Ch.1§3, pp.29-46
Basis for Enforcing Promises: Which
Promises Should the Law Enforce?
Why aren’t ALL promises
enforceable?
Impracticality of Enforcing All Promises
• Bare promises (for which nothing is asked in
return) are easily made and easily broken.
• Shouldn’t one have the option of changing one’s
mind?
• Evidentiary Issues
• Flood the courts?
• Is there any economic benefit to enforcing
promises for which nothing is given in return?
• Is there economic benefit to enforcing promises
for which something is asked in return?
So, which promises will the law
enforce?
Is there consideration (quid pro
quo) for the promise?
No
Gift Promisegenerally NOT
enforceable
Yes
Kx Promise (promises
for which there is
considerationgenerally enforceable
Promises historically enforceable
under English Common Law
Common Law Actions
• Covenant (promises under seal)
– Evidentiary
– Cautionary
– Later supplanted by signature
• Debt
– Debtor had something belonging to promisee
• Assumpsit
– misfeasance
Assumpsit
• Allowed recovery only for misfeasance until midfifteenth century
• Thereafter, permitted recovery for nonfeasance,
but required detrimental reliance
• Replaces the action of Debt to recover for unpaid
loans and delivery of goods not paid for.
• End of 16th Century, enforces promise-forpromise (Bilateral Kx)
Consideration
(Sources of the Doctrine)
• By the 17th Century, Assumpsit becomes the
action for enforcing all manner of promises
• The term “consideration” expressed the
conditions necessary for a promise to be
enforceable
• The action of Debt contributes the concepts
quid pro quo and benefit conferred to the
Consideration Doctrine. The action of
Assumpsit supplies the notion of detriment.
Road Map for Kx Analysis
1.
2.
3.
4.
5.
Scope
Kx Formation
Enforcement
Performance and Breach
Remedies
(Road Map)
1. Scope
a. Geographic: which state’s law governs the
transaction?
In many transactions, more than one state may be
implicated. For instance, in a Kx for the sale of goods, the
seller may reside in Oklahoma, while the buyer resides in
Texas. These are “choice of law” or “Conflicts” issues
relating to jurisdiction and venue.
(Roadmap)
(1. Scope)
b. Subject Matter
Having decided, if necessary, which state’s law
controls, the next step is to decide which law within
that state governs the transaction.
Kx law is embodied in statutes and codes (from
legislatures) and the common law, or case law (from
the courts). This step in the road map entails
determining if the transaction is governed by statute
or code on the one hand or case law on the other.
(Subject Matter Scope)
In addition, various organizations (e.g., the
National Conference of Commissioners on
Uniform State Laws) interested in clarity and
uniformity in the law, as well as law
transformation, have been influential in the
development of Kx law. Most notable among
such organizations is the ALI, which drafted the
Restatements of the Law, including the law of
property, torts and other areas, as well as the
Restatement of Contracts.
(Subject Matter Scope)
The Restatement of Contracts endeavors both to
state the law as it is and to and, with respect to
various issues, what the law should be.
The Restatement is not a statute or code—the
ALI is not a legislative body. As the product of a Kx
brain trust, however, it has been extremely
influential and is frequently cited by courts. Where
a Restatement provision thus becomes part of a
judicial opinion, it becomes part of the case law of
that jurisdiction.
(Road Map)
2. Kx Formation
The question here is whether a Kx has been
formed. A cause of action for breach of Kx
requires initially that a Kx has been formed
between the parties. The first part of this course
will be devoted to determining the requirements
for Kx formation.
(Road Map)
3. Enforcement
Once it has been determined that a Kx has
been formed, the next step is to decide if there
are any bars to enforcing it. Not all Kx’s are
enforceable for various policy reasons. What
might some examples Kx’s the law should
decline to enforce?
(Road Map)
4. Performance and Breach
In an action for breach of, if Kx is found,
and there are no bars to enforcement, it remains
to decide if there has been a breach. If so, the
party against whom breach is alleged has an
array of Responses to Breach available. These
are considered under this part of the analysis.
(Road Map)
5. Remedies
If we find Kx, no bars to enforcement, and breach
to which there is no response, the complaining party
is entitled to a Remedy for Breach of Kx. Generally,
the remedy will be money damages, though under
some circumstances, an “Equitable Remedy” (e.g.,
Injunction or Specific Performance) may be
available in lieu of $ Damages.
