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Contracts
Temple University School of Law
Harvey, Hosea H.

 
Contracts
Fall 2015
Professor Harvey

Contract is a promise or set of promises enforceable by law

1.      Mutual Assent
a.       Outward expression of assent as interpreted by a reasonable person (Lucy v. Zehmer, RST §20)
i.      “Meeting of the minds” outdated
b.      Person believing themselves to be bluffing can still contract
1.      “Mental assent of the parties is not requisite for…formation” Id.
c.       Continuing to negotiate signal no mutual assent (Gleason v. Freeman)
d.      “In every deal there are some terms that don’t matter”
i.      Materiality determined by Court (Gleason v. Freeman, also Fairmout Glassworks v. Grunden-Martin Woodware)
e.       Mere presence during a deal occurring does not make one a party to the deal, even when benefitting from the deal
2.      Offer
a.       Manifestation of willingness to enter into a bargain, made as to justify another in understanding their assent is invited and will conclude it – RST§24
b.      Offeror is King. They construct terms of the deal
c.       Reasonability
i.      If Judge determines no reasonable party would make an offer, it’s not an offer (Leonard v. PepsiCo)
d.      Price quote usually not an offer (UCC§1-103)
i.      Unless expressed otherwise (Maryland Supreme Corp. v. Blake)
e.       Advertisements
i.      Generally not offers (Leonard v. PepsiCo)
ii.      Can be offers when advertisement is…  (Lefkowitz v. Great Minneapolis Surplus Store)
1.      Specific
a.       Exactly what is offered
b.      Steps to acceptance
2.      Definite
a.       Specifies time period of availability
3.      Limited
a.       How many people can accept
f.       Killing the offer
i.      Rejection
ii.      Revocation
1.      Offeror may revoke through agent
2.      If offeree hears second-hand deal is killed, they cannot accept (Dickinson v. Dodds)
3.      Offer not need remain open without consideration
iii.      Lapse
1.      Acceptance must be timely
2.      What is timely dependent on circumstances of negotiation, what K is for
a.       e.g. Waiting to accept oil offer until the market value rises – even 1 day – is lapsed acceptance (Minnesota Linseed Oil v. Collier Lead)
iv.      Death / incapacity
1.      Corbin disagrees, thinks incapacity – maybe even death – should not kill offer
g.      Option (RST§25)
i.      Option is a distinct K to keep offer open and exclusive until a specified time
ii.      Option is a K – requires consideration, etc.
1.      No consideration, offer can be revoked (Dickinson v. Dodds)
2.      Option agreement w/o consideration still is an offer which can be accepted within a reasonable time (Beall v. Beall)
3.      Nominal consideration acceptable, but it must actually be paid (Board of Control of Eastern Michigan U. v. Burgess)
iii.      If A breaks option w/ B and sells to C
1.      C keeps property
2.      B recovers for $ against A
h.      Subjective vs. Objective
i.      Subjective theory = any intended offer is an offer
ii.      Objective theory = offer is only if a reasonable party would make that offer (“No reasonable Pepsi”)
i.        Which party offeror? Offeree?
i.      Offeree is whichever party can “seal the deal”
ii.      Drafter usually, but not always offeror
1.      e.g. Company drafts agreement which, after customer signs, it completes by performance  (Ever-Tite Roofing Corp. v. Green)
j.        Vagueness / Indefiniteness
i.      Deal may be killed due to indefinite promise (Varney v. Ditmars)
ii.      Need not be 100% fleshed out (Community Design Corp. v. Antonell)
iii.      Definiteness is a sliding scale
1.      Courts use context to define term ONLY when it’s ambiguous (CDC v. Antonell)
iv.      Reasonable reliance required to overcome indefiniteness
1.      “You can’t rely on what you can’t pin down”
v.      Measured via QTIPS
1.      Quality, Time of performance, Identity of parties, Price, Subject matter
3.      Acceptance
a.       Must be timely
i.      What is timely depends on circumstances of negotiation, what K is for (Minnesota Linseed Oil v. Collier Lead Co.)
b.      RST§30: If offer fails to specify mode of acceptance, any reasonable mode may be chosen by offeree
c.       Unilateral v. Bilateral
i.      This distinction eliminated from Restatement and modern Courts generally unconcerned w/ it.
ii.      Unilateral = Acceptance by performance.
iii.      Bilateral = “ “ “ or promise.
d.      Acceptance by Promise
i.      Arguably exists when offeror requests the “immediate reply” of offeree (Davis v. Jacoby)
e.       Acceptance by Performance (Carlil v. Carbolic Smoke Ball Co.)
i.      Can begin seemingly early
1.      Packing roofing materials and driving to job began performance (Ever-Tite Roofing Corp. v. Green)
2.      But Ever-Tite suing to collect implied full performance so they couldn’t recover attorney’s fees, only expectation
f.       Mailbox Rule
i.      Acceptance effected upon dispatch (Adams v. Lindsdell)
ii.      Delivering signed papers to your own agent not enough (Hendricks v. Beehee)
1.      Your own agent is, effectively, you
g.      Acceptance by

ity)
2.      Mere ambiguity will NOT kill deal
a.       e.g. Selling a “red pen” if you thought it’d be cherry but it’s maroon, we DO have a deal
b.      If I deliver a red play-pen? NO deal
3.      Determining what’s ambiguity vs. misunderstanding
a.       Requires persuasion to what underlying deal is for
b.      e.g. Was it for 125 bales of cotton? Or for that cotton to arrive on a specific ship?
4.      Consideration
a.       Quid pro quo
i.      Quid = Exchange
ii.      pro = Inducement
iii.      Quo = Bargain
b.      Purpose
i.      Shows both sides formally accept the K
ii.      Makes the agreement “stick”
c.       Inducement
i.      Ask “why?”
1.      e.g. “Why” did Harvey give Kevin his car? Not to see Kevin walk on stage, therefore no inducement (gift)
ii.      Inducement defined
1.      My consideration is to get your consideration
2.      Your consideration is to get my consideration
d.      What IS consideration
i.      Generally (RST§71)
1.      Act or promise to act
2.      Forbearance or promise to forbear
3.      Creation/destruction of legal relation, or promise to
ii.      Forbearing legal right (Reed v. UND, Hamer v. Sidway)
iii.      Prior material, pecuniary benefit received (RST§86)
1.      Including someone saving your life (Webb v. McGowin)
e.       What is NOT consideration
i.      Forbearing non-existent legal right (Schnell v. Nell)
1.      Unless parties believe they really do have the legal right RST§74
a.       Court will ask: Did they really believe they had this legal right to forbear?
ii.      Fulfilling “pre-existing duty”  ~ consideration (RST§73)
1.      e.g. Police officer cannot claim reward for arresting someone when he already had to (“Public duty”)
2.      e.g. Breaching a K then demanding higher pay to keep working under K (Alaska Packers Ass’n v. Domenico)
iii.      Condition of receiving gift (Kirksey v. Kirksey)
1.      e.g. Tramp walking to store to retrieve free coat
2.      Lacks inducement