Chapter 1,§3, pp.29-46
Basis for Enforcing Promises: Which
Promises Should the Law Enforce?
©Knippenberg
Should All Promised Be Enforced?
• The law might be such that all promises made
would be enforced. Were that the case, a
promisor (the party making the promise) would
be subject to liability (obliged to pay damages) to
the promisee (the party to whom the promise
was made) for failure to fulfill it.
• Indeed, that is not the law: not all promises are
enforceable. Why might that be? Shouldn’t we
be required to fulfill the promises we make?
What negative consequences might follow from
enforcing all promises?
Impracticality of Enforcing All
Promises?
• Bare promises for which nothing is asked in
return (gift promises) are easily made and
easily broken.
• Shouldn’t one have the option of changing
one’s mind?
• Evidentiary Issues
• Flood the courts? So, which promises should
the law enforce?
So, which promises should the law of
Kx enforce? Why?
• In general, the law of Contract will enforce
those promises for which something (called
‘consideration’) is asked in return, but not
promises for which no consideration is sought,
so called ‘Gift Promises’. Why should that be
the case? There are a number of theoretical
explanations. Here’s an explanation offered
by finance theorists:
Promises Seeking Consideration and
Pareto Efficiency
• A transaction or rule of law leads to a Pareto
Efficient outcome where at least one of the
parties involved is better off and none of the
parties are worst off.
• Thus, enforcing a promise makes economic
sense where to enforce it would yield a Pareto
efficient result. Consider the following:
(So, which promises should the law
enforce?)
• Assume A promises to sell 100 bushels of apples
to B for 10 Inter-galactic units per bushel, for a
total of 100 Units, and that it costs A 5 units per
bushel to produce the apples.
• Assume further that B has entered into a contract
to sell the 100 bushels of apples to C at 15 units
per bushel. B enters into a Kx with D, a common
carrier, to deliver the 100 bushels of apples to C
at a cost of 2 units per bushel. It costs D 1 unit
per bushel to perform (deliver the apples)
(Promises Seeking Consideration)
Promise to sell Apples
At 15 Units /bushel
Promise to sell Apples at
10 Units /bushel
A
Promise to buy Apples at
10 Units /bushel
B
C
Promise to buy Apples at
15 Units /bushel
If A’s promise is enforceable under Kx law, there is
a net gain to all: A gains 5 Units per bushel, while
B, who values the apples at 15 Units per bushel,
realizes a net gain of 3 Units, and so on.
No Rotten Apples
• A’s cost to produce the apples = 5 units, so A nets 5 units (is
5 units better-off) if the Kx between A and B is enforced. B
is better off if this Kx is enforced because B values the
apples at more than 10 units per bushel.
• B’s cost to purchase (10 units per bushel) and ship (2 units)
is 12 units. If the Kx between B and C is enforced, B realizes
a net gain of 2 units and is better off.
• C apparently values the apples at 15 units, so if the Kx is
enforced between C and B, C is no worse off, and, again, B
is better off.
• Consider also the Kx between B and D for portage: if B
couldn’t rely on the A’s promise to sell being enforced, B
could not safely enter into the carriage Kx with D
Promises without consideration: Gift
Promises
• By contrast consider the following:
– A promises to pay B 10,000 Inter-galactic Units,
asking nothing in return, i.e., A makes a gift
promise, which looks like this:
Promise to pay 10,000
A
B
(Gift Promises)
• Assume that A refuses to perform the promise
(defaults), but that we live in a world in which all
promises are enforceable, including gift promises.
Thus, B sues A and recovers damages for A’s breach
of promise.
• Is there any economic gain here?
Promises Seeking Consideration: look like this . . .,
Promise to sell Apples
At 15 Units /bushel
Promise to sell Apples at
10 Units /bushel
A
Promise to buy Apples at
10 Units /bushel
B
C
Promise to buy Apples at
15 Units /bushel
Each of A, B and C are seeking something in return for their own
promises. A, for its promise to sell, is seeking B’s promise to pay. B,
for its promise to buy the apples and pay for them, is seeking A’s
promise to sell at the agreed upon price. In short, A is not making a
promise to give the apples to B, nor is B promising to make a gift of
1000 IU’s to B. B’s promise to pay is the consideration sought by A
for its promise to deliver apples, and A’s promise to deliver apples is
the consideration for B’s promise to pay.
