Select Page

Contracts
SUNY Buffalo Law School
Wooten, James A.

Contracts Outline
Fall 2009
I.            CHAPTER I: THE OBJECTIVE THEORY OF CONTRACTS
1. REQUIREMENTS OF A CONTRACT
a.      Contract requires an offer and an acceptance. Example, if you say, “I’ll sell my car for $1000,” that’s an offer. It becomes a contract when the other party says “Yes” which indicates their willingness to take the deal. 
b.      Another definition states a contract is a promise that the law will enforce. The law only enforces promises that are “supported by consideration”
c.       Consideration: a promise is “supported by consideration” when the promise is made in consideration of a return promise or performance. The promisor requires something in return for the promise. (Usually but not always the case, there can be contracts w/o bargain, such as when a promise is relied upon to the detriment of the accepted party )
d.      Requirement for consideration is known asthe bargain requirement. An example, a friend says “I’ll sell you my car for $1000” which means, he will give you his car for $1000. The law enforces these types of contracts.
e.       Offer: “the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.”
2. ELEMENTS OF AN OFFER
a.      “a manifestation” – written, verbal, conduct, by interest posting, etc.
b.      “of willingness to enter into a bargain”
c.       “so made as to justify another”: the standard is what the others are justified in concluding from this “manifestation of willingness.”
d.      “in understanding that: First, “his assent to that bargain is invited” (i.e., is asked for, is given). Second, “will conclude it” (i.e. if the offeree responds with a “yes, I accept” there will be deal).
3. ELEMENTS V. FACTORS
a.      Elements are required to meet a standard; they are usually joined with the express or implied conjunction “and”. They are never joined by the conjunction “or”.
b.      Factors are considerations that bear on a standard. They may be joined by the conjunction “and”.  
4. OBJECTIVE THEORY OF CONTRACTS 
a.      Whether a reasonable person to whom the statement was addressed would believe it to be an offer
5. R2d § 24 – OFFER DEFINED: An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
 R2d § 26 – Preliminary Negotiations: Not an offer is 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 further manifestations of assent.
 
6. CHAPTER 1 CASES
a)      LUCY v. ZEHMER – Situation: The intent of a party has no bearing on whether a contract exists, if the conduct of a party, judged by a reasonable standard, displays an intention to agree there is a contract. (Objective Contract Theory).  
b)      EMBRY v. HARGADINE, MCKITTRICK DRY GOODS CO. – Situation: If a reasonable person would have taken a party’s words to constitute assent to the formation of a contract, then the contract is enforceable. (Has an offer been made; Objective Contract Theory)
c)      LEONARD v. PEPSICO.INC – Situation: SatireTelevision advertisement does not constitute an offer & no objective, reasonable person would find make that conclusion.
 
II.            CHAPTER II: HAS AN OFFER BEEN MADE?
1. TEST FOR DETERMINING WHETHER AN OFFER HAS BEEN MADE: Whether the offeree was justified in believing that by manifesting their assent, they could form a binding proposition? Important note: There is no “list” for determining whether an offer has been tendered.
 
2. FARNSWORTH ON DETERMINING IF IT IS AN OFFER: (1) Examine the language of the “proposal”; (2) prior communications between parties; and (3) completeness of the proposed bargain
 
3. IMPORTANT FACTORS IN DETERMINING WHETHER AN OFFER HAS BEEN MADE:
a.      Language Used: Some courts rely heavily on the fact that the language used showed a clear intent to sell (Lucy, Lefkowitz,,and Courteen Seed; sometimes the circumstances under which the communication was made outweigh the language (Southworth)
b.       Specificity and Detail:  The more detailed the communication is, the more likely it will be construed as an offer. If the offeror went to the trouble of explaining details, it indicates he intended to be bound, where as if he left important things open, it indicates he thought he would have room to negotiate later.
c.       Customs and Practices in Business: The definition of an offer varies depending upon the industry. See Scheider and Continental Laboratories 
d.      The Multiple Acceptance Problem:  If a seller has a limited quantity of things to sell and the communication is sent to a number of people, it indicates that the seller does not intend to be bound but is only soliciting offers to choose from.
e.       The Context in which the Communication is made: In Southworth, the court was influenced by the fact that Mr. Southworth had been led to believe Mr. Oliver would be sending him an offer.
4. CHAPTER 2 CASES:
a.      LONERGAN v. SCOLNICK: Seller sent out multiple statements declaring “this is a form letter” which demonstrated that the letter was not an offer. Deal was involving many items and assent on the behalf of plaintiff would not have closed the deal.
b.      LEFKOWITZ v. GREAT MINNEAPOLIS SURPLUS STORE, INC: Advertisements generally are not deemed to be offers; however, when the ad is specific regarding what the buyer needs to do to retrieve the product, there is no danger of multiple acceptances. (it is an offer in that case)
c.       COURTEEN SEED CO. v. ABRAHAM:. Defendant’s t

be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances.
 
 
10.  Who is the offerer and who is the offeree? (following is treatise from contract law)
a.       “problem arises when A, through a salesman, has frequently solicited the orders from B, the contract to arise when approved by A at A’s home office. As we have seen in this situation B is the offeror and A the offeree. (A is the company) T.P.
 
IV.            WHETER THE OFFEREE’S WORDS OR ACTIONS CONSTITUTE ACCEPTANCE:
a.      EVER-TITE ROOFING CORP v. GREEN: K was either unilateral or bilateral. Green made the offer & Ever-Tite could accept by performance or signing, they chose the former. Plaintiff accepted contract by commencing performance.  (COMPARE TO PETTERSON)
b.      PETTERSON v. PATTBERG: Defendant made Plaintiff an offer to pay off mortgage by performing two acts. Plaintiff performed first act and when plaintiff went to perform second act, defendant revoked the offer. Intent to perform is not performance. Initial payment by Plaintiff was a pre-existing duty; performance would have been when plaintiff gave money to defendant for second act.
c.       BEARD IMPLEMENT CO. v. KRUSA:   The offeror is the master of the offer (time, place and manner of acceptance). Defendant signed purchasing order that unambiguously required plaintiff’s acceptance by signature of an authorized “dealer”. Plaintiff’s dealer never signed the purchasing order.
 
V.            WHAT IS ACCEPTANCE/DISTINCTION BETWEEN UNILATERAL & BILATERAL OFFER
a.      DAVIS v. JACOBY: Restatement 31 provides: “In case of doubt it is presumed that an offer invites the formation of a bilateral contract by an acceptance amounting in effect to a promise by the offeree to perform what the offer requests.” Also, Whitehead relied on Davis’s promises to perform services after his death, which indicate that it is a bilateral contract. Davis’s performed promise by moving to California and caring for Mrs. Whitehead.
b.      CARLILL v. CARBOLIC SMOKE BALL CO: An ad placed in a newspaper by Carbolic Smoke Ball Co. was an offer. It was an offer because the plaintiff accepted by performing the act described in the ad (unilateral offer); therefore, the company was bound by promise to pay her the award.