Restatement 1st
• Until the 1st Restatement, individual transactions
involving contracts were separately governed
(e.g., Kx for shipping, purchases, etc.)
• The theme of the Restatement was to propose a
single body of law governing all manner of
contracts, whatever the subject matter of the
contract
• Even after the Restatement, general categories of
Kx are still identifiable
Categories of Kx’s
1. Family Kx
– Non-commercial, family contracts regularly
implicate personal, family relationships. As such,
they frequently do not lend themselves readily to
resolution through judicial process
– They are frequently oral
– They are frequently gift promises
• Promises made among family members are routinely
presumed gratuitous
Hamer v. Sidway
• At a wedding celebration, Story promises his
nephew, Hamer, $5,000 if Hamer would
refrain from drinking, smoking, etc. until age
21.
(Hamer v. Sidway)
• Nephew assented and refrained until age 21,
fully performing as uncle requested.
• Uncle deposited the money in a bank account
at interest.
(Hamer v. Sidway)
• Who’s Sidway?
(Hamer v. Sidway)
• Who sued whom for what (what is the cause
of action)?
• What is the remedy sought?
• What is the outcome below?
• Who appeals, and what is the outcome on
appeal?
Issues in the case
• What is the defendant’s argument?
• How does the NY Ct. of Appeals define
consideration?
• How might the issue(s) in this case be stated?
Hamer v. Sidway
• Issue: Whether Nephew’s refraining from
smoking, drinking and gambling, all of which
he had a legal right to do, was consideration
for Uncle’s promise to pay $5,000, though
Nephew’s refraining was of no measureable
benefit to Uncle?
*Why wasn’t Nephew’s refraining a benefit to
Uncle? Isn’t what that what Uncle wanted?
(Hamer v. Sidway)
• Rule: A Promisee’s performance is
consideration for the Promisor’s promise if it
is either beneficial to the Promisor or
detrimental to the Promisee. Forgoing the
exercise of a legal right constitutes a
detriment to the Promisee.
(Hamer v. Sidway)
• Holding/Application: Since Nephew had a
legal right to smoke, drink and gamble, his
forbearing constituted a detriment to him and
was, therefore, consideration for Uncle’s
promise to pay $5,000.
• Would the result be different in the case if,
under NY law, Nephew could not drink or
gamble until age 21?
So, what are the requirements for
consideration so far?
2. Kx Formation
Requirement: Promisee’s performance must
be consideration for Promisor’s promise.
From Hamer v. Sidway:
To be consideration, a performance must either
be a benefit the promisor (Uncle in the case) OR
constitute a detriment to the promisee
(Nephew). Forfeiting a legal right constitutes a
detriment to the Promisee.
What constitutes a detriment to
Promisee?
A Promisee suffers a detriment in forgoing
something the Promisee otherwise has a right to
do.
Nephew had a legal right to drink, smoke and so
forth which he forfeited in response to Uncle’s
promise.
Note 1: Benefit and Detriment, p.37
• Recall that the notion that a benefit had been
conferred on the promisor has its historical antecedent
in the common law action of Debt
• The concept of detriment is traceable to the action of
Assumpsit.
• Which is/are required according to the Hamer case?
• Do those concepts find their way into the Restatement
? What constitutes consideration under the
Restatement §§71 and 79?. Would there be a contract
formed between Story and Hamer under The
Restatement?
Note 2: Bargain Theory of Exchange
• According to eminent jurist, Justice Holmes, the
central requirement for consideration is the
“reciprocal conventional inducement”. What
does that mean? What does “Bargained For”
mean?
• Is the Restatement definition of consideration
consistent with Holmes’ view?
• If Bargained For is one of the requirements for
consideration, would there be a Kx in Hamer?
• We will return to the Bargained for requirement
with Feinberg v. Pfeiffer, p.46.
Note 3: Sufficiency of Consideration
• Is it required that the relative value of
consideration given be “enough”? What was the
position of the Restatement 2nd ? (See §§76-81)
• What is the position of the Second Restatement
on sufficiency? See Restatement 2nd §79. Why
did the Restaters adopt this position in the
Second Restatement?
• What is meant by Peppercorn consideration?
Restatement 1st §84, Re.2nd §71
Note 4: Peppercorn
• What is meant by “Peppercorn”
consideration?
• Why is it a matter for concern under the
Bargain Theory of Exchange?
