Contracts I Outline
I) Mutual Assent
· “Same bargain at the same time” or “a meeting of the minds.”
1) Intent to Be Bound
· Objective Theory of Contracts: In determining whether the parties have reached mutual assent, what matters is not what each party subjectively intended. Instead, a party’s intentions are measured by what a reasonable person in the position of the other party would have thought the first party intended.
· Offer: An offer creates the power of acceptance in the offeree and a corresponding liability on the part of the offeror. For a communication to be an offer, it must create a reasonable expectation in the offeree that the offoror is willing to enter into a contract on the basis of the offered terms.
· For a communication to be an offer, it must contain a promise, undertaking, and commitment to enter into a contract. The must be intent evidenced by language, surrounding circumstances, prior practice, method of communication, industry custom, and with the certainty of terms.
· §17Requirement of a Bargain: The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and consideration.
· §21Intention to be Legally Bound: Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intent that a promise shall not effect legal relations may prevent the formation of a contract.
· U.C.C. § 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 a contract. (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is unknown. (3) Even though one or more terms are left open, a contract may still be enforceable.
(a) Ray v. Eurice Brothers:A developer signed a contract without reading it and later tried to get out of the special demands the property owner had made. Court held that the standard for evaluating a contract is objective. “Meeting of the minds”. Absent fraud, duress or mutual mistake, signing is binding. It does not matter what a party thought or meant by signing into an agreement, but what a reasonable person in the position of the parties would have thought it meant. The case is objective not subjective. Res. § 20.
2) Offer and Acceptance; Bilateral
· §24 Offer Defined: as the manifestation of willingness to enter into a bargain, which justifies another person in understanding that his assent can conclude the ba
ee’s possession, without regard to whether it ever reaches the offeror, but (2) An acceptance under an option contract is not operative until received by the offeror.
· §65 Reasonableness of Medium of Acceptance: Unless circumstances known to the offeree indicate otherwise, a medium of acceptance is reasonable if it is the one used by the offeror or one customary in similar transactions at the time and place the offer is received.
· §66 Reasonably Dispatched:An acceptance sent by mail or otherwise from a distance is not operative when dispatched, unless it is properly addressed and such other precautions taken as are ordinarily observed to insure safe transmission of similar messages.
§68 What Constitutes Receipt: A written revocation, rejection, or acceptance is received when the writing comes into the possession of the person addressed, or of some person authorized to receive it for him, or when it is deposited in some place which he has authorized as the place for this or similar communications to be deposited for him