Contracts Fall 2016 Leo Martinez
1. Contract Formation (rest 1-4, 22 ucc 2204 cisg 8, 23)
a. Ascertaining assent = once offer has been made that gives manifestation of willingness to enter contract and invites assent, the assent from the other party concludes the bargain. Assent can be given expressly (written/orally), implied in fact (not written or expressly given but intentions can be determined through conduct), or through quasi contract (one party confers benefit, other party aware of benefit and accepts and retains benefit such that it would inequitable not to pay them back)
Embry v. Hargadine – McKittrick told Embry not to worry about his contract expiring, later said he didn’t intend to renew contract. Regardless of the parties’ subjective or actual intent, if a reasonable man could infer from their conduct intent to enter into a binding and enforceable contract, a binding and enforceable contract is presumed to exist. Contract was implied in fact because intention of the parties can be deduced from the words.
Lucy v. Zehmer – Even though both parties were drunk and Zehmer thought it was a joke, Lucy thought contract was real. The objective, outward expression of a party’s intent to be bound in an agreement, as opposed to that 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 –A quasi-contract may be enforced between two parties when one party confers a benefit upon the other party, the beneficiary party is aware of the benefit, and the beneficiary party accepts and retains the benefit under circumstances in which it would be inequitable not to pay the other party for the benefit. No quasi contract here because Bailey volunteered to take care of horse with knowledge that he may not be paid, Bailey housed lame horse but West never asked him to or accepted bills to pay.
b. Implied-in-fact agreement = terms of the contract are not given orally or in written language, but the contract is formed by conduct. Sitting in barber chair and barber cuts hair à implied in fact contract
Wrench v. Taco Bell – A contract between two parties may be implied in fact when there is no intent to enter into a contract manifested by the direct or explicit words of the parties, but intent is instead implied by or deduced from the parties’ conduct, language used, actions, or other circumstances. Court found enough evidence for the existence of IIF contract even though the exact moment of the formation was unknown.
UCC 2-204 =1. provide a good or service 2. With expectation of compensation 3. Have opportunity to decline
c. Offer = (rest 24, 26, 29, 35 cisg art 14) manifestation of willingness to enter into a bargain to show to another person that their assent to the bargain will conclude it. Three components: manifestation of willingness to enter into a bargain, invites assent, that assent will conclude the bargain. Offers change the legal relations between the parties by giving the power of acceptance to the party receiving the offer. Mutual assent may be made even though neither offer nor assent can be identified.
Lonergan v. Scolnick – Scolnick confirmed that Lonergan was on the correct land, but never invited assent. L’s assent would not have concluded the bargain based on the language in the form letter. L was not given the right to act in a specified time by S’s “hurry up” letter, therefore the negotiations were purely preliminary between S and L.
Southworth v. Oliver – Oliver asked if Southworth was interested, then outlined every detail of the terms, Southworth immediately accepted. Even though the letter never expressly stated it was an offer, letter was an offer because the context suggested it was an offer, the letter included details including sale price and a map, the letter was specifically addressed to a definite set of people, and the seller initiated the negotiations, which is a manifestation of objective intent. An offer can be sent to multiple people, and the more detailed the letter is the more likely it will be construed as an offer.
Lefkowitz v. Great Minneapolis Surplus –Usually ads are not offers, but are invitations to make an offer. When an advertisement is clear, definite, and explicit, and leaves nothing open for negotiation however, it constitutes an offer, acceptance of which will complete the contract. L fulfilled his part of the deal, Surplus had no right to invoke house rule stating you must be a woman after L accepted.
d. Acceptance = (rest 30, 32, 35, 50, 57, 61 cisg art 18) concludes the bargain. Offeree has the power of acceptance until 1. The offeree rejects the offer 2. Too much time elapses 3. The offeror withdraws the offer or 4. Death or incapacity of the offeror or offeree
(1) Who Decides What Counts as Acceptance?
