Promissory Restitution-Contracts Law 1L Year Notes PDF

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Notes on promissory restitution, Mills v. Wyman, Webb v. McGowin, material benefit rule, contract formation, SoF framework and restatement examples for contracts law 1Ls....

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PROMISSORY RESTITUTION Right side of line Mashup – crossover between Promissory Estoppel + Restitution + Contract AKA Moral Obligation (customary term – same thing) Doesn’t come up a lot in real life

Mills v. Wyman - Mills (P) nursed/cared for Levi Wyman, the son of Wyman (D) - Upon learning of P act of kindness towards son – D promised to repay P his expenses incurred - Later- D refused to pay - ISSUE: whether or not P can recover - ANSWER: NO o No breach of contract o No contract at all between anyone o No offer acceptance mutual assent consideration, etc. - A Moral Obligation is NOT ENFORCEABLE (traditional position) - Caring for the son is Not Consideration because it was Not Bargained for o She did not promise to take care of son in exchange for dad to reimburse her o Her caring for the son = past consideration o Past Consideration = No Consideration o Promise to Pay = Gratuitous Promise (not enforceable) o This is the Traditional View

Webb v. McGowin - Webb injured while preventing injury to employer, McGowin - McGowin promised him $15 every two weeks for life - McGowin honored promised till he died - Executor – said gratuitous promise o Not enforceable contractual promise o Result doesn’t have to pay Webb and money goes into pool for beneficiaries - No restitution recovery because of volunteer exception o P saved D life – did so as a volunteer o No expectation of payment o Confer the benefit gratuitously - There is a promise - No reliance – no change in position

MATERIAL BENEFIT RULE (safe as promissory restitution) Recovery is possible if: 1. Plaintiff confers a material benefit on defendant 2. Defendant subsequently promises to pay for the benefit

Restatement § 86 Promise For Benefit Received (1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. (2) A promise is not binding under Subsection (1) (a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or (b) to the extent that its value is disproportionate to the benefit.

Benefit previously received = (benefit already conferred) Web saving McGowin’s life Followed by a promise that is made based on that benefit Sub 2 Escape hatch for the D to get out of paying (B)seeks to balance the equities Recovery not allowed if value of promise is disproportionate to the benefit Ie) save your life, they are so appreciative and promise to pay $1 million May enforce promise for some other number

WE ARE DONE WITH CONTRACTS FORMATION!!! DONE WITH ALTERNATIVES TO CONTRACT FORMATION

Now We Assume There Is A Contract Moving on to other contractual issues

STATUTE OF FRAUDS Refers to idea that some contracts have to be in writing or evidenced by a writing 1. Statute of Frauds is not one statute 2. Statute of Frauds does not deal with fraud a. “statue of writings” (could be a better name) If certain contracts are not in writing, one party could commit some type of fraud Guards against one person saying this was our contract when it was not

Policy Rationale 1. Statute serves an evidentiary function = lessens the danger of perjured testimony (traditional view- original reason) 2. Requirement of writing causes the parties to reflect on importance of agreement 3. Writing requirement makes it easier to distinguish agreements which are enforceable from those that are not ***But, we need exceptions so that we don’t fallow the S/F to be used to perpetrate a fraud

Number of exceptions have to be considered in tandem with SoF

1. Which Contracts Have to Be In Writing 2. Framework for Considering SoF Problems

“MY LEGS”

Which contracts have to be in writing M Y

Marriage Year

consideration of marriage contracts which can’t be performed within one

L E G of SoF S

Land Executor Goods

transfer of interest in land (wills- don’t worry about this one) Art. 2 issue- have own approach to issue

year

Surety

(not going to talk about this one)

PRELIMINARY CLARIFICATION Conceptually Separate 2 Different Questions 1. Whether there is a contract 2. Does the contract satisfy the statute of frauds?

(most people mix these up and confuse) Formation: whether it meets the 4 elements of contract formation 1. Mutual assent 2. Offer/acceptance 3. Consideration 4. Definite terms START WITH ALL THE TIME (don’t worry about the writingworry this is truly a contract)

Once we know there is a contract THEN transition to SoF (separate analysis) Entirely Possible: had a valid contract  but not have written proof of it Contract  Substantive Ingredients Writing  Evidentiary Example) I agree to sell my TV to you for $1000 You agree to pay $1000 Is there a contract? YES

