Contracts Flashcards

Question

Illusory Promise

Answer 1

= Promise of performance that leaves performance to the unlimited discretion of the promising party → does NOT constitute consideration. → e.g., You agree to paint my portrait, and I agree to pay you $1,000 if I decide I want it.

Answer 2

= Promise to make a gift → generally unenforceable due to insufficient consideration. - One-sided: I can change my mind → I promise to give my nephew a car for his birthday, then I decide not to; that’s fine, he cannot sue me. *Exception: Gratuitous transfers are legally binding. → e.g., If I promise you a new car for your birthday, that would constitute a gratuitous promise and would be unenforceable if I decline to follow through. However, if I give you a new car for your birthday, then the transfer is legally binding, and I cannot later change my mind and take back the car.

Answer 3

= General Rule: A promise in exchange for something already given or performed is NOT supported by consideration. (same as a pre-existing duty: a promise to perform a pre-existing duty is not supported by consideration) → e.g., In Mills v. Wyman, the court refused to enforce the father’s after-the-fact promise to compensate a Good Samaritan for nursing his dying son past consideration is not actually consideration: no present exchange the good Samaritan did not provide the care to get paid *Exception (this is enforceable): - A written promise to pay a debt barred by a statute of limitations. → e.g., If I owe Visa $10k and don’t pay, then they don’t sue to collect before the statute of limitations (so they can no longer sue to collect), but then after that I promise Visa to pay them back the $10k, that is enforceable even though Visa didn’t do anything new to get my money

Answer 4

1) Past or Moral Consideration 2) Material Benefit Test (minority rule) 3) Promissory Estoppel *each has their own card

Answer 5

= Promise made in recognition of a past benefit conferred is enforceable if: - promisee conferred the benefit on the promisor (not a third party); and - the benefit is material. → e.g., A sees that B is in grave danger and heroically intervenes to save the latter, injuring himself in the process. B gratefully promises to compensate A for his efforts. These are the facts of Webb v. McGowin, where the court enforced the promise because A’s efforts bestowed a material benefit (the saving of a life) on B. → e.g., Because the Good Samaritan in Mills v. Wyman bestowed the benefit of nursing services on the promisor’s son rather than on the promisor, the promise would not be enforceable.

Answer 6

= Promisee that reasonably relies to his detriment on a gratuitous promise may be able to enforce that promise even without consideration. 4 Requirements: 1) A promise → e.g., Statements like “I’d like to give you some money to help you with college” would be considered too vague to be an actual promise. But “I’ll give $25,000 toward your tuition this fall” would be specific enough to qualify as a promise. 2) Foreseeable reliance → e.g., The widow’s move to her brother-in-law’s farm on the faith of his promise would have been reasonably foreseeable to the brother-in-law at the time he made her the promise. However, if the widow had purchased a high-end SUV to facilitate the move, this would likely not have been foreseeable. 3) Actual reliance (must be induced by the promise) → e.g., If the widow had already decided to make the 60-mile move before her brother made her the promise, then this would not be actual reliance. 4) Injustice without enforcement → Factors to analyze “injustice” requirement: - Strength of proof of the other three requirements; - Blameworthiness or willfulness of the breach (e.g, I could pay for the car, but just decide not to do it vs. I’ve fallen on hard times and can’t pay for it anymore); - Relative position or equities of the parties (e.g., I’ve fallen on hard times at the end of my nephew’s 4 years of college, but he’s just landed a big high-paying job, the court may not enforce my promise); - Extent to which the reliance was detrimental; and - Availability of alternatives short of enforcing the promise. → HYPOTHETICAL: Uncle promises his nephew $8,000 to enable the latter to purchase a neighbor’s car for transportation to school and an after-school job. In reliance on the promise, the nephew secures possession of the vehicle and promises the neighbor the $8,000. If the uncle reneges on his promise to pay, is promissory estoppel available if the neighbor is willing to accept the return of the car and release the nephew from debt? No, there is an alternative short of enforcing the promise.

