Contracts Outline
Prof. Stacey Lantagne
Fall 2018
behind contract law:
Predictability: World functions better; people more likely to do things
Efficiency: Ties in w/ predictability
Freedom to Contract: between individuals more most (legal) things
Fairness: Courts sometimes re-write unconscionable contracts; duress, gun-to-head, etc. This is done on a case-by-case basis
Communication of Present Commitment
Contract- Promise/promises, if breached the law provides a remedy, or performance is recognized by the law as a duty.
Present Commitment- Offer and acceptance w/ consideration creates mutual assent to form a contract
Present Commitment = Mutual Assent + consideration
Mutual Assent: agreement on same bargain at the same time, a meeting of the minds, aka offer and acceptance. Measured objectively by apparent intention manifested to the other. Intent to be bound.
Subjective / Objective Intention-
Lucy v. Zehmer- MUTUAL ASSENT – OBJECTIVE INTENT
We must look to the outward expression (objective intent) as a manifest intent to form a contract, NOT an unexpressed or secret intent (subjective intent)
Harvey v. Facey- LOWEST PRICE – PREDICTIBILITY
Statement of lowest price isn’t agreement to sell at that price
Certainty of Terms- Contracts § 33
1. Offer can’t be accepted unless the terms are reasonably certain
2. Terms are reasonably certain if they can determine a breach and appropriate remedy
Required terms:
Subject Matter
Quantity
Parties
Price
3. If terms are open/uncertain may show it’s not a valid contract
Certainty of Terms U.C.C., less strict as restatements of contracts
Contract for sale of goods can be oral/written/action. Action shows both parties recognize a contract
A contract for goods may exist even if moment of creation is undetermined
If terms are left open, contrast is valid if they intended to make a contract and there’s a reasonably certain basis for remedy.
UCC will read in reasonable price if none is listed
Price left to later negotiations must be food faith or contract can be void
If no intent to be bound till price is set then it’s not yet a binding contract
Price: ‘good faith’ if not stated. Intention to price or no contract.
Place: Seller’s place if not stated
Time: reasonable time
Payment: due upon goods being received,
Advertisements: NO specific offeree or specific quantity.
IF an advertisement is “clear, definite, and explicit, leaving nothing open to negotiations it is an offer and acceptance creates a contract”
Leonard v. PepsiCo- An ad isn’t an offer unless the terms are clear, definite, explicit, and leaves nothing open to negotiation. Joke ads aren’t clear enough to constitute an offer.
Judged by an objective intention
“first come first serve” is too indefinite to be an offer
Fairmont Glass Works v. Cruden Martin Wood Ware co- Aim of court is to arrive at intent of parties
A quote price is an invitation to accept and binding if accepted.
Language used is important to determine mutual consent
Communications help to determine intent
Letters of Intent
LoI: Non-binding offer documenting progress toward a contract after future manifestation of assent
OR
LoI: A binding contract and future agreements as formalities
Store Properties v. Neal- if a contract appears to be a preliminary agreement, capturing the spirit of a possible future contract and it is clear there was no meeting of the minds then it’s not enforceable. When terms are to be written, assent to contract must be shown by a written agreement by all
The document referred to a future lease to be written
Diesel Power Equipment v. ADDCO- no meeting of the minds, wasn’t concrete enough to form contract
Requests for Bids: Invitations for offers, which can be accepted/requested by person requesting for bids.
Communication of Present Commitment RECAP
Present Commitment / Mutual assent are needed to form contract
Mutual Assent is offer and acceptance
Judged by objective standard Lucy v. Zehmer
Offers must have reasonably certain terms
Subject, Quantity, Parties, Price (time and place are non-essential)
UCC will read some terms in to offers for goods only
Quote price isn’t always an offer to sell at that price Harvey v. Facey, Fairmont Glass Works
Ads are generally not offers but are invitations for others to make an offer Leonard v. Pepsi
Requests for bids are not offers but invitation to receive offers
IF terms for Quotes, Ads, and Bids are certain and defined they could be offers
LoI may or may not be offers, depending on certainty and circumstances Store Properties v. Neal and Diesel Power Equipment v. ADDCO
Manner of Acceptance
Requirements to Accept- Manifestation/Acceptance to terms by the offeree in the correct way
Form of Acceptance Invited (Restatement of Second of Contracts § 30
An offer may invite/require acceptance to be made with an affirmative answer in words, OR by performing/refraining from performing a specified act, OR may empower the offeree to make a selection of terms in his acceptance.
Unless otherwise indicated by the language or circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.
Manner of acceptance stated- Offeror can require offeree to accept the offer in a certain way
If required acceptance stated offeree can only accept by that manner
If no required way to accept / suggested then offeree can accept by any reasonable way
Kuzmeskus v. Pickup Motor co- If clear that the offer wasn’t presently binding and no expectation to be bound till fully authorized then there’s no contract till authorization occurs. Offeree can withdraw any time before authorization, as it’s not a binding contract.
Promise made with understanding to not be binding but only express intention isn’t a contract
Before acceptance there’s no contract
Unilateral v.
ccept or take the offer under further consideration. Offers made face-face continue till the end of the conversation then can’t be accepted.
Revocation by Offeror’s communication to offeree- Offeree’s power of acceptance ends when offeree receives a manifestation of intent not to enter into the proposed contract by the offeror. Communication to offeree that you don’t want to ender the contract terminates power of acceptance
Petterson v. Pattberg- a unilateral contract can be withdrawn, ending offeree’s power to accept, anytime before the request has been performed
Indirect communication- offeree’s power of acceptance ends when offeror takes actions inconsistent w/ an intention to enter into the contract and offeree has knowledge to that effect.
Action to make present commitment doubtable
Offeree must know of offeror’s actions
Dickinson v. Dodds- Offeror can revoke acceptance w/o expressed/actual statement if there’s been no meeting of the minds and the offeree know the offeror intends to revoke the offer.
Lapse of time- Offeree’s power of acceptance ends at the time specified to in the offer or if not specified at a reasonable time.
Reasonable time depends on all circumstances when the offer and attempted acceptance are made.
Offer sent by mail is accepted if acceptance is mailed before midnight on the day the offer is received.
Counter offer- an offer made by offeree to offeror regarding same subject offer proposing an alteration from the original offer.
Offeree’s power of acceptance ends when he makes a counter-offer unless offeror has shown contrary intention or the counter-offer shows a contrary intention of offeree.
Mirror Image Rule- acceptance that actually changes terms of the offer is a counter-offer
Livingstone v. Evans- Counter offers are rejections of 1st offer, and any response to a counter offer is a renewal of the 1st offer if offeror demonstrates he’ll stand by the 1st offer
Option Contracts- Power of acceptance for option contracts are not ended by rejection or counter offer, revocation, or death/incapacity of offeree, UNLESS the requirements are met for the end of a contractual duty, like time running out.
If you have an option contract, it doesn’t get termination in typical ways, because this is a special situation
Telephone / Telecomm- instantaneous communication is governed by normal principles of acceptance where parties are face-face
