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Issue Spotting a Contracts
Question
Michael DeBlis III, Esq.
Partner
DeBlis Law
Review of Two Major Issues of
Contract Law
• Assume you have found an agreement
• You want to qualify that agreement as having
about it the elements of legal enforceability.
There are two ways:
– Is there a legally binding contract? or
– Promissory Estoppel
Existence of Legally-Binding Contract
• First, is there a bargain?
– If there is a bargain, it is presumed to be an executory
K
• Second, if there is a bargain, what are the terms
of this bargain on the day it was formed? Did
each of the traders incur bargained for legal
detriment?
• Third, look for defenses that would preclude
formation (real defenses) or enforcement of the
terms of the bargain (personal defenses)
Promissory Estoppel
• If there is no bargain at all, but merely a
promise that has been breached which left
the promisee worse off than on the day she
received the promise, review the fact pattern
for the elements of promissory estoppel.
Issue Spotting
• Hypo: Bob, a wealthy investor whose hobby
consists of growing orchards, wants to help
Mildred, his widowed daughter-in-law. Bob writes
her the following signed letter: “If you will come
to my estate and cultivate my orchards, you can
have room, board, and $500/month until my
death.” Mildred moves from her residence from
another state to Bob’s estate where she tends to
the orchards. One year later, Bob evicts Mildred
and terminates monthly payments of $500 w/o
reasonable provocation. Mildred files suit against
Bob.
Issue Spotting
• This question raises two of the possible issues.
Issue Spotting
• Issue # 1: Is there an agreement? Is there an
offer? There is no stipulation so you must
search for it in fact pattern. Was the letter the
offer of a bargain or a disguised gift? If Bob’s
intention was to make a gift, there is no
liability in K. But if he offered a bargain, there
may be.
Issue Spotting
• Were there any obligations imposed by this
arrangement on the other party? If there were
and if they benefited Bob in a pragmatic
sense, then that was the offer of a bargain.
Mildred has duties under arrangement
articulated by Bob – to tend to the orchards
and by Bob’s own admission, “they’re too
burdensome.” Bob benefits if Mildred does it.
Many courts would construe this offer as a
bargain.
Issue Spotting
• Issue # 2: Was the offer still alive at the time
acceptance was attempted? If there was an
offer to bargain, it was to bargain in the
unilateral mode. Bob sought no promise from
Mildred – he wanted an act. The only way to
accept an offer in the unilateral mode is to
complete the requested performance – i.e., to
tend to the orchards until Bob dies. Bob is
alive and kicking, indeed he kicked Mildred off
his estate!
Issue Spotting
• There is a revocation problem with the offer
while the offeree is merely attempting to
accept. At the time Bob attempted to revoke
the offer, Mildred had been working for 18
months. Surely she has made a substantial
commencement of the requested act that
would cut off Bob’s power to revoke, so as to
give her a reasonable opportunity to
complete.
Issue Spotting
• Was the acceptance defective? No, Bob told
Mildred what to do and she did it efficiently. She
has been discharged w/o provocation. Is the
agreement a K? Is there bargained for detriment
on the part of Mildred? But for the attempted
formation of the bargain w/ Bob, she had no legal
obligation to leave her home in another state,
relocate to Bob’s estate, and take up these duties.
• Any problems w/ defenses? No. Bob would be
estopped from revoking the offer.
Issue Spotting
• Alternative rationale in PE:
– Did Bob make a promise? Yes.
– Did Bob’s promise have foreseeable consequence
of inducing reliance on promisee’s part? Yes.
Issue Spotting
– Did it in fact induce reliance that was reasonable
in dimension and w/in the realm of the
foreseeable that Mildred would have to leave her
home in order to take up the tending of the
orchards? Yes.
– If Mildred can only recover in PE, she will n/
receive the expectation interest, only a sum of
money sufficient to put her back in the position
she was in on the day she received the letter. Any
expenses or losses that she incurred in disposing
of her home would be recoverable but that would
be all.
Connect With Me!
