Contracts Outline Essay Sample

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I. Introduction a. What is a K?: A promise of a set of promises for the breach of which the law provides a legal remedy. § 1. b. Hawkins v. McGee – an expectation to the idea that most medical promises should be argued in malpractice suit c. Bayliner v. Crow – promise was Insufficiently specific i. General intro into what kind of promises are enforceable II. Remedies (Prelim.) a. 2 assumptions – Naval & Sullivan i.

are enforceable

II. Remedies (Prelim.)

a. 2 assumptions – Naval & Sullivan

i. Rather than punishing the breaching party, we look to heal the breach victim

1. Expectancy (benefit of the bargain) “in as good a position as he would have been had the contract been performed” Restatement § 344(a) and § 347

2. Reliance (P back at SQA) – “”being reimbursed for loss caused by reliance” “in as good a position as he would have been had the contract not been made” in the first place. § 344 (b) and § 349

3. Restitution (D back at SQA) – “restore to any him any benefit that he has conferred on the other party” – Restatement § 344(c) and § 371

III. Consideration as a Basis for Enforcement

a. Basic Definition

i. Benefit to promissor

ii. Detriment to promisee

iii. Bargained for exchange

1. Restatement § 71: To constitute consideration, a performance or return promise must be bargained for.

2. Restatement § 79: There only needs to be a bargained for exchange. No need for benefit or detriment, or equal values of exchange.

a. Holmes’ “reciprocal conventional inducement”

b. Requirement of Exchange

i. Consideration must come prior to a contractual agreement

1. Feinberg v. Pfeiffer, Mills v. Wyman, Webb v. McGowan

c. Requirement of Bargain

i. Kirksey v. Kirksey, Land Land Employment Group v. Columber

d. Promises as consideration

i. Unilateral and bilateral contracts

ii. Illusory promises

1. A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances. § 77

2. Promisor cannot have an unfettered route of escape

a. Strong v Sheffield (the wife and the promissory note), Mattei v. Hopper (the strip mall deposit),

i. Satisfaction clauses do not make a promise illusory due to the restraint of acting in good faith.

3. Output and requirements

a. Eastern v. Gulf

i. There are objective measures creating ceilings and floors for the possible future needs. UCC 2-306(1)

4. Exclusive dealing

a. Wood v. Lucy

i. Wood’s promise was inferred; the acceptance of the exclusive agency was an assumption of its duties.

IV. Promissory Estoppel
a. Reliance on the promise – Restatement (Second) § 90: i. Promisor reasonably expects action or forbearance on the part of the promisee and ii. Which does induce such action or forbearance and iii. Enforcement needed to avoid injustice

1. Ricketts v. Scothorn, Feinberg v. Pfeiffer, D&G Stout v. Bacardi

a. Reliance on the promise must be foreseeable on the part of the promisor

b. The reliance need not have been detrimental to the promisee

V. Quasi contracts – contract implied in law – constructive contract

a. Restitution as an alternative basis for recovery

i. Remedy to prevent unjust enrichment; forces disgorgement of unjust gains.

ii. If restitution is the reason for recovery, it will also be the measure. The converse is not always true.

1. Cotnam v. Wisdom, Callano v. Oakwood Park Homes, Pyeatte v. Pyeatte

2. Cannot substitute a third party in the case of an actual contract (with some exceptions)

iii. Rest. 2d § 371

VI. Nature of Assent

a. Does not require a ”meeting of the minds”

b. If the parties both act as though they wish to be in a deal, the court will infer a deal was made (Lucy v. Zehmer)

c. Gentlemen’s agreements

i. Employee handbooks

d. § 27 “Formal Contract Contemplated”

i. If mere clerical tasks are left to be finished, then a K is likely formed

ii. If there are still deal-breakers to be hashed out, then no K

VII. Offer § 24

a. § 24: The manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude

b. “An act (words) whereby one person confers upon another the power to create contractual relations between them.” – Corbin

c. Advertisments

i. Specific response to a specific request is an offer

ii. Otherwise, not generally offers

d. 153. Mistakes

i. Rescission can be had if the non mistaken party knew or should have known of the mistake and

