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University of Iowa School of Law
Burton, Steven J.

Contract Outline
Expectation, Reliance Restitution Interests
–          Expectation
o        Stems from psychological fact that, at formation, each party anticipates that the world of the contract will come into existence as promised
§         Expectation interest from moment of contracting
§         Lends a party to change its position in advance of performance by action or inaction
–          Reliance
o        This change of position gives rise to the reliance interest
o        A person has relied on the promise and has an interest in the other sides performance
§         The expectation and reliance interests are often harmed by the same reasons
·         Mistakes, misunderstandings, changed circumstances, and misplaced trust
o        These two interests define the harms that are distinctive concerns of contract law
–          Restitution
o        Interest is concerned with benefits one party may receive at the expense of the other
§         A fee paid for a job negligently done on a contract, if retained, seems unjust
§         Thus the party has a restitution interest protected by restoring the benefit of the bargain, usually the money paid, sometimes specific performance.
One has a legal right when they have an interest strong enough to justify imposing a duty on another person to act with respect for that right
–          Making a Bargain Contract
o        Was there a legal offer?
o        Was there a valid acceptance?
o        Was there consideration?
o        Was there an absence of invalidating causes?
–          If the answer to all is yes there is a bargain contract, enforceable at law upon breach by either promisor.
The Autonomy and Security Principles
–          Autonomy Principle- The law empowers people to make and receive enforceable promises when they communicate decisions to act or refrain from acting in some definite way in the future.
–          Security Principle- The law requires each party to do its part to respect the other party’s reasonable expectations.
–          Promises
o        To say something which obligates the promisor
§         Those who use such words shall be bound to do the things designated by them
·         An act by a which a person imagines a possible world and signals commitment to bring that world into being by future action
·         Promise must be made in a social context, and not all cultures have the promise concept
o        Every contract will contain a promise, but not every promise is a contract
–          Promissory Agreements- R2C § 201
o        Two parties “agree” when they both intend to make an agreement and they communicate their desire to do so.
§         Cooperate jointly by entering into an agreement with a promise on at least one side committing themselves to each other to bring that world into being through their actions
o        Different ways to determine intention, subjective and objective tests.

, to trade on an as is basis on the spot is not a contract, no promises on either side, no action will occur in the future
·          An offer to barter is not an offer to contract
§          Offers to contract are promises manifesting a commitment to some specified action in the future in return for some promise or performance by the offeree
·          A sequential offer and acceptance not only way to contract, many made by negotiating a single document or using a standard form contract
o         Power of acceptance- R2C §§ 36, 38, 39, 41, 59
§          People making an offer are exercising a legal power.
§          The offer CREATES a power of acceptance in the offeree.
·          An agreement is made when the offeree exercises that power of accepting
o         If agreement is enforceable the parties have contract rights and duties
·         Acceptance concludes the deal if the power of acceptance is alive the moment of acceptance.
§         Termination of the power of acceptance:
·         Rejection or counteroffer by the offeree
o        Counteroffer is really a new offer by the offeree (now offeror) to the previous offeror (no offeree)
Lapse of time