Fundamentals of Consideration: Hamer v. Sidway--right to party case

Again, see hard copy for write-in notes from class. Do not rely on what's below (9/30)

 
 

Hamer v. Sidway

Ct. of Appeals, NY, 1891

124 NY 538, 27 NE 256

 
 

Procedural history:

-appeal from appellate ct reversing judgment entered on decision of the court at special term

-judgment of lower court entered 10/1/1889

-P claims $5,000 plus interest is owed to her from estate of William E. Story Sr. (Sr)

-She acquired it (the $$?) from several mesne (intermediate) assignments from Story 2nd (2)

-Claim is rejected by estate executor who claims the contract was invalid because it lacked sufficient consideration to support it

-2 was not harmed by the conditions of the contract but instead benefited

-Unless promisor is benefited, which in this case he is not, the contract is without sufficient consideration

P=

D=

 
 

Facts:

-Sr is uncle to 2

-Sr promised 2 that if 2 straightened up until he was 21 years old (no alcohol, tobacco or gambling), Sr would pay him $5,000

-2 assented and upheld his side of the deal

-2 sends Sr a letter asking for cash upon 2's 21st birthday

-Sr writes back "when I was your age" note and suggests he keep the cash safe on 2's behalf

-2 agrees to the arrangement

-Sr died 12 years later while still in possession of money

 
 

Issue:

Is adequate consideration present in the promise Sr made to 2?

 
 

Rules:

-Exchequer Chamber defines "consideration" as:

Consideration: a valuable consideration in the sense of the law may consist either in some right, interest, profit, loss or responsibility given, suffered or undertaken by the other"

-"It is enough that something is promised, done, forbone or suffered by the party to whom the promise was made as consideration for the promise made to him."

-In general, a waiver of any legal right at the request of another party is a sufficient consideration for a promise (Parsons on Contracts)

*Consideration is NOT so much as one party profiting as it means the other party is abandoning some legal right in the present or limits his legal freedoms of action in the future.

-Courts do not inquire into the adequacy of consideration

 
 

Analysis:

-2 had a habit involving substance and had a legal right to do so. He abandoned that right for a period of years upon the strength of the promise his uncle made to him. He modified and restricted his behavior in accord of what his uncle asked of him upon the faith the agreement would come through.

 
 

 
 

 
 

Conclusion:

Surrender of legal right caused by the promise is sufficient consideration to uphold the promise. Order reversed. Judgment of special term affirmed.

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Hamer%20v%20Sidway%20family%20consideration.doc>

 
 

 
 

 
 

Notes

 
 

Consideration as a basis for enforcement

Class notes:

 
 

"Bargained-for" exchanges are an absolute requirement in contracts. (R2C sect. 71)

 
 

There are two types of contractual exchanges:

1. Promise for exchange for promise (bilateral)
   
2. Promise for exchange for exchange (unilateral)
   

 
 

Consideration supports contracts. Consideration is something of value. It's an essential concept. It is what induces each party into the agreement. Quid pro quo.

Nudum pactum: a bare, naked contract lacking consideration and is therefore unenforceable in court

 
 

R2C section 71 defines what constitutes consideration.

Considerations must be bargained-for

-something of value

-it's what induces each party to enter agreement

-is a requirement of quid pro quo

 
 

Consideration must run both ways in order to be a valid contract.

 
 

Consideration is also required for performances.

 
 

Cases and take-home msgs:

Hamer v. Sidway – right to party case: waiver of a legal right is consideration for a promise if it is given in return for the promise.

Fiege v. Bohm- A promise to forbear a legal claim that turns out to be invalid if the forbearing party believes in good faith that the cliam is valid at the time the promises are exchanged.

Feinberg v. Pfeiffer- It is incoherent to speak of past consideration… If it's in the past, it's not consideration. (Here services were rendered were in the past or services rendered subsequent to the making of the promise were not rendered in return for the promise… It lacks that causal relationship (causation for the promise))

 
 

 
 

Book notes:

Question of which promises law should enforce

 
 

Common law actions closely tied with enforcement:

1. covenant
   
2. debt
   
3. assumpsit
   

 
 

1- Convenant:

-used to enforce contracts made under seal

-once a written document was sealed and delivered, the action of covenant kicks in and it becomes enforceable

-the "contents" or guts of the promise (what is was worth, degree of consideration, what it involved) did not matter

-Later, with the growth of literacy, the use of wax became archaic and was replaced with any written or printed symbol intended to serve as a seal

 
 

**Functions of seal:

1. Evidentiary- provides evidence contract existed

2. Cautionary- brings home to the parties the significance of their actions

 
 

In modern times, the use of the seals has been abolished in nearly half the states and greatly curtailed in the rest.

 
 

The most recent assault against the use of seals was when the UCC wiped out "sealed instruments" related to contracts for sales

 
 

2-Debt:

-Common law action used to enforce some types of unsealed promises

 
 

3-Assumpsit:

-Most important common law action

-Promisee sought to recover damages for physical injury or property on the basis of consensual undertaking

(ex. Ferryman drowns horse because he overloaded the boat and the horse drowned)

 
 

Misfeasance: the doing of a proper act in a wrongful or injurious manner

-This is the underlying theme of assumpsit

 
 

Nonfeasance: the undertaker fails to do what he said he would

 
 

 
 

Typical categories of agreements:

1. Contracts for sale of goods
   
2. Real estate transactions
   
3. Construction contracts
   
4. Employment agreements
   
5. Family contracts
   

 
 

Family contracts involve relationships outside the scope of judicial intervention.

-They are usually informal, frequently oral, not preceded by significant bargaining, lack detail and are not of great economic movement.

Initial question: Is a promise made between family members enforceable?

Answer: Traditionally, no. Gifts between family are usually motivated by altruism, not motivated by gain. However, in modern day, difference between intimate agreements and commercial agreements have become less. There is now a greater legal acceptance for intimate agreements.

 
 

Gratuitous promises often happen inside of families.

Gratuitous promise: one by which a person promises to do or refrain from doing something without any consideration in return

-Law recognizes gratuitous transfers but not promises.

-Element of intent kind of important here. For a gratuitous promise, promisors are often motivated by altruism and while conditions for the promise might exist, the parties do not seek a material benefit in return.

Question: Will a token payment (eg $1 for a house) work?

• Courts generally do not inquire into the amount of the consideration but just that it existed (just like those old seals).
  

*The word "peppercorn" is used to deride consideration that is trifling in value.

 
 

Unjust enrichment is a theory of recovery.

