Contracts II Outline

Contracts II Outline- Spring2010- Gaetke
 
WHEN ACCEPTANCE BECOMES EFFECTIVE (remainder)
 
MAILBOX RULE/Deposited Acceptance Rule
Mailbox Ruleà an acceptance is effective on dispatch (when offeree puts it in mail, not when received)
It protects the offeree more than offeror
Reasoning Theories behind Rule
Agency Theory
                                                               i.      Post office is agent for Offeror thus he has received it as his agent
                                                              ii.      Problem is the offeree can get the letter back from the post office.
Offeror is Master of the Offer
                                                               i.      Offeror has chosen mail as the method and thus assumes the risk of uncertainty (could have always required different manner of acceptance)
Allows Offeree to start performing quicker.
It is easier to tell when something is sent than when it was received
Exceptions when rule doesn’t apply
Option contracts (accepted on receipt)
When Offeree has first sent a rejection, but then sends an acceptance, then acceptance only good if received before rejection.
Lost in transmissionà if properly addressed, then still applies, but if improperly addressed then only effective after received if outside normal time.
Keyà K can always provide otherwise, meaning stating the mailbox rule is not in effect.
 
SILENCE AS CONSENT (See Rest. § 69)
Old C/Là Silence not acceptance, unless offeree had ad duty to speak
Restatement only Allows Silence/Inaction as Acceptance in Three cases
Offeree takes the benefit of offered SERVICES with reasonable chance to reject them and has reason to know that offeror expected compensation. 69(a)(i)
Where offeror has given offeree reason to know that silence/inaction will manifest acceptance, and offeree does so INTENDING to accept 69(a)(ii)
In course of dealings, it is reasonable that the offeree should have notified the offeror he didn’t intend to accept 69(a)(iii) (past dealings causes obligation to respond)
If offeree does any act inconsistent with offeror’s ownership rights, the offeree is accepting unless terms are manifestly unreasonable 69(b) Exercise of Dominion
                                                               i.      We have statute to avoid this rule for unsolicited merchandise.
KEY is offeree must normally have reason to know/intend that silence be acceptance.
 
 
PAROLE EVIDENCE AND INTERPRETATION
 
PAROLE EVIDENCE RULE
Generally
PER discharges all prior agreements/negotiations (CAN BE ORAL AND WRITTEN)
                                                               i.      thus limits the extent a party may establish that prior discussions/writings should be a part of the agreement.
                                                              ii.      Keep evidence out of trial
PER is about the finality of negotiations and Intent (trying to decide if the parties meant to have this one written contract be the finality of their negotiations)
PER is a rule of substantive law, not just evidence.
Process
Is the Contract an Integration?  (See Rest. § 209 and 213)
                                                               i.      If yes, PER does apply to keep evidence out.
1.       If Total integrationà then no evidence of prior expressions that contradict or adds to the writing (Analysis Done) (discharges all agreements in its scope)
2.       If Partial integrationà No evidence that contradicts is allowed, but evidence consistent with and adding to the agreement is allowed (Move to Consistency)
                                                              ii.      If no, the PER doesn’t apply and evidence is admissible.
Is the additional evidence consistent with the Agreement?
                                                               i.      Two Views
1.       Must be consistent only with the EXPRESSED terms (minority view)
2.       Must be consistent with Expressed AND fairly Implied terms (Majority and Rest. View § 216)
Determining Integration
Meanings
                                                               i.      Integrationà where parties intended agreement to be final expression of their agreement
                                                              ii.      Full/Total Integrationà Agreement is intended to be the final and includes all details
                                                            iii.      Partial Integrationà Agreement intended to be a final agreement on at least some issues, but not on all details
JUDGE determines if integration, type of integration, and whether terms supplement a complete integration , and the jury then decides actual terms later if evidence let in.
Usually it is assumed to be a integration unless evidence establishes otherwise. (§ 209(c))
                                                               i.      However, UCC 2-202 does not have that presumption
Two Views of determining Integration (KEY)
                                                               i.      OLD VIEWàLook solely at the four corners of the Document, OR
                                                              ii.      BETTER VIEWàLook at all available evidence/circumstances (Rest. & UCC view)
                                                            iii.      Factors include
1.       Merger Clauseà says an agreement is the final agreement and discharges all other agreements
a.       This makes a strong presumption for Total Integration.
2.       Complexity/Detail of Contract
a.       The more complex/detailed the more likely total integration
3.       Sophistication of the parties
4.       Course of Dealings
5.       Prior agreement/negotiations themselves (Rest. 214)
Limitations on the PER (Situations where Extrinsic evidence allowed in)
Subsequent agreements
                                                               i.      PER only applies to prior oral and written agreements
Ancillary Agreements
                                                               i.      if it is so close to be a part of it (ancillary), then PER doesn’t apply, thus it must be collateral
Collateral Agreements with separate, independent consideration
Existence of a Condition going to the Effectiveness of the Document itself
                                                               i.      Meaning there is no contract until after condition met – fine line with a condition in contract as to enforcements
Fraud (and other elements showing that no contract exists)
                                                               i.      Frost Requirements
1.       Intentional
2.       Reliance
3.       A scheme to defraud not just once.
                                                              ii.      OK to allow since this is Tort liability and the standard for fraud is much tougher and your damages are limited to rescission and restitution instead of enforcement and expectation damages
                                                            iii.      General Merger clause cannot get around fraud, but the more specific the better the chance it can (such as no reliance on . . . )