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Contracts
University of North Carolina School of Law
Feibelman, Adam

Restatement 2d § 17: Requirement of a Bargain
(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration
(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §82-94

MUTUAL ASSENT

Mutual Assent—parties must reach an agreement to which they mutually assent. Usually achieved through offer and acceptance.
Offer and Acceptance not necessary…can have 3rd part present to 2 people terms of a K, lots of detailed rules govern the process
NOT SUBJECTIVE—the parties don’t need have been subjectively in agreement or have a “meeting of the minds,” must act in a way that leads the other to believe an agreement has been reached
Agreement only required of MAJOR TERMS—must agree to major or essential terms for sure, if disagree about minor/did not provide for minor, a court will determine what to do
OBJECTIVE THEORY OF CONTRACTS—Existence and terms of Ks are determined form the outward manifestations of the parties, not subjective intentions
Assent Killers: In employment context if you don’t have the particulars of work, if quantity is left out of an order, sometimes if price is left out it can be evidence that there was no agreement

(1) Certainty
Assent means Agreement, so if the terms of the bargain are not settled, then there is no agreement and therefore no assent

Restatement 2d. §33: CERTAINTY
(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.

(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.

(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

Joseph Martin Jr. Delicatesson v Schumacher—rent renewal price left open, court said not enforceable, saying a mere agreement to agree, in which a material term is left for future negotiations, is unenforceable. K liberty includes the liberty to not K, have to have assent of obligation that is sufficiently certain and specific

Dissent—there was assent, just uncertainty about $, which a court could decide

Kearns v Andree—re-wallpaper house case, the original mortgage did not have certainty about the terms, so it was unenforceable

(2) However, if we think that they intended to make a deal, than an agreement can still have a few open terms

UCC § 2-204. Formation in General.
(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
· If you have parties, the course of dealing may help us determine what the course of each deal was

(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
· Helpful when looking @ offers

(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
· Flip side to R2d certainty provision
· The question is if there are terms that are left open or there is some uncertainty, is it such that parties intended to not make a K?
· Can have terms that are left open that don’t make a K void…could just be used as evidence by other party
· Even though its not uncommon that price is left out, if quantity is left out its very strong evidence that there was not mutual assent to a deal
o Can determine price on market price
o If don’t know size of deal, hard to give market price
o Assent killer, sometimes leaving price out can be evidence that no agreement was reached

UCC § 2-305. Open Price Term.

(1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if
* (a) nothing is said as to price; or
* (b) the price is left to be agreed by the parties and they fail to agree; or
* (c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.

(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.

(3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.

(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.
[most open-price arrangements will be enforceable, combine with 2-205 and court sets price]

(3) Offer to Enter a Bargain

Restatement 2d §24. OFFER DEFINED
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

Restatement 2d §26. PRELIMINARY NEGOTIATIONS
A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

An offer has to:

Propose a deal; and
Designate the offeree(s)

An offer must manifest intent to make a bargain and must justify another person, the offeree, in thinking that assent will conclude the bargain. The offeree then has “power of acceptance.”

Cobaugh v Klick-Lewis—hole in one for car case
Simmons—fishing competition case

If something is understood as an inquiry to a deal, it traditionally falls short of manifesting an intent

(4) Forms of Acceptance

Restatement 2d §32. INVITATION OF PROMISE OR PERFORMANCE
In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree choose

use subjective elements in addition to objective manifestations to determine if K exists, saying: Probative testimony is admissible unless some rule compels its exclusion, and it is difficult to deny that a person’s own view of his position in a negotiation can bear on his behavior as perceived by other parties

1. Parole Evidence Rule

Even though we are concerned with outward manifestations, parties will often be allowed to testify about what they thought in order to figure out what actually happened.

If there is no manifest of an intent to conclude an agreement, there is no agreement

Empro Mfg. Co. v. Ball Co. Mfg. Inc—A letter of intent to negotiate is not a binding agreement b/c it didn’t bind the parties to anything…have to look at whole document and circumstances to prove otherwise
Agreeing to agree in the future often manifests an intent NOT to have reached an agreement (can be shown otherwise)
Some jurisdictions will enforce agreements to negotiate in good faith, letters that bind you to certain terms, or those that bind you to nothing…but the parties’ intent to make this agreement should be very clear

(6) Terminating of an Offer before Acceptance

Restatement 2d. § 36 Methods of Termination of the Power of Acceptance
(1) An offeree’s power of acceptance may be terminated by
(a) rejection or counter-offer by the offeree, or
(b) lapse of time, or
(c) revocation by the offeror, or
(d) death or incapacity of the offeror or offeree.

(2) In addition, an offeree’s power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer.

If no time limit is given, an offer lapses after a reasonable time

Question of law asking what was the reasonable time frame and what would the respondent have expected?
Caldwell v Cline—Offeror gave 8 day limit from date mailed, court said the time frame was not allowed to accrue until the letter was received, justified expectation.

· Acceptance is effective when you send it

Textron—customer called back 5 months later, court said unless otherwise indicated, an oral offer (phone/person) laspes @ end of conversation
Awards/crime rewards—there can be no K unless the claimant when giving desired info know of the reward and acted w/ intention of accepting such offer

If the offering party revokes before acceptance, the offer is terminated

Until the action sought is begun, the offer can be revoked
Peterson v Pattberg—offer is terminated when the party arrived to pay debt if the offer is revoked prior to the tendering of the money, can be milliseconds

· Dissent—would apply §45

Brackenbury v Hodgkin—mother in law cannot terminate once the children had begun acceptance by taking care of her

James Baird v Gimbel—bidding with wrong #s on construction job caused