-Causative event that renders one party enriched at the other party's expense

-Obligation for enriched party to make restitution then arises regardless of liability for wrongdoing

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Consideration%20as%20a%20basis%20for%20enforcement%20notes.doc>

 
 

 
 

 
 

Gratuitous Promises:

 
 

• Fiege v. Bohm (the baby daddy brief)
  

 
 

Adam Smith says "Even gifts are exchanges." Cooperative exchanges are relied upon in our society.

Cooperation may be best achieved through "free enterprise"

 
 

-Gifts have an economic utility. (Judge Posner). A gift giver gets a higher utility in return for a gift than holding on to material himself or bargaining recipient into a specific performance (p. 116 top of the page)

 
 

Gratuitous promises often happen inside of families.

Gratuitous promise: one by which a person promises to do or refrain from doing something without any consideration in return

-Law recognizes gratuitous transfers but not promises.

-Element of intent kind of important here. For a gratuitous promise, promisors are often motivated by altruism and while conditions for the promise might exist, the parties do not seek a material benefit in return.

Question: Will a token payment (eg $1 for a house) work?

• Courts generally do not inquire into the amount of the consideration but just that it existed (just like those old seals).
  

*The word "peppercorn" is used to deride consideration that is trifling in value.

 
 

**While intent of parties is very important in contracts, intent on its own is not sufficient consideration to enforce a promise**

Gratuitous promises often happen inside of families.

Gratuitous promise: one by which a person promises to do or refrain from doing something without any consideration in return

-Law recognizes gratuitous transfers but not promises.

-Element of intent kind of important here. For a gratuitous promise, promisors are often motivated by altruism and while conditions for the promise might exist, the parties do not seek a material benefit in return.

Question: Will a token payment (eg $1 for a house) work?

• Courts generally do not inquire into the amount of the consideration but just that it existed (just like those old seals).
  

*The word "peppercorn" is used to deride consideration that is trifling in value.

 
 

 
 

Gratuitous promises often happen inside of families.

Gratuitous promise: one by which a person promises to do or refrain from doing something without any consideration in return

-Law recognizes gratuitous transfers but not promises.

-Element of intent kind of important here. For a gratuitous promise, promisors are often motivated by altruism and while conditions for the promise might exist, the parties do not seek a material benefit in return.

Question: Will a token payment (eg $1 for a house) work?

• Courts generally do not inquire into the amount of the consideration but just that it existed (just like those old seals).
  

*The word "peppercorn" is used to deride consideration that is trifling in value.

Gratuitous promises often happen inside of families.

Gratuitous promise: one by which a person promises to do or refrain from doing something without any consideration in return

-Law recognizes gratuitous transfers but not promises.

-Element of intent kind of important here. For a gratuitous promise, promisors are often motivated by altruism and while conditions for the promise might exist, the parties do not seek a material benefit in return.

Question: Will a token payment (eg $1 for a house) work?

• Courts generally do not inquire into the amount of the consideration but just that it existed (just like those old seals).
  

*The word "peppercorn" is used to deride consideration that is trifling in value.

 
 

 
 

There is no such thing as "past consideration" … If a promise comes without service or without the exchange for performance or act, it is a gratuitous promise.

 
 

-Webb v. MCowin
Minority view, contra the R2C

Rule: where a material benefit was conferred on the promisor by the promisee, moral obligation arising fromt hat benefit is consideration for the promisor's promise to pay money.

 
 

-Harrington v. Taylor

-Dementas v. Estate of Tallas
Majority view, consistent w/ R2C

Rule: gratuitious act voluntarily performed by promise is not consideration for the promisor's subsequent promise to pay money.

 
 

Legal balancing devices to aide in recovery for P's:

"Unjust enrichment"

 
 

In a complaint in a situation like this, it's important to put all of possible ways for your client to recover. You want to make every claim that might have a legitimate basis in law or fact. You get one shot so you have to argue everything that you can in that first pleading. If you fail to preserve issues for appeal at trial, they are gone forever. Objections must be put on record in order raise questions of appeal later on…

 
 

What theories Bridy would have used if she represented P in Dementas v. Estate

1. Bargain argument

2. reliance argument

3. Unjust enrichment

4. Codolsel to the will and not a contract at all

 
 

Key question: Can the result in Webb be reconciled with the results in Harrington and Dementas?

Not really. It's hard to distinguish these cases from each other in terms of facts, but yet there are different results. It's frustrating, but it happens.

 
 

 
 

Class 9/8/2008

 
 

Problems p. 52:

1. Daughter lunch at Tiffany's problem… Bargained-for exchange. She's paying a higher cost and doing something unpleasant in exchange for the emerald ring.
   

   The tramp
   

 
 

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Ch%201%20Gratuitous%20Promises.doc>

 
 

 
 

 
 

 
 

 
 

Fiege v. Boehm

Ct. of Appeals, Maryland, 1956

210 Md. 352, 123 A. 2d 316.

 
 

Procedural history:

-D is appealing decision from Superior Ct.

-D was previously acquitted in criminal ct.

-Superior ct jury awarded full amount ($2415.80) to P

-D then filed a motion n.o.v. and was overruled

-Judgment then entered

 
 

D contends that even if he did enter that contract as it is alleged, it would not be enforceable because the plaintiff's forbearance to prosecute was not based on a valid claim and hence the contract was without consideration.

 
 

Issue:

Is P's promise to D, although based on uncertain premises, sufficient consideration and enforceable as a contract?

 
 

Rules:

-Agreements made between unwed parents of a child in states with statutes are enforceable as contracts. The court holds that refraining to press a bastardy suits or abandoning proceedings already commenced is supported by sufficient consideration.

-In Md., bastardy prosecutions are criminal. Contracts drawn up on the condition that if agreement of child support is breached are invalid. Contracts forcing someone to refrain from doing something that is already illegal will not be enforced. (I cannot agree to sell you heroin.)

-Bona fide questions (even if they later turn out not to be what the parties think) are still sufficient to support a promise

-"Bona fide" must have a reasonable basis for support:

-Not absurd to a reasonable man

-Not unfounded in the law to one who has an elementary knowledge of legal principles

-The surrender of or forbearance to assert an invalid claim by one who has not an honest or reasonable belief in its possibly validity is not sufficient consideration for a contract

 
 

Analysis:

-The point of illegality of bastardity in Md: It is undesirable for people to have sex without marriage…. A social policy issue.

-Real issue hinges on whetehr she sincerely believed this guy could have been the father. If she had a doubt then she committed fraud in the inducement/fraud in the factum.

