CONTRACTS I OUTLINE
A Contract is an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law.
Writing Not necessary. Oral contracts are enforceable. Writing just serves as evidence. However, under statute of frauds, some contracts must be in writing.
An offer is “the manifestation of willingness to enter into a bargain,” which justifies another person in understanding that his assent can conclude the bargain. In other words, an offer is something that creates a power of acceptance.
Acceptance An 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.”
Rejects original offer. A person who gives a new offer different from the original.
Contract of adhesion
One entered into between parties with unequal bargaining power; no choice; “take it or leave it”.
Promise or set of promises that if breached the law gives a remedy or the performance of which the law recognizes as a duty. Requires:
The terms stated by the parties. A contract which expresses the intentions of the parties in words; where there is an actual promise
Where there is no actual promise; when it is manifested by conduct. (through manifestation of assent)
The quality of not being sufficiently specific, if too indefinite, they are void.
Injunctive relief A court order to prohibit or order a party to do something. ∏ wants to compel ∆ to give them his score.
Declaratory judgment An explanation by the Judge on who is right. What are the rights of the respective parties.
A contract that is of no legal effect so that there is really no contract in existence at all (no contract has really been formed b/c illegal) –indefinite, illusory, failure of consideration
Valid until annulled. It was good to start (valid) but can be voided (i.e. contract that was made under duress) Capable of being affirmed or rejected at the option of one of the parties (by fraud, or b/c minor, duress, mistake, coercion, undue influence) (i.e. innocent person may avoid agreement, 1 party has control)
Valid contract that due to technical defect cannot be enforced (statute of limitations, statute of fraud) It was good from the start (valid) but can’t get Judge or Court to enforce it. No discretion of whether to follow k b/c law steps in, neither party has control.
When a person is entitled to either a money judgment, an injunction, or specific performance due to a breach
Quasi Contract If a person keeps goods then person has to pay for reasonable value of goods or services. Under contract it is the actual price of the goods but in a quasi contract it is a reasonable value of goods (may be more or less than amount if in contract). Person may be able to recover under quasi contract. The law will impose reasonable payment for benefit conferred when there was no contract. (Quantum meruit recovery) Can’t have quasi contract if there was a valid contract.
Basis for a k-like remedy when there is an agreement but no K or where a contract has existed but has somehow come to an untimely end.
Maybe too indefinite
Based on the unjust enrichment of a defendant at plaintiff’s expense
Agreements that are too indefinite to constitute contract but one party has performed in whole or in part
Agreements that should be evidence by a writing but which are not, and one party has partly performed
Agreements that are avoided b/c of duress, fraud, incapacity or the like
Agreements that are discharged on grounds of impossibility
Promisory Estoppel If she made promise which induced him to act and the promissor detrimentally relied on that promise than they should be estopped from relying on the promise and should recover damages.
Illusory promise- no commitment, promise to do nothing. (wants, or at-will)
Merchant- a person who deals in goods of the kind, but also one who by following particular occupation, has or represents having knowledge or skill concerning the goods. Even a person who doesn’t trade in goods could be considered a merchant if person is a professional user of the goods as opposed to a causal inexperienced seller/buyer.
Goods- any thing that is movable at time of k, including specially manufactured goods, that are for sale . doesn’t include $, price to be paid, investment securities, profits anything in action. May include unborn young of animals and growing crops, and gas and oil.
WHAT CAN BE CONSIDERED MATERIAL TERMS-
GOODS, PRICE, QUANTITY AND DELIVERY TERMS, SUBJECT MATTER, PAYMENT TERMS, QUALITY, DURATION AND WORK TO BE DONE.
CURING INDEFINITENESSà IF PARTIES DON’T AGREE TO MATERIAL TERMS (COTTON CLOTH), BUT LATER AGREES TO IT, THEN IT’S OK.
Chapter 1. The Agreement Process
Intent to Contract
What would a reasonable person be led to believe by words or conduct of other party
OFFER Made in Jestàobjective theory applies
Lucy v. Zehmer (In a drunken state D intended to K with P)
The presence of intent and how it’s measured takes the form of actions or outward manifestations and behavior. (objective intent) In general, we are not concerned with what the ∆ was thinking but what his actions were. The party’s intention regarding whether a K is to be enforceable will normally be effective.
If you can show lack of capacity, a contract can be ruled invalid.
If you can show that you are not serious, a contract can be ruled invalid. However, if your manifestations make the other party think you are serious (even if you are not), that contract is binding.
o Offers made in jest are valid (unless the offeree knows or should know the offer was made in jest).
Delivery does not matter. There was already the existence of the contract/agreement. Just because one party does not give the other a copy of the executed contract does not mean that they do not have a valid contract.
