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Classical Contract Law: Preference for clear rules (legal formalism)
Traditional Contract Law: Indifferent to moral or social policy except that contracts should be kept(pacta sunt servanda).
A. Mutual Assent: A contract requires that there is mutual assent to exchange and a consideration. You can have a contract even though no bargaining took place between the parties. (EX: Feldman v. Google). The doctrines of restitution and promissory estoppel involve liability between parties even though no contact has been formed or contemplated between parties. 1. How can a party be relived of an Obligation? If the other party has engaged in some form of i. bargaining misconduct ii. fraud iii. duress iv. undue influence v. Or if circumstances that existed at the time of the contract have changed sufficiently to justify nonperformance. 1. Intention to be Bound: The Objective Theory of Contract: Many states believe that in order to form a valid contract that you must have a meeting of the minds between the two entities. Meeting of minds is required: This view is considered subjective because the actual intention of the party rather than the conduct determines the legal obligation that is required. If manifestation of mutual assent: This view is considered objective because it looks at the conduct of the parties from the view of a reasonable person rather than the subjective intentions.
instead of a mutual misunderstanding does not stop the meeting of the minds that is required in order to form a contract. The defendant even signed the back of the specifications. the five page specifications were present and discussed at the signing. Eurice & Bros. Holding: Yes.Ray v. Court: Maryland Court of Appeals Procedural History: Started in the circuit court of Baltimore County by the owners of the unimproved lot against the construction company for breach of contract to build house ruled for the defendants and the plaintiffs (Ray appealed). The court ruled that a unilateral mistake could not cause a contract to be invalid as would a bilateral mistake. William G. the company wrongfully breached their contract due to a one sided misunderstanding. Defendant claims that the contract drawn up by Plaintiff’s attorney was to be based on the three-page proposed contract and that the five page specifications were not physically attached to the contract when signed. Facts: Plaintiff decided to build a house and entered into negotiations with a number of builders and the defendant was chosen. Defendant made changes which were marked in green and the Plaintiff drew up their own specifications and sent them to the Defendant who said that they would have their lawyers draw up a contract. . Plaintiff states that while the specifications may not have been physically attached. Issue: Whether there is a legally binding contract even when there is a unilateral misconception between the two parties about the specific specifications of the building of the house. Rule of the Case: Even though the misunderstanding may be one sided. Inc. The contract was entered into. The Court of Appeals figured differently by finding that if the mistake was unilateral the contract specifically specified which specifications where to be used. The court first thought that due to the fact that there was not a meeting of the minds because of a misunderstanding of the specifications caused the contract to be invalid..
An exchange of promises that involve commitments from both sides is known as Bilateral Contracts (offer and acceptance). .2. Offer and Acceptance in Bilateral Contracts: A contract normally involves the notion of Futurity.commitment to some course of action to be undertaken in the future.
. When this case first came to trial with the trial courts they found that an offer had been made but was not binding because the plaintiff did not accept before the offer was removed.Longergan v. the defendant and the plaintiff did not enter into a legally binding contract. -Lonergan (plaintiff) On March 26th wrote a letter describing the land and how interest was expressed. Rule of the Case: Just because interest is expressed in making an offer does not make it an enforceable contract. When the case reached court of Appeals the court stated that the Defendant’s letters with the plaintiff where not a contract but invitation for offers and the Defendant let the plaintiff know that there were other buyers and does not agree to hold the property for plaintiff. meanwhile Scolnick the Defendant wrote that he had found the property and gave a description of the land and that the bank suggested was fine but that the plaintiff would have to act fast indicating that there was more than one person competing for the property on April 8th. Issue: Did the Defendant and the Plaintiff enter into a legally binding contract when the ad was placed and the Plaintiff responded with interest in purchasing the property? Holding: No. Facts: Scolnick (Defendant) was trying to post an ad for selling a 40 acre piece of land. On April 12th Lonergan takes too long to make offer and Scolnick sell to someone else unbeknown to the reader. The judgment was entered and now the plaintiff has appealed. Scolnick Court: California District Court of Appeal Procedural History: In the lower courts it was found that the plaintiff and defendant did not enter into a contract and the defendant is entitled to judgment. On the 14th of April Lonergan received the letter and thinks that is a formal offer and writes on April 15th to accept the offer and puts down $ 100. On April 7th Lonergan responds with a suggestion for an escrow bank.00 to start the escrow proceedings.
000 allowance. Court: Florida District Court of Appeal Facts: Plaintiff attempted to purchase a vehicle from Defendant for $3. . Based on Defendant’s advertisement. would be offered a $3. Rule of the Case: An advertising that is misleading by reasonable understanding may still be considered a binding contract even though the person who made the advertisement did not intend to make an offer.595 and a trade in. In fine print the ad indicated that the allowance applied to only two vehicle models. Issue: Did the defendant breach his contract. the Plaintiff may file a breach of contract claim because the Court believes that Defendant may have in fact wanted the public to interpret the advertisement as Plaintiff did allowing for the bait and switch and the courts want to promote honesty and fair business process. neither of which Plaintiff was attempting to purchase. regardless of value. Inc. Plaintiff believed that any trade-in. Plaintiff mistakenly thought the allowance applied to the purchase of any new vehicle. and did the Defendant extend an offer by reasonable understanding? Holding: YES. Machado (Gus) Ford.Izadi v.
Issue: Does a counter-offer have a time period attached when one is not stated? Does the original time period from first offer still apply to counter-offer? Is supplying a counteroffer a rejection of the initial offer? Did Normile and Miller enter into a binding contract to buy property? Holding: No. Cites Ward v. Both Plaintiff’s filed for summary judgment. Miller Court: Supreme Court of North Carolina Procedural History: Normile and Segal both file separate actions for specific performance (sell the house as bound by contract). The power of acceptance was then on Normile. thinking they had an ‘option’. Albertson and Kidd v. but Plaintiff responded with a counteroffer in turn not accepting the original offer. Facts: Plaintiff Normile and a third party buyer Segal both tried to purchase a piece of real estate from Miller the Defendant. Normile was the first to give a bid. Normile appealed summary judgment denial to Court of Appeals.Normile v. NC Supreme Court heard case on Discretionary Review appeal. Early. Prior to Normile’s counteroffer being accepted. Segal’s accepted. granted. The counter-offer effectively erased the initial offer by changing the terms. Defendant Miller sold the property to Segal. Miller recognized contract with Segal. but since lawsuit pending. Segal won the right to buy the house. couldn’t hand over title to Segal. which they didn’t. who waited. Miller ordered to give title to Segal. both of which demonstrate the way in which a time period can be designated. Miller did not have to hold it for a specific period of time. Affirmed by ct. .Segal motioned for consolidation of trials. Normile’s attachment of a time frame on first offer does not apply to counter.A contract is not an option unless there is a time attached to it.
.Cites Restatements 1&2.Power of acceptance terminated by offeree’s rejection. Restatements 2nd both people must be on exact same page for there to be a contract. Rule of the Case: A counteroffer is essentially a rejection of the original terms and the original terms do not exist unless the counteroffer is accepted before it is taken away. prior contract is terminated. upon revisions. Affirmed lower court’s ruling.