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Contracts
University of Mississippi School of Law
Case, David W.

Ks Outline
Case § 3
Fall 2009
 
 
Important terms:
1.)    K- Agreement b/t two or more people. An exchange of promises. Not necessarily in writing. Formation requires a bargain in which there is an agreement to the exchange and consideration. R. §1: “K is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.”
 
2.)    Promise- R. §2(1): A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.
 
3.)    Bargain- agreement to exchange:
–          Promises- Heart of a K; not all are enforceable
–          Promises for a performance
–          Performances
 
3.) Agreement- manifestation of mutual assent b/t two or more people
       4.) Consideration- something of value sought by promisor and received by promisor from              
      promisee in exchange for the promise. Necessary to make a K enforceable
–          May take the form of a return promise or performance
–          Must either be a detriment to promisee or benefit conferred upon promisor
 
      5.) Performance- successful completion of a K duty. May consist of:
–          An act other than a return promise
–          A forbearance
–          Creation, modification, or destruction of a legal relation
 
 
 
     
I. CHAPTER 2: MUTUAL ASSENT AND CONSIDERATION p. 21
     
A. Mutual Assent
1.) For there to be a K, must have a “meeting of the minds”, i.e. a manifestation of mutual assent            to enter into the K
2.) All K’s must have an offer and acceptance; mutual assent of both parties to the same bargain
 
 
 
1. Two approaches to K law:
Classical Approach- Objective Theory of K- it doesn’t matter what parties thought or intended, but what a reasonable person in position of parties would have thought or intended.  If parties’ actions, judged by a standard of reasonableness, manifest an intention to agree, then the real state of the party’s mind is irrelevant.
–          Ray v. Eurice Bros, 1952 p. 23-
o   Party is bound by a signed document which he has read w/ the capacity to understand it, absent fraud, duress, and mutual mistake.
o   Interpret an offer or acceptance not  by what the party making it thought it meant or intended it to mean, but what an objective, reasonable person in the position of the parties would have thought it meant
o   When “minds don’t meet”, have 3 options:
§ No K
§ Buyer’s interpretation
§ Seller’s interpretation
–          Lucy v. Zehmer, p. 32 Note 6-
o   seller maintains he was joking, but RP would conclude otherwise, thus valid K
o   Buyer intended to form K, had no reason to know it was a joke
o   Ct. found seller at fault b/c he should have known that buyer was serious, but buyer had no way of knowing seller was not serious
Modern Approach- greater focus on fairness; looks at intent of parties.
 
2. Offer and Acceptance in Bilateral Ks p. 33:
 
1)      Offer- a manifestation of willingness to enter into a bargain, so made as to justify another’s understanding that his assent is invited and will concluded the offer (§ 24). A manifestation of willingness to enter into a bargain is NOT an

     4.) Death or incapacity of the offeror or offeree
-§41- Lapse of time
1.) An offeree’s power of acceptance is terminated at the time specified in the      offer, or at the end of a reasonable time.
2.) What is “reasonable” is a question of fact
3.) Mailbox Rule: revocation effective when received; acceptance effective when      dispatched.
            -§39- Counter-Offers
1.) Offer made by an offeree to his offeror relating to the same matter as the      original offer and proposing a substituted bargain different from original offer.
2.) Offeree’s power of acceptance terminated by his making a counter-offer,       unless the offeror has manifested a contrary intention or unless the counter-      offer manifests a contrary intention of the offeree.
Bilateral K- exchange of promises b/t two parties
     
Unilateral K:
– Promise in exchange for an act or performance
      -Classical Approach: free to revoke b/f completion of full performance
     
Option K:
      – An agreement to keep an offer open for a stated period of time. 
– Must always be supported by consideration from K.
 
Mirror image rule- acceptance must be made on exact terms as the offer.                            
 
Peterson v. Pattberg, 1928 p. 53-
-Facts: Pattberg revokes offer when Peterson attempts to pay.