Select Page

Contracts
Vermont Law School
Firestone, David B.

What is a Contract?
A promise or set of promises, which the law in some way recognizes as a duty; for breach of which the law gives a remedy to protect people

Breach a party’s failure to perform some contracted for or agreed up act or failure to comply with a duty imposed by law which is owed to another or to society

I. What is the purpose for contracts?
1. Economic growth
A. Builds strong economy (strengthens the economy
B. Establishes and maintains credit system
2. Keeps order in society
3. Discourages breach
4. Provides compensation for breach
5. Lowers possibility of retaliation

II. The Mechanics of an Offer & Acceptance: (Interpretation)

· Objective Intent / External – What the party expressed or seemed to have meant.
· The standard is to a reasonable person

· Subjective Intent / Internal – What a party really meant, there state of mind
· The meeting of the minds standard

Objective is used b/c you cannot read what is in a person’s mind

· Issues: We need to know for an offer

I. What were the words?
II. What do they mean?
III.What would a Reasonable Person interpret those words to mean?
o We are looking at your outward manifestations and what they mean to a Reasonable Person

· Latent Ambiguity – Where the words of a K to a reasonable person appear to be ambiguous, there is no K (Embry v. Hargadine, McKittric Dry Goods Co & Raffles v. Wichelhaus [Peerless or Peerless])
o Counter-argument – To Reasonable Person there was no ambiguity

· What Constitutes an Offer?
· Expression of present/current intent to enter into a K
· Has to be clear, definite, and explicit; & leaves nothing for negotiation…acceptance of which is a contract
o Preliminary negotiations are unenforceable – everything that is out there but never got to an offer

· Rules for Advertisements:
o They are an invitation to receive offers form the public
o The advertiser has the option to accept, negotiate or reject the public’s offer to buy
· He is not bound until he accepts
o Before the K is made the seller may modify or revoke the offer

· Does the Offer still exist? If you have an offer, which continues to exist, then you go to acceptance

o Ways in which an offer can cease to exist:

o Revocation – (Dickinson v. Dodds)
§ An offer can be revoked by the offeror at any time before acceptance
· It can be revoked expressly / directly or impliedly / indirectly
§ Modification(Lefkowitz v. Great Minneapolis Surplus Store)
o Lapse of Time – (Akers v. J.B. Sedberry) (Restatement 41)
§ Stated Time in the Offer
· Reasonable time (when there is no stated time)
o Default: if there are no specificities in the facts & circumstances, lapse of time is @ the end of the conversation or midnight
· Facts & Circumstances Test
o It is a question of fact, depending on the K proposed & other circumstances in the case
o The offer becomes terminated if not accepted within a reasonable time
· When the offer is not accepted within the time fixed it no longer exists
· Face-to-face conversation – offer ends at the end of the conversation
§ Correspondence
· Mail situations
o Offer in the mail ends at the end of a Reasonable time if no time stated, which is determined by facts & circumstances
o If there are no F & C, then you have until midnight that day {default}
o Rejection [expressly or impliedly]- Offer is terminated where it is expressly or impliedly rejected by the offeree (Akers v. JB Sedberry)
§ Conditional Acceptance
§ Counter Offer –
§ A Counter offer creates a new offer &

ce
§ But acceptance cannot be made conditional on assent to the additional terms

· What can the offeree do to keep the offer open? Irrevocable Offers
§ Option K: This is when the offeree has given the offeror something / money to keep the offer open until a certain time
· It is a promise with consideration
· An offer becomes irrevocable by an option-K

§ UCC 2-205:
· Do not need consideration to make an offer irrevocable
· Even though there is no consid to keep the offer open, the offer is irrevocable if:
o The offer must be by a merchant
o The K must be a signed writing
§ A signed writing is a deliberate intent to keep the offer open to think about it longer
o Can only be held open for up to 3 months max

§ Promissory Estoppel – Reasonable reliance on the promise
· Promissory estoppel is now a species of consideration; it is treated as (1) consideration or (2) substitution for consideration
o the remedy required may be limited as justice requires (substitution for consideration)

§ Unilateral – K Situations:
· This is a promise in exchange for an act
· Once the offeree begins to perform, within a reasonable time, then the offer becomes irrevocable
· However, beginning to perform does not make the offeror bound to the K
o The offeror is only bound to keep the offer open
o When the K is completed, then the offeror is bound to pay the offeree
· Mere preparation by the offeree is not enough