• Is it a problem where a benefit to Promisor or
Detriment to Promisee is required?
• How do the Restatements 1st and 2nd deal with
Peppercorn consideration?
Note 5: Unilateral and Bilateral Kx
• Unilateral Kx refers to a promise given for a
performance in return. Restatement §71(1).
• Bilateral Kx refers to a contract in which
parties exchange promises.
• Which sort was involved in Hamer v. Sidway?
• What if on receiving Uncle’s promise, Hamer
would have promised to refrain until age 21.
Would there have been a Kx formed?
Gift (Gratuitous) Promises versus
Completed Gifts (p.39)
• Are completed gifts—where something is
actually transferred by one party to another
“enforceable”, or should the party conferring
the gift be able to deploy the courts to force
the recipient to return the item?
• If completed gifts are “enforceable”, why
shouldn’t a promise to give a gift (a gratuitous
promise without consideration) not be
enforceable?
(Kx Formation)
So far, the requirements for Kx look like this:
• Promise
• Price (performance or return promise)
• Consideration: Requires Promisee’s
performance to be . . .
(1) a Benefit to Promisor or Detriment to
Promisee
(2)*Bargained For-will be added as a
requirement later
(Road Map: 2. Kx Formation)
• Promise plus a price for that promise
– What might be a working definition for Promise?
– The price for the Promisor’s promise will be either
• In unilateral Kx, a performance by the Promisee (e.g.,
Nephew’s refraining in Hamer v. Sidway).
• In bilateral Kx, which we’ll study later, the price for the
Promisor’s promise will be the Promisee’s return
promise.
Promisor’s
Promise
E.g., “to pay”
Price
E.g., Refraining
Prom’ee’s Perf or
return Promise
Fiege v. Boehm, p.40
• Facts: Boehm had an intimate relationship with Fiege,
became pregnant and later gave birth to a daughter.
• Before the birth, Fiege promised to pay Boehm’s
medical expenses associated with the pregnancy and
birth, compensate her for lost wages, and pay $10 per
week for support until the child reached age 21
provided Boehm would not institute Bastardy
proceedings against Fiege.
• It was later determined that Fiege was not the father,
whereupon he discontinued paying Boehm.
If not to get Fiege’s promise not to
prosecute, why did Boehm agree to
pay?
(Fiege v. Boehm)
• Cause of Action (C/A): Boehm sues Fiege for
Br/Kx—did not pay support.
• Remedy: $ Dmg’s measured by support due.
• Decision: Jury Verdict for P; D moved for JNOV
or New Trial; Trial Ct. denied D’s motion and
entered Jdgt for P; D appealed to the Ct. App
of Maryland-Affirmed.
(Fiege v. Boehm)
• Issue: Whether Boehm’s refraining from
bringing bastardy proceedings against Fiege,
whom she believed to be the father of her
child, was consideration for Fiege’s promise to
pay expenses and support though the claim
later proved to be invalid?
(Fiege v. Boehm)
• Rule: Forbearance to assert an invalid claim is
consideration provided there is an honest and
reasonable belief that the claim is valid.
• Application: Since Boehm honestly and
reasonably believed she could prosecute Fiege for
bastardy under Maryland law, her refraining from
prosecution was consideration for Boehm’s
promise to pay, although her claim later proved
to be invalid as Fiege was not the father of her
child.
Note 1: Objective Requisite (p.45)
•
•
•
•
•
What is meant by the ‘objective requisite’?
What, then, is the ‘subjective requisite’?
What does the Restatement 1st require?
What does the Restatement 2nd require?
What did the Fiege court require?
Note 2: Nondisclosure
• What significant fact did Beohm omit?
• Could she have enforced promises made by
two promisors?
• What about . . . . Three?
• More?
Note 3: Lawyer’s Ethical Responsibility
and Invalid Claims-Rule 11
• An attorney may face serious sanctions on
bringing a frivolous claim!
Policy Behind Fiege v. Boehm
A rule without a reason—some worthwhile
policy advance—is worse than useless, as it
impedes behavior.
Does Fiege v. Boehm advance some
worthwhile policy? What policy?
Bargained for Exchange Requisite:
Action in the Past
• Recall Justice Holmes’ “reciprocal
conventional inducement” that drives his
Bargained for Theory of consideration back in
Note 2, p.37.
• Did Holmes’ theory influence the drafters of
the Restatement 1st? See Feinberg v. Pfeiffer,
p.46.
