I) Objective Theory of Assent Barnett 9-10, 296-303
A) In a situation where the stated subjective perspectives diverge, we must look to the objective intent (objective intent rules)
B) Objective Theory of Assent is the “how would this look to a fly on a wall” idea. Thus if a person says they intend to be bound and it is reasonable to believe they do, then it can be said they intend to be bound, regardless of their unexpressed intentions.
C) Lucy v. Zehmer = L and Z are in a bar and make a contract for Z to sell L his land. Both are drinking. L makes a fair offer for the contract, Z seems to accept. When L begins the process to enforce the contract the next week. Z claims that the whole thing was a joke. Court finds that:
i) The mental agreement of the parties is not necessary for a contract.
(a) If the words and acts of each party are reasonable, then the undisclosed intentions are irrelevant except when an unreasonable meaning is known to the other party.
ii) Law ascribes to a person an intention that corresponds to the reasonable meaning of his/her words and actions.
(a) If those words and acts are judged by a reasonable standard to be an intention to agree, then it is immaterial what may be the real but unexpressed state of his mind.
II) Sources of Contract Law
A) Historical Background Barnett 5-9, 15-21
i) Roman Law notion of debt (suing to recover money you spent b4 someone backed out) à English law of Assumpit (Defendant undertook to do a crappy/incorrect job, you sue him) à Assumpsit claims and nonfeasance (suing for the losses incurred as a result of the bad job or nonfeasance) àBreaches of promises (proto-contract law) à Modern Contract Law
B) Introduction to Uniform Commercial Code (UCC)
i) Sought to harmonize and make uniform the commercial laws of the 50 states
ii) Used by 49 states (LA still uses Napoleonic Code variation)
iii) Only applies to sales of goods
(a) Under the UCC, a “good” is any tangible thing that is moveable
(b) [UCC § 2-105(1)]
(1) growing crops or timber, unborn young of animals and other identified things attached to land (other than minerals or the like or structures), regardless of who severs them from the land provided that they can be removed without causing material harm to the land
(2) currency exchanged as a commodity (as opposed to the medium of payment for a good)
(3) minerals or the like or a structure or its materials to be removed from realty that are to be severed by the seller
C) Restatement (Second) of Contracts
(a) Product of the American Law Institute (ALI) (lawyers, scholars, judges)
(b) Summaries of existing law
(c) Non-binding, but respected in the court systems of the US
(1) Quoted often in lieu of law or if there is no law written on the issue
ii) Basic §
(a) §1: A Contract is a promise of a set of promises which the law give a remedy or the performance of which the law (in some way) recognizes as a duty.
(b) §2: A promise is a manifestation of intent to act or to refrain from acting in a specified way…
(c) §3 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
(d) § 4: A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct
i) The United Nations Convention on Contracts for the International Sale of Goods (abbrev. CISG) is a treaty offering a uniform international sales law that, as of August 2010, has been ratified by 76 countries that account for a significant proportion of world trade, making it one of the most successful international uniform laws. Turkey is the most recent state to have ratified the Convention. (From Wiki)
III) Freedom of Contract vs. Public Policy Barnett 11-15, 22-48, 58-60
i) Contracts that violate the law or public policy may be denied enforcement, though sometimes courts will enforce them
ii) Ex: contracts that involve:
(c) Violation of licensing requirement
(d) Interference with other peoples’ contractual relationship
(e) Restraint of trade
(f) Impairment of family relationships
(1) Baby M Case
(g) Interference with administration of justice
iii) Contracts are only unenforceable when they are so obviously against the public good, morals, safety, or welfare that there is virtually unanimity of opinion (Sheehan v. Knight; R2d; §178; §179)
iv) Cannot sue for a good result (in this case, having a child) (Sheehan v. Knight)
i) R2d §178 When a Term is Unenforceable = If legislation against the contract or if public interest clearly outweighs performance.
ii) R2d §179 = Public Policy Against Enforcement = Court may use the following factors to go against the enforcement of a contract
(a) Legislation (against the contract) is relevant to said policy
(b) The need to protect some aspect of the public welfare OR the need for the judge to act against.
(1) Restraint of trade
(2) Impairment of family relations
(3) Interference with other protected interests
i) Sheehan v. Knight (PA 1957)
(a) Sheehan claims he contracted with Knight for a sterilization. 18 months later, Mrs. Sheehan gave birth to another child (assumed to be Mr. Sheehan’s)
(b) Court Finds:
(1) Dr. and Patient may contract for any (legal) particular result
by acts or failure to act. (2) Manifestation is not effective unless party intends to engage in conduct and knows (or has reason to know) that other party may infer his conduct from the act. (3) Contract may be voidable if conduct of a party manifests assent but does not intend to (Fraud, duress, mistake, other invalidating causes)
i) UCC § 2-204 (1)Contract may be made in any manner sufficient to show agreement, including conduct which shows existence of such a contract. (2) Unknown time of formation does not harm the formation of a contract. (3) Even if one or more terms are left open, a contract does not fail for indefiniteness if parties intend to make the contract and there is a reasonable basis for remdy [UCC §2-204]
ii) UCC § 2-206 =1. (a) Offers to contract shall be construed as inviting acceptance by any manner. 2. In situation where the beginning of requested acceptance involves notification, an offeror who is not notified within a reasonable time may treat the offer as having lapsed.
iii) UCC § 2-305 Open Price Term = Parties can conclude a contract for sale even though price is not settled. In these case price = reasonable price at time for delivery IF
(a) Nothing is said as to price
(b) Price is left to be agreed to and they fail to agree to it
(c) Price is led to be fixed in some market and it is failed to be agreed on.
iv) § 2-308 = Absence of Specified Place for Delivery
(a) Unless otherwise agreed place of delivery is the sellers place of business or if he has no POB his home.
(b) With Identifiable goods which to the knowledge of the parties at the time contracting are in some are in some other place , that place is the place for delivery
v) §2-309 Absence of Specific Time Provisions; Notice of Termination
(a) Absence specific time, time for delivery = reasonable
(b) Where contract allows for successive performances but is indefinite in duration, it is valid for a reasonable time unless terminated at any time by either party
(c) When a contract is set to terminate if a certain event happens, event must be agreed upon and a reasonable notification by the other party must be given. An agreement dispensing with notification is invalid if it is unconscionable