Matheson_Contracts_Fall_2010
Has your client made a deal?
A. DETERMINING THE MEETING OF THE MINDS
i. Standard of interpretation – reasonable and actual understanding
1. Factors in interpretation
a. Manifestations – must have it for enforceable contract i. language of commitment
ii. specificity – enough terms that the court would know what it was enforcing
iii. form (oral/written)
b. Circumstances
i. context (ex: office v. cocktail party)
ii. relationship (ex: doctor/patient – element of trust)
c. Course of Negotiations – length of negotiation (timing)
d. Course of Performance – performing multiple times under the same contract (ex: monthly rent)
e. Course of Dealing – prior contracts (ex: last year’s lease)
f. Usage of Trade – the way people operate in a specific place of business or industry
ii. Hawkins v. McGee – P sues D for injury to hand after unsuccessful operation
1. RULE – language of commitment can create contract
iii. Lucy v. Zehmer – P makes a promise to D at a bar to sell his farm—(reasonable price), and scribbles it on the back of a check. Then when D tries to enforce the contract, P suggests the whole thing was a joke.
1. RULE – a party’s objective intent will be considered in determining if
there is a contract
2. If there is no meeting of the minds, P must prove (w/respect to intent)
a. a reasonable person would believe that the parties intended to enter into a contract through objective manifestations
b. one party actually believed that a contract was formed
iv. Smith v. Boyd – D discusses sale with two parties. One party gets the contract for the purchase of land. P is the other party. Court finds P did not have contract to purchase land.
1. RULE – usage of trade – common practice in real estate to have purchaser sign purchase and sales agreement as offer; must have selling party sign for valid contract
v. Raffles v. Wichelhaus – P and D enter into agreement regarding sale/purchase of bales of cotton; cotton arrives on wrong ship
1. RULE – parties intent is shown (in order of importance)
a. course of performance – multiple shipments under one contract b. course of dealing – prior contracts
c. usage of trade – in shipping business, what is common practice when to expect the shipment
B. OFFER
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i. 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 the bargain is invited and will conclude it. Restatement (Second) §24
ii. Lonergan v. Scolnick – Ad placed in paper for sale of land. April 8 – D
describes land, tells P to act fast in response to P’s inquiry about land. April 14
– P responds to purchase land; D already sold to 3rd party
1. RULE – Restatement (Second) §26 – A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of intent.
2. No offer – preliminary negotiation; no definite language that creates power of acceptance in purchaser. If ―I accept‖ would create a contract, then it is an offer.
3. Assuming offer on April 8 – timing & communication; ―acceptance‖ was
not timely; communication – P needed to check with D if offer had lapsed
iii. Fairmount Glass Works v. Grunden Martin Woodware – 1st letter request for a price quotation. 2nd letter price ―quotation‖ plus specifics constitute offer. 3rd letter telegram accepting
1. RULE – Factors of interpretation can change price ―quotation‖ into offer
2. language of specificity
a. price ―quotation‖ (alone, it is not an offer; ex: catalog, grocery store ad, estimate for car)
b. quantity
c. addressed to one person d. type of goods
e. shipping date
f. payment method
3. language of commitment
a. ―for immediate acceptance‖
iv. Russell v. Monticello Ford and Mercury – ad for car from dealer at specific price that P claims is offer
1. RULE – Restatement §26 (noted above in Lonergan)
2. if goods advertised for sale at certain price, not an offer and no contract
formed; it’s only an invitation to bargain
3. ad is offer only when it is clear, definite, explicit, and leaves nothing open for negotiation
v. Leonard v. PepsiCo. – TV ad for Harrier jet; cost is many ―Pepsi Points‖; P tries to purchase enough points and writes the order in by hand on the official order form, because Harrier jet did not appear on form
1. RULE – generally, ads are not offers
a. to be offer, must be language of commitment or invitation to take action without further communication
b. language of specificity to limit liability; how many and to whom i. ex: Minneapolis Surplus case: ad for 3 fur coats, $1 each,
―first come first serve‖
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2. RULE – offer must be one that an objective, reasonable person would believe constitutes an offer
a. commercial was obviously a joke
C. DESTROYING THE OFFER
i. At any time before acceptance, an offer can be terminated by
1. revocation by offeror
a. direct (ex: ―I revoke my offer.‖)
b. indirect (ex: finding out through someone else that the offeror has completed a sale to a 3rd party)
2. rejection by the offeree
3. lapse
ii. Dickinson v. Dodds – D tells P he has until
he offeror to be valid)
1. Death of offeror revokes an offer no matter what a. Even if offeree doesn’t know of the death
b. Example – Davis v. Jacoby – if X dies before Y accepts, offer is revoked
2. Contract provisions say that acceptance need not be communicated
a. Contract basically says, you can accept whether or not I find out about it
b. §54 Acceptance by Performance; Necessity of Notification to
Offeror
i. Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offeror requests such a notification (the assumption here is that the offeror will find out that you are commencing performance)
ii. If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless
1. the offeree exercises reasonable diligence to notify the offeror of acceptance, or
2. the offeror learns of the performance with a reasonable time, or
3. the offer indicates that the notification of acceptance is not required
3. Mailbox rule
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a. Acceptance is effective upon dispatch
iii. Lasalle Bank v. Vega – offer provision called for execution of trust to create valid acceptance; trust never executed; no contract
1. RULE – offeror has complete control over offer and may condition acceptance to the terms of the offer
2. RULE – language of offer governs mode of acceptance
3. RULE – where offer requires written acceptance, no other mode may be used
iv. Ever-Tite Roofing Corp. v. Green – acceptance provision called for written acceptance (bilateral) OR upon commencing performance of work in order to accept (unilateral); court said loading truck with supplies constituted performance; contract was formed
1. RULE – Must be reasonable time between offer and acceptance if timing not specified in offer
a. Reasonable time depends on circumstances
b. Question of fact and can be argued both ways
c. This case court found timing reasonable (9 days) because credit check normally takes some time
