Contracts Outline

Contracts Outline Professor Roedrick White

Fall Semester 2016

Meaning of a Contract

– A contract is 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.

Contract (in general)- An agreement between two or more parties that is enforceable by law.

Elements of a contract:

Offer – a 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

Acceptance – An announced intention of the offeree to accept the offer- any manifestation of willingness to accept the offer will create a valid contract.

Mutual Assent (to the agreement itself)
Mutual Assent (to the terms)
Consideration

Bilateral Contract- contract in which both sides make promises.

Rule – The general rule is that where there is an offer to form a bilateral contract, the offeree must communicate his acceptance to the offeror before any contractual obligation can come into being. A mere mental intent to accept the offer is not sufficient.

Ex.- Promise to sell you my car for $300, you promise to pay me $300.

Unilateral Contract- A unilateral contract is one which involves an exchange of the offeror’s promise for the offeree’s act. That is, in a unilateral contract the offeree does not make a promise, but instead simply acts.

Ex. – ”If you walk across the Brooklyn Bridge, I promise to pay you $1,000 as soon as you finish.” A has proposed to exchange his promise for B’s act of walking across the bridge. Therefore, A has proposed a unilateral contract.

Interpretations – (Assent)

Rule – Where a party’s actions and statements could reasonably be seen as manifesting an intent to enter into a contract, the party will be bound to the contract, even if the party had no subjective intent to enter into the agreement. (What goes on in a person mind does not matter)

Types of Intent

Substantive View – existence of contract depends on what parties intended.

Objective View – existence of a contract depends on if all of the actual elements of a contract has been exist. (Again intent of parties does not matter)

Lucy v.Zemmer

We must look to the outward expression of a person as manifesting his intention rather that to his secret and unexpressed intention. The law, therefore, judges of an agreement between two persons exclusively from those expressions of their intentions which are communicated between them.

The material assent of the parties is not required for the formation of the contract; a person’s undisclosed intention is immaterial if his words and acts have but one reasonable meaning.

If plaintiff had knowledge of reason to know defendant did not seriously intend to enter in the contract, then NO valid contract. Burden of proof is on party

But plaintiff was justified in actually believing defendant meant to enter contract in good faith, so contract will be enforced.

Latent Ambiguity

Defined – an ambiguity that does not readily appear in the language of a document, but instead arises from a collateral matter when the document’s terms are applied or executed.

Rules: Subjective intent does come into play if there is ambiguity on the face of the contract, and one of the parties meaning lines up with the ambiguity

Ex. Frigaliment Importing Co. v. B.N.S. Intern. Sales Corp , the issue of the case is what is the meaning of chicken? In order to to specify the meaning of the word chicken, you must make sure that the other party knows what you mean.

If narrowing the definition, must show narrowing meaning should apply.

It is the responsibility of the narrowing party to inform the other party of the narrowing meaning.

Trade Usage

If someone is involved in a particular trade or vocation, they should know or have reason to know the meaning of the trade usage. Thus the meaning attached to a particular term in a certain region, or in a certain industry, would be admissible.

If you’re in the industry, you should know terms. If