Select Page

Contracts
Vermont Law School
Smiddy, Linda O.

 
I.        CONTRACT—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 a duty. Rest §1
a.       Article 1-103(b) UCC – if something isn’t covered in the UCC look to common law
b.      What law applies? UCC or Common Law
                           i.      UCC deals with goods – moveable tangible things (§2-102, 2-105, 2-204, 2-206) – All transactions are made in “good faith”
                         ii.      Common law applies to real estate and services
                       iii.      Restatement – only persuasive but explains terms
II.    Mutual Assent – Offer and Acceptance
a.       Mutual Assent – determined by objective approach – have both parties objectively intended to enter into a contract? §1-201 (b)
                           i.      A bilateral K is formed where a promise is exchanged for a promise. The offeree’s promise must be communicated to the offeror. A unilateral K is a promise exchanged for a performance, and that K is formed only when the performance is tendered. Notice of performance must be given within a reasonable amount of time
b.     Intent – court looks at the manifestation of intent; if the offeror makes an offer that can be accepted by performance and the offeree performs the requested act, there is a legal presumption that the offeree has accepted the offer UNLESS the offeree says they are not accepting §69 in Restatement
                             i.      Capacity – certain classes of persons have a limited ability to contract. For infants and mentally infirm, contracts they enter into are voidable at their option – they can enforce the contract or escape from it
1.      Death – if the offeror dies after making the offer but before acceptance, the offer is terminated – no K
c.       Offer – the manifestation of willingness to enter into a bargain: Rest §24– a promise to do or refrain from doing some specified thing in the future that a reasonable person would conclude asks for acceptance– can be in writing, spoken, an action or a forbearance of an action to establish a bargain
                              i.      The offeror has the power to determine who can accept the offer
                            ii.      The offeror also has the power to determine the mode of acceptance: if the offeror asks for a specific mode of acceptance and the offeree accepts in a different manner it may be seen as a counter offer;
1.      the offeror may allow a different form of acceptance than requested if it reasonably looks like acceptance and there are no further negotations, substantial performance by either party can show intent (K is formed)
                          iii.      Ads, catalogues, price quotations, and circular letters – not ordinarily offers because they do not promise and they do not spell out the quantity term (cannot be filled in) – if they are to be enforceable they must be SPECIFIC
1.      Leonard v. Pepsico – generally an ad is not an offer, only a request for an offer. Would a reasonable person think this was an offer? NO. Ad was sufficiently indefinite and no K was formed
2.      Leifkowitz – ad had offer, offeree (first come, first serve), subject (3 fur coats) and price. Ad was an offer.
                          iv.      Sullivan v. O’Conner – bad nose job. Common Law Applies (services) Dr. promised to enhance beauty and improve appearance. Awards ∏ for breach.
d.     Revocation of Offer
                           i.      Offer may be revoked anytime before acceptance, but not after
                         ii.      A revocation by the offeror is not effective until received by offeree
                       iii.      Partial performance by offeree of an offer results in contract with a condition, condition is offeror must allow for full performance within the time specified by the offer (or a reasonable time)
1.      Marchiando – ∆ selling property through broker to buyer % to broker, ∆ revokes on the final day of offer, performance was getting buyer for sale of property, broker had partially performed.
e.       Acceptance – after an offer is established, the offeree has the power to accept. Acceptance creates a contract and terminates the power of revocation that the offeror has §1-202, 2-204 (2), 2-206 (2), Restatement §30, 32, 53, 69
                           i.      5 Qs: (1) Who can accept? (2) What form must acceptance be in? (a) return promise (b) conduct (c) either a or b. (3) Must offeree know of offer? (4)Must offeree notify offeror? (5) Must offeree intend to accept??
                         ii.      An offer may only be accepted by the per

fferee manifests a contrary intention – counter offer may be made if the terms of the acceptance don’t match (mirror image rule)
                       ix.      Battle of the Forms §2-207
1.      Different term – one that contradicts a term of the offer
2.      Additional term – one that introduces a new term to the K
f.        Rejection or Counter-offer by the offeree
                           i.      Common Law – A rejection or counter offer terminates the offeree’s power of acceptance, unless the offeror or the offeree manifests a contrary intention – counter offer may be made if the terms of the acceptance don’t match (mirror image rule)
                         ii.      UCC – §2-207 designed to change the last shot rule – even though the acceptance contains “different” or “additional” terms, there is an acceptance
1.      If either of the parties is NOT a MERCHANT – additional terms are to be construed as proposals for addition to the contract – not included in the K unless accepted by the offeror – see flow chart
2.      Diamond Fruit Growers v. Krack – battle of the forms
                       iii.      Revocation – if an offer has not been accepted, it may be terminated by a communicated revocation. A revocation is effective when received.
1.      Indirect revocation- the offeree acquires reliable info that the offeror has engaged in conduct that would indicate to a reasonable offeree that the offeror no longer wishes to make the offer.
a.       Ex. When a letter is sent out to a group for a piece of property and one person accepts
2.      Once the offeree begins performance on a K requiring performance, an option K is formed (and offeror must allow time for offeree to perform)
g.       Revocable Offers – a revocable offer must be accepted before the power of acceptance created by the offeror is terminated in order to form a K