Contracts I_ Kent_ Fall_2009
INTRODUCTION
Contract – this is a set of promises by two or more people that the law will enforce.
if X makes a promise to Y, when, to what extent, and under what circumstances, will the law compel X to perform that promise or pay damages to Y for not doing so
O + A + “C” = K
**The promises which the law enforces are called contracts (K); the law doesn’t enforce all promises. If it is not enforceable in the court of law, then it is not a K (Cox refers to this as an “agreement”)**
2 types of K’s:
1. FORMAL K (very formal) enforced because of formalities
a. K’s under seal – made enforceable by wax seal; no longer used today (however, still see with notary seal)
b. recognizance – promise made in court during open litigation
c. the negotiable instrument (technical)
2. INFORMAL K’s (enforced because certain elements are present.)
3. Elements of K
a. mutual assent (O + A)
i. verbally – using words
1. oral
2. written
ii. conduct – action (implied-in-fact K)
iii. combo of both – verbally and by conduct
b. “consideration” (C) – true consideration promissory estoppels moral obligation**any of these can make a promise enforceable**
c. legal capacity – metal state of parties involved
d. absence of principle which makes K unenforceable(i.e. statute of frauds – require something in writing)
Uniform Commercial Code (UCC) – the original (from 50 years ago) is the only one legally used today; the law deals with securing and protecting human interest. K is important because it deals with people’s economic interests; many things that have evolved favor the person with money
Caveat Emptor – “let the buyer beware;” law favors the seller (last 30-40 years public interest groups have been trying to protect people against “unfair” K’s)
CONTRACT FORMATION (OFFER AND ACCEPTANCE)
Does the UCC apply
Is it the sale of goods?
1. All things that are moveable at the time of identification, other than money in which the price is to be paid, not investment securities, and things in action. Goods also includes the unborn young of animals and growing crops and other identified things that can be severed from realty.
2. Land and services are not goods
Applies to everyone, not just merchants
2. **NOTE – 1st determine if article 2 of UCC applies, sale of goods; if yes, use §2-205 (if merchant) or §2-207 (if counteroffer)
OFFER – made by offeror (O/R)
An offer is the manifestation of willingness to enter into a bargain which justifies another person in understanding that his assent can conclude the bargain. It is a “yesable” proposition; it contains all the terms to K; objective manifestation/mutual assent (reasonable person)
Elements of an offer:
1. Definite in its terms – meaning that it should be clear and specific; the nouns (primarily price and quantity; i.e. car, truck, $25,000); not always by O/R, can be by third party; agreement to agree is NOT sufficient
a. Price has to be stated or a way to determine price
b. If no price stated for land you have no offer
2. Commited: the verb (i.e. “I will sell” v. “I am thinking of selling”)
“might” does not constitute a commitment
3. Communicated: meaning the offer was conveyed
a. EXCEPTION – government awards (do not need prior knowledge of reward being offered)
To determine intent to offer (refer to Lucy v. Zehmer):
1. outward manifestations-outward gestures
a. objective test (reasonable person standard)
b. what the person says/does (i.e. write and sign napkin stating the deal)
c. this is what we do care about
**Mutual assent is the objective standard**
2. secret unexpressed intentions
a. what the person is thinking, but not saying (i.e. just joking)
b. this is what we don’t care about
3. EXCEPTION
a. subjec
of the offer of the reward before giving information in order to make O/R bound to the offer
b. governmental rewards – O/ee does not need to know of reward prior to giving of information; does not need to be communicated
c. no matter what, police are not eligible to collect rewards – acting within scope of job
d. motive is not essential (Norman Bates example, pg. 58, Problem 17)
e. information given must be voluntary – cannot force statement (i.e. prison guard dressing up as bunny, beating inmates with hammer and phone book to force confession)
f. all rewards are unilateral K’s – look for an act not a promise
Types of offers:
1. unilateral K – only one promise; O/R makes promise looking for an act in return
a. part performance (§45 of R[II]) – option K; binds O/R
b. unclear offer (§62 of R[II]) – binds O/R and O/ee
bilateral K – two promises; O/R makes promise for a return promise
Written K to follow
A lack of a written K does not negate the existence of a K.
The K is valid if the parties’ intent to be bound prior to a written K is determined.
Test of validity of pre-K
1. Whether the K is the type of K usually found to be in writing.
2. Whether it needs a formal writing for its full expression.
3. Whether it has few or many details.
4. Whether the amount is large or small.
5. Whether the K is common or unusual.
6. Whether all details have been agreed or some remain unresolved.
7. Whether the negotiations show writing was discussed.
AD HOC DECISION = each case is decided based on each facts.
option : a promise by offeror to keep the offer open for a specified period of time—NO CONSIDERATION – O/R is not bound to keep offer open (i.e. On Oct. 1, A says to B, “I will
