Contracts Outline - Midterm PDF

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criminal law outline 1l semester
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Contracts I - Outline Introduction to Contracts – is there a deal? A. Key Terms

a. A contract is a promise or set of promises that are enforceable. Elements of a contract include: i. Oral or written agreement between two or more persons ii. An exchange in relationship iii. At least one promise iv. Enforceability

b. A unilateral contract: not exchanging promises, have a contract, only by performance. Performance of the contract is acceptance. If you perform my offer, then there’s an acceptance; no acceptance until you complete performance; person could be looking for puppy and offeror can revoke at any time because you don’t accept until you’re done; only thing that accepts is completed performance. When offeror dies, the offer dies with him.

c. A bilateral contract: promises exchanged is acceptance of contract. d. Option Contract is seller agrees that property available for the buyer to purchase at a specified price and within a certain time period and buyer provides consideration – value given in exchange for performance, or a promise to perform, by another party. Money is paid to keep the offer open for a certain period of time and the counteroffer does not terminate the power to accept, unless the buyer detrimentally relies on it.

e. Void Contract is one that is totally without any legal effect from the beginning (an agreement to commit a crime)

f. Voidable Contract is one that one or both parties may elect to avoid or to ratify (contracts of infants or mentally ill persons)

g. Unenforceable Contract is one in which is an agreement that is otherwise valid, but that may not be enforceable due to various defenses extraneous to contract formation, such as the statute of limitations or Statute of Frauds.

h. A promise is some commitment for the future, some assumption of liability lasting beyond the instant of agreement. The undertaking to act or refrain from acting in a specified way at some future time. i. Promises may be “express” – in words or “implied” – inferred from conduct of circumstances of the transaction. ii. A promise is legally enforceable if made as part of a bargain for valid consideration; reasonably induced the promisee to rely on the promise to his detriment; or is deemed enforceable by a statute despite the lack of consideration. iii. A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise – Restatement (Second) 90.

i.

A duty puts the responsibility of duties (to perform or to abstain) on persons entering into agreements for consideration whether they want them or not

j. Performance is the fulfillment or accomplishment of a promise, contract or other obligation according to its terms. i. Specific performance is an equitable remedy whereby the court requires the parties to perform their obligations pursuant to a contract

k. A breach is a non-performance of a contractual duty which has become due

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i. A remedy will be enforced for the breach if a court does indeed find a contract has been established. A validly formed contract must provide a basis for determining the existence of a breach and for giving an appropriate remedy [Restatement § 33; UCC § 2-204]. ii. An anticipatory repudiation of obligations also serves to breach a contract In contracts for the sale of goods, in addition to repudiation: a seller breaches the contract by offering a tender or delivery of non-conforming goods and also if a buyer breaches by wrongfully rejecting goods, wrongfully revoking acceptance of goods, or failing to make a payment when due. iii. Specific enforcement of the promise is not always the primary remedy for a breach of contract. Rather compensatory damages may be issued instead where the financial loss caused by the breach may be awarded. In other words, if the promisor offers the promisee a price of $400.00 for a kayak and the next closest thing is $450.00, $50 in compensatory damages will be issued. iv. If a judgment issues the promisor to pay the compensatory damages and he fails to do so voluntarily, an execution occurs where a sheriff will under command of the court try to seize the promisor’s property and sell it at a public auction to satisfy the debt.

B. Three Types of Contracts

a. Express contracts are formed by language (words), oral or written b. Implied-in-fact contracts are agreements manifested by conduct (actual doing) c. Implied-in-law contracts are Quasi-Contracts which are not true contracts but an obligation imposed by a court despite the absence of a promise in order to avoid an injustice. They are not based on the apparent intention of the parties to undertake the performance in question, nor are they promises. They are constructed by courts to avoid unjust enrichment by permitting the plaintiff to bring an action in restitution to recover the amount of benefit conferred on the defendant. It is a contract implied in law. C. Thoughts on Contracts a. Objectively speaking, a contract would lead the other party to reasonably understand that agreement was reached. b. A party can not be coerced (duress) or tricked into entering contract c. Contracts can be oral or written agreements d. Contract is upheld when a promise is made and has legal consequences in that the performance of the promise may be enforced in court by a money judgment and sometimes by a decree ordering specific performance. e. Every contract for the sale of goods imposes an obligation of good faith dealing on all parties in its performance and enforcement. [UCC § 1-203] All parties, including nonmerchants, are subject to UCC § 1-201(19) which defines "good faith" as "honesty in fact in the conduct or transaction concerned." Merchants are subject to an additional good faith standard, set forth in UCC § 2-103(1)(b), which requires "honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade." RR v. MH. Not all agreements are enforceable, even if the agreement is wholly voluntary and mutual promises and supported by consideration. 1. Valid agreements are sometimes not enforceable because not good with public policy.

