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Contracts
University of North Carolina School of Law
Gerhardt, Deborah R.

 
 
 
 
 
 
 
 
 
 
 
 
Contracts
 
Professor Deborah Gerhardt
 
University of North Carolina Chapel Hill
 
Fall Semester 2012
 
 
 
 
 
 
 
 
 
 
                                                                                               
 
 
 
Have the parties made a deal:
 
1)      OFFER – “An offer must be definite and certain.  To be capable of being converted into a contract of sale by an acceptance, it must be made under circumstances evidencing an express or implied intention that its acceptance shall constitute a binding contract.” ( Maryland Supreme Corp. v. Blake)
 
a.      Destroying the Offer
                                                                    i.            Rejection
                                                                  ii.            Revocation
                                                                iii.            Lapse
                                                                iv.            Death/Incapacity
b.      Preserving the Offer
 
2)      ACCEPTANCE – “Manifestation of assent by the offeree to the terms in a manner invited or required by the offeror.” (Restatement Sec. 50)
 
a.      Promissory Acceptance
b.      Acceptance by Performance
c.       Acceptance by Silence or Inaction
d.      Imperfect Acceptance
                                                                    i.            UCC 2-207
 
3)      DEFICIENT AGREEMENTS
 
a.      Misunderstood, Incomplete, and Indefinite Terms
b.      Postponed Agreements
 
4)      CONSIDERATION – To constitute consideration, a performance or a return promise must be bargained for.  A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. The performance may consist of (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation.  The performance or return promise may be given to the promisor or to some  other person. It may be given by the promisee or by some other person.
 
a.      Family Agreements
b.      One Promise as Consideration for Another Promise
c.       Consideration and Contract Modification
d.      Moral Obligations
e.       Reliance and Promissory Estoppel
                                                                    i.            Charities
 
 
5)      REASONS FOR NOT ENFORCING AN AGREEMENT
 
a.      Statutes of Fraud
b.      Fraud, Fraudulent or Material Misrepresentation and Nondisclosure
c.       Lack of Capacity
d.      Durres and Undue Influence
e.       Illegality and Public Policy
f.       Unconscionability
g.      Mistake
 
6)      TERMS OF A DEAL
 
a.      Trade Customs and Usage
b.      Words of the Parties that are not in the Final Written Version of the Deal: The Parole Evidence Rule
 
7)      BEING EXCUSED FROM ENFORCING A DEAL
 
a.      Conditions
b.      Modification, Waver, or Estoppel
c.       Impossibility, Impracticability
d.      Anticipatory Repudiation
e.       Material Breach
 
8)      HOW THE LAW ENFORCES A DEAL
 
a.      Specific Performance
b.      Agreed Remedies
                                                                    i.            Liquidated Damages
c.       Judicial Determination of Money Damages
                                                                    i.            Expectation Interest
                                                                  ii.            Reliance Interest
                                                                iii.            Restitution Interest
 
 
 
 
 
 
 
 
 
 
Contract:
        i.            A set of promises that the law will enforce
a.       Promise made to someone else (2 or more parties)
b.      Offer + Acceptance = Manifestation of Mutual Assent
      ii.            Bargain of exchange (consideration)
a.      Offer + Acceptance + Consideration = Contract
b.      A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. (Restatement Sec. 1)
 
 
 
Freedom of Contracts:
·         If deal is struck then parties have to stick with it
o   Unless there is duress, fraud, etc.
·         Courts role to enforce the contract
·         Little government involvement
 
1.      R.R. v. M.H.
Facts:  Plaintiffs, M.H. & another, entered into a surrogacy agreement with Defendant, R.R. Defendant changed her mind prior to giving birth and expressed a desire to keep the child.
a.       Very clear promises, but the court does not enforce
                                                              i.      Not every agreement can be relied on
b.      Policy Concern:
                                                              i.      Personal autonomy.  Don’t want to create situation where peo

Freeman (D) listed house on eBay (formerly Elvis’ house).  Gleason (P) and partners bid $905,100 on the house.  Freeman’s agent had added a statement to the ad that stated that all bidding is legally binding.  Freeman was told that the intent of this statement was to deter frivolous bidders.  EBay’s terms and conditions on the other hand, stated that transaction on eBay is not legally binding.  Freeman ended up selling his home to a 3rd party for $1 million.
a.       Rule: When there is ambiguity in the language, the court has to look at the words and conduct of the parties. 
                                                        i.            Continuing to negotiate terms (no contract made)
                                                      ii.            Gleason was still negotiating with Freeman (it was not his intent to be bound by the statement on the ad either)
 
4.      Smith v. Boyd
Facts:  The Boyd’s (D) listed their home for sale with real estate broker Joan Carter.  The Boyds had used Carter in prior real estate sales, for which they received written purchase offers. The Smiths (P) made an offer to purchase the property, after detailed discussions. After the discussions, Carter filled in the blanks on a standard purchase agreement, putting the terms of the discussion in writing. On the same day, the Durigan (defendant-interveners) made a written offer to purchase the property. The Boyd’s accepted the Durigans’ offer, and the Smiths filed an action against the Boyds for specific performance.
a.       Rule: Need to examine what is custom in the industry. 
                                                        i.            The custom in the industry of Real Estate is that contracts need to be in writing
                                                      ii.            The Boyd’s intended for nothing to be agreed on until it was in writing
                                                                                      i.      Brokers role was to get offers for the Boyd’s review