Promises Seeking Consideration Look Like this:
Promise to sell Apples
At 15 Units /bushel
Promise to sell Apples at
10 Units /bushel
A
B
Promise to buy Apples at
10 Units /bushel
C
Promise to buy Apples at
15 Units /bushel
Consideration for B’s
A’s
promise to buy
sell
In this Kx C’s promise to
pay is Consideration for
B’s promise to sell, B’s
promise to sell is
Consideration for C’s
promise to buy
Thus—General Rule: Promises with consideration,
called Contract Promises, are enforceable, gift
promises are not
Is there consideration (quid pro
quo, something sought) for the
promise?
No
Gift Promisegenerally NOT
enforceable
Yes
Kx Promise
(promises for which
there is
considerationgenerally enforceable
Antecedents of the Consideration
Doctrine—some old historical stuff
• The consideration doctrine did not spring Ex
nihilo into the law of Kx, like Minerva sprang
from Jove’s brow
• Rather, it evolved from English Common Law,
really gnarly and old concepts
Promises historically enforceable under English
Common Law: The Sources of the Consideration
Doctrine
Common Law Actions
• Covenant (promises under seal)
– Evidentiary
– Cautionary
– Later supplanted by signature
• Action for Debt
– Debtor had something belonging to promisee
• Action for Assumpsit
– Misfeasance, but, early on, not for NON-feasance
Assumpsit
• Allowed recovery only for misfeasance until midfifteenth century
• Thereafter, permitted recovery for nonfeasance,
but required detrimental reliance (keep this in
mind for later!)
• 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.
Yeah, so what?
• Bottom line is, around the end of the 17th, the basis for
enforcing Kx’s was consideration—the historical stuff
shows where the concept of consideration came from:
the concept of benefit conferred from the old writ of
Debt , and the concept of detriment from the
action/writ for Assumpsit
• Also, the concepts of benefit and detriment which form
the basis of the Consideration Doctrine will continue
into the modern law of Kx in other contexts, as we’ll
see later in the course, so keep them in mind!
So: General Rule: Promises with consideration, called
Contract Promises, are enforceable, gift promises are not
No
Gift Promisegenerally NOT
enforceable
Yes
Kx Promise
(promises for which
there is
considerationgenerally enforceable
Kx Promises (Promises with
Consideration): Analysis
• While we will discuss gift promises (promises
without consideration, or Non-Kx Promises, and
the occasions on which they are enforceable
(remember the rule that gift promises are
unenforceable is a general rule, suggesting there
are exceptions), our initial focus will be on Kx
Promises.
• The following slide shows what will be our Kx
Model or rubric—our ‘Road Map’. It will be the
basis for analyzing issues arising in Kx law.
All Kx issues arise under the categories
delineated in the road map below
Road Map for Kx Analysis
1.
2.
3.
4.
5.
Scope
Kx Formation
Enforcement
Performance and Breach
Remedies
All Kx issues arise under the categories
delineated in the road map below
Road Map for Kx Analysis
1.
2.
3.
4.
5.
Scope
Kx
Formation
Two
questions are raised under this part of the
Kx Analysis: first, “which state’s law governs
Enforcement
this transacton?”. And, second: “What law
Performance and Breach
within that state governs?”
Remedies
The first may be referred to as an issue of
Geographic Scope; the second may be referred
to as an issue of Subject Matter Scope.
(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.
(Road Map)
(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. It is not, absent some
action, the law. 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. Is the promise under scrutiny a Contract
Promise (i.e., a promise for which there is
consideration) or a Gift Promise? 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. The rule that Kx
promises (as opposed to gift promises) are
enforceable , a general rule, implying exceptions.
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.
More on the Restatement
• Until the 1st Restatement, individual transactions
involving contracts were separately governed
(e.g., Kx for shipping, purchases, storage,
employment, 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
The following case is an example of a family Kx
Hamer v. Sidway
• At a wedding celebration, Story promises his
nephew, Hamer, $5,000 if Hamer would
refrain from drinking, smoking, etc. until age
Good Ole Uncle
21.
Story
(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.
Nephew
(Hamer v. Sidway)
• Who’s Sidway?
Briefing 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?
Where does Hamer fit within the Kx
Analysis/Road Map?