1. Honest, preferably clerical, error

2. Performance of the K would result in undue hardship on the performing party

3. Non-mistaken party can be restored to SQA

e. Goods § 2-105

i. Any movable thing identified at the time of the making of the contract. Can include “future” goods that are not yet in existence like unborn livestock or cattle.

f. Merchant § 2-104

i. A person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction

VIII. Acceptance § 50

a. § 50: A manifestation to assent to the terms by the offeree in the manner invited or required by the offeror

b. A voluntary act of the offeree whereby he exercises the power conferred upon him by the offer and thereby creates the set of legal relations called a contract – Corbin

c. How? § 30, 2-204, 2-206

i. § 30: Offeror can stipulate what will constitute acceptance (Promise or performance)

ii. UCC § 2-204: Agreement to sale of goods can be shown by any manner sufficient including by conduct. Terms left open doesn’t mean indefiniteness if intent to enter into K can be shown and there’s a reasonably certain remedy.

iii. UCC § 2-206: Acceptance to sale of goods can be shown by either the prompt shipping of goods or a promise to ship goods.

d. § 69: Silence is not acceptance unless stated by offeror or by past conduct of the parties.

e. Notice § 54, 56

i. Acceptance by Performance: Doesn’t require notice unless stated by the offeror. § 54

ii. Acceptance by Promise: The promisee must give notice of acceptance to the promisor. § 56

IX. Termination of Power of Acceptance

a. Lapse of Time § 41

i. Offeree’s power of acceptance is terminated by the time specified in offer or at end of reasonable time.

ii. Reasonableness of time is determined by the facts.

iii. Offers made in face-to-face conversation are considered closed at the end of the conversation.

b. Revocation §§ 42, 43

i. Direct: Power of acceptance is terminated when the offeree receives notice from the offeror that offer is revoked. § 42

ii. Indirect: When the offeror’s actions are inconsistent with someone with intentions to enter into a contract and when offeree gets notice of revocation from reliable source.

iii. Exceptions to Revocation

1. Option K’s cannot be revoked

2. Firm offers cannot be revoked (only applies to merchant offerors in signed writings or electronic records)

3. Promissory estoppel may also apply if offeree has relied on promise

c. Death/ Incapacity § 48

1. Death does not end an option K

2. Contracts survive death, offers do not

d. Rejection §§ 38, 39, 58, 59

i. Counteroffers are usually considered rejection. § 39

1. Parties may keep more than one offer on the table if they express such intentions

2. A valid acceptance must comply to the terms of the offer (Mirror Image Rule). § 58

3. Acceptance by adding conditions to acceptance is a rejection and counteroffer. § 59

ii. Offers made in conversation are considered closed at the end of the conversation.

iii. Mailbox rule § 63

1. Acceptance is effective upon proper dispatch:

a. Properly addressed and mailed

b. Unless offer states otherwise

c. Rejection overtaking acceptance

X. Pre-K Liability

a. Firm offer 2-205

i. Statutory anomaly

1. Only by merchants (doesn’t matter who offeree is)

2. Must be an offer for goods

3. Must be in writing

4. Has a time limit (either specified or implied to be reasonable(3mos)

5. Must have explicit language indicating it will be kept open

b. Paid for Option §§ 25, 27

i. Offeree pays the offeror to keep offer open for certain period of time

ii. Is actually a K in and unto itself

iii. Rejection or a counteroffer does not kill the option K

1. Exception to that is if there is still a possible estoppel; rejection that results in reliance by the offeror to sell the goods to someone else can cut off the option K

c. Reliance on Offer – § 45. Acceptance by Performance

i. Brooklyn Bridge Hypothetical

ii. Creates option K that protects the offeree from offeror’s ability to revoke once performance has been started.

