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

 
Contracts Burton Fall 2015
 
Chapter 1: The Autonomy and Security Principles
 
1) Promises
 
Hawkins v. McGee:
·         Holding (Liability Issue): When there was evidence that a surgeon promised a good result after repeatedly soliciting the opportunity to perform surgery, wanted to experiment, and was inexperienced, and that he failed to achieve a good result, a jury verdict finding that the surgeon breached a contract was upheld.
·         Holding (Remedy Issue): Holding: No. When a surgeon breaches a contract to achieve a good result from surgery, a jury should be instructed to measure damages by the difference between the values of the promised result and the actual result.
 
2) Promissory Agreements
           
A) The Intention of the Parties
           
Lucy v. Zehmer: When a landowner signed a written agreement to sell and later claimed he was joking, but the buyer proved both parties were serious, then they made an agreement.
·         Zehmer signed a writing, long negotiations, they revised the draft to add Mrs. Zehmer’s signature, they discussed what the sale included, provision for examination of the title, completeness of the writing, Lucy took the writing; Zehmer didn’t object.
                       
Embry v. Hargadine, McKittrick Dry Goods Co: If one party manifests an intention to agree and the other party so understands it and intends to agree, then you have a contract.
·         Embry gave McKittrick an ultimatum to continue his employment or he would leave (fish or cut bait) McKittrick said “go ahead, you’re alright,” (fish), and so Embry believed they had an agreement.
·         Promissory Agreement: When the parties’ intentions do not match, they agree if one intends to agree and reasonably understands the manifestations as its agreements
 
Oswald v. Allen: The parties do not agree when their intentions do not match and neither party’s manifestation of intention was reasonably understood by the other as assent to the other’s terms.
·         Swiss Coin collection case (All Swiss coins v. Swiss Coin collection)
·         No meeting of the minds à no subjective agreement
·         Neither party knew or should’ve known of the other’s intention à no objective agreement
·         Conclusion: No agreement
 
Synthesis:
·         Subjective Agreement: When the parties’ intentions match, they make an agreement (Lucy); OR
·         Objective Agreement: When the parties’ intentions do not match, they agree if one intends to agree and reasonably understand he other’s manifestations as its agreement (Embry); AND
·         If there is no subject or objective agreement, there is no agreement (Oswald)
 
B) Offers
Overview: Making a Bargain Contract
·         Was there a legal offer?
·         Was there a valid acceptance?
·         Was the agreement in writing and signed, if required?
·         Was there a legal reason to enforce the agreement?
·         Was there an overriding legal reason not to enforce it?
 
Elements of an Offer
·         (1) R2 Sect. 24: Manifested Intention to Agree
o   1. Was there a manifestation of intention to enter into a bargain?
o   2. Would it justify another person in understanding that his/her assent to the bargain is (a) invited and (b) will conclude the deal?
·         (2) R2 Sect. 33: Reasonable Certainty.
o   1. Are the contract terms reasonably certain?
§  I.e. is there a basis in the agreement for determining a breach and a remedy?
 
Mesaros v. United States: There is an offer if (1) a party manifests its willingness to conclude a deal and (2) the terms are reasonably certain.
·         Sent out an advertisement that included a Purchase Order form for liberty coins.
·         Form: “Yes please accept my order…” à buyer is making the offer.
·         Limited quantity + multiple addressees.
·         Conclusion: The USG did not make an offer.
 
Academy Chicago Publishers v. Cheever: There is an offer if (1) [above] and (2) the terms are reasonably certain.
·         Facts: The terms are not reasonably certain.
·         The ag

e offeree’s rejection constitutes an acceptance. The acceptance may be communicated by the other party either by a formal acceptance, or acts amounting to an acceptance. Delay in communicating action as to the acceptance may amount to an acceptance itself. When the subject of a contract, either in its nature or by virtue of conditions of the market, will become unmarketable by delay, delay in notifying the other party of his decision will amount to an acceptance by the offeree.
 
Seaview Ass’n of Fire Island, NY v. Williams: Implied-in-fact contract; parties manifest assent by conduct.
·         Did the buyer manifest assent to an offer?
o   Offer: The Association provided services (conduct) to owners; the buyer knew this.
o   Acceptance: The buyer bought (conduct)
·         Rationale: The Association reasonably expected that the purchase was an acceptance, and the buyer knew (or should have known) this.
 
E) Formation Under the U.C.C.
 
U.C.C. §§ 2-204, 2-206
 
ProCD, Inc. v. Zeidenberg: Shrinkwrap licenses included within a product’s packaging are enforceable unless their terms are objectionable on grounds applicable to contracts in general, such as violating a positive rule of law or being unconscionable.
 
American Law Institute Principles of the Law of Software Contracts §§ 2.01, 2.02
 
Empire Machinery Co. v. Litton Business Telephone Systems: If an offeree with authority to legally bind its organization takes steps to begin performance of its contractual obligations that would lead a reasonable offeror to believe that the contract has been accepted, such conduct may constitute acceptance of the contract.