George Mason School of Law Contracts I D. Theories of Enforcement F.H. Buckley fbuckley@gmu.edu

Today Why Perform Promises? Natural Duties and Quasi-contract Offers

Contract damages solve the PD game problem Player 2 Cooperate Defect 3, 3 2, -3 -3, 2 0, 0 Player 1

What is collectively rational is now individually rational Player 2 Cooperate Defect 3, 3 2, -4 -4, 2 0, 0 Player 1

The trust this generates fosters beneficial reliance Where David would have been had he relied B 100, 100 100 I 200 E 50 150, 50 Ino-reliance David spends only 50 in period 1 100 150 Goetz and Scott, 89 Yale L.J. 1261 (1980)

And results in a wealthier and happier country

Is there another explanation for contract enforceability? What’s so great about autonomy?

Hume on promissory and contractual conventions The conventions of men … create a new motive, when experience has taught us, that human affairs wou'd be conducted much more for mutual advantage, were there certain symbols or signs instituted, by which we might give each, other security of our conduct in any particular incident, After these signs are instituted, whoever uses them is immediately bound by his interest to execute his engagements, and must never expect to be trusted any more, if he refuse to perform what he promis'd.

Autonomy Theories If Hume is right that promising is an artificial convention, can autonomy theories explain why the convention ought to exist?

Hume on natural duties versus conventional obligations A father knows it to be his duty to take care of his children: But he has also a natural inclination to it. … But as there is naturally no inclination to observe promises, distinct from a sense of their obligation; it follows, that fidelity is no natural virtue, and that promises have no force, antecedent to human conventions.

Some vocabulary Obligation: an “artificial” moral requirement voluntarily undertaken Duty: a moral requirement “naturally” imposed when not voluntarily undertaken. E.g., tort law duties

Promissory obligations vs. natural duties Obligations are content-independent (so long as not illegal) Natural duties are content-dependent Parent’s duty to his child

Promissory obligations evolved from natural duties Suppose A sold X goods and X didn’t pay. What remedy is available, before an action for breach of contract? The forms of action

Trespass on the case in indebitatus assumpsit as the remedy for breach of contract The King to the sheriff &c. as in Trespass to show: for that, whereas the said X heretofore, to wit (date and place) was indebted to the said A in the sum of £ for divers goods wares and merchandises by the said A before that time sold and delivered to the said X at his special instance and request. and being so indebted, he the said X in consideration thereof afterwards to wit (date and place aforesaid) undertook and faithfully promised the said A to pay him the said sum of money when he the said X should be thereto afterwards requested. Yet the said X, not regarding his said promise and undertaking but contriving and fraudulently intending craftily and subtilly to deceive and defraud the said A in this behalf, hath not yet paid the said sum of money or any part thereof to the said A (although oftentimes afterwards requested). But the said X to pay the same or any part thereof hath hitherto wholly refused and still refuses, to the damage of the said A of ___ pounds as it is said. And have you there &c.

The slow evolution of a remedy for breach of contract Note how this turned breach of contract into the tortious duty not to commit fraud Legal fictions

The rise of quasi-contract out of the forms of action There are natural duties and contractual obligations, but is there a tertium quid of liability for promises we ought to have made?

Moses v. Macferlan B promises to pay A £6, giving him a series of promissory notes A then assigns and endorses these over to C, so C can collect from B. It is a condition of the assignment that C promises not to sue A if B does not pay (a non-recourse note) B does not pay C sues A and collects £6 in a Court of Equity So C recovers from A in spite of his promise not to sue A A then seeks to recover the £6 from C before Lord Mansfield “for money had and received”

Moses v. Macferlan 2 Burr. 1005 (1760) per Lord Mansfield "This kind of equitable action, to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged. It lies for money which, ex aequo et bono, the defendant ought to refund; it lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, (express or implied) or extortion; or oppression; or an undue advantage taken of the plaintiff's situation, contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity, to refund the money."

Quasi-Contract Does an action lie for a performance which ought to have been made, even where there is no promise? Quasi-contract, unjust enrichment, restitution

Just what does “ties of natural justice and equity” mean? In the circumstances of Bailey v. West?

Bailey v. West Strauss West Trainer Kelly (driver) Bailey

Bailey v. West Was there a contract “implied in fact”?

Bailey v. West Restatement § 19 CONDUCT AS MANIFESTATION OF ASSENT (1) The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act. (2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents. (3) The conduct of a party may manifest assent even though he does not in fact assent.

Bailey v. West Restatement § 19 CONDUCT AS MANIFESTATION OF ASSENT (1) The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act. (2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents. (3) The conduct of a party may manifest assent even though he does not in fact assent.

Bailey v. West Was there an Implied Contract? Restatement § 19(1): What about “by failure to act”?

The Five Guys hypothetical p. 10

Day v. Caton p. 11 Poussin, Summer

What is an implied at law contract? Lord Mansfield

What is an implied at law contract? Quasi-contract Quantum meruit Unjust Enrichment Restitution

Moses v. Macferlan 2 Burr. 1005 (1760) per Lord Mansfield "This kind of equitable action, to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged. It lies for money which, ex aequo et bono, the defendant ought to refund; it lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, (express or implied) or extortion; or oppression; or an undue advantage taken of the plaintiff's situation, contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity, to refund the money."

Bailey v. West When is quasi-contractual liability imposed?

Bailey v. West When is quasi-contractual liability imposed? Benefit conferred on defendant by plaintiff Appreciation by defendant of the benefit Acceptance and retention of benefit by defendant where it would be inequitable to retain the benefit without payment

Bailey v. West When is quasi-contractual liability imposed? Is consent by the recipient necessary?

Bailey v. West When is quasi-contractual liability imposed? Is consent by the recipient necessary? You ask me as your agent to trade your horse for a cow. I do so, and get a bribe of $100 which I pocket

Bailey v. West When is quasi-contractual liability imposed? Is consent irrelevant?

Consent and the definition of a benefit? I think orange aluminum siding is neat. When you are on holiday I cover your house with it. A benefit?

What is a benefit? No recovery for “officious” benefits from “volunteers” What does this mean and just how do you tell?

What is a benefit? What about the Good Samaritan?

What is a benefit? What’s the difference between aluminum siding and the Good Samaritan?

What is a benefit? In what way is the aluminum siding example unlike the day laborer in Day v. Caton?

What is a benefit? In what way is the aluminum siding example unlike the day laborer? The informational problem How might the informational problem be cured?

What is a benefit? Should Bailey be permitted to recover for the first 4 months of board?

What is a benefit? So what would you have advised Bailey?