Wayne State – Contracts A – Eric Zacks – Fall 2011
1. Introduction to Contract Law
A. Primary concerns of Contract Law
i) Provides evidence of what the parties intended to do (the voluntary transfer of property)
ii) Protects reliability of promises in contracts (through the judiciary)
a) Cannot enforce all promises (ie. Social promises)
b) damages must be present
iii) Ensure or make it likely that both parties are benefiting from contract
B. Skills necessary
i) Comprehend details of a case
ii) extract relevant details of a case
iii) apply rule when different facts apply (being able to argue for different applications)
iv) compare competing rules
C. Essential elements of a contract: (Restatement 2d )
i) A promise
a) manifestation of intent to act or refrain from acting in a specific way
b) so made to justify a promisee in understanding that a commitment has been made
ii) Identifiable promiser, promisee, beneficiary
iii) Can be oral (assumpsit), written, or implied by conduct
D. Awarding remedy
i) Did a contract (as defined above) exist?
a) Natural default in ruling is to assume a contract did not exist
b) Certain hoops must be jumped through in order to reach a contract
c) Once those reached, it is very difficult to return to “no-contract” state
ii) What there a breach of contract?
iii) Were there damages?
iv) Should those damages be remedied/awarded? (is it in accordance with public policy to do so?
E. Shaheen v. Knight
i) Summary Judgment: damages were incurred on the part of the plaintiff by breach of contract (assumed under conditions of petition for summary judgment) but awarding damages would be against public policy by setting precedent that medical professionals cover costs of raising their patient's children
ii) Promise: Sterility
a) Manifestation of intent: agreement to perform surgery to induce sterilization
b) Justification of understanding of commitment: medical profession, money exchanged, procedure undergone
iii) Theory of relief: had contract not been breached (infertility existed and not child conceived) the plaintiff would not have incurred the damages (expense of raising and rearing a fifth child until maturity)
iv) Arguments in defense and response
a) Void as public policy – no unanimity of opinion, thus not against public policy
b) No implicit “Warranty of cure” -irrelevant b/c case is pertaining to express contract
c) Deceit claim, there was no deceit (tort) – not about tort (tries to deal with loss and who will bear it) but contract (voluntary assumption of risk of loss)
d) Negligence (tort), not negligent– not about tort (tries to deal with loss and who will bear it) but contract (voluntary assumption of risk of loss)
e) Status of physician not contract- duty and contract can coexist
f) No damage- damage did occur but to award it would be against public policy
v) Public Policy Standard: Something must be so for or against the morals and general norm of society that there is public unanimity around it.
a) Using this standard adds credibility to the Judicial system (doing things with public support, not simply out of own volition)
b) Because public opinion can vary it allows the possibility of change and fluidity in the future
c) Risk of deciding against public policy in favor of awarding damages would have made it risky to perform procedures like this and made doctors likely to discontinue this practice in medicine which our society values
• Breach of contract can be a formal cause of action
• Informal promises can be treated as contract
2. Formating of a Contract
A. Reaching an agreement
i) Mutual Assent
a) Embry v Mickitrick
• Issue: Whether both parties had assented to Embry's renewed contract of employment (whether it was even offered)?
• Error in lower court: To pronounce jury instruction using subjective standard, declaring that Mickitrick needed to have mentally intended to offer a contract in order for contract to have been established.
· Based on “meeting of the minds”
· both need to have intended to enter into contract, regardless of actions
· used to avoid loose contracts or ones where people don't intend to be bound
· Objective Theory of Assent:
· based on what is presented (regardless of intent)
· understanding of a reasonable person in the contextual setting
· and the subjective assent and understanding that a contract was entered into by the promisee (so as to avoid taking advantage of others)
• Policy Concern:
· Enhanced public's ability to rely on commitments of others
• Holding: reversed and remanded
b) Lucy v. Zehmer
• Facts: Lucy offered Zhemer a large sum of money to buy his farm. After some debate about whether Lucy possessed that sum of money, Zhemer wrote an agreement and had his wife sign it. He said to his wife that it was be
· Did the factors indicate that the harrier jet was available?
· Considered the following factors:
· Disparity of value
· Product Itself
· Amount of pepsi necessary to get points
· Declaratory judgement upheld
· Commercial was obviously in jest and the catalogue did not include the item, a reasonable person would have known there was no offer
c) Empro Manufacturing Co. v. Ball-Co Manufacturing
• Empro and Ball-co were exchanging letters of intent for Empro to purchase Ball-co. Empro had left the final contract contingent on shareholder approval. In the final letter of intent, Ball-co said they still needed some “clarification” and needed securities that Empro was unwilling to agree to. Ball-co then began negotiations with another company. Ball-co brought a suit for breach of contract.
• Issue: whether the preliminary negotiations that had taken place were binding.
• Rule: §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 a reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.”
• Was there an offer?
• Was the offer accepted?
• Objective theory of assent. Factors that could have lead empro to believe there was no intent to be bound.
· Letters of intent, not final agreement
· disagreement about sercurity
• Holding: Affirmed lower court's dismissal of the complaint based on failure to state a claim on which relief can be granted (no contract to breach)
d) Dickinson v. Dodds
• Dickinson offered to sell Dodds a property and in a letter gave him until Friday at 9:00AM. Dodds heard from another source that Dickinson was negotiating with others.
• Issue: Did Dickinson (the offeror) have the power to revoke his offer before the stated time?