Contract-A promise or set of promises that are enforceable under law.
Statute of Frauds requires that certain contracts must be in writing to be enforceable. (i.e. contracts to pay for debt or duty of another; contracts not being performed within one year of being made; contracts to sell any interest in real property; contracts not to be performed within lifetime of promisor; UCC 2-201-contracts for the sale of goods for the price of $500 or more).
UCC 2-102 states that the UCC applies to all “sales of goods.” Goods are defined in 2-105 as “all things that are movable at the time of identification to the contract for sale.” Doesn’t include land.
The UCC trumps the common law, but there are situations where the UCC does not speak directly to the issue. Thus, the common law would apply to those situations. For example, the UCC does not speak to the mailbox rule, so the mailbox rule applies to transactions for goods.
Under UCC 2-106 a “contract for sale” includes both a present sale of goods and a contract to sell goods at a future time.
Express Contract – Promises are communicated by language, there is a bargained for exchange. (e.g., I will agree to do this for you if you agree to give me this…). The agreement is either written or oral and has been confirmed by both parties.
Implied Contract – Parties’ conduct indicates that they assented to be bound. (e.g., person fills their gas tank at a fuel station. Contract for the sale and purchase of gas implied in the person’s performance of filling their tank.) Agreement reached by conduct.
Quasi-Contract(Not a contract at all) – One party is unjustly enriched at the expense of another party so that the enriched party must pay restitution to the other party equal to the unjust enrichment. The essential elements are (1)a benefit conferred upon the defendant by plaintiff, (2)appreciation by defendant of such benefit(meaning knowledge of the benefit), (3)and acceptance (4)and retention by defendant of such benefit under such circumstances that (5)it would be inequitable to retain the benefit without payment for the value thereof
Restatement (Second) § 1 (Contract Defined) 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.
Restatement (Second) § 2 (Promise, Promisor, Promisee, Beneficiary) (1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made. (2) The person manifesting the intention is the promisor. (3) The person to whom the manifestation is addressed is the promisee. (4) Where performance will benefit a person other than the promisee, that person is a beneficiary.
Restatement (Second) § 3 (Agreement Defined, Bargain Defined) An agreement is a manifestation of mutual assent on the part of two or more persons. A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.
Restatement (Second) § 4 (How A Promise May Be Made)A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.
Restatement (Second) § 5 (Terms of Promise Agreement or Contract) (1) A term of a promise or agreement is that portion of the intention or assent manifested which relates to a particular matter. (2) A term of a contract is that portion of the legal relations resulting from the promise or set of promises which relates to a particular matter, whether or not the parties manifest an intention to create those relations.
Mutual Promise:Both parties must be bound or neither is bound
Bailey v. West, The most important factor is that the defendant had informed the trainer, and the trainer then told the van driver that he had no intention of boarding the horse before the driver dropped the horse off at plaintiff’s farm. Defendant had knowledge of a dispute of ownership so he could not expect to have formed a contract with anyone for his boarding and feed of the horse (he assumed the risk). There was no mutual agreement or “intent to promise” to establish a contract implied in fact. Both parties must be clear on with whom they are contracting with. A quasi contract is not formed where performance rendered by one person is not requested by the other. Defendant did not accept or retain the benefit conferred upon him by the plaintiff once he became aware of it (he told plaintiff he was not owner of horse and to get rid of him if he didn’t want him.), so no quasi contract. Therefore, Defendant is not obliged to pay Plaintiff for the maintenance of his horse. If van driver had been an agent for defendant, there would be no question of whether there was a contract. But he is an agent for neither party.
Bolin Farms v. American Cotton Shippers Association, When two knowledgeable, competent parties enter into a contract, the contract stands regardless of changed circumstances that might make the contract less attractive to one of the parties at the time of performance. Facts: The plaintiffs, eleven cotton farmers, entered into contracts with the Defendant before farming season. Plaintiffs agreed to sell to Defendant all of the cotton that Plaintiffs planted on certain areas of land at fair market value price at the time. Afterwards the market price of cotton increased dramatically. The decision emphasizes the equal footing the parties were on in experience and knowledge and that both parties took risks in entering into the contracts they did. Upholding the contract despite the change in circumstance makes it possible for business to continue. Nobody would make a contract if one party could walk away if circumstance changed making the contract less attractive.
In some cases, defenses of mistake, commercial frustration or commercial impracticability can relieve you of your contractual duty.
The Agreement Process:Offer, Acceptance, and Consideration
Manifestation of Mutual Assent 2 Theories of Contracts:(a) the ‘actual intent’ theory, ‘meeting of the minds’ (b) the ‘objective’ theory,
Embry v. Hargadine, McKittrick Dry Goods, The Plaintiff worked for the Defendant. The Plaintiff’s contract expired in December and he met with defendant’s President to renew it for a year. The President said “go ahead, you’re all right; get your men out and don’t let that worry you.” The contract was terminated a few months later. If a reasonable person would understand the oral promise to be an agreement for employment, then it is a valid contract. It is only necessary that a reasonable man would have construed what the President said to be an offer of employment offer and that Plaintiff so understood it. The court looks to an objective manifestation of assent parties to determine if the contract was valid.
