THE AGREEMENT PROCESS
Three essential requirements of contracts
Must have mutual assent
Must have objective assent and intent to be bound
Must have expected legal consequences
Lucy v. Zehmer
Zehmer writes up an agreement to sell land to Lucy while they are drinking in Zehmer’s bar thinking he is joking.
Subjective intent is irrelevant in agreement process.
Application:
If you engage in conduct which
You know
You have reason to know
Should reasonably have known
Would convey to the other party intent to offer then that is assent
MUST INTEND LEGAL CONSEQUENCES:
Balfour v. Balfour
Husband and wife lived together overseas and return to England. Wife decides to stay and husband returns to Ceylon Says he’ll pay 30 lbs/mth.
Agreement made in the shadow of relationship and no legal consequences intended is not a contract.
IMPLIED CONTRACT:
Sanchez v. Life Care Centers of America Inc.
At will employee sues for wrongful firing because of presence of company manual.
SOCIAL POLICY rules that the manual did in fact imply contract. Where there is uncertainty of whether or not a contract exist a fact finder must occur to weigh evidence to see what was intended.
BARGAINING POWER/CONTRACTS OF ADHESION:
K.D. v. ETS
KD retook LSAT and his scores jumped significantly and under the terms of the agreement ETS had to investigate and he had to retest.
COURT RULED
A contract of adhesion is not automatically void. Contract law will balance protection of the parties with maintaining terms of contract.
DUTY TO READ/PROTECTION FROM FRAUD
MCC Marble Ceramic Center, Inc v Ceramica Nuova D’ Agostino
MCC signs a contract wit an Italian firm in Italy written in Italian and says later it is void because signer could not read Italian.
COURT RULED
That the signer had a duty to read.
This was more complex than first appears. The law of contracts appears here to not protect people from Fraud but the courts here took into consideration the commercial experience of the parties and balanced this against the need to protect people from unwittingly entering into a contract.
THE OFFER
MUST HAVE:
Manifestation of present contractual intent by the party making the offer
Certainty and definiteness of essential terms
Communication of those terms to another person thereby endowing him with the power to accept and in so doing to form a contract
STATEMENTS THAT ARE NOT OFFERS:
Expression of opinion or prediction
e.g. doctor/patient we must look at specifics to decide whether or not it is a promise or an opinion.
(2)Attorney/client is slightly harder. Some are and some aren’t. The filling out of a sales draft is definite enough to be a contract as opposed to an opinion about the outcome of a trial. When a lawyer writes to client’s landlord and says something specific like if there is a settlement I will protect your money then this is a contract. He cannot promise for someone else though.
Intention:
Wishes, Hopes & desires
Estimates
Inquiry or Invitation to Make Offer
: YES AND NO Must have QUANTITY. “Shoes for$10.00 today” is not an offer BUT “10 pairs of shoes on sale today for $10.00” is an offer. “First come first serve” is also an offer because they include a quantity and are promissory.: If a guy says ” Will you sell your store for $6000.00? and response is “No it would be irresponsible of me to sell for less than $16000 this is an invitation to offer but not an offer. If I gave you $10000 would you sell is not the same as I offer you $10000 for that_________.: Not usually a contract BUT if in response to an invitation to bid the party says, “I estimate” then this is considered an offer.: These are not contracts If A says to B “I am going to sell my car for $400.00 and B says to A Here is $450.00 I’ll take it. This is not a contract. A didn’t offer he simply stated his intent to offer. Auction announcements are intentions not offers.
Statements of Intention, hopes and desires:
Ads Catalogs, circulars and form letters
ATTORNEY/CLIENT:
Collins v. Reynard
In some situations attorney/client relationships are contracts.
DOCTOR/PATIENT:
Sullivan v. O’Connor
Doctor agreed to fix patient’s nose in 2 operations but ended up taking three operations.
COURT RULED
Patient could only recover for pain and suffering from 3rd operation since medical science is so inexact that reputable doctors for the most part will not promise. If we hold doctors to contracts what we are really doing is letting a therapeutic positive statement be construed as a promise.
TEXACO
ARCADIAN
Did they express the right only to be bound after written agreement is signed?
What was the context of the negotiations?
Was there any partial performance
Was t
Lonergan v. Scolnick
p
A form letter is not necessarily an offer.
PLASS SAID:
2 possible scenarios
It could be that it was a form letter and too vague to approach the standard of definiteness required of an offer.
Even if it was specific enough to be considered an offer the buyer lost the power of acceptance when somebody else bought it before he did.
IMPORTANT:
Meeting of the minds necessary for contract to occur as explained in the Restatement of the Law of Contracts: If the person to whom the promise or manifestation is made knows or has reason to know that the person making it did not intend to be bound by it until he gives a subsequent, fuller expression of assent no contract is formed.
INTENT TO MEMORIALIZE AND INDEFINITENESS
Problems occur when there is the intent but the actual memorializing does not take place. Usually 2 basic resolutions:
(1) Writing as evidentiary memorial: If parties intended the writing only as evidentiary memorial but agreed the oral argument was binding it is enforceable
(2) Writing as consummation of the agreement: If the parties intended not to be bound unless and until a written contract existed then the oral argument could not be binding.
Texaco Inc. v. Pennzoil Co.
AND Arcadian Phosphates Inc. v. Arcadian Co
FACTORS USED TO DECIDE IF THE INTENT TO BE BOUND EXISTED:
contacted D about an ad D placed stating his intention to sell some land and D responded with a FORM LETTER saying that if p was interested he had better act soon. p set up escrow account and started acting like if they had a contract for the sale of the land. D sells property to someone else.: asks D to give him the lowest possible price on Mason Green Jars. D responded with a “quote” including specific quantities, prices and the words “for immediate acceptance.” p then said that he wanted as described and D responded that he couldn’t deliver..:
