1. MUTUAL ASSENT
(a) Mutual Assent – a requirement of a valid contract that the parties possess a mutuality of assent as manifested by the terms of the agreement and not by a hidden intent
i. agreement may be manifested wholly or partly by words, written or spoken, by acts, or even by failure to act
ii. a meaning intended by one party may be understood quite differently by the other
iii. contract obligation is voluntarily assumed, resting on the assent of each party to the proposed exchange
iv. – contracts don't arise unless parties agree (meeting of the minds)
(b) WHEELER v. WHITE – -A promise that a promisor should expect to induce action or forebearance of substantial character on the part of the promisee, and which does induce such forebearance or action is binding if injustice can be avoided only by enforcement of the promise
-It is reasonable to conclude that all that is required to achieve justice is to put the
promise in the position he would have been in had he not acted in reliance upon the promise
(c) RAFFLES v. WICHELHAUS – Parties’ intention at the time of drafting the contract is used to decide whether or not stipulations in a contract were made without ambiguity, and whether or not such stipulations are made to be enforceable
-Intention is of no avail, unless stated at the time of the contract; the time of sailing is no part of the contract, and therefore the ship mentioned in the agreement “Peerless” was meant and intended to be the ship that arrived in October, to wit, the plaintiff was not ready for delivery to the defendant
(d) RESTATEMENT OF CONTRACTS, SECOND
Section 20. Effect of Misunderstanding
(1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and
(a) neither party knows or has reason to know the meaning
attached by the other; or
(b) each party knows or each party has reason to know the
meaning attached by the other.
(2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if
(a) that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or
(b) that party has no reason to know of any different meaning attached by the other and the other has reason to know the meaning attached by the first party.
(e) EMBRY v. MCKITTRICK- -Intentions or beliefs will not affect the formation of a contract in which the words and actions indicated their intention to enter into a binding agreement.
-If you believe plaintiff's version of the conversation, no reasonable man would construe the “ambiguous” answer to the plaintiff’s demand other than how the plaintiff responded and the plaintiff had the right to rely on this assent as a binding agreement
-one who did not actually assent to the contract may be held to if he carelessly led the other party to reasonably think that there was assent
(f) KABIL DEV. V. MIGNOT- Subjective opinions regarding a contract may be admitted so long as suitable jury instructions counteracting prejudicial effect are given, to interpret such testimony as a subjective interpretation of the contracting of an agreement and not objective intent or fact
-such opinions as to whether or not a party may feel as if a contract has been formed may allow for an objective interpretation by the court that a contract was actually formed
II. OFFER AND ACCEPTANCE
(a) Unilateral Contract – when an act that is wanted in return for a promise (whether to pay or otherwise), a unilateral contract is created when the act is done, and it is clear that the promising party is bound.
i. Promise for performance – acceptance by performance only
i. B is not bound to walk across the Brooklyn Bridge
ii. A is bound to pay B $100 IF B proceeds to walk across the Brooklyn Bridge
iii. one side is an act, the other side is a promise
iv. The acceptance by B of A's offer could be nothing but the act of B's party of crossing the bridge.
v. It is elementary that an offeror MAY withdraw his offer until it has been accepted. It follows logically that A is perfectly within his rights in withdrawing his offer before B has accepted it by walking across the bridge – the act contemplated by the offeror and the offeree as the acceptance of the other
(b) Bilateral Contract – a barters away his violation in return for another promise
i. Both parties are bound from the moment in which their promises are exchanged
ii. Promise for Promise – acceptance by return promise
(c) MORRISON v. THEOLKE – -the contract is regarded as made at the time and place that the letter of acceptance is put into the possession of the post office (post office is acting as an agent for the offeror, awaiting receipt of contract)
-Traditional rules and concepts should not be abandoned save on compelling ground . . .
[W]e are constrained [to] hold than an acceptance is effective upon mailing and not upon receipt . . . .
-an unqualified offer was accepted and the acceptance made manifest by way of
(d) MAILBOX RULE – ADAMS V. LINDSELL – the revocation of an offer is ineffective if received after an acceptance has been properly dispatched (not necessarily received)
-acceptance by telegram is governed by the same tests as acceptance by mail
-not a rejection but purported acceptance that imposed a new term and thus was a counteroffer, which was then lost in the mails and never delivered. The court held that an unconditional acceptance sent 10 days later was ineffective, since the offer had already been terminated
-this was a rejection that introduced a counter offer, and not an outright rejection of an offer, an acceptance after the lost mail, from the counteroffering party was not valid acceptance, si
PETTERSON v. PATTBURG
a. Rule of Law: An offer to enter into a unilateral contract may be withdrawn at any time prior to performance of the act requested to do so.
i. Revocation: The cancellation or withdrawal of some authority conferred or an instrument drafted, such as the withdrawal of a revocable contract offer prior to the offeree’s acceptance.
ii. Unilateral Contract: An agreement pursuant to which a party agrees to act, or to forbear from acting, in exchange for performance on the part of the other party.
(J) COBAUGH v. KLICK-LEWIS, inc- The only thing that warrants acceptance of the offer in a unilateral contract is actual performance; promising to give future performance is not sufficient acceptance to make a unilateral agreement a binding contract
(k) ALLIED STEEL v. FORD MOTOR CO.- -Acceptance by performance must be done with the offeror having knowledge, consent and acquiesce such performance as acceptance
-in this case, FORD consented, knew, and acquiesced ALLIED STEEL's work prior to the point in which it is claimed that the offer was accepted; ALLIED performed their part of the agreement prior to the agreement being offered, which counted as a form of acceptance
(l) DAVIS v. JACOBY- -when it is ambiguous as to what would satisfy as acceptance of a purported unilateral contract, it will be distinguished as a bilateral contract, in so far as the thing bargained-for is a promise to accept the offer
-evidence shows that performance of the offer can and probably would likely take place after the offeror has died, showing that his offer was to promise something, in return for the offeree's promise to help his financial situation
-the invited performance is (1) to take care of Rupert, but traveling to California is a necessary condition precedent to actually perform, and substantiates a beginning of performance when that travel starts
(m) BRACKENBURY v. HODGKIN- the only acceptance of the offer is that is necessary is the performance of the act prescribed in the offer
-the plaintiffs actions constituted a valid acceptance of an offer that was not revoked, and upon their acceptance (moving to Maine) the contract became binding, and any attempt to give the land to another party is a breach of the contract