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Contracts
Villanova University School of Law
Maza Courtney, Kathryn

CONTRACTS MAZA COURTNEY SPRING 2017

COMMON LAW FORMATION

MUTUAL ASSENT– Objective manifestation of intention to be bound

Objective analysis of assent of terms judged through outward expressions and reasonable notice of terms ALLEN v. BISSINGER & CO (mail order documents), FELDMAN v. GOOGLE (not reading clickwrap agreement)

EXCEPTIONS à Contract still enforceable, even if

Unilateral mistake, except fraud – RAY v. EURICE BROS. (misreading contract)
Ignorance of terms; FELDMAN

BILATERAL OFFER & ACCEPTANCE – Involves commitments on both sides à PROMISE FOR PROMISE

1. ASSENT – R.2d § 22

Manifestation of mutual assent to exchange ordinarily offer or proposal by one party followed by acceptance by other party or parties

May be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined

OFFER – R.2d § 24

Offer is manifestation of willingness to enter into bargain, so as to justify another person in understanding that his assent to that bargain is invited and will conclude it

Aka – Assent = Bargain, so if assent will NOT conclude it, it’s not an offer

Preliminary Negotiations – R.2d § 26

A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made further manifestation of assent

Aka – Does offeree have reason to know that the acceptance will conclude a bargain

Invitation for offer v. offer – LONERGAN v. SCOLNICK

Where offeror expresses intention to be bound without further assent
Advertisement are invitation for offer, not offer – R. 2d §26

Offer was founded on hope that people would misread advertisement therefore the court, looking to public policy, ruled this ad would be an offer à EXCEPTION to the rule – IZADI v. MACHADO FORD

Could be offer if:

Language of commitment invited to
Act without further communication

Option contract

Irrevocable promise to keep offer open must be supported by consideration

ACCEPTANCE, REJECTIONS AND COUNTER-OFFERS

Once an offeree has received an offer, she can:

ACCEPT if terms comply with Mirror Image rule / Necessity to comply with terms of offer – R.2d §58

Acceptance must comply with requirements of offer as to the promise to by made or the performance to be rendered

QUALIFIED ACCEPTANCE – R.2d §59

Reply to an offer which purports to accept but is conditional on offeror’s assent to additional or different terms from those offered is not an acceptance but a counteroffer
In summary:

Additional / different terms = counteroffer
Counteroffer = rejection
Additional / different terms à rejection
Can be inferred from conduct

See III. BATTLE OF THE FORMS

TERMINATE POWER OF ACCEPTANCE THROUGH – R.2d §36

REJECTION ­ R.2d §58

Offeree’s power of acceptance is terminated by his rejection of the offer, unless offeror has manifested a contrary intention
Manifestation of intention not to accept an offer is a rejection unless offeree manifests an intention to take it under further advisement
Reminders:

Reasonable reliance on manifestations of intent
Rejection could be via conduct (buying another house) so long as it is communicated to offeror
Rejection terminates offeree’s power of acceptance

COUNTER-OFFER – R.2d §39

Counter offer is offer made by offeree to offeror relating to the same matter as original offer and proposing substituted bargain differing from that proposed by original offer
Offeree’s power of acceptance is terminated by counter-offer, unless offer has manifested contrary intention or unless counter-offer manifests a contrary intention of offeree.

AKA: Counter offer terminates offeree’s power of acceptance

INDIRECT REVOKE OFFER – NORMILE v. MILLER

Offeree’s power of acceptance is terminated when offeror take definite action inconsistent with an intention to enter into the proposed contract and offeree acquires reliable information to that effect

Ex // Pl. thinking she had time to decide on a counteroffer by real estate agent but he made no promise to keep the offer open for her à Did not violate contract because none existed therefore offer was terminated by the offeror’s revocation

Lapse of time
Death or incapacity of offeror or offeree
By non-occurrence of any condition of acceptance under the terms of offer

MAILBOX RULE – R.2d §40

Generally acceptance effective upon proper dispatch

Only acceptances
Sent via mail
In bilateral contracts
Properly addressed
Unless offer specifies otherwise à Offer controls

n memorial thereof; but circumstances may show agreements are preliminary negotiations

CERTAINTY IN PRACTICE

Reasonable price – Reasonably certain dependent on contract such that the court can fashion a remedy
Lease renewal à Depends on jurisdiction

Traditional rule = needs price but modern rule is more relaxes

If there is a writing, there is either; QUAKE CONSTRUCTION

No contract

If too ambiguous; QUAKE

Contract
Agreement to agree

Test manifestation of intent to determine if there is agreement

How many terms decided on?
How detailed?
Is it the type of contract that requires full-written agreement?
Oral or written communication?

IRREVOCABLE OFFER – CL

OPTION CONTRACT – R. 2d §87

An offer is binding as an option contract if it

Is in writing
Signed by the offeror
Recites purported consideration for making the offer
Proposes an exchange on fair terms

An offer which the offeror should reasonably expect to induce action / forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice
AKA reasonable reliance can create binding option and requires consideration
Ex//

A orally agrees to give B irrevocable 3-day option to purchase A’s home, in exchange for $100. (B needs time to travel to property to inspect, prior to making final offer.) If B hasn’t actually paid the $100, is there a valid option?

No, for lack of consideration

A executes and delivers to B a written agreement “in consideration of one dollar in hand paid” giving B an option to buy described land belonging to A for $15,000, the option to expire at noon six days later. If A hasn’t actually given B one dollar, is there a valid option contract?