Contracts Outline

Contracts I

Fall 2005 – University of Denver
Following Problems in Contract Law – 5th Edition Knapp/Crystal/Prince

Contracts I Outline

Remember

Are Goods Being Exchanged?

Might the Statute of Frauds Apply?

Are the Parties Merchants?

Overview of Basic Remedies

Contract

Restitution

Remedial Action:

Restoration of Enrichment

Principal Focus of Remedy:

Disgorgement of the market value of what was received

Tort

Remedial Action:

Redress of Injury

Principal Focus of Remedy:

The sum of money needed to return plaintiff to the statute quo ante – to compensate for loss of injury caused by the defendants

Offer

Receipt

When Communicated

Rejection / Counteroffer

Receipt

R.§40

Revocation

Receipt

R.§43

Acceptance

By Means Dictated

R.§60

Acceptance not defined

Dispatch

R.§63(a)
– Mailbox

Options Acceptance

Receipt

R.§63(b)

Overtaking Exception

Acceptance on Receipt

R.§40

Is there a Contract?

General Definition

Parties who may enter into Contracts

Individuals or Corporations

Only Agents with proper authority may enter into a Contract

Types of authority to look for

Express Authority is actual authority from the principal; thus binding

When a principal has expressly instructed its agent to male a particular action.

Implied Authority is actual authority from the principal; thus binding

Principal gives authority not of the act itself but through a general mandate which can reasonably been seen associated with the act.

Apparent is not actual authority from the principal, but is still binding.

A principal may be bound by the actions of its agent if the principal has done or said something that leads the other party to reasonably believe that the agent does indeed have actual authority.

Some parties that may not enter into legally enforceable Contracts

Persons under 18 years old – R.§14

Those with Mental Illness or Defect have special exceptions – R.§15

Intoxicated Persons have special exceptions based on the other parties knowledge – R.§16

Mutual Assent

Manifestation of Mutual Assent to an exchange and consideration is the basis of a Contract – R.§17.

Traditional Approach

Traditionally, courts gave overwhelming weight to a genuine “meeting of the minds” only enforcing a contract after subjectively looking to each party’s actual understanding.

Modern Approach

Today, assent is an objective standard: R.§2 speaks to a manifestation of intent by the promisor that justifies the promisee in understanding that a commitment has been made. Assent is determined from the objective viewpoint of a reasonable third person in the position of the parties. The court asks not what the words or actions did mean to either party, but how they should have been understood if interpreted reasonably. In so doing, the court balances the requirement of assent with the protection of reasonable reliance.

There are three elements to a Contract

The manifestation of Mutual Assent ordinarily takes the form of Offer and Acceptance – R.§22(1)

Note: manifestation of mutual assent may be made without identifiable offer and acceptance or if the moment of formation cannot be determined. – R.§22(2)

The third element is Consideration.

Intention to be Legally Bound

Neither real nor apparent intention that a promise be legally binding is essential to the formation of a Contract – R.§21

Manifestation of intention that a promise SHALL NOT be legally binding MAY prevent formation of a contract. – R.§21

Subjective Evidence Often Admissible

Few Jurisdictions are strict objectivists