I. Introduction to Contracts
A. Legal Definition
ReS 2d § 1: “Contract” is “a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
ReS 2d: although reads like a statute is a treatise that court’s look to for guidance.
B. Hallmarks of a Contract:
a. Exchange Relationship – a reciprocal arrangement in which each party gives up something to get something else from the other
b. Created by agreement – both parties agree to K, if made under duress or fraud, not a valid K
c. Containing at least one promise – in no future commitment is made, then the law of contracts has no role to play in the relationship
i. An undertaking to act or refrain from acting at some future time
ii. Can be expressed or implied
d. Recognized as enforceable in law: Courts will look to enforce K’s more often than not enforce K’s
C. Consideration + Offer and Acceptance = Enforceable K.
D. Look to the “four corners” of the document to determine K, no other evidence is necessary.
i. Misfeanceàbad performance
ii. Non-feanceànot doing
E. UCC § 1-103: when the UCC is silent, refer to common law
F. Predominant Purpose Test
II. The Objective Standard for determining assent
Courts rely on evidence of outward manifestations of intent to determine the existence and terms of a K, a person can be bound to a K if her words and actions indicate assent, event though she did not intend to agree to K. Subjective is much harder to prove, therefore, courts look to the OBJECTIVE standard to determine assent.
*Justice Holmes: “the law has nothing to do with the actual state of the parties’ minds. In contract, as elsewhere, it must go by externals, and judge parties by their conduct.”
III. Determining the Objective Standard
A. The reasonable person construct: look at words and conduct that would lead other party to understand agreement was reached.
DELIBERATELY undisclosed intent
· Lucy v. Zehmerà K deemed enforceable even though
ffer, and the signification of the assent is the acceptance.
2. Definition of offer
ReS 2d § 24: Offer: “the manifestation of a willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.”
OFFER (common law basics):
(1) Communicated
(2) Indicate a desire to enter into a K
(3) Directed to a person or group
(4) Inviting acceptance
(5) K will form without anything further
Determining the VALIDITY of an offer:
(1) Creates an immediate power of acceptance in the offeree
(2) Would a reasonable person in the offeree’s shoes see it as an offer
(3) Must be complete and final such that offeree can accept
a. If not, invitation to negotiate
b. Can improve with more specific terms
c. Reasonable range of choices are OK, offeree must resolve ambiguities in acceptance
TIMING: if time is not specified, must be accepted within a reasonable period of time
