BCOR 3000 1nd Edition Lecture 12 Outline of Last Lecture I Agreement II Offer III Special Offers IV Offeree Options V How an Offer Dies VI Acceptance VII Effective Times VIII E Contracts IX Shrink Wrap Contracts X E Signature XI Federal E Sign Act XII Key E Sign Act Provision Outline of Current Lecture 1 Consideration 2 Consideration Issues 3 Promissory Estoppel 4 Disaffirmance 5 Time to Disaffirm 6 Ratification 7 Necessaries 8 Emancipation 9 Intoxication 10 Illegal Contracts 11 Contracts Against Public Policy These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Current Lecture Chapter 11 Consideration Capacity and Legality Consideration Each party must have something at stake in the arrangement Each party must suffer a legal detriment Be worse off in some way which can be either Taking on a new legal duty or Giving up an existing right Detriments bargained for the only reason I am going to do something is b c I am going to get something from it One party s detriment is the other part s benefit Gifts are unenforceable by law Example If you tutor me in Spanish at the Rio I will buy you dinner This is a legal contract b c it takes on consideration Example Negotiating with landlord Take on legal duty to pay rent Landlord gives up right to live in house Consideration Example Hamer v Sidway p 283 if you don t drink smoke cuss play pool or cards till you are 21 I ll pay you 5000 Cousin lived a life of a monk Uncle dies Benefit rules used but do not matter Only consideration matters Consideration yes Both taking on a duty and gave up legal right to do things Because legal detriment on both sides this becomes Does each suffer a detriment The cousin suffers the detriment while the uncle did not What role does benefit play B c one person received no benefit then there is no benefit role Two elderly people move in together in his house sign agreement where each gives up the right to boot the other out He tries to kick her out after meeting another lady She points to agreement and says he cannot do this This was a gift promise B c she moves into his house she never had the right to give up therefore no agreement Also gift are unenforceable by law Hostage in prison riot agrees not to prosecute his captor if released Hostage says he will not prosecute if set free Does not meet consideration requirement because he cannot give up that right b c that is a right of the state Consideration Issues Pre existing duty One party was already obligated Due to job Due to specific contract Ex Police patrolling street Teacher in office hours would not have to pay them for patrolling the streets or extra office hour s b c that is part of their job duty Unforeseen Duty if there is unforeseen difficult and the party agrees to pay then that is alright Past consideration Violates bargained for aspect Gift that lead to a secondary gift Second promise is a gift promise Ex Go on vacation for a couple of weeks and forget to ask someone to mow the law Come home to see the lawn has been cut Offers to pay mower with a gift card to the Rio Now there is a gift promise but it is unenforceable under contract law The 1st gift was the unexpected mowed lawn which then triggered the 2nd gift of the 50 gift card to the Rio But this 2nd gift is not binding by contract law Example in Business some companies on the day a employee retires makes a promise to pay health insurance for the rest of your life This is a gift promise b c it is in consideration of what was previously done Since this is made after employment it is not binding Illusory Promises promise you all this stuff but can still take it away but it is within the agreement which allows them to do so There is a promise of absolutely nothing Ex I will promise to bump your grade up to a B if I feel you are deserving of it Moral Obligations Accord and Satisfaction For legitimate disputes agree to change terms to settle the dispute Accord an agreement Where you settle a dispute A settlement is a new contract if it is a legitimate dispute it will meet the consideration requirement Ex If landlord take 4000 without reason it does not meet the consideration requirement there for can turn around and take to court and sue Releases E g accepting insurance settlement check When you accept the payment it will have fine print saying that it is the FINAL payment even if you discover more damages Do not rush to get your money Make sure you have assessed all your damages Promissory Estoppel Fairness Promises without consideration will be enforced if Promise Justifiable reliance Reliance substantial recovery is based on not necessarily what is promised but you will get what you were out Injustice if promise not enforced Usually the last chance argument an exception to general consideration rule Based on fairness Ex Drive to vail and I will buy a ski pass Person gets there and the offeror changes their mind Offeree turns around and drives back to Boulder Spent 25 on gas Because this was out of the way and an injustice of a promise violates contract law Ex King Soopers 110 ski lift ticket vs Offeror denies you ski pass so you buy on in vail for 125 reliance substantial is 15 Capacity Minors if a party is lacking capacity there may not be a contract Minors Drunks and the Insane Only protected if you are drunk enough or intoxicated enough Need protection from Overreaching adults Their own youthful folly Law presumes the above and provides broad protections Disaffirmance provides this minors can get out of a contract Many statutory exceptions today Disaffirmance Minor can avoid the contract Contract is voidable by the minor Only the minor has choice to avoid Minor is returned to status quo Even if this hurts the adult Adults deal with minors at their peril The minor gets protected at the expense of the adult Upon Disaffirmance Restitution Duty of adult to return minor to status quo Return of Consideration Or a reasonable substitute Restoration Duty of minor to return what is left of consideration to the adult But modern trend is to require more than mere restoration Minor s Duty Current Trend Historically Restitution minor is entitled to full refund still the rule in most states Trend Deduct from minor s refund an amount for either Minor s use benefit from the item Decline in fair market value Next slide p 289 case ex 11 12 Case 11 12 Minor bought truck Engine developed problem Minor kept