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South Texas College of Law Houston
Powers, Jean Fleming

Contracts Outline – Prof. Powers Fall 2004
1)     Introduction
a)     Contract
i)       Objective Theory – what a reasonable person would understand from what is manifested by parties
ii)     Promises Law won’t enforce
(1)  Gift – with no C
(2)  Illegal – K for a murder
(3)  Illusory – future not bound by statement à promise to sell car tomorrow if I still want to
(a)  If limitation placed on it, it’s ok – just b/c one party has greater control over it, doesn’t mean unenforceableà promise to lease you car I buy next month if I decide to buy it
(b)  Just b/c there are alternatives, it’s ok as long as there are limitations à If I decide to buy car, I will lease to you or your cousin
iii)   Promise for a promise – bilateral K; Promise for an act or forbearance – unilateral K
b)     UCC
i)       Article 2 governs sales/transactions in goods (sales – title passes from buyer to seller)
(1)  UCC defines goods as objects which are movable at the time of their identification to the K
(2)  Excludes transactions in real property, sale of intangible rights (insurance, promissory notes, stocks, bonds, checks) and sale of services
ii)     Courts look to combinations of goods/services to see which predominates
iii)   NOT limited to merchants, though there are some rules that only apply to merchants
c)      Common Law – Governs anything not for the sale of goods
d)     Software – Huge fight over whether goods or intangibles
2)     Offer
a)     Offer – intentional statement by an offeror that creates in mind of offeree a reasonable expectation that the offeror intended to enter into a K; usually viewed from point of view of a reasonable person and ask whether he would understand that the offeror had contractual intent
i)       Opinions – don’t usually create K à doc thinks arm will heal in a month – therapeutic value
(1)  Some exceptions – Hawkins v. McGee à hand grafted – doc promised 100% new hand b/c went beyond therapeutic value and doc used it to get him to agree to operation
b)     An offer lasts until:
i)       Offeror revokes before acc
ii)     Offeror dies or loses capacity (if there’s already a K, that will not be affected)
iii)   Lapse (time stated or a reasonable time)
iv)   Offeree rejects
v)     Offeree counteroffers
c)      Offer must be definite enough to allow us to figure out what the K would be
i)       UCC 2-part Test in §2-204
(1)  Did parties intend to have K?
(2)  Can court fashion a remedy?
ii)     UCC has gap-filling provisions
(1)  Price – reasonable price
(2)  Risk of Loss
(3)  Obligations
(4) Remedies
(5)  Warranties
(6)  Place of Delivery – seller’s place of delivery
(7)  Time of Performance – reasonable time
iii)   UCC §1-303 – “Construction Terms”
(1)  Usage of trade – custom of industry; binds all, sometimes even consumers
(2)  Course of dealing – parties’ past history w/each other
(3)  Course of performance – what parties do in performing this K; useful in installment Ks
iv)   Preliminary Negotiations
(1)  Tend not to force parties into K until it’s clear they intended a K
(2)  Major test – did parties intend??? – courts are slow to force into K when it’s unclear they intended K, but also slow to let parties out once they’ve established K
v)     Advertisements
(1)  Usually presumed to be mere solicitations for offers b/c leave too much to be negotiated like quantity, price, and form & time of payment
(a)  Exception – Lefkowitz v. Greater Minneapolis Surplus Store à “one black lapin stole for $1” & “1st come 1st served”; court allowed b/c advertisement was specific/definite enough – specif

nder K law and are enforceable
(2)  Courts usually construe fairly & not in accordance with their literal language
(a)  “reward for arrest & conviction of the man who murdered my brother” – courts will usually say that b/c most people can’t arrest others, info leading to arrest is sufficient
(3)  Revocation – Requires same or similar publicity/channels of communication to revoke
vii) Death/Incompetency – CL usually says offer terminates and power to acc is destroyed
viii)           Rejection – Slightest rejection kills offer – “Will you buy my tie for $10?  No…wait, yes!” à no good
ix)   Counteroffer
(1)  Impliedly a rejection; destroys power of acc, UNLESS
(a)  Option K
(b)  “Mere Inquiry Rule” à“Will you buy my tie for $10? I wonder if you’d consider $5”
3)     Acceptance
a)     General
i)       Announced intention of the offeree to accept the offer
(1)  By conduct/performance – unless offeror has expressly required a written acc
(2)  By verbal communication
(3)  By writing
ii)     Replies are construed as what a reasonable person in the offeree’s shoes would understand to mean “reply” – i.e. “reply by return mail” – could mean only by return U.S. mail or could mean by e-mail, telegram, phone call, etc.
“Mirror Image Rule” and “Battle of the Forms”– CL rule says acc has to look exactly like offer; if acc tries to add new terms, it is a counteroffer; it destroys the offer, and unless acc by the offeror, no K