CONTRACTS
(Prof. Deboer- Spring 2012)
(focus will be on common law)
CHAPTER 1. INTRODUCTION TO CONRACT LAW (judges and legislatures, as noted by the casebook on pg 5, express their will and not reason- somewhat troublesome)
-Contracts is really private law. They are choosing how they will conduct themselves regarding one another and their affairs. As opposed to public law, where society and its affairs are guided by representative bodies
FOCUS ON: the duties, the rights, the obligations, what the parties bargain for, and what each party is due
A. Sources of Contract Law- judicial opinions, statutory law, the restatements, legal commentary, and international commercial law
B. Perspectives of Contract Theory-
C. Lawyering Perspective
D. Basic Uses
1. Plan affairs- estates, wills, trusts, setup corps
2. Resolve conflicts/disputes (somewhat of a backwards approach as opposed to planning affairs)
3. Justice- contract provides justice by illustrating what it is the other party is obligated to do or is due. If one party fails to perform or breaches, the other person is not getting his/her due and the civil justice system is available to remedy the injustice
CHAPTER 2. BASIS OF CONTRACTUAL OBLIGATION; MUTUAL ASSENT & CONSENT
Traditional Requirements for a contract
· Mutual assent
· Offer and acceptance
· consideration
A. Mutual Assent
1. Intent to be Bound: Objective Theory of Contract (
a. Objective v. subjective theory
i. Objective intent (mutual assent)- based on the actions or conduct (TARP test)
ii. Subjective intent (“meeting of the minds”) based on the intentions of the parties
b. Manifestation of mutual assent v. “meeting of the minds”
i. Mutual assent
ii. Meeting of the minds- did the intentions of each party come together
Ray v. Eurice Co. (asked for facts, helped lead along but was fact intensive, asked for the trial cts ruling and reasoning and app court ruling and reasoning and the damages awarded)
· Mr. Ray wants to structure the contract more particularly and specifically and the Eurice bros wanted the contract to be more general and give them as builders more discretion bc it would cost them less and would make building easier due to familiarity with materials, etc
· App ct said that mutual assent was based on the signing of the agreement and on what TARP what do
· The law is clear, absent fraud, duress, or mutual mistake, that one having the capacity to understand a writte document who reads and signs it, or, without reading it or having it read to him, signs it, is bound by his signature
· Rest. Contracts Sect. 20 (pg.29)-
· Rest. Contracts Sect. 230 (pg. 30)-
2. Offer and Acceptance in Bilateral Contracts
a. Contract- commitment to some course of action to be undertaken in the future
b. Bilateral contract- involves the exchange of reciprocal commitments and are the product of a process known as “offer and acceptance.” There are commitments on both sides.
i. Stated another way- a bilateral contract is formed when the parties exchange promises of performance to take place in the future: each party is both a promisor and a promisee: the offeree’s communicated acceptance also constitutes, in effect, her promise to perform.
Longergan v. Scolnick
· Lonergan (P)- interested buyer, Scolnick- Owner of the property. D sold property he advertised in LA before the P had a chance to buy it
· Holding: Court says that there is not an offer bc there is not a fixed purpose/commitment on the behalf of the D. Therefore the letters did not constitute an offer
Notes
o SO A DIFFICULT QUESTION, DOES THE COMMUNICATION AMOUNT TO LEGAL COMTEMPLATION TO AN OFFER
o THE OFFER AND REVOCATION MUST BE COMMUNICATED TO BE EFFECTIVE
o MAILBOX RULE- (REST ACC) ACCEPTANCE, WHEN YOU HAVE THE POWER OF ACCEPTANCE, IS EFFECTIVE WHEN DISPATCHED/PLACED IN THE MAIL
o THE MAILBOX RULE DOES NOT APPLY WHEN THE OFFEROR HAS STATED (EXPRESSLY OR BY IMPLICATION) THAT HE MUST RECEIVE THE ACCEPTANCE FOR IT TO BE EFFECTIVE
Izadi v. Machado (Gus) Ford, Inc.
· D says that the P has not even made a complaint upon which relief has not been given (Fed. R. Civ. P. 12(b)(6))
· The court uses TARP to determine if when an ad is placed, if TARP would think that an offer was made
Notes
1) S
2) Typically, advertisements
Normile v. Miller
· D- Miller- selling house, P- Normile- prospective buyer and P2- Segal- actual buyer
· Factual development
·
HOLDING:
TRADITIONAL MODEL OF BILATERAL CONTRACT FORMATION
Step 1- Preliminary negotiations- what the terms of the contract might, what each party can bring to the contract so that the contract can be structured (this stage can sometimes resemble an offer).
Step 2-
· Offer- it is a proposition/proposal that a contract be entered into in which both parties agree to defined performances (the offeror makes an expression to another (the offeree) can include a specific time frame
· Power of acceptance- offeree
Step 3- can accept the offer, counter-offer (sometimes referred to as a qualified or conditional acceptance), reject the offer, delay, revoke
3. Offer and Acceptance in Unilateral Contracts
a. Unilateral contract- occurs when the offeror offers to exchange his promise of a future performance only in return for the offeree’s actual rendering of performance, rather than her mere promise of future performance
i. essentially, the offeror promises to a future performance only if the offeree goes ahead and performs
ii. In this case,
equested
· AS pres subsequently made another purchase order for the order in question but this time the pres of Harlow never signed and returned the order even though he had received it
· 2 shipments of steel came it and AS accepted and paid for both.
· the 3rd shipment came in Nov. 27 and was rejected by AS for late delivery
Rule:
UCC §2-204(1)- A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such contract.
UCC §2-204(2)- an agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
UCC §2-204(3)- Even though one or more terms are left open, a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
UCC §2-207(3)- Conduct is sufficient to establish a contract even if the writings of the parties does not.
Holding:
· An oral agreement had been formed prior to the exchange of documentation.
Reasoning:
· The conduct of the parties indicates that a sale had been arranged as of July 9. Harlow had assumed understanding when it mailed order for steel which Advance had given to broker. So Harlow confirmation could not be considered an offer. AS’s conduct also confirms existence of an oral argument. Conversing with Harlow’s broker and then communicating an order quantity with certain specifications makes it pretty evident that AS had made a firm commitment.
B. CONSIDERATION (when parties are bargaining to reach an agreement is there some sort of detriment that each party is considering and may incur if they enter into such an agreement. What are the factors they are considering/implications for the contract?)
1. Defining Consideration
Hamer v. Sidway
Facts:
· P presented claim to executor of Will E. Story, Sr, for $5k. Executor rejected claims so P brought this action
· D (Sidway- executor) and D (Hamer- assignee- person who had also been promised money by Story, Sr.)
· William E. Story, Sr, promised his nephew that if he would refrain from drinking, using tobacco, swearing and playing cards or billiards for money until he became 21 he would pay him $5k.
· William E. Story, 2d, senior’s nephew, assented to the terms and performed and then wrote his uncle telling him that he had turned 21 and that he had done as he wished
