Contracts Drennan Fall 2016
WHAT IS A CONTRACT?
A. Definition-a promise or a set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
B. Types of Contracts
1. As to Formation
a. Express Contract – formed by language, oral or written.
b. Contract Implied In Fact – formed by manifestations of assent other than oral or written language (conduct) (ex. a person sits in a barber’s chair and the barber cuts his hair, a contract has been formed by the parties conduct).
c. Quasi-Contract or Constructive Contract or Implied in Law Contract – NOT CONTRACTS, constructed by courts 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. Ex. Restitution, Quantum Merit (legal fiction traditionally used in transactions involving services), Unjust Enrichment, Promissory Estoppel…
2. As to Acceptance
a. bilateral-exchange of promises (promise for a promise)
b. unilateral-exchange of an act (or performance) for a promise. The offeror-promisor promises to pay upon completion of the requested act by the promise. Once the act is completed, a contract is formed.
c. most contracts are bilateral.
1. Acceptance by promise or start of performance
2. Unilateral Contract Limited to 2 circumstances
(i) where the offeror clearly indicates that completion of performance is the only manner of acceptance (offeror is the master of the offer and may create the offer in this fashion AND
(ii) there is an offer to the public, such as a reward offer, which so clearly contemplates acceptance by performance rather than a promise (not to mention the total ineffectiveness of a promise in such a situation) that only the performance requested in the offer will manifest acceptance
3.Void or Voidable and Unenforceable
a. Void- no legal effect from the beginning (cannot be enforced)
1. example-agreement to commit a crime
b. Voidable-one that a party may elect to avoid or ratify (party may elect to enforce it)
1. example-contract by a minor
c. Unenforceable-otherwise valid but for which some defense exists
1. example- statute of frauds or limitations
C. Creation of A Contract
1. Three Elements Needed to Create an Enforceable Contract:
a. Offer
}mutual assent
b. Acceptance
c. Consideration
2. Unenforceable Contracts
a. Mere Talk
b. Negotiations
c. Preliminary Drafts
SOURCES OF CONTRACT LAW
Statute of Frauds
U.C.C. – not uniform, adopted by states with different provisions
Consumer Protection Laws
State Codified Laws
Restatements
Restate the law, or what they believe it should be
Only becomes law if accepted by jurisdiction
CONTRACT THEORIES
Classical or Formalism (Williston, Holmes)
try to figure out abstract principles, find universal rules, then apply them
BLACK LETTER RULES
Legal Realist (Karl Llewyn)
no abstract rules, figure out what is best for economy, judge should become immersed in facts of particular case
what justice & fairness would require
BLACK LETTER RULES
Law & Economics (Posner, Chicago)
Try to reduce transaction costs
Some very pro-business, some very pro-consumer
Seek efficiency and predictability
Critical Legal Studies
Ask who is benefitting from legal rule, determine which group will be disadvantaged by legal rules
OFFER AND ACCEPTANCE (Mutual Assent)
From Ray Case: “A true interpretation of an offer or acceptance is not what the party making it thought it meant or intended it to mean, but what a REASONABLE person in the position of the parties would have thought it meant.”
“the test is objective and not subjective.”
OFFER:
A. Why have offer and acceptance rules?
1. enable court to draw dividing line between preliminary negotiations and closing of a bargain.
2. ensure parties had agreed on minimum quantity of terms so the court could find they actually had made a deal.
3. give court reliable method to determine content of their deal.
B. What constitutes an offer?
1. Definitio
“superfine print” if the superfine print is contradicted by the prominent thrust of the advertisement”
“a binding offer may be implied from the very fact that deliberately misleading advertising intentionally leads the reader to the conclusion that one exists.
2. Terms & Conditions
For the consumer to assent to the terms and conditions proposed by the seller, the consumer must have reasonable notice of the T&C.
In the absence of fraud, the consumer’s failure to read the terms of a clickwrap agreement is NOT a valid excuse so that the consumer need not follow the terms.
Carnival Cruise Lines, Inc. v. Shute
FACTS: P purchased tickets for cruise line. Face of ticket contained forum selection clause, and that no refunds were available once the tickets were purchased.
RULE: A forum selection clause is not fundamentally unfair solely because the clause was not negotiated. D HAD DUTY TO READ.
4 Reasons forum selection clause was enforceable:
(1) Cruise line had special interest
(2) had salutary effect (producing good effects) on where to file, reduced confusion
(3) conserve judicial resources
(4) reduced cruise prices by reduced attorney’s fees, savings passed onto customers
DISSENT: will not deter negligent conduct, exempt client from liability, limit damages, any law suit must be filed in short period of time, forum selection clause
Enforcable
Facts in Google v. Feldman
• Notice in Bold Notice at Top Page
• Pre-Amble & First 2 ¶s visible on 1st page
• Scroll Bar on 1st page to see all 7 ¶s
• Link to Printer-Friendly Version
• “Yes” Button to agree to T&C
• Cannot Proceed and Purchase w/o Clicking the “Yes Button
