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Contracts
University of South Carolina School of Law
Nelson, Eboni S.

Contracts Study Outline – Fall 2010
Policy – rationale – reason for legal doctrine

Freedom of contract

Freedom to contract

i. To encourage commercial transactions
ii. Limits – cannot contract for things that are against public policy

Freedom from contract

i. Parties need predictability
ii. We want to fulfill parties’ expectations and intents

Public policy
Assent policy

Do not want to bind parties to contracts that they did not want to be bound by
Do bind parties to contracts that they intended to be bound by
Mutual assent – reaching an agreement

i. Required to form a contract
ii. Mutual assent of parties
iii. and some showing that this assent is the kind the law will enforce
iv. §18 Manifestation of Mutual Assent requires a promise or beginning of actual performance

Subjective and objective conceptions of assent

i. objective theory of assent
1. meeting of the minds
2. objective plus test
a. reasonable person in clients’ position in the party’s circumstance
b. leans toward there is a contract
c. Embry v. Hargadine Mckittrick Dry Goods Co.
3. Texaco v. Pennzoil
4. Lucy v. Zehmer
a. If words and acts, by a reasonable standard, manifest an intention to agree, then there is an agreement
ii. subjective intent matters only to the extent that it is manifested objectively to the other party – seller understands
iii. §22 Mode of Assent – Offer and Acceptance
1. Takes the form of an offer or proposal by one party followed by acceptance by the other party
2. Manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined
iv. §19 conduct as manifestation of assent
1. Written or spoken word, acts or failure to act
2. Must intend to engage in the conduct and knows the other party may infer assent from his conduct
3. Conduct may be assent even if he subjectively does not assent

Expectancy theory

In re Baby M – surrogacy case
The court seeks to fulfill expectations of both parties involved

Specific performance – makes each party actually enforce the letter of the contract
Void as against public policy – no exception at all

Shaheen v. Knight – sterilization case – to recover is against public policy
In order for something to be against public policy, there must be “virtually unanimity of opinion in regard to it”

i. Not void unless so obviously against public health, morals, etc.

§178 contract cannot be enforced if legislation says that it is unenforceable or if enforcement is outweighed by a public policy concern
Unconscionability

i. inconspicuous risk-shifting provisions
ii. contracts of adhesion – take it or leave it
iii. exculpatory clauses
iv. limitations or remedies

Competing interest between expectancy and assent policy
Mutuality of obligation

Sources of Authority – Doctrine

Restatement

common law can supplement UCC
land contracts

Uniform Commercial Code Articles 1 & 2

sale of goods
goods – tangible moveable objects §2-105(1)

be made in any manner sufficient to show agreement – including conduct
b. Sufficient even when moment of its making is undetermined
c. Even though one or more terms are left open, a sales contract does not fail for indefiniteness if there is intent and an appropriate remedy
v. Revocation (Restatement §§ 42, 43) – reasonable information received
1. §35 an offer creates in the offeree the power of acceptance. A contract cannot be created by accepting an offer that has been taken off the table
a. Dickinson V. Dodds
b. Revoked as Dodds was trying to accept
c. Revoked once both parties know there is no meeting of the minds
2. Option Contract (Restatement §§ 25, 45)
a. 2 promises in 1
b. need consideration for both promises
c. goods contract
d. contracted promise to hold the offer open
e. suspends the promisor’s ability to revoke the contract
f. §45 – option contract created by performance
i. Part performance constitutes an implied promise to complete performance within the time called for in the offer
ii. Part performance = acceptance
iii. Can be revoked before performance completed if acceptance only takes place at completion
3. Firm Offer (UCC § 2-205)
a. offeror has to be a merchant
i. §2-104 – someone who is in the business of dealing in goods of that kind
ii. buyer or seller of goods