Contracts I Terms

Front 1

Specific Relief/Performance

Back 1

Occasionally a court grants a promise specific relief by ordering the promisor to perform the promise. This is always the exception, not the rule.

Front 2

Substitutional Relief

Back 2

Usually, a court grants substitutional relief by awarding a sum of money intended to compensate for the harm to the promisee's interests caused by the promisor's failure to perform the promise.

Front 3

Expectation Interest

Back 3

"The benefit of the bargain." The amount of the award is measure by the promisee's expectation interest. The court attempts to put the promisee in the position in which the promisee would have been had the promise been performed. This is the measure generally used today in actions founded on promises that are enforceable because supported by consideration.

Front 4

Reliance Interest

Back 4

If the promisee incurred expenses in performing or preparing to perform, the court might award a sum of money intended to compensate for this loss. Recovery would be measured by the promisee's reliance interest in an attempt to put the promisee back in the position in which the promisee would have been had the promise not been made. This is normally less generous than expectation interest.

Front 5

Restitution Interest

Back 5

An attempt to put the promisor back in the position in which the promisor would have been had the promise not been made. This happens if the promisee conferred a benefit on the promisor. This is ordinarily less generous than expectation or reliance interest.

Front 6

Consideration

Back 6

The second restatement of contracts added something 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."

Front 7

What can constitute consideration?

Back 7

Virtually anything that anyone would bargain for in exchange for a promise can be consideration for that promise. The same consideration can support a number of promises.

Front 8

Unilateral Contracts

Back 8

A promise is made only on one side. Consideration for a promise is some performance by the promise.

Front 9

Bilateral Contracts

Back 9

The consideration is a return promise. These are more common than unilateral contracts, and make up the bulk of economically significant contracts.

Front 10

Bargain Test for Consideration

Back 10

Was something given in exchange for the promise? The bargain test does not require us to ask whether the performance/forbearance provided any benefit or detriment to the other party.

Front 11

Gratuitous Promises

Back 11

Unenforceable for lack of consideration because there is no exchange at all. What is significant is not that the promise is gratuitous in nature, but that it lacks consideration. For the nature of bargain to be met, there must be reciprocity.

Front 12

Bargain, Restatement Second

Back 12

Consideration must be "sought by the promisor in exchange for his promise" and "given by the promisee in exchange for his promise."

Front 13

When is bargain absent?

Back 13

When: 1. the promisor was not seeking to induce action by the promisee, and 2. the action that the promisee took was not induced by the promise.

Front 14

No past consideration

Back 14

Only if the action has not been taken when the promise is made can the promisor be bargaining for it when making the promise. This is inevitable under the bargain test.

Front 15

Minor's Promise

Back 15

A minor's promise to perform is voidable for lack of capacity, but a promise on coming of age to perform that voidable promise is enforceable.

Front 16

Unsolicited action

Back 16

Unsolicited action is not enforceable.