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Contracts
Wayne State University Law School
Hammer, Peter J.

CONTRACTS- Outline

Legal Formalism /Classical Regime
Legal Realism/ Modern regime
Williston, Christopher-Columbus Langdell -Holmes
Llewellyn, Farnsworth
1st Rest (1932)
2nd Rest (1979), UCC
Ø      Formal k Law, Law is doctrine –pure, absolute, abstract, scientific – a logician dream of heaven. Legal mechanism.
Ø      Rules and principles
Ø      Background: laissez-faire economy, limited gvt interference with private transactions
Ø      Indifference to issues of morality and public policy other than that the k should be held.
Ø      Objectivist theory of k (twenty bishop), judge parties by their conduct
Ø      All text is context, immerse itself in the facts. Empathy to the facts and to the social context. Looking through details and not for a box to put my decision. Judges r social actors.
Ø      General standards of unconscionability and good faith, pillars of the modern regime.


Law and Economics mvt
Ø      Renewal emphasis on the workings of a free economy.
Ø      A swing back toward a more conceptual or formalist view of k Law. Less concerned with imbalances of power and more concerned with enforcing the agreement as made or at least as adhered to.

UCC
Bus customs & practice is a source of reference and significance / window where actions might speak louder than words.
·        The influence of the UCC, architected by Llewellyn, might have served to counter what might be viewed as the “ivory tower” of K law. Here it conforms the law with bus practices, and direct the crts to inform their decisions with bus customs. Yet it wasn’t trying to make a body of supporting empirical data.


I-                   Enforcing Promises: Basis of legal obligation
K unenforceable b/c unconscionable
Burch [15] homeowners purchased house with warranty from double diamond. Arbitration clause is not conspicuous.
A crt need not enforce a k that is unconscionable. A standardized k on a “take it or leave it” basis, no realistic opportunity of bargaining.

Fuller [25] in 1941 identified 3 subst. basis of contractual liability:
1)      Private autonomy: where private indiv have the power to effect changes in their legal realities.
2)      Reliance: recognition that the breach of promise may work an injury to one who has changed his position in reliance on the expectation that the promise would be fulfilled
3)      Unjust enrichment: unjust gain of the promissor. The law of restitution is the law of gains-based recovery. So you give up what you unjustly gained.

K enforceable b/c signed and read/ classical regime
Ray v. Eurice Bros [27] Π wanted his house according to certain specifications. Δ refused to carry on the construction                            after signing it even though the Π had attached the specifications..
Ø      Law: 1st rest: a k is a manifestation of mutual assent is essential but neither the mental assent to the promises in the k nor real and apparent intent that the promises shall be legally binding is essential.
Ø      Objective Theory (Holmes), One is bound or not bound , not by her “secret intent” to that effect, but by the reasonable interpretation of the words and actions. By the externals.
Ø      A party that signed a k which he has read is bound absent fraud, duress and mutual mistake.

Objective theory of Law, Judge Learned hand: Twenty Bishops example,
A k has, strictly sp

anifestation is addressed knows or has reason to know that the pers making it does not intend it as an expression of his fixed purpose until he has given a further expression of assent, he has not made an offer.
An offer should be definite and give the power of acceptance

The “mailbox rule” or “deposited acceptance”. Acceptance is effective as soon as dispatched (mailed, telegraphed). Unless the offeror stated otherwise. “The offeror is the master of the offer”.

An ad can be considered as an offer/”Bait and switch”
Izadi v. Machado [166] Π responding to an ad for a minimum trade allowance, wanted to trade an unspecified trade                                                    in, the ad in fine print had specified the 2 cars.
Ø      If an offer is conveyed by the objective reading of an advertisement, it does not matter that the advertiser may subjectively have not intended for its chosen language to constitute a binding offer.
Ø      Williston: The test of the true interpretation of an offer and an acceptance is not what the party making it thought it meant or intended it to mean, but what a reas pers in the position of the parties would have thought it meant.
Corbin, where bait and switch advertising suspected, public policy ought to justify a court in holding deceptive advertising to be an offer despite the seller’s intent not to make such offer.