-If the mother of a bastard child knows that there is no basis (in either law or fact) to charge the man as the father, but that man promises to pay her money in order to prevent bastardy proceedings, her forbearance in pressing charges in NOT sufficient consideration.

 
 

Elements of consideration for forbearance in this:

• If mother and father believe, in good faith, this could be father… sufficient consideration
  
• If no good faith, the threat of pressing charges (forbearance) against someone who could reasonably be innocent is not sufficient consideration.
  

   
   

  -As along as the woman made the promise in good faith, it is sufficient. Here, there is no evidence P acted in bad faith when the promise was made. Therefore, the lower court acted properly in overruling the demurrer to the amended declaration and the motion for a directed verdict.
  

   
   

  Conclusion:
  

  -Judgment of TC affirmed. Judgment entered on the verdict of that jury.
  

   
   

  Notes:
  

  -In PA parents of a child who are confirmed as the true parent cannot enter a binding contract for child support or anything else related to the support of the child. In PA, the child has the right to be supported at an adequate level…Once the father takes steps to support a child ("affirmative steps") the law will enforce it…. Once a man recognizes a child as his own, he is estopped from revoking that recognition.
  

  - Fraud in the Factum is a type of fraud where misrepresentation causes one to enter a transaction without accurately realizing the risks, duties, or obligations incurred. Black's Law Dictionary (2nd Pocket ed. 2001 pg. 293). This can be when the maker or drawer of a negotiable instrument, such as a promissory note or check, is induced to sign the instrument without a reasonable opportunity to learn of its fraudulent character or essential terms. Determination of whether an act constitutes fraud in the factum depends upon consideration of "all relevant factors." Fraud in the factum usually voids the instrument under state law and is a real defense against even an holder in due course.
  

   
   

   
   

  Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Briefs\Fiege%20v%20Boehm%20baby%20daddy%20contract%20fraud%20in%20inducement.doc>
  

   
   

  Again, see hard copy for write-in notes from class. Do not rely on what's below (9/30)
  

 
 

 
 

Requirement of exchange: Action in the Past: Feinberg v. Pfeiffer-- old lady retirement

Again, see hard copy for write-in notes from class. Do not rely on what's below (9/30)

 
 

Feinberg v. Pfeiffer Co.

St. Louis Ct. of Appeals, MO 1959

322 SW 2d 163

 
 

Procedural history:

-Lower ct- Action on alleged contract brought by P against D to pay specified amount of $ upon her retirement from D's employ. Bench trial. DC rendered judgment for P, D is now appealing.

 
 

Facts:

-P worked for D and claims D agreed to pay her $200/mo. for life upon retirement

-Board of Directors of D's company met 12/27/47 and adopted a resolution upping P's salary by $50 and allowing her to retire whenever she wants with a set retirement pay of $200/mo. for life. It was understood that they weren't pushing her out the door but decided to do this for P's sense of security

-P found out through messengers of D

-P was surprised but said she would have cont'd working there regardless of the news

-No contract, oral or written, as to length of P's employment. She was free to quit or be fired at any time.

-P retired 6/30/49

-D began paying her $200/mo.

-D died, wife succeeded, son in law (Harris) succeeded wife

-New accounting firm + legal counsel tell Harris payments to P not necessary, were gratuitous and not under contractual obligation

-Harris then sent P a check for $100 which P declined to accept

 
 

Issues really relevant to the appeal:

-P said during testimony even though she relied on the promise of her retirement, she would not have quit working there.

• She also said although she was well enough she never actively sought employment elsewhere (night job)
  

 
 

Appeal Issue:

Was sufficient consideration given or paid by P to enforce this promise?

 
 

D contends that there was insufficient evidence to support the lower ct's findings that P would not have quit D's employ had she not known and relied up on the promise of a retirement package. **Ct of Appeals upholds DC's conclusion on this.

 
 

P says past employment=promise without consideration. But employment from date forward of the resolution being known is sufficient consideration. Second, the decision directly weighed in on her decision to retire when she did.

**Ct says evidence does not support 1st statement. She made no promise to continue working there in order to gain such benefits.

 
 

Rules:

-Restatement sect. 75—Elements of consideration.

-"Only when a party making the promise gains something or the party accepting the promise loses something that the promise becomes legally valid."

-see case against "moral obligation" on following page…. A promise made in recognition of a "moral obligation" arising out of a benefit previously received is not enforceable. A benefit given before a promise is made can hardly be said to have been given in exchange for that promise.

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Briefs\Feinberg%20v%20Pfeiffer%20Co..doc>

 
 

 
 

 
 

More on Action in the Past/Req. of Exchange

 
 

• Webb v. McGowin
  
• Dementas v. Estate of Tallas
  
• Harrington v. Taylor--axe saver
  

  Cross-reference w/ earlier notes
  

 
 

Webb v. McGowin

Ct. of Appeals, Ala. 1935.

 
 

Parties:

P=Joe Webb

D=McGowin couple, executors of estate of J. Greely McGowin's estate. Greely is owner of company plus promisor

 
 

Procedural history:

 
 

Lower court judgment: "nonsuit" P is now appealing

 
 

-Action is in assumpsit (damages are sought for consensual undertaking)

-Original complaint was amended

-Amended complaint was demurred by D

-Those demurrers were sustained

• Result: P took nonsuit
  

  Nonsuit: adjudication that results when P failed to provide sufficient evidence to make out case. Does not decide merits of COA, therefore, P can bring suit again.
  

  Acquit: in contracts means to free from debt, duty to charge
  

 
 

Issue on Appeal: Reason why it's in front of the Ct. of Appeals: "The assignment of errors regarding the nonsuit" aka case was dismissed

 
 

P wants unpaid installments accrued up to the time of suit.

 
 

Facts:

-P is former employee of WT Smith Lumber Co.

-August 3, 1925: P in scope of employment was about to drop a very heavy block of wood SOP for this task but saw J. Greely would be in harm's way. P decided to divert path of block by falling with it to save his boss. P sustained serious injuries of a terminal nature because of his act. P, as a result, became physically and mentally disabled.

-J. Greely, in appreciation of the event and its consequences, agreed to financially support P for rest of P's life ($15 every 2 weeks for rest of his life) "In consideration of the injuries the appellant received" is the language of the opinion… Magical words says AB.

-J. Greely died eight years later. Up until his death he made good on his promise to P.

-Payments stopped 1/27/1934

-Webb sues to enforce promise

 
 

Issue:

..Whether there was consideration for the promise between P and D?...

