Basics Flashcards
Promissory Liability
Contracts are legally enforceable promises that can give rise to liability. Measure by an objective standard. Factors: specificity of the statement, context of statement, nature of defect, parties’ knowledge and sophistication, language employed by seller.
Consideration
Any action, forbearance, or promise as an inducement for a promise made that involves a legal detriment or a change in the legal position of the promisee constitutes sufficient consideration.
Requirement of Exchange
To constitute consideration 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.
Requirement of Bargain
To constitute consideration, a performance or a return promise must be bargained for.
Promises as Consideration
“A promise that is bargained for is consideration if the promised performance would be consideration.” Restatement (2d) s. 75, comment; Mutual promises at the time are not essential unless the promisee understood that the promisor was not bound, except on condition that the other party entered an immediate and reciprocal obligation to do the thing requested.
Rights and duties in unilateral contracts
Promise on one side only; promisor: duty, promisee: right; no mutuality required.
Rights and duties in bilateral contracts
A promise on both sides; promisor: duty AND right, promisee: right AND duty; where promises are exchanged for promises, there must be a mutuality in obligation (sometimes referred to as mutuality).
Illusory promise
Words of promise which by their terms make performance entirely optional with the “promisor” do not constitute a promise.
Termination Clauses as Illusory Promises
If a termination clause gives a party the power to terminate at will, at any time, for any reason, the promise is illusory. If the clause restricts the right of termination in some way, not illusory
Termination Clauses under UCC
Requires “reasonable notification” for termination, except on the happening of an agreed event.
Conditional Promises
A promise that will become due only if a particular event, called a condition, occurs. A promise creates a duty; a condition postpones that duty.
Express Conditions
One that’s clearly stated. Ex. You pay $1,000 to an insurance company in exchange for the company’s promise to pay out $100,000 if your house has serious fire damage.
Implied Conditions
Courts can impose a condition by implication, even if the contract does not provide any. Ex. constructive condition of exchange—one party’s duty to perform is not triggered until the other party has performed.
Implied Promises, Common Law
A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct. Restatement (2d) Contracts 4; Promises can be inferred from conduct or from the circumstances of the transaction.
Implied Promises, Sale of Goods
A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.
General Obligation of Good Faith and Fair Dealing
Implied in every contract as a matter of law.
General Obligation of Good Faith and Fair Dealing, Common Law
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.
General Obligation of Good Faith and Fair Dealing, Sale of Goods
Every contract or duty within the UCC imposes an obligation of good faith in its performance and enforcement.
Promissory Estoppel (Reliance)
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.
Elements of Promissory Estoppel
Actual Inducement: The promise must have, in fact, induced the promisee’s action or forbearance; Justification: The promisee’s response must have been a justifiable reaction to the promise.; Avoiding Injustice: The promisee must have suffered some actual harm by relying on the promise, not merely not receiving the promised benefit.
Restitution
Liability in restitution derives from the receipt of a benefit whose retention without payment would result in the unjust enrichment of the defendant at the expense of the claimant.
Unjust enrichment
Gains produced through another’s loss
The Officious Intermeddler
Absent circumstances that justify a claimant’s intervention, there is no liability in restitution for an unrequested benefit voluntarily conferred.
Quasi-contract
A ground for recovering money in an action at common law, when the claim is not based on a true contract but seeking redress for unjust enrichment; also called “constructive contract” or “contract implied by law”; With regular contracts, the contract defines the duty; with quasi-contracts, the duty defines the contract
