Contracts

Front 1

Consideration as a Basis for Recognizing an Enforceable Obligation: what constitutes consideration for a promise?

Back 1

1. A benefit to Promisor or a detriment to Promisee
2. Bargained for in exchange for the promise in question

Front 2

What are the two functions of consideration?

Back 2

1. Evidentiary function: proves that the contract was serious on both sides
2. Cautionary function: protects from frivolous promises

Front 3

Cases and holding concerning Consideration?

Back 3

1. Hamer v. Sidway: Uncle promised nephew $5,000 if he didn’t drink, use tobacco, swear, or play cards or billiards for money until he was 21 years of age. The nephew kept his part of the bargain and asked for the money. The uncle acknowledged his debt but offered to keep the money for his nephew until he was ready. The nephew agreed. In the intervening years, the nephew transferred the promise to his wife. The uncle died 12 years later and the nephew’s wife sued the executer of the uncle’s estate for the $5,000. The promise was supported by consideration because the nephew gave up part of his freedom in exchange for the promise.] Giving up legal right:
2. [Fiege v. Boehm: In early 1951, Fiege had sexual intercourse with the unmarried Boehm, resulting in pregnancy. Fiege acknowledged that he was responsible for her pregnancy and, prior to the child’s birth, he agreed to pay all of Boehm’s medical and miscellaneous expenses and to compensate her for the loss of her salary. Also, he agreed to pay $10 a week for the child’s support until she reached 21. These payments were conditional on the fact that Boehm would not institute bastardy proceedings against him as long as he made the payments in accordance with the agreement. Fiege paid $480 before going to Boehm’s doctor to inquiry about paternity tests. The results of those tests indicated that he was not the father and he stopped making payments. Boehm brought bastardy proceedings against him and Fiege was acquitted by the Criminal Court. Boehm put the child up for adoption in July of 1954. She sued Fiege for breach of contract to recover $2,415.80, the remaining balance due under the agreement. The court ruled that the contract had consideration because, at the time, the plaintiff believed her forbearance to be valid.] She gave up legal right to bring the suit:

Front 4

HYPO: Promisee agrees to walk across the room (detriment?) in exchange for $5,000; (Consideration?)

Back 4

. Probably no consideration; thus no enforceable K, because its really a condition to getting the money, so it’s a gratuitous promise:

Front 5

Rest. 2d. S. 347: Expectation Damages

Back 5

i. Restatement (Second) of Contracts § 347.
1.The injured party has a right to damages based on his expectation interest as measured by:
a.The loss in the value to him of the other party’s performance caused by its failure or deficiency, plus
b. Any other loss, including incidental or consequential loss, caused by the breach, less
c. Any cost or other loss that he has avoided by not having to perform.

Front 6

Damages: U.S. Navel Insitute v. Charter Comm.

Back 6

[US Navel Institute v. Charter Communications, Inc. (Berkeley): Plaintiff entered into a licensing agreement with Defendant to publish the paperback copy of Hunt for Red October with the caveat that the Defendant wouldn’t publish any until October 1985. Defendant sent out 1.4 million copies to retailers early (a common trade practice) but selling of the books began on Sept.15, 1985 and was brisk enough to land it toward the top of the bestseller lists by the end of the month. The court of appeals decided that the Plaintiff was not entitled to the profits because there was no copyright infringement but that it was entitled to the compensatory damages for breach of contract.]
The Rule: a. Purpose of damages for breach of K is to compensate the injured party for the loss caused by the breach.
b. K damages are not intended to punish the breacher

Front 7

Restitution Damages: Rest. 2d s. 371

Back 7

1. If a sum of money is awarded to protect a party’s restitution interest, it may as justice requires be measured by either:
a.The reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in the claimant’s position, or
b.The extent to which the other party’s property has been increased in value or his other interests advanced.
ii.Give up ill gotten gains from breach

Front 8

Reliance Damages: Rest 2d s. 349

Back 8

1.The injured party has a right to damages based on his reliance interest including:
a. Expenditures made in preparation for performance or in performance, less
b.Any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed.
ii.Back to where you were before the contract occurred (where you would be if you hadn’t relied on the broken promise)
iii.Would include costs incurred but not ill gotten gains

Front 9

Do sullivan damages problem

Back 9

outline page 2 and 3

Front 10

What are the factors for determining specific performance?

Back 10

a. Ease of administering
b. Lack of adequate monetary remedy (remedy at law)
i. Uniqueness; if something is unique, money can’t replace this
c. Is the contract clear?
i. If the court is going to tell D what to do, it is imperative that the contract be clear as to what D needs to do:
REMEBER: 2. Specific performance only applies to goods not services
a. With property, it can be seized; a person can’t be forced to provide a service. (only in extreme cases)

Front 11

What are two equitable remedies?

Back 11

-Injunction and Specific Performance

Front 12

What are the factors for determining specific performance?

Back 12

a. Ease of administering
b. Lack of adequate monetary remedy (remedy at law)
i. Uniqueness; if something is unique, money can’t replace this
c. Is the contract clear?
i. If the court is going to tell D what to do, it is imperative that the contract be clear as to what D needs to do:
REMEBER: 2. Specific performance only applies to goods not services
a. With property, it can be seized; a person can’t be forced to provide a service. (only in extreme cases)