Can a promise be enforceable when the benefit is given before the promise is made?

-If benefit comes before the promise, is it still a valid promise?

-Is there a material benefit to saving a man's life?

-Is there enough of a material benefit present here to satisfy the consideration req. for a bargained-for exchange?

 
 

 
 

 
 

 
 

Rules & Analyses:

 
 

*Rule: where a material benefit was conferred on the promisor by the promisee, moral obligation arising fromt hat benefit is consideration for the promisor's promise to pay money.

 
 

Rule 1: Saving a man's life is not a material benefit sufficient to uphold a subsequent promise to pay for the service.

 
 

Analysis: The rules assumes savings a man's life has only a sentimental value. This is not true if one considers the medical practice. Life and preservation of the body does have a quantifiable value. Otherwise, how would doctors make their money? Assessment of value when it comes to the body is also permissible in personal injury cases under law of negligence. Factors of assessment include: extent of injuries, earning and life expectancies (these are also used in insurance policies). Therefore, it is possible to attach a "fee" for services rendered after services were received. Even if the promise is done with the request of the promisor.

-This reasoning is very actuarial

 
 

Physicians by profession; not P's profession. Docs have expectation to be compensated. Random dudes do not.

 
 

Rule 2: Moral obligation is sufficient consideration to support subsequent promise to pay when promisor has received a material benefit as distinguishable from conscious duty

 
 

Analysis: Promisor did receive a material benefit

 
 

Rule 3: Requirement of prior legal or equitable obligation that's rescinded or compromised in some other way but promisor is still morally bound.

 
 

Analysis: Here, the promise to pay ratifies/affirms the service happened and that a request for the service was previously made.

 
 

Rule 4: Requirement for bargained-for exchange. Restat. Contracts, sect. 71

 
 

Analysis: D promised to pay

P promised to save life (false: Webb had already done it)

D's consideration for exchange is his life was saved

P's consideration for exchange is the money D promise to pay

All of the consideration in this case is in the past, ergo no consideratine existed

 
 

Rule 5: Gratuitous promises.

 
 

Analysis: Nope, not here. Agreement and acceptance by parties show to the contrary

 
 

Rule: R2C sect 86: Promise for Benefit Rec'd

• A promise made in recognition of a benefit previously received by promisor from promise is binding to the extent necessary to prevent injustice.
  

  Exceptions: 1. Benefit was conferred as a gift
  

  2. Benefit value (payment) is disproportionate to actual benefit
  

Conclusion:

Finds that d actually did receive a material benefit said the court.

AB thinks this case was wrongly decided.

Court of Appeals says lower court erred in sustaining demurrer. Case is reversed and remanded.

Case is settled b/f ever going to trial

 
 

Concurring opinion: Judge Samford. The strict interpretation of this rule would bar recovery b P. "Though doubtful, the correct result prevailed. But remember this principle: "Law should not be separated from justice.""

 
 

Denial of Certeriori: Ct of Appeals correctly identified difference b/n moral obligation based on ethical duty and obligation based on material benefit

 
 

(Back in the day, courts of equity: Justice, fairness, less concerned w/ letter of the law. But that's not enough here.) In this case, we get the court's sense of justice,. Sometimes couert decisions are righto n the law but the outcome seems unfair and unjust. Sometimes, like here, the opposite holds true.

 
 

 
 

Notes:

• Courts have positive legal ground for enforcing promises. Courts can say who ought to pay and who ought not
  
• NY Statute: A promise in writing and signed by promisor is valid even if consideration is past as long as consideration is in writing and has been performed.
  

 
 

Unjust enrichment: a theory of recovery

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Briefs\Webb%20v%20McCowin%20block%20drop%20death%20promise.doc>

 
 

Dementas v. Estate of Tallas

 
 

Facts:

-Demantas (P) wants to collect $50,000 from Tallas estate (D) based on memo drafted

-P was Tallas' friend who helped Tallas like an assistant

-Tallas said he would change will, wrote a memo to change will, notarized with Tallas' seal but will was never was actually changed

 
 

The promise here is to change a will. It is not to pay $50,000.

 
 

Memo is dictated in Greek. Give it to Dementas. Later has the memo translated into English (looks like an intent to be bound)

 
 

Procedural history:

-Trial ct said no enforceable contract.

-Ct of Appeals finds it also not a promise supported by legal consideration because services were already received at the time of the promise and were not performed in exchange for promise

"past consideration" = "no consideration"

-Some states allow "moral obligation" in to make some of these promises enforceable, Utah is not one of those states.

-Even if Utah did, P would not prevail b/c there was no expectation by P (during performance) of being compensated.

 
 

Issue on Appeal:

-Issue on Appeal: Whether tallas' promise to pay was merely "an expression of appreciation for services gratuitously performed" and, therefore, unenforceable for lack of consideration.

 
 

 
 

Reasoning of Appellate Court:

-To recover for BOC, P has to show consideration or suff. legal substitute

-A subsequent promise to pay for services already performed is not sufficient. legal consideration

-Tallas' promise to pay Demnats for his past services was therefore not supported by consideration

-Moral obligation is not consideration, and even it if were, Dementas' services were gratuitous (i.e. a gift) and Tallas was not morally obligated to compensate him for them.

 
 

**While intent of parties is very important in contracts, intent on its own is not sufficient consideration to enforce a promise**

 
 

Conclusion

Affirrmed for the estate. P is not entitled to recover on Tallas' promise to pay, b/c gratuitous action in the past is not consideration for a promise to pay money.

(If this were NY, P would likely prevail because of language of the memo. In it Tallas said that Tallas "owed" money for specifically what P did… P is golden under the NY statute)

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Briefs\Dementas%20v.%20Estate%20of%20Tallas%20plus%20gratuitious%20promise%20notes.doc>

 
 

 
 

 
 

Harrington v. Taylor

 
 

Facts:

Wife beater, wife runs to neighbor, husband follows

Wife about to decapitate husband, neighbor stops her

Husband promises to pay her but husband stops her just in the act of time

P saves D's life, gets hurt by axe (D is violent husband in middle of attack)

Husband promises to pay for neighbors cut hand due to axe injuries

 
 

Court's holding

Ct holds for D and says: "kind, voluntary acts are not sufficient consideration." A situation of a gratuitous promise. Taylor should be motivated by gratitude to compensate Harrington but this is not a contractual situation.

