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CONTRACTS: ENFORCEABLE AGREEMENTS
GENERAL COMMENTS
Students usually respond with greater interest to subjects that they believe to be relevant to their daily
activities and personal concerns. Few areas within the study of law qualify better than contracts. However,
despite the impact of contracts on daily life, most persons are uninformed about the nature and operation
of these “enforceable agreements.” Most contract transactions are entered into and executed routinely
without consideration of what might go wrong. With the internet such a pervasive part of every day life
this has never been more true. Difficulties are usually overlooked or resolved promptly through informal
negotiation or parties just give up.
In this chapter, we dissect the contract and examine requisites for its validity. We classify the contract
in terms of method of expression, parties involved, legal effect and extent of performance. We explain
how persons other than the original contracting parties become involved. Although most contracts are
routinely performed, we note the variety of other methods that one can use to discharge contractual duties.
As is to be expected, sometimes people fail to keep their promises and thus breach their contracts. We
look at the consequences of such breaches. We outline the legislative protection of consumers before,
during, and after sales contracts. Thus, opportunity is afforded students to learn much more about their
future contracts than, perhaps, did their parents.
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CHAPTER SUGGESTIONS
1. Consider drafting a simple contract for sale of personal property such as a computer, or an
employment agreement. Have the class discuss and analyze each clause. Also, select an adhesion
2. Challenge your students’ imaginations and powers of observation with this simple exercise.
a. Have them visually survey the classroom and identify the different visible or perceptible
objects used by persons present. Items noted may include books, papers, pens and pencils,
clothing, pocket computers, eyeglasses, shoes, jewelry, desks, audio-visual equipment, watches
and clocks, and the building and its component parts.
b. Have a student write the names of the items on the board as they are suggested. Remind your
students that all of these things are at their disposal because of contracts.
3. Have your students look at the first and second pages of their daily newspaper and identify the
stories that involve potential contracts. A variant of the same exercise can occur through use of on-
line newspapers.
4. Ask your students how many of them read the terms and conditions relating to on-line transactions?
Go to an on-line vendor and download the contract terms for a transaction. Is it a purchase or lease?
What are the restrictions and limitations existing in its terms? What are the surprises? How should
courts treat such transactions?
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7. Invite the manager of the credit department of a local department store to discuss the types of
8. Bring a bank representative to discuss ATM transactions, debit cards and credit cards. This would
9. Have a student look at the FTC website for various types of scams. Discuss whatever scam catches
the students’ attention. What is it and why does it work? Are there personal and government
remedies available to contest the scam? Are they effective? Why? Why not?
10. Consider the historical development of the Statute of Frauds and more recent developments such as
the English elimination of most provisions and the numerous exceptions now existing in American
law. Does the doctrine continue to make sense? Have your students research the literature and do a
pro and con discussion.
FOR CRITICAL ANALYSIS
Hamer v. Sidway
1. No. If one is required by law to refrain from conduct (forbear), then not doing it (forbearance) is not
consideration. Likewise, if one is required by law to do something, his or her promising to do it is
not consideration. The price paid must be for some new duty; if the price must be paid anyway it is
not consideration.
2. Who knows, but why do anything to anger a generous uncle? Family lawsuits are fortunately
3. The contract, by its terms, was to take more than a year. However, it was performed, so it does not
fall under the statute. If the statute had applied, the acknowledgement letter from the Uncle
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Lucy v. Zehmer
1. People’s memory of what they thought or intended is usually, if not always, self-serving. We can be
expected to know what someone said, but how can we ever know what they thought?
2. a. He did not intend to contract. The court found the objective manifestation of his conduct
suggests he did.
3. The statute of frauds requires that a contract to sell real property is to be evidenced by a writing;
however, this agreement was oral.
ANSWERS TO QUESTIONS AND PROBLEMS
1. a. The five essentials of a valid contract are:
(1) Competent parties;
(2) Mutual agreement (offer and acceptance);
(3) Genuine assent (not clouded by duress, undue influence, fraud, and certain types of
mistake);
(4) Reciprocal consideration;
2. a. No. Breaching a contract is generally not comparable to committing a crime or being a
tortfeasor. It is usually not considered immoral or unethical, especially if the victim is promptly
made whole, or is given the benefit of the bargain without being compelled to wait or to sue for
justified relief. In a contract breach there is no mens rea (criminal intent), although of course
there can be wrongful intent. Society and its laws encourage fulfillment of freely undertaken
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3. The answer will depend on the students’ individual circumstances. Ample examples for analysis
can be found in simple purchases of food and candy; books and school supplies; housing;
4. A contract that complies with all essential elements is a valid contract, including your automobile
insurance policy and your agreement to buy coffee this morning. The courts will allow you to
enforce your right to money damages or equitable remedies in the appropriate case if there is a
5. When an offer is delivered by U.S. Postal Service mail, the offeror impliedly authorizes the offeree
to respond by mail, unless otherwise specified. The acceptance would be effective when mailed.
Generally, the offeree may accept by the same or faster means than that which was used by the
offeror. The rule is called the deposit acceptance rule. Thus,
a. It is effective before the arrival.
b. Decisions to accept that are not communicated are as valuable as other unexpressed thoughts,
thus, obviously, no acceptance.
c. Generally, courts consider it a mailing when the letter has left the control of the offeree. If your
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6. Marcie and Bruce have a valid, bilateral contract. It was executory, which allows for the possibility
that rights might be assigned and duties might be delegated. The subject matter of the contract is
specially manufactured goods.
Bruce entered into a second contract with Shadoe. Both parties have partially performed their
promises, and outstanding contractual obligations still exist. The subject matter of the
delegator, Bruce, and so Marcie really has no reason to object. (However, of course, she was foolish
to deliver the glider before getting paid the sales price of $18,000.)
Despite the delegation of his duty to pay, from Bruce to Shadoe, Bruce remained contractually
responsible. A delegation may create new liability, but it cannot extinguish prior liability without
the express consent of the obligee for payment (Marcie, here). In other words, Marcie did not agree
7. This is an illusory promise, or no promise at all, because performance depends solely on the
decision of the teacher. There is no bargained-for consideration. The statement merely declares that
the professor may or may not do something in the future, based on undefined criteria. The
professor’s statement declares: “If you have worked hard…” (How hard?); “…and continue to
perform at a high level…” (How high? By how many of the students?); “…I will pay for a pizza
party…” (Where? When? Costing how much?); “…if I think it is warranted…” (What do I think?
Who says so?) The source of this question is a law school professor who routinely discussed having
8. No. The court found that the consideration was insufficient to support the contract. The court
determined that the alleged consideration created no detriment to the plaintiff, the alleged promisee.
The plaintiff had been named after his grandfather several months before the alleged oral contract
was made. The court stated that “past or moral consideration is not sufficient to support an
executory contract.” The plaintiff argued that his love and affection constituted sufficient
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consideration to support the contract, but the court held that such a promise created “at most, bare
moral obligations.” Therefore, the plaintiff did not get title to the property.
9. No. The card is not a contract, as it is incomplete and missing more than one of the five essentials
10. Martin is liable to American Express for $5,300. The Credit Card Act of 1970 protects the
cardholder from the unauthorized use of his or her credit card with a statutory liability of $50 if
statutory conditions are present. The court distinguished the provision for limited liability under the
statute from the instant situation in which another person was permitted to use the card. The court
11. This is a discussion question. I expect that involvement by the courts in freedom of contract is
inevitable as businesses abuse their position of power relative to consumers.