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Considerations for Bargain Promises

Situation 1

Sam was getting along in years and wanted to provide for his grandson Dave's future. Over dinner one evening, Sam asked Dave what he would like Sam to leave him after Sam died. Dave replied that he was very fond of Sam's 1957 Thunderbird. "Very well," said Sam, "I will change my will to leave you the Thunderbird." "Thanks, Grandpa," Dave replied. "I'll make you proud."

Question 1

True or False: Sam and David formed a contract obligating Sam to amend his will to leave the Tbird to Dave. Answer True or False and provide legal support for your conclusion.

Situation 2

Suppose that Dave was a reckless 21-year old who was, in Sam's opinion, a bit too fond of cold beer, high stakes poker, and fast cars. Sam promised to will the Thunderbird to Dave if Dave would refrain from drinking and gambling and avoid speeding tickets for the rest of Sam's life. Dave promised to refrain from drinking and gambling and to avoid speeding tickets for the rest of Sam's life.

Question 2

Select the best answer and provide legal support for your selection:
A bilateral contract is formed. Sam must change his will.
A unilateral contract is formed. Sam is under no obligation to change his will.
A unilateral contract is formed. Sam must change his will.
A bilateral contract is formed. Sam is under no obligation to change his will.
Situation 3

Suppose that, in addition to promising to refrain from drinking and gambling and to avoid speeding tickets for the rest of Sam's life, Dave actually did as he promised for the rest of Sam's life.

Question 3

True of False: Sam and David formed a contract obligating Sam to amend his will to leave the Tbird to Dave. Answer True or False and provide legal support for your conclusion.

Situation 4

Returning to the facts of Question 2, suppose that Sam promised to will the Thunderbird to Dave if Dave would promise to refrain from drinking, gambling, and speeding for the rest of Sam's life. Dave replied that he promised to refrain from drinking, gambling, and speeding for the rest of Sam's life.

Question 4

Select the best answer and provide legal support for your selection:
A bilateral contract is formed. Sam must change his will.
A unilateral contract is formed. Sam is under no obligation to change his will.
A unilateral contract is formed. Sam must change his will.
A bilateral contract is formed. Same is under no obligation to change his will.
Situation 5

When Sam's regular nurse told Sam that she required back surgery and that the doctor estimated it would take at least six months for her to recover sufficiently to resume work, Sam sought to hire Jill to be his nurse for a period of up to six months, or until Sam's regular nurse became physically able to resume her duties. In exchange for Jill's services, Sam promised to either (1) pay Jill $5,000 per month or (2) provide Jill's family with suitable rent-free housing for as long as Jill was Sam's nurse.

Question 5

Sam made alternative promises to Jill as consideration for her services. Sam was able to choose between the two alternatives, yet a valid contract was formed. Why?

Solution Preview

Contracts
Sample Answers

Question #1: Did Sam and Dave form a contract obligating Sam to amend his will to leave the Thunderbird to Dave?

I: Unrelied upon donative promise made in a social setting
R: The general rule is that a simple donative promise is unenforceable because there is a lack of consideration.
A: One evening over dinner, Sam asked Dave what he wanted. Dave wanted Sam's Thunderbird. Sam stated that he would change his will.
Under Restatement Second §79, the question of consideration is simply if it exists, with no mention of sufficiency. Dave has provided no consideration in this case. There is no mention of a past moral obligation which in some jurisdictions may constitute consideration; there is no mention of payment; there is no mention of forbearance; and there is no mention of an act which may constitute a unilateral contract. Sam's promise is simply donative and given in a social setting (over dinner) - as shown in Schnell v. Nell 17 Ind. 29 (1861) a gratuitous promise is not enforceable. Over dinner, Sam did not have a "contract making" state of mind as evidenced by his lack of a request for consideration, that is, his offer was not given as part of a bargain.
Unless Sam changes his will, there is no gift which as shown in Gruen v. Gruen, 68 N.Y.2d 48 (1986) which may be enforceable to change custody of the Thunderbird.
Consideration is not an absolute necessity if Dave could show that he reasonably relied on Sam's promise in a manner that the promisor (Sam) should have reasonably expected.
C: At the point of time immediately following Sam's conversation with Dave, there is no legally enforceable contract as there was no consideration.

Question #2: Did Sam and Dave form a contract obligating Sam to amend his will to leave the Thunderbird to Dave?

I: Conditional donative promise vs. a bargain promise
R: The difference between a conditional donative promise and a bargain is that in a conditional donative promise, fulfillment of the condition is not the price of the promisor's performance. If the parties view the performance of the condition as the price of the promise, there is a bargain and there is a contract as demonstrated in Hamer v. Sidway, 124 N.Y. 538 (1891).
A: Sam promised to will the Thunderbird to Dave if Dave would refrain from drinking and gambling and avoid speeding tickets for the rest of Dave's ...

Solution Summary

This solution discusses answers for a case study considering a bargain promise.

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