Contact Information
Website: www.DeBlisLaw.com
Email:
MJDeBlis@DeBlisLaw.com
Office: 973-783-7000

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Issue Spotting a Contracts Question

  • 1. Issue Spotting a Contracts Question Michael DeBlis III, Esq. Partner DeBlis Law
  • 2. Review of Two Major Issues of Contract Law • Assume you have found an agreement • You want to qualify that agreement as having about it the elements of legal enforceability. There are two ways: – Is there a legally binding contract? or – Promissory Estoppel
  • 3. Existence of Legally-Binding Contract • First, is there a bargain? – If there is a bargain, it is presumed to be an executory K • Second, if there is a bargain, what are the terms of this bargain on the day it was formed? Did each of the traders incur bargained for legal detriment? • Third, look for defenses that would preclude formation (real defenses) or enforcement of the terms of the bargain (personal defenses)
  • 4. Promissory Estoppel • If there is no bargain at all, but merely a promise that has been breached which left the promisee worse off than on the day she received the promise, review the fact pattern for the elements of promissory estoppel.
  • 5. Issue Spotting • Hypo: Bob, a wealthy investor whose hobby consists of growing orchards, wants to help Mildred, his widowed daughter-in-law. Bob writes her the following signed letter: “If you will come to my estate and cultivate my orchards, you can have room, board, and $500/month until my death.” Mildred moves from her residence from another state to Bob’s estate where she tends to the orchards. One year later, Bob evicts Mildred and terminates monthly payments of $500 w/o reasonable provocation. Mildred files suit against Bob.
  • 6. Issue Spotting • This question raises two of the possible issues.
  • 7. Issue Spotting • Issue # 1: Is there an agreement? Is there an offer? There is no stipulation so you must search for it in fact pattern. Was the letter the offer of a bargain or a disguised gift? If Bob’s intention was to make a gift, there is no liability in K. But if he offered a bargain, there may be.
  • 8. Issue Spotting • Were there any obligations imposed by this arrangement on the other party? If there were and if they benefited Bob in a pragmatic sense, then that was the offer of a bargain. Mildred has duties under arrangement articulated by Bob – to tend to the orchards and by Bob’s own admission, “they’re too burdensome.” Bob benefits if Mildred does it. Many courts would construe this offer as a bargain.
  • 9. Issue Spotting • Issue # 2: Was the offer still alive at the time acceptance was attempted? If there was an offer to bargain, it was to bargain in the unilateral mode. Bob sought no promise from Mildred – he wanted an act. The only way to accept an offer in the unilateral mode is to complete the requested performance – i.e., to tend to the orchards until Bob dies. Bob is alive and kicking, indeed he kicked Mildred off his estate!
  • 10. Issue Spotting • There is a revocation problem with the offer while the offeree is merely attempting to accept. At the time Bob attempted to revoke the offer, Mildred had been working for 18 months. Surely she has made a substantial commencement of the requested act that would cut off Bob’s power to revoke, so as to give her a reasonable opportunity to complete.
  • 11. Issue Spotting • Was the acceptance defective? No, Bob told Mildred what to do and she did it efficiently. She has been discharged w/o provocation. Is the agreement a K? Is there bargained for detriment on the part of Mildred? But for the attempted formation of the bargain w/ Bob, she had no legal obligation to leave her home in another state, relocate to Bob’s estate, and take up these duties. • Any problems w/ defenses? No. Bob would be estopped from revoking the offer.
  • 12. Issue Spotting • Alternative rationale in PE: – Did Bob make a promise? Yes. – Did Bob’s promise have foreseeable consequence of inducing reliance on promisee’s part? Yes.
  • 13. Issue Spotting – Did it in fact induce reliance that was reasonable in dimension and w/in the realm of the foreseeable that Mildred would have to leave her home in order to take up the tending of the orchards? Yes. – If Mildred can only recover in PE, she will n/ receive the expectation interest, only a sum of money sufficient to put her back in the position she was in on the day she received the letter. Any expenses or losses that she incurred in disposing of her home would be recoverable but that would be all.