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Contracts
SUNY Buffalo Law School
Su, Rick

 
CONTRACTS OUTLINE PROFESSOR SU FALL 2014
 
            -Split into 4 sections: Determining if there is a contract, Interpreting Terms, Performance, and Remedy
 
-Contracts- study of the legal enforcement of promises
-Form v. substance argument- what form something takes v. because it takes this form it means something
 
A. Fundamental Questions
1.      When a person promises to do something but later changes their mind will or should the law intervene and enforce the promise?
2.      If so, what steps are appropriate to enforce such promises?
*Answers determine when and how society through the legal system intervenes in contractual relationships
 
B. The Sources and Functions of Contract Law
-Study of contract law consists of two inquiries:
1.      Explain the patterns of promissory enforcement observed in contract law – descriptive and positive theory
2.      Justify the exercise of state coercion through application of contract law – normative theory
 
-Restatement (Second) of Contracts- assist various state and federal courts in determining the patterns of prior judicial decisions in developing common law contracts
 
-Why we have contracts- autonomy, efficiency, and fairness
1.      Autonomy- recognize an individual as an individual, both from a promisor and promisee standpoint
a.       If promisor changes his mind how is this autonomy? – making the promise and binding yourself to it, being able to make a decision and prove a point (to create trust)
b.      Court will be looking at formation of contract – intent of the parties, time and whether that was truly what was intended
2.      Efficiency- efficient market system, want the society to produce more good than bad- better off for more people than not
a.       Basic express contract- making exchanges to allocate resource to people who value it the most
b.      Scope of efficiency- concerned more about the world in which the contract occurs not necessarily the individual person/ specific context- more concerned with the rule in each case and setting precedent
3.      Fairness- sense of justice, fairness of relationship between people in the contract
a.       Duty to act on contract with good faith
 
 
 
 
-Basic Functions that the Rules and Doctrines of Contract Law Serve:
1.      Solve an initial sorting problem
2.      Gap filling function – promises made are sometimes incomplete, up to the court to decide missing pieces but is most times fixed by the contracting parties
3.      Determining the meaning of promises
4.      Line drawing problem- which rules should be treated as default rules and which ones should be mandatory and not subject to variation
 
-Restatement (Second) of Contracts 1- contract defined- a contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty
 
-Restatement (Second) of Contracts 2 – promise defined- a promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made
 
-Restatement (Second) of Contracts 4- implied in fact contracts- mutual agreement and intent to promise (conduct only)
 
1. DETERMINING IF THERE IS A CONTRACT
 
CHAPTER 1: OVERVIEW OF CONTRACT LAW
 
-Requirements for a Legal Contract:
1.      Offer and Acceptance (doctrines)
2.      Consideration- bargained for exchange in return for a promise (doctrine)
3.      Legal Capacity of the Parties
4.      Legal Purpose
 
-Types of Contracts:
1.      Express Contract- all the essential terms of the agreement are found in words, oral or written
2.      Implied in Fact Contract- created by conduct rather than words; facts and circumstances indicate that a contract or agreement has been entered into
a.       Plaintiff furnished some goods/services
b.      Plaintiff expected to be paid for goods/services
c.       Defendant knew or should have known payment was expected
d.      Defendant had the opportunity to reject services and did not do so
3.      Implied in Law Contract- quasi contract- view that a person should not be allowed to profit or enrich himself inequitably at the expense of another; only volunteer based for good nature
 
-Contract Theories:
1.      Autonomy Theories- ex post- promisors have a moral obligation to keep promises and promises have a corresponding moral right to the promisor’s performance.  This suggest that the legal enforcement of a contract promotes individual freedom by giving people power to bind themselves to others
2.      Economic Theories- ex ante- mechanism for creating rules and rights that will provide incentives for individuals in the future- social desirability
 
-Meeting of the Minds- agreement upon both parties that they know what they are getting into and know the issues/ disputes wanting to be solved
 
-Consideration Doctrine- bargained for bilateral exchange
 
C. Enforcing Promises
          1. What is a promise?
***Bailey v. West (RI 1969) p. 5
Facts: Defendant bought a lame horse.  He tried to return it to original owner but original owner refused.  Defendant shipped horse to plaintiffs farm.  Plaintiff was aware there was a dispute among where the horse should be kept but plaintiff accepted the horse anyway.  Plaintiff sent defendant bills but defendant refused to pay saying the horse was not his. 
Rule: Implied in Law Contract- quasi contract- view that a person should not be allowed to profit or enrich himself inequitably at the expense of another; only volunteer based for good nature
Holding: Plaintiff cannot recover- he was

tallment plans.  Defendant filed a complaint in replevin for possession of all the items purchased because payments were in default and that it retained title to the goods, some already all paid off, according to the contract.  Plaintiff read contracts but didn’t understand the terms. 
Rule: One who refrains from reading a contract and in conscious ignorance of its terms voluntarily assents thereto will not be relieved from the bad bargain.  However, defendant should have known place plaintiff was in and should have taken advantage of her through an unconscionable bargain.
Holding: Reverse and remand from original judgment for defendants. Need to take to next level to determine public policy and how such an unconscionable bargain would fair in society.
 
CHAPTER 3: THE BARGAIN CONTEXT
A. Introduction
-The dynamics of the bargain context are governed by a number of rules grouped under the general heading of offer and acceptance
-Offer and acceptance are the default rules which provide contracting parties a set of guidelines for determining the precise point during the bargaining process when legal liability attaches and thus saves contracting parties the time consuming process of specifying all procedural requirements for reaching a legally binding agreement
 
 
B. Offer and Acceptance
1. Subjective and Objective Tests of Mutual Assent
-Restatement (Second) 17- before contractual obligations can be created, both parties must agree to the terms or have a manifestation of mutual assent
            -Two tests for mutual assent
                        -Subject test or actual intent (meeting of the minds)
                        -Objective tests- people believe what was said and done rather than the actual intent (reasonable person would believe a deal happened)
-Restatement (Second) 20- Effect of misunderstanding- there is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations
 
2. Offer
-An offer is an act on the part of one person whereby he gives to another the legal power of creating the obligation of a contract
-Restatement (Second) 24 definition of offer- an offer is a special kind of promise, one that is conditioned explicitly or by implication on a specified term