Select Page

Contracts
St. Thomas University, Florida School of Law
Martin, Jennifer S.

Contracts Martin Fall 2015
 
Contract:  a promise or a set of promises for the breach of which the law gives a remedy. MUST have exchange of promises in order to have a contract. R§1
K=MA + Consideration (or other)
K – often is a set of promises; the objective theory controls unless subjective minds agree.
MA – mutual assent; often found by Offer & Acceptance
Chapter 1: The Autonomy and Security Principles
Promises: manifestation of intent to act or not to act. A commitment or an undertaking that some event will or will not occur in the future; made by using express words or implied by conduct or some form of words and conduct R §2
Assumsit = breach of K
Hawkins v. McGee, (Hairy Hand Case – doctor solicited surgery and guaranteed results): Damages for breach are to put plaintiff in same position as if def. didn’t breach.  R1-3 Apply
Agreement/Bargain: manifestation of mutual assent on the part of two or more persons. An agreement to exchange promises or to exchange a promise for a performance or toe exchange performances. R §3
Promissory Agreements
The Intention of the Parties
Lucy v. Zehmer, (Drunks make Farm Sale on a Napkin – Zehmer agrees to sell farm, then says jk): Court rules on outward expression, not secret intentions. R201 Applies
“Mirror Image Rule:” Whose Means Prevails – R §201
Parties have same meaning: agreed upon meaning
Different Meanings:
     -if A didn’t know what B meant, but B knew what A meant (or had reason to know) = A’s meaning
     -if neither party knew what the other meant = no K
Dicta = recommendation of court, but not binding to future cases.
Embry v. Hargadine, McKittrick Dry Goods Co., (“Go ahead, get your men out” Case – employee relied on manager’s word that employment was renewed): if reasonably relies on promise, secret intention doesn’t matter. Court looks at if reasonable person would think a K exists.
Manifestation of Mutual Assent: requires that each party either make a promise or begin or render a performance R §18
Subjective and Objective theory: when bodies shake hands while the minds do not. R§ 20
     -Subjective: what a party actually intends or believes or assumes
     -Objective: manifestation of assent, namely what a party says and does rather than what a party subjectively intends or believes or assumes.
     -(No manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and neither party is aware of the other’s).
                  Consensus ad idem = meeting of the minds, agreement to same thing.
Raffles v. Wichelhaus, (Peerless Ship Case – parties agree to cotton on Peerless ship, two different ships named Peerless, were not agreeing on same ship): no meeting of the minds = no K.
Oswald v. Allen, (Swiss Coin Collection Case – Oswald thought buying all coins, Allen says two different collections, so no!): no meeting of the minds = no K. Subjective beliefs were different for material element (item being sold).
Offers: promises manifesting a commitment to some specified action in the future in return for some promise of performance by the offeree. R §24
Fairmount Glass Works v. Crunden-Martin Woodenware Co., (Sold out jars price quotation case – Crunden (P) requested price; Fairmount responded then didn’t fill order):  “For Immediate Acceptance” on price quote is an offer to sell.
Mesaros v. United States, (Mint Coin Solicitation Case – Mint sent offer for coin, then ran out): Solicitations are not offers; advertisements are generally not offers. R24, 26, 33, 35 Apply
Preliminary Negotiations: A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent. §26.
Certainty – §33:
(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.
Lefkowitz v. Great Minneapolis Surplus Store, (Cross-dresser mink stole case – newspaper said “first come, first serve”): Clear, definite, explicit = offer. If ad shows promised performance, leaves nothing for negotiation = offer, which acceptance will complete contract.
Power of Acceptance – §35: An offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer.
Akers v. J.B. Sedberry, Inc., (Boss fires employees after declining offers to resign): offer made in face-to-face conversation is only valid until close of conversation. Offeror is mast of the offer. R36, 41 Apply.
Termination of Power of Acceptance – §36: A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the following ways:
Rejection or counter-offer by the offeree, or
Lapse of time, or
Revocation by the offeror, or
Death or incapacity of the offeror or offeree
 
 
 
 
Time Lapse for Acceptance – R §41:
Power of acceptance terminated at time specified in offer, otherwise within a reasonable time.
Reasonable time depends on facts/circumstances existing offer and attempted acceptance is made.
An offer sent by mail is seasonably accepted if mailed before midnight on day the offer is received.
 
