a. Promise + Legal Enforcement = K(Contract)
i. Set outs
1. The more definite you can point toward damages the more likely a court with rely on
2. Expectation interest (expectancy)
3. Reliance interest
4. Restitution interest
iv. Allocates Risks
1. Assuming that in contracts both parties do the background work leading into a contract.
b. Civil Damages that compensate losses sustained by one type of party
i. It is not criminal and does not involve fines and penalties
c. (Assent) + O + A + C + (Definiteness) = K
d. 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
a. Governs sale of goods.
i. DEF: Goods
1. All things (including specially manufactured goods) which are movable at the time of identification to the K for sale.
ii. DEF: Merchant
1. Deals in goods of the kind, or by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involves
b. Increases certainty. Uniform laws
i. Decreases transaction costs (lawyers)
c. Issue: When is a K a sale of goods?
i. Test: What is the main purpose of the K?
1. If main purpose is good à UCC
2. If main purpose is service à Not UCC
III) Efficient Breach
a. DEF: When the breaching party is able to breach and enter into a new (pareto superior) transaction, and is able to compensate the non-breaching party w/ the expectancy interest.
i. Non-breaching party is no worse off, and breaching party is better off.
b. Policy: Allow for efficient breach is beneficial for economic transactions.
c. Problems: Accounting for externalities and undermines a promise
IV) Mutual Assent
a. DEF: Mutual agreement of both parties to a K
i. Both parties intend to be bound
b. Maj/Min: Considerations for Assent
i. (look to both)
ii. Maj: Objective Theory of K
1. DEF: Outward manifestation of intent
2. Test: Would a reasonable third person view it as a serious offer
3. Pro: Easy to measure evidence
4. Con: Could create bind person to a K who didn’t intend to
iii. Min: Subjective Theory of K
1. DEF: Looks to the actual intention of the parties (mind)
2. Test: Did the parties think they entered a K
3. Pro: K between people who actually intend it
4. Con: Difficult to measure
c. Courts will not enforce a K where both parties didn’t intend to enter.
i. If D’s objective acts suggested he was serious, but he was actually joking, and P intends to make a K, courts will enforce the K.
1. Policy: Take K’s seriously.
i. If K is written à courts will most likely enforce it.
1. Writing is objective act, showing that you’re not joking.
V) Types of K’s
i. Promise is consideration for a promise
ii. Rule: Binding upon acceptance
i. Performance is consideration for a promise
ii. Rule: Binding upon completion of performance
iv. The agreement of this type of is usually written in writing or not
c. Bargain theory
i. A’s manifest assent to B to enter into a Ķ if B manifests assent in return by some action
ii. Quantity must be definite or clearly ascertainable.
1. If not à no K.
a. Unfair to bind party where Q is unknown.
iii. KEY Aspects to Look For:
1. Invitation to open negotiations?
a. Open Terms are allowed
i. (Courts won’t enforce open terms that are deal breakers)
3. Language regarding offeror’s intent to be bound?
4. Sequence of communications.
a. K comprises of all communications leading up to offer and acceptance.
5. Context of the communications
a. Analysis of communications
b. No offer
i. I will not sell for less than 16,000
c. Actual communication
i. I will not sell unless I receive 16,000 in cash
i. I will sell it to you for 16,000
6. Industry standards
a. (may require tons of detail)
b. (may clarify vagueness of terms)
iv. After acceptance, offeror has no right to change the terms.
d. Offeror is the master of the bargain
i. Has tremendous power in setting the offer
1. If offeror excludes a store policy from the offer, he’s screwed.