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Contracts
University of Toledo School of Law
Davis, Benjamin G.

Contracts I – Outline

Basic Background info for exam

A. Rule background

what is a contract – Rst 1: promise or set of promises for breach of which the law gives a remedy, or performance of which law recognizes as a duty

what is a promise – Rst 2: manifestation of intention to act or refrain from acting in specified way, so made as to justify a promisee in understanding that a commitment has been made

agreement – Rst 3: manifestation of mutual assent on the part of two or more persons.

how a promise may be made – Rst 4: words, either oral or written, or even inferred wholly on conduct

requirements of a bargain – Rst 17: formation of contract requires manifestation of mutual assent to the exchange and consideration.

B. Legal Theory – F.L.E.R.C.R.F.
Formalism – rules came down from heaven, nothing should get in the way
Legalism – application of neutral princepals
Economic – efficiency
Relational – effects of rules on long term relationships
Critical Legal Studies – legal rules are tools of domination, deconstruct rules and this becomes clear, they should be fixed – component of race and gender is apparent

Lawyers are Counselors, Negotiators, Drafters, and Advocates

How to run through problems…

I. What Law Applies (is it goods?)

A. What was the predominant purpose of the contract (Princess Cruises)
Things to consider…
-langauge of contract
-nature of business and supplier
-worth of materials

UCC 2-105
anything moveable
animals, crops, etc.
manufactured products

if we are talking about goods UCC will control

II. Is there Intent to be Bound?

A. Objective v. Subject Theory of Contracts

1. Subjective Theory is old theory…
-meeting of the minds, what people thought contract was

2. Objective Theory – currently used

a. what would a reasonable person determine has been agreed to

B. Other concerns….

Rst 17: formation of contract requires a bargain in which there is a
manifestation of mutual assent to exchange and a consideration

Rst 20: misunderstandings
NO manifestation of mutual assent if…
-neither party knows or has reason to know opposing meaning attached by other party
-each party knows or has reason to know meaning attached by other party
Manifestations operative in accordance with one if
-party does not know or have reason to know of meaning attached by other party who does know or have reason to know of meaning attached by fi

ss to enter into a bargain, so made as to justify
another person in understanding that his assent to that bargain is invited and will conclude it

B. things to remember
Rst 26: not an offer if person has reason to know that intention to conclude is not present until a further manifestation of assent

Rst 32: offer can be accepted by promise of performance (bilateral) or performance (unilateral)

Rst 33: see above – must be certainty

Rst 36: methods of termination
-rejection or counter-offer
-lapse of time
-revocation by offeror
-death or incapacity
also, power of acceptance terminated by offeree not meeting condition of acceptance

***typically only used by courts in contractor / subcontractor dealings***
Rst 87(2): an offer which the offeror should reasonably expect to induce action or forbearance of action on the part of the offeree and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice