Contracts Dodge Fall 2015
Subjective vs Objective Theories
Raffles v. Wichelhous
There must be a “meeting of the minds.” (intent of the parties must match)
Ship Peerless case. Court rules according to Subjective theory of contracts. In order for there to be a contract, the intent of the parties matters.
What a reasonable person would find
Ray vs Eurice Bros
Not what the a party thinks, or wanted it to mean, but what a reasonable person in the position of the other parties would think it means.
Contract to build a home. Ray changed the provisions of the contract the parties had discussed. D’s signed the contract, and later breeched, stating it was not their intent to enter into a contract with such strict provisions. The Def’s entered into a valid contract when they signed.
Modified Objective Standard
Objective with two exceptions
If both parties subjective intents agree, even if a reasonable person would find different
If one party knows the subjective intent of the other party, they are bound by the intent
*Objective standard protects the parties reasonable expectations of the contract
Requires “a bargain in which there is a manifestation of mutual assent to the exchange and consideration.”
UCC Contract formation
Offer can be made in any way that shows agreement, including conduct
A K can be formed even if the moment of formation is undeterminable
Can have open terms (including price) if the parties intended, and there is a way to determine a remedy
Sources of Contract Law
Collection of Statutes
Adopted by 49 of 50 states
Deals with the sale of goods
Goods – movable objects
Persuasive authority, not binding
For purposes of test, consider it the law
Treaty – (Federal Law, trumps UCC)
Applies to K’s between parties of different States
Applies to sale of goods
Only applies to member countries
When looking at the different sources, for a sale of goods K:
UCC is the top coat of paint, where there are gaps, use common law (base coat)
For international sale of goods Contract:
CISG is the base, where there are gaps, use domestic law
When it’s a mixed K for goods and services
Factors for determining whether the UCC or CL govern
Language of the K
Nature of the business of the supplier
Intrinsic worth of the materials
Types of Contracts
Look to the language of the K: If the offer is ambiguous, acceptance can be made by promise of performance
Promise for a promise
A promise for the actual rendering of performance
Classic example is Brooklyn Bridge example
No acceptance until performance is complete
Mostly found in two scenarios:
Reward situations (lost cat)
Bonus programs at work.
Good for offeree, not bound to finish (not sure if performance is possible ie bonus)
Rnd §32 Invitation for promise or performance
If the offer is ambiguous, acceptance can be made by promise of performance
Rnd §45 Option K created by part performance
Once performance has begun, irrevocable
Must complete the performance in order to accept
*Offeree is free not to finish, no acceptance, no K
COOK V COLDWELL BANKER
Offeror is bound to a unilateral contract once offeree has rendered substantial performance
Mortgage broker offer bonus program at work when reaching certain thresholds
Stayed with Coldwell for the entire year to receive the bonus
Coldwell tried to revoke original offer in Sept, after substantial performance
First question in K formation, is there an offer?
Look to the 3 elements.
Is the offer addressed to a specific person(s)?
Are the terms reasonably certain?
Was there an intent to be bound?
Under the UCC, offer can be made in any way that
Is reasonable under the circumstances
A purchase order is an offer which invites acceptance by shipping, or promising to ship the goods.
Terms can be left open, as long as the parties intended to make a K, and there is a reasonably certain way to remedy
Under the CISG (similar to the CL)
Addressed to one or more persons
Indicate an intent to be bound
Must expressly or implicitly fix or make provisions to fix the price and quantity
Things to remember:
Offer is effective upon receipt
Offers are freely revocable, even if promised to stay open
If no time frame stated, offer stays open (expir
s (ads) unless the other party clearly indicates to the contrary
Was there acceptance? Or merely a counter offer?
An expression of assent to the terms of the offer
Must be made in accordance to the terms of the offer (if offer says stand on your head in the corner, that’s what you have to do)
If no manner of acceptance specified, any reasonable manner will suffice.
An acceptance is only valid, however, if the offeree knows of the offer, the offeree manifests an intention to accept, and the acceptance is expressed as an unequivocal and unconditional agreement to the terms of the offer.
Acceptance is manifestation of assent to the terms made in the offer, in accordance to the requirements of the offer.
Acceptance by performance requires at least part of what the offer requests be performed.
Acceptance by a promise requires that the offeree complete every act essential to making the promise
Acceptance by silence not valid in most cases
Offeree takes the benefit of the offer, and knows they were offered with expectation of compensation.
Offeror has stated that assent may be manifested by silence or inaction, and the offeree intends to accept by silence or inaction
Previous dealings show that silence is norm for acceptance, and should notify if rejecting.
Mirror Image Rule
Acceptance must mirror the terms of the offer. Cannot add or delete terms.
Rnd §59 Acceptance that is conditional on the offeror’s assent to terms additional or different from those offered is not acceptance but a counter offer.
Proposal of a substitute bargain relating to the same matter of the original offer.
Offeree’s power of acceptance terminated by making a counter offer
Suggestions to a K do not necessarily make a counter offer