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Contracts--JJ White--Fall 2001

Contracts--JJ White--Fall 2001 - I Obligations Arising From...

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I. Obligations Arising From An Agreement With Consideration A. Consideration as Bargained for Exchange 1. Hardesty v. Smith a. Smith got rights to an invention, which later claimed to be useless. Promissory notes assigned to Hardesty who demanded payment. Smith wouldn’t pay cause, invention was useless. b. Court’s ruling: i. fact that no utility is not sufficient for a suit ii. court doesn’t look at who got best of a bargain- only if there was one iii. agreement to pay is valid consideration iv. court can’t amend value afterwards cause then have to and permitted to determine the value of every article and thereby eliminate all special contracts 2. Dougherty v. Salt a. Aunt Dougherty wrote a promissory note to nephew. Executor of Dougherty’s will (Salt) refused to pay. b. Court’s ruling: i. note was voluntary ii. promise was neither offered nor accepted iii. consideration must be regarded as such by BOTH parties c. JJ says: i. problem with gifts is that no cautionary element. D did write a note, but conversation suggested coercion. ii. economists say bargain is better for society than a gift: both sides increase wealth in the former. Gifts are one-sided. Bargains should be facilitated 3. RESTATEMENT (FIRST) OF CONTRACTS §75 (1932) a. consideration for a promise is (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification or destruction of a legal relation, or (d) a return promise b. consideration may be given to the promisor or to some other person. It may be given by the promisee r by some other person. 4. Restatement (Second) of §71 a. Promisee must suffer a legal detriment, b. the detriment must induce the promise, c. the promise must induce the detriment 5. Fuller, “Consideration and Form” a. consideration has a formal function i. evidentiary- evidence of existence of contract ii. cautionary- a check against inconsiderate action. Can’t go through with action without thinking iii. channeling- person conceives or desired transaction, must go through the process of doing transaction (lawyers, memos, contracts, etc.) b. substantive bases i. contract is an expression of a person’s power to change individual legal relations ii. breach of promise may injure someone who has relied on a promise to change his position 6. Maughs v. Porter a. P responded to D’s notice of auction that gave chance to win a car. P won car and D refused to pay. D claimed wasn’t sufficient consideration b. Court ruled: i. A gift must be executed to be valid ii. P showed enough consideration by showing up to the auction. Condition of the gift was of benefit to Defendant- attracting people to the auction. 7. Hamer v. Sidway
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a. Uncle promised nephew that if nephew refrained from drinking, tabacoo, swearing,etc. would pay him $5000. Uncle died without paying, after nephew complied with conditions. Executor wouldn’t pay b. Court: i. Something promised, due or suffered by promissee is consideration ii. Suspension or forbearance is valid consideration c. JJ: i. If nephew did smoke, drink, etc. Could uncle sue for breach? In theory yes.
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