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University of Toledo School of Law
Eisler, Beth A.

Final Contracts Outline

Professor Eisler

Fall Semester 2010

A. What is a Contract?
· General Definition:
o 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 way recognizes as a duty

· A contract is formed in any transaction in which one or both parties make a legally enforceable promise
· A promise is a commitment or undertaking that a given event will or will not occur in the future and may be express or implied from conduct or language and conduct. A promise is legally enforceable where it:
o was made as part of a bargain for valid consideration;
o reasonably induced the promisee to rely on the promise to his detriment; or
o is deemed enforceable by a statute despite the lack of consideration

B. Three Sources of Legal Rules:
· Justice/Fairness
· English Tradition
· Economic Efficiency

C. Types of Contracts:
· Contract may be of the following types:
1) Express – an agreement manifested by words
2) Implied-in-fact – an agreement manifested by conduct
3) Implied-in-law (“quasi-contract”) – not a true contract but an obligation imposed by a court despite the absence of a promise in order to avoid an injustice

D. Elements of Contract:
· Offer
· Acceptance
· Consideration

E. Sources of Contract Law:
i. Common Law:
· Contracts is largely a common law subject (i.e., large case law/judge-made)
ii. Statutes:
a) Uniform Commercial Code:
· The major exception to the common law nature of Contracts is that contracts for the sale of goods are covered by Article 2 of the U.C.C.
· The purpose of the U.C.C. is to make commercial law uniform among the states
· Where Article 2 does not cover a Contract law issue, the common law governs the issue
· Other important articles of the U.C.C. are:
o Article 1 (general provisions that apply to all of the U.C.C.)

b) Statute of Frauds:
· Governs the issue of when a contract must be in writing
· Adopted by all States

c) State & Federal Statutes:
· In addition to the U.C.C. and the Statute of Frauds, various state and federal statutes have been adopted that relate to isolated issues of Contract law

iii. The Restatements: (Restatement of Contract law)
· They are intended to set forth the law of the subjects they cover and to reconcile conflicting state rules by adopting the best rules
· Restatements do not have the force of law, unless they’ve been adopted by a specific court

A. The Agreement Process:

(1) – Intent to Contract

A. Intent to Contract
i. Definition:
· R.2d.§21:
o It is not necessary that the agreement be attended by legal consequences, but manifestation that a promise not affect legal relations may prevent formation of a contract

· R.2d.§ 1:
o A promise or set of promises for the breach of which the law gives remedy, or the performance of which the law in some way recognizes as a duty

· UCC § 1-201
o The total legal obligation that results from the parties’ agreement…Relations among parties to the process of projecting exchange into the future.

ii. Law:
a) R2d § 1. Contract defined:
· Promise or set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
b) R2d § 2(1). Promise:
· A promise is 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.
c) UCC § 1-201(11)
· “Contract” means the total legal obligation which results from the parties’ agreement as affected by this Act and any other applicable rules of law.
d) R2d § 3: Agreement defined; Bargain defined:
· An agreement is a manifestation of mutual assent on the part of two or more persons. A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.
e) R2d § 17: Requirement of a bargain:
· The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.
f) R2d § 21. Intent to be legally bound:
· Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.

1. Exceptions:
a. Agreements that are not K: Husband and wife; hospitality; taking a walk together (Balfour p5)

g) R2d § 22. Mode of Assent: Offer and Acceptance:
· The manifestation of mutual assent to an exchange takes place by offer and acceptance.
· (2) A manifestation of mutual assent may be made even though neither offer no acceptance can be identified and even though the moment of formation cannot be determined.
h) UCC § 2-208(1). Course of Performance or Practical Construction:
· (1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of th

bound until that time
· If they intend the future writing to be merely a convenient memorial of their prior agreement, they are bound whether or not such a writing is executed

iv. Basis for Remedy:
· A validly formed contract must provide a basis for determining the existence of a breach and for giving an appropriate remedy [Restatement § 33; UCC § 2-204].
· Non-goods contracts, according to the Restatement, must include terms that are sufficiently definite and certain; goods contracts, on the other hand, do “not fail for indefiniteness even if one or more terms are left open if the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.”

v. Rationale – Protection of parties’ reasonable expectations:
· The importance of protecting the parties’ reasonable expectations in relying on a promise, and the need for security and certainty in business transactions, make it imperative that each contracting party be able to rely on the other party’s manifested intentions, without regard to her thoughts or mental reservations (R.2d §18)

vi. Application:
· There is sufficient manifestation of assent whenever a party uses an expression that he knows, or has reason to know, the other party would reasonably interpret as an offer of acceptance, and the other party does so interpret it (R.2d §19)
· Example:
o (Lucy v. Zehmer, An offer made in jest is still enforceable if the other party actually & reasonably believed it to be a serious transaction)

vii. Receipt of Electronic Communications:
· A number of communications relevant to contract formation – such as an offer, revocation of offer, or rejection of offer – are effective upon receipt by the person for whom the communication is intended. In contracts for the sale of goods, any legally effective communication sent by electronic means has effect upon receipt by the intended

viii. Express & Implied Contracts:
1) Express Contracts:
· If mutual assent is explicitly manifested in oral or written words of agreement, the resulting contract is said to be express