Contracts Outline – GULC – Klass – Fall 2007 – 1
This is a 54 page outline from Professor Klass’ contracts class in the fall 2007 semester at Georgetown University Law Center (GULC). You will immediately be sent an email containing links to the outline in both .pdf and .doc format (2 files total).
1. Contract Formation
Rest. 2d § 17 – Requirements of a bargain
- a. Contract formation requires a bargain which must include a manifestation of mutual assent and consideration.
- b. Absent a bargain, a contract may be formed under certain circumstances involving special rules applicable to formal contracts or under the rules that apply to contracts lacking consideration (Rest. 2d §§ 82-94).
Rest. 2d § 71 Requirement of Exchange; Types of Exchange
(1) Valid consideration requires that the performance or a return promise must be bargained for.
(2) A bargained for performance or return promise is one that is sought by the promissor and is given in exchange for the promissor’s promise by the promisee.
(3) The performance may be an act other than a promise, or a forbearance, or the creation, modification, or destruction of a legal relation.
(4) Promise can be from promissor to promise, or to/from someone else.
1.1.1. The Consideration Requirement
Kirksey v. Kirksey (widow offered a residence by brother in law). (Brother-in-law promised to give the widow property if she moved to his estate. He later evicted her and she sued to enforce the promise.
Rule: promise that is a mere gratuity (no consideration) is NOT enforceable.
Test: Whether a detriment is assumed or a benefit conferred.
Uncle promised to pay nephew if didn’t drink, use tobacco, swear, or play cards until he turned 21. The nephew performed but the uncle died before paying. Nephew assigned claim to P and P sued the uncle’s estate. Executor refused to honor the promise.)
Here, consideration was the abandonment of a legal right by the nephew. Consideration exists where a promise induces a forbearance of some legal freedom or right.
Rule: A promise is enforceable and consideration exists if the promisee suffers detriment.
Employer promised to pay a pension if plaintiff would not work for a competitor. P accepted the offer and D stopped paying. D was bound to pay because it benefited from P’s not working for competitor.
Rule: consideration exists where the promissor derives a benefit from promisee’s act or forbearance.
Test: whether the promisee’s performance was induced by the promissor’s promise (court disagrees with Kirksey).
Objective Theory of Contract: Whether a contract exists is determined objectively from the manifestations of intent made by each of the parties rather than the subjective intent of the parties. The court looks to objective intent as demonstrated through actions and considers whether a reasonable person would have understood the actions of a party as an inducement.