Contracts Outline

Contracts Outline
§2 Promise (oral, written or inferred from conduct): a manifestation of intention to act or refrain from acting in a specified way so made as to justify a promisee in understanding that a commitment has been made.
Agreement: manifestation of mutual assent on part of two or more persons
Bargain: agreement to exchange promises or to exchange a promise for a performance or to exchange performance
overriding themes in Contracts –
        economic efficiency
        parties’ intentions about the economic allocation of risk
        fairness
        game theoretic approach to contracts, esp. default rules
        whom does policy encourage/dissuade/prefer?
        extra-legal sanctions — especially reputational damage
        regarding enforcement (of any type), tradeoff between:
            judicial discretion in interpreting and enforcing and
            individual freedom to contract
        asymmetry of information
        lopsided bargaining power
 
Public Policy Limits of Freedom of Contract
–          Court wants to enforce promises
–          Court wants to ensure that people understand all the terms of contracts
–          When considering matters of Public Policy, the court looks at
1.   Legislature’s intent in adopting particular statutes
2.   The public reaction to matters related to PP concerns
When should a person’s manifestation of consent to contract prevail if ever to countervailing policy considerations and override this consent?
 
Unenforceability Due to Public Policy
1) A contract is unenforceable on the grounds of public policy if it contradicts legislation
2) A contract is unenforceable on the grounds of public policy to protect some aspect of public welfare
3) A contract is unenforceable on the grounds of public policy if it contains a “release from all liability” (exculpatory) clause that seeks to exclude intentional torts or gross negligence or when it affects activities that are in the public interest like medical care.
4) A contract is unenforceable on the grounds of public policy if it is unconsciously unfair to one party because of oppression, surprise, or fraudulence.
5) If contract is deemed unenforceable, the only possible remedy is restitution and that is suspect if the contract is void due to public policy violation
 
In the Matter of Baby M, 22 – surrogacy contract, egg from surrogate                                 
F: contract for the surrogate parent to bear child.
                I: are these contracts void?
                R: yes, conflicts with:
1. Law of state – violates rules of adoption and prohibits termination of parent rights by contract
2. Public policy – court does not what to encourage baby bartering/money connected to adoptions, lacks counseling and evaluation, use of money to purchase children, mother does not make an informed decision
H: no remedy, contract is void
Public policy – The contract basic premises that the natural parent can decide in advance of birth which one is to have sutday bears no relationship to the settled law and the child’s best interests.
Public policy – in this case is to the utmost extent children should remain with and be brought up by both of their natural parents. The surrogacy contract violates the policy of the state that the rights of the natural parents are equal to the child; the fathers right is not greater than the mothers.
Notes: The significance a contract has is that when its enforceableit kind of signifies a tie breaker, Courts are trying to what’s best for the child, If the Court thinks the child could flourish under both parents that’s one thing, but to say contract is enforceable then it’s a tiebreaker. Shouldn’t use judicial system to make people do things they are not obligated to do.
Court says they invalidate surrogacy contract because it conflicts with the law/statutes and public policy of this state. Payment for surrogate for a surrogate mother is degrading
– Absent precedent or any clear answer the court will rule on what they think is right.
 
Restatements capture what the common law is for most of country. Common law of a state is creatureof the Supreme Court. UCC helps too
178, p. 60: When a term is unenforceable on grounds of public policy
(1)    Unenforceable if legislation say it’s unenforceable or the interest in its enforcement is clearly outweighed by public policy
(2)    In weighing interest for enforcement, take into account:
a.        Parties’ justified expectations
b.       Any forfeiture that would result if enforcement were denied, and
c.        Any special public interest in the enforcement of the particular term
(3)    In weighing a public policy against enforcement, take into account:
a.        Strength of that policy as manifested by legislation or judicial decision
b.       Likelihood that a refusal to enforce will further that policy
c.        Seriousness of any misconduct involved and the extent to which it was deliberate, and
d.       The directness of the connection between that misconduct and the term
 
179, p. 65: Bases of public polices against enforcement
        A public policy against enforcement of promises or other terms may be deprived by the Court from:
1 – legislation relevant to such a policy,
2- the need to protect some aspect of the public welfare like: restraint of trade or impairment of family relations.
 
Applying the Principles of Enforceability to a Case
 
 ii.      Will principle – parties consent to be bound voluntarily “meeting of the minds, therefore enforceable
exception: objective manifestation of consent unless subjective intent can be proven to be contrary
iii.      Reliance principle – liable for harm caused by verbal behavior (oral or written)
iv.      Restitution principle – to prevent unjust enrichment of promisor (one of benefited and now wants out)
 v.      Economic efficiency – if benefits of enforcement exceed benefit of unenforcement (max. of social wealth)
vi.      Substantive fairness – only enforce contracts that are fair – “just” prices and terms
vii.      Bargain principle – mutuality of inducement (also look at fairness of bargain, look for consideration)
exception:   “I promise to take out the trash” ß no bargain, not enforceable
Can take action to federal law if one party wants to if both parties are from different sates – diversity
Expressed Contracts– promise said in words, acceptance by oral, silent, written acceptance
Implied Contracts – contract inferred from acts in light of surrounding circumstances (fear: holding people to agreements they never agreed to make)
Marvin v. Marvin,605 – live in love, implied contract?                                                                             
F: parties living together and shared everything in oral agreement, they held themselves as husband and wife b