Contracts I
I. Types of K:
FORMAL
a) Contract under seal
b) Recognizance
c) Negotiable Instrument
INFORMAL
a) Unilateral (promise for an act)
b) Bilateral (promise for a promise)
offeror is the master of the K and is the one who determines if offer is unilateral or bilateral
àTo have a valid informal K the following elements must be met:
1. Mutual Assent (O+A) “Meeting of the minds” through words or conduct.
2. “Consideration”
a) Consideration
b) Promissory Estoppel
c) Moral Obligation
3. Legal Capacity (covered in K)
4. Absence of a statute or rule to void the transaction (like statute of frauds)
Unilateral
Bilateral
Promise for an act
Promise for a Promise
Promise ≠ Contract
Promise à Contract
Act à Contract
Act ≠ Contract
Communication of promise could be verbal or non verbal
II. Intent to Contract: Offer and Acceptance
A. Mutual Assent (O&A)
1. Meeting of the minds of the parties of the K this means all parties are on the same page and is required to have a K. Mutual assent is determined by an objective standard.
▪ Objective standard: The apparent intention of the parties as manifested by their contracts.
2. Lucy v. Zehmer (you don’t have the $ to by farm)
Look at outward expressions which are communicated between them. The mental assent is not necessary for formation of a K.
3. Note on Social Contracts (special offers)
a. Professional statements
i. generally they do not rise to the offer.
ii. However, they could be made offers by the professional making a particular guarantee.
4. Stepp v. Freeman (lottery pool)
a) Implied-in-fact
i. Formed by the conduct and surrounding circumstances, just as enforceable as a written K.
b) Group had a custom of handling everything even though no written K, rules were understood.
III. The Offer
A. Four things that must be communicated in a K:
1. Offer
a) Generally an offer must be communicated to the offeree.
b) Exception: Private rewards need prior knowledge. Gov’t.
rewards don’t need prior knowledge.
2. Acceptance
a) Must be communicated
b) Exception: Mail box rule
3. Revocation
a) In order to revoke an offer, the revocation must come before the acceptance.
b) Exception: Option contract and acceptance prior to death offer continues. Death revokes an offer but does not revoke a contract.
4. Rejection
a) Has to be communicated or else the offer will remain.
b) When offeree turns down the offer.
B. Offer: A “yes-able” proposition
1. Communicated: The O must be communicated to the Oee
2. Commitment: The Or must have a commitment to K
3. Definite in its terms: (price & quantity)
C. Solicitations (Advertisements):
1. Generally not offers
2. Vague lack significantly
3. Not definite terms
a) Lefkowitz v. Greater Minneapolis
i.) The terms of the K must be clear, definite, and explicit, and leaves nothing open for negotiations.
ii.) It constitutes an offer, acceptance of which will complete the K.
b) Note: Deceptive Practices:
i. Bait and Switch Ads.
1. It’s a solicitation for the sale of a product that the seller does not really plan to sell.
2. Many state legislatures have been trying to stop this.
D. Written Contract to Follow:
a) To be memorialized later
i. Verbal agreement is reached which is to be formalized later.
Continental Labs v. Scoot Paper Co.
a) If either party intends not to be bound in the absence of a fully executed domcument,, no binding K will be formed in such absence.
First agree orally à execute written agreement b) Continental lacked evidence to prove K was binding orally.
c) K is complex and therefore not feasible unless in writing.
E. Rewards
a) Private Rewards
i. Offeree must be aware of reward prior to acceptance.
b) Govt. Rewards
i. Offeree doesn’t need to be aware of reward prior to acceptance in order to redeem reward.
IV. Acceptance- a manifestation of intent to accept an offe
1. Generally motive does not matter
a) Unless involuntary
i. i.e. give it up as a plea bargain
iii. Coerced
H. Mode of Acceptance
1. May be by conduct- or by words (spoken/written)
2. Mode must be of EQUAL or FASTER response than that used for offer. OR
3. Faster than what was requested
A. Davis v. Jacoby (moved from Canada to help old people)
a) Death will terminate an offer, but will not terminate a contract.
i. The executor of the estate becomes responsible for enforcing the K.
b) As soon as the promise was made, the offer became a K.
b) Restatement II: Doubtful offer: the Oee may choose which one they want.
I. Acceptance is effective if :
1. (Restatement II view)
a) 1. Received (comes in the possession of the Or)
b) 2. Received by a person authorized to receive the A
c) 3. Deposited in a place where the Or has authorized for communications (does not have to be read)
2. Tender of Acceptance
a) Offer to perform the requested act with the present ability to do so.
i. i.e. the case where he does not tender the $ on the mortgage- the guy had already sold the mortgage and did not accept the tender.
a. Before the Oee could show the $, the Or revoked offer.
3. UCC 1-201
a) A person “receives” a notice or notification when:
i. (a) It comes to his attention; or
ii. (b) It is duly delivered at the place of business through which the contract was made or at any other for receipt of such communications.
V. TERMINATION
Termination of the Power of Acceptance
5 Terminators:
1. Revocation
2. Lapse of Time
3. Rejection or Counteroffer
4. Rejection or Counteroffer
5. Non occurrence of a condition
