Fall 2003
Contracts – Colombo
I. CLASSIC CONTRACT.. 2
a. Offer and Acceptance. 2
i. Classic Rules. 2
ii. Subjective vs. Objective Theories. 2
b. Consideration. 3
i. Old rule – benefit/detriment doctrine. 3
ii. New rule – bargain for exchange. 3
II. ALTERNATE THEORIES OF RECOVERY.. 3
a. Promissory Estoppel3
iii. Family Promises. 4
iv. Charitable Subscriptions 4
v. Commercial Promises. 4
b. Restitution 5
c. Promissory Restitution. 6
III. OBLIGATION IN ABSENCE OF COMPLETE AGREEMENT 6
a. The Agreement to Agree/Letter of Intent6
IV. THE STATUTE OF FRAUDS. 7
V. INTERPRETING THE AGREEMENT 7
VI. PAROL EVIDENCE RULE.. 8
VII. IMPLIED TERMS. 9
a. The Implied Obligation of Good Faith 9
VIII. DEFENSES TO ENFORCEMENT 10
a. Incapacity 10
i. Minor incapacity 10
ii. Mental Incapacity 10
b. Duress and Undue Influence. 11
i. Duress 11
ii. Undue Influence. 11
c. MISREPRESENTATION AND NON-DISCLOSURE 12
i. Misrepresentation and Fraud 12
ii. Non-Disclosure 13
d. Unconscionability. 13
e. Public Policy. 14
IX. BREACH OF CONTRACT.. 14
a. Material Breach. 14
b. Anticipatory Repudiation 15
X. DAMAGES 16
a. Expectation Damages. 16
ix. Restrictions on Expectation Damages. 18
1. Foreseeability/Certainty/Causation 18
2. Mitigation of Damages. 19
I. CLASSIC CONTRACT
a. Offer and Acceptance
i. Classic Rules
1. Offer
a. Manifestation of willingness to enter into a bargain
b. Needs to be specific
c. Lonergan v. Scolnick – guy places add in paper advertising property – was held this was not an offer – no meeting of the minds, no specifics – even with other communications between parties, still no offer – sent form letter, let other party know had multiple people interested
d. An offer is revocable at any time up until acceptance
i. Revocation does not have to be direct – offeree is considered informed once he receives reliable information of revocation
2. Acceptance
a. Does not have to be verbal/written
b. If offeree instead makes counteroffer
i. If the terms of the contract are changed, or new ones are added, this is a non-acceptance of the first contract and an offer for a new contract
3. Unilateral Contracts
a. Definition – when only one person has a commitment, provided the other person performs an act.
i. Ex. I will give you 25 dollars to eat these worms. He doesn’t have to eat the worms, and I only pay him if he does.
b. An offer to make a unilateral contract is accepted when the requested performance is rendered.
i. Modern law / restatement says it is accepted once you begin performance
ii. Common law says when there has been substantial performance (not generally used)
c.
ge
1. If (consideration is given) then I promise that
2. I’ll give you “this” for “that”
3. Must be reciprocal inducement of parties to do something by bargaining
4. Dougherty v. Salt – aunt signed a note saying she would pay nephew at her death or before just because he is a good boy. She died without paying, court said not a valid contract because it was just a gift and could be revoked at any time.
5. Baehr v. Penn o Tex Oil – court said that promise to pay rent to avoid being sued was not consideration – no cross inducement
6. Plowman v. Indian Refining – Employer promises to pay employees after they are forced into retirement, then stops paying. Court says there was no contract – no consideration. Their 30 years of work does not count
a. Consideration can not be based on a past act
II. ALTERNATE THEORIES OF RECOVERY
a. Promissory Estoppel
i. Elements
According to the restatement §90, a promise is binding if
1. There is in fact a promise
2. It is reasonably believable
3. It induces action or forbearance (actual reliance)
and it causes injustice
