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Contracts
University of California, Hastings School of Law
Prince, Harry G.

Contracts Issues
1.        Formation
2.        Terms/Interpretation
3.        Performance/Breach/Excuse
4.        Remedies
 
Bases of Obligation
1.        K= MA (O+A) + C
2.        Detrimental Reliance—Promissory estoppel — AND Pre-acceptance reliance
3.        Restitution—implied in law K– unjust enrichment
4.        Promissory Restitution
5.        Formality—a writing under seal
 
 
Bilateral K
Unilateral K
§          Part performance –§45
§          Classic view Wormsor Bridge Hypo
§          §32—if unclear offeree decides –perform or prom
Offer
§          §24—just say yes & we have a deal
§          §33—Cartianty of terms
§          §26—Preliminary negotiations
§          Lonergan v. Scolnick
§          creates a power of acceptance
§          §43- indirect revocation—reliable info
 
Acceptance
§          By means specified by offeror (master!)
§          §50—Manifestation of assent to the terms
§          Mirror Image Rule (§59) [contrast to battle
of forms UCC § 2-207] §          Rejection
§          Counteroffer swaps power of accept. (Normile)
§          Mailbox Rule (henthorn v. fraser)
§          Acceptance by any means reasonable
§          timely acceptance. power of accept. lapses
after reasonable time
§          by silence (contrast UCC)
 
Consideration
§          bargained for exchange (§71)
§          mutual inducement or benefit detriment
§          conditional gifts (dougherty)
§          adequacy of consideration (batsakis)
§          Past consideration (plowman)
§          sham/nominal consideration
§          Illusory/Alternative promise (DuPont or §77)
§          Moral Obligation (Penn O Tex)
§          To avoid fraud—alternative view Prof Fried—moral oblig. just should be enforced
§          funstions: 1)evidence(iary) of assent, 2) cautionary (against inconsiderate action), 3) chenneling—simple & external test for the ct.
 
Restitution
§          life rescue (§116) – In re Crisan
§          property rescue (§117) – Glenn v. Savage
§          3 party cases – Flooring systems
§          cohabitation – Watts v. Watts
 
 
 
 
Promissory Restitution
§          Material benefit (webb v. McGowan)
§          Maj Rule- Mills v. Wyman—Moral oblig not
enforceable
               
Promissory Estoppel
§          family relationships—Kirksey v. kirksey
§          charitable subs. – Allegh. Coll. or Marylnd Bank
§          commercial promise (pension) Katz v. Danny
§          substantial & material change in position—Fried
v. Frank
§          unconscionable injury—Tutak v. Tutak
Pre-Acceptance Reliance
§          Baird
§          Drennan/ R2d
§          Palpable Mistake Rule
 
Option K
§          consideration—nominal/recited
§          writing necessary—SoF
§          prom estoppel applies
§          Compare—merchants firm offer (UCC)
 
Agreement to Agree
§          not enforceable/don’t waste the courts time
§          (Walker)
§          Duty to negotiate in good faith (Teachers)
§          UCC by analogy—some terms can be left out
 
Statute of Frauds
§          §110- things included
§          §131—Subject Matter, Parties, Essential Terms
§          §132—several writings ok (Crabtree)
§          §133- memo not made as such
§          §134—signature
§          §129-Exceptions—part perf. on an interest in
land– $$ not good enough, must have moved in or made repair
§          to discourage fraud, perjury, cause memories
fade, encourage deliberation in k making, judicial efficiency
 
Interpretation
§          COP, COD, UOT—R2d §202
§          Purpose of parties
§          plain meaning rule
§          adhesion K’s
 
Parol Evidence Rule
§          fully or partially integrated?
§          consistent or contradictory term?
§          Williston—4 corners
§          Corbin—intent of parties/extrinsic evidence
§          merger clause
 
 
Nuances of the rule
 
Analogize to case facts/cite case names
 
Analogize to UCC
 
Restatement Section #’s
 
Spin on facts. “If the facts showed that he relied by. . .”
 