Feinberg v. Pfeiffer, p.46
• The Board of Directors of Pfeiffer Co.(Co.) passed
a resolution to pay Feinberg a pension for life on
her retirement in consideration of her
outstanding past service to the company.
• Co. did not ask Pfeiffer to retire in exchange
• Co. did not require her to continue working in
exchange.
• Pfeiffer continued to work for Co., then retired.
• Thereafter, Co. discontinued paying Pfeiffer
(Feinberg v. Pfeiffer)
• C/A: Feinberg sued Co. for Br/Kx
• Remedy:Money Dmg’s-lifetime pension
payments withheld and payment of pension
for life.
• Decision: Trial Ct. held for P, D appealed to Sp.
Ct. of Mass. Rev’d (on Kx issue).
Issue: Kx Analysis (Road Map)
• 2. Kx Formation
– Promise plus price.
The Promisor’s (Co.’s) promise was a promise to
pay Feinberg a pension of $200 for life. What was
the Price for Co.’s promise?
Recall, the price of the promisor’s promise will be
either the Promisee’s performance or return
promise. Feinberg made no promise: what was her
performance, then?
(Kx Analysis: Feinberg v. Pfeiffer Co.)
(2. Kx Formation)
• Promise plus Price
• Consideration
– Benefit/Detriment (ala Hamer v. Sidway)
Did Feinberg’s performance constitute consideration
as to the Benefit/Detriment requirement?
(Feinberg v. Pfeiffer)
Issue: Whether Feinberg’s years of service to Co.
was consideration for Co.’s promise to pay her a
pension for life?
(Feinberg v. Pfeiffer Co.)
2. Kx Formation
a) Was Feinberg’s 37 years of service a benefit
to D (Pfieffer Co.)?
Was it a detriment (as we defined it in
Hamer) to Feinberg?
If so, what was missing? Is there an additional
requirement for consideration? If so, what is it?
(Feinberg v. Pfeiffer)
Rule: To be consideration for the Promisor’s
promise, the Promisee’s performance must be
bargained for; that is, the Promisor must have
made the promise in order to get the Promisee’s
performance. Action in the past is not
bargained for.
(Feinberg v. Pfeiffer)
Holding/App: Since Co. already had Feinberg’s
years, they could not have made their promise
to pay her a pension for life in order to get her
services. Thus, Feinberg’s past services were not
bargained for and not consideration for Co.’s
promise to pay.
What Feinberg Adds to the Analysis
2. Kx Formation
• Promise plus Price
• Consideration
– Benefit/Detriment (ala Hamer v. Sidway)
– Bargained For: Promisee’s performance or return
promise must be bargained for: that is, the Promisor
must have made the promise in order to get the
Promisee’s performance or return promise. That is,
the Promisor must have been induced to make the
promise by the Promisee’s performance or return
promise.
Interlude: Outlining-plugging in cases
and Restatement Provisions
2. Kx Formation
• Promise plus Price
• Consideration
– Benefit/Detriment:
• Hamer v. Sidway—Benefit-Detriment a requirement for Consideration.
Benefit-must be measureable; Detriment-forfeiting legal right
• Restatement §§71 and 79: a performance or return promise is
consideration if Bargained For; benefit/detriment abandoned (majority
view). Small group of states retains Ben/Det requirement
• Fiege v. Boehm—Forfeiting what proves to be an invalid claim is
consideration for a promisor’s promise if Promisee held an honest and
good faith belief in the validity of the claim at the time of Kx Formation.
I.e., beneficial to Promisor/detrimental to Promisee at the time of Kx
Formation.
• Restatement §44(1): failure to assert an invalid claim is consideration if
Promisee honestly believed claim was valid.
– Bargained For:
• Feinberg v. Pfeiffer—Promisee’s performance or
return promise must be Bargained For, so past
services cannot be consideration for a Promisor’s
promise.
• Restatement §71: To be consideration for
Promisor’s promise, the Promisee’s performance or
return promise must be Bargained For—sought by
the Promisor in exchange for its promise.
(Feinberg v. Pfeiffer Co.)
Follow-up
• If Feinberg’s past performance was not
consideration for Co.’s promise to pay, what
about her continuing to work?
• What about her retiring?
Note 2, p. 50. If Co. wished to make the
promise a promise with consideration (a Kx
promise) and therefore binding, how might the
resolution been drafted?