CONTRACTS
ROBERTO CORRADA
FALL 2016
MUTUAL ASSENT
Mutual Assent in General
Mutual assent is often said to be an agreement on the “same bargain at the same time”—“a meeting of the minds.” The process by which parties reach this meeting of the minds generally is some form of negotiation, during which, at some point, one party makes a proposal (an offer) and the other agrees to it (an acceptance).
Contractual obligations differ from other duties, as they are always freely undertaken. To ensure voluntariness, the law requires that both parties must provide “assent” for a contract to be formed.
Manifestation of Mutual Assent
To manifest mutual assent to an exchange, parties must make a promise or begin to render a performance.
Rest. (2d) Contracts § 18
Conduct as Manifestation of Consent
Manifestation of consent may be made wholly or partly by written or spoken words or by other acts or failure to act;
Conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.
Rest. (2d) Contracts § 19
“Reason to Know”: actor has a duty to another and where he would not be acting adequately in the protection of his own interests were he not acting with reference to the facts which he has reason to know.
Exception – Fraud and/or Mistake
The conduct of a party may manifest itself even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating cause.
III. Effect of Misunderstanding
There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and:
Neither party knows or has reason to know the meaning attached by the other; or
Each party knows or each party has reason to know the meaning attached by the other.
The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if:
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
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.
IV. Subjective Intent vs. Objective Statements
Objectivity best protects parties' reliance on counterparts words/actions and encourages clarity of communication.
Precedent favors objectivity in determining validity of contracts:
Even if it is “proven by 20 bishops” that a party intended to mean something other than the usual meaning which the law imposes, “[the party] would still be held.”
Hotchkiss
Even with voluntarin
nce.
Bilateral Offer: Open to anyone that will accept it:
R.2d § 30: 1) An offer may invite words or actions to constitute bilateral acceptance.
Or, acceptance may be made in any matter reasonable to circumstances.
PRICE QUOTATIONS
Price quotations are generally not considered offers, but rather invitations to negotiate.
Barclay
EXCEPTION:
Price quotation can be specific enough to allow mutual assent to an offer if 1) presented after significant negotiations, and 2) with complete terms, and 3) is directed somewhat privately, and 4) asks for immediate acceptance.
Nordyne, Inc.
Facts: Plaintiffs sent a price quotation directly to defendant after three months of negotiations, and included quantity, price, and time in which to accept. Thus offer was constituted.
ADVERTISEMENTS
Advertisements are generally not considered offers, but rather invitations to negotiate.
Craft
Offer was open ended because it did not specify quantity of sewing machines available.
Leonard
Offer did not specify quantity of harrier jets available, and separate writing did not include harrier jet option at all.
