Contracts Outline

Contracts Outline
 
I.      Is There a Contract, an Enforceable Obligation?
A. Agreement or Promise?
                                i.            Mutual Assent: Offer and Acceptance?
1.      Offer? The words/conduct used must be words of offer, must evidence a present contractual intent. Manifest willingness to enter into a bargain.   Offer creates a power in the offeror to set the appropriate acceptance (“master of the offer”) and power in the offeree to create a contract between the two parties by the appropriate (set by offeror or if not, what is reasonable) acceptance.
a.       Offer must have:
                                                                                            i.            Manifestation of present contractual intent
                                                                                          ii.            Certainty and Definiteness of terms
                                                                                        iii.            Communication to the offeree.
b.      Test of Offer: Objective theory of contract law. Would a reasonable person in the offeree’s place feel that, if he accepted the proposal, a contract would be complete and that no further negotiations would be necessary to bind both parties. No need for subjective meeting of the minds.
                                                                                            i.            Factors considered by courts in assessing the objective intent:
1.      Words used
2.      Surrounding circumstances
3.      To whom proposal is made: if made to the public or a large number of people, more likely to be considered an invitation not an offer.
4.      Definiteness and certainty of terms: the more definite the proposal the more likely it will be construed as an offer.
5.      Written contract contemplated: if the proposal contemplates or provides for a subsequent written instrument to memorialize the agreement, the question arises whether an offeree who accepts is bound immediately or only upon subsequent execution of the writing.: 
c.       Subjective intent of parties does not matter. Mutual subjective intent of the parties is not required for contract. Only matters what a reasonable man would have understood by the words or actions of the promisor/offeror.
                                                                                            i.            “Hairy Hand” Hawkins v. McGee: Matters not what promisor intended by promise, only matters what promisee reasonably understood by promisor’s statements. If promisee reasonably understood promisor’s statements to be a contract/promise, then there was a promise/contract.
                                                                                          ii.            “Ultimatum” Embry v. Hargadine, McKittrick Dry Goods Co.: Though the def may not have intended to employ P by what he said, if what de said would have been taken by a reasonable person to be an employment promise, and P so understood it as so, it constituted a valid contract of employment.
                                                                                        iii.            “Employee Handbooks” McDonald v. Mobil Coal Producing, Inc.: Contractual obligation is imposed not on the basis of the subjective intent of the parties, but rather on the outward manifestations of a party’s assent sufficient to create reasonable reliance by the other party. That the def did not subjectively intend that a contract be formed is irrelevant, provided that def made sufficient intentional, objective manifestations of contractual assent to create reasonable reliance by P. Thus, employee handbook that provides guidelines regarding employment, but also states that employment is terminable at will by either parity, modifies an at-will employment relationship.
d.      Requirement of Definiteness and Certainty of Terms: terms of offer must be sufficiently clear and complete so that the court can determine what the parties were intending, and can fix damages in the even of nonperformance.
                                                                                            i.            Restatement § 33 Certainty
1.      Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
2.      The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
3.      The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.
4.      Comment:
a.       Certainty in basis for a remedy. The rule stated in Subsection (2) reflects the fundamental policy that Ks should be made by the parties, not by the courts, and hence that remedies for breach of K must have a basis in the agreement of the parties. Where the parties have intended to make a K and there is a reasonably certain basis for granting a remedy, the same policy supports the granting of the remedy…See UCC §2-204(3) and Comment. Thus the degree of certainty required may be affected by the dispute which arises and by the remedy sought. Courts decide the disputes before them, no other hypothetical disputes which might have arisen.
e.       Implication of reasonable terms of the offer: these essential terms must either be expressly stated by the parties or capable of reasonable implication from their agreement, consistent with the expressed intentions of the parties.
                                                                                            i.            Price
1.      Price term completely omitted: no price provision, but clearly intent to charge the courts may imply a reasonable price—usually the fair market value of the goods or services involved.
2.      Price term indefinite: if parties have made some provision, but it is too vague to be enforceable, reasonable terms cannot be read in to the terms the parties have agreed to…there is no room for implication of terms and most courts would therefore hold no enforceable contract exists.
a.     “Salt Invitation” Moulton v. Kershaw: Letter stating that certain goods are available for sale at a specified price cannot be reasonably construed as an offer. If it was so inferred, the letter would contain too much uncertainty to be an enforceable contract. More reasonable to construe letter as an invitation, advertisement.
3.      Time for performan