Chapter 11: Contracts—agreement in traditional and e-contracts Agreement: An essential element for contract formation—the parties must agree on the terms of the contract and manifest to each other their mutual assent (agreement) to the same bargainoOrdinarily evidenced by two events: an offer and an acceptanceOne party offers a certain bargain to another party, who then accepts that bargainoDoesn’t necessarily have to be in writingoOnce agreement is reached, if the other elements of a contract are present (consideration, capacity, and legality—discussed in subsequent chapters), a valid contract is formed, generally creating enforceable rights and duties between the partiesobjective theory of contracts: a party’s words and conduct are held to mean whatever a reasonable person in the offeree’s position would think they meantOffer: a promise or commitment to do or refrain from doing some specified actionin the futureoOfferor:the one who makes an offer or proposal to another partyoOfferee:the one to whom the offer or proposal is madeUnder the common law, three elements are necessary for an offer to be effective:o1. The offeror must have a serious intention to become bound by the offer.o2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. o3. The offer must be communicated to the offeree.Once an effective offer has been made, the offeree’s acceptance of that offer creates a legally binding contract (providing the other essential elements for a valid and enforceable contract are present).Intention: The first requirement for an effective offer is a serious intent on the part of the offerorodetermined by what a reasonable person in the offeree’s position would conclude that the offeror’s words and actions meant.oOffers made in obvious anger, jest, or undue excitement do not meet the serious-and-objective-intent test—not bindingCase 11.1: Lucy vs. ZehmerBACKGROUND AND FACTS •W.O. Lucy, the plaintiff, filed a suit against A. H. and Ida Zehmer, the defendants, to compel the Zehmers to transfer title of their property, known as the Ferguson Farm, to the Lucys (W.O. and his wife) for $50,000, as the Zehmers had allegedly agreed to do.Lucy had been trying to convince Zehmer to sell his farm for a long time but Zehmer never agreed. This time Lucy tried a new approach. He said “I bet you wouldn’t take $50,000 for that place.”—while they got drunk at a bar.
Eventually, Lucy enticed Zehmer to write up an agreement to the effect that the Zehmers would sell the Ferguson Farm to Lucy for $50,000 complete. Zehmer sobered up and didn’t want to actually sell.Lucy sued Zehmer to compel him to go through with the sale.
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- Fall '08
- Business Law Outlines