 
 

Here, the theory of consideration was properly applied

 
 

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Briefs\Harrington%20vTaylor%20axe%20saver%20gratuitious%20promise.doc>

 
 

 
 

 
 

Requirement of "Bargain"

 
 

• Kirksey v. Kirskey
  
• CAB Inc. v. Ingram
  

   
   

 
 

Kirksey v. Kirksey

Supreme Ct. of Alabama, 1845

8 Ala. 131.

 
 

Parties/Facts:

-P was wife of D's brother. P is now a widow and is comfortably settled on her land.

-In a letter, D offered P a place to live after P's husband died if she moved to where he lived

-P picked up her things and took D up on his offer

-D kept his promise for 2 years but then forced her to move to a less-comfortable place in the woods which he later kicked her out of

 
 

Procedural history:

-P wins $200 (in lower ct?)

-Supreme Ct reverses judgment

Issue:

Consideration sufficient for this promise?

 
 

Rule:

Gratuitious act voluntarily performed by promise is not consideration for the promisor's subsequent promise to pay money.

 
 

Analysis:

-Elements for bargained-for exchange:

P gave up her land and life on it

D gave her a place to live.

P gets place to live

D gets nothing but general sense of altruism

-Consideration requires inducement (present) and material benefit for promisor (not present)

 
 

Conclusion:

Reversed for D. Promise was altruisticgratuitous, not enforceable.

 
 

Justice Ormond thinks that P's loss and inconvenience assoc. with the move were considation to support the promise. Majority disagrees.

 
 

 
 

What did the D promise?

A place for P to live and raise family

 
 

What did P promise in return?

Nothing

 
 

What was the consideration for D's promise to give the house?

P's picking up and moving even though she was comfortably settled

 
 

What was the consideration for P's performance?

D's promse of a place to raise her family.

 
 

 
 

Notes:

-"If" interpretation in the letter. S. Ct. read it as a condition of a gratuitous promise, not a bargain for exchange.

"Advise" sounds more like a gratuity

"If you..I will" sounds more like a promise, but still lacking material benefit

 
 

Def of "preference": the paying or securing by an insolent debtor to one or more of his creditors the whole or part of their claims to the exclusion or detriment of the other creditors.

 
 

AB thinks P could have recovered under bargain theory.

 
 

Is there a way for P to recover? Alternative theory: Restat. Sect. 90 Reliance Theory.

1. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise… and which does induce such action or forbearance is binding if injustice can be avoided…
   

 
 

 
 

Reliance as a Basis for Enforcement

-This is a prime case for reliance theory. It could kind of work in a bargained-for exchange, but it's a strong reliance case.

 
 

Elements of cause of action for promissory estoppel:

1. A promise: Yes. Δ said he would give Π a place to life.
   
2. The prormisor reasonably expects to induce action or forbearance by promissee in response to the promise: Yes. Δ could reason. expect Π to pack up her house and move her family far away to come see him.
   
3. If promisee actually does that action or forbearance: Yes. Π abandoned her house and traveled to see Δ
   
4. Is enforceable if injustice can be avoided only by enforcement of the promise: yes. The Δ induced her to abandon her home and then threw her and her children out with no money and no place to go.
   

 
 

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Briefs\Kirksey%20v%20Kirksey.doc>

 
 

Central Adjustment Bureau, Inc. v. Ingram

Supreme Ct. of Tennessee, 1984

678 S.W.2d 28

 
 

Issue on Appeal:

1. What consideration is necessary to support a promise for a non-compete contract after employment has begun?
   

 
 

1. Whether a covenant not to compete (with very broad language as to time and geographical restrictions) can be modified by the court to make it reasonable and enforceable?
   

 
 

*Not in dispute: Tort liability for unfair competition and breach of duty of loyalty

 
 

Parties:

P=CAB, a debt collector business

Ds=former employees of CAB that formed a competitive business after leaving P's employ

D1: Ingram

D2: Goostree

D3: Bjorkholm

 
 

Procedual history:

-P brought suit in Chancery Court (tort court) seeking both injunctive and compensatory relief for BOC for non-compete contract

-Chancellor found contracts to be too broad (in terms of time and geography)

-Modified these restrictions and then enforced that modified contract by injunctive relief

-Also awarded P $80,000 for BOC and unfair competit and breach of loyalty duty

-Court of Appeals reversed Chancellor on issue of BOC. Affirmed Ds' liability in tort but remanded for reconsideration for damages.

 
 

Facts:

-D1 signed non-compet. 1 month after started work

-D2 signed non-compet. 1 day after "being hired"

-D3 signed 3 weeks after started work

 
 

Non-compet. stips: No competition during employment or 2 years after termination; can't work or participate in industry at all for 2 years after term.; if contract is disputed or to be revised by court, original contract stands in interim

 
 

-D1 takes steps to start a new, competitive business while still working for P. Takes client information (directly violates contract)

-Other Ds plus three others start new business (Ingram and Assoc.) 3/1979

-Facts clearly state that Ds made money from stolen client info

 
 

Rules and Analysis:

 
 

Rule 1

1. What is consideration for a promise?
   

   Consideration for a promise, as defined by Restat. Sect. 75 is "bargained for and give in exchange for that very promise."
   

2. Use and practice of restrictive covenants between employees and employers.
   

   Will be enforced if they are reasonable under the particular circumstances. Application of the rule of reasonableness to consideration as well as time and geographical limitation stipulations in covenant.
   

   -Employment is sufficient when covenant is part of original employment agreement Ramsey
   

• For D2, covenant was clearly part of original employ. agreement
  

 
 

1. Whether is there is adequate consideration to support a non-competit. Covenant when it is signed during on-going employment depends on facts of each case
   

   -Cts in other states have found that continued employment is suff. consideration in these situations
   

   -Cts in other states have found that the signing employees performance under the new contract is enough to supply mutuality
   

   -Time is not the most important factor. Employers must be able to make enforceable promises with employees throughout scope of employ.
   

 
 

-Ray Moss is case D uses. Moss is an in-state case where ct. held that a non-compet. agreement signed after employment began was without consideration because the terms "at will" remained and promisee was not promised a specific number of days to keep working (or stay hired).

-S. Ct. now disagrees with this because they interpret the length of employment of each defendant is binding against them and is sufficient to constitute substantial performance.

 
 

Conclusion:

Ct. of Appeals judgment is reversed. Judgment of Chancellor is affirmed. Costs are taxed against the Ds.

