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Contracts II
Widener Law Commonwealth
Meadows, Robyn L.

Intro to Law of Contracts
Sunday, August 24, 2008
11:35 PM
1.                 What is a K?
A.                     Contract: private economic relationships/mostly common law
                                  i.          Contract (Rest. 1): promise or set of promises for which law has remedy if breached or performance if which law recognizes as duty
·         Voluntary relationships→ helps set premise
·         There needs to be an agreement, purposefully entering into relationship
                                 ii.          What is a promise?
·         General Rule: a promise must show
·         Show intent
·         Manifest intent
·         Both showing intent and manifesting intent must be in place to enter contract
·         Promisor (person doing); promisee (person receiving)
     Ex. Pepsi commercial that spurred lawsuit (Example)
·         Harrier jet plane→ $7 million Pepsi points
· Could get points for $.10 per 1 point w/ @ least 15 Pepsi points
·         Plaintiff sent in $150,000 worth of points to get plane
·         Pepsi said no to giving the plaintiff the plane
·         Plaintiff wanted the diff b/w money he sent in and true value of jet plane
·         Plaintiff sued for breach of contract
·         Was there a contract? (fundamental question in case)
· Plaintiff sent in money, so he argued that Pepsi made an offer and basis of argument on fact that he sent in money
·        Art. II of Uniform Commercial Code (UCC) enacted by all states except Louisiana
·         Applies to sale of goods
UCC 2-201 Sale of Goods
                 It must evidence a contract for the sale of goods (anything for $500 or more)
                 It must be signed by the person whom enforcement is necessary
                 It must specify a quantity
If output or requirements K, writing must indicate that rather than provide specific quantity à 2-306 (requirements K)
·         Statutes/codes followed by commentary–very useful, use when reading code
·         If not answered by Code, then refer to common law
·        UCC did not answer this issues
                                                                                                                             ·            Case in NY, so must refer to common law of that state
                                                                                                                             ·            Can refer to Restatement to get idea/place to start
· Meaning of contract: promise/set of promises for which breach of law carries remedy
                                                                                                           ·           Must find promise on part of Pepsi
·         Plaintiff’s argument: promise found in commercial
·         Pepsi did not intent, but did manifest action (plaintiff’s argument)
·         Defendant’s argument:
·         Placement of jet plane in commercial was a joke
·         Any reasonable person would know that jet plane not available for purchase
·         Not legal for plaintiff to purchase jet because it is US military commissioned hardware
· In actuality, plane not placed in catalog
·         Ct had to decide:
                                                                                         ·     Did plaintiff have enough reason to believe that he could receive the plane
                                                                                         ·     Was this an offer
·         From whose perspective should we determine whether there was an offer made by Pepsi?
                                                                                         ·     Differentiate b/w promise and what is not
                                                                                         ·     Gift v. contract (bargain of exchange)
                                                                                         ·     Revolves around consideration
                                                                                         ·     Then address legal remedies
Mutual Assent
Sunday, August 24, 2008
11:39 PM
1.                 Mutual Assent
A.                     General Rule: mutual assent + consideration= contract (Rest. 17)
                                  i.          Manifestation of assent, and
a.       Generally determined objectively (Objective Theory)
                                                                      i.            Mutual assent position: judge actions by a reasonable person’s standpoint
a.       What is shown
                                 ii.          Consideration
a.       Bargain for exchange or promises
                               iii.          Should rule be more objective or more subjective?
a.       Objective modified by subjective

·         Sometimes cts wont get involved, leave it to another arbitrator
                 3 types of contracts
     Express contract: assent manifested in words, written or oral
           Can be bilateral or unilateral
                 Unilateral contract- a promise of one party and performance as acceptance of another party; no notice of acceptance is required, full performance is sufficient
                 Bilateral contract- a set of promises on both parties ***(most types of contracts)***
     Implied-in-fact contract: assent manifested through conduct, not actual contract; law imposes obligation to pay to avoid unjust enrichment
           Still must have manifest of assent and consideration
     Implied in law contract (quasi contract): not actual contract; law imposes obligation to pay to avoid unjust enrichment; obligation imposed out of fairness
                                   ·          Ex. Stepp v. Freeman: lottery pool
·         Group won but did not give earnings to member who was normally included in lottery pool (this member didn’t drop out of pool)
·         K: pay when playing lotto; if win, then get share (group’s view)/ (Stepp) pay when we play (exchange of promises)
                                                                       ·            Other terms:
· if gone, can pay later
· Will be informed when purchasing ticket
· No removal from group w/o agreement
                                                                       ·            Always 20 people in group
                                                                       ·            Still has basic set of promises–fundamental K
·         Rationale: No members of the group would have no reason to believe that they would be dropped from the group if they did not pay their money in a timely manner.
·         Notes:
 Freedom of contract: let parties set their own terms/define their relationship