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According to Justice Oliver Wendell Holmes Our law does not enforce every promise
which a man may make. Promises made as ninety-nine promises out of a hundred are, by
word of mouth or simple writing, are not binding unless there is a consideration for them.
That is, as it is commonly explained, unless the promisee has either conferred a benefit
on the promisor, or incurred a detriment, as the inducement to the promise.
http://www.constitution.org/cmt/owh/commonlaw07.htm
Promises are made by individuals all of the time yet not all promises are legally
enforceable. Contracts are promises that are legally enforceable and for which the law
will give a remedy if breached.
The Path of the Law, Oliver Wendell Holmes, Jr., 10 Harvard Law Review 457 (1897)
http://www.constitution.org/lrev/owh/path_law.htm
Does Holmes agree with the objective theory of contracts which is the generally accepted
of determining whether the parties ever intended to enter into a contract? The objective
theory asks: would a reasonable person in the shoes of the parties think there was intent
to contract as determined by the partys words (written or oral), conduct and
circumstances?
Why would a court consider the inner thoughts, feelings and subjective intent of the
parties to be irrelevant?
Sources of Contract Law
In most jurisdictions the laws pertaining to contracts are a matter of common-law and
have not been codified into statutes. To determine the prevailing rule of law in a contract
case reference must be made to prior cases and judicial decisions. Another source of
contract law is the Restatement Second of Contracts (Restatement) compiled by the
American Law Institute. This is a scholarly treatise that summarizes what the commonlaw rule on contracts as it currently exists in most jurisdictions in the United States. The
Restatement is a source of persuasive authority for judges but it does not carry the
authority of a statute. Contracts involving the sale of goods are governed by the
Uniform Commercial Code (UCC) Article 2. Most states have enacted their own version
of the uniform commercial code to govern business transactions involving goods. Goods
are defined as tangible moveable items of personal property. Goods include items such
as books, clothing, furniture, etc. Also included are intangible items of personal property
like copyright, trademark and stock. Non-goods which would fall within the purview of
the common-law and not the uniform commercial code would include real estate, i.e.
houses, building, land and anything permanently attached to the real estate (known as
fixtures) and services.
Types of Contracts
Contracts are classified in several ways and their classification is based on how they are
created. Express contracts are created by the words of the parties words which can be
either in writing or orally spoken. Implied in fact contracts are created by the actions,
conduct and circumstances of the parties as evaluated by the objective standard for
contract formation. A Quasi contract is not a contract but a remedy devised by the
courts to prevent one party from being unjustly enriched at the expense of another party.
Quasi contracts arise when one party knowingly receives a benefit of some sort either
goods or services and retains the benefit without payment. In those situations the judge
will order the party who has knowingly benefited to compensate the other party for the
reasonable value of the goods or services received.
What are the public policy and business reasons for awarding compensation in the
situation of a quasi-contract?
Closely related to the concept of quasi contract is the doctrine of promissory estoppel.
The law also gives a remedy in situations where one party has reasonably relied upon a
promise made by another party and due to such reliance suffered a detriment
(detrimental reliance). The remedy awarded to the party who has acted in detrimental
reliance is their reliance damages.
Copyright 2010 R.Kowal