Is it enforceable? NO If party DOESN’T bring up the SoF – then contract will be enforceable SOF has to be affirmatively pled Statute of Frauds FRAMEWORK 1. TYPE: Is the contract within the statute; ie.) required to be in writing? a. Here look to MY LEGS acronym 2. WRITING: If the contract is within the statute- is there a sufficient memorandum to comply with the statute’s writing requirement? 3. EXCEPTION: if the contract is within the statute

IMPORTANT If you have a document called “CONTRACT” and it is Signed (contract, agreement etc) Then you DON’T have a statute of frauds issue You Only have a SoF issue when you DON’T have a formal contract Look for SOME WRITING that satisfies SoF (invoice, bill, letter, email, price quote, purchase agreement, etc.) What Must the Writing Contain? - Contract required to be in MY LEGS writing - Signed by party to be charged (party against whom enforcement sought)

**At Common Law (sales law is a little different) Requirement as FOLLOWS - Must contain all of the material terms - AND - Must be signed by the party to be charged (term of art) o The party resisting reinforcement o Their signature must appear in the writing

Crabtree v. Elizabeth Arden Can you “Link” Documents”

Two documents may be combined to form a memorandum that complies with the statute if: 1. The documents taken together have all the essential terms: a. Can appear in more than one document – collectively have all the essential terms 2. At least one of the documents is signed by the party to be charged; and a. Party resisting enforcement 3. The unsigned document shows on its face that it relates to the same transaction a. The Linking Requirement i. Document doesn’t have signature has to be clear from the document that it is referring to the same transaction ii. Can’t use oral testimony to link Restatement Examples 1. Statement of Law a. Writing doesn’t need to have been intended as a contract b. A memorandum sufficient to satisfy the statute of frauds need not have been made as a memo of a contract 2. Example 1 a. A and B enter into oral contract for the sale of Blackacre b. A writes and signs letter to C containing accurate statement of contract c. Letter = is sufficient memorandum to charge A even though it is never mailed i. I just bought this house and paid this amount, I’m so excited here is link to house ii. Put in draft and never send iii. That is a sufficient writing to BIND ME 1. Writing is intended to go to some third party 3. Example 2 a. A writes and signs letter to B i. I will employ you as superintendent of my mill for 3 years from date, at a salary of $28,000 a year. Let me know if you wish to accept this offer ii. B orally accepts iii. Letter is sufficient memorandum to charge A 1. Signature of parties to be charged 2. Has key dates 3. DOCUMENT IS AN OFFER DOC 4. Doesn’t indicate on its face indicate that a contract has been made BECAUSE B accepted orally 5. Offer doc that contains all of the terms = sufficient for SoF purposes (rule at Common Law – Art 2 is DIFF (prop not suff))

4. Example 3 a. Getting at: Even if you deny the enforceability of the contract b. Nonetheless, specify the terms of contract AND sign the document = sufficient for SoF purposes i. Doesn’t need to be sent, cant be sent to another party, can be offer letter, can deny enforceability of contract ii. SO LONG as terms are there AND it is signed = sufficient SoF

POINTS Article 2 - Offer letter = not efficient - Writing must show a sale of goods on itself - More lenient o Don’t need all material terms o JUST NEED QUANTITY TERM - SIGNATURE o Either CL or Art 2 the DOC writing must be SIGNED  Art. 2= signed = definition, across the board courts are liberal about signed (what it means)  Electronic signature sufficient, intended to authenticate a document  Looking for some Mark Identifying the party to be charged has “signed” document

“ONE YEAR” Category - Contracts cannot be performed in one year are subject to SoF and require writing - Tricky - Ex) if contract is a 5 year – it obviously cant be completed in one year so that’s easy - WHEN contracts don’t have an end date o Indefinite Duration Contracts - GENERAL RULE: o If it possible to perform the contract in one year, EVEN THOUGH it is unlikely to happen, then you don’t need to comply with the SoF - ISSUE: Lifetime Contract (employment arena) o Cant be performed in one year = lifetime o Court have treated these as capable on complete in one year  Technically you could die in that year so contract would be fully performed

QUESTIONS 1. What needs to be in writing 2. What writing needs to look like 3. What the signature requirement is 4. Some nuisances under Article 2 Then transition exceptions If you can’t find writing satisfies SoF See if exceptions are applicable to the rule If no writing- exceptions are your only hope

IF YOU CANT FIND A WRITING THAT SATIFIES THE SOF THEN YOU HAVE TO SEE IF THERE IS COME APPLICABLE EXCEPTIONS: 1. IS THE CASE WITHIN THE S/F 2. IS THE S/F SATISFIED 3. IS THERE AN EXCEPTION...