Contracts I Knippenburg Fall 07
Contract-A contract is a promise or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
Types by formation-Express, implied or quasi.
1. Express-Formed by language, oral or written
2. Implied-formed by manifestations of assent other than language, i.e. by conduct.
3. Quasi-Contract-Constructed by courts to avoid unjust enrichment by permitting the plaintiff to bring an action in restitution to recover the amount of the benefit conferred on the defendant.
Types by acceptance-Bilateral, Unilateral
1. Bilateral-Exchange of mutual promises.
2. Unilateral-Acceptance by performance.
Creation of a contract- when a suit is brought, court must first determine whether there was a contract. 3 basic issues-mutual assent, consideration or some substitute, defenses.
Interests in Contracts:
1. Expectation-Measured from perspective of promisor- Ex- Return promise or performance not as expected. In order to remedy look to position promisor would be in if return promise or performance was successful
2. Restitution-Measured from perspective of the party who receives the benefit. If a benefit is conferred on a party without proper return performance, the remedy is equal to the value of the benefit conferred. Remedy for quasi-contracts (does not apply to intermeddlers)
3. Reliance- look to put the person who relied on the promise back into the pre-contract/promise position. Remedy as justice requires.
Contract law is common law. Sales of goods is governed by UCC sec. 2.
Mutual Assent -Offer and Acceptance
Offer consists of a promise plus a price, the price being consideration for the promise. For the consideration to be effective, it must be bargained for ie agreed upon by the parties bound by the contract.
Mutual assent-assent is measured objectively; each party is bound by the apparent intention manifested.
The Offer-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. Must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms. To decide whether the offer creates such a reasonable expectation, consider 1) was there an expression of a promise, undertaking or commitment to enter into a contract 2) were there certainty and definiteness to the essential terms 3) was there communication of the above to the offeree.
1. Promise undertaking or commitment- Language must show that an offer was or was not intended, such as I offer or I promise. Circumstances are considered-an offer made in apparent jest is not an offer, but an offer made in jest which is not apparent to the offeree is still an offer. Prior relationships- a prior relationship and practice of the parties can show whether remarks constitute an offer or not.
2. Definite and certain-Terms must have been provided so that a contract including them would be capable of being enforced. Usually the required
on putting the item up for auction has not made an offer. Acceptance occurs at the end of the auction.
Termination of the offer/duration of the power of acceptance- Under restatement four ways offeree’s power of acceptance may be terminated: 1) rejection or counter offer by the offeree; 2) lapse of time; 3) revocation by the offeror; 4) death or incapacity of the offeror or the offeree.
1. A revocation is the retraction of an offer by the offeror. A revocation terminates the offeree’s power of acceptance if it is communicated before acceptance.
a. Methods of communication
i. Direct communication terminates offer. Offers made by publication may be terminated by publication of revocation through comparable mean
ii. Indirect termination effective if offeree receives 1) correct info 2) from a reliable source 3) of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer.
b. Effective when received. If by publication, effective when published.
c. Limitations on power to revoke.
Options-Option is distinct contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer. Counteroffer does not constitute rejection under options.