d. Reliance on Offer – Bilateral K 87(2)

i. Like when a General contractor relies on subcontractors promise in compiling his bid

ii. Says much the same as § 90, but replaces the words ”promise” and “promisor” with “offer” and “offeror”

e. Offeree’s Choice §§ 32, 62

i. Where an offer can be accepted by promise or performance

ii. Beginning of performance constitutes a promise to fully perform

f. Reliance on promise § 90 (a promise not specific enough to be an offer)

i. Promise reasonably inducing action or forbearance which does induce such action or forbearance is binding

ii. On the basis of his reliance, he gets a reliance based remedy

g. Pre-K Contract

i. Promises to negotiate exclusively and in good faith with consideration

ii. Channel v. Grossman (the mall deal gone bad)

h. Definiteness (specificity, Clarity)

i. Courts must be able to determine if there has been a breach

ii. Can’t know if there was a breach without knowing the K’s contents

iii. Doesn’t require a specific number, but only a basis for determining that number

XI. Statutes of Frauds – things that must be in writing

a. One year Provision

i. K’s that by their express terms cannot be fully performed within a year of their making. Clock starts to run when the K is made

b. Interests in Land

i. Any transfer of interest or lease of real property

ii. Part performance as an exception to SoF defense

iii. Renovations and additions to real property can be seen as reliance

c. Good priced at $500 or more §2-201

i. Between merchants, a confirmation of an oral deal is sufficient against the sender of the confirmation and against the receiver if he remains silent for ten days

ii. 2-203 – specially manufactured goods

iii. part performance can also get out of it

d. Suretyship

i. anyone promising to answer for the debt or default of another

ii. “leading object” exception – surety done solely for benefit of surety can be outside the SoF

XII. UCC 2-207 and the Battle of the forms

a. no “meeting of the minds” for a K – loosens the def. of offer and acceptance

i. a rejection of the mirror image rule

b. a definite and seasonable expression of acceptance…operates as an acceptance even though it contains terms different or additional to those offered and agreed upon

c. the additional terms are to be construed as “proposals” for addition to the K

d. look to the affirmative agreements; courts may fill in the blanks and enforce what they see to be reasonable

e. 2-207(3) – dispenses with the “knockout rule”

XIII. Policing the Bargaining Process

a. Status of Parties

i. Minors/ Infants § 14

1. Contracts reached with a minor are voidable

ii. Mentally Infirm § 15

1. Cognitive test (“That bitch is crazy.”) or

2. Volitional test (know what you’re doing but cant control it)

a. Other party had to know or should have known

b. Bargaining Process/ Behavior

i. Pressure

1. Duress §§ 175, 176

a. § 175. Extracting a promise by making an improper threat that leaves the victim with no reasonable alternatives

b. § 176. A threat is improper if the threat is criminal or tortious, threatening to pursue criminal prosecution, or the threat would be acting in bad faith.

2. § 177 Undue Influence

a. Unfair persuasion by using position of authority to induce victim to assent to terms.

3. § 177 does not preserve self-interested actors make whatever kind of deal they would make within the bounds of the law.

a. Factors to consider undue influence:

i. Discussion at unusual or inappropriate time

ii. Consummation in unusual place

iii. Demand business be finished at once

iv. Extreme emphasis of consequences of the delay

v. Use of multiple persuaders

vi. Absence of third-party advisers

vii. Statements that there is no time to consult financial advisors or attorneys.

ii. Pre-Existing Duty Rule § § 73, 89

1. § 73. Doing something you’re already obligated to do, doesn’t serve as consideration for some additional benefit.

2. § 89. The terms of a pre-existing K can be modified if there are unanticipated circumstances that create new duties for the promisee.

3. 2-209 kills pre-existing duty rule in sales of goods

a. No new consideration needed for a contract to be binding (still need good faith)

c. Substance of the Resultant Agreement

d. Concealment/ Misrepresentation § 161-169

i. Innocent misrep. or bare non-disclosure

1. § 161. Unless there is a duty to disclose (fiduciary relationship), bare non-disclosure is not grounds for rescission.

2. § 169. Opinions are generally not misrepresentations unless the recipient:

a. stands in such a relation of trust and confidence to the person whose opinion is asserted that the recipient is reasonable in relying on it

b. reasonably believes that, as compared with himself the person whose opinion is asserted has special skill, judgment or objectivity with respect to the subject matter

c. is for some other special reason particularly susceptible to a misrepresentation of the type involved.

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