Contracts
Fall 07
Notes By Syllabus Topics
INTRODUCTION TO CONTRACT LAW: CHAPTER 1
INTRODUCTION TO CONTRACT LAW
MUTUAL ASSENT AND CONSIDERATION: CHAPTER 2
Restatement 17: Requirement of a Bargain
(1) manifestation of mutual assent and (2) consideration (quid pro quo)
not necessary to bargain in the negotiation sense of word
Note: there are defenses even if both elements have been met
Two theories of liability without an agreement: (in addition to breach of k)
Promissory estoppel
Restitution
Jury – question of fact; judge – question of law
Nonjury – judge makes finding of fact and conclusion of law
If a case is appealed, it is likely appealed on a question of law made by the judge (very rarely can you appeal a jury)
On appeal, It is important to understand whether the judge is reviewing a question of fact OR a question of law. They have different standards of review:
Finding of fact: (clearly erroneous)
in order to overturn the trial judge must have been clearly erroneous. If not, the findings of fact will be accepted
Conclusion of law: (de novo)
The appellate will do whatever it believes to be best law,
A. MUTUAL ASSENT
1. OBJECTIVE THEORY OF CONTRACT
R § 17: Requirements of a Bargain
(1) Manifestation of mutual assent and (2) consideration
Two theories of liability without an agreement:
1. Promissory Estoppel
2. Restitution
Manifestation of mutual assent::
a. Objective theory or contract – reasonable observer
b. Subjective theory – “ meeting of the minds”
Why do we have objective theory of contract?
The subjective view undermines the authority of every k because they could all be taken to jury
Reasons of policy that can be given by a court:
1. Efficiency argument – reliability and predictability
2. Fairness
Ray v. William G. Eurice & Bros., Inc., 1952
—court uses the standard of what an objective reasonable observer would interpret, not “meeting of minds” standard.
2. OFFER & ACCEPTANCE: BILATERAL CONTRACTS
(1) manifestation of mutual assent—determined by the rules of offer & acceptance
+ (2) consideration—reasonable person, objective theory .
= contract
Lonerganv. Scolnick, 1954
The ad in the paper was only a request for an offer. Nowhere in the exchange of letters is there a definite offer by the defendant. Moreover, the defendant explained that he expected to have a buyer in the next week or so, thus indicating that he was open to other parties interested in buying the property on a first-come first-serve basis. In other words, the defendant did not make an offer.
Izadiv. Machado (Gus) Ford, Inc., 1989
The standard of review follows in what a reasonable person would have interpreted the advertisement to mean. It also follows that a binding offer may be implied from the fact that deliberately misleading advertising as evidenced with the three different types of vehicle all being reduced by $3000. An advertisement may not intentionally mislead the readers of the advertisement s
ces (unilateral)
Modern contract law has modified in two respects:
§ 32 When there is doubt, a return promise or performance would due.
§ 45. if the offeror begins a unilateral contract and the offeree begins the action, then 45 counts that as consideration to hold the option contract open. Basically treating a unilateral contract as an option contract. Making the offer irrevocable during performance
§90- protects detrimental reliance even without contract
Fiction of law- #2 is an example. It sort of hides the law to an extent…
Dictum- not specifically applicable, but kind of an offhand statement made for whatever reason- no binding effect
Pettersonv. Pattberg, 1928
This case is an illustration of traditional contract law. Meaning that an offer could be revoked at any time before full completion.
Decided under the traditional rules regarding formation of unilateral ks, where the performance had to be fully completed and could be revoked until the last moment.
Classical contract law said that the offeror cannot be held binding because the offeree was not until completed.
The dissent seems to rely on the defendants good faith.
Good faith found in the modern approach, whereas traditional approach is clear rules very defined.