 
 

 
 

Dissent opinion:

-Justices Fones and Brock return to Ray Moss and the terms of the covenant when it is signed after employment has already begun. The promise of continued employment under an "at will" employment agreement is not enough. Because Ds signed covenants after they terminated previous employment and begun work for CAB they were no longer the subject of "free bargaining" … Even if new employee finds out about restrictive covenant on his first day, he has already foreclosed his other options at that point and have little choice but to sign.

 
 

 
 

 
 

Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Briefs\CAB%20v.%20Ingram.doc>

 
 

 
 

 
 

"Promise for a promise" as Consideration

 
 

• Strong v. Sheffield
  
• Mattei v. Hopper
  
• Eastern Air Lines v. Gulf Oil
  
• Wood v. Lucy
  

 
 

§75: Exchange of Promise for Promise

 
 

Unilateral: contract in which a performance is given as consideration for a promise (Kirksey v. Kirksey, Right to Party case)

 
 

Bilateral: Promise is given in return as consideration for a promise (used for the future)

-much more common

-much more economically significant

-requires mutuality or that each party be bound in some way

 
 

§71 A return promise is bargained for if it is sought by the promisor

…

 
 

 
 

 
 

Return promises are not consideration when:

-When it's "illusory" (illusory: appears on its face that is insubstantial as to impose no obligation on the promisor or is cloaked in promissory terms but actually contains no commitment by the promisor)

 
 

Strong v. Sheffield (1895)

 
 

Parties:

Π=Strong, creditor, payee of a promissory note made by Mr. Sheffield but guaranteed by Δ

Δ=Sheffield, widow of man who incurred debt, now is guarantor

 
 

Facts:

-Δ signed note and gave it to Π as security for prior debt.

-Π said he would hold the note until he felt like collecting the debt

-Π makes no effort to collect debt for 2 years, afterwards, he sues for debt

 
 

PH:

-decision in TC= for Π

-Appeals= Reversed (for Δ)

• Now, Strong is P (he is appealing in the SCt)
  

   
   

  Issue on appeal: Whether Strong's promise to forbear collection of debt until he wanted the money constitute consideration, making Δ's agreement to pay a valid contract?
  

   
   

  What Strong promised:
  

  -not to collect the debt until "such a time I want my money." He did not promise a definite or reasonable extension of time;…
  

  -Cts problem with Strong's return promise: It was illusory. He did not promise to do anything specific. The agreement was intended to be bilateral but there was no consideration.
  

   
   

  Was the contract b/n Π and Δ intended to be unilateral or bilateral?
  

  -It was intended to be bilateral. Strong did make a return promise at the time when Mrs. Sheffield promised to guarantee the debt but it lacked consideration.
  

   
   

  Result:
  

  -Affirmired for Δ…. BC no consideration for the guarantee by Π (therefore not good… Π could go after Mr. Sheffield for money but then it's a blood from a stone problem)… It only looked like a promise to forbear thereforeà Π's promise was illusory (Problem: Π made a promise to do nothing)
  

   
   

  **If Π had promised a specific amount of time then it would have constit. consideration. (I will forbear for 6 months if you promise to pay.) That would clear this whole thing up.
  

  **Does the contract b/n Π and Δ (creditor and third party) have to be in the forma of a bilateral contract?
  

  • No. Does not have to be bilateral. Does not even have to be expressed as unilateral contract… Unilateral qualities (like in this, Π's promise to forbear in return for Δ's guarantee) do not even have to be expressed… They can be inferred by Π actually forbearing.
    
  • If Π followed Δ's terms (say Δ asked Π to forbear for 6-months), even if he did not expressly agree but ended up forbearing for 6 mos. anyway, it would probably have been a valid unilateral contract. (Inference based on structure of relationship… Could have been inferred forbearance was given in exchange for performance and therefore, consideration would exist)
    

   
   

   
   

  Mattei v. Hopper (1958)
  

   
   

  Parties:
  

  Π=Mattei real estate developer, prospective buyer
  

  Δ=Hopper owns land Π wants, prospective seller
  

   
   

  Facts:
  

  -Π wants land b/c he wants to dev. a shopping center
  

  -Δ says she's gonna sell it
  

  -Agreement is in writing
  

  -"Deposit receipt" stips: $1000 deposit, finds satisfactory leases (clause @ end) and examine title, within 120 days, after period rest of $$ due and Δ would turn over title
  

  -Deposit is paid, deposit receipt gets rolling
  

  -During 120 day period, Δ's atty tells Π that Δ will NOT sell land under terms in deposit receipt
  

  -Leases were still obtained by Π and Π still offered to pay balance of purchase price
  

  • D failed to tender the deed according to deposit receipt
    

  -Π sues to enforce agreement of sale
  

   
   

  PH:
  

  TC=Δ wins
  

  App.Ct=Π
  

   
   

  Issue on Appeal:
  

  Whether Δ's promise to buy, which was conditioned on his satisfaction with the leases, was consideration for Π's promise to sell?
  

   
   

  App.Ct's reasoning:
  

  -Consideration is necess. From both parities
  

  -If one of the promises leaves party free to perform or w-draww from agreement at his own unrestricted pleasure, the promise is deemed illusory and it provides no consideration. (Can't be illusory)
  

  -Satifaction clause present a problem from the stdpt of consideration b/c it gives on party wide latitude to avoid obligation
  

   
   

  Rules:
  

  -Ct says 2 classes of "satisfaction" clauses
  

  1. Clauses involving satisfaction as to commercial value or quality…. (Objective)
  

  2. Clauses involving fancy tastes or judgment (subjective) [Fear=this could be totally arbitrary but Ct says these clauses can actually be held]
  

   
   

  Legal std for each:
  

  #1 is held to the std of a reasonable man
  

  #2 is held to std. of good faith ("Did the promisor exercise good faith as to his or her satisfaction?")
  

   
   

  For this case, #2 std is used because there is just too much stuff in play… There are all kinds of different reasons why the leases would or would not be satisfactory that a reasonable person might not know about/weigh in properly (requires complex industry knowledge)
  

  "Good faith req. makes sure there's some degree of obligation on the part of the buyer." Enforced by looking at other cases with similar facts and surrounding circumstances, if a dispute over what is and what is not good faith arises.
  

   
   

  Analysis:
  

  -Π's promise was not illusory because even though #2 std was held, he was still obligated to prove "good faith" if he wanted out. He could not have arbitrarily walked away… Counts as consideration.
  

   
   

  Result:
  

  -This K was not illusory or lacking in mutuality of obligation b/c the parties inserted a provision in their K making the Π's performance dependent on his satisfaction with the leases to be obtained by him but he was not free to walk away arbitrarily. He was still bound to a std. of judgment (to leave or abandon agreement) be excercised in good faith… This provides a basis for enforcement.
  

