Contracts Fall 2013 Professor Sullivan
Contracts Cases, Discussion, and Problems 3rd Edition
I. Chapter 1 Overview of Contracts
A. Contract Definition: a promise or 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.
B. Distinction Between Law and Equity
a. Standard remedy for breach of contract is monetary damages (Adjudication of the court enforced through seizing property).
i. Expectation damages: focus on awarding the plaintiff a sum of money that will compensate him for loss of the economic benefit that he reasonably expected from the transaction.
b. Specific Performance (Order of the court enforced through court’s contempt power): not available unless the plaintiff can show that the legal remedy of damages is inadequate and the equities favor specific performance.
II. Chapter 2 Overview of Sales of Goods Governed by UCC Article 2
A. Goods: UCC 2-105(1) “…all things (included specially manufactured goods) which are movable at the time of identification to the contract for sale…”
B. Sale: UCC 2-106(1) “…the passing of title from the seller to the buyer for a price…”
C. Hybrid Transactions:
a. Gravamen Test: looks to that portion of the transaction upon which the complaint is based, to determine if it involved goods or services.
b. Predominant Purpose Test (Majority): looks at the transaction as a whole to determine whether its predominant purpose was the sale of goods or the provision of a service.
D. Merchants: 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 to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.
III. Chapter 3 Contractual Assent and the Objective Test
A. The objective theory of contracts provides that mutual assent to a contract is determined by reference to external acts and manifestations, not by evidence of subjective, internal intention.
a. Interpreted through reasonable person construct.
B. Duty To Read: Party’s accountability to knowledge of a contract’s terms.
C. Terminology:
a. Boxtop: Terms printed on the exterior of the packaging and discernible before opening the packaging.
b. Shrinkwrap: Terms included with a product in sealed packaging.
c. Rolling Contracts: Formed over a period of time following the initial manifestation of the agreement.
d. Clickwrap: Terms which buyer indicates assent to by checking a box or clicking a button on a popup screen before placing an order.
e. Browsewrap: Terms available to buyer through a link, but may not require buyer to take any affirmative steps to indicate assent.
IV. Chapter 4 The Offer
A. General Rule: As long as an offer has not yet been accepted, the offeror can cancel it before time has expired. To do this, the offeror must notify the offeree that the offer is revoked.
B. Restatement, Second §24. Offer Defined:
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
C. UCC 2-204. Formation in General.
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 undetermined.
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.
D. Advertisements do not usually make offers, they merely solicit offers.
E. Term: de minimis non curat lex: the law disregards trifles
V. Chapter 5 Acceptance
A. Acceptance: The offeree’s manifestation of assent to the offer.
a. Knowing, voluntary, deliberate act
B. Restatement §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 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 the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.
C. UCC § 2-206. Offer and Acceptance in Formation of Contract.
(1) Unless otherwise unambiguously indicated by the language or circumstances
(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
D. Mailbox Rule: Where the mail is an expressly or impliedly authorized or reasonable medium of acceptance, a properly stamped and addressed acceptance takes effect when deposited in the mail.
Offeror can avoid this by specifying in the offer that acceptance will only be effective upon receipt.
a. Restatement §63. TIME WHEN ACCEPTANCE TAKES EFFECT
Unless the offer provides otherwise,
(a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror; but
(b) an acceptance under an option contract is not operative until received by the offeror.
b. Restatement §64. ACCEPTANCE BY TELEPHONE OR TELETYPE
Acceptance given by telephone
ent from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act. (Knockout Rule)
VII. Chapter 7 Preliminary, Incomplete, and Indefinite Agreements
A. Preliminary Agreements
a. Type I: Complete on all issues perceived to require negotiation and bind both sides to their ultimate contractual objective.
b. Type II: Reflect agreement on certain major terms, but leave other terms open for negotiation and are binding only to a certain degree. (Parties may be required to continue negotiating in good faith)
c. Agreements to agree are not binding.
d. Four factors determining enforceability to ultimate contractual objective:
1. Whether there is an expressed reservation of the right not to be bound in the absence of a writing;
2. Whether there has been partial performance of a contract;
3. Whether all of the terms of the alleged contract have been agreed upon; and
4. Whether the agreement at issue is the type of contract that is usually committed to writing.
e. Helpful factors in determining whether parties have manifested an intention to be bound:
1. The language of the preliminary agreement,
2. The existence of open terms,
3. Whether partial performance has occurred,
4. The context of the negotiations, and
5. The custom of such transactions
6. Restatement Comment C adds: whether the agreement has few or many details; whether the amount involved is large or small; and whether it is a common or unusual contract.
