Select Page

Contracts
University of Florida School of Law
Fenster, Mark

 
CONTRACTS FENSTER Spring 2016
Def. of Contract:  a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty.  Restatement §1
 
**in contract law: we are trying to pay attention to what people say and what they mean when they enter a contract.  Goal is to enforce the agreements that individuals made themselves as legally binding and not provide opinions of those.  (Freedom of Contract, Predictability, Efficiency, Fairness)
 
Making Contracts- Contract Formation
Governing Law: UCC or Common Law?
 
1.    UCC governs sale of goods over $500
2.    Common law governs services, real estate sales etc.
·         When mix of goods and services-need predominance test. (What is the contract about?)  Volume v. Focus
·         When UCC applies, common law can apply always
**** CONTENT OF THE DEAL MATTERS!****
·         Remember to think WHY this rule?  Policy Rationale:
o   Predictability:  need to know what to expect, one should be bound by words-needs to have obligation
o   Freedom of Contract: everyone can create contracts (except minors and incapacitated individual) Essential marking of adulthood.  All contracts are generally enforced.
o   Fairness: to protect the public and encourage contract making; grossly unfair contracts will not be enforced
o   Efficiency/Economy: promote market economy-encourage contractual exchange
Contract Requirement:  Manifestation of MUTUAL ASSENT & CONSIDERATION
 
I.          Mutual Assent
Rst §§ 17, 22, 24, 50, 59, 61, 33 UCC §§ 2-204(3), 2-305, 2-308 to 2-310
General Rule: In form of Offer and Acceptance (but not requirement), needs to have meeting of the minds and certainty of terms.
                1.         In Common Law, Basic Requirements to form contract:
a.         A bargain in which there is mutual assent and consideration; but ALSO,
b.         Sufficient certainty of terms (there cannot be mutual assent absent certain of terms).  *Sometimes invitation to offer can be mistaken as offer.
 
Certainty of Terms: (Rest § 33)
·         Even though manifestation of intent  is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contracts are reasonably certain
·         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.
·         The fact that one or more terms of a proposed bargain are left open of uncertain may show that a manifestation or intention is not intended to be understood as an offer or as an acceptance.
** QTPPPS :Test for mutual assent (Quantity, Time for performance, Price, Parties, Place, Subject)
Lucy v. Zehmer  (distinguishes objective intention vs. subjective intention) (How drunk do you have to be)
Facts:  Zehmer and Lucy had prior history of a bargain to buy L’s farm which was called off by Zehmer; Lucy had clear intentions and was very interested in the farm.  Z claims his offer was made in jest however Z’s behavior was such that a reasonable person would believe he had present intent by  language in the written instrument; it was changed from I to We and was handed to Lucy. (doesn’t matter what Lucy was thinking)
Rule:  Manifestaion of intent is judged by what the parties OBJECTIVELY manifested given the context and circumstances what a Reasonable person would believe.
Outward expression of a person as manifesting his intention rather than to his secret and unexpressed intention
Harvey v. Facey (Q whether quoting price is an invitation/ offer?)
                                                            Policy Rationale:  Freedom of Contract.  (obligated to your words)
Issue:  Was F telegram quoting lowest price, an offer to enter contract?
Facts:  a). Harvey: Telegram-“will you sell us B.P.  Telegram lowest cash price…answer paid” content does not represent offer, there is not present intent. 
b). Facey: Telegram response-“ lowest price for bumper HP. 900 pounds”  -is this acceptance of negotiation? 
c). Harvey:” we agree to buy BH for 900”  H sued for specific performance and was denied.  Appealed.
Holding/Rule:  No.  Mere quotation of price is not an offer.  Statement of lowest price is not an offer to sell.
In this case, the terms are ambiguous and lack certainty of terms.
2.         In UCC, (Always looser to encourage commerce exchange)
         Certainty of Terms is NOT a requirement.  (Important but not an element)
A.   OFFER:  communication of commitment; Generally, (Rest § 24)
o   Communicated
o   Present desire to enter into a contract
o   Directed at some specific person or group
o   Inviting acceptance
o   Creating the reasonable understanding that upon acceptance a contract will form.
Special offers:
Rst §§ 26-27
i.              Advertisement
General Rule =  not considered offers; it is an invitation.  BUT it can be if specific offeree and specific quantity is expressly indicated
Case Ex:  Leonard v. Pepsi Co. Inc.
Π answered a TV add for a harrier jet where all the other items were meant to be used with the points but not the harrier jet.
Holding: Court held this add is not an offer because no objective person could reasonably have concluded that the commercial actually offered consumers a harrier jet
ii.            Price quotes
General Rule = not offers; it is treated as a preliminary; UNLESS the language, in the context in which it is used, communicates a present commitment and not just a general offer to large group
Fairmount Glass Works v. Crunden-Marten Wooden Ware Co
The Court held that language used in telegram, “for immediate acceptance” sent in correspondence to lowest price inquiry of jars was more than just a price quote.  This language used communicated present intent for proposition to sell.  The quote was an offer.
·         Be careful with this case because Fenster thinks it is a much closer case
iii.           Request for Bids
General rule = contractor’s request for bids is an invitation for offers.  The subcontractor’s bids are considered offers.
·         Rest 26 & 27
iv.           Letter of Intent
General rule = not an offer but a document signed by both parties that purports to progression of a contract (partial completion), unless the language presents certainty and present commitment.   
·         Sometimes parties cross the lines in seeking to bind other party and bind themselves in contract.
Store Properties v. Neal
Parties sign a letter of intent for 99 year lease for plot. Plaintiff claims it was a written contract.
·         The court rules that unless there was meeting of the minds upon details it is not enforceable.
·         If parties contemplate a reduction to writing to be executed by the parties, and such writing is never signed, there is no contract until writing is signed.
·         Enough uncertain language in the letter to indicated parties contemplated entering into more negotiations.
B.   ACCEPTANCE: communication of agreement; Specifically,
a.    Rst §§ 50, 30, 32, 45, 51, 60, 62, 65, 69
a.  Kuzmeskus v. Pickup Motor Co.
·         Problem is that there is no one there to authorize the sale and the se

