Contracts Outline
Definitions
Form letter – standard letter sent out to a lot of people
Unilateral contract
– offeror offers to exchange his promise of a future performance only in return for the offeree’s actual performance
– one sided action
– offeror is not bound unless the offeree performs
– a lot of protection for the offeree
Bilateral contract
– where two parties each agree to do something, commitments on both sides, offer and acceptance
Specific Performance
– ordering ∆ to cooperate with P in exchanging performances as originally agreed upon in the contract
implied in fact contract
– true contracts
– party receiving the benefit of services or property had requested it.
implied in law contract
– Quasi contract
– Person performs a service for another which are known to and accepted by the latter, the law implies a promise to pay for those services
Intro
– Primary Authority creating contract law
o Common law and judicial decisions
o Statutes
– Secondary
o Restatements
o Legal Commentary – Williston and Corbin
Contract = intention to be legally bound §21
Basis of Contractual Obligations: Mutual Assent and Consideration
Objective Theory of Contract
Ray v. William G. Eurice & Bros., Inc
– house built by memo specs
– Facts
o Rays want to have house built by the Eurice Bros. Through communication b/w the parties what they agreed to becomes confused. The Eurice Bros. say they won’t build the house according to the contract
– Rules
o No mutual assent
o Unilateral mistake doesn’t void a contract; party who made the mistake is bound absent fraud, duress, undue influence
o If party has capacity to read or have the contract read to him and signs it, then he is bound absent fraud, duress, undue influence.
Intention to be legally bound §21
– don’t need intent to form a contract
– if there is a manifestation of not wanting to be legally bound, then you aren’t
Bargain § 17
– manifestation of mutual assent and consideration
Mutual Assent
– Ray v. Eurice Bros.
Reasonable person
– objective standard
– what would a reasonable person do in this situation
Offer and Acceptance in Bilateral contract
Lonergan v. Scolnick
– ad for sale of land; form letter
– Facts
o Ad was placed in the newspaper for the sale of land to which the P responded. A later letter not the newspaper ad constituted the offer. During an exchange between P and ∆ no acceptance was made even though the P acted to appropriate funding to purchase the land. The ∆ sold the land to a third party.
– Rules
o Form letters are not offers when considering a specific piece of land
o Ads are generally not offers
o Time limit to keep offer open can be implicit or explicit
o Preliminary negations are not an offer
– Mailbox rule
o Offer or revocation is effective upon communication
Izadi v. Machado (Gus) Ford, Inc.
– misleading car advertisement
– Facts
o P attempted to follow deal in a newspaper advertisement which included a very tiny printed exception. He was unable to do so.
– Rules
o Consider whether a reasonable person would consider the ad to be an offer.
o Look at the ad as a whole
o Bait and switch
Normile v. Miller
– snooze you lose; house sale
– Facts
o ∆ owned property which was shown to potential buyers, P, who made a counteroffer. The ∆ did not accept or reject counteroffer. Then sold it to a third party who agreed to their terms.
– Rules
o Notice of revocation terminates the ability to accept an offer
o Indirect communication of revocation is sufficient way to revoke an offer.
o Counteroffer rejects the initial offer.
o Doing something inconsistant with the continuance of the intention to create a contract revokes the offer.
Offer §24
– manifestation of willingness to enter into a bargain, so made as to justify another person in understanding his assent (acceptance) to that bargain is INVITED and will CONCLUDE it
– ads as offers
o no, traditionally invitations for offers
o Pepsi Co case – no reasonable person would think that pepsi was offering harrier jet for such a low price.
Promise for a promise §1, §2
– contract = promise or set of promises for the breach of which the law gives REMEDY or PERFORMANCE.
– Promise=manifestation of intention to act or to stop acting; to justify to the promise that a commitment has been made
o Where performance benefits someone other than the promise; call it the beneficiary.
How a Promise Is Made §4
– oral, written, inferred wholly or partly by conduct
Indirect Communication of Revocation §43
– offeror acts inconsistent to the intention to create a contract and the offeree obtains reliable information to that effect.
– Normile v. Miller
o You snooze you lose
Counteroffer §39
– offer made to offeror reg
v. Caldwell Banker
Part Performance §50 (2)
– acceptance by performance or part performance
– cook v. Caldwell banker.
Unidentifiable Contract
UCC
Formation §2-204
– contract for goods may be made in any manner sufficient to show agreement
– agreement sufficient to constitute a contract for sale may be found even though the moment of making is undermined
– open terms are ok
–
Additional Terms in Acceptance or Confirmation §2-207 (3)
– conduct by both parties which recognizes the contract is sufficient to establish a contract for sale although the writings of parties do not otherwise establish a contract. Contract exists under terms on which the parties agree and other supplementary terms
No Offer §22 (2)
– manifestation of mutual assent may be made even if offer or acceptance can not be identified and moment of formation cannot be determined.
Consideration
Do I have offer and acceptance or conduct that can constitute a contract?
– if yes, do I have consideration?
o Performance or return promise
o Sought by promisor in exchange for his act or promise
Hamer v. Sidway
– refraining from smoking, drinking, ect.
– Facts
o P is assigned right to money of nephew. uncle promises to give him money if he will refrain from bad habits until 21. Upon uncle’s death payment is not made.
– Rules
o Forebarence is enough for consideration
o Right to benefit of a contract can be assigned to another §317
§ Talbert v. Stemmons
· Grandma says sonny can’t chew tobacco if he does he has to give mom double.
o Right to use defenses against third party as the person w /the original right §336
o Benefit/Detriment Test
§ Did the ∆ receive a benefit
§ Will there be a detremint to the P if ∆ does not perform or remedy?
Dougherty v. Salt
– mere recitation of consideration is not consideration
– Facts
o Aunt makes a note to her nephew. Note reads value received.
– Rules