1. Scope: no question about what state’s law
governs, or what law (it’s the law of Kx)
which controls.
2. Kx Formation
Rather,
Hamer v. Sidway raises the question, is there a
3. Enforcement
Kx, or was Uncle’s promise to pay a Kx promise for which
4. Performance and Breach
there was consideration, or a mere gift promise.
5. Remedies
Requirements for Kx Formation
2. Kx Formation
Hamer v. Sidway, then, tells us something
about what is required for a Kx to be formed,
namely, there must be consideration. The case
helps define when there is consideration for a
promisor’s promise. That is to say, the case
explores the doctrine of consideration.
Requirements for Kx Formation
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.38
• 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? See Holmes’ ‘Bargained For Exchange’
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 1st ? (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
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?
– They are enforced
• 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 for the promise (performance or return
promise)
• Consideration: Requires Promisee’s
performance to be . . .
(1) a Benefit to Promisor or Detriment to
Promisee (about a half-dozen jurisdictions)
(2)*Bargained For-will be added as a
requirement
(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
Settlement Agreements
• For all the cases you find in your casebooks, by
far most cases settle before trial. If a party
gives up a valid claim against another, that
certainly constitutes consideration. Question
is, does a party who forfeits a claim in a
settlement agreement that turns out to be
without merit give consideration?
Kx Formation in Settlement
Agreements (Contracts)
Consideration in Settlement Contracts
Promise to
forfeit claim
Promisor
Promise to
forfeit claim
Promisee
Note 2: Fiege v. Boehm
• 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.
Note 2: Fiege v. Boehm
• Fiege first argued that he did not make his
promise to pay support, etc., in order to get
Boehm to refrain from bringing bastardy
proceedings. Why did he?
If not to get Fiege’s promise not to
prosecute, why did Boehm agree to
pay?
(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. See also, Re. section 44. Feige was decided
under the older ‘minority’ view to which the Dyer Court
refers: there were two requisites: GF and reasonable belief
in the validity of the claim. Contrast Dyer. Note that the
objective requirement drops out.
• 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?
What did the Dyer court require?
Note 2: Nondisclosure
• What significant fact did Boehm omit?
• Could she have enforced promises made by
two promisors?
• What about . . . . Three?
• More?
Dyer v. National By-Products, Inc., p.43
• Dyer, an employee of NBP, lost his foot in the
course of his employment. NBP orally
promised Dyer a job for life in exchange for his
foregoing bringing and action for his personal
injury. After returning to work, Dyer was
thereafter laid off. It later was determined
that his personal injury claim was invalid.
Why?
Kx Formation: Dyer
Lifetime Job
Promisor’s
(NBP) Promise
Relinquish
personal injury
claim
Promisee’s
(Dyer’s)
Promise
(Kx Formation: Dyer)
• Kx Formation
– Promisor’s (NBP’s) promise: lifetime employment
– Price for Promisor’s promise: Promisee’s (Dyer’s)
promise to forgo personal injury suit
– Was the price, Dyer’s promise to forgo the lawsuit,
consideration for NBP’s promise of lifetime
employment? Given what we learned from Hamer v.
Sidway and the Re2nd, section 71, what’s the inquiry?
• BF?
• Beneficial to Promisor, NBP? OR
• Detrimental to Dyer?
(Dyer v. National By-Products, Inc.)
• C/A: Dyer sues NBP for breach of Kx
• Remedy: $Dmgs
• Issue?
– Whether Dyer’s forbearing from bringing a
personal injury action against NBP was
consideration for NBP’s promise of lifetime
employment, although Dyer’s personal injury
claim was invalid, provided Dyer believed in good
faith his claim was valid at the time?
(Dyer v. National By-Products, Inc.)
• C/A: Dyer sues NBP for breach of Kx
• Remedy: $Dmgs
• Rules:
– First, the Court observes there are two types of
invalid claim cases-what are they? See bottom of
page 43, top page 44. Which type is before the
court?
– The Court discusses two views in the ‘unfounded’
type cases, such as those before it. What are the
two views?
(Dyer v. National By-Products, Inc.)
• Rules:
– What is the Restatement 2nd approach? When,
under section 74, is forbearing from asserting an
invalid claim consideration?
– What is Corbin’s view? Williston’s view?
