Contracts Outline-CH3-Making of Agreement

Contracts Outline-CH3-Making of Agreement - Contracts CH 3:...

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Contracts CH 3: 1 Contracts Outline CH 3: The Making of Agreements I. Mutual Assent- The Reasonable Man Test of Contract Formation a. Agreement may be manifested wholly or partly by words, written or spoken, by acts, or even by a failure to act b. Objective Test i. Test: Jury determines what acts occurred and judge determines if a reasonable person would believe a contract was made under those facts 1. For a K to be enforceable, the parties must have had an INTENT to contract a. A “meeting of the minds” b. This intent is determined by an Objective Standard : i. Would a Reasonable Prudent Person interpreting the words and conduct of the parties think they had intended to make a deal 2. Embry v Hargadine, McKitrrick Dry Goods Co- Employment contract renewed a. Employee worked on a year-to-year basis traveling with samples for salesman i. He contends that he was re-engaged in December for another year but was discharged in March ii. Respondent contends he never re-employed employee after termination of his written contract for the previous year b. The issue is to be determined by whether the reasonable prudent person would have thought a deal was made by the exchanged words between the parties i. ii. EXCEPTION : Subjective intent of the parties is of no consequence except if both have no intent to contract 1. Kabil Developments Corp v Mignot- No-show helicopter a. P alleged an oral agreement that Inland helicopters, owned by D, would provide Kabil with helicopter services needed for a construction job which Kabil contracted to perform for the US Forest Service i. The helicopter never showed and D denied there was a contract ii. Kabil sued for their cover price b. Court allowed the parties testimony as to their beliefs at time of the alleged contract iii. New York Trust Co v Island Oil & Transport Corp- Sham Oil Deal 1. Island oil barred by law from drilling within 50 KM of Mexico a. Sets up Sham deal w/Mexican subsidiaries to appear as owners b. Mexican companies kept books showing debts owed by Island Oil 2. Financial trouble causes Mexican companies to try to sue for these false debts on their books 3. Court refuses: Sham K EXCEPTION : i. If both parties DO NOT intend to contract, but intentionally set up a sham deal, the objective standard will NOT be applied. ii. Either party can introduce evidence for this exception iii. Hard exception to get because parties must testify that it was a sham iv. Courts will enforce the sham deal ONLY IF third party relied on it
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Contracts CH 3: 2 iv. Effect of Written Disclaimer of Intent to K 1. Rule: A written stipulation that a party has no intent to K is of no consequence or is treated as an invitation to negotiate a. McDonald v Mobil Coal Producing- McDonald was fired for rumors of sexual harassment i. McDonald was hired as at-will employee and sued Mobil, claiming that his employee handbook constituted a contract and that Mobil was in breach. 1.
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This note was uploaded on 04/18/2008 for the course LAW Contracts taught by Professor G.flint during the Fall '07 term at Saint Mary's University Texas.

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Contracts Outline-CH3-Making of Agreement - Contracts CH 3:...

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