Contracts
Scope – Choice of Law.. 1
Contract Formation. 1
I. Offer. 1
II. Acceptance. 5
Termination in power of Acceptance. 8
Lapse of an Offer. 8
Revocation of Offer. 8
Exception: Option Contracts. 9
Death of Offeror. 10
Rejection. 11
Pre-Contract Liability. 11
Definiteness. 11
III. Consideration. 11
Enforcement. 13
Bars to Enforcement. 13
Breach and Performance. 23
Remedies. 35
Gift Promise (Promissory Estoppel). 38
Promissory Estoppel – Original38
§ 90. Promise Reasonably Inducing Action Or Forbearance. 39
Promises to Pay For Past Performance. 39
§87(2) Liability for Pre-Contract Negotiations (accepted by limited jurisdictions). 40
Modern Promissory Estoppel40
Quasi Contracts – Restitution. 41
Scope – Choice of Law
· Sovereign – Federal or State law apply?
· Geographic – Which state’s laws apply?
· Which law within a state
o common law of contracts
o UCC
Contract Formation
· Contract – a promise of set of promises for the breach of which the law gives a remedy , or the performance of which the law in some way recognizes a duty
o Unilateral Contract – Promise in exchange for performance
§ Can only accept with full performance
§ No recovery because of reliance, maybe quasi-contract (restitution)
§ If the offeree does an unacceptable job and offeree refuses to pay, there is not contract to sue on because no full performance
§ §45: Partial performance creates an implied options contract
o Bilateral contract – Promise in exchange for a promise
§ Conditional – a promise’s performance only comes due if a “condition” occurs
* Under “constructive condition of exchange” a court may impose a condition by implication
§ Rights and Duties
* In Unilateral contract there is a promise on one side of the contract \ a right on one side and a duty on the other
* In bilateral contract there is a promise on each side of the contract \ a right on each side of the contract.
I. Offer- Knippenberg – “A manifestation of intent to enter a bargain that justifies the offeree belief he could accept the offer.” (Feels like all he has to do is say “yes”.)§ 24: “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.”[A manifestation of intent to enter into a bargain.]
· An offer must be clear, definite, and explicit leaving nothing open for negotiation
o Offers must be explicitly stated – (Owen v. Tunison: It would be impossible to sell unless I received 16000 is not an offer)
1. Rationale: Reasonable people know prices are thrown out to test the water
2. If all statements of price were considered acceptable offers there could be no bargaining
· Assent
o Prevalent – Objective theory of assent – According to Judge Learned HandContract has nothing to do with personal or individual intent of the parties; does away with meeting of minds; A contract is words that are taken to portray the intent of the parties that will be binding with the force of law
o Antiquated: Subjective – According to Judge Jerome FrankContracts should be considering the “actual intent” of the partiesBelieves the objective theory cause the court to carry out consequences that were never considered by the parties
· Objective manifestations: In determining whether an offer has been made, the objective manifestations of the offeror, not the offeror’s secret, undisclosed intentions are determinative. Where the offeree reasonably believes an offer has been made, the offeror’s unexpressed intentions to the contrary are irrelevant and does not defect the offer.
o Lucy v. Zemher – There was a contract to see a piece of land owned by Zehmer to Lucy. The contracts said, “We hereby agree to sell W.O. Lucy the Ferguson Farm complete for $50,000 title satisfactory” and was signed by Zehmer and his wife. After Zehmer wrote and signed the contract, Lucy offered $5 to bind the offer. At that point, Zehmer claims to have told Lucy he was joking, and he was trying to get Lucy to admit he did not have $50,000. In creating the contract Zehmer began by writing “I hereby agree” but changed it to “We hereby agree to encompass his wife.” The two also left the restaurant where they were bargaining and had the contract signed by Zehmer’s wife.Held – The court ruled that regardless of his true intentions, Zehmer was in a sound state of mind to bargain and had entered into a binding contract
s nothing open for negation and limits multiple acceptance it is an offer rather than an advertisement
o Lefkowitz v. Great Minneapolis Surplus Store – Surplus had an advertisement as follows: Saturday 9AM, 1 Black Lapin Stole, Beautiful, worth $139.50…… $1.00, First Come First Serve. Leftkowitz was the first to present himself but Surplus refused to sell because a “house rule” stipulated the offer was only for women.Held: The court ruled that the advertisement of the defendant made a clear, definite, and explicit offer that left nothing for negotiation. Upon its acceptance by the defendant it was binding, and the plaintiff could not change terms of the offer. First come, first serve took care of multiple acceptances.
· “Last shot principle” – If multiple offers the last offer before performance prevails
· Construction: If an proposal is founded on a sufficiently large mistake, it is not an offer can cannot be accepted
o If the mistake is less dramatic, the court may be unenforceable and rescission allowed if:
1. Material
2. Not the result of a neglect of duty
3. Enforcement would be unconscionable
4. Other party can be returned to their status quo
a. Promise –unequivocal assertion that something will or will not be done
i. Illusory / equivocal promises: If a promise is illusory or equivocal (I’ll do it if I feel like it) there is no consideration \ the agreement is not bindingStrong v. Sheffield – Sheffield’s wife co-signed a note under the agreement that Strong collect until he wanted the money. After two years Strong filed suit against the wife to recover the debt. Held:There was no consideration in the promise w/ Sheffield wife. Sheffield did not give up anything. Forbearance was not bargained for.