Bretz v. Portland General Electric – PGE changed details of agreement, asked if Bretz was okay with it. Not an offer, just further negotiations. PGE retained power of acceptance by asking B to resubmit offer, therefore acceptance was invalid and there was no contract for sale of stock
La Salle v. Vega – Stipulation in agreement that La Salle Bank’s trustees had to exercise the agreement for it to be valid. If trustees never sign, then not a valid contract. An offer to form a contract may only be accepted according to the terms and conditions of the offer. The offeror bank retained the power to control the offer and condition acceptance until the trustees signed
(2) Acceptance by Performance and Acceptance by Promise (rest 51, 53, 54… ucc 2206)
Acceptance by promise = requires that the offeree complete every act essential to making the promise
Acceptance by performance = requires at least partial performance, which serves as promise to complete the performance. When an offer invites acceptance by performance it is not necessary to notify the offeror to make acceptance effective unless the offeror requests notice. If the offeree knows that there is no way the offeror can learn of the performance in a reasonable amount of time, the contract is not binding on the offeror unless the offeree reasonably tries to notify the offeror
Hendricks v. Behee – Defendant withdrew offer before notified of the acceptance of Smith. Hendricks received broker fee, Behee got rest of deposit back. When an offer calls for a promise by an offeree, there is no contract until the offeree communicates acceptance the offeror or the offeror’s agent
Carlill v. Carbolic Smoke Ball Co – A general advertisement of an award constitutes an offer that is capable of being accepted and binding the offeror in a valid contract, provided at least contemporaneous notice and some consideration are present. By satisfying the requirements for the reward, Carlill accepted the contract, and the ad is an offer because Carbolic deposited money in a bank to show sincerity. Further, Carbolic made a definitive promise to a limit
nt with the intention to enter into the proposed contract and the offeree acquires reliable information to that effect. When Dickinson found out about the deal the offeror had with Berry, the revocation of the offer was communicated to him, despite that the contract allowed acceptance until 9am the next day
timing (rest 63, 65, 66, 67… cisg art 15)
Adams v. Linsdell – mailbox rule. An acceptance is good as soon as it is put in the mail. Acceptance must be made in the manner invited by the offeror (mirror image rule). This is true whether the acceptance ever reaches the offeror. Violation of the mirror image rule destroys the power of acceptance. The offeree accepted the contract as soon as they mailed the acceptance, the fact that the acceptance was delayed while in transit does not affect when the acceptance is given by the offeree
nature and effect of counter offer = (rest 36, 39, 58… UCC 2207, cisg art 19) a counter offer is an absolute rejection of the offer. Once the offeree has rejected the offer he cannot go back and accept it. If the assent is not expressly conditional to additional terms, then the additional terms are to be construed as proposals for addition to the contract. In order for a written instrument to qualify as a rejection, it must clearly reveal that the offeree is unwilling to continue with the transaction unless he is assured of the offeror’s assent to the different or additional terms.
UCC 2-207 = a timely expression of assent is an acceptance even if it states different or additional terms unless acceptance is expressly conditional on assent to the different or additional terms. Different or additional terms are proposals that the original offeror can either accept or reject, but do not destroy the original acceptance. Between merchants, different or additional terms become part of the contract unless they 1. Limit acceptance to the terms of the offer (protects offeror w/mirror image) 2. Materially alter the contract (such as price, quantity, or delivery term) or 3. Notice of objection or rejection to the proposals have been given after a reasonable time after notice of the proposals was received (also protects offeror).
The conduct of the parties can establish a contract between the parties as to the terms upon which they agree .
Knockout rule = to resolve a battle of the forms, both conflicting terms are knocked out and a UCC gap filler is provided
Minneapolis and STL railway v. Columbus Rolling Mill – railway asks for 1200 tons after getting price quote for 2k-5k tons via telegram. Not a mirror image response (letter to telegram), and destroyed the RR’s power of acceptance. Once the initial offer was rejected by the RR, they cannot go back and accept it after the mill denied the existence of a contract