Physical presence or proximity also does not matter. Think about contracts entered over the phone, Internet or through representatives.
A. Objective theory of contracts: Contract law follows the objective theory of contracts. That is, a party’s intent is deemed to be what a reasonable person in the position of the other party would think that the first party’s objective manifestation of intent meant. For instance, in deciding whether A intended to make an offer to B, the issue is whether A’s conduct reasonably indicated to one in B’s position that A was making an offer. [10 – 11] Example: A says to B, “I’ll sell you my house for $1,000.” If one in B’s position would reasonably have believed that A was serious, A will be held to have made an enforceable offer, even if subjectively A was only joking.
Offer made in jest: An offer which the offeree knows or should know is made in jest is not a valid offer. Thus even if it is “accepted,” no contract is created. (i.e. outward expression was “boastful and blustering” and the price of the lost item to the reward is disproportionate)
Intent that Legal Consequences follow the Agreementà
Balfour v. Balfour (Husband & Wife allowance)
Gifts are effective upon delivery and are irrevocable once the delivery is complete. Not everything people say to you evidences contractual intent, someone’s statements may have gratuitous intent (gift promises). If person doesn’t intend legal consequences (to be bound), it’s a gift promise.
If the parties are on bad terms, then may be a k.
If gifts are given over a long period of time do they evolve into a binding contract or intent? No. It is still a gift unless the relationship changes and something else is communicated. He has to manifest contractual intent by he wants to be bound
B. Legal Enforceability: The parties’ intention regarding whether a contract is to be legally enforceable will normally be effective. Thus if both parties intend and desire that their “agreement” not be legally enforceable, it will not be. Conversely, if both desire that it be legally enforceable, it will be even if the parties mistakenly believe that it is not.
Example: Both parties would like to
but if doctor makes a promise there is a breach
C. Advertisements: Most advertisements appearing in newspapers, store windows, etc., are not offers to sell. This is because they do not contain sufficient words of commitment to sell. (Example: A circular stating, “Men’s jackets, $26 each,” would not be an offer to sell jackets at that price, because it is too vague regarding quantity, duration, etc.)  1. Specific terms: But if the advertisement contains specific words of commitment, especially a promise to sell a particular number of units, then it may be an offer. (Example: “100 men’s jackets at $26 apiece, first come first served starting Saturday,” is so specific that it probably is an offer.)
2. Words of commitment: Look for words of commitment – these suggest an offer. (Example: “Send three box tops plus $1.95 for your free cotton T-shirt,” is an offer even though it is also an advertisement; this is because the advertiser is committing himself to take certain action in response to the consumer’s action.)
Leonard v. Pepsico (Commercial was an advertisement and invitation to negotiate)
Offers have certain characteristics. In offers you will find 1) definiteness (ads are indefinite) 2) commitment (ads lack commitment)
Indefiniteness- incomplete, vague, undefined
Courts conclude that it is an ad because it lacked definiteness -quantity. (What if everyone turned in the point, would Pepsico have to provide Harrier Jets for everyone?) It was fatally indefinite because it was missing an important term-QUANTITY. It was just an ad. (Same if you go to Macy’s for sale but they don’t have the particular item you went in to buy. Macy’s does not have to sell it to you if they don’t have it anymore) Ads are merely invitations to negotiate.
The contract has to have specific terms (quantity, price, description). The absence of quantity will render a contract indefinitely fatal and will be void (it was never formed).
Catalogs are also ads bc it lacks quantity-we don’t know how many there are
Offers Distinguished From Preliminary Negotiations and Price Quotations
Manifestation of willingness to enter into a bargain is not an offer if the person whom it is addressed knows or has reason to know that the person making the offer does not intend to conclude a bargain until he has made a further manifestation of assent.
D. Auctions: When an item is put up for auction, this is usually not an offer, but is rather a solicitation of offers (bids) from the audience. So unless the sale is expressly said to be “without reserve,” the auctioneer may withdraw the goods from the sale even after the start of bidding. See UCC § 2-328(3).
Hoffman v. Horton (Auctioneer can reopen bid)
Auctioneer’s ability to reopen bidding. Can reopen bidding even after bid is made at fall of hammer. Look into conspiracy of auctioneer and hammer.
Where a bid is missed or is made simultaneously with the falling of the auctioneer’s hammer, he may, in his discretion, reopen the bidding.
Estimate v. Offers-
U.S. v. Briggs Manufacturing Co. (quote for freight charges that were though to be accurate and were relied on)
The general rule is that an estimate is not an offer because it lacks certainty and commitment. You are not committing to the price. However it can rise to the level of an offer because it is being relied upon and the person giving the estimate may be in the best ability to know that it should have been a certain price.