Contracts Outline

Contracts

Weidemaier, Mark

Fall 2013

Introduction

A. Identify the source of the rules

1. Article 2 of the UCC: contracts involving ①the sale of ②goods

(1) Definition of goods UCC 2-105(1)

①all tangible things

②has to be movable

③at the time of identification to the contract

(2) Common law rules supplement contracts governed by the UCC to the extent those rules are not displaced (取代) by the Code.

2. There are other statutes but, if a contract or issue is not governed by UCC Art.2, assume that common law rules apply.

i.e. lease for car going to be governed by common law because it’s a lease and not a sale.

3. “Mixed” contracts

Hooker v. Roberts

look to (1) Nature of contract (Most courts look primarily or exclusively to the nature of contract.)

· If more work is required to do the service part, it is service K and common law used. And vice versa. Look at how money allocated. (e.g., restaurant bill–most goes to food, only 20% for services.)

· If relatively balanced, courts might apply UCC to goods part and common law to services part

(2) Nature of dispute. (Whether the dispute primarily concerns goods)

Here, the dispute actually concerns the performance of services and the delegation of duties under a contract. Not goods.

B. Is there a contract? (A contract is simply a promise + A reason to enforce it)

1. A contract 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 as a duty.” Rest. §1

2. Promise

· A promise is: Rest. §2

①A manifestation of intention to act or refrain from acting in a specified way

¡ “manifestation of intention” indicates that the law is interested in behavior, not intention. A party may make a promise without intending to do so.

②So made as to justify a promisee in understanding that a commitment has been made.

¡ This means that it is enough that a reasonable person would understand the promisor to have made a commitment (unless the promisee actually knows that no commitment was intended).

3. A promise “may be stated in words either oral or written, or may be inferred wholly or partly from conduct.” Rest. §4

(1) Express promise

①Specific undertaking in words

②Need not be done in writing, can be done orally

(2) Implied promise

①implied in fact: promises that are actually based on conduct, not expressly made but are essentially treated like express contracts. (Ex: holding someone’s rope while rock climbing)

②implied in law: “not a promise but don’t care.” The law will presume there is a promise whether the parties intended that or not. Don’t need manifestation of intent by the parties.

Chapter 1 Theories of Enforcement

If there has been a promise, there must also be a reason for enforcement:

A. MUTUAL MANIFESTATIONS OF ASSENT + CONSIDERATION

I. General

Rest. §17 A contract has been formed if

①the parties mutually manifest their assent to an exchange, and

②there is a consideration.

II. Was there a manifestation of mutual assent?

1. General

(1) Objective Theory: Each party manifests assent by behaving so as to justifiably lead the other to believe they have assented.

· Whether an objective, reasonable person in the position of the offeree would believe a commitment has been made.

· No “intent to K” required, subjective intentions are not taken into account.

(Hawkins v. McGee).

· Lucy v. Zehmer

¡ Facts: After a night of some drinking and “needling” conversation, Zehmer offered in writing to sell Lucy his farm for $50,000, a fair price. Lucy accepted. Zehmer later contended that no contract had been formed in part because he was “higher than a Georgia Pine” when he made the offer, and mostly because he subjectively believed the offer to be a joke—a kind of dare to see if Lucy really would commit to pay the $50,000.

¡ Rule: The words and acts of a person are interpreted according to a reasonable person standard. Contract formation does not require the mental assent of the parties involved.

¡ Held: Zehmer made a valid offer to sell the farm because, to a reasonable person in the position of the offeree (Lucy), it appeared that Zehmer made a sincere offer. And Lucy indeed understood Zehmer to have made a commitment. Some of the acts Zehmer undertook that made it appear to a reasonable person that there was an offer included a discussion of the deal for about 40 minutes with Lucy, including a detailed discussion of the title that was to be conveyed, and a rewrite of the offer to include his wife as a co-seller. It was thus irrelevant what Zehmer subjectively believed or that Zehmer and the Lucy did not have a “meeting of the minds.” The key was that the Lucy is reasonable in believing Zehmer was serious under the objective theory of contracts.

(2) Rules

Rest. §18 Manifestation of mutual assent requires that each party either make a promise or begin or render a performance.

Rest. §19: Conduct as manifestation of assent

①Manifestation of assent may be made wholly or partly by written or spok