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University of California, Davis School of Law
Imwinkelried, Edward J.

Contracts Outline Spring 2007
Enforceable, Unenforceable, Voidable and Void Contracts:
Enforceable: other party can obtain a direct legal remedy ($ or performance)
Unenforceable: court recognizes there is a contractual relationship b/t parties, but they cannot sue each other (ex. SoF)
Void: No K, parties can both walk away
Voidable: At least one party has the choice to avoid/disaffirm K, Or Ratify it making it enforceable.
The Formation Stage:
2 theories of mutual assent:
The Subjective Theory “meeting of the minds”
Must prove that what was going on in P’s mind corresponds to what was going on in D’s mind.
                                                               i.      If jury believes D when he says that he didn’t mean to enter into K, D will win.
Policy goal: Liberty such a huge value that unless actually subjectively means to enter a contract that constrains one’s liberty, then no contract existed.
The Objective Theory: “a manifestation of mutual assent”
Outward manifestation of intent is used to determine if parties intended to enter into a K. Would reasonable parties believe they were entering into K?
                                                               i.      Belief must be reasonable
Policy justification:
                                                               i.      Must protect people engaging in contracts for our modern commercial society. Both parties must be able to rely on their reasonable expectations of others behavior.
Mutual Assent:
Step 1: Identify all parties manifestations of intent and arrange them in chronological order.
Step 2: Apply the working description of an offer and identify the first offer
Step 3: Apply the norms for the termination of an offer and determine the priod for acceptance
Step 4: Apply the working description of an acceptance and search for an acceptance within the period for acceptance.
Tentative Working Guide for an Offer:
Definition: A definite, conditional promise manifesting present intent to enter a binding final agreement.
3 components:
a.      A conditional Promise “I promise to pay you 10 tomorrow, if you promise to walk across the bridge tomorrow”
1.      There must be a request for a return from the offeror, what does offeror want?
2.      Unilateral K: offeror makes promise in return for an act
1.      “I promise to pay you $10 if you walk across the bridge now”
3.      Bilateral: offeror makes a promise in return for a promise
1.      “I promise to pay your $10 Tuesday if you promise to walk across the bridge on Wednesday.
4.      Reverse Unilateral: Act for a promise
1.      “I’ll walk across the bridge for $10
b.      Intent to enter a legally binding agreement
a.       Express provision – “we intend that this be legally binding”
b.      Interpretative Intent: Intent that parties would have had if they had thought about the problem, if they had paused in business setting they would have said that they intended normal legal remedies to apply.
                                                                                       i.      In business setting don’t have to specify that want it to be legally binding – infer from context
                                                                                     ii.      In social or familial situation presumption that legal remedy is not available.
c.      Pres

                           i.      Courts assume that won’t make offers of same thing (house) to multiple people because that would open you up to liability
1.      Advertisements are solicitations for offers, not offers themselves.
e.       The contemplation of subsequent formalities
                                                                                       i.      Won’t be offer if there is evidence that parties intend future formality, signature, to seal the deal.
                                                                                     ii.      Alternatively, parties could say this is an offer, but at later point in time, to collect convenient evidence, we want it in writing. This would be a K.
Look at other language and actions suggesting intent “the true meaning of the correspondence must be determined by reading it as a whole.”
Look at other exchanges of information before the falling out
Look at the customs in the industry
General Rule: Policy goal to protect advertisers from litigation – courts say ads are preliminary negotiations – invitation for customers to make an offer
Concern is that when thousands get an ad, if advertiser runs out of stuff, could be sued for breach.
Exception: “first come first served” relieves policy concern of exposing advertiser to multiple liability.