Contracts II Outline
CHAPTER 3 Making of the Agreement
I. Mutual Assent
® a concept that all parties agree to the terms of a K.
® this is all about communication between the parties.
o If employee reasonably relies on statements by the employer that they will continue to have a job, courts will determine there was a K. (Embry v Hargadine McKittrick Dry Goods pg 1)
o LOOK TO INTENTIONS OF THE PARTIES.
® Two Schools of Thought for Mutual Assent
o 1. Meeting of the minds- an obligation that is created only be free will of autonomous parties and depends on showing that will.
§ if a party’s intent towards a K is different then the other then the K will not be enforceable.
o 2. Objective Theory-greater emphasis on one party’s right to rely on the reasonable expectations created by the apparent agreement of the other.
§ reasonable man theory
® Sham Written Agreements- is conclusive only so far as the parties intend it to be the authoritative memorial of the transaction. (New York Trust Co v Island Oil & Transport Corp pg 1- agreement was a sham and meant nothing)
® Conspicuous disclaimer. Used for modifying items like HANDBOOKS.
o But when is it conspicuous enough?
o Want to make it obvious this not an amendment to the K and to say this can be used or not used at our discretion. Set it apart to tell people that we are not making a new deal.
o To avoid this- have a consent form.
o (McDonald v Mobil Coal Producing Inc.- pg 1- Π alleged that discharge was not appropriate due to the rules set out in handbook)
® Employer Protection with Handbooks and Employer Actions.
o Court’s make assumptions about employees not reading the handbooks and go ahead and do it. Do you want a new deal? If so continue working.
o If a more favorable provision is offered and they continue to keep working they accept, if it is unfavorable and they keep working, they can not take it as conclusive evidence. Reason is people need to work.
o Employees are getting increased protection over time from employee handbook cases so heads up if you represent an employer.
® Advertisements- When is it an Offer?
o When no amount is given as to how much quantity is available to buy or order, courts hold that this is an ad and not an offer. (Moulton v Kershaw- pg 1).
o UCC was not used in KERSHAW case but if it had been this would probably have not applied b/c there was no remedy available b/c can’t determine if seller even has the quantities available to sell.
o UCC 2-204(3)
§ Even though one or more terms are left open a K for sale does not fail for indefiteness if the parties have intended to make a K and there is a reasonably certain basis for giving an appropriate remedy”.
o TEST in advertising as to whether it is an offer is whether the facts show that some performance was promised in positive terms for something requested.
® No Price Given for Future K- UNCERTAINTY OF PAYMENTS
o Rule- put something in the lease as to who or what will set the price, this is an agreement in the PRESENT rather then the FUTURE. WRITE A BETTER LEASE that has this agreement in there to avoid problem.
§ If just says to be determined in the future, that is not acceptable for courts. (Joseph Martin Deli v Schumacher- pg 2)
o Absent a K- Can recover under PROMISSORY ESTOPPEL if one party relied on the other for a benefit ie: loan as in Wheeler v White pg 2.
§ Absent a K courts only allow reliance damages b/c other party is at fault as well for not having entered into a K.
o Restatement of K 2nd Section 33- Certainty
§ 1. Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a K unless the terms of the K are reasonably certain
§ 2. The terms of a K are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy
y the other, and the other has reason to know the meaning attached by the 1st party.
II. Control Over K Formation
® TIMING OF OFFER/ ACCEPTANCE
o “The promoter of a prize winning contest, by making public the conditions and rules of the contest, makes an offer and if before the offer is withdrawn another person acts upon it, the promoter is bound to perform his promise”. Cobaugh v Klick Lewis Inc. pg 3 (golf tournament hole in one car offer, did it in wrong tournament, sign still up so the offeror had to give car)
§ Remedy- when offering something for a prize specify what it is being offered for, the name of the tournamen
o An offer may waive formal acceptance; it is enough that the offeree performs as specified in the offer.
o If someone sends an offer in the mail and says- you have 8 days to respond, it is 8 days from when the letter is RECEIVED not mailed.
o Offer not binding until Accepted (problem for this arose in Allied Steel & Conveyors Inc v Ford Motors Co.- pg 3- who was liable for injury to employee)
o Return the acknowledgement that you have received and accepted offer.
o Selling Land
§ Rule- an offer to sell property may be withdrawn before acceptance w/o any formal notice to the person to whom the offer is made. (Petterson v Pattburg- pg 4- In this case the offer was withdrawn before its acceptance- even though Petterson said he was there to pay the rent, it was not accepted, told him NO)
o BILATERAL K- promise for a promise-
§ Bilateral acceptance is through a promise, both parties are bound from the time of the exchange.