I) INTRODUCTION TO THE LAW OF CONTRACT
A) Types of legal Authorities
Primary Authority (the Law)
Secondary Authority (not law)
· Constitutions
· Statutes
· Case law (precedents)
· Court rules
· Administrative rules
· Restatements
· Treatises
· Periodicals
· Encyclopedias
· ALR annotations
B) Main Contract Authority
1 Precedent—LAW—Case Law, set by courts
2 Statutes—LAW—by state legislatures
a Uniform Commercial Code
b Began to be enacted state by state 1953
c Only applicable to sale of goods—all things which are movable at the time of identification to the contract for sale other than the money in which the price to be paid. Also includes cattle unborn young, and growing crops.
3 Restatements—NOT LAW—but highly persuasive
a Restatement I (1932), Restatement II (1979)
b American Law Institute it is advice as to what common law should be
4 Treatises—NOT LAW—but persuasive
a Murray on Contracts
b Williston
c Corbin on Contracts
d Others as well
e Well written on point, often cited by the courts
C) What is a CONTRACT?
1 A promise or set of promises by a party to a transaction enforceable or otherwise recognizable by law
a Not all promises are enforceable by law, thus not all promises are contracts
b For example marital affairs unless in a business manner (family business)
2 A contract also exist to protect economic interests
3 Evidence that manifests a contract:
a Writing
b Words
c Conduct
d Customs
4 ELEMENTS OF CONTRACT
a OFFER
· Communicated—to OEE but not necessarily by OR
· Committed—look to use of verbs, agree, will sell, promise
· Definite—look to use of nouns price, quantity, brand, amount, specific
b ACCEPTANCE
· Responsive—must accept the offer, (offered 10 bananas, accept 10 oranges)
· Absolute and Unequivocal—must actually be ready to accept offer
· Communicated—cannot accept without telling offeror
c CONSIDERATION
· Define later in term
5 Offer + Acceptance + Consideration = Contract
6 Terminators
a Revocation—by offeror
b Lapse of time
c Rejection or Counteroffer—by Offeree
d Death or Incapacity
e Non-occurrence of a condition
D) Types of Contracts
1 Formal
a Contracts under seal—with a wax seal of the offeror
b The recognizance—debtor (owes something) voluntarily go to court and state they owe the creditor sum of money
c Negotiable instrument—like a check, promissory note
2 Informal
a Opposite of formal. It is not because formalities rather because specific elements have been met!
· Bilateral Contract—promise for promise
· Unilateral Contract—promise for act
3 Social Contracts—not generally enforceable by law, not family marital status (there is a sliding scale if family business is involved also divorce and custody cases), social engagements do not have adequate legal implications (can have elements but not law to back up)
4 Express Contracts—assent is expressed by language either written or oral (both offer and acceptance are oral-spoken– and written WORDS)
5 Implied in fact Contracts—formed by means other than verbal—words oral or written—language (by CONDUCT) surrounding circumstances, declarations of parties form contract
6 Implied in Law Contracts—legal fiction created by courts for equitable result (Deal with more later in term)
7 Communicated-4 main things, offer, acceptance, rejection, and revocation there are exceptions
8 Problem 4: has clause that says not enforceable in court. This would mean it is not a contract. By definition a contract means enforceable by law, if not enforceable in court is not contract.
9 Option: simply set the time for an offer to lapse, but they are revocable at any time.
10 Option Contract: set the time for lapse, but they are irrevocable until the time stated. The difference between option only and option K is that the OEE paid to guarantee to keep it open.
11 Firm “Merchant” Offer—like option contract, contains one or more merchants, signed writing, keep open for time stated up to 3 months (UCC 2-205)
12 Continuing offer contract—if have a term of 1 year, no one acceptance would be binding for the year, each acceptance would form a new K; (unless irrevocable for some reason such as a option k it could be revoked b/4 the year) wordslike, I want I wish I would like, indefinite
13 Requirement contract— Give term of 1 year, acceptance is binding for 1 year; The buyer promises to purchase all goods that they require from a seller; look for words like: I need, I will use, require need use—definiteness
14 Output contract—opposite of requirement K, if a seller promises to sell all of his output goods to a particular buyer;
II) MUTUAL ASSENT
A) ELEMENTS
1 OFFER to contract and the ACCEPTANCE of the offer
2 If OR has manifested a willingness to enter into a contract in such a way that the OEE knows that assent is all that is necessary to cement the deal and OEE accepts/assents then mutual assent exists
B) “meeting of the minds”—courts use this term but actually mean objective test
C) Objective Test
1 an objective measure is used to determine the apparent intention that each party made clear to the other
2 Each party agrees to all the terms and conditions with the same sense and same meaning as the others
3 Look to outward expression of a person as manifesting his intention rather than secret and unexpressed intentions
4 This is done by a reasonable person standard
a Example: Lucy v. Zehmer (bar sale of Ferguson farm
e of Frauds—definition???
E) OFFFEROR MUST HAVE A COMMITMENT TO CONTRACT
1 Problem 8
a If you want to avoid making an offer avoid each of the elements
b Obviously must communicate—but don’t be committed, I am thinking about selling
c Don’t be definite, no exact price
2 Problem 9
a Were they committed?
b Each signed a separate copy of same contract but got up and walked away over the issue of method of payment
c Did not commit because they did not sign the same contract
F) OFFER MUST BE DEFINITE IN ITS TERMS
1 Solicitations/ADVERTISEMENTS
a Rule: not considered to be offers due to
· Lack of detail, concerning size and quantity
· Advertisements are to general public creating unlimited OEE’s
· Generally considered to be an invitation to negotiate a price
¨ Problem 6 (tire ad) no brand listed, not detailed
¨ Problem 7: College brochure, similar Coley has a clause that says gives professors course freedom meaning may not get to everything in course description
b Exception: if advertisement is Clear, Definite, and Explicit, and leaves nothing open for negotiation it is an offer
· Example: Lefkowicz v. Greater Minneapolis Surplus (fur coat offer)
¨ The ad was clear be first customer at specific time and get specific item (listed original value) for specific price. When he arrived was told had to be woman (happened twice) but ad was open, did not state had to be woman within ad, this ad left nothing open to negotiation= offer.
¨ p. 27 whether it is an offer v. an invitation to make an offer depends on the legal intention of the parties and the surrounding circumstances.
c Bait and Switch—an advertisement for which the seller does not intend to sell. FTC protects consumer against such practices. Rain checks.
IV)ACCEPTANCE
A) Acceptance “cements” the deal. The close of offer and acceptance freezes the agreement’s terms unless there is a mutual modification (we’ll learn about it later).
B) RESTATEMENTS:
1 OEE must accept offer in the terms set by OR
2 Acceptance by performance requires at least part performance or tendered
3 Acceptance by promise requires that OEE complete every act
a Meaning partial performance turns into a PROMISE to complete performance creating a bilateral contract
