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Contracts - Peppet 2004

Contracts - Peppet 2004 - Contracts Outline INTENTION TO...

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Contracts Outline I NTENTION TO BE B OUND : B ASES OF L EGAL O BLIGATION Objective Theory of Contracts: o Objective manifestation of intent o The maker of a promise may be held legally bound by it without expressly stating an intention to be bound, or even if she does not have the intent to enter into such an obligation – RSTMT (First) §20 If you signed the contract, you intended to be bound Mutual assent : Absent fraud, duress, or mutual mistake, one having the capacity to understand a written document who reads and signs it, or without reading it or having it read to him, signs it, is bound by his signature Ray v. Eurice (held to be bound even though Eurices said they hadn’t read it all) Rollins v. Foster (nearly illiterate woman held to be bound to arbitration clause in the contract) UNLESS . . . The contract is “unconscionable” o Burch v. 2 nd Judicial District (arbitration clause was unconscionable, so it wasn’t binding) There is fraud/misrepresentation o Park 100 There is disparity in bargaining power – sophistication o Burch (unsophisticated buyers) compared to Ray (sophisticated home builders) One party is not serious o If a reasonable person would know in the circumstances that the promise was a joke (bar scenario) o A reasonable person would know the supposed promise was not real (Pepsi case) o The court uses a reasonable interpretation of the words and actions of the parties Peppet’s Summary Slide OBJECTIVE Manifestation Not to enter K To enter K SUBJECTIVE Manifestation Not to enter K Mutual agreement not to be bound; no K is formed Illiterate? – bound ( Foster ) Unilateral mistake – NO ( Ray ) Side agreement not to be bound – NO Actor in play – NO Joking – maybe To enter K See if you can use mutual mistake or parol evidence to interpret the contract to show intent to be bound Mutual assent; K is formed 1
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O FFER AND ACCEPTANCE : W HEN IS A K ( CONTRACT ) FORMED ? Valid Offer + Consideration + Valid Acceptance Bilateral Contracts o Offeror Promise o Offeree Promise w/ detriment o Offers Test for a valid offer Is there a manifestation of willingness . . . To enter into a bargain . . . so made as to justify another person to believe? Courts generally look at: Language of the proposal – how specific? Prior communications between the parties Whether suggested bargain would be complete Number of persons to whom it is addressed Missing terms Whether the suggested bargain would impose unreasonable or unduly risky terms Restatement §§24 and 26 Not just an invitation for an offer B: “Will you sell me your watch for $100?” S: “I couldn’t sell unless I got at least $200” “I would like to buy your watch” Lonergan (ad was merely an invitation for offers) Not an inquiry “Do you want to buy 240 good 1000 lb. cattle at $8.25? Must sell by Friday.” Unless there is language that makes it an offer o “For immediate acceptance?” vs. “subject to approval by headquarters?”
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