Kar Contracts Fall 2015
Restatement definition (Intro Material Before 3 Beast)
Contract – A contract is a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law recognizes as a duty.
Promise – A promise is a manifestation of intention to act or refrain from acting in a specific way so made as to justify a promisee in understanding that a commitment has been made.
•The formation of a contract requires a “bargain in which there is a manifestation of mutual assent and a consideration”.
(was a contract formed?)
Formation of a K requires an offer, acceptance, and consideration.
(a) Mutual assent – Manifestation of mutual assent usually takes place in the form of an offer by one party and acceptance by another. (mutual assent = offer and acceptance)
(1) Offer – An offer is the 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.
(2) Acceptance – Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. Acceptance would be in exact terms as agreed upon and communicated to offeror.
(b) Consideration – a performance or a return promise that is bargained for.
(1) Bargained for – if performance or return promise is sought by promisor in exchange for his promise and given by promise in exchange for that promise.
(2) What’s NOT Consideration – gratuitous promise/gifts , Illusory promises (I’ll give you $100 if I feel like it), past consideration (something you did in past not consideration for future contract)
Elements: Know rules to determine prerequisites. Remedies: Each cause of action has different remedy. Policy/purposes: “why” we are doing it
Breach of Contract:
1. Mutual assent (3 Ways)
a. Sign a contract simultaneously
b. Offer+ accept (Restatement Section 50)
· Identify an offer
· Identify an acceptance
· Did acceptance occur prior to termination of power to accept?
c. Some form of conduct
How can power to accept terminate? (Section 36)
· Lapse of time
· Revocation by offeror
· Offeror dies/mentally incapacitated
· Rejection or counter offer
2. Consideration: A return promise or performance that was “bargained for” (Section 71). Past Consideration is no consideration.
– Remedy is Expectation Damages: Get what you would have if promise was fulfilled.
– Purpose is Empowerment (for the promisor)
Promissory Estoppel (9-16 Through 9-18):
2. Induce action or forbearance
3. Promisor should have reasonably expected (1-2) promise would induce action or forbearance
4. Injustice can only be avoided through enforcement (usually means reliance is detrimental or does harm)
– Remedy is Reliance Damages: Money you get from harm caused (Less then Expectation damages)
– Purpose is Reliance (for the Promisee)
Restitution (9-23 Through 9-24)
o 1. Conferral of a material benefit
o 2. And under circum
time a promisor is obligated.
a. Offeror: Maximum protection to the offerror who would not be bound unless and until he receives the performance that he sought
b. Offeree: If the offeror should revoke his offer at a time when the offeree had commenced but not yet completed the requested performance, the offeree is denied any remedy on the contract because the offer was revoked before the proposed contract ever came into being
NEW RULE: Once a person starts performing in reliance, make the offer irrevocable: Solves the problem without binding the offeree: this is what the offeror wants through empowerment
Key: If you have an offer for a unilateral contract you allow that to affect your offer and subsequent analysis
– Only complete performance is acceptance
– Once someone begins performance the contract becomes irrevocable
· Applies to goods only (Not Services)
· An option contract is: An offer of a contract. Valid subsidiary promise to keep offer open. Supported by consideration (Can be service in addition to usual consideration)
· In option contract, promise to keep offer open is supported by consideration (i.e. deposit) whereas in unilateral, its more based on reliance (i.e. once you start performance, offer is irrevocable)