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Contracts
University of Toledo School of Law
Porter, Nicole Buonocore

Contracts I – Prof. Porter
Fall 2017

I.             Introduction

A.           What is a contract?
1.            Agreement in Fact
a.            Agreement between 2+ people as to something that is to be done in the
future by 1 or all
i.             X offers to pay someone to paint house, someone agrees to
paint house
2.            Agreement as Written
a.            Document in which agreement is set forth
i.             May be different than Agreement in Fact
3.            Set of rights and duties created by P1 and P2
a.            Legal effect of agreement

B.           UCC v. Common Law/Restatements
1.            UCC COVERS GOODS
2.            COMMON LAW COVERS SERVICE CONTRACTS

C.           Contract Formation
1.            Requirements for valid contract
a.            Offer and Acceptance
b.            Consideration
c.            SOMETIMES, a writing (Statute of Frauds)

IS THERE A CONTRACT?

II.           Mutual Assent

A.           Intent to be bound – Objective Theory of Contracts
1.            Requirement of Bargain (Restatement 17)
a.            Formation of contract requires a bargain in which there is manifestation
of mutual assent to the exchange and a consideration
2.            Mistake
a.            Absent fraud, duress or mutual mistake, one having capacity to
understand a written document who reads and signs, or without reading signs it, is bound by signature
3.            Reasonable Person Standard
4.            Mutual Assent v. Meeting of Minds
a.            Meeting of Minds test
i.             Requires both parties to substantively agree to same terms
b.            Mutual Assent
i.             What reasonable person believes contract says

III.          Offer and Acceptance of Bilateral Contract
Bilateral Contract
1.            Promises on both sides
2.            Both sides promising to do something in future
3.            Most contracts are bilateral
4.            Promise for a Promise
B.           Preliminary Negotiations
1.            Person to whom offer addressed knows or has reason to know that person
making it does not intend to conclude bargain until further manifestation of intent
a.            Testing waters by the parties

C.           Offer
1.            Manifestation of willingness to enter a bargain, so made as to justify another
person in understanding that his assent to that bargain is invited and will conclude it
a.            Reasonable person thinks Offeror intends to make an offer and all that
is needed to be done is the other party’s acceptance to make contract
2.            Advertisements as Offers
a.            Generally, an advertisement is an invitation to make offer, not an actual
offer
b.            Exception
i.             Objective, reasonable person would believe ad is offer
ii.            Binding offer may be implied from fact that deliberately
misleading advertising leads reader to believe binding offer exists
3.            Revocation of Offer
a.            Can be revoked anytime before acceptance
i.             Must be communicated to Offeree
–              Not necessarily required to be from Offeree
b.            Offeree’s power of acceptance terminated when Offeree receives from
Offeror a manifestation of an intention not to enter the proposed contract
c.            Indirect Communication of Revocation
i.             Offeree’s power of acceptance is terminated when:
–              Offeror takes definite action inconsistent with an
intention to enter into proposed contract and
–              Offeree acquires reliable information to that effect
4.            Mailbox Rule
a             Acceptance to offer is effective when it is dispatched, even via regular
U.S. mail
b.            Revocation of offer valid upon receipt
c.            If acceptance sent in mail before offer revoked, acceptance is effective
d.            Unless offer says otherwise, an acceptance made in a
manner/medium invited by offer is operative and completes manifestation of mutual assent as soon as put out of Offeree’s possession, regardless of whether it actually reaches Offeror
e.            Exception
i.             Offeror has right to state how offer to be accepted
–              “Offer not accepted until acceptance received”

4.            Counteroffer
a.            If acceptance with changes, it is a rejection of offer and thus, not
acceptance, but a counteroffer
b.            Offeror is master of offer. Counter-offer terms prevail.

IV.          Offer and Acceptance Unilateral Contract

A.           Unilateral Contract
1.            One party makes promise to induce other party to actually do something
2.            Promise for Only Performance
3.            Reasons
a.            Offeror don’t want to be bound until performance has been rendered,
and Offeree’s ability to perform is speculative
4.            Typical Cases
a.            Reward, real estate agent
5.            Rare
6.            Offer = NOT accepted until performance has been rendered

B.           Invitation of Promise or Performance
1.

          Generally, a waiver of any legal right at the request of another is
sufficient consideration
2.            Gift
a.            Promise to give gift = NOT enforceable
3.            Reasonable person standard
4.            Revocation of Promise
a.            Once start performing, creates option contract and forces Promisor to
hold offer open

B.           Bargain for Exchange Test (Modern)
1.            A performance or return promise must be bargained for
2.            Bargained for
a.            Sought by Promisor in exchange for his promise AND
b.            Given by Promisee in exchange for promise
3.            What may performance consist of?
a.            Act other than promise
b.            Forbearance or
c.            Creation, modification or destruction of a legal relation
4.            Not required to be for specific terms

C.           Adequateness of Consideration
1.            Once consideration requirement met, no additional requirements of:
a.            Gain, advantage or benefit to promisor or loss, disadvantage or
detriment to Promisee
b.            Equivalence in values exchanged
c.            Mutual obligation
2.            In other words, no inquiry into adequacy of consideration if there was
consideration
3.            Exceptions
a.            Grossly inadequate consideration + circumstances of unfairness in
contract creation = grounds to rescind or cancel contract
b.            Simply stating there is consideration is not sufficient if there is actually
no consideration
i.             Evaluate to see if there ACTUALLY IS consideration
ii.            Example
–              Contract saying “For valuable consideration” or “buying
a $1 book for $1,000”
c.            Sham consideration
i.             Giving a gift but acting like needs something for exchange