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Contracts
University of Iowa School of Law
Sidel, Mark

Contracts Course Outline

Chapter 1: The Autonomy and Security Principles
Promises

R2K § 2: Promise; Promisee; Beneficiary: Defines Parties and Promises: p. 195
R2K § 3: Agreement Defined; Bargain Defined: p.196
To constitute an enforceable promise, the P show whether “the words could possibly have the meaning imputed to them by the party who founds his case upon a certain interpretation.” Hawkins v. McGee, p. 4.

Promissory Agreements
The Intention of the Parties

R2K § 201: Whose Meaning Prevails: Rule Regarding Miscommunications: p. 254

Lucy v. Zehmer: While drinking parties discuss sale of farm. One party believes it is a joke, but signs receipt selling the farm, and convinces his wife to do so as well. Valid contract. P.15.

“We must look to the outward expression of a person as manifesting his intention rather than to his secret and unexpressed intention.” “The law imputes to a person an intention corresponding to the reasonable meaning of his words and acts.”

Embry v. Hargardine, McKittrick Dry Goods Co.: Verbal contract for employment. In circumstances, words “Go ahead, you’re all right. Get your men out and don’t let that worry you” constituted a contract for employment. P. 20.

“Insofar as their intention is an influential element, it is only such intention as the words or acts of the parties indicate; not one secretly cherished which is inconsistent with those words or acts.”

Oswald v. Allen: Two coin collectors, one from NY and one from Switzerland, have different understandings of what coins they are discussing in the contract for sale. No party should have known and both were in good faith. No contract. P.22

“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.” P.23

Offers

R2K § 24: Offer Defined: “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.”: p. 201.
R2K § 26: Preliminary Negotiations: Not an offer if offeree knows or should know it wasn’t meant to conclude bargain. P. 201. Comment on advertising is available.
R2K § 33: Certainty: Terms must be reasonably certain, basis for breach and remedy. P. 204.
R2K § 35: The Offeree’s Power of Acceptance: Offer gives a continuing power to accept until the power has been terminated. P. 204.

Mesaros v. United States: P’s order coins from the mint. Order form stated that orders subject to approval by home office and “Please accept my order…” P. 25.

“The construction is rather favored that such an advertisement is a mere invitation to enter into a bargain rather than an offer.”

Lefkowitz v. Great Minneapolis Surplus Store: Store offers various items on a first come first served basis for $1. The owner decides that he will not give the fur stole to a man, says the advertisement was not an offer. The court disagrees. P. 30.

An advertisement constitutes an offer when it is “clear, definite, and explicit, and leaves nothing open for negotiation.” P.32.

Powers of Acceptance

R2K § 36: Methods of Termination of the Power of Acceptance: rejection, counter-offer, lapse of time, revocation, death or incapacity, non-occurrence of a condition. P. 205
R2K § 41: Lapse of Time: Specified by offer or reasonable time and mail rules. P. 206.

Akers v. J.B. Sedberry, Inc.: Employees meet with manager and orally tender their resignation. Manager refuses. The next day the manager attempts to accept the offer of resignation via telegraph. Court finds that the power of acceptance ended at the end of the conversation. P. 37.

“A reasonable time for the acceptance of most offers made in conversation will not extend beyond the time of the conversation unless special words or circumstances indicate an intention on the part of the offeror that is shall do so.” P.36-37
“An offer is rejected when the offeror is justified in inferring from the words or conduct of the offeree that the offeree intends not to accept the offer or to take it under further advisement.” P.37

R2K § 38: Rejection: power of acceptance is terminated unless a contrary intent is manifested. P. 205
R2K § 39: Counter-offers: A counter offer generally terminates the power of acceptance unless contrary intention expressed. P. 205.
R2K § 59: Purported Acceptance Which Adds Qualifications: An purported acceptance that adds conditions is actually a counter-offer. P. 210.

Ardente v. Horan: D selling house to P. Agreement sent to the P, who signed and returned along with a letter asking to confirm that certain items were included with the home. They were not included and D cancelled the deal. P sues for SP. Court says letter constituted a counter-offer, therefore no SP. P. 41.

“To be effective, an acceptance must be definite and unequivocal.”
When an offeree makes a suggestion or request, “so long as it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer whether such request is granted or not, a contract is formed.”

R2K § 42: Revocation by Communication From Offeror Received by Offeree: p. 207
R2K § 43: Indirect Communication of Revocation: when offeror takes action inconsistent with offer and offeree knows it. P. 207.
R2K § 46: Revocation of General Offer: A general offer, like an advertisement, is revoked upon using equal means. P. 208.
R2K § 50: Acceptance of Offer Defined; Acceptance by Performance; Acceptance by Promise: Acceptance equals manifestation of intent, can be done by performance or promise, as requested by offeror. P.209
R2K § 53: Acceptance by Performance; Manifestation of Intent Not to Accept: Performance only when invited, when offeree can manifest intention to reject. P. 209.

Petterson v. Pattberg: D offered to reduce principal if P made an early payment on loan. When P approaches house, the D revokes offer. Court upholds revocation. P. 43.

“Clearly an offering party has the right ot name the precise act performance of which would convert his offer into a binding promise. Whatever the act may be until it is performed, the offer must be revocable.”
Note: Partial performance and good faith usually require you to keep the keep the offer open once the other party begins performance.

R2K § 25: Options Contracts: Limits the promisor’s ability to revoke an offer. P. 201.
R2K § 37: Termination of Power of Acceptance Under Option Contract: Not terminated under an option contract by rejection, counter-offer, or death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty. P.205
R2K § 45: Option Contract Created by Part Performance or Tender: When offer accepts performance and not promise, an option contract is created when the offeree begins performance. Offeror’s duties are conditional upon completion of the performance. P. 207
R2K § 54: Acceptance by Performance; Necessity of Notification to Offeror: When offer invites performance, no notice is necessary unless requested, or unless the offeree knows that the offeror has no adequate means of learning of performance, reasonable diligence to notify is required. See for more details. P. 209

Acceptance

R2K § 32: Invitation of Promise or Performance: When in doubt, either will suffice. P. 203.
R2K § 50: Acceptance of Offer Defined; Acceptance by Performance; Acceptance by Promise: Acceptance equals manifestation of intent, can be done by performance or promise, as requested by offeror. P.209
R2K § 54: Acceptanc

ear contracts, and others depending on the state. P. 231.
R2K § 129: Action in Reliance; Specific Performance: Contract for land may be specifically enforced if the party reasonably relies on the contract on the continuing assent of the seller and has changed his position so that injustice can only be avoided by SP. P. 234.
R2K § 131: General Requisites of a Memorandum: A contract is enforceable if it is evidenced by any writing signed by the party to be charged, reasonably identifies the subject matter, sufficient to indicate that a contract has been made, states with reasonable certainty the essential terms of the unperformed promises in the contract. P. 235.

Chomicky v. Buttolph (contract signed subject to rezoning, then oral agreement that they would sell anyway. Changed mind, wanted to sell whole thing then. Suit for SP.) p. 112.

“We do not believe that [an admission of the existence of the oral contract] takes the contract outside the SOF.”
“Any proposed changes or modifications are subjected to the same requirements of form as the original provisions.”
“The doctrine of part performance is invoked to give relief to those who substantially and irretrievably change their position in reliance on the oral agreement.”
“Money payments (like deposits) on the purchase are not enough to give the oral agreement enforceable status, even coupled with possession, in the face of the SOF.”

Radke v. Brenon (division of lakefront strip between neighbors, each pay equal share, oral agreement, then letter sent to neighbors without all details) p. 115, 117.

“We will overlook technical requirements only if proof of the oral contract is clear and uncontradicted.”
“If after a consideration of the surrounding circumstances, the pertinent facts and all the evidence in a particular case, the court concludes that enforcement of the agreement will not subject the defendant to fraudulent claims, the purpose of the SOF will best be served by holding the [writing] sufficient even though it be ambiguous or incomplete.”

UCC § 2-201: Formal Requirements; SOF: SOF applies to contracts for sale of goods greater than $500. Exceptions: goods specially manufactured that have been substantially started or materials procured; admission in pleadings; goods have been accepted. P.30.
UCC § 2-209: Modification, Rescission, and Waiver: Modifications do not require consideration; SOF must be satisfied if the modified contract falls under provisions; a modification that does not satisfy the SOF may operate as a waiver. P. 37.

Cloud Corp. v. Hasbro, Inc.: POs used to purchase product, changes to be verified. Both parties ignored acknowledgement forms. Formula for product changed, so P increased volume. Both parties acted as if those were the numbers until this controversy arose. P 119, 123.

“The UCC does not require that the contract itself be in writing, only that there be adequate documentary evidence of its existence and essential terms.”

Chapter 2: The Justification Principle
The Bargained-For Exchange – Consideration