Cornell Law - Contracts Outline (Gillette, Fall 2005)

Cornell Law - Contracts Outline (Gillette, Fall 2005) -...

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Contracts (Fall 2005) Professor Clayton Gillette Farnsworth, Young, Sanger, Contracts: Cases and Materials , 6 th Ed. I. I NTRODUCTION A. Purpose 1. Common law from unrelated judicial opinions that govern how private parties enter into agreements i) Basic interaction – parties want to improve their position through trade ii) Small domain of cases: not face-to-face, long-distance, small transactions 2. Why do people enter contracts? When should they be enforced? 3. R§1: “a contract is a promise…for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty” B. Goals 1. Determine a mechanism for identifying the kind of promises that ought to be enforced 2. Create default terms to define parties’ obligations that allow for efficiency; disallow unsocial terms 3. Determine rules to provide damages or relief in the event of a breach II. E NFORCEMENT OF P ROMISES A. Enforceable Contracts 1. Typical Categories i) Sale of goods, real estate, construction, employment, family (more so now, although informal) B. Consideration (R§71) 1. Historical: necessary for action of assumpsit – needed bargain, benefit to promisor, detriment to promisee 2. Reasons to use consideration i) Illuminates value placed on promise by both sides ii) Encourage mutual gains and trade for people to get what they value iii) Easy tool for courts to use as a surrogate for underlying contract policies 3. Fundamentals i) Confers benefit on promisor OR imposes detriment on promise ( Hamer v. Sidway : nephew’s forbearing from legal rights sufficient) a) Promise for promise is bilateral; promise for performance is unilateral (only one right-duty) b) Gifts/peppercorns do not count: must have sufficient consideration where detriment ~ benefit (subjectively determined) 1) Personal choice, prohibitive cost of enforcing them efficiently, diminished social value ii) Even if the consideration given would be legally invalid, it would still work if it was offered in good faith (subjective test) and the parties had a reasonable basis to believe it was valid (objective test) ( Fiege v. Boehm : forbearance from an invalid claim to start bastardy proceedings) a) Even if no real benefit/detriment: disvalue deception, value confidence and personal responsibility 4. Exchange i) Past or continual work not consideration ( Feinberg v. Pfeiffer Co. : retirement pay was a gift) a) Must be given in exchange, so there must be a change in party’s behavior; otherwise a gift ii) Moral obligation + material benefit is consideration to support a subsequent promise ( Webb v. McGowin : worker crippled in saving boss’s life) a) Compared to promisor must lose or promisee must gain ( Mills v. Wyman : past Good Samaritan) 1) Although it might reduce desire to care, it also rewards pure altruism 2) Contracts are NOT based solely on moral obligation: too broad or too variable b) Material benefit is one that can measured monetarily c) Mimi theory: Enforce promises that the parties would have made if they had the chance
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This note was uploaded on 02/12/2008 for the course LAW 5041 taught by Professor Summers during the Fall '07 term at Cornell University (Engineering School).

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Cornell Law - Contracts Outline (Gillette, Fall 2005) -...

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