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Contracts
Temple University School of Law
Harvey, Hosea H.

 
Contracts
Fall 2012
Prof. Hosea Harvey

Is it governed by the UCC?  Does Statute of frauds apply? Must be in writing if in regards to land, if it takes more than a year to perform, or re: goods greater than $500

I.        Have you made a deal?
a.      RST §1: a contract is a promise which is legally enforceable
i.      R.R. v. M.H.: Surrogacy contract.  Court decided it was “unconscionable”.  No law directly related to this case, so court looked at state adoption statutes- public policy.
b.      RS §18 Manifestation of Mutual Assent: Manifestation of mutual assent to an exchange requires that each party make a promise or begin or render a performance.
c.       RST §24: an offer is the manifestation of willingness to enter into a bargain, such that other person’s assent to that bargain is invited and will conclude it.
i.      Lucy v. Zehmer: Zehmers sold Lucy his land in bar for $50K cash.  Written contract is enforceable.  30min discussion, change in agreement, offered $5 consideration.  Knowingly entered contract.  Objective, outward manifestations matter in binding contract, not inward, internal thoughts.
ii.      Watanabe v. Harrah’s: Watanabe lost $127 million at Harrah’s Las Vegas.  Because harrah’s gave him alcohol to the point of inebriation and withheld his medication, gave him pain meds, not responsible for losses.
iii.      Leonard v. Pepsico: Leonard sent $700,000 for 7 million pepsi points to buy Harrier Jet, as offered by commercial.  Judge looked at from perspective of Pepsi – outrageous offer, obviously a joke, no reasonable company would offer this.  There was no offer.
iv.      Gleason v. Freeman: Gleason & partners win Ebay auction to buy Elvis’ old home.  Ebay terms state sale isn’t legally binding, further negotiations with contract terms afterward (crossed out 60 day possession) demonstrated they did not intend to be bound by sale.
d.     RS §19 Conduct as Manifestation of Assent
1.      The manifestation of assent may be wholly or partly by written or spoken words or by other acts or by failure to act
2.      The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know the other party may infer from his conduct that he assents.
3.      The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating clause.
II.     Offer
a.      RS §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
b.      RS §26 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.
i.      Lonergan v. Scolnick: Skolnick advertised land in the paper, multiple letters where Scolnick named bottom price, Lonergan asked questions & Skolnick made clear he must act fast. Lonergan put $2,500 in escrow “in comformity with offer”.  RST 26- he didn’t make offer.
c.       RST §29:The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance. To whom the offer is addressed. Offerer is king!
d.     UCC §1-201 (3): agreement means the bargain in fact as found in their language or implied by other circumstances, including course of dealing or usage of trade.
i.      Maryland Supreme Corp v. Blake Co.: Supreme is cement company offering Blake $21/yd concrete “guaranteed throughout job”.  Though no written contract, there was an offer and was accepted based on course of dealing, usage of trade, & performance demonstrated that.
e.      UCC §2-204: contract may be made in any manner sufficient to show agreement, including conduct by parties recognizing its existence, and even if one or more terms are left open.
III.   Destruction of the Offer
a.      Lapse
i.      RST §70: a late or otherwise defective acceptance may be effective as an offer to the original offeror, but his silence operates as an acceptance in such case only as stated in §69.
ii.      RS§ 41 Lapse of Time
1.      (1) An offeree’s power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time. 
2.      (2) What is a reasonable time is a question of fact, depending on all the circumstances existing when the offer and attempted acceptance are made.
3.      (3) Unless otherwise indicated by the language or the circumstances, and subject to the rule stated in §49, an offer sent by mail is seasonably accepted if an acceptance is mailed at any time before midnight on the day which the offer is received.
iii.      Minnesota Linseed Oil v. Collier White Lead Co.: Minnesota oil asked Collier for best offer for oil.  Collier offered 55c/gal, Minnesota offered 58c/gal, Collier accepted 58c/gal, but 3 days later. Though over weekend, whole trading day had passed = beyond a reasonable time frame for acceptance, price of oil was fluctuating greatly from day to day.
iv.       
b.      Rejection
i.      RS§ 38 Rejection
1.      (1) An offeree’s power of acceptance is terminated by his rejection of the offer, unless the offeror has manifested a contrary intention.
2.      (2) A manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it under further advisement.
ii.      RST §43: an offeree’s power of acceptance is terminated when offeree receives from the ofreror a manifestation of an intention not to enter into the proposed contract
c.       Revocation
i.      RS§ 42 Direct Revocation: An offeree’s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.
ii.      RS§ 43 Indirect Revocation: An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect.
iii.      Dickinson v. Dodds: Dodds signed & delivered letter to Dickinson offering to sell land & house for $800, stating offer to be left open until Friday.  On Thursday, Dickinson learned through friend Berry that Dodds was selling house to someone else, Thomas Allen.  Thursday night, Dickinson delivered letter to Dodds accepting & Friday am delivered letter in person, but on Thursday Dodds has signed formal contract for sale w/deposit of $40.  Offer was nudum pactum promise (without consideration).  Dickinson knew Dodds no longer intended to sell him the property.
d.     Death
i.      RS§ 48 Death or Incapacity: An offeree’s power of acceptance is terminated when the offeree of offeror dies or is deprived of legal capacity to enter into the proposed contract.
IV.  Preserve the offer
a.      Options contract
i.

