CONTRACTS – Korobkin Fall 2005
I. Table of Contents
A. Theories of promissory liability
B. K proper
1. offer
2. acceptance
3. timing in general
4. methods to terminate power of acceptance – rejection, counter-offer, revocation
5. consideration
C. Types of Contracts
1. option K
2. bilateral K
3. unilateral K
D. Promissory Estoppel
E. Restitution
1. nonpromissory
2. promissory
F. Defense against enforceability
1. Statute of Frauds
G. Terms of K
1. parol evidence rule
2. interpretation
3. implied terms
H. Defenses to Formation
1. contractual capacity
2. duress
3. undue influence
4. misrepresentation
5. unconscionability
6. public policy
I. Excuses for Nonperformance
1. mistake
a. mutual
b. unilateral
2. changed circumstances
a. impracticability
b. frustration of purpose
3. modification
J. Consequences of Nonperformance
1. material breach
2. substantial performance
3. failure of express condition
K. Damages
1. expectation
a. foreseeability
b. duty to mitigate
2. reliance
3. restitution
4. specific performance
5. liquidated damages
II. Theories of Promissory Liability – Grounds For Enforcement
A. Generally
1. bargain (K proper),
2. reliance (promissory estoppel)
3. unjust enrichment (restitution)
III. Contract Proper
A. Generally
1. K needs consideration and mutual assent (offer and acceptance)
2. use objective theory of K to determine if manifestation of mutual assent was an effective offer and acceptance
3. was there an effective offer? (did it have definite enough terms, and was it more than just negotiations)
4. was there an effective acceptance? (must be unconditional, occur b/f revocation, rejection, reasonable time, offeree didn’t make counteroffer, if in unilateral K, need to know of offer b/f can accept)
B. Formation of K
1. an agreement
a. agreement §3 is a manifestation of mutual assent btw people
b. different from a K b/c a K is legally enforceable agreement by definition
2. consideration
a. bargain §3/§17 – is an agreement to exchange promises/performances
C. Objective theory of K §19
1. type of conduct that is sufficient:
a. manifestation of assent may be made by written or spoken words, acts, failure to act
2. reasonable person std requirements
a. how reasonable person in the circumstances interpret the expression
b. volitional act – the actual conduct should be intentionally engaged in AND
c. party knows/has reason to know other party will interpret it that way
d. subjective intent not required – not required that minds are in accord
3. invalidating causes – when manifestation is not assent in fact
a. If capable person signs written K, but is mistaken because other party fraudulently misrepresented contents of K to induce signing, then K not enforced
b. Park 100, P signed K using reasonable care, but other party told them K was something other than what it was = fraudulent misrepresentation
c. Rationale – objective theory of K would be invi
6. Lonergan, ad in the newspaper not an offer, but an invitation to offer since the terms are not definite – not directed at a particular person; letter of inquiry also not an offer since it didn’t have the price of the property
7. Izadi, a reasonable person would interpret the ad in a way to make it an offer; on top of that, it was a bait and switch –looked like a particular car for sale, but it wasn’t – use public policy to justify
8. Negotiations – Invitation to negotiate/deal §26
a. Not yet an offer b/c
i. the person knows that the person manifesting willingness to bargain didn’t mean to conclude the bargain until the other person had made a further manifestation of assent
b. Bargaining intent is missing, or material terms missing or both
c. ie, advertisement, which is an invitation to negotiate/deal, and not an offer to sell
i. rationale: usually indefinite terms, usually addressed to public and not to any one person so would be “overaccepted”
ii. exception: some ads can be offers when it’s on definite terms, there’s intention to bargain, specific action invited, and overacceptance unlikely
d. Legal effect of negotiation
i. Power of acceptance not given to other party
9. Inquiry
a. Power of acceptance not terminated
b. No K formed, wait for possible acceptance by offeree
10. Bidding Contracts – sub-bids are offers
a. Putting K out for bid is usually not deemed an offer
i. Therefore the general Ker is free to reject all of the subKers’ bids
b. But the bids submitted in response by subKers are offers
c. Then treat the offer/sub-bid as a promise, and make it bilateral an option K w/ pre-acceptance reliance §87(2)
d. GenKer accepts when assents, not when using the sub-bid in general bid
11. Firm offer – type of offer
a. is an offer that expressly or implied in terms is to remain open for certain period
can be revoked even if in period; but can be irrevocable if is option K