– Finally, which view does the Court adopt? Whywhat is the policy behind the rule it chooses?
(Dyer v. National By-Products, Inc.)
• Rules from the case?
– Failure to assert an invalid claim is consideration
for a promise, provided the party forbearing has a
good faith believe in the validity of the claim.
– Does the fact that a claim is ‘clearly invalid’ have
any bearing at all? In what way might patent
invalidity be relevant? See Note 2, p.46. Contrast
the requirements from the Restatement/Dyer
with Fiege v. Boehm, following:
Dyer and Fiege compared:
In Fiege, six?
Good Faith Belief
(Subjective)
Reasonable Belief
(Objective)
In Fiege,
two? Three?
Maybe
Good Faith,
Good Faith AND
maybe, BUT
Reasonable
Reasonable
Belief
Belief?
Bad Faith Belief
(Subjective)
Unreasonable Belief
(Objective)
Note 2, cont’d: (Forbearing invalid claims as
consideration in settlement agreements)
• How do Dyer and Fiege differ from one
another apart from the different tests they
deploy-Subjective, GF belief only in Dyer
versus GF plus Reasonable belief (Objective) in
Fiege?
Note 3: Lawyer’s Ethical Responsibility and
Invalid Claims-Rule 11. An attorney may face
serious sanctions on bringing a frivolous claim!
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.38.
• Did Holmes’ theory influence the drafters of
the Restatement 1st? See Feinberg v. Pfeiffer,
following.
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? Are there any actions we might
consider as a possible ‘performance’ by Fienberg?
Feinberg v. Pfeiffer: Finding the Issue
• Now that you’re familiar with our Kx Analysis, in
preparing your briefs and discovering the issue,
that’s where you go!
• Recall, every Kx issue can be relegated to a part of
the Analysis: Scope, Formation, Enforcement,
Performance and Breach and Remedies. Here, of
course, we’re concerned with Formation, which
raises the basic question, “Is there a Kx”. Without
a finding of Kx, one can’t state a C/A for breach of
Kx and the analysis stops here.
(Kx Analysis: Feinberg v. Pfeiffer Co.)
(2. Kx Formation)
• Promise plus Price
• Consideration
– Benefit/Detriment (ala Hamer v. Sidway)
Did Feinberg’s performance, her years of faithful
service, constitute consideration as to the
Benefit/Detriment requirement?
(Feinberg v. Pfeiffer Co.)
2. Kx Formation: the two requirements
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?
b) Was Feinberg’s performance, viz, 37 years
of faithful service bargained for, that is, sought
by the promisor, Pfeiffer Co., in exchange for it’s
promise to pay a retirement income for life?
Now, we’re ready to state the issue.
(Feinberg v. Pfeiffer)
Issue: Whether Feinberg’s 37 years of service to
Co. was consideration for Co.’s promise to pay
her a pension for life, though her performance
was action in the past?
(Feinberg v. Pfeiffer)
Rule?
To be consideration for the Promisor’s promise,
the Promisee’s performance must be bargained
for (Re 2nd, Section 71(1)); that is, the Promisor
must have made the promise in order to get the
Promisee’s performance. Section 71(1), . Action
in the past is not bargained for.
(Feinberg v. Pfeiffer)
Holding/App: Since Co. already had Feinberg’s
37years of service, 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.
Conclusion, no Kx, and the Trial Court erred in
finding one. The judgment on this issue (was
there a Kx) was, thus, reversed.
(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?
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
• Dyer v. NBP, Inc. & 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.
What does Feinberg add?
– Elaborates the Bargained-For requirement:
• 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.
Interlude: Outlining-plugging in cases
and Restatement Provisions
2. Kx Formation
• Promise plus Price
• Consideration
– 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.
(Outlining-plugging in cases and Restatement)
2. Kx Formation
• Promise plus Price
• Consideration
– Bargained-for
• Feinberg v. Pfieffer-performance must be sought by promisor for its
promise: consideration in the past cannot be ‘sought’ by the promisor.
– Ben/Det
• 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.
Moral Obligation as Consideration
Mills v. Wyman, p.52.
• Levi Wyman became after returning from a
sea voyage
• Mills took care of Levi for two weeks, incurring
expenses in the process
• Seth Wyman wrote Mills promising to pay the
expenses Mills incurred in caring for Levi.
