Contracts
Chao
Fall 2011
1) Why Contracts?
a) Allows party to rely on reasonable expectations
b) Reduce uncertainty (not eliminate)
2) Is there a deal
a) Objective Theory of Contracts
i) Lucy V Zehmer
ii) We must look to the outward expression of a person manifesting his intention rather than to his secret and unexpressed intention
iii) We don’t really care about teh meeting of the minds, we look for mutual assent.
iv) Applies except when both parties understand that an different meaning is intended
v) Exceptions:
(1) Mailbox Rule
(2) Death
3) Breach
a) Must be a contract
b) Must be a breach of that contract
c) Must be Damages as a result of breach
4) Offer
a) Advertisement is Usually not an offer
b) Reasonable Person Standard
i) Leonard v Pepsi co
c) Restatement (Second) of Contracts § 24 definition is:
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it
d) What is the rule
i) An offer must be definite and certain. . . .
ii) It must be made under circumstances evidencing an express or implied intention that its acceptance shall constitute a binding contract.
iii) . . . a general willingness to do something on the happening of a particular event or in return for something to be received does not amount to an offer. Thus, a mere quotation or a statement of a price or prices and an invitation to enter into negotiations, are not offers which may be turned into binding contracts upon acceptance
e) UCC § 2-204. Formation in General.
(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.
f) What are the four ways to “kill” an offer?
i) Rejection
(1) Restatement of Contracts § 36, What Is A Rejection Of An Offer
An offer is rejected when the offeror is justified in inferring from the words or conduct of the offeree that the offeree intends not to accept the offer or to take it under further advisement.
ii) Revocation
(1) Dickinson v. Dodds
(a) Sell with expiration clause, Sold to 3rd party before expiration
iii) Lapse
(1) Minnesota Linseed Oil v. Collier White Lead
(2) Offer open for a reasonable time
iv) Death or incompetence of Offeror
g) Preserving of the offer
i) Restatement (Second) of Contracts § 87(1). OPTION CONTRACT
(1) An offer is binding as an option contract if it
(a) is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or
(b) is made irrevocable by statute.
h) Firm Offer
i) UCC § 2-105
(1) “Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. “Goods” also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2-107).
(2) Goods must be both existing and identified before any interest in them can pass. Goods which are not both existing and identified are “future” goods. A purported present sale of future goods or of any interest therein operates as a contract to sell.
ii) UCC § 2-205. Firm Offers
An offer by a merchant to buy or sell goods in a signed record that by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may the period of irrevocability exceed three months. Any such term of assurance in a form supplied by the offeree must be separately signed by the offeror.
iii) Must be a good. See UCC § 2-105 for definition of good.
iv) Must be in writing (signed records).
v) Only firm for 3 months
vi) Offeror must sign term providing “firm offer” separately
5) Acceptance
a) UCC § 2-206. Offer and Acceptance in Formation of Contract.
Unle
unless
(a) the offeree exercises reasonable diligence to notify the offeror of acceptance, or
(b) the offeror learns of the performance within a reasonable time, or
(c) the offer indicates that notification of acceptance is not required.
i) Acceptance by part performance creates a K with a condition that allows completion with a reasonable time.
k) RST (2nd) of Contracts § 58. Necessity Of Acceptance Complying With Terms Of Offer
i) An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered.
l) RST (2nd ) of Contracts § 59. Purported Acceptance Which Adds Qualifications
i) A reply to an offer which purports to accept it but 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.
m) RST (2nd) of Contracts § 61. Acceptance Which Requests Change Of Terms
i) An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms
6) Filling the gaps
a) Mirror Image
i) An acceptance must be coextensive with the offer and may not introduce additional terms or conditions
ii) Dickinson v. Dodds
b) Restatement (Second) of Contracts § 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 contract unless the terms of the contract are reasonably certain.
(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.
