Contracts Outline

 
CONTRACTS
Fall 2015
Sloan
 
 
I.  Contracts Introduction
A.  Definition: (§ 1) – A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which in some way recognizes as a duty.
1. Promise—“manifestation of intention to act or refrain from acting in a specified way.”
B.  Basics
1. Oral or Written agreement between 2 or more people or entities;
2. Need an exchange relationship – consideration;
3. Need AT LEAST one promise – may have more;
4. Enforceability by society.
C.  Two Elements:
1. A promise or promises (to perform or not perform a specific task); AND
2. Enforcement – legal enforcement (award of damages or some other order by court of law)
D.  Types of Contracts:
1. Bilateral – Promise in exchange for a promise
2. Unilateral – Promise for performance
3. Nudum pactum: naked promise
E.  Promisor/Promisee
1. Make sure you know who the promisor and promisee
2. In a bilateral contract, you both can be promisor and promisees
3. The person who is seeking to enforce the promise is the promisee.
4. Look for the inducement of the promise
F.  Sources of Contract Law
1. Common Law Tradition
2. Restatement
i) Not binding —
3. U.C.C. (Uniform Commercial Code)
i) Sale of Goods – things!!
ii) If no rule in UCC, apply restatement.
G.  Objective Theory of Contracts
1. From the standpoint of a reasonable person in the position of the party to whom the manifestation was made
2.  contrast, ‘subjective’ refers to what the party actually meant or what the other party actually understood
3. The ‘objective’ measure is the standard by which assent to a contract is judged.
i) How should the acts and words of the party been understood if interpreted reasonably?
II.  Mutual Assent – Offer and Acceptance
A.  Determining—use objective theory
1. Does not have to be a subjective meeting of the minds to form a contract, if outward manifestation would appear to reasonable person to manifest assent, we have mutual assent.
2. Cannot have contract without mutual assent.
3. Does not matter if party is not serious unless a reasonable person would understand the person was not serious
B.  Offer and Acceptance Overview
1. Offeror is compelling power of acceptance on offeree
i) Offeror gets to say how the offer has to be accepted.
2. Offeror is the master of the offer.
i) If the offer specifies certain parameters, the acceptance must comply with them in order to form a contract.
3. Express Contract: involves words
4. Implied Contract: when people manifest mutual assent in their actions.
C.  Intent to Memorialize
1. Fail to get final agreement in writing but manifest intent to be bound
2. Will not preclude formation of contract but may show they did not actually achieve mutual assent—is fact specific
3. Ask – did the parties really agree to everything and not get around to formality of putting on paper or did they not finish negotiations?
4. If oral agreement contains all terms, may have formal agreement even though not written.
5. NOTE–Statute of frauds could still be a barrier
6. Clues to Look for in Letter of Intent
i) “subject to”
a) Letter may not be intended to be binding
ii) Letter discloses particular issues on which further negotiation is necessary
a) Letter probably not intended to be binding
iii) Procedural formalities before closing deal (shareholder or Board approval)
a) Letter probably not intended to be final
iv) Transaction is particularly large or complex
a) Letter probably not intended to be binding, parties