  • Judgment is reversed.
    

   
   

   
   

  **Ks in real estate are almost never unilateral.
  

   
   

   
   

   
   

  Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Section%2075%20promise%20by%20promise.doc>
  

   
   

   
   

  Eastern Air Lines v. Gulf Oil Corp.
  

  United States District Court, South District of Florida, 1975.
  

   
   

  Π= Eastern buyer of jet fuel
  

  Δ=Gulf seller of jet fuel
  

   
   

  Procedural history:
  

  1. Π alleges Δ breached its contract and requested preliminary and permanent mandatory injunctions requiring Δ to comply with the K's terms
  

  • A preliminary injunction preserving status quo was entered which enforced the terms of K but with final decision of the injunction pending…both parties stipulated to temporary injunction until judge can decide
    

   
   

  2. Δ answers Π's complaint by claiming the contract was not a binding requirements K on the basis of (1) lacking mutuality, (2) indefiniteness and was (3) "commercially impracticable"
  

• current focus: lack of mutuality
  

   
   

  Facts:
  

  -Π and Δ have enjoyed a mutually beneficial business relationship for decades involving the sale and purchase of fuel (This is a bilateral requirements K. Eastern will buy all the fuel it needs, for certain cities, from Gulf)
  

  -This relationship was governed by a series of Ks. One in focus: June 27, 1972 which called for Δ to furnish fuel to Π at certain cities in Π's flight system. This K was drawn 1 year early, initiated by Δ as an effort to "preserve their historic relationship"…
  

  -Both parties saw this K as favorable
  

  -Both parties also knew at the time of the K negotiations that increases in crude oil prices would be expected
  

  -Both parties intended those increases would be borne by Π in a direct proportional relationship of crude oil cost per barrel to jet fuel cost per barrel (Was this a fixed price K? No. Price is tied to an index. To do this, parties selected an indicator (West Texas Sour) to monitor the market value of crude oil
  

  -During period of K there were in effect various forms of U.S. government price controls which controlled the price of jet fuel as a consequence… this is a result of the fact the price of oil goes nutty due to political volatility in other regions of the world
  

  -U.S. gov't imposes a "two-tier" system… government designates some quantity of oil to "old" oil (subj. to price controls) and some qty. to "new" oil.
  

  -The indicator they chose happened to fall under the old oil gov't controlled oil price. (Not good for Gulf)
  

  -Gulf gets upset, wants out of arrangement… Threatens to cut off Π's oil supply unless Π pays a higher price\
  

  -During period of temporary injunction, Π paid "old" prices for jet fuel
  

   
   

  Issue 1: Did the K between Δ and Π (1) lack mutuality of obligation; (2) was the K vague and indefinite AND (3) did the K render Δ subject to Π's whims and is therefore invalid?
  

   
   

  Rule: (Historical Treatment of Requirements Ks)
  

  -In earlier cases, requirements Ks were found invalid when they lacked the required "definiteness" or mutuality. The rule evolved over time….
  

  -Now, the law views Requirements Ks binding where the purchaser has an operating business
  

  Why: There's some objective indicator (historical record) that the court can look at to figure out what "requirements" mean. Also, I bet there's a preservation of markets component here too (instrumental ends)
  

   
   

  What the Code says:
  

  -What's "required" by the K in terms of seller's performance means the actual output or requirements as may occur in good faith, except that no quantity of a stated estimate to any normal or otherwise comparable prior output… -U.C.C. §2-306(1)
  

  (This narrows the generalness of the Act (a problem). The Act requires the reading of commercial background and intent into the language of any agreement and demands good faith in the perfromancce of that agreement. It applies to Ks of nonproducing establishments like dealers and distributors as well as to manufacturing concerns….
  

  More interpretation: A K for outputs or requirements is not too indefinite since it is held to mean the actual good faith output or requirements of the particular aprty. Nor does such a K lack mutuality of obligation since the buyer is required to operate his business in good faith… (no outrageous demands)… His output and requirements will approximate a reasonably foreseeable figure. [What is needed in good faith by the buyer]
  

  • Reasonable elasticity of demand is held to "good faith" standard.
    

   
   

  **Why, according to the drafters of the UCC is a promise to buy one's requirements is NOT an illusory promise?
  

  • A K for output or requirements is not too indefinite b/c it is held to mean the actual good faith or output or requirements of that particular party (based on historical data b/n two parties in question or buyer and frmer seller) [UCC §2-306, cmt. 2]
    

    --There are things in place to both protect buyer and seller (buyer can't buy large quanitites if good is cheap; seller can't refuse supply if it's too expensive)
    

   
   

  Can't a buyer that agrees to buy its requirements avoid its obligation by saying that it requires NOTHING? No. Good faith std. is used by UCC "commercial standards of fair dealings and good faith…" within a reasonable range that is foreseeable to both the parties [UCC §2-306 cmt. 2]
  

   
   

   
   

   
   

  Analysis:
  

  -What makes this a "requirements" K àfuel. The way this requirement has been applied and what it means has been constructed by the parties and has been upheld for many years and in many contracts b/n these two parties:
  

   
   

  Mutuality of obligation/consideration break-down for these parties:
  

  Π gives $
  

  Δ gives fuel
  

   
   

  Referring to objective evidence of the volume of goods required to operate Eastern's business, the court could determine the volume of goods provided for in the terms of the K. (see more on this above..)
  

   
   

  Conclusion:
  

  For Π. This K is a binding and an enforceable requirements K.
  

   
   

  Black's def:
  

  commercial impracticability: the occurrence of a contingency whose nonoccurrence was an assumption in the K, as a result of which on party cannot perform… Ks that include "weasel words" like 'severe shortage,' 'marked increase,' ''basic assumptions,' and 'force majeure.'
  

   
   

  U.C.C. (§2-615) governs commercial impracticability:
  

  "Delay in delivery or non-delivery in whole or in part by seller who complies with 2 lower paragraphs of requirements (1st: in a time of deficiency, seller may allocate production and delivery in any manner he chooses as long as it is fair and reasonable; 2nd: seller must notify buyer that there will be a delay or non-delivery AND when allocation is req. by 1st, seller must notify buyer of the quantity that's been allocated and is available for the buyer), is NOT A BREACH OF DUTY under a K for sale if the performance as agreed has been made impracticable by the occurrence of an event that was a basic assumption upon which the K rests or if the seller complies, in good faith, with any applicable foreign or domestic gov't regulation or order whether or not it proves to be invalid.
  

