Contract
1. Offer
Elements:
a. Must be Communicated, somehowà words, written, conduct| C
b. Must have a Commitment to contract| C
c. Must be Definite à is the subject of the offer clearly described| D
2. Acceptance
3. Consideration
Causes of Action:
1) Contract
2) Promissory Estoppel = enforceable promises/NOT K
3) Past Consideration/Moral Obligation = enforceable promises/NOT K
Damages
Statute of Frauds
Offer + Consideration = Mutual Assent
Mutual Assent – parties agreement to contract, manifested by their expressed intent to offer and accept, or by a reasonable objective view, their intent may be inferred
a. When mutual assent is reached, terms are unchangeable; unless explicitly stated that a party has unilateral power to do so
Lucy v. Zehmer – determination of mutual assent is objective based outward acts and words of parties
Under Common Law, an offer to buy or sell something is NOT valid and DOES NOT create the power of acceptance when there is no Price
HOWEVER: Under UCC: If parties intend, they CAN conclude a CONTRACT for sale even though a price is not settled. Factors for determining a reasonable price (6) pg. 42 restatement.
Uniform Commercial Code, article 2 – applies when there is a sale of goods.
1. Parties involved do NOT necessarily have to be merhcants
MUTUAL ASSENT
Lucy v. Zehmer
Issue – Was there mutual assent? Holding: Yes
Key Facts – Negotiation took 40+ min, written and revised drafts, signed by both parties, discussion of specifics included in sale
RULES:
1. There must be mutual assent to form a binding contract
2. Judgment of mutual assent is judged from an outward objective view. Judgment can only be based on outward acts and words of the parties, NOT by their secret intent.
3. pg. 7 – Mutual Assent is essential to a valid contract and the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts.
4. Secret Intent is NOT valid; intent is judged by OUTWARD conduct
Examples:
1. Everyone knew Plaintiff was joking; however everyone also knew Defendant was of low mental capability.
RULE – If you know the other person doesn’t think it’s a joke, you will be bound to the contract
RULE – Agreements to make social dates are NOT contracts, it is a Naked Promise
Stepp v. Freeman – Freeman organized a lotto playing group where Freeman notified members when they were playing, collected money, covered members when they were not available to pay, and formally spoke with and dismissed members when they wished to do so. Stepp was a member with responsibilities who after an argument was not notified the group was playing and did not pay when the group played and won the lotto.
Issue – Was there an implied contract, and if so, did Freeman breach it (Holding: Yes, Yes: He who breached the contract first (Freeman) is liable, not any parties afterwards)
RULES:
Express contracts – assent to the terms of the contract is actually expressed in the form of an offer and an acceptance
Implied contracts – There is no express offer and acceptance, but “mutual assent” can be inferred from the surrounding circumstances and indirect evidence
To Establish: A plaintiff must demonstrate that the circumstances surrounding the parties’ transaction make it reasonably certain that an agreement was intended (pg. 13)
Implied in Law – are NOT true contracts: they are a legal fiction used to find an equitable result
Leftowitz v. Greater Minneapolis Surplus Store – Def. advertised fur coats to be on sale for $1 and gave narrow conditions for acceptance (first come first serve). Plntf. went to the store and was the first customer and wished to purchase the coats for $1. Def. refused and said they were only for women (house rule).
Issue: Was the advertisement an offer of contract? (Yes, but this case is the exception to the rule)
Reasoning: The advertisement was clear, definite, explicit and method for acceptance was stated.
RULE:
Advertisement as a Binding Contract: the EXCEPTION – if the advertisement is very clear and no terms are left open, and the method of acceptance is explicit, the offer can be accepted making a binding contract
General Rule for advertisements, circulars and the like: They are NOT offers to be binding contracts because too many terms are left open à they are invitations for the customer to make an offer
Continental Lab v. Scott – Continental and Scott began negotiations for a supply and distribution contract where Scott would be entering a new market. After a conference call, Scott stated they had reached an agreement in principle; Continental believed an oral agreement had been reached. Scott gave Continental a contract marked draft with the commencement date left blank, after revisions and return of the contract, Scott stated they were no longer interested.
Issue: Did the parties enter into an enforceable oral contract during the conference call
o. Terms based on prior dealings.
c. Usage of trade – terms based on customary dealings of trade
4) Exception: The offeror is the master of the contract, but an offeror CANNOT force silence as a method for acceptance on a offeree
Unilateral Contracts
1) Rewards
a. When accepting, non-contractual motive is NOT important
b. The action for acceptance must be taken voluntarily and the actor must have prior knowledge of the reward offer
c. If a person has a prior duty to perform the act required in a unilateral contract offer, the performance by the party with the pre-existing duty does NOT constitute acceptance (police officer cannot collect a reward offered by a third party for the apprehension of a criminal: Officer has a prior duty to do so anyways. Policy – if it were allowed, officers would only arrest people while off duty)
2) Acceptance may only be done by performance
a. Generally acceptance (performance) does not require notice from the offeree to the offeror, à HOWEVER. an offeror will NOT be bound to the contract if the offeree has reason to know performance cannot be known to the offeror, UNLESS:
i. The offeree takes reasonable diligence to notify the offeror
ii. The offeror learns of the performance
iii. The offer itself waives the requirement of notice
3) The beginning of the performance is acceptance, but mere preparation to perform does not constitute acceptance (Marchiondo v. Scheck)
4) Acceptance freezes the terms of a contract
Unless otherwise unambiguously indicated by language or circumstances (Beard v. Krusa) UCC 2.2 Sales
1. An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances
2. An order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by prompt promise to ship or by prompt or current shipment of conforming or non conforming goods; but if such shipment of non