                         Petterson v. Pattberg
·         P agreed to pay mortgage in cash in exchange of reducing $780 from principal.
·         D refused to accept cash when P showed up at door with it stating he sold property to someone else. 
·         Court ruled the contract was a unilateral one because D expected the act of bringing the cash from P and as a unilateral contract, it is revocable until performance commences. 
Dickinson v. Dodds
·         Facts:  D sends a memo to P of sale of land with the price and date to accept by. 
·         P learns D intends to sell the property to a third party, and went to D’s house and left a letter of acceptance there. 
·         D sold to a third party.
·         The court ruled that because P “learned” of D’s intention to sell to someone else from a trustworthy third party, this acts as revocation. 
·         This is not an option contract.  Option contract requires mutual assent and consideration.  This was a gratuitous offer and can be revoked before acceptance.
ii.         Rejection (Restatement § 36)
·         An offer is rejected when the offeror is justified in inferring from the words or conduct of the offeree intends not to take it under further advisement.
iii.        Lapse
·         Within the time specified in the offer
·         If no time limit is specified, within a reasonable time (Reasonable=in factual context/ circumstantial)
·         Face to face conversations usually lapse when the discussion ends.
Ex: When friend offers to sell 1 mil $ apt, this may deem reasonable to carry over the offer to next day because reasonably the offeree would need to discuss this type of deal with spouse.
                                                Akers v. J.B. Sedberry
·         About the two guys who gave offers of resignation to CEO then she had them in talked about there jobs like she wasn’t going to accept, two guys chose they would continue to work for company and then she fired them
·         Rule: If two parties are in each other’s presence and one makes an offer without indicating any time for acceptance, an inference will be drawn that that offer will not extend beyond the time of the conversation unless special words or circumstances indicate a contrary intention on the part of the offeror.
iv.   Counter-Offer (Restatement § 39)
·         Offer
·         From the offeree to the offeror
·         Relating to the same subject
·         Proposing a different bargain
·         Terminates the offeree’s power to accept UNLESS the offeror or offeree manifests a contrary intention
–          Counter offer is generally a rejection unless offeree puts it under advisement;
–          offeree reserve the right to indicate that he/she is not necessarily rejecting what’s offered. 
–          If INTENT to accept the offer is indicated, and discuss terms it now becomes INQUIRY.