Restate the Restatement
Section 18 True or False
Manifestation of mutual assent to an exchange requires that each party either make or promise or begin or render a performance
True
Section 18: Manifestation of Mutual Assesnt Manifestation of mutual assent to an exchange requires that each party either make or promise or begin or render a performance
Jose, literate only in Spanish, is visited by a salesman of refrigerator-freezers for Jim. They negotiate in Spanish; Jose tells Jim he cannot afford to by the appliance because his job will end in one week, and Jim tell Jose that Jose will be paid numerous $25 commissions on sales to his friends. Jose signs an installment contract printed in English. The contract provides for a cash price of $900 plus finance charge of $250. Jose defaults after paying $32, and Jim sues for the balance plus late charges.
True or False: the Court will determine the contract was unconscionable when made.
True.
The contract was printed in English which provided the parties unequal in bargaining despite they orally agreed in the same language. Section 208 illustration 3.
True or false there is no consideration for A's promise.
A desires to make a binding promise to give $1000 to his son B. Being advised that a gratuitous promise is not binding, A offers to buy from B for $1000 a book worth less than $7. B accepts the offer.
True.
In Re Edwin Farham Greene. The nominal consideration is a mere pretense to a gratuitous promise which is not binding.
Section 71 Illustration 5 tweaked to not be exactly like In Re Edwin Farham Greene.
True or False:
The pre-existing rule requires fresh mutual consideration and mutual assent.
False:
To have a modification, it has to have fresh mutual consideration and mutual assent.
Section 71: True or False
The performance bargained for may consists of an act other than a promise.
True
Section 71 Requirement of Exchange; Types of Exchange subsection (3) The Performance may consists of
(a) an act other than a promise, or
(b) a forbearance, or
(c) the creation, modification or destruction of a legal relation.
True or false: The modification is binding
A contracts to manufacture and sell to B 78,000 castings for lawn mowers at 50 cents each. After partial delivery and after B has contracted to sell a substantial number of lawn mowers at a fixed price, A notifies B that the increased metal costs require that the price be increased to 75 cents. Substitute castings are available at 55 cents, but only after several months delay. B protests but is forced to agree to the new price to keep its plant in operation.
False.
A modification has to be fair and equitable in view of the circumstances not anticipated by the parties when the contract was made. It was not fair that he charged 75 cents when substitutes could be made for 55 cents and there was not Fresh consideration from A.
The limitation to a modification which is fair and equitable goes beyond absence of coercion and requires an objectively demonstrable reason for seeking a modification.
True or False.
A lends money to B, who later dies. B's widow promises to pay the debt. The promise to pay the debt is binding.
False. It is not binding.
The initial act is not consideration because it was not bargained for. Daniel Mills v. Seth Wyman
Section 86. Promise for Benefit Received.
When a court creates a condition in an implied covenant “excuse nonoccurrence of the condition” lights up what?
When a court creates a condition in an implied covenant “excuse nonoccurrence of the condition” lights up the duty to perform
How does Section 1 differ from Section 3 in the restatement?
Section 1 Contract Defined: defines a contract 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 way recognizes as a duty.
Section 3 Agreement Defined; Bargain Defined: An agreement is a manifestation of mutual assent on the part of two or more persons. A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.
A car dealer owned a bank $10,000, due on June 1. The dealer subsequently sold a car to a buyer at a price of $10,000, payable at $1,000 per month beginning on June 1. The dealer then telephoned the bank to ask whether the bank would accept payments of $1,000 per month for 10 months beginning June 1, without interests, in payment of the dealer's debt to the bank. The bank agreed to that arrangement, and the dealer then asked the buyer to make his car payments directly to the bank. When the buyer tendered the first payment to the bank, the bank refused the payment, asserting that it would accept payment only from the dealer. On June 2, the bank demanded that the dealer pay the debt in full immediately. The dealer refused to pay, and the bank sued the dealer to recover the $10,000.
Which of the following arguments best supports the bank's claim for immediate payment?
A: The agreement to extend the time for payment was not in writing.
B: The dealer could not delegate its duty to pay to the buyer.
C: The dealer gave no consideration for the agreement to extend the time of payment.
D: The dealer's conduct was an attempted novation that the bank could reject.