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2. Freedom of contract: Done deal and shouldn’t have done deal. Upholding this value would mean that contract is valid. But what’s best for the people and best of health. This freedom of contract conflicts with moral and safety of the people of Massachusetts. Meaning, you couldn’t have surrogate agreements in Mass. Not valid, so if advising person, wouldn’t recommend in getting into surrogate agreement.

I.

Intent to Contract – Determining Mutual Assent A. Mutual Assent - A prerequisite of a valid K that the parties possess a mutuality of assent as manifested by the terms of the agreement and not by hidden intent. Mutual assent is a requisite to the formation of a contract. It is ordinarily arrived by a process of offer and acceptance. At times, however, mutual assent exists even though it is impossible to identify the offer and the acceptance. B. Things to Consider a. Questions of fact are determined by juries, questions of law by judges. b. Whether a person said 50 or 100 on a particular occasion is a question of fact. Whether a reasonable person in the position of the P would conclude that the D had made a commitment is question of fact unless the court rules that reasonable person could reach only one reasonable conclusion. c. Even where reasonable persons could reach different conclusions the question is often held to be one of law when it involves the interpretation of a writing. d. Objective theory of Contracts states that mutual assent should be determined solely from objective manifestations of assent-what the parties do and say rather than what either party subjectively intends, believes or assumes. “What does the other party reasonably intend from this contract?” e. Reasonable person in the shoes of the offeree, does he intend to know what the offeror is thinking? f.

Offeree must actually believe the offeror intended to be bound.

C. Objective theory of Contracts v. Subjective a. Subjective: means what this person was thinking in particular, from his perspective. b. Objective: what would a reasonable person, in this case the offeree position think? Coming from the π, a reasonable person in the shoes of the offeree would believe that we have a contract. Two parts: i. What would a reasonable person think based on the words and conduct? ii. Did the offeree actually believe that there was an intent to contract? c. The intention of acceptance (in the mind) is not effective; it has to be communicated with the offeror. D. Examples of Mutual Assent a. A makes an offer to sell B a vintage automobile for $200,000, specifying all necessary terms. B, in turn states he accepts the offer. Mutual assent has arisen through a process of offer and acceptance. b. A and B are two ignorant persons who are unaware that society offers a remedy for enforcement of contracts. They agree to exchange a horse for a cow, the agreement is enforceable; their ignorance of legal sanctions does not prevent their formation of a contract. This result is consistent with the rule that a mistake as to a rule of law does not necessarily deprive an agreement of legal effect. c. A and B enter into an agreement regulating their commercial relations, but further agree that their agreement creates no legal obligations, the agreement is not enforceable because the parties did not have the requisite of intent. There are, however, cases which

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have upheld such agreements, usually pension and employee benefit plans and bonuses. These cases are supported by promissory estoppels which is a promise that foreseeably induces substantial and definite acts of injurious reliance by the promise or a third party is enforceable.

E. Cases a. Lucy v. Zehmer – Defendant is intoxicated and signs over deed to property claiming he was joking. If a person’s words and acts, judged by a reasonable standard, manifest a certain intent, the subjective unexpressed state of mind is irrelevant. Joking is unnecessary to holding of a case: Dicta: Not binding to the judgment. Contract is binding by what is said, not by what is thought; irrelevant because thoughts, meeting of the minds, don’t matter. b. Leonard v. PepsiCo. – The plaintiff tried to purchase a harrier jet for 7,000,000 Pepsi points. Defendant stated that it was just an advertisement. Violates the objective theory of contract. A reasonable person would not believe it was a contract. It doesn’t matter what Leonard was thinking subjectively. What matters is was a reasonable objective person in his shoes would think. c. Gleason v. Freeman – Plaintiffs bidded and won Elvis Presley’s house at 900K. An alternative offer was made for $1 million dollars and the defendants signed the contract. Plaintiffs filed suit against the defendants for breach of contract, fraud, and negligent misrepresentation. Plaintiffs contended the “legally binding contract” phrase at the close of auction. The Court ruled that there was no intent to create a legally binding contract based on the terms and agreement. 1. Terms and agreement are unambiguous and can’t be overridden. 2. Even if they were ambiguous, there was never an intent to make an offer. No intent to be bound. The defendants were in the negotiation phase after the bidding. d. Smith v. Boyd – The Smiths signed a purchase agreement form to buy Boyd’s house. The Boyds received a better offer from another buyer; made them sign the purchase agreement and then countersigned. In real estate, a reasonable person would not believe to have formed a binding contract until both parties have signed. The conversations between both parties are irrelevant; there was no mutual assent without the signing of the contract between both parties. Also, violates statute of frauds (...