Contracts Outline

Professor Sylvester_Contracts_Spring 2014

[Chapter 1 – Bases for Enforcing Promises]

1. Contract R2d §1 à A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty

2. Contract Law = Enforcing promises

a. Why enforce them?

i. Economy à Want to preserve confidence to go out in marketplace and do business

ii. Morality à No enforcement = Unraveling order (self-help)

b. Contract law is state law

3. Enforceable K

a. When the K’s breach entitles the non-breaching party to damages, legal or equitable

4. Void K

a. When it results in no legal obligation on the part of the promisor

i. “Void for lack of consideration”

5. Voidable K

a. Power to avoid legal obligations imposed by the K

i. Ex: Legal incapacity (minor)

6. Unenforceable K

a. Valid K, but court won’t enforce it

i. Ex: K lacked a signed writing to satisfy the SOF

7. Governing Authorities

a. Restatement of Contracts (persuasive authority)

i. Land; Real property; Services; IP à Everything BUT goods (UCC)

ii. Summaries of existing law but NOT the law itself

b. Statutes (direct authority)

i. Article 2 of the Uniform Commercial Code (UCC)

1. § 2-105 Sale of goods; Banking; Insurance

2. Only law once it’s adopted in a given state or jxd

3. Depends on subject matter of transaction, NOT on whether parties are merchants

8. Cases close to the line between enforceable vs. nonenforceable contracts:

a. Ex: On gurney to hospital, you ask if you’re going to be okay. Doctor says “don’t worry you’ll be alright.”

i. NOT enforceable – promise made for therapeutic purpose

b. Hawkins v. McGee – R2d

c. Bayliner v. Crow – UCC

Hawkins v. McGee [Doctor said that he would guarantee to make boy’s hand 100% perfect]

1. A promise can be inferred from the language, context and nature of the transaction even if the word “promise” was not employed.

2. Thought to be counterintuitive b/c promises by doctors typically not held to be enforceable at a contract level

a. Why is case different here?

i. Doctors back then very revered and D solicited P’s father

ii. D was experimenting w/skin grafting and people need to know or be paid to be part of experiment

iii. D solicited P’s father – was like a commercial transaction

Bayliner Marine Corp. v. Crow [D argued that P breached express warranty since his particular boat didn’t reach speeds D’s brochure said it would]

1. No breach b/c D’s boat was different (weight and propeller) than one in brochure and representations were repeated but not made by retailed (were made by manufacturer)

2. Clearly commerce – no policy consideration like with doctor

3. Highlighted importance of looking at specific facts of the case

v Hawkins & Bayliner show how K law is about enforcing promises but we don’t enforce ALL promises

[Chapter 2 – Creating Contractual Obligations]

Mutual Assent

1. Need mutual assent for a K

a. Most commonly found through Offer & Acceptance

i. BUT possible to have MA w/o independently identifiable O&A

1. You can have negotiations and get to assent w/o being able to look back and identify offer and acceptance as distinct chronological events

b. Sets boundary between the precontractual and the contractual stages

c. Assent is a necessary condition for contractual liability, but it is NOT sufficient

2. Objective Test à RP standard

a. Used in finding mutual assent

b. Looks to parties’ words/actions (outward manifestations) NOT what they subjectively believed

3. What’s left of subjective

a. If party seeking to enforce K knew/should’ve known other party was joking you can’t enforce K

4. Intention to be Bound

a. Absent an expressed intent that no K shall exist, mutual assent b/t the parties, even though oral or informal, to exchange acts or promises is sufficient to create a binding K; and

b. What’s sufficient to show intent to not be bound?

i. Court considers factors:

1. Whether there’s been an express reservation of the right not to be bound in the absence of a writing

2. Whether there has been partial performance of the K

3. Whether all of the terms of the alleged K have been agreed upon

4. Whether the agreement at issue is the type of K that’s usually in writing

c. Hypo

i. 2 parties agree on essential terms of the K, leaving details to be worked out by their lawyers in a final, formal document that the parties expect to sign. If one of the parties then refuses to sign the formal document, can the other enforce their agreement?

1. Depends on whether parties intended to conclude their agreement at th