Practice Exam Fall 2008

1. Practice ExamFall 2008 Prof. Carol B. Swanson

2. For Your Test Today… • Review your Contracts texts: • Summers/Hillman pp. 47-49, 56-58 • Knapp/Crystal/Prince, pp. 71-75, 87-90 • Hamer v. Sidway (NY Ct App 1891)(uncle promises nephew $5,000 for abstaining from alcohol, tobacco, cursing, gambling) • Dougherty v. Salt (NY Ct App 1919)(aunt gives 8-yr-old nephew a $3,000 note for “value received”)

3. CONTRACTS in a NUTSHELL • Contracts are enforceable promises • Not all promises are enforceable • So how do we determine which promises should be enforced? • PRIMARY MECHANISM—CONSIDERATION! • Consideration = bargained-for exchange

4. Consideration “Gold Nuggets” • Benefit to the promisor OR detriment to the promisee (one way to ascertain existence of bargained-for exchange) • Gift promises/conditional gifts • Past consideration (is no consideration) • Nominal consideration (in name only) • Adequacy of consideration (almost) never questioned! (peppercorn)

5. Case Briefing: Hamer v. Sidway • Case Name/Court/Date: • Hamer v. Sidway (N.Y. Ct. App. 1891) • Procedural Posture (Facts?): • P acq’d K claim as remote assignee from nephew • D is executor of uncle’s estate • Special Term trial: J/P • Supreme Ct (Gen’l Term): Rev’d & rem’d • Here: Ct App reverses, affirms Special Term (J/P)

6. Case Briefing: Hamer v. Sidway Facts • Uncle told his nephew that if the nephew refrained from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he became 21, then the uncle would pay him $5,000. • Nephew agreed and fully performed. • When nephew turned 21, parties mutually agreed that the uncle would hold the $5,000 until the nephew is capable of “taking care of it.” • Uncle died (12 yrs later) without having paid nephew. • P acq’d K claim as remote assignee from nephew. • D is executor of uncle’s estate.

7. Case Briefing: Hamer v. Sidway Issue & Holding • Does the consideration doctrine’s benefit/detriment analysis render enforceable a promise to pay money in return for the promisee’s agreement to give up liquor, tobacco, swearing, and gambling, even though the promisee arguably benefited from performance, and no benefit to the promisor has been demonstrated? • Held: YES.

8. Case Briefing: Hamer v. Sidway Analysis • Court cites various consideration definitions: • “may consist either in some right, interest, profit or benefit accruing to the one party, or some forebearance, detriment, loss or responsibility given, suffered or undertaken by the other” –Exchequer Chamber (1875) • “In general, the waiver of a legal right at the request of another party is a sufficient consideration for a promise” --Parsons • “Consideration means not so much that one party is profiting as that the other abandons some legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first.” –Pollock

9. Case Briefing: Hamer v. Sidway Analysis • Promisee nephew had legal right to use tobacco, drink liquor; he abandoned rights for years, based on his uncle’s promise • This forbearance furnishes good consideration, regardless of what effort was required to forego these activities, or whether the nephew or uncle benefited from the forbearance • Ct favorably cites several cases finding consideration where the promisee gave up legal rights: Lakota (drinking); Talbott (tobacco)

10. Case Briefing: Hamer v. Sidway Rules • Consideration may consist either in some right, interest, profit or benefit accruing to the promisor, or some forebearance, detriment, loss or responsibility given, suffered or undertaken by the promisee. • Consideration means not so much that one party is profiting as that the other abandons some legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first. • In general, the waiver of a legal right at the request of another party is a sufficient consideration for a promise. • If a promisee agrees to forego his legal right to engage in certain activities (like drinking and smoking), that forebearance is good consideration supporting the promise to pay.

11. What Does Dougherty Add? • Aunt hands $3,000 promissory note to 8-yr-old nephew (printed form contains the words “value received”), saying to him “You have always done for me, and I have signed this note for you”, and telling his mother that she loved the child, wanted to take care of him. • Why does the court conclude that this promise is NOT enforceable?

12. Mary SAMPLE EXAM • Read exam directions • Answer the question(s) • Can Mary recover from CT, Grumpo, or Bong? • Allocate your time • Keep in mind the “BIG PICTURE” • IRAC • Issue, Rule, Analysis, Conclusion!