Thereafter, Wyman refused to pay.
(Mills v. Wyman)
• Was Mills’ performance, taking care of Levi,
consideration for Seth Wyman’s promise to pay
Mills’ expenses under the Kx Analysis as
developed so far?
• No—not bargained for, as the ‘performance’,
taking care of Jr., had already occurred.
• If it is a agreed that Seth Wyman was morally
obliged to fulfill his promise, why wasn’t his
moral obligation consideration notwithstanding
the requirements for consideration in the Kx
analysis? (See Note 1, p.53).
(Mills v. Wyman)
Note 3, p.54: Exceptions
Do these exceptions relate to Kx formation or
some other part of the Kx analysis?
Harrington v. Taylor, p.57.
• Remedy: $Dmgs, measured by amount of
compensation pyts promised.
• Issue: Kx Analysis
• 2)Kx Formation
– Offer? Promisor’s promise? Price? Was the price of
the promisor’s promise consideration for the
Promisor’s promise?
– The Sp. Ct of N.Car sustains the demurrer—No Kx.
What’s missing?
– Rational?
Webb v. McGowin, p.52
• Webb, an employee of Smith Lumber Yard, dropped a
heavy pine block from the upper floor of the mill to the
yard below.
• At the instant Webb dropped the block, he saw McGowin
below, and, in an effort to save McGowin from injury or
death, Webb fell with the block to divert it, thereby
preventing injury to McGowin.
• McGowin was not injured; however, Webb was severely
injured and unable to work.
• Thereafter, in consideration of Webb’s selfless act,
McGowin agreed to pay Webb an income for life. McGown
paid until his death, upon which the executor of his estate
refused further payments.
(Webb v. McGowin)
• Is there a Kx between Webb and McGowin
under the Kx Analysis? If not, what’s missing?
Question: The case seems to say Moral
Obligation is consideration for a promise (see
Note 2). If so, can the Webb case be reconciled
with Mills v. Wyman? How do they differ? Does
Webb really stand for the proposition that moral
obligation is consideration?
(Webb v. McGowin)
• Answer: the Webb court refers to a material
benefit—McGowin’s life which, the court
notes, is measurable in dollars and cents.
Might it be that the benefit received by Seth
Wyman was not measurable? Not material?
• McGowin actually made payments to Webb
for about ten years. Wyman Sr. paid nothing.
How might that distinction be relevant?
• Finally, note the dates of the two cases . . . .
(Webb v. McGowin)
Can the case be reconciled with the consideration
requirements for Kx formation? That is, can the
same outcome be reached without scrapping the
analysis, just throwing up our hands, and declaring
that the case says moral obligation = consideration?
Indeed, a number of scholars and courts have done
so. Read very closely this language from the case
(last paragraph of p.53), where the court refers to
the Boothe v. Fitzpatrick case: “ . . . [A] promise by
defendant for the past keeping of a bull which had
escaped from defendant's premises . . . .”
(Webb v. McGowin: the ‘implied
promise’ fiction)
Implied promise to
pay occurs here
Webb diverts
block
• Material Benefit conferred upon
McGowin
• Material Detriment suffered by Webb
McGowan
promises to pay
(Alternate reading of Webb)
• Through this fiction, the Implied Promise to
Pay now pre-dates Webb’s performance,
diverting the block.
(Webb v. McGowin)
• Using the implied promise, the analysis now looks
like this:
2. Kx Formation
Promisor’s (Webb’s) promise: the implied promise
to pay a monthly income to Webb for life.
Bargained for? Did McGowan make his implied
promise to pay in order to get Webb’s performance,
diverting the block? What facts indicate he did (or
would have)?
Note 2: Statutory Reform
• Would McGowan’s promise have been
enforceable under the New York statute?
• Would Wyman’s promise have been
enforceable by Mills?
Harrington v. Taylor, p.57.
• Harrington diverted an axe propelled at Taylor by
his wife so as to decapitate him. Harrington
diverted the axe with her and, which was
mutilated as a result, saving Taylor’s life.
Thereupon, Taylor promised to compensate
Harrington for her injuries, made payments for a
period, then discontinued them.
• C/A: Harrington sues Taylor for Br/Kx,
discontinuing payments
• Decision: Δ demurred, Trial Ct sustained; P
appealed to Sp Ct No. Car, aff’d.