C
The bank's agreement to allow the dealer to pay the debt in installments was not supported by consideration necessary to make this modification enforceable.
True or False: There is a binding contract.
Z finds J's escaped bull and feeds and cares for it. J promises to pay reasonable compensation to A.
True.
The escaped bull was an emergency. Therefore, a quasi contract formed because J would have bargained with Z if he would have been able to.
Webb v. McGowin.
Section 86 Illustration 6.
Otis F. Wood v. Lucy, Lady Duff-Gordon is what type of law and why?
THE LAW!
There was a contract that had an implied promise and the court read in an implied covenant to perform.
Section 224: True or False
A duty may not be conditioned upon the failure of something to happen rather than upon its happening, and in that case its failure to happen is not the event therefore, it is not a condition.
Section 224: Condition Defined
False
A duty may be conditioned upon the failure of something to happen rather than upon its happening, and in that case its failure to happen is the event that is the condition.
Section 75: True or False
A promise which is bargained for is consideration if, but only if, the promised performance has value.
Section 75: Exchange of Promise for Promise False
A promise which is bargained for is consideration if, but only if, the promised performance would be consideration.
True or false there is a condition within the contract.
A tells B, "If you will paint my house, I will pay you $1,000 on condition that 30 days have passed after you have finished."
False. Section 224
A tells B, "If you will paint my house, I will pay you $1,000 on condition that 30 days have passed after you have finished." B paints A's house.
Although A is not under a duty to pay B $1,000 until 30 days have passed, the passage of that time is not a condition of A's duty to pay B $1000. Because the mere passage oof time to which there is no uncertainty, is not a condition and a duty is unconditional if nothing but the passage of time is necessary to give rise to a duty of performance.
A woman hired a contractor to repair water damage in her bathroom. The contractor agreed to a price of $5,000 for labor. The woman contracted to purchase tile for the project directly from a tile warehouse for $1,000. After starting the job, the contractor discovered that the damage was much worse than either party initially had believed. The contractor told the woman that he would need to spend several extra days working on it. He quoted her a new price of $8,000. The tile warehouse then phoned and stated that, due to increasing shipping costs, it was forced to increase the price of the tile to $1,500. The increased shipping costs had long been predicted in the industry and were therefore foreseeable to the warehouse. However, the tile warehouse’s representations were truthful; in the month since contracting to supply the tile for the woman’s job, the warehouse’s shipping costs had doubled.
True
Angel v. Murray
Under the preexisting-duty rule, an act or forbearance does not constitute consideration if it is already a legal obligation or not a legal entitlement. The preexisting-duty rule applies when a contract is modified. Because both parties to a contract are already legally obligated to perform the terms of the contract, a modification is usually unenforceable without new consideration. Typically, new consideration is provided if the parties’ duties are altered under the modification. However, a modification is enforceable without new consideration if it results from unforeseen circumstances that the parties did not anticipate when the contract was formed. Moreover, Article 2 of the Uniform Commercial Code (UCC) rejects the preexisting-duty rule for the sale of goods. Rather, a modification to a contract governed by the UCC is enforceable if it is made in good faith, even if it is not supported by consideration.
Here, each price increase is supported by one of the exceptions to the preexisting-duty rule. The contractor’s contract with the woman is for his repair services and is governed by the common law. The price increase for the contractor’s labor was triggered by unforeseen circumstances, because neither party anticipated how bad the water damage would be prior to the start of the job. Therefore, the contractor’s price increase is enforceable without new consideration. The woman’s contract with the tile warehouse is for tile, which is a good. Therefore, the contract for the tile is governed by the UCC. The tile warehouse seeks to increase the price to account for increased shipping costs. Although these increases were foreseeable, the tile warehouse is being truthful, and no facts indicate that the warehouse is acting in bad faith. Therefore, the price increase for the tile is enforceable without new consideration because the contract with the tile warehouse is for goods and the modification has been made in good faith.
True and False:
Moral Obligations can be consideration
To be able to select the next category if correct. What case does the answer come from?
False.
Moral obligation is not consideration. Gratuitous promises are not consideration.
Mills v. Wyman
To renew SOL you need what (1) an express acknowledgment of old debts, (2) a part payment of stale debts (3) and what?
An express promise.
1st Hawaiian Bank v. Zukerkorn.
