Contracts Martinez Fall 2015
Unilateral Contractà A contract in which only one party makes an express promise, or undertakes a performance without first securing a reciprocal agreement from the other party.
In a unilateral, or one-sided, contract, one party, known as the offeror, makes a promise in exchange for an act (or abstention from acting) by another party, known as the offeree. If the offeree acts on the offeror's promise, the offeror is legally obligated to fulfill the contract, but an offeree cannot be forced to act (or not act), because no return promise has been made to the offeror. After an offeree has performed, only one enforceable promise exists, that of the offeror.
Bilateral Contractà An agreement formed by an exchange of a promise in which the promise of one party is consideration supporting the promise of the other party.
A bilateral contract is distinguishable from a unilateral contract, a promise made by one party in exchange for the performance of some act by the other party. The party to a unilateral contract whose performance is sought is not obligated to act, but if he or she does, the party that made the promise is bound to comply with the terms of the agreement. In a bilateral contract both parties are bound by their exchange of promises.
I. Introduction to Contractsà A contract is a legally enforceable promise.
Rest 2d §1: Contract Defined.
Contract: is 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.
Rest 2d §2: Promise; Promisor, Promisee.
Promise: A manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.
Promisor: The person manifesting the intention is the promisor.
Promisee: The person to whom the manifestation is addressed is the promisee.
Rest 2d §3: Agreement Defined; Bargain Defined
Agreement is a manifestation of mutual assent on the pad of two or more persons.
Bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.
Rest 2d §4: How a Promise May Be Made
A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.
Rest 2d §22: Mode of Assent: Offer And Acceptance
The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties.
A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.
Rest 2d §17: Requirement of a Bargain
(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.
(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§ 82- 94.
Rest 2d §18: Manifestation of Mutual Assent
Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render a performance.
Rest 2d §19: Conduct as Manifestation of Assent
(1) The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act.
(2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.
(3) The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating cause.
Rest 2d §23: Manifestation of Assent in General
It is essential to a bargain that each party manifest assent with reference to the manifestation of the other.
UCC § 2-204
(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
CISG art. 8
(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.
(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.
(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.
CISG art. 23
A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.
Lucy v. Zehmer, p. 179-82
· Is actual mental assent of the parties to an agreement is necessary to form a valid and enforceable contract?
o No. Zehmer’s outward actions, when interpreted by a reasonable person, indicate a willingness to be bound in his agreement to sell his farm to Lucy, and Lucy is thus entitled to specific performance of that agreement.
o Party’s subjective mental assent to the agreement, is all that matters when determining the existence of a valid and enforceable contract
Bailey v. West, p. 11-15
· Was the obligation of the Plaintiff to feed and board the horse a result of a contract “implied in fact”? or Was a quasi contract formed by Plaintiff acting as a volunteer when he accepted the horse for boarding?
o There was no mutual agreement or intent to contract between the Plaintiff and Defendant to establish a contract. Thus, there is no contract “implied in fact”.
o No, a quasi contract is not formed where performance rendered by one person is not requested by the other.
· Quasi-Contract or Contract Implied-in-Law à A quasi-contract may be enforced between two parties when:
o one party confers a benefit upon the other party,
and Southworth’s acceptance of that offer formed a binding and enforceable contract between the parties.
o Four factors serve as a guide in making determination
§ What a reasonable person in the position of the offeree has been led to believe, based on all the circumstances of the transaction.
§ The language of the parties. (If there are no words of promise, undertaking, or commitment, a statement by a party will typically be construed not as an offer, but as an invitation for an offer or mere preliminary negotiations.)
§ Definiteness of the addressee to which the statement is made is controlling. (As opposed to an indefinite group)
§ Definiteness of the proposal itself: containing many material terms are more likely to be construed as offers.
Lefkowitz v. Great Minneapolis Surplus, p. 208-10
· Under what circumstances does an advertisement for the sale of goods constitute an offer?
o An advertisement involving a transaction in goods is an offer when it invites particular action, and when it is clear, definite, and explicit and leaves nothing open for negotiation.
o Generally advertisements are NOT offers: look for definiteness of terms and “words of promise”
§30 Form of Acceptance Invited
(1) An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his acceptance.
(2) Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.
§32 Making of Offers
In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.
§35 Offeree’s Power of Acceptance
(1) An offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer.
(2) A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the ways listed in § 36.
§50 Acceptance of an Offer Defined; Acceptance by Performance; Acceptance by Promise
(1) 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.
(2) Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise.
(3) Acceptance by a promise requires that the offeree complete every act essential to the making of the promise.