   
   

  Not excuses:
  

  -Increased cost alone does not excuse a party to perform unless rise in cost is due to some unforeseen contingency which alters the essential nature of the performance.
  

   
   

  -A rise or collapse in a market does not excuse a party to perform because a rise or a fall in the market is exactly what business Ks made at fixed prices are intended to cover.
  

   
   

  Acceptable excuses:
  

  -Wars, embargo, local crop failure, unforeseen shutdown of major sources of supply or the like (true commercial impracticability)
  

   
   

  Issue 2: BOC
  

  -Ct determind Π's performance under the K was not a BOC with Δ
  

   
   

  Issue 3: Commercial Impracticability
  

  Here, Δ is not excused on these grounds
  

   
   

  Final Remedy:
  

  Preliminary injunction is made permanent.
  

   
   

  Notes:
  

  -word "requirement"/"require" is probably essential in the K itself for this type of K; "demand" may also suffice "I'll never demand less than x or more than y"
  

   
   

  -A requirements K provides that seller will deliver and the buyer will take all of the goods that are req. by the buyer
  

  -An output K provides that the seller will deliver and the buyer will take all of the goods that are produced by the seller.
  

  **The rules that apply to requirement Ks apply to output Ks as well.
  

   
   

  Case Comparison:
  

  Mattei v. Hopper v. Eastern v. Gulf re: illusory promises
  

   
   

  M v. H
  

  -M promised to buy property if I can find satis. leases
  

  -Promise was not held to be illusory in eyes of ct. b/c M was required to act in good faith. He was not allowed to arbitrarily walk away.
  

   
   

  E v. G
  

  -E promised to buy all the jet fuel we require from you (in specified cities)
  

  -Not an illusory promise b/c E was req. to act in good faith, there was a historical req. of what would be reasonably req. E could not deny its needs nor inflate them… E had to operate its business in good faith.
  

   
   

  In both situations, the good faith requirement saves promise from being illusory b.c it prevents a party from walking away from the K at whim. Mutuality of obligation existed in both b/c one party is not allowed to arbitrarily walk away.
  

   
   

   
   

   
   

   
   

  Wood v. Lucy, Lady Duff-Gordon
  

  Ct. of Appeals of NY, 1917
  

  (predates UCC but it would today be covered by UCC as an exclusive dealing arrangement)
  

   
   

  Parties:
  

  Π=Wood, frmr exclusive agent of Δ
  

  Δ=Lucy, Lady Duff-Gordon
  

   
   

  PH:
  

  -Appeal from judgment of Appellate Division which reversed an order denying Δ's motion for judgment on the pleading and which dismissed the complaint (Π won in trial court)
  

  -Π is appealing now
  

   
   

   
   

   
   

  Facts:
  

  -Δ is a "creator of fashions" … a stylish woman who makes her money endorsing other companies' goods as well as designing her own
  

  -She employed Π to help her turn her "vogue" into money. The terms of his employment included his exercise of exclusive right, a right always subjected to her approval, help her place her endorsements on the designs of others. In return, she was to take ½ of whatever money (stemming from creation of Ks) he made doing this
  

  -Π does not expressly agree to go out and solicit Ks with vendors. He does promise to give $$ for any Ks formed but he doesn't say he'll actually go out and get them… (Nub of case)
  

  -Term of Π and Δ's contract: Π to be exclusive dealing arrangement for one year, starting April 1, 1915 and then from year-to-year unless terminated by 90 day notice
  

  -Π alleges Δ broke the K by placing her endorsements without his knowledge and withholding the monies made
  

  -Agreement of employment is signed by both parties
  

   
   

  Issue:
  

  -Did the K lack mutuality of obligation on the part of the promisee (now Π) and is therefore invalid? (Did Π really have any obligations in the K?) à Did Π make a sufficient promise or was his promise illusory for want of obligation?
  

   
   

  Analysis:
  

  -While the K does not expressly state that Π will use reasonable efforts to place the Δ's endorsements and market her designs. Formerly, this would have been fatal But the law now takes a broader view and the court finds that Π's promise to place Δ's endorsements and market her designs was implied…. The promise may be lacking but the whole writing is "instinct with an obligation"
  

  Support for this implied promise: Δ's acceptance, present in the K, of the exclusive agency of Π.
  

  -Her compensation in relation to his function (Or: "Why promise someone half of the profits you're going to make if you're not going to go out and make profits?")
  

  -he also promised in the K that he would use a business organization to adequately promote Lucy's interests
  

   
   

  The presence of duty from Π to Δ in K: his promise was not baseless because he did assume some duties… Even if he didn't expressly say that he would go out and work for her, he did say he would do all of these other fxs that would imply such a basic promise.
  

  • Implied promise of good faith… Saves this promise.
    

    Conclusion:
    

  Order denying Δ's motion for judgment on the pleading is affirmed (Appellate Ct's judgment is reversed) …pro Π.
  

   
   

   
   

  Notes:
  

  Π's actual actions of doing what the K said that he would do did not help support his promise in the court's analysis…. NO. This is a bilateral K… The actions of one of the parties only helps show consideration when it's an unilateral K only.
  

   
   

  *Both cases above invoke UCC §2-306. Easter was requirements (2-306(1)), Wood was exclusive dealing (2-306 (2))
  

   
   

  Pasted from <file:///C:\Documents%20and%20Settings\Tecla%20Markosky\My%20Documents\LS%20Contracts%20I\Contracts%20for%20the%20Sale%20of%20Goods%20Intro%20pp%2076%20-86.doc>
  

   
   

 
 

 
 

UCC primer

 
 

Contracts for the Sale of Goods

 
 

Uniform Commercial Code is the governing law of modern domestic sale of goods cases.

UCC reflects characteristics of commercial sales transactions in a number of ways.

-Agreements to buy and sell are often made quickly, sometimes over the phone, so the requirements for K formation are less demanding

-Parties entering these types of agreements tend to be "repeat players" in the sense that they know each other and the goods well because they've been doing these types of transactions for a while

• These understandings as well as practices within the particular trade may add content to their agreements
  

-Terms and forms are often standardized

-The nature of the goods themselves is significant (different here from real estate) because the goods are usually more easily replaced or resold in the case of breach

-Market price plays an important role in the calculation of damages

 
 

Goods under UCC: moveable things incl. the unborn young of animals and the growing (not yet harvested) crops. Jet fuel is considered to be a good under the UCC.