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Contracts
St. Johns University School of Law
Borgen, Christopher J.

Christopher Borgen
Contracts I
Fall 2009
CONTRACTS OUTLINE
I. GENERAL INFO
A. O + A + C = K
B. Types of Contracts
1. Bilateral contracts
a) An exchange of promises
(1) The offeror requests a promise and the offeree accepts the promise with a return promise creating a binding contract.
2. Unilateral contracts
a) A request for performance.
(1) The offeror requests performance and the offeree accepts when performance is complete.
C. Efficient Breach
1. A t least one party better off and no party worse off.
2. Goal: Not only not worse off but non-breaching party gets expectancy interest of the promise. – textbooks hypo
3. Critiques of E.B.:
a) Problem of externalities: Doesn’t take into account third parties or “downstream transactions”. – In order to fix this problem, need to identify externalities and compensate them.
b) Can’t always easily calculate the expectancy interest.
D. General Policy

II. ASSENT
A. The Nature of Assent
1. Has to do with consensual nature of Ks; the idea that both parties are consensually entering into a joint venture.
2. Objective View – Did the outward demonstrate mutual assent based on the reasonable person standard? Court primarily uses objective theory.
a) Lucy v. Zehmer – Zehmer’s actions demonstrated an intent to make a K
3. Subjective View – focuses on the actual intent of the parties at the time; used as a kicker (i.e. if both parties clearly state they felt it was a joke the court will refuse to enforce the K)

B. The Offer
1. Definition: an act whereby one person confers upon another the power to create contractual relations between them
2. Definition #2: X manifests his assent to Y to create a K (offer), if Y manifests assent in return by some action (acceptance) a K is formed.
3. 3 Things to look for to find an offer:
a) specificity of the language
b) language concerning intent to be bound
c) if multiple correspondences where, does the intent to be bound lie
4. Offeror is the master of the offer
a) Has the first advantage to name the terms, but if fails to include then it’s his fault
b) If the offer is ambiguous or vague court will err on side of no offer (Freedom from K)
5. Determining if a statement is an offer
a) create 2 similar statements 1 definite offer and one definitely not an offer and see which similar statement the original statement is closer too.
6. Application
a) Owen v. Tunnison – “it would not be possible to sell” was merely an invitation to negotiate.
(1) Offer must be specifically directed to the offeree.
b) Fairmount Glass v. Crunden-Martin –
(1) specific details in a communication create a reasonable inference of offer
(1) See Also Lefkowitz – applies this premise to advertisements; even if offeree knows of intended but unincluded conditions, they are not applicable unless actually contained in the offer (only in public offer)
7. Construction Contracts
a) Because of the nature of construction project bidding

as a contract”
b) Restatement 2nd §50 Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. (Offeror is the master of the offer)
(1) Offeree has the power to bind both parties
2. Acceptance by performance
a) Restatement 2nd 50(2): Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise
b) Restatement 2nd §54:
(1) Where an offer invites an offeror to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification
(2) If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless
(a) The offeree exercises reasonable diligence to notify the offeror of acceptance, or
(b) The offeror learns of the performance within a reasonable time, or
(c) The offer indicates that notification of acceptance is not required