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Contracts
University of Florida School of Law
Fenster, Mark

Contracts Fenster Fall 2017
 
Introduction
What is a contract?
 
A promise or set of promises law will enforce. Key elements are 1) promise (commitment to future event) and 2) enforcement
 
The “Why” of Contract Law (Policy)
 
The four policies most commonly used by lawyers in contracts cases are:
Predictability
The law strives to structure human relations so that people can predict the consequences of their actions. This encourages contracts, since we can secure in the knowledge that contracts will be enforced. Legal rules and enforcement should be clear and certain so parties know how their agreements will be enforced.
Freedom of Contract
In general, we are free to enter into contracts and free to not enter into contacts. And all contracts are generally enforced. Parties should be free to agree to terms without state intervention. Judicial role is to enforce will of parties.
Fairness
When parties believe they will be treated justly by the courts, they are more likely to enter into contracts. Grossly unfair contracts not enforced. Government and courts play key role in policing contracts to protect against exploitation and to further public values.
Efficiency
Contracts ought to facilitate exchanges that are economically efficient (resources are allocated in way that maximizes the welfare of both parties). Even breach can be efficient, if the parties are better off as a whole. The goal here is to promote contractual exchange in the market. Sometimes the state intervenes to enable parties to more freely and predictably contract (e.g., Uniform Commercial Code)
 
These policies can conflict. Freedom of contract pushes for very little government regulation while Fairness pushes for a lot of regulation. Efficiency wants regulation, but with different outcomes than fairness. Predictability is mostly compatible with the other policies though.
 
UCC, Article 2 vs Common Law
 
The sale of goods is governed by the UCC, Article 2 (§ 2-102). Everything else is common law. If UCC fails to address something (even regarding sale of goods) common law is used.
 
NOTE: UCC is more than just sale of goods, but Article 2 is sale of goods. And that’s what generally covered in first year from UCC.
 
Goods are not real property (houses, land, condominiums, factories) or services.
 
Livestock counts as a good! As do crops, unborn animals, growing crops, and “priceless” pieces of art. Contracts to create a good still count as a good. All goods you buy off the shelf are already manufactured, but you still pay for that manufacturing. Thus, paying for manufacturing, even specialized manufacturing, still falls under paying for a good. If the labor is entirely devoted to creating a tangible good, then the transaction is a sale of goods.
 
Restaurants often involve both goods and services. Most restaurants involve both goods (the food and preparation) and services (serving the food, providing a table, cutlery, napkins, drink refills, etc.).
 
NOTE: Go to page 387 for useful chart of Contract terms
 
 
Mutual Assent
 
The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange (Rst § 17). Generally, mutual assent is in the form of offer and acceptance (Rst § 22), but this is not a requirement. In fact, most modern business deals occur without a clear offeror and offeree.
 
Manifestations of assent are sufficient to form a contract, even when a further written memorial is contemplated. ((Rst § 27),
 
For mutual assent under UCC, see § 2-204.
 
Offer
 
An offer is generally a 1) communicated, 2) present desire to enter into a contract 3) directed at some specific person or group, 4) inviting acceptance and 5) creating the reasonable understanding that upon acceptance a contract will form. (Alternative definition in Rst § 24)
 
Offeror Intention
 
Lucy v. Zehmer: “If the words or acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to the other party[.]”
 
Subjective Intention vs. Objective Intention:
Subjective intention is what a person claims she meant by the words she used.
Objective intention is how a reasonable person would interpret the words she used.
BUT contingent gifts are not offers. (Rst § 24 comment b). If there is an exchange, then there is contract. However, it is not enough that a promise be performable only on a certain contingency. For example, gratuity for the action of another (even if such gratuity is expressed in advance). However, mixture of gift and bargain IS consideration (Rst § 71 comment c)
 
Certainty of Terms
 
Most important terms that ought to be present in a contract for certainty of terms: Q-TPPPS (Rst § 33)
 
 
Quantity
Time for performance
Following terms are all certain enough TIME terms to form contracts:
Immediately
At once
Promptly
As soon as possible
In about a month
Parties to the contract
Price
Place for performance
Subject matter
 
 
Under UCC, certainty important, but not as important as under the Restatement. Under UCC, if an agreement is “sufficiently definite” is not invalid simply because it leaves out the particulars of performance. (§ 2-311(1) and § 2-204(3) VERY similar language, so cite both).
Price (§ 2-305)
Not a requirement for a contract. (if parties intended to be bound) If no price agreed upon, then the price is a reasonable price at the time of delivery.
Place (§ 2-308)
Unless otherwise agree, place of delivery is SELLER’s place of business (or residence if there is no place of business)
BUT if parties know that the goods being sold are in some other place, then that place becomes the default place of delivery.
Time (§ 2-309)
Unless otherwise agreed, the time of delivery or shipment is “a reasonable time”
Payment and Credit (§ 2-310)
Unless otherwise agreed, payment is due at the time and place at which the BUYER is to receive the goods
Advertisements (Rst. § 26 c

the offeree can accept by any reasonable medium “[u]nless circumstances known to the offeree indicate otherwise[.]”
 
Rst § 32: In case of doubt, offeree can choose to accept by either performance or promise (up to offeree). BUT “if you will promise” or “if you will undertake” calls for acceptance by promise and thus requires a promise for acceptance, not performance (See Rst § 50 Illustration 3)
 
Rst § 62: If an offer is accepted by performance, “the tender of beginning of the invited performance of a tender of a beginning of it is an acceptance by performance.”
 
Kuzmeskus vs. Pickup Motor Company: “A promise made with an understood intention that it is not to be legally binding, but only expressive of a present intention, is not a contract.”
P accepted a contract with a local school district for transportation to provide 5 new school buses. P signed order forms for each of the 4 buses he was going to purchase from D. P was offeror, he expressed a present willingness to be bound by writing a check. He used D's terms of acceptance. Because D made it clear that D was not yet bound to contract (because had not made credit checks yet) when P rescinded offer, D never completed acceptance.
 
Davis v. Jacoby: Presumption of a bilateral contract. Also, stating “Will you let me hear from you as soon as possible” indicates that a promise is sought (as opposed to performance).
P close to her aunt and uncle. When they fell ill there was communication and P was asked to come to California to take care of aunt, uncle promised that upon their death they would inherit money. Uncle committed suicide before P and her husband arrived. Ct. says it's a bilateral, because he asked to know decision, and because necessarily involved services after his death.
 
UCC 2-206(1)(a): Unless otherwise “unambiguously” indicated by either the language or surrounding circumstances, offers are construed as inviting acceptance in any manner and by any medium reasonable in the circumstances
 
UCC 2-206(1)(b): An offer (think order) to buy goods for prompt shipment is construed as inviting acceptance either by a prompt promise to ship or by the prompt shipment of conforming or non-conforming (has some defect) goods, BUT such a shipment of NON-CONFORMING goods does NOT constitute an acceptance IF the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer. (see comment 4)