Contracts Outline

CONTRACTS I OUTLINE – MORGAN – SUMMER 2011
 
MUTUAL ASSENT
 
1.       At the very heart of contract law is the determination of the parties’ intent to contract. 
a.       A showing of mutual assent is necessary for an enforceable contract. 
b.      In determining whether that assent exists, courts typically ask whether there has been an offer to contract and an acceptance of that offer. 
c.       If the offeror has clearly manifested a willingness to enter into a contract in such a way that the other party, the offeree, knows that assent is all that is necessary to cement the deal, and the offeree accepts, the contract is created
 
2.       CONTRACT = OFFER + ACCEPTANCE (K = O + A)
 
3.       Familial relationship: courts have been reluctant to become involved in disputes within a harmonious, unbroken marital relationship.
 
4.       Person’s intent is deemed to be what a reasonable person would thinking in the same position (objective)
a.       The law judges of an agreement between two parties exclusively from those expressions of their intentions which are communicated between them – has to be outward expressions and actual words
i.         Lucy v. Zehmer – guys in a bar, Lucy tries to buy farm from Zehmer, who “jokingly” put offer on a napkin which Lucy accepted. Secret intentions irrelevant, only what is outwardly portrayed; court found for Lucy.
b.      When evidence is ambiguous about intent of parties:
i.         Social – presumes no intent to be legally bound (ex: bridge tournament)
ii.       Business – presumes intent to be legally bound
 
5.       Implied in Fact Contract – based on the facts, a contract will be implied
a.       If no express O & A, but conduct indicates that K is formed = K
b.      contract doesn’t need to be in writing to be enforceable, or even expressly orally stated
c.       look to surrounding circumstances to find what the contract is
d.      Stepp v. Freeman – lottery case – informal rules, but never in writing, court found for Stepp and awarded lost lottery winnings
e.      In familial transactions – courts generally assume a gift, unless o’ee has knowledge payment is expected
 
OFFER
 
1.       Definition: “The manifestation of willingness to enter into a bargain which justifies another person in understanding that his assent can conclude the bargain.  (R2nd 24) It must be communicated outwardly
a.       i.e. something “yes-able” – if specifications are clear and detailed enough for offeree to accept and have a contract
b.      O’or is the master of the offer – can specify any way possible to accept
 
2.       PRELIMINARY NEGOTIATIONS
a.       Contract subject to a written document
                                                               i.      PFT Robertson, Inc. v. Volvo Trucks – email where some terms were finalized and some “required details remained to be finalized”
b.      Not an offer yet if there are things left to be decided upon
c.       A tentative agreement is not enforceable if parties agree it is expressly contingent on signing a formal or final document
 
3.       STATEMENT OF OPINION OR INTENTION
a.       Opinions aren’t considered offers. 
b.      Problem 5: lawyer says “we’ll win for sure”, and they lose, no liability
 
4.       OFFER MADE IN JEST:
a.       If o’ee reasonably believes offer is valid = K
b.      But if o’ee knows offer is a joke, no K even if acceptance
 
5.       SOLICITATIONS
a.       Ads are invitations to make an offer, not an offer itself, unless the words rise to the level of an offer
b.      It needs to be very detailed, with nothing left to be negotiated, when any of the terms are unclear
c.       Lefkowitz v. Greater Minneapolis Surplus Store – ad for fur, this one was determined to be an offer because of how detailed and specific it was.
                                                               i.      This case was rare – most ads are not considered offers.
 
6.       WRITTEN CONTRACT TO FOLLOW
a.       Question of intent – what do the parties mean when they say there is a written K to follow?
                                                               i.      No K until written? OR
                                                             ii.      K, all we need is written document to put it on paper
b.      K has to be so quantum filled – guy on the other side can say “yes K” if this indicates a K.
                                                               i.      Need to know the facts and look at the words stated and understand the context of what it is and who the parties are
                                                             ii.      Look for: dickered terms (quantity, price, time of K, etc)
c.       If facts and surrounding circumstances specify that a written document is to follow, then they are not bound to a draft document, or an oral agreement.
                                                               i.      Even if parties agree to all items, but it is clear a written doc is to follow
                                                             ii.      Where intent to a written doc is ambiguous, generally K as soon as mutual assent is reached, even w/o written doc.
d.      Continental Laboratories v. Scott Paper – a phone conversation was thought to be a binding agreement by one party and not another, held that it was not since it was decided a written contract was to follow.
e.      Factors to consider:
                                                               i.      Is contract of a class usually found to be in writing?
                                                             ii.      Is it of a type needing a formal writing for its full expression?
                                                            iii.      Does it have few or many details?
                                                           iv.      Is the amount large or small?
                                                             v.      Is contract common or unusual?
                                                           vi.      Were all details agreed upon or were some unresolved?
                                                          vii.      Did negotiations show a writing was discussed or contemplated?
 
ACCEPTANCE
 
1.       DEFINITION: (R2nd 50)
a.       Manifestation of assent to the terms made by the o’ee in a manner invited or required by the o’or
b.      Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise (unilateral)
c.       Acceptance by a promise requires that the offeree complete every act essential to the making of the promise. (bilateral K)
 
2.       WHO CAN ACCEPT
a.       Only o’ee, the one o’or intended to give the power of acceptance
 
3.       EFFECT OF ACCEPTANCE
a.       As soon as an offer is made and accepted, unless the original contract reserves power to do so, one party may not unilaterally alter the contract by changing its terms.
                                                               i.      Acceptance cements the deal – snap shot – you are frozen into place