CHAPTER I. THE AGREEMENT PROCESS
1. INTENT TO CONTRACT
GENERAL RULE: Intent – The objective manifestation to enter into a K, right here right now.
Intent to Contract
– Mutual Assent
– Agreement – An assent to the same terms of the K. An essential prerequisite to the formation of a contract.
Lucy v. Zehmer (Joke sale)
RELEVANT FACTS: Zehmer was selling farm to Lucy, but Zehmer said it was a joke, but Lucy didn’t know it was.
RULE: Objective Test for Intent to Contract
ANALYSIS: Person cannot set up that he was merely jesting when his conduct, words would warrant a reasonable person in believing that he intended a real agreement.
Balfour v. Balfour (Husband and wilfe alimony)
RELEVANT FACTS: Husband made promise to wife to pay her alimony and when he didn’t she sued.
RULE: Both parties must intend that an agreement be legally binding in order to be enforceable.
EXCEPTION: K b/t spouses related to business relationships can be enforced.
ANALYSIS: Agreements between husband and wife cannot be enforced for daily activities.
HYPO: (constituting an offer) Would you buy my bottle of water? – No offer.
Buy my bottle of water for $1. – Yes offer.
HYPO: (Husband and wife agreement, Balfour v Balfour)
If husband takes out the trash and you have an agreement with him, you can’t sue him if he doesn’t. BUT, if you own a law firm and hire your husband to be the receptionist. Husband would want an employment agreement.
– Wife and husband could have a binding agreement as employer and employee.
Texaco v Pennzoil (Oil Merger case)
RELEVANT FACTS: Getty and Pennzoil entered into agreement to acquire Getty. Texaco made alternative offer to Getty. Getty repudiated agreement with Pennzoil.
RULE: Contract existence depends on intent rather than form.
ANALYSIS: Even though Pennzoil didn’t have K, it wasn’t necessary because there was no understanding that a signed writing was required before the parties were bound.
2. THE OFFER
OFFER: Objective manifestation by the offeror with intent to enter into a K right here right now which is communicated to the other party (Offeree).
•3 Elements to an Offer
Intent – Objective manifestation of intent to form a present K right here and right now (obligations can mature at anytime)
Content – Essential Terms of the Offer (otherwise the offeree would not know what to accept or court to enforce) and
Communication of that intention and those terms to an individual who is Intended by the offeror as the offeree.
(a) Offers Distinguished from Expressions of Opinion, Advertisements, etc.
Hawkins v. McGee (Hairy hand)
RELEVANT FACTS: Dr. McGee pursued Hawkins for 3 years to fix hand. Dr. said he had prior experience. Dr. performed surgery and the guys’ hand turned hairy.
ANALYSIS: It was a guarantee. Dr. said that it would be 100% and it wasn’t.
Sullivan v. O’Connor (Nose job)
RELEVANT FACTS: Patient wanted and wasn’t satisfied with outcome.
RULE: Not a promise, but an opinion.
ANALYSIS: Dr. said her nose would look better.
Leonard v. Pepsico (Harrier Jet commercial)
RELEVANT FACTS: Kid saw adv. for a harrier jet and said it was an offer.
RULE: Advertisements are generally not offers.
EXCEPTION: It is possible to make an offer by an adv. if the adv. is explicit, clear, definite and nothing left open to negotiation.
LEVANT FACTS: Wagenseller was an at-will employee and went on a trip with supervisor who mooned and then Wagenseller got fired shortly thereafter.
RULE: At Will Doctrine – At-will employees do not have contracts and the relationship can be terminated at any time by either party for Good Cause and No Cause.
Personnel Policy Manual Exception – (1) Manuals are not automatically part of a K (2) Must look to language of the manual and practice of the company to determine if they mean for the manual to be part of the employment K. – Question of Fact for Jury; Usually refers to disciplinary procedures and affects “Bad Cause” portion of Doctrine.
Good Faith and Fair Dealing Exception – (1) Not liked by most courts (2) Firing for w/o Good cause violates Good Faith Doctrine (3) Argument for “No Cause” firings
Public Policy Exception – (1) Public policy statutes (2) Cannot be fired for things like perjury (3) Accepted by courts
ANALYSIS: Personnel manual became part of K when it was given to Wagenseller.
Joseph Martin Deli v. Schumacher (Deli lease case)
RELEVANT FACTS: Deli had a 5 yr. lease in which the renewal clause stated that he may renew and the lease amount to be agreed upon. When the time came, landlord agreed to a high price in which tenant couldn’t afford.
RULE: A mere agreement to agree in which a material terms is left for future negotiations is unenforceable.