Ardente v. Horan, (Bought house then wanted items in house case): acceptance that is not equal to offer is not acceptance; it is a counter-offer. Acceptance could be valid despite condition if acceptance does not depend on condition. R 38, 39, 59 Apply.
Minneapolis & St. Louis Railway Co. v. Columbus Rolling-Mill Co., (Rolling offer to sell 2k-5k of rails, Minneapolis agreed to buy 1200 case): acceptance that varies terms of offer is a rejection.
                              Things that kill an offer = rejection, revocation, lapse, counter-offer.
Rejection: an offeree’s power of acceptance is terminated by his rejection of the offer, unless the offeror has a contrary intention. R § 38
 
Counter Offers: when an offeree changes or makes additions to the original offer. A counter offer terminates the offeree’s power to accept the original offer. R§ 39
               *one proposal is dropped when another is taken under consideration.
               *the original offer can only be carried out after a counter offer has been made if the original offeror manifests intent to renew his original offer.
Purported Acceptance that adds Qualifications: a reply to an offer which purports to accept it but is conditional on the offeror’s assent to terms additional to or different from those offered is not an acceptance but is a counter-offer. R § 59
Ever-Tite Roofing Corp. v. Green, (Credit check by contractor leads to other contractor doing work when P showed up): Offer expires at the end of a reasonable time. The court held that in this case the record disclosed no unreasonable delay by P in receiving, processing or accepting the contract or in commencing the work.
 
Dickinson v. Dodds, (“I revoke” case – P knew land was sold bc 3rd party told him): offer can be revoked any time before acceptance; offeree can know of revocation directly or indirectly. In order for offer to b

not required.
 
Option Contract – §87:
(1) An offer is binding as an option contract if it
     (a) is in writing and signed by the offeror, has consideration, and proposes an exchange on fair terms within a reasonable time; or
     (b) is made irrevocable by statute.
(2) An offer which the offeror should reasonably expect to induce action or forbearance on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
 
Acceptance: an offeree’s power of acceptance terminates at time specified in offer, or at the end of reasonable time. R § 41
Davis v. Jacoby, (Come and Inherit Case – dying uncle “Whitehead” offer to put Davis in will if she comes to care for aunt; he forget?): When in doubt, offer is bilateral. Default is bilateral to protect both parties.  R 32, 50, 54, 56, 58, 63 Apply.
Invitation of Promise or Performance – §32: In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.
 
Effect of Performance by Offeree, where Offeror invites either promise or performance – §62:
Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance.
Such an acceptance operates as a promise to render complete performance.
Necessity of Acceptance Complying with Terms of Offer – § 58:
An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered.
Acceptance by Promise; Necessity of Notification to Offeror – § 56: Except as stated in § 69 or where the offer manifests a contrary intention, it is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably.
Time When Acceptance Takes Effect – § 56: acceptance completes manifestation if made in acceptable manner as soon as leaves offeree’s possession. Option K acceptance not operable until offeror receives.
Houston Dairy, Inc. v. John Hancock Mutual Life Insurance Co., (Loan was accepted week after offer closed, then found better rate case) Counter-offer, Retention of money, silence are all not acceptance.  R 19, 69 apply.
Conduct as Manifestation of Assent: manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act. R § 19
Acceptance by Silence: usually silence does not constitute acceptance. R § 69 Doesn’t constitute offer unless:
Taking benefit of the offer
Prior conduct of the offeree giving the offeror reason to believe that the silence would be acceptance
Exercise of dominion over goods
Where the offer states that the offer may be accepted by silence and the offeree remains silent with his intention of accepting