Introduction
Contract and Quasi-Contract Obligations (CF 1.0)
-Contract – 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.
-Implied Contract – 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.
-Essential elements of implied contracts are mutual agreement, and intent to promise, but the agreement and the promise have not been made in words and are implied from the facts.
-Quasi-Contracts – obligations created by law for reasons of justice to avoid unjust enrichment by permitting the plaintiff to bring an action in restitution to recover the amount of the benefit conferred on the defendant.
Default Rules (CF 2.1)
-UCC defines “good” as “all things (including specially manufactured goods) which are moveable at the time of the identification for sale.”
-“Foreign-Natural Test” states if a substance causing injury was “natural” to the practice of business, the injured party ought reasonably to anticipate its presence and could not hold the server liable for any damages it caused.
-The test is, whether or not the presence should have been reasonably anticipated by the consumer.
UCC- “Sale of Goods” / “Merchant” (CF 2.2)
-UCC 2-511
(1) Unless otherwise agreed, tender of payment is a condition to the seller’s duty to tender and complete any delivery.
-UCC 2-201
(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.
Consideration
Doctrine of Consideration (CF 3.0)
– Restatement (First) of Contracts § 75
(1) Consideration for a promise is
· An act other than a promise, or
· A forbearance, or
· The creation, modification or destruction of a legal relation, or
· A return promise, bargained for and given in exchange for the promise.
(2) Consideration may be given to the promisor or to some other person. It may be given by the promisee or by some other person.
– The consideration must be requested as the price of the promise, and not just a condition of a gratuitous promise. (Tramp example)
– 4 Elements of a Gift
1. Intention to give on the part of the donor.
2. Delivery, actual or constructive, to the donee.
3. Termination of the donor’s dominion over the subject of right.
4. Dominion in the donee.
– No gift for the future can be an enforceable promise
– A bargain for exchange must be present to distinguish consideration from a condition.
Material Benefit (CF 4.0)
– In the absence of mistake or the like, there is no element of unjust enrichment in the receipt of a gift
– Material Benefit Rule- where the promisors (defendants) have received something from the promisee (plaintiff) of value in the form of money or other material benefits under such circumstances as to create a moral obligation to pay for what they received, and later promise to do so there is consideration for the promise.
-In order for a contract to be enforceable there has to be consideration! But, some promises are enforceable with no consideration. This leads to the material benefit rule. The courts will enforce a promise with no contract due to this.
Promissory Estoppel (CF 5.0)
– Promissory Estoppel Elements (PE)
1. Promise (Promisor reasonably should expect promise to rely on)
2. Detrimental reliance
3. Promisee’s detrimental reliance was reasonable
– The remedy routinely granted in promissory estoppel cases is either specific performance or expectation damages.
Promissory Estoppel and Gap Filling in Employment Context (CF 6.0)
-Unilateral Contract – one-sided contract only one party promises a performance as the exchange for an act other than a promise bargained for and performed by the promisee.
· – An employee originally hired under a contract terminable at will may be able to enforce the termination procedures in an employee manual under one of the following alternative theories:
1. In promulgating the termination procedures the employer was making an offer to the employee—that is, the employer manifested his willingness to enter into a bargain in such a way as to justify the employee in understanding that his assent to the bargain was invited by the employer and that the employee’s assent would conclude the bargain. (Second Restatement of Contracts § 24)
2. Initial or continued employment constituted acceptance of and consideration for those procedures. In such a situation the termination procedures may be construed as an offer of a unilateral contract.
Offer and Acceptance
Basic Rules for Offer and Acceptance (CF 7.0)
– Counter-offer is not an acceptance even if it reports to be. (i.e. conditions are imposed)
– Acceptance must be absolute and final. (No conditions) The exception is that immate
hem as otherwise unless the circumstances are exceptional and the words used are very plain and clear.”
2. Rewards as Offers
According to the “Carbolic Smoke Ball” case, “If a person chooses to make extravagant promises…he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them.”
3. An Objective, Reasonable Person Would Not Have Considered the Commercial an Offer
Court found in the Pepsi case that no person could reasonably have concluded that the commercial actually offered consumers a Harrier Jet. The court ruled that it was obvious the “offer” was in jest.
Offer and Acceptance of Unilateral – Contracts (CF 9.0)
– A unilateral contract is not legally binding until performance is completed.
– A commencement of performance, however, may give a reciprocal promise which can transfer a unilateral contract to a bilateral contract.
– Silence is not usually deemed adequate for acceptance.
– There must be acceptance in the form of action or words, but must be clear and exist a meeting of minds. The intent to enter an agreement must be satisfied.
– In a unilateral contract, if a commencement of a performance occurs, the offer is legally bound to be kept open, but not legally bound to be completed.
– Duty of the offeror will be discharged unless “the offeror learns of the performance within a reasonable time.”
– There can be no anticipatory breach of a unilateral contract.
-The general rule of law is that an offer proposed may be withdrawn before its acceptance and that no obligation is incurred thereby. This is, however, not without exceptions. For instance, Restatement of the Law of Contracts stated, “ (1) The power to create a contract by acceptance of an offer terminates at the time specified in the offer, or, if no time is specified, at the end of a reasonable time.”
-§ 33. Certainty
(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the