13. Mary/CT Sample EXAM • Can Mary recover $1,000 from CT under contract law principles? • “Can Mary recover from any of them?” • Promise + Consideration (Bargained-for exchange) • NOTE other possibilities (you’ll discuss these in Contracts this fall): • Promissory Estoppel (Promise + Detrimental Reliance) • Promissory Restitution (Promise + Moral Obligation)

14. Mary/CT ISSUE: • Did Mary & CT form an enforceable contract, based on CT’s representations at the family gathering and her going meat-free for one year? • In other words, did CT’s representations constitute a promise to pay Mary if she remained meat-free for a year, and did her actual performance provide good consideration, rendering his commitment enforceable? • PROMISE + CONSIDERATION!

15. Mary/CT RULES + ANALYSIS: PROMISE • Define it: An unambiguous statement of commitment to do or not do something • How to determine it: Look to surrounding context, language actually used, etc. • ANALYSIS HERE: • Family gathering • “Just stop eating meat for one year! If you can accomplish that, you certainly would deserve $1,000!” • Unambiguous statement of commitment? • Tough to find clean “promise” here • If no promise, no binding deal • If promise (or not clear), then we need to consider the next issue...

16. Mary/CT RULES + ANALYSIS: CONSIDERATION • Define it: Bargained-for exchange • How to determine it: • Benefit to the promisor OR detriment to promisee • Waiver of a legal right at the request of another party is a detriment to the promisee providing sufficient consideration to enforce promise, regardless of whether the promisee is otherwise “benefited” by the deal • Look to surrounding context • ANALYSIS HERE: (like Hamer v. Sidway) • Mary gave up a legal right (right to eat meat) for one year, and that forbearance is a detriment that supports the finding of consideration • Although she may have enjoyed certain health benefits along the way, that does not offset the detriment she incurred

17. Can Mary Obtain Relief from CT? • Can Mary obtain relief under contract principles? • She probably cannot. • Her primary difficulty is the absence of an unambiguous commitment by CT to pay her for performing. His language is suggestive, but seems to fall short of a true “promise.” • If, however, a court finds a “promise,” then Mary’s performance (giving up a legal right by not eating meat) does provide legal consideration, and the promise would be enforceable.

18. Mary/Grumpo • Can Mary recover $1,000 from Grumpo under contract law principles? • “Can Mary recover from any of them?” • Promise + Consideration (Bargained-for exchange) • Did Grumpo’s note create an enforceable contract to pay $1,000? • In other words, does consideration support Grumpo’s promise to pay $1,000 when it is given “for all [Mary] has accomplished” and for “good value received”? • Bargained-for exchange?

19. Mary/GrumpoRULES + ANALYSIS: CONSIDERATION • Define it: Bargained-for exchange (presumably already done) • How to determine it: • Benefit to the promisor OR detriment to promisee • Look to surrounding context: what did these parties “bargain for”? • ANALYSIS HERE: (like Doherty v. Salt) • NOTE content: • “for value received” does not establish consideration • “for all [Mary] has accomplished”—not bargained for • OTHER: favorite niece enriched aunt’s life (not bargained for)

20. Can Mary Obtain Relief from Grumpo? • Can Mary obtain relief under contract principles? • No. • The facts do not support the finding of a bargained-for exchange. • The words “good value received” are not conclusive. • Grumpo cannot bargain for Mary’s past acts: • Favorite niece who enriched Grumpo’s life • “for all [Mary] has accomplished” • This is an unenforceable gift, not a contract supported by consideration.

21. Mary/Bong • Can Mary recover $50 from Bong under contract law principles? • “Can Mary recover from any of them?” • Promise + Consideration (Bargained-for exchange) • Is Bong’s promise to pay $50 if Mary abstained from smoking dope enforceable?

22. Mary/BongRULES + ANALYSIS: CONSIDERATION • Define consideration, explain how to determine: Been there, done that! • ANALYSIS HERE: • Smoking abstention (twist on Hamer): • Mary DOES give up something, BUT... • MOTIVE: doesn’t matter that she “had very little interest in smoking dope”

23. Can Mary Obtain Relief from Bong? • Can Mary obtain $50 under contract principles? • No (unless you are in a jurisdiction that permits smoking dope). • The facts do not support the finding of a bargained-for exchange. • Mary gave up an act she had no legal right to perform (as a matter of public policy, that’s no bargained-for exchange)

24. TIPS for Exam-Taking SUCCESS • Start Today (set up OUTLINE for each class) • Communicate • Keep in mind the “BIG PICTURE” • Issues/doctrines, not individual cases • Cases demonstrate important CONTEXT • Read the question, particularly the “ask,” closely • Allocate your time wisely • IRAC structure • Maintain your sanity

25. Good Luck!Enjoy Your Fall Semester! Questions or concerns? Feel free to contact me… Carol Swanson cswanson@hamline.edu 651-523-2138