Policy/Theory
 
Read fact pattern twice
 
Read call of the question
 
IRAC
 
state whether counter argument is weak or strong
MUTUAL ASSENT
 
CONTRACTS
1.        Formation
2.        Terms/Interpretation
3.        Performance/Breach
4.        Remedy
 
K in the CLASSIC sense:
K=MA(O + A) + C
 
I.                     Formation Generally
 
R2d § 1 Contract Defined
A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law recognizes as a duty.
 
R2d § 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.
 
R2d § 22 Mode of Assent: Offer and Acceptance
(1)     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.
(2)     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.
 
R2d § 27 Existance of a Contract Where Written Memorial Is Contemplated
Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations.
 
II.                   Objective Theory
 
“meeting of the minds”—an agreement about the gist of the exchange
 
Test: an OBJECTIVE ONE. Would a reasonable person have believed that the parties agreed to the terms and agreed to be bound?
 
What a reasonable person in the shoes of the parties would understand the words and conduct to be.
 
Judge Learned Hand: Twenty Bishops—“even if it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held”
 
You don’t want to make it hard to enforce contracts even with poor/uneducated etc. because then people/businesses would be unlikely to enter into contracts with them—therefore ignorance, not reading or understanding DOES NOT get you out.
 
Good
Bad
1)        keeps people from lying—it would be too easy to lie and say “that’s just not what I intended”
2)        Protects expectation—   
otherwise people would not be able to rely on the language of contracts.
1)        Benefits more sophisticated/law-educated parties
2)        runs counter to the “consent theory” of contracts— they are supposed to enforce CONSENSUAL agreements
 
 
 
 
 
 
 
 
III.                  Cases
 
Rollins v. Foster (1998)
Duty to read. Objective test of assent—she signed it!
(vs. Subjective)
 
Ray v. Eurice Bros. (1952)
Dispute over plans for house. Plans were signed—objectively it looked like they assented. These guys should have read it—in absence of f

a letter or telegram of acceptance started after the sending of an otherwise effective rejection or counter-offer is only a counter-offer unless the acceptance is received by the offeror before he receives the rejection or counter-offer.
(rejection, counteroffer, acceptance is effective upon receipt)
 
 
R2d § 43: Indirect Communication of Revocation
An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect.
 
 
 
IV.               Cases/etc.
 
Lonergan v. Scolnick (1954)
Real estate in Joshua Tree—3 potential offers: 1) ad in paper, 2) form letter, 3) “act fast” letter. None are offers b/c in all cases it was apparent that he had more to say. See § 26.
Also R2d § 25—expression of a fixed purpose
 
 
 
 
 
 
 
 
 
 
 
 
 
ACCEPTANCE (Bilateral K)
 
1.        Generally
2.        Mirror Image Rule
3.        Mailbox Rule (deposited acceptance)
4.        Cases etc.
 
I.                     Acceptance Generally
 
R2d § 50 Acceptance of 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 perfromed 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 a promise.
 
 
 
II.                   Mirror Image Rule
 
R2d § 58: Necessity of Acceptance Complying with Terms of Offer
An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered.
R2d § 59: Purported Acceptance Which Adds Qualifications
A reply to an offer which purports to accept but it is conditional on the offeror’s assent to terms additional to or different from those offered is not an acceptance but is a counter-offer. (Exception—see UCC 2-207 below)
 
U.C.C. 2-207—Battle of the Forms
 
III.                  Methods of Acceptance
 
§          The offeror is master of the offer—can specify the prescribed method of acceptance. (see §60 below)
§          If not specified, then acceptance by any reasonable means is valid.
§          Signing a K is also acceptance
§          Silence is usually not acceptance, but can be. (See §69 below)
 
R2d § 60: Acceptance of Offer Which States Time, Place, and Manner of Acceptance
If an offer prescribes the time, place, or manner of acceptance its terms in this respect must be complied with in order to create a contract. If an offer merely suggests a permitted place, time, or manner of acceptance, another method of acceptance is not precluded.
R2d § 69: Acceptance by Silence or exercise of Dominion