Restatement 2D § 1

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Restatement 2d § 1 defines

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as “a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some was recognizes as a duty”

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Restatement 2d Contracts § 16 (p.200),

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Comment b: Where there is some understanding of the transaction despite intoxication, avoidance depends on the showing that the other party induced the drunkenness or that the consideration was inadequate or that the transaction departed from the normal patterns of similar transactions; if the particular transaction in its result is one which a reasonably competent person may have made, it cannot be avoided even though entirely executory.

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Restatement 2d § 15

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mental illness-unable to understand in a reasonable manner the nature of the consequences of the transaction.

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Restatement 2d § 12(1)

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No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties (minors below the age of 18, mental illness, under guardianship, or intoxicated)

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Restatement 2d § 71-Elements

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defines the requirement of consideration in the following way:
a. To constitute consideration, a performance or a return promise must be bargained.
b. 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.
c. The performance may consist of (a) an act other than a promise, or (b) a forbearance (refraining from legal right), or (c) the creation, modification, or destruction of a legal relation…

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Restatement 2d § 71

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the mechanism the law uses to distinguish promises that are legally binding and promises are not legally binding(i.e. a gift is not a consideration, no bargain). Promise professor Ernst$20 to wash Prof car, professor promises to pay Ernst $20 for car wash, that is consideration (MUST BE BARGAIN, SEE WHAT THEY ARE EXCHANGING).

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Restatement 2d § 79

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Adequacy of consideration if the requirement of consideration is met, there is no additional requirement of (see below) Elements:

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i. A gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promise; or
ii. Equivalence in the values exchanged; or
iii. ‘mutuality of obligation’
iv. Adequacy-- refers to the amount or value of what is exchanged.

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Rest. 2d § 79(b)(p.224 supp)

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Equivalence of Exchange-valuation is left to private action. there is no requirement of equivalence in the values of exchange. Courts will not inquire into the adequacy of consideration. Consideration is not used to vet the fairness of an exchange.

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Unilateral contract

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when a promise is given in exchange for a future act by promise.(Hammer v. Sideway)—the doctrine of mutuality is applicable to bilateral contracts only

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Bilateral contract

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the exchange of a promise for a promise (doctrine of mutuality), with each promise serving as consideration for the other.

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“Executory accord” contract

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neither party will yet have performed or be performing, traditionally rule is unenforceable. This rule is inconsistent with the bargain principle, because an executory accord is a bargain, and bargains are normally enforceable.

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Res 2d §§ 71 (3)(b)-

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Forbearance from exercising legal right constitutes consideration.

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Res 2d § 77

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Illusory Promises-—“Words of promise which by their terms make performance entirely optional with the “promisor” do not constitute a promise”(∆ in Petroleum v. Kendrick attempted to state this claim and failed)
a. An illusory promise does not limit one’s future options
b. apparent commitment that actually leaves “a free way out” (i.e. “I will buy wheat from you at $10/bushel insofar as I want to buy wheat from you at that price,” or I will buy all my requirements of wheat from you at $10/bushel but I may terminate my obligation at any time”)
c. Note: the party that made the illusory promise does not need the doctrine of mutuality in order to escape the contract.

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Moral Consideration

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where the promisor acts from a strong sense of duty towards the promisee (donative promise, unenforceable)

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Past consideration

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if the promisor is seeking to compensate the promisee for a benefit previous (considered to be donative promise, unenforceable) Can’t bargain for somebody to do something they have already done.

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Traditional Rule

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a promise based on moral or past consideration is simply a donative promise and is therefore unenforceable

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a. a promise to pay a debt barred by the S/L Res. 2d § 82

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the new promise, not the old debt, that is enforceable. If the debtor promises to pay less than the amount of the barred debt, or only in installments, that is all she is obliged to do. If a new promise is made before the S/L has run on the old debt, the new promise will begin to run from the date of the new promise.

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b. a promise to perform a voidable obligation Res. 2d § 85

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new promise that was before voidable (i.e minor before when made the initial promise or defrauded into entering a contract (cheated))

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c. a promise to pay a debt discharged by bankruptcy Res. 2d § 83-- Reaffirm

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Reaffirm a debt that would be discharge per bankruptcy. (example: want car back after being taken because of bankruptcy, can sign reaffirmation agreement).

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Three Exceptions to Past Consideration:

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a. a promise to pay a debt barred by the S/L Res. 2d § 82
b. a promise to perform a voidable obligation Res. 2d § 85
c. a promise to pay a debt discharged by bankruptcy Res. 2d § 83-- Reaffirm

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Res. 2d § 87(1)(a) An option is binding

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In writing and signed by offeror
-Recites the purported(supposed) consideration AND
-Is fair and reasonable

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UCC § 2-205 Firm Offers

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Firm offers are not revocable, for lack of consideration, during the time stated or reasonable time but no longer than three months when in writing signed by offeror.

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Promissory Estoppel: Restatement 2d § 90.

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“A promise that the promisor should reasonably expect will induce promise to take some action of forbearance, when it does in fact induce the action or forbearance, is binding if injustice can be avoided by enforcement of the promise.”

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Promissory Estoppel:

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Requirements:
o Promise
o Foreseeable reliance
o Actual reliance
o Enforcement is necessary to prevent injustice
o Remedy can be limited as justice requires
o The court would create a quasi contract between the doctor and the unconscious patient.

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Partial enforcement, Res. 2d § 90 comment d

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Remedy may be limited as justice requires to restitution or to damages measured by the extent of reliance.

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Charitable promises Res. 2d § 90(2)

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will be upheld when the target of the gift has taken some action in reliance to the promise, (i.e. Already building a new facility in expectation of the money promised to be given). There is case law to support.

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a. Elements of a contract

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i. Offer,
ii. acceptance,
iii. contractual capacity,
iv. consideration—a detriment to the promise or a benefit to the promisor (right, interest, profit, forbearance, loss, responsibility given, suffered, or undertaken by the promise)Manifestation of mutual assentLegality of object and consideration

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Formation in General Res. 2-204

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1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

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Additional Terms in Acceptance or Confirmation 2-207

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(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
• (a) the offer expressly limits acceptance to the terms of the offer;
• (b) they materially alter it; or
• (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

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Offer Defined Res. 2d 24-

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An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. Elements:

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Elements of Offer

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- Be communicated
- Indicate a desire to enter a K
- Be directed at some person or persons
- Invite acceptance and
- Create a rxbl understanding that upon acceptance a K will arise.
- This empowers the offeree to accept the offer. After offer power to revoke is cutoff.

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Preliminary Negotiations Res. 2d 26-

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A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent... or the word quote eliminates offer, unless has an additional phrase for immediate acceptance.

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Counter Offer Rest. 2d 39:

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(1) A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the originaloffer.
(2) An offeree's power of acceptance is terminated by his making of a counter-offer, unless
the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary
intention of the offeree. (Power of acceptance is terminated with a counter offer).

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Methods of Termination of the power of Acceptance Res. 2d 36

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- (1) An offeree's power of acceptance may be terminated by
(a) rejection or counter-offer by the offeree, or
(b) lapse of time, or
(c) revocation by the offeror, or
(d) death or incapacity of the offeror or offeree.
(2) In addition, an offeree's power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer.

Comment: