BCOR 3000 1nd Edition Lecture 12 Outline of Last Lecture I. AgreementII. OfferIII. Special OffersIV. Offeree OptionsV. How an Offer DiesVI. AcceptanceVII. Effective TimesVIII. E ContractsIX. Shrink Wrap ContractsX. E SignatureXI. Federal E Sign ActXII. Key E Sign Act ProvisionOutline of Current Lecture 1. Consideration2. Consideration Issues3. Promissory Estoppel4. Disaffirmance5. Time to Disaffirm6. Ratification7. Necessaries8. Emancipation9. Intoxication10. Illegal Contracts11. Contracts Against Public PolicyThese 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 LectureChapter 11—Consideration, Capacity and LegalityConsideration• 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—butdo 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 detrimentwhile 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—wouldnot 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. The1st 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 willmeet the consideration requirement– Ex: If landlord take $4000 without reason—it does not meet the consideration requirement there for can turn around and take tocourt 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 whatis 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 todayDisaffirmance• 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 adultUpon 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