Contracts I Outline
CONTRACTS OUTLINE
Prof. Page – Contracts I – Fall 2011
|CONSIDERATION |
- A legal contract only exists when there is an exchange – whether that’s a promise for a promise, performance for a promise, etc… this is called consideration. The promises/performance have to be influencing the other party to act/promise. *i.e. the ‘fuzzy coughdrop’ rule*
i. RESTATEMENT §71
There needs to a ‘bargained for’ exchange: a performance or promise for a performance or promise.
- This return performance or promise must be ‘sought for’ by the promisor in exchange for his promise (sought for means it must influence him to act – if something is provided which does not influence him to enter in to the K, then it is not a K at all. *i.e. fuzzy coughdrop*)
- Both parties must be ‘after’ something – if not, no K.
Motivation Test: - Is there something motivating on both sides to make the party enter in to their agreement/promises?
Benefit/Detriment Test: - Is one party to the K receiving a benefit while the other is suffering a detriment? If so = K. - If the promisor has a goal in mind, there is consideration. - i.e. Hamer v. Sidway: Uncle promised newphew $5000 to quit smoking/gambling. The ‘detriment’ was the nephew giving up legal rights to smoke/gamble – benefit: Uncle had peace of mind knowing his nephew wasn’t doing that = enforceable. - A promise not to do something (forbearance) counts as consideration. - If you create, modify or destroy a ‘legal relation’, this counts as consideration. - Promises can be made from or given to either the promisor/promisee, or 3rd parties to the promisor/promisee.
‘If-Then’ Test: - If an agreement between two parties can be placed in to an ‘if-then’ statement, there is a good possibility that it is an enforceable K. (Not ALWAYS the case: “if its hot, I’ll give you a lemonade” – NOT
Prof. Page – Contracts I – Fall 2011
|CONSIDERATION |
- A legal contract only exists when there is an exchange – whether that’s a promise for a promise, performance for a promise, etc… this is called consideration. The promises/performance have to be influencing the other party to act/promise. *i.e. the ‘fuzzy coughdrop’ rule*
i. RESTATEMENT §71
There needs to a ‘bargained for’ exchange: a performance or promise for a performance or promise.
- This return performance or promise must be ‘sought for’ by the promisor in exchange for his promise (sought for means it must influence him to act – if something is provided which does not influence him to enter in to the K, then it is not a K at all. *i.e. fuzzy coughdrop*)
- Both parties must be ‘after’ something – if not, no K.
Motivation Test: - Is there something motivating on both sides to make the party enter in to their agreement/promises?
Benefit/Detriment Test: - Is one party to the K receiving a benefit while the other is suffering a detriment? If so = K. - If the promisor has a goal in mind, there is consideration. - i.e. Hamer v. Sidway: Uncle promised newphew $5000 to quit smoking/gambling. The ‘detriment’ was the nephew giving up legal rights to smoke/gamble – benefit: Uncle had peace of mind knowing his nephew wasn’t doing that = enforceable. - A promise not to do something (forbearance) counts as consideration. - If you create, modify or destroy a ‘legal relation’, this counts as consideration. - Promises can be made from or given to either the promisor/promisee, or 3rd parties to the promisor/promisee.
‘If-Then’ Test: - If an agreement between two parties can be placed in to an ‘if-then’ statement, there is a good possibility that it is an enforceable K. (Not ALWAYS the case: “if its hot, I’ll give you a lemonade” – NOT