in order to validly form one must have:
(1&2 are “mutual assent”)
offer and acceptance
past repeated behavior, previous contract followed
mutual assent and consideration
expired, illegal (embargo placed and goods cannot be delivered)
it will be voidable at option of the offeror “statute of fraud”
promise in exchange for an act
promise in exchange for a promise (99.9% of contracts)
contracts created by the court to prevent an unjust enrichment
fully performed on both ends
one side has performed, other party is expected to perform
In order to have a valid offer there must be the outward manifestation of present contractual intent to be bound by certain and definite terms communicated to the offeree
(must be a serious and realistic offer, that is capable to be performed)
certain and definite terms of offer
quantity term, time for performance, interested parties, price term, subject matter (QTIPS)
destroy an offer
Rejection, Revocation, Death of party, Lapse of time, Destruction of subject matter, Insanity (Red Rover Does Laps During School)
offeror as master of offer may revoke offer prior to offeree accepting
alteration, modification, or deviation of the outstanding offer
– pure rejection: “no”, “forget it”
– counter offer: rejection of offer and creation of whole new offer “or…”
death of party
party dies prior to acceptance
lapse of time
offer expires after certain amount of time
destruction of subject matter
offer died when subject matter was destroyed
destroys contract when offeror is under the influence or has a mental defect and is incapable of making reasonable offer/decision
contract designed to keep an offer open for a stated period of time supported by consideration
(sell book by 1, offers $1 to keep offer open until 5pm)
firm offer rule
cannot revoke offer for that period of time, cannot exceed 3mos.
only applicable under UCC
uniform commercial code
gap filler, quantity part is not there
“an act that has been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within US”
The unqualified unequivocal assent to the terms of the offer
Mirror Image Rule
Offeree respond exactly how offeror expects
Rejection Valid on Receipt
Acceptance Valid on Dispatch.
Pan Handle Realty v. Olins
Olins wanted to lease prop for 1 year, agreed with PHR for $138,000 for year and gave check. Stop payment order following day, did not go through (everything else had been met). Had to restage prop for $80,000 and suing to recover loss. Olins had to pay, breach in contract.
Baugh v. Columbia Heart Clinic
Baugh worked for CHC and signed non compete after leaving stating he would not start up clinic within 20 mile radius for a year. For every month he would get $5,000 for 12months (up to $60,000) if he complied. He didn’t, yet claimed non compete agreement was ‘unenforceable.’ Court ruled in favor of CHC, stating clinic owed Baugh nothing.
Jacob & Youngs v. Kent
parties entered a contract to build a country home, Kent stated must use leading manufacturer “Reading pipes”
J&Y however installed different piping, Kent ordered it be replaced but it would cost a lot to demolish and remodel
J&Y suing to get remaining balance of ~ $4,000
I: Is Defendant entitled to the cost of replacement of the pipe for Plaintiff’s breach of contract?
In this case, adjustment can be made, it is not a breach. “The cost of completion is grossly and unfairly disproportionate to the good to be attained, the measure of damages is the difference in value.” J&Y is entitled to remaining balance due (pipe is same quality and meets performance of the name brand).
Hallmark Cards v. Murley
Corporate restructuring cut the vp of marketing. Offered a severance pkg of $735,000 in exchange for signing a non compete
Murley got a new job after non compete was over, however she clearly divulged information to new employer (breach)
Hallmark sued for the $735,000 to be returned as well as $125,000 from new job
Hallmark is entitled to getting the money back, however it would be very unfair and disproportionate to request $860,000 from Murley. Instead, $735,000 from original pkg returned
Lucy v. Zehmer
Zehmer and Lucy were out together, Zehmer started discussing his farm and eventually an offer came about for $50k (which is low)
Is this verbal contract valid since they were drinking and Zehmer claims it to be jest?
They had been drinking but Zehmer made offer prior to this (it was even redrafted), and the offer had been accepted by Lucy, so yes, Zehmer must give Lucy the promised real estate for $50k.
Krell v. Henry
Henry contracted use of Krell’s flat to view the coronation procession of King Edward VII. Under the terms, Henry was granted use of the flat for 2 days in exchange for 75 pounds. Coronation was postponed though.