Section 86: True or False
A promise made in recognition of a benefit previously received by the promisor from the promisee is not binding to the extent that its value is disproportionate to the benefit.
True
Section 86: Promise for Benefit Received
(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prvent injustice.
(2) A promise is not binding under subsection 1
(a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or
(b) to the extent that its value is disproportionate to the benefit.
A buyer contracted in writing with a shareholder, who owned all of XYZ Corporation's outstanding stock, to purchase all of her stock at a specified price per share. At the time this contract was executed, the buyer's contracting officer said to the shareholder, "Of course, our commitment to buy is conditioned on our obtaining approval of the contract from our parent company." The shareholder replied, "Fine. No problem."
Assume that the parent company orally approved the contract, but that the shareholder changed her mind and refused to consummate the sale on two grounds: (1) when the agreement was made there was no consideration for her promise to sell; and (2) the parent company's approval of the contract was invalid.
True or False. If the buyer sues the shareholder for breach of contract, the buyer is likely not to prevail because the condition of the parent company's approval of the contract was an essential part of the agreed exchange and was not in a singed writing.
False.
The buyer is likely to prevail because the buyer's promise to buy, bargained for and made in exchange for the shareholder's promise to sell, was good consideration even though it was expressly conditioned on an event that was not certain to occur.
A promise is not consideration to support a return promise if by its terms the promisor unconditionally reserves the right of alternative performances, such as reserving the right to cancel the contract. Such a promise is an illusory promise. However, where the promisor's obligation is conditioned upon the occurrence of an event that is outside of the promisor's control, the mere fact that the obligation is subject to a condition does not render the promise illusory. Because the buyer presumably does not control the actions of its parent company, the fact that the buyer's obligation is conditioned upon the parent's company's approval does not render it illusory, since the buyer will be bound once the condition is satisfied, and the occurrence or nonoccurrence of the condition is for the most part outside of the buyer's control.
An automobile retailer had an adult daughter who need a car in her employment but had only $3,000 with which to buy one. The retailer wrote to his daughter, "Give me your $3,000 and I'll give you the car on our lot that we have been using as a demonstrator." The daughter had paid the $3,000, but before the car had been delivered to her, one of retailer's sales staff sold and delivered the same car to a customer for $10,000. Neither the salesperson not the customer was aware of the transaction between the retailer and his daughter.
True or false the daughter after rejecting a tendered return of the $3000 by her father, have an action against him for breach of contract because the retailer's promise was supported by bargained-for consideration.
True.
Browning v. Johnson—Relative values of things exchanged does not really need to be considered, what matters is legal sufficiency.
Parties who are competent to contract will not be relieved from a bad bargain they make unless the consideration is so inadequate as to be constructively fraudulent.
Even though the retailer promised a car worth $10,000 to his daughter in exchange for only $3,000, the contract was supported by consideration. Courts do not inquire into the "adequacy" of the detriment to evaluate the effectiveness of he consideration. As long as the promisee suffers some detriment, no matter how small, the court will not determine that consideration is lacking simply because the promisee gave up something of less value than what he received.
True or False:
Implied bargain + sufficient consideration on both sides = contract
What case give you the answer?
Yes.
Penny supply v. American Ash
A woman had a ticket to a play that she would not be able to attend. She offered to sell the ticket to a friend for $200. The woman told her friend that the play was in six months and that the friend could accept at any time, because the woman would keep her offer open until the night before the play. The friend told the woman he needed to think about it. Four months after the woman made the offer, a coworker offered to buy the ticket from the woman for $300. The woman sold the ticket to the coworker. Before the woman was able to tell her friend that she was had revoked her offer, the friend told her that he accepted the offer and wanted to purchase the ticket. The woman refused to sell the ticket to the friend.
Is the woman liable to the friend for breach of contract?
Yes, because the friend accepted the woman’s offer before she revoked it.
An offeror may revoke at any time before an offeree accepts. However, to be effective, revocation must be communicated to the offeree prior to acceptance. An offeror may revoke an offer directly or indirectly. Direct revocation occurs when the offeror directly notifies the offeree that the offer has been revoked. Indirect revocation occurs if the offeree learns from a different reasonably reliable source, other than the offeror, that the offer has been revoked.