il to the offeror.  Provided that it is addressed properly.
vii.      Davis v. Jacoby: Caro & Frank Davis moved from Canada to CA to care for Blanche & Rupert Whitehead.  Accepted letter offer that Caro would inherit everything ($150K) by promise. Began performance, but Rupert died & when Blanche died, will left estate to nephews.
viii.      Maryland Supreme Corp v. Blake: Blake promptly notified Supreme of successful bid & verbally accepted Supreme’s offer.  Blake began ordering concrete & continued to do so until notification of price change.  Common conduct for previous business.
ix.      Adams v. Lindsell: In 19th Century England, Adams accepted Lindsell’s offer to sell fleece wool. Rec’d letter late b/c wrong address and by the time Lindsell rec’d acceptance he’d sold to another. MAILBOX RULE (In most non-English speaking countries, acceptance is only valid once received).
c.       By Performance
i.      RST §45: where offer invites acceptance by performance & not promise, option contract is created when offeree begins performance. 2) offeror’s duty of performance under option contract is conditional on completion of terms of offer.
ii.      RST §50: 1) acceptance is manefestation of assent to terms made in offer in manner invited 2) acceptance by performance requires at least part of offer be performed, which also induces a return promise 3)acceptance by promise requires offeree complete every act to make that promise.
iii.      RST §51: offeree who learns of offer AFTER rendering part performance may accept by completing requested performance.
iv.      RST §54: 1) when accepting by performance, no notification is necessary to make acceptance effective unless requested. 2) offeree who accepts by performance but knows offeror has no means of learning of performance w/reasonable promptness, no contract unless offeree exercises diligence to notify offeror, offeror learns within reasonable time period, offer indicates notification is not necessary.
v.      RST §62: when accepting by promise or performance, beginning of invited performance is an acceptance by performance & operates as promise to complete.
vi.      Carlill v. Carbolic Smoke Ball Co: Carlill contracted influenza after being on smoke ball for 2 mos.  Ad is vague – is it an offer? Reward granted to anyone who contracted disease in reasonable time? What is that?  Don’t want to detrimentally effect businesses b/c minor mistake.
vii.      Marchiondo v. Scheck: Scheck offered Marchiondo (real estate broker) percentage of sale, limited 6 day time frame. Scheck revoked morning of 6th day & later that day broker received acceptance.  He partially performed, Scheck must let Marchiondo finish.  What was the consideration????