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Contracts
St. Thomas University, Florida School of Law
Sullivan, Todd P.

 
Professor Sullivan
Contracts 1
Fall 2013
 
 
 
FIRST QUESTION::::: What law governs?:
1.      U.C.C.- governs contracts for the sale of goods. A contract for the sale of goods requires a specified quantity of goods, for a price, and a transfer of title.
Goods: are defined as anything that is moveable at the time of identification to the contract
         a.      Things attached to property can be goods if they can be moved without damaging the property.
         b.      Specially manufactured goods can be considered future goods.
(note: per the Statute of Fraudsà K for the sale of goods over $500 MUST be in writing)
 
2.      Common Law- governs Contracts for:
a.      Services- employment in duties or work for another.
b.      Real property- (per the Statue of Frauds, K for real property MUST be in writing)
c.       Leases
d.      Checks
e.      Stocks
f.        Bonds
 
3.      HYBRID Ksà 2 Tests used to determine::: WHAT LAW GOVERNS a Mixed or Hybrid?
1.      Gravaman Test: looks at the nature of suit:
(1)   breach of in the use of the goods, then the UCC Applies.
(2)   breach in the service then Common law Applies
         (Gravaman– ONLY NEED TO KNOW FOR MULT CHC, do not apply in the Essay)
2.      Predominant Factor Test:
a.      Language of the K-  (Trigger Termsà   Buyer/Seller=Goods
b.      Nature of the Suppliers Business:  (does the supplier predominantly sell or service?)
c.       Reasons for Entering into the K:  (does the buyer need the Good or the Service?)
d.      Cost of Goods v. Cost of Service:  (Which costs more?)
(Note: The Predominant Factor test is as a comparative weight test not all elements need to be met, it should be looked at with a reasonableness standard.)
A BMC v. Barth Industriesà K for specially manufactured goods, generally governed by the UCC, UNLESS the goods are simply a byproduct (rarely the case) of K.
 
SECOND QUESTION::::::: Is there an Agreement?
Agreement is a mutual manifestation of assent to be bound by the terms of a contract. An agreement is formed by an Offer & Acceptance.
Sub-Questions:
Is there an Offer?
What type of Offer?
Was there Revocation (or Expiration) of the Offer?
Is there Acceptance?
What was the moment of Acceptance?
What were the terms included in the Acceptance?
℗      Public Policyà courts usually favor the formation of a contract
Third Question::::: Did the Agreement form a binding Contract?
Contractà a promise or set of promises for the breach of which the law gives a remedy or the performance of which someway recognizes a duty.
Sub Questions:
Was the Agreement Supported by Consideration?
Was the contract expressed or implied?
What type of Contract was formed?
Does the contract include all the terms?
Did the parties have the Capacity to enter into the Contract?
Is the Contract avoidable?
Was the Contract Ratified?
 
Types of Contracts:
1.      Express: an agreement manifested ORALLY or in WRITING
a.      Unilateral K- promise for performance
A Advertisementà if there is an offer in an AD, it is typically a Unilateral Offer
A Rewards: Generally unilateral offers, which can be accepted by anyone b/c they are presumed to know of the offer, UNLESS the offeror can prove that the Offeree was not aware of the Offer and thus did not rely on it.
              Reward Cases:
              Malmà  Governor unilateral offer for a reward for info on a Criminal.  Plaintiff did not                  rely on the offer b/c she gave info day before the offer was advertised. No K.
              MacFarlandà
b.      Bilateral K- promise for a promise (most contracts are bilateral, if there is an ambiguity in what type of contract a bilateral K is assumed.)
 
2.      Contracts of Adhesion: when one party has considerable more bargaining power than the other; Adhesion K’s are enforceable (typically as a matter of Public Policy for the benefit of public or b/c it is an industry standardà i.e. Standardized test Companies, Rental Leases, or any contracts where the parties are not able to bargain or negotiate::: take it or leave it).  
A EXCEPTION: If the K is Unconscionable it will be unenforceableà if the parties have such a disparity in bargaining power and the affected party has no other choice but to enter into the contract
(note: the lesser party must enter the K out of necessity, party must have no other choiceà even the choice to not enter into the K must not be an option)
Adhesion Cases:
 KD v. Educational (LSAT case)- the LSAT was found to be an adhesion K but it was enforceable b/c: (1) it was not unconscionable- b/c the Plaintiff chose to take the test in order to go to Law School (he was not forced to go to law school and therefore he had an option not to go and he wouldn’t have to take the test) also b/c the Def offered the Plaintiff an opportunity to take it again and he refused; AND  (2) it is in the Public’s best interest to have the Def Screen applicants to who wish to become lawyers. (It is only when an Adhesion K is found to be unconscionable b/c of the difference in bargaining power, that the K would be unenforceable.)
 
Mcc Marbleà Lawyer signed a K written in Italian and did not understand the terms printed, nevertheless the K is enforceable as a matter of public policy b/c the Lawyer is an educated person and, offeror would expect him to sign only those things which he understands.
A RULE OF LAW:  Signing a K in a foreign language is enforceable even if the offeree does not understand the terms.  (this is not an adhesion K but the exception to this is)
Ê  EXCEPTIONS:
–          Where it is obvious to the offeror that the offeree does not know what he is signing,
–          Where there is a big disparity and in sophistication of the parties (however, if the offeree only speaks Spanish and he is intending to buy a car, he should know that the K will be in English and therefore should take someone to translate for him.  This example would be enforceable.)
3.      Employment Contracts: if no direct length of employment; employment is deemed an AT-WILL contract.
a.      “AT-WILL”= any party can terminate the employment contract at will for good cause or no cause 

by law (a legal fiction) without regard to the parties’ expressions of assent to avoid unjust enrichment.
A One party MUST have received a BENEFIT under circumstances that made it unjust to retain it without giving compensation.
A Damages: Restitution suit. (No Consideration needed to make this binding)
Wilhoite Caseà “Dead Man Statute”- a person with an adverse interest in an estate, may not testify against the estate. K was implied in law b/c decedent was unjustly enriched by not paying rent for many years.
3.                  Promissory Estoppel- this doctrine will be invoked when, (1) the offeror has made a clear an definite promise; (2) the offeror has reason to believe the offeree would justifiably rely on the offeror’s promise; (3) the offeree did justifiably rely on the offeror’s promise; (4) the offeree was harmed by his reliance; and (5) the only way to avoid an injustice is to enforce the promise.
Ä  Damagesà the offeree will be granted reliance damages. The idea is to restore the offeree back to where he was before he relied on the promise. Therefore, the offeree will only collect the on the money or time spent.
Ñ  Grey Areas will arise in Real Estate, and other service transactions where the offeree has not spent money and this is their only work: i.e. The Art Dealer deals art, if he did not spend money, how much is he really harmed?
Ä  Triggering Facts:
o   Price Quote (typically from a professional mechanic or other specialized job where the “promisee” could assume that the quotation is reasonably accurate.
o   Construction Bids
o   Attempt to revoke a unilateral offer after performance has begun- typically where offeree has spent $, and where offer may still be effectively revoked.
o   Charitable donations: public policy deems that individuals should be held to their promises to charities in order to continue the benefits that charities provide to society
A the charity organization will receive the entire amount pledged; BUT must satisfy all the elements of promissory estoppel
o   At-Will Jobs and At-Will Relationships: if an employee is fired before being allowed to start employment, the employee has a promissory estoppel argument. The employer should know that promisee will have to resign from current job in order to accept their offer.
o   Duty to Bargain in Good Faith: By entering into negotiations with another party, a person may be found to have promised that he will make a good faith effort to reach agreement with the other party.