Contracts
Harvey
Fall 2015
Contract (from restatement § 1) A contract is a promise or a 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. 1.0.9/9 Lotus Garage.
§ 2. Promise; Promisor; Promisee; Beneficiary
(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.
(2) The person manifesting the intention is the promisor.
(3) The person to whom the manifestation is addressed is the promisee.
§ 4. How a Promise May Be Made. A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.
Comment to § 4. a. Express and implied contracts. Contracts are often spoken of as express or implied. The distinction involves, however, no difference in legal effect, but lies merely in the mode of manifesting assent. Just as assent may be manifested by words or other conduct, sometimes including silence, so intention to make a promise may be manifested in language or by implication from other circumstances . . .
Illustrations: (1) A telephones to his grocer, “Send me a ten-pound bag of flour.” The grocer sends it. A has thereby promised to pay the grocer's current price therefor. (2) A, on passing a market, where he has an account, sees a box of apples marked “25 cts. each.” A picks up an apple, holds it up so that a clerk of the establishment sees the act. The clerk nods, and A passes on. A has promised to pay twenty-five cents for the apple
Implied Contract. A “contract implied in fact,” . . . or an implied contract in the proper sense, arises where the intention of the parties is not expressed, but an agreement in fact, creating an obligation, is implied or presumed from their acts, or, as it has been otherwise stated, where there are circumstances which, according to the ordinary course of dealing and the common understanding of men, show a mutual intent to contract. (quoting CJS) 1.0.5. Cited in Bailey v W.
– No implied K. Must contain all the elements of an express K…Dependent on mutual agreement… & intention of parties; meeting of the minds . . . out of facts …inferred. Bailey.
o No prior biz btwn farmer & horse owner. Trainer said owner wont pay for boarding.
Quasi K Home Savings Bank v. General Finance; 1.0.6 The essential elements of a quasi-K:
1. a benefit conferred upon defendant by plaintiff,
2. appreciation by defendant of such benefit, and
3. acceptance and retention by defendant of such benefit
4. under such circumstances that it would be inequitable to retain the benefit without payment of the value thereof.
–
– No Quasi K. A person who officiously confers a benefit upon another is not entitled to restitution therefor. (quoting Restatement of Restitution). Bailey v. West. (S.Ct. 1969).
o TT Farmer knew there was controversy over ownership. D nvr acquiesced benefit.
Enforceability of K:
Mental assent of the parties is not requisite for the formation of a K. If the words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial …
– … except when an unreasonable meaning which he attaches to his manifestations is known to the other party.
– Restatement of K, Vol. I, § 71, p. 74. Cited by Lucy v. Zehmer, 196 Va. 493, 503 2.0.5
In the field of contracts, as generally elsewhere, “We must look to the outward expression of a person as manifesting his intention rather than to his secret and unexpressed intention. 'The law imputes to a person an intention corresponding to the reasonable meaning of his words and acts.'” First Nat. Bank v. Roanoke Oil Co., 169 Va. 99, 114. Cited by Lucy v. Zehmer supra. 2.0.5
The law, therefore, judges of an agreement between two persons exclusively from those expressions of their intentions which are communicated between them. * * *.”
– Clark on Contracts, 4 ed., § 3, p. 4. Cited by Lucy v. Zehmer supra. 2.0.5
– Enforceable K. Words and acts, judged by a reasonable standard, manifest an intention to agree, it is immaterial what may be the real but unexpressed state of his mind. LvZehmer.
o D/seller claims was selling R/E in jest. Signed BofS. Back and forth negotiations.
Interests Fuller & Perdue, The Reliance Interest in K Damages, 46 Yale L.J. 52, 84 (1936). 2.0.6
– Court supports enforcing promises on 3 interests.
– Determines type of damages/remedy to enforce or to enforce at all based on interest.
1. Restitution: Breaching party has gained. Breached party has lost.
2. Reliance: Breached party relied, possibly to his detriment or to the breaching party’s benefit.
3. Expectancy: Breached party expects promise to be kept.
Inquiries – Z. Pittes, The Philosophy of Contract Law Margee Pub., Company. 2.0.7
1. When are people morally obligated to keep promises
2. When are the courts justified in enforcing promises.
– Positive Theory: Explains results but doesn’t justify results.
– Normative Theory: 1 result better than the other for stated reason.
– Theory can be P or N.
Will Theory: Promisor made voluntary commitment. Doesn’t explain autonomy. No justify disti.
Reliance: Enforcement. justification=protecting the promisee who changed position on acct of the prom.
Efficency: can be valuable to both b/c it makes promise more reliable. Seriously intended promises should be enforced.
– No theory of promise enforcement or moral duty to keep promises has achieved widespread adherence.
UCC §2-104 (1) Merchant means a person:
– who deals in goods of the kind or
– otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or
– whom such knowledge/skill may be attributed by his employment of an agent /broker or
– other intermediary who
relation
4) The performance or return promise may be given to: Promisor OR to Some Other Person.
It may be given by the Promisee or by Some Other Person.
– Commentary
a. Historically: quid pro quo.
b. Bargained for: consideration & promise bear reciprocal relation of motive or inducement: C induces the making of the P & P induces the furnishing of the C.
– Consideration. It’s enough that something is promised, done, forborne or suffered by the party to whom the promise is made as consideration for the promise made to him. Hamer
o TT gave up smoking for 5 years in consideration for uncle’s promise of $5K.
1 Williston on K §112: Williston’s tramp’s walk isn’t consideration b/c he needs to perform walk as a “reasonable construction” to receive the gift.
O. W. Holmes, The Common Law 293-94 (1887) Consideration not to be confused w/motives.
Hoffman v. Wausau…It is boilerplate law that 4 elements must be demonstrated to prove a Gift:
1. Intention to give on the part of the donor.
2. Delivery, actual or constructive, to the done.
3. Termination of the donor’s dominion over the subject of the right.
4. Dominion in the done…
– Gift, not consideration. “…the promise on the part of he defendant, was a mere gratuity, and that an action will not lie for its breach…” Kirksey v. Kirksey 8 Ala. 131 (1845).
Seal: R2K§95(1)(a) – “[i]n absence of statute a promise is binding w/o consideration if it is in writing and sealed…”
UCC§1-103Must b liberally construed&applied2promote its underlying purposed&policies which are2simplify,clarify&modernize the law governing com trans.2permit the cont’d …
R2K§30 Form of Acceptance Invited (1) An offer may invite or require acceptance to be made by an affirmative answer:
– In words OR
– By performing [a specified act] OR
– Refraining from performing a specified act OR
– May empower the offeree to make a selection of terms in his acceptance
(2) Unless otherwise indicated by the language or circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.
R2K§32 Invitation of Promise or Performance. In case of doubt: an offer is interpreted as inviting the offeree to accept either by:
– Promising to perform what the offer requests OR
– By rendering the performance
As the offeree chooses.
