Gift Promises and the Edge of Contract Law

27 Pages Posted: 2 Sep 2014

See all articles by George S. Geis

George S. Geis

University of Virginia School of Law

Date Written: September 2, 2014

Abstract

Contract law is celebrated for empowering private parties to enact customized legal rules. Anyone can summon state actors to enforce personally tailored laws that govern private agreements. Yet this unique power is obviously limited in scope and context, and it is important to consider where and why we draw these borders. One can write a contract that annuls tort liability, for instance, but criminal laws cannot be overruled by contract - even in a hypothetical lawless commune where everyone is willing to accede to the change.

One of the most interesting and persistent theoretical border- lands relates to gift promises. The consideration doctrine formally bars gift promises from the domain of contract law, but there are a number of side doors - such as reliance, moral obligation, and irrevocable trusts - that permit some gratuitous promises to be treated like contractual obligations. These one-way promises do involve future transfers, after all, and they feel very close to bilateral exchange. Contract law has refused to convert all gift promises into binding obligations, however, and it has even made it more difficult to form mindful commitments here by repealing the efficacy of the seal.

But there is another, previously unexplored dimension to this puzzle. Contract law embraces special rules that protect third-party beneficiaries - outsiders who enjoy legal enforcement rights despite a lack of privity. Moreover, these rights can be vested as irrevocable. This Article argues that this obscure corner of contract law should receive independent legal significance, such that a mindful promisor should be able to recruit a willing counterparty to make a binding gift promise in any context. It demonstrates this third-party beneficiary technique, evaluates the implications for the borders of contract law, and concludes that vested third-party beneficiary rights are a feasible (though unexpected) device for moving gift promises comfortably in- to the realm of contract law.

Suggested Citation

Geis, George S., Gift Promises and the Edge of Contract Law (September 2, 2014). Virginia Law and Economics Research Paper No. 2014-12, Available at SSRN: https://ssrn.com/abstract=2490684

George S. Geis (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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