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Contracts
University of California, Davis School of Law
Horton, David Owen

K Outline

Fall 2017

Horton

Intro/Overview

Contract

An agreement between 2 or more persons as to something that is to be done in the future by one or both of them.
The apparent mutual assent of the offer and agreement to a proposal.

Classical/Traditional Conception

Contract

A bargain in which there is mutual assent to the exchange and consideration.

Bargain

Assumed to have preliminary elements of negotiation

Mutual Assent

Objective standard (v. Meeting of the Minds, a subjective standard).

Signed

Consideration

Contracts are only binding if they are an exchange, not one-sided or a gift.

K Formation

Mutual Assent

Objective Theory of Contract

This section focuses on disputes between persons who have engaged in the process of attempting to reach mutual agreement for bargained-for exchanges of promises.
Types of K

Bilateral

Parties make promises to each other. Two Promises

Unilateral

Offeror not looking for a promise in return. Performance is acceptance of the offer
Rewards or Contests are examples.

Implied K

Contract in fact

Don’t have express verbal or written terms
Understand terms based on parties’ conduct.

Contracts in Law

“Quasi” contracts, ct. created situation where one party gives a benefit to another party and would be unfair if no fair compensation.

Relevant cases: Lucy v Zehmer
Offer and Acceptance in Bilateral K

First find the offer

Restat 24: Offer defined

An offer gives the offeree the “power of acceptance” and must

Spell out the key terms in sufficient detail
Indicate that the offeror is actually willing to be bound to the term

If there is an offer, what happens to it?

Restatement 36: Methods of Termination of the Power of acceptance

An offeree’s power of acceptance may be terminated by

Rejection or counteroffer by the offeree or
Lapse of time or
Revocation by the offeror or
Death or incapacity of the offeror or offeree.

Restatement 50

Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.

The offeror is the master of the offer and can 1) revoke at any time before acceptance and 2 specify exactly how acceptance must take place.
Restatement 63: Time when Acceptance Takes Effect

Unless the offer provides otherwise

An acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s Possession, without regard to whether it ever reaches th offeror; but
Mailbox Rule

An offer is effective when it’s received
A revocation is effective when it’s received
But unless the offeror states otherwise, an acceptance is effective the instant it’s deposited in the mail or otherwise leaves the offeree’s possession.
Contract law traditionally held that although both an offer and a revocation must be communicated to be effective, an acceptance will in some circumstances be trusted as effective as soon as dispatched.
Offeree needs firm basis for action in reliance on effectiveness of acceptance once sent.

Relevant Cases: Lonergan v. Scolnik, Izadi . Machado, Normile v. Miller

Offer and Acceptance in Unilateral Contacts

Unilateral K Defined Again

Offeror’s offer to exchange his promise of a future performance only in return for offeree’s actual rendering of performance, rather than a promise for a promise.

Less risk for the Offeror, More risk for the Offeree. Offeror can revoke while offeree already started commencing.

Modern Rules Governing Unilateral K’s

Restat § 32: Invitation of Promise or Performance

In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform wht the offer requests or by rendering the performance, as the offeree chooses.
EXPLANATION

Unilateral K issues arise in two situations

Some offers call for acceptance by performance only
Some offers call for acceptance by either promise or performance, but the offeree attempts to accept by performance.

made of the terms of the original offer.

An offer or counter offer must be accepted with no modifications. The offeror is the master of one’s offer.

Last Shot Rule

A party impliedly assented to and thereby accepted a counter offer by conduct indicating lack of objection to it.

Relevant Cases: Princess Cruises, Inc. v. GE (160)

The Battle of the Forms Under the UCC

UCC § 2-207 Additional Terms in Acceptance or Confirmation

Statute

A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms
The additional terms are to be construed as proposals for addition to the contract Between merchants such terms become part of the contract unless:

The offer expressly limits acceptance to the terms of the offer;
They materially alter it; or
Notification of objection to them has already been given or is given within a reasonable time after notice of them is received

Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a K. In such case the terms of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

Explanation

2-207 applies in two situations

The parties exchange writings. The writings don’t contain the same terms
The parties reach an oral agreement. Then one or both of them send writings (“confirmations”) that contain terms that differ from the oral agreement or from each other.