Jeffrey Davis
Contracts
Spring 2010
7 Questions:
1. Is there Agreement
2. Is there any Reason Not to Enforce the Agreement
3. What are the Terms of the Contract
4. Was Contract Performed
5. Is there Any Excuse for Non-Performance
6. Consequenses/Damages
7. Third Party Duties
1. Must be Agreement where someone makes promise
2. Must have Basis for Enforcement
a. Consideration is one basis for enforcement
b. Certain Moral Obligations
c. Certain kinds of Reliance
3. Breach Occurs
4. Parties Must Have Capacity to Contract
1. IS THERE ENFORCEABLE CONTRACT __ yes ___ no
KEYWORDS-Enforceable contract requires agreement containing a promise and a basis for enforcing the promise (i.e. consideration/or a consideration exception).
2. IS THERE AGREEMENT ____ yes ____ no
KEYWORDS-Agreement= offer + Acceptance;
Requires manifestation of mutual assent-RS 17
A. WAS THERE AN OFFER ____ yes ____ no.
1. Offer Defined-RS 24-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.
Owen v. Tunison-(130)- 1st letter will you sell me property for $6,000.00. 2nd letter-can’t sell for less than 16,000.00. Third letter-accepts offer. Person not justified in belief communication invited assent-no power to accept. RS 24.
2. Writing Not Required-RS 27-Manifestation of assent enough and if also intended to prepare written document-not done-won’t preclude contract. Factors to consider-(1) reservation of right not to be bound in absence of writing (2) partial performance (3) if all terms have been agreed upon (4) at issue-type usually committed to in writing.
3. Indifferent offers-doubt offeree can choose to perform/promise.
4. Offeror Has Power of Offer-RS 30. Offer can invite acceptance by promise, (Bilateral) performance or forbearance (unilateral) or indifferent giving decision to offeree. If not explicit offeree can accept in any manner reasonable. RS 32-
5. Meeting of Minds Not Required-Objective Theory of Contract-Average reasonable person has reasonable belief under all acts and circumstances to believe person was serious to enter agreement. See Lucy v. Zhemer (120). (said joke about selling property)
6. Elements for Offer
a. Uncertain Terms-RS 33(1)-Look for unclear phrases (fair, appropriate, reasonable)-no offer.
b. Certain Terms-RS 33(2)-Certain terms provide basis to determine existence of breach and appropriate remedy. Ex. Requirements (“all” “only” “solely”)-offer made.
c. Missing Terms- RS 33(3)-if terms left open or uncertain-may show no offer. Ex. Real estate must have price and describe real estate.
7. Mistake is offer (RS 153) Unless (1) material mistake and (2) enforcement unconscionable or (b) other party knows mistake. General Exception-contractor bids (See below)
Elsinore Union Elementary School District v. Kastorff-(143) submits bid to school board w/ plumbing addition error. Promptly notifies of error and withdraw bid. Board-accepts bid. Contractor refuses. Hire 3rd party. Mistake revokes offer if (1) mistake of fact material to contract (2) not result of negligent legal duty (3) if other party can be placed in status quo (4) must give prompt notice of election to rescind and restore or offer to restore everything of value exchanged under the contract. Mistake in offer can void contract. RS 153.
Jaguar-newspaper misprints price. Statutes says must sell. But have argument that mistake. Counter would be legal negligence.
8. Misunderstanding/Joke-Not defense unless party knows or has reason to know different meaning (mutual misunderstanding) (RS 20). See: Lucy v. Zhemer (120) (said joke about selling property-but buyer had no reason to know misunderstanding)
9. Advertisement-generally not offer (MAY SAY OFFER). Can’t close deal. Advertisers can’t control demand. But if offeree and quantity stated, it is offer. No danger of oversubscription. Exception-firm offer see below and below case. Future offer, auctions-generally not offers.
Lefkowitz v. Great Minneapolis Surplus Store-advertisement $1.00 stole on first come first served basis. First in line. Said only women. Average reasonable stick person-first come person with quantity and price would close deal.
10. Price Quote-Generally Not Offer-Unless-see below case.
Fairmont Glass Works v. Cruden-(135)- Buyer requests lowest price for 10 cars; Forward “quote” for immediate acceptance. Accepted. Seller sold out. Specifications mailed-for sizes and asked premium jars/lids. Usually price quote not offer (as don’t have power to close deal). But bid is offer, even if called “price quote”. Had price, terms of acceptance, delivery info. First quality goods is understood in trade-reiteration only. RS 24.