Answer 7

→ SOF is a defense = If the K falls under the SOF → It must be in writing + signed by the party against whom enforcement is sought. (aka the Defendant) → SOF = exception to the general rule that oral and written Ks are equally enforceable 6 Categories of Contracts Subject to SOF (MYLEGS) - Marriage Ks (e.g., prenups) - Year: Ks that cannot be performed within one Year of their making - Land: Ks for the sale of Land - Executor: Ks of an Executor or administrator to answer for a duty of a decedent - Guarantee: Ks of Guarantee or suretyship (i.e., guarantor) - Sale: Ks for the Sale of goods at a price of $500 or more (UCC 2-201)

Answer 8

Ks that cannot be performed within one Year of their making → Measured from *date K made,* not date performance begins. → At point of formation, is it at all possible (even if not probable) to complete required performance within 1 year? (if technically possible to do it in under a year, NOT subject to SOF) - e.g., One of the parties to an oral construction agreement attempts to back out 14 months into the project and raises the Statute of Frauds as a defense. Because the prospect of performance is measured from the point of making the contract (when completion within a year was possible) rather than from the time of the dispute (when completion within the first year is clearly no longer possible), the agreement is not governed by the one-year provision and no signed writing is required. **Frequently Tested Situations → K that can be breached or excused within a year of its formation. - This is potentially true of any K and so would swallow the one-year rule. - Irrelevant. What matters is not whether the K can be breached within one year but whether the K can be performed in full by its terms within one year of its formation. → A lifetime or permanent contract of employment is not governed by the one-year rule because employee’s death is possible within a year.

Answer 9

= where the main purpose of the guarantor is to protect his own economic interests, the guarantee agreement is not governed by the Statute of Frauds, and can be oral. → HYPOTHETICAL: Joe Plumbing Co. secures a loan from Piggy Bank. N. Vestor, who owns a controlling interest in the plumbing firm, makes an oral promise to the Bank to guarantee repayment of the loan. Is the guarantee within the Statute of Frauds? - No, the oral promise is not subject to SOF. Vestor owns a controlling interest and is looking to protect his own interests in Joe Plumbing. It could be an oral agreement and be enforceable.

Answer 10

**Writing Requirement** → All that is necessary is that the writing be a memorandum of the agreement which can be prepared before, during, or after formation. - e.g., “Dear Tony, I regret to inform you that I cannot go through with the sale of my racehorse to you. Although the $100,000 you agreed to pay is very generous, my accountant has advised me of the tax implications, which I had not considered, and so I must regretfully bow out.” (this is a memorandum after the fact that is sufficient to satisfy SOF→ he proves that there was a contract!) The following terms are required in the memorandum: * Identity of the parties to the transaction; * The nature and subject matter of the K; and * The essential terms of the agreement, such as price and date for performance. **Signature**: Any symbol with intention to authenticate the writing (ex: initials, typed, stamped or preprinted signature, or letterhead). **Performance**: SOF may be satisfied with respect to some categories of governed contracts via part performance, in an action for specific performance. → Land sale Ks: Part performance requires a showing of any combination, or all three of the following: - Payment of all or part of purchase price; - Taking possession of land; - Making substantial improvements to property. → One-Year Ks: - If fully performed—enforceable despite SOF. - If only partially performed—not enforceable. (i.e., need full performance: so if I’m hired as a sports agent on a 3 year contract and I represent the player for all 3 years, but we just have an oral arrangement, he CANNOT then come back and say there was no contract due to SOF—because I did all 3 years; but if I did less than 3 years, I’m screwed)

Answer 11

Ks for sale of goods for $500 or more

Answer 12

1 normal way; 4 exceptions: **1) Signed Writing:** - Writing; - Quantity; and - Signed by the party against whom enforcement is sought. *If no price, even if signed writing, only enforceable as to the quantity. With no quantity, no enforceable agreement. **2) Merchant’s Confirmation: ** = Two merchants enter oral agreement, one sends the other written confirmation of agreement. SOF satisfied against the recipient merchant if: - Both sender and recipient are merchants; - Writing is in confirmation of the K and contains a quantity; and - Recipient does not send written objection within 10 days. **3) Judicial Admission: ** = Party admits K formation in pleading, testimony, or otherwise in court. **4) Partial Performance: ** = Despite absence of writing, an otherwise valid K is enforceable for: - goods for which payment made/accepted; or - goods which have been received/accepted. *both parties have to act in both scenarios (A has to pay/send; B has to accept $/goods) **5) Specially Manufactured Goods: ** = SOF satisfied against buyer who orders custom goods from a manufacturer if: - manufacturer detrimentally relied by beginning performance before buyer’s withdrawal; and - manufacturer can’t resell the goods in the ordinary course of business.