I. The Agreement Process
a. Intent to Contract
i. Lucy v. Zehmer
1. If a party to the contract has a reasonable belief that the other party has the requisite intent to enter into the agreement when he does not, the contract is still enforceable.
2. The mental assent of the parties is not a requisite for the formation of a contract. If the words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to the other party.
3. A person cannot say he was joking when his words and conduct would result in a reasonable person believing it was a valid agreement.
4. The court does not look to Defendants intent when making the agreement. The only focus is on the Plaintiff and if he had a reasonable belief.
ii. Balfour v. Balfour
1. Agreements between husband and wife to provide monies are generally not contracts because generally the “parties d[o] not intend that they should be attended by legal consequences.”
2. The court first recognized that certain forms of agreements do not reach the status of a contract. An agreement between a husband and wife is often times such a form of agreement.
3. These agreements are not contracts because the “parties did not intend that they should be attended by legal consequences.”
iii. Sanchez v. Life Care Centers of America, Inc.
1. In order for a disclaimer in an employee handbook to be effective, it must be conspicuous.
2. The type size equals that of other provisions on the same page. No border sets the disclaimer apart from any other paragraph on the page. The disclaimer is not conspicuous.
a. If the employer, for whatever reason, does not want the manual to be capable of being construed by the court as a binding contract, there are simple ways to attain that goal:
i. A statement that there is no promise of any kind by the employer contained in the manual
ii. That regardless of what the manual says or provides, the employer promises nothing and remains free to change wages and all other working conditions without having to consult anyone and without anyone’s agreement
iii. That the employer continues to have the absolute power to fire anyone with or without good cause.”
iv. K.D. v. Education Testing Service
1. In adhesion contracts, courts will make an effort to ” to protect the weaker party from the agreement’s harsher terms by a variety of pretexts, while still keeping the elementary rules of the law of contracts intact.”
2. Just because the contract is a contract of adhesion, the contract is not necessarily void.
3. The court refused to disregard the clause.
a. If defendant reasonably believed that the test scores of plaintiff as scored on the April, 1974 test, did not accurately reflect his aptitude for law school, it acted within its right to protect its own image as well as its obligation to the schools who are its clients in canceling plaintiff’s scores and requiring him to take a retest.”
b. The court found that the Defendant, by giving the Plaintiff the option to retake the test a third time, and if the score was within 50 points of the second test, report the second test score to law schools, was fair and reasonable.
v. MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D’Agostino
1. A corporation will not be relieved from its contractual obligation if one of its employees signs a contract in a language he does not speak or read.
2. Parties who sign contracts will be bound by them regardless of whether they have read them or understood them.
i. Types of offers
1. Collins v. Reynard
a. A complaint against a lawyer for professional malpractice may be couched in either contract or tort and that recovery may be sought in the alternative.
b. Although the purposes underlying contract and tort law are different, certain behavior can be prosecuted under both theories.
2. Hawkins v. McGee
a. Defendant’s statements that the boy would be home from the hospital within three or four days and would be back at work a few days after did not form a contract.
i. This was the Defendant’s opinion or prediction.
ii. If the Plaintiff were in the hospital or could not work for a longer period of time, the doctor would not be contractually obligated.
b. Defendant’s statement “I will guarantee to make the hand a hundred per cent perfect hand or a hundred per cent good hand” arguably “would establish the giving of a warranty in accordance with his contention.”
c. Intent to Memorialize
i. Texaco, Inc. v. Pennzoil, Co.
1. Four factors to determine whether parties intended to be bound by only a formal, signed writing:
a. Whether a party expressly reserved the right to be bound only when a written agreement is signed
b. Whether there was any partial performance by one party that the party disclaiming the contract accepted
c. Whether all essential terms of the alleged contract had been agreed upon
d. Whether the complexity or magnitude of the transaction was such that a formal, executed writing would normally be expected.
2. No clear intent of the parties not to be bound to establish, as a matter of law, that there was no contract at that time.
3. Little relevant partial performance in this case that might show that the parties believed that they were bound by a contract.
a. Nonetheless, the court finds “the absence of relevant part performance in this short period of time [only a few days] does not compel the conclusion that no contract existed.”
4. There was sufficient evidence for the jury to conclude that the parties had reached agreement on all essential terms of the transaction with only the mechanics and details left to be supplied by the parties’ attorneys
5. Although the magnitude of the transaction here was such that normally a signed writing would be expected, there was sufficient evidence to support an inference that the expectation was satisfied here initially by the Memorandum of Agreement
6. This case demonstrates how agreements can be consummated in a variety of ways – oral, written, partially oral and partially written – and that a case-by-case analysis is the only way to determine whether an agreement was made.
ii. Haines v. City of New York
a. If no duration term – reasonable time
2. This case offers a good example of how courts determine the duration and scope of a contract if these characteristics are not clear from the words in the contract
3. The duration of the agreement
Rejects the contention that the court was perpetually