Krell sued for balance due but court ruled that there was no purpose to the contract since the coronation was postponed, so Henry didn’t owe anything.
Hamer v. Sidway
Agreement that uncle would pay his nephew $5000 if the nephew would refrain from drinking, using tobacco, swearing, and playing cards and billiards until he turned 21. Nephew earned the money and in a letter the uncle said he would hold the money with interest until the nephew was older. Uncle died, nephew transfers to Louisa Hamer.
Hamer sues the executor of the uncle’s estate, Franklin Sidway. The court held that in this case, the language of the offer made it clear that the uncle sought acceptance by performance and not by a promise to perform. Ruled in favor of Hamer.
Facto v. Pantagis
Facto contracted Pantagis $10,578 for a wedding reception, all of which was to be paid in advance. Contained a force majeure clause, which stated: “Snuffy’s will be excused from performance under this contract if it is prevented from doing so by an act of God (e.g., flood, power failure, etc.), or other unforeseen events or circumstances.”
Power went out 45min in.
Court ruled Pantagis Renaissance partially performed the contract by starting the reception before the power failure, it is entitled to recover the value of the services it provided to plaintiffs
Bargained for exchange of a legal detriment
is no consideration
pre existing duty rule
“promising to do something that you already have a legal obligation to do is not valid consideration” (giving firefighter $100 to save cat out of tree)
the promisor makes or conveys a promise to the promisee and a failure of the promised to full fruition would create a hardship for the promisee
“to force another to perform their obligations under a contract, using the theory of promissory estoppel”
1. minor: can hold contract valid at their discretion/option (exception if emancipated minor, certain necessities)
2. intoxication: alcohol, allergies, drugs
3. mental disease/defect
Mistake of law is NEVER a defense. Mistake of FACT is a legal defense.
mutual mistake: deemed invalid
unilateral mistake: will be deemed valid where the non mistaken party either knew or should have known of the mistake
A deliberate deception intended to secure an unfair or unlawful advantage
Professional way in which use position to threaten. Happens a lot with adult children and elderly parents.
someone threatens you and makes you do something you would have not done normally
a contract that is so heavily favored for one party that the court refuses to enforce in part or at all because it is so oppressive/unfair
statue of frauds
intentional misrepresentation of fact that deceives (intentionally) so that the individual will act upon it to his/her legal injury.
certain contracts must be in writing for them to be deemed valid— marriage, realty, debt of another, cannot be completed within a year, goods of $500 or more (MRDOG)
statue of frauds: marriage
Must be in writing to be enforceable
statue of frauds: realty
must be in writing to be enforceable
**Part performance (gave $50k of 100k, didn’t transfer title)
statute of frauds: debt of another
If one person agrees to pay the _____ as a favor, it must be in writing to be enforceable.
**Purpose Doctrine: where the party who is answering benefits, then it will justify the invalid contract.
statue of frauds: conditions met in 1 year
contracts over 1 year must be in writing to be enforceable
**argue Full Performance (one party started their part)
statue of frauds: goods over $500
**Receipt in full or part goods of funds.
Whose time for performance has become due. Who is in breach?
Precedent: someone needs to go first
Subsequent: performs after
Concurrent: at the same time
Free on board (FOB)
put in common carrier, title transferred to buyer and they assume risk of loss
Free alongside (FAS)
once seller puts goods alongside common carrier (greyhound, queen mary, range river, elevator, etc.) it is as though title has transferred to buyer
Cost of Insurance and Freight (CIF)
Whoever takes out cost for insurance coverage and freight expense pays for the damage done to the item, doesn’t allow for double recovery
Sale on Approval
Sale that is not completed until buyer approves goods, goods are delivered to the buyer in an “on trial” or “on satisfaction” basis
expressed: expressly given (verbal, written)
implied: implied warranty of merchantability (product must work as it should) and implied warranty of fitness for a particular purpose (a merchant knows the purpose/desire of the buyer and that the buyer relies on merchant’s expertise)
performance excused / discharged
Impossibility / Impracticability: Act of God. Earthquake swallow the car)
Waiver: relinquishment of a known right / Modification: change in terms post contracting)
Substituted Performance: one of the original contracting parties substitutes another in
Novation** want to protect yourself: original contracting party consents to the substitution or performance of 3rd party