (misfeasance)
What is nonfeasance?
Promisor simply did not perform
What must there be in a contract?
Benefit to the promisor and a detriment to the promisee
What is consideration?
Legal detriment that has been bargained for by the promisor, and exchanged by the promisee in return for the promisor’s promise
What are the three elements that must coexist to make a binding transaction?
1) promisee must suffer legal detriment
2) detriment must induce the promise
3) promise must induce the detriment
4) bargain for objectively understood
What does it mean for the promisee to suffer legal detriment?
Promisee must promise to do what he was not legally obligated to do, or refrain or promise to refrain from doing what he is legally privileged to do
Does it matter who the consideration is going from or to?
No, the detriment can be given by someone other than the promisee and go to a person other than the promisor. As long as it is bargained for and given in exchange for the promise it doesn’t matter
What does it mean for detriment to introduce the promise?
The promise must be made to induce the conduct of promisee
What does it mean that the promise must induce the detriment?
The promise must induce the promisee to exchange her conduct for the promise. Offeree must actually/apparently be induced to act by the promise
If Ally says to Bee, “if you paint my house I promise to pay you $10,000.” Bee performs. Find the consideration
- Bee has incurred legal detriment because Be performed an act that he was not legally obligated to perform
- A was exchanging a promise to pay for the act
- be painted knowing of the offer and intending to accept
How does motive relate to consideration?
It can be evidence about whether an exchange was intended
What is wrong with this promise?
A mother tells her son that because he isn’t as rich as his brothers she will pay him $5000 for 30 days
Not enforceable because the promisor didn’t request or induce anything in exchange. No detriment, so no consideration
What is wrong with this promise?
Someone says because they have named their child after you a promise to pay you $5000
It is not enforceable because the promise didn’t induce a detriment. The promisee didn’t know about the offer/have any intent to accept when the offer was done. Past consideration isn’t consideration.
What is the problem with making an exchange when something has already occurred?
Parties cannot bargain for something that has already happened. Past consideration is not consideration
What does prospective mean?
Bargaining for something in the future. Consideration exists
What do courts do when there is inadequate consideration?
They want parties to make their own bargains, so generally they do not get involved in issues of consideration adequacy
What is a grubstake?
When a loan is made to help someone start an enterprise, and it is often conditional upon whether or not the enterprise is successful. In these situations it is okay that consideration is much more than the detriment because of the risk involved
What is wrong with this situation?
A tells B that if it rains tomorrow he will pay him $10.
B cannot enforce the promise even if it rains because A has merely made an unenforceable conditional promise to make a gift
How do you figure out whether the promisor has bargained for the detriment, or has made a conditional gift?
Consider many factors:
- The smallness of the detriment
- whether the happening of the contingency would be a benefit to the promisor (contract making state of mind)
- if the benefit is merely the pleasure of altruism (gift making state of mind)
If an offeror dies before there is an acceptance what is one way that the contract wont be terminated?
If there was consideration it would have made the offer irrevocable
What is sham/nominal consideration?
Nominal gesture given as a formality and done to create a contract (feigned or pretended)
The only consideration is false or sham recital of consideration, does that make the offer irrevocable?
- majority view: consideration hasn’t been paid or given
- minority view: opposite result
- Restatement two: no consideration (option contracts/credit guarantees = special treatment)
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Is it possible to make a gratuitous gift enforceable by using some sort of bargain? Ie) having someone pay $10 as a token for $100,000 gift?
- restatement two: no just a formality instead of a genuine bargain. Token payment is nominal consideration
- your number two: the token manifests a bargained-for exchange
What happens when a promisor has more than one motive?
- it doesn’t matter, unless both parties know the consideration is just pretense it is immaterial that the promisor’s desire for the consideration is incidental to other objectives
When a promisor has more than one motive is the promise enforceable?
Under the objective theory, so long as the promisee doesn’t know that the detriment is only a pretense the promise is enforceable. But if it is clear that the consideration is only pretense, the promise is not enforceable
Is surrender of a valid claim detrimental?
It is, and if it is bargained for it constitutes consideration
What is your duty with regard to unfounded claims?
Not to assert a claim you know is unfounded
Can a contract be entered into under threat?
No it will be set aside on the ground of duress
If a party believes in/isn’t certain about the validity of a claim, should the surrender of an invalid claim still be non-detrimental?
A) earliest view: no detriment because a person has the right to assert an unfounded claim
B) modern view: consideration if it was asserted in good faith and if a reasonable person would believe it was well-founded
C) other courts: the only requirement is good-faith so long as the invalidity of the claim is not obvious.
D) statement two: must be either good faith or objective uncertainty about the validity of the claim
What is an invalid claim?
When the promisor is bargaining for a discharge of duty
What is the pre-existing duty rule?
Where a person performs/promises to perform a legal obligation, or promises to refrain from doing/refrains from doing what he is not legally privileged to do… Person has not incurred detriment
What is the simple version of the pre-existing duty rule?
A rule that prevents a party from promising the identical consideration in one agreement that the party is already duty-bound to perform by a previous agreement
What is an example of the pre-existing duty rule?
If a landlord promises it tenant to refrain from evicting her if she pays her past rent, the landlord can still evict her even if she pays because it was her duty to pay the rent
How do duties imposed by law relate to the pre-existing duty rule?
A promise is made to a subpoenaed witness in consideration for his testimony: not enforceable because by law the witness had to testify