B. DID OFFER TERMINATE BEFORE ACCEPTANCE ___ yes __ no
1. RS 36. Will terminate if
___ (a) rejection(RS 38)-not rejection if take under further advisement/counter-offer by offeree (RS 39)
___ (b) lapse of specified or reasonable time (RS 41). Reasonable time question of fact for reasonable stick person to decide.
Akers v. JB Sedberrry, Inc.-Employee offer resign. Employer ignored-accepts days later. Face to face offer deemed to lapse at end of conversation.
Loring v. City of Boston-City advertised for 1 week reward for conviction of person setting fire to city building 1837. January 1841-requested award. No good. Presumed forgotten and lost purpose.
___ © revocation by offeror received by offeree directly (RS42) or indirectly (RS 43) Revocation of general offer made advertisement/newspaper terminates with notice of termination equal to offer given. (RS46)
Hoover Motor Express Co v. Clements Paper Co-H offers to buy real estate from C. Called and said ready to discuss, offeror said not sure they were. Sent acceptance after. Said telephone remark constituted revocation.
G Dickinson v. Dodds-offer sell left open until Friday 9:00 a.m.. Seller begins negotiating with another Thursday. Buyer hears about it and accepts. Buyer had reliable information that offeror no longer intended to sell. Can’t accept once revocation received directly/indirectly.
___ (d) death of offeror or offeree. (RS 48)
2. Was there a revocation © exception ____ yes ____ no
___ Option Contract Created by Part Performance or Payment of Unilateral Contract seeking performance. (RS 45(1)) Offeror’s duty begins when performance completed. Brooklyn Bridge Hypo
___ Option-Promise n
t shipping of conforming and non-conforming goods unless notified it is accommodation to buyer.
Corinthian Pharmaceutical System Inc. V. Lederle Labs-LL changes prices. CP orders 1,000 vials by phone. LL sends 50 at old price and letter saying others will be shipped at new price and cancel if don’t want. No acceptance-no manifestation of intent. Tracking number from computer not acceptance. Shipping vials-not acceptance as was nonconforming shipment as accommodation.
9. Acceptance by Silence-(RS 69). Silence is acceptance only when (a) offerree takes benefit w/ opportunity to reject and reason to know expectation of compensation. (b) offerree reason to know silence considered assent (c) previous dealings on silence as acceptance where verbal cancellation needed.
10. Are parties in separate places w/ inconsistent communications? ___ yes ___ no
Mailbox Rule- All communication except acceptance valid when received. (RS 63)-Acceptance valid when sent even if not received. Gives simple clear rule to govern communications. Exception: Option Contract-acceptance not valid until received by offeror. (RS 64) Exception: Telephone/Teletype (RS 64)-same rules as if in presence of one another. Exception: If offerror sends rejection and relies to detriment on rejection, offeree may be estopped from enforcement.
9. Did offeree reject before acceptance. ___ yes ___ no
(a) Counter-offer-kills offer (RS 58)
(b) Conditional Acceptance-kills offer (if, but, provided, so long as) (RS59). Purports to accepts but adds to or requests different terms from those offered and is not acceptance but counter-offer. Exception: Condition that does not add or request different term to offer (ex. –I accept as long as I don’t get a lower price in the next 2 weeks).
(c) Additional Terms- (and) Mirror Image Rule. (RS62) Offer not accepted if acceptance dependant on additional terms. Exception-Sale of Goods UCC-2-207. If performance-than Last Shot Doctrine governs.
Ex. Railway Company case-offered to sell 2-5 LK. Accepted 1,200. Said no acceptance. No Mirror Image so counter-offer.
4. ANY REASON NOT TO ENFORCE AGREEMENT ____ yes ____ no
KEYWORDS “POLICING THE BARGAIN”
A. CAPACITY AT ISSUE ____ yes ___ no
KEYWORDS-DOES NOT VOID AGREMENT BUT CAN DISAFFIRM
1. Intoxication-only if lack understanding to comprehend K.
2. Mental Issues
3. Minors-can disaffirm but minor can enforce agreement. Must disaffirm soon after becoming adult or enforceable. Usually must give back consideration received if disaffirm.
a. Exceptions-necessities (food, clothing, home, medical care)
