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Contracts
University of Iowa School of Law
Burton, Steven J.

Outline  
Contract Law ; Professor: Steve Burton, Principles of Contract Law
Enforceability of contract à Identify and interpret terms à Perform/right to cancel/excuse of non-performing à Breach à Remedy (compensate non-breaching party)
1)      Is there a legal offer?
2)      Is there a valid acceptance of the offer?
3)      Whether the agreement meets the writing and signing requirements if required?
Agreement  
4)      Is there a prima facie reason to enforce the agreement? (consideration, reliance, unjust enrichment)
5)      Is there overriding reasons not to enforce the agreement? (lack of competency, illegality, public policy, misrepresentation, mutual mistake, unconscionability)
Enforceable Contract
 
Intention
An agreement is existed, either there is a subjective agreement or an objective agreement.
n  Subjective: meeting of the minds – autonomy
Lucy v. Zehmer: facts prove the execution of the contract was a serious business rather than a jesting matter.
n  Objective: manifestation of intention the meaning they would have to a reasonable person under the circumstances – security (preferred) respect the other party’s reasonable expectation and reliance
Lucy v. Zehmer, Embry: When a landowner signed a written agreement to sell and later claimed he was joking, while the buyer proved that both parties were serious, then they made an agreement.-subjective, autonomy
Dicta: If the words or other 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. -objective, security+ exception, R2 §201
Embry (oral contract…writing not required)[SS1] : the general rule is that it is for the court to construe the effect of writings relied on to make a contract, and also the effect of unambiguous oral words. If oral words turn out to be ambiguous, the question of whether they form a contract is for the jury.
Oswald v. Allen: when any of the terms used to express an agreement is ambivalent, and the parties understand it in different ways, there cannot be a contract unless one of them should have been aware of the other’s understanding.- subjective+objective: Under the common law, when neither sub nor obj, then no contract
, R2 §71(a)
 
Offers
n  Manifestation of willingness to enter into a bargain §24-objective
n  Reasonably certainty of the contract terms §33(1)(2)-objective;(3)not necessarily
Invitation of offer: ads unless objective reasonableness of the alleged offeree’s belief that the ad was intended as an offer, e.g. “first-come, first-served” Lefkowitz
Mesaros: it’s unreasonable for a person to believe that ads are offers that bind the advertiser; otherwise, the advertiser could be bound by an excessive number of contracts requiring delivery of goods far in excess of amounts available.
 
Lefkowitz: 1) Whether in any individual instance a newspaper advertisement is an offer rather than an invitation to make an offer depends on the legal intention of the parties and the surrounding circumstances. “First-come, first-served” advertisement provides sufficient basis for the court to understand that the advertiser intended an offer. 2) While an advertiser has the right at any time before acceptance to modify his offer, he does not have the right, after acceptance, to impose new or arbitrary conditions not contained in the published offer.
 
Powers of acceptance termination
n  Lapse of time: specified/reasonable time §41
Akers: – An offer made by one to another in a face to face conversation is deemed to continue only to the close of their conversation, and cannot be accepted thereafter (security principle-expectation) unless special words or circumstances indicate an intention on the part of the offeror that it shall do so (autonomy principle,”offeror is the master of the offer”).
–          Where no time is fixed, the question of what is a reasonable time (§41) depend on the nature of the contract proposed, the usages of business and other circumstances of the case.
–          Alternative holdings: Offer terminated by rejection.
n  Rejection or counter-offer (qualified/conditional acceptance) §38 39 59
Ardente v. Horan: an acceptance must be definite and equivocal. The acceptance may not impose additional conditions on the offer nor may it add limitations. But it may be valid despite conditional language if the acceptance is clearly independent of the condition.—conditional acceptance, therefore a counteroffer / unconditional acceptance with an offer to modify the contract.
n  Revocation §42 43 46
Petterson v. Pattberg: any offer to enter into a unilateral contract may be withdrawn before the act requested to be done has

offeree was directed toward the fulfilling of its obligation so as to sufficient express its assent to the agreement and such conduct was performed by individuals who had authority to bind the offeree.
 
“Open terms” Even terms are left open, a contract for sale does not fail indefiniteness if the parties have intended to make a contract and there is a reasonable certain basis for giving an appropriate remedy. §2-204(3)
 
“Additional terms” Abolish “mirror image rule” in common law: additional or different terms in acceptance will not constitute a counter-offer unless acceptance is expressly made conditional on assent to the additional terms.  §2-207
Additional terms will become part of the contract if they don’t materially alter the original bargain and no notice of objection is given. Different terms will be governed by default rule, not becoming part of contract.
Ionics v. Elmwood: where the terms in two forms are contradictory, each party is assumed to object to the other party’s conflicting clause. Mere acceptance of the goods by buyer is insufficient to infer consent to seller’s term. Nor do such terms become part of the contract.
 
Incomplete agreements
Sun Printing v. Remington: the contract was incomplete when agreement in respect of time was not reached and the party reserved the privilege of doing its business in its own way and did not undertake to conform to the practice and beliefs of others.
 
An agreement to agree is not binding. But an agreement to all essential terms only lack of formality may be binding, depending on parties’ intention (circumstances surrounding the negotiations, the actions of the parties)
Palmer v. Fuqua: parties’ intention to be bound by the Memo of Intent or not is a factual issue.
 [SS1]Can I spot issues such as recognition of assent in an oral contract should be more restrictive? although it might not be included in class.