Lucy v. Zehmer, D agreed to sell farm to P while the two parties were at a bar; D wrote a contract on a restaurant order ticket and he and his wife signed it; P attempted to execute the agreement; D refused to follow through with the promise; D claimed the agreement was in jest: P is entitled to specific performance of the contract. Rule: The words and acts of the parties should be used to determine their intentions, “his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to the other party.” There was reliance by Lucy, as demonstrated by his actions in the days following the forming of the contract. This showed that plaintiff honestly believed there was a contract
Restatement (Second) § 18; Manifestation Of Mutual Assent; Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render a performance.
Restatement (Second) § 21; Intention To Be Legally Bound; Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.
Restatement (Second) § 22; Mode Of Assent: Offer And Acceptance; (1) The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties. (2) A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.
Offer: Creates power of Acceptance in offeree; saying I’m willing to enter into a contract with you right here now if you accept to the terms of the offer.
1. Primary factors to determine intent to be bound-manifestation of intent to be bound. (finality,completion of terms,context-what is the situation,audience-how many people did you offer to,jargon-do they use terms offer and acceptance,method of acceptance,buyers are generally the ones who make offers-you want to give the seller the final say)
2. Objective intent-believable by the reasonable person standard
3. Use reasonable standard unless one party has specific knowledge to which they can be held (Communication of offer by offeror to offeree).
4. Duration of offer
-if stated in offer,generally, the time for acceptance is measured form date offer is received.
-If no time limit stated, reasonable amount of time applies.
Restatement (Second) § 24 (Offer Defined), An offer is a manifestation of willingness to enter into a bargain, so that the other party is justified in believing that their assent to that bargain is invited and that it will be concluded with assent.
Restatement (Second) § 26; Preliminary Negotiations; A manifestation of willingness to enter into a bargain is not an o
hbor and two others. Plaintiff immediately responded to letter “I accept your offer.” Neighbor called Plaintiff and said he needed to buy some of that land. Defendant decided to pull the offer because he did not want to arbitrate a disagreement between his neighbors. The “surrounding circumstances” under which this letter was prepared by Defendants and sent to Plaintiff would lead a reasonable person to believe that Defendant’s were making an offer to sell to Plaintiff. • There is a valid offer if a price quotation is addressed to a definite group and includes explicit language such as price, exact location, terms and sale date because a reasonable person would believe that the Seller is making an offer to sell. It is the manifestation of a previous intention that is controlling, rather than a person’s actual intent. The failure to add the word “offer” is not controlling and an offer may be made to more than one person. If there are no words of promise, undertaking or commitment, the tendency is to construe the expression to be an invitation for an offer or mere preliminary negotiations in the absence of strong, countervailing circumstances.
1. invitations for offers to buy which may be rejected by the seller….
2. unless auction is “without reserve” in which case the seller offers to sell for any price. Seller cannot reject highest bidder.
3. Bidders are treated as offerors.
Equitable Life Assurance Society of the United States v. First National Bank,Plaintiff and Defendant are both mortgage companies, which obtained liens against a ranch. When the owners defaulted on both mortgages, Plaintiffs mortgage was judged superior. Plaintiff made arrangements for a sheriff’s sale of the ranch. The morning of the sale, Defendant offered to buy the ranch from Plaintiff. Plaintiff’s attorney tried to contact the sheriff to stop the sale, but could not get a hold of him. All three parties, including the party that bid highest on the ranch, appeal to determine the status of the land. When there is a Sheriff’s sale, it is up to the mortgagee, when the auction is not without reserve, to withdraw the property from the auction. The advertisements did not say it was without reserve and, thus, it is not presumed to be “without reserve”. • When an auction is without reserve, the auctioneer may withdraw the item any time before the bidding ends.
Restatement (Second) § 28; Auctions; (1) At an auction, unless a contrary intention is manifested, (a) the auctioneer invites offers from successive bidders which he may accept or reject(with reserve); (b) when goods are put up without reserve, the auctioneer makes an offer to sell at any price bid by the highest bidder, and after the auctioneer calls for bids the goods cannot be withdrawn unless no bid is made within a reasonable time; (c) whether or not the auction is without reserve, a bidder may withdraw his bid until the auctioneer’s announcement of completion of the sale, but a bidder’s retraction does not revive any previous bid. (2) Unless a contrary intention is manifested, bids at an auction embody terms made known by advertisement, posting or other publication of which bidders are or should be aware, as modified by any announcement made by the auctioneer when the goods are put up.
-Acceptance must mirror terms
-Bilateral Contract: Mutual promises-Acceptance in a way required by offer.
-Unilateral Contract: One party promises and the other accepts by performance
a. contract arises where offeror has no way of learning of performance only if offeree notifies offeror, offeror learns of performance within reasonable time, or offer indicates that notice is not necessary.
b. Notice of performance must be communicated where notice is required
c. reward-recovery available where offer induces completion of performance