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Unformatted text preview: Contracts Outline Roy § 3 Fall 2004 K- agreement b/t two or more people. An exchange of promises. Not necessarily in writing. Two approaches to K law: 1. Classical Approach- Objective Theory of K- it doesn’t matter what parties thought or intended, but what a reasonable person in position of parties would have thought or intended. Mutual assent is not necessary. If parties’ actions, judged by a standard of reasonableness, manifest an intention to agree, then the real state of the party’s mind is irrelevant. –What would a reasonable person have thought? Ray v. Eurice Bros.- Duty to read rule; Park 100- fraud is a valid defense. 2. Modern Approach- tries to be fair, looks at intent of parties. Elements: 1. Offer 2. Acceptance 3. Consideration 1) Offer- a manifest intention to be bound w/out further assent a) communication by offeror b) creating a reasonable expectation in the offeree c) offeror is willing to enter into a K d) specified terms e) offeree need only accept to form a K- R. §70- One who makes a written offer which is accepted, is bound, though ignorant of the terms. Obj. Theory. 2) Acceptance- offeree has “power of acceptance” that is terminated at time specified in offer, or, if not time specified, at end of a reasonable time (depends on circumstances). R. §41: Mailbox Rule- revocation effective when rec’d; acceptance when dispatched.- qualified acceptance = counter offer = rejection- revoke at any time b/f acceptance. Effective when communicated (directly or indirectly). Normile v. Miller- “you snooze, you lose” by agent was held to be effective indirect revocation. Bilateral K- exchange of promises Unilateral K- promise in exchange for an act 1- Classical Approach: free to revoke b/f completion of full performance Peterson v. Pattberg- Modern Approach: part performance may create an option K- R.§45 R. §32- in case of doubt, offeree may choose to accept offer by performance or promise to perform-uni or bi. 3) Consideration- must be something “bargained-for exchange” R. .§71: Consideration a) to constitute consideration, a performance or return promise must be bargained for b) bargained for = if it’s sought by the promisor in exchange for his promise and is given by the promise in exchange for that promise c) Performance may consist of: i. Act ii. Forbearance iii. Creation, Modification, or Destruction of Legal Relation CONSIDERATION: Hamer v. Sidway- Classical consideration- Benefit/Detriment Test= benefit to promisor or detriment to promise. Legal Detriment- someone forbears from doing something that they are legally entitled to do. In this case, boy refrained from drinking, smoking, swearing until 21. Baehr v. Penn-O-Tex- Bargained-for exchange is test for consideration. Here, forbearance not to sue was not induced by promise. Ct. did say that forbearance to sue could be consideration, just not here....
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