1. Contracts – General
vi. Why enforce contracts
1. Promote smooth commerce
2. Promote certainty in commercial transactions
3. Promote good faith and fair dealings
vii. choice of remedies if breached contract:
1. Damages, specific performance, rescission and restitution, quasi-contract, & tort action
2. Contract Basics
1. Must have a bargain sought by the promisor in exchange for his promise and given by the promisee in exchange for that promise.
vii. Two types of contracts-
1. Unilateral – Promise for a performance
a. Hamer v. Sidway
2. Bilateral – Promise for a promise
a. Mattei v. Hopper
viii. Contract must be supported by consideration-A performance or promise that each party seeks in return for their performance.
ix. § 344 Judicial remedies serve to protect one or more of the following interests of a promisee
a. Expectation interest – Put him in the position he would have been had the contract been performed?
b. Reliance interest – putting him in the position he would have been had the contract not been made.
c. Restitution interest – His interest in having restored to him any benefit he has conferred on the other party.
d. Punative damages are not permitted in actions for breach of contract
2. United States Naval Institute v. Charter Communications (Focus on Injured Parties Damages)
a. (P) sued (D) for copyright infringement of paperback sales of Hunt for Red October seeking all of (D)’s profits. (P) received damages for actual loss, but not profits
b. The goal of contract law is not punitive its compensatory
c. The purpose of damages for breach is to compensate the injured party for its loses that are a result of the breach. How much would the party have made if the other party kept its promise?
3. Sullivan v. O’Connor (Unsuccessful surgery)
a. Case of the Hedi Lamar Nose. Reliance, putting back in position originally occupied before agreement, is the recovery for breach of a physicians contract to produce certain results.
b. Two types of restitution
i. Compensatory – applied to breach of contracts involving goods. Difference between status quo and what would have been had the contact been enforced.
ii. Restitutive – award based on what plaintiff has lost as a result of the breach.
x. § 345 Remedies Available.
1. Money due under the contract or as damages
2. Performance
3. Restoration of a specific thing.
4. Money to prevent unjust enrichment.
5. Declaring the rights of parties
6. Enforcing arbitration.
3. Is There a Contract?
1. Need
1. Offer
2. Acceptance
3. Consideration –OR- Reliance
vii. § 17 Requirement of a Bargain – The formation of a contract requires a bargain in which there is mutual assent to the exchange and a consideration.
viii. § 18 Manifestation of Mutual Assent – Mutual assent to an exchange requires that each party either make a promise or begin or render a performance.
4. The Offer
i. § 24 Offer Defined – Showing willingness to enter into a bargain, so made as to show another person that gives the other the power to accept it. If they accept it, it will be a concluded contract.
ii. Corbin Definition-An offer is an act whereby one person confers upon another the power to create contractual relations between them.
iii. 4 Guides for an offer…
1. Does the reasonable person believe an offer has been made?
2. Was there promissory language?
3. Was the proposal addressed to a specific party?
4. Is the proposal definite in terms?
iv. NOT
1. An invitation to deal
2. Joke/Absurd proposition
3. Absurdly low price.
4. Advertisements – These are an invitation to make an offer.
5. Preliminary negotiation
Equal publicity as the offer is enough
vii. If there a number of offers in a single transaction, any of the offers may be rejected without ending the other contracts.
viii. Deposits do not limit the offeror’s power to revoke an offer and the offeror can even sometimes even recover the deposit.
ix. Offeror’s death or incapacity – The offeree’s power of acceptance is terminated if the offeror dies before the offer has been accepted, regardless of whether the offeree has had notice.
x. § 48 Death or Incapacity of Offeror or Offeree
xi. Offeree’s rejection – Rejection by the offeree terminates the power of acceptance. A direct rejection means the offeree cannot later accept that particular offer
xii. § 38 Rejection
xiii. A later acceptance is construed as an offer.
xiv. Counter Offers – Usually related to the original offer, but proposing a substituted bargain differing from the original offer.
1. § 39 Counter Offers
a.A counter offer is considered a rejection of the original offer unless it is expressly stated in the offer that counter offers would not be considered rejections.
b. Usually considered that the offeree will not be accepting the original offer.
c.The offeree must make an expressed counter offer for it to be considered a revocation (asking if they will take less is different than offering less).
xv. § 206 Interpretation Against the Draftsman
xvi. § 207 Interpretation Favoring the Public
§ 45 Option Contract Created by Part
