Contracts McWilliams Fall 2014
What qualities must a private undertaking have to merit enforcement by public institution?
An Enforceable ContractàOffer, Acceptance & Consideration
First step
The first question when analyzing a contracts problem is:
1. Is the K for goods or services?
a. If goods, then the K is governed by the UCC.
b. If not goods, the K is governed by the Restatement.
2. What if the K is for both goods and services?
a. What was the intent of the parties, what was the K originally for, what was the most money paid for, the good or the service?
Answer: UCC-Contract for Goods (wooden boxes)
Contract Formation
1. What is a contract?
a. Contract R§ 1: “a contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some recognizes as a duty”
b. Promise R§ 2(1): “a promise is a manifestation of intention to act or refrain from acting in a specific way, so made as to justify a promisee in understanding that a commitment has been made”
i. All contracts contain promises BUT not all promises are contracts
ii. A Promise alone cannot result in a formation of a contractàrequires consideration
1. Enforceable ifàcourt will give a remedy for abreach
2. Sources of contract law
a. Services & real estate: Restatement (2d) of Contracts
i. Common/judge made law
ii. “stare decisis”: let the decision (precedent) stand
b. Goods: Uniform Commercial Code (UCC)
i. states will adopt UCC in statutes
ii. goods: “all things which are movable at the time of identification to the contract
3. Theories of contract law
a. Classical (Objective) approach
i. Williston, 1st Restatement
ii. Intent determined by what reasonable person would find 1st parties intent was by words & actions
iii. Applies hard/fast rules w/o regard to social justice
iv. “four corners” approach
b. Modern (Subjective) approach
i. Corbin, 2nd Restatement
ii. Examines the party’s intentions, rather than their actions.
iii. more attentive to needs of the commercial marketplace
iv. equity doctrines and social norm policies
c. Today
i. **objective theory of contracts: What a reasonable person would objectively think, regardless of parties personal, subjective thoughts or intentions
1. courts want to make sure the parties intended to enter into contract and then uphold and encourage contracts
4. Qualities every contract must have
a. Offer
b. Acceptance
c. Consideration
The Function of Legal Formalities
Evidentiary Function: Provides evidence of a contract’s (1) existence
AND a contract’s (2) terms
Cautionary Function: Evidences an intention to be bound.
Provides a check against inconsiderate or hasty action
Channeling Function: Channels into court the types of cases the court wishes to hear; and channels away from court the types of cases the court does not want to hear.
Is there A Contractual Obligation? à Mutual Assent & Consideration
1. Mutual Assent (B = O + A)
R §17 Requirement of a Bargain:
The formation of a K requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.
Bargain: a negotiated exchange.
Mutual Assent: offer or proposal of one party, followed by an acceptance by another party.
· Consideration(§71(1)): something of value that is bargained for in exchange for something else.
R § 22 Mode of Assent: Offer and Acceptance:
1.) The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party, followed by an acceptance by the other party or parties.
2.) A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of forma
method of comm
· circumstances
NOT offers:
· Mere invitation (jest)
· Preliminary negotiations (solicitation of bids or statement of future intention to contract)
o Offeree knows/should know offeror intends further manifestation of assent (Lonergan)
· Price quotations/Estimates
· Most advertisements are not offers.
· When an auctioneer puts an item up for auction, this is not an offer.
· A note is a promise to payà NOT a K.
Offer:
· Official bid
Acceptance Defined (Restatement § 50(1)):
(1) Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.
Modes of Acceptance (Restatement § 50(2) & (3))
(2) Acceptance by performance requires that at least party of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise.
(3) Acceptance by a promise requires that the offeree complete every act essential to the making of the promise.
Mailbox Rule: (Lonergan)
· Acceptances are effective when sent.
· Offers and Revocations are effective when received.
Specific Performance as a remedyàdoing what was set out in contract (Lonergan)
· Equitable Remedy
· Rarely granted (except in real estate cases): normally only granted when $$$ is not an adequate remedy.
Acceptance by silence
ii. an offer cannot be accepted by silence unless
1. parties have reason to understand silence as acceptance
2. an offeree who silently receives a benefit of services (not goods) will be held to have accepted a contract for them if he could have rejected the service and knew or should have known the provider expected to be compensated
3. prior course of dealings may make it reasonable
4. acceptance by dominion – offeree receives goods and keeps them
