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Adams Contracts I: Fall 2010 Contract – “a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty” - A promise of future enforcement; thus contracts are executory (not yet completed), NOT executed - Contracts can be written or oral - Only one promise needs to be made for a contract to come into existence Peppercorn - "Whereas each party must promise to do or provide something to the other, even a promise to give the other a peppercorn – a nominal item or change in position – is usually enough for a court to find that a Contract exists." Promise – A promise is an undertaking to act or refrain from acting in a specified way at some future time - Promises may be express or implied (inferred from conduct or the circumstances of the transaction Restatement § 2 - “Manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made” “Duty to read” – When a writing is signed without having been read and understood, courts often express this accountability principle as “duty to read.” The person is held accountable for giving the impression of assent, even is he did not actually intend to agree. Contracts, Quasi-Contracts, Implied in Fact, Express Contracts Quasi-Contract - not a contract, but is a term used by courts to denote a recovery imposed by law which justice so requires, even though the parties have not made an agreement. Equity concept. Contracts implied in law – a quasi-contract, also known as quantum meruit Contracts implied in fact – a real contract where an agreement is reached through parties’ actions, not by their words Express Contract – An agreement manifested by words I. Which law applies? a. UCC (Uniform Commercial Code) i. The UCC governs the sale of goods which are tangible, moveable things (as opposed to the sale of land and services) ii. Is this a contract for the sale of goods (thus, of things that are movable at the time of identification to the contract?) iii. Even if the UCC applies, the common law fills gaps in the UCC. So, if there’s no UCC rule, consult the Restatement. b. Restatement i. The American Law Institute publishes the Restatement which organizes and summarizes the American common law of contracts ii. Common law – real estate, services iii. Fills gaps in UCC c. CISG (Convention on the International Sale of Goods) i. United Nations treaty whose provisions apply to contracts for
the sale of goods between parties whose places of business are in different countries ii. The places of business of both the plaintiff and the defendant must be in countries that are signatory to the CISG iii. When it applies, the CISG takes precedence over state law, including enacted UCC provisions Contracts for both goods and services i. Use predominant-purpose test 1. The language of the contract I. What do they address in their negotiations? 2. The value of the good relative to the value of the services I. Does it like they are making a contract for services, and goods are incidental to services? 3. The nature of the provider of goods and services
Manifestation of Mutual Assent a. Once you figured out what law to use, then look for mutual assent b. Look for a promise, and then offer c. Restatement 2 – Promise i. “Manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made” d. Parties can manifest their assent to an agreement by together adopting a joint statement of terms or it can be accomplished by a series of back-and-forth communications between the parties (offer and acceptance). e. For a valid contract to be formed, you have to have two things: 1. Objective reasonable intent to make a contract I. What’s the setting within which the communication between the parties took place (problem #2)? II. Were there communications between the parties that indicate intent? Were they objectively meant in earnest? (Pepsico & Zehmer) III. Was there a written document drafted in the language of K. (Angelou, Sun Printing, Cheever) IV. Did one or more of the parties prepare to perform the K. V. Did one or more of the parties actually perform under the K. (Angelou, Cheever) 2. Essential terms that are Definite and Certain I. Essential terms can include II. There are four essential elements which an agreement must cover (either expressly or implied) in order for it to be enforceable I. Parties to the contract II. Subject matter of the contract, work to be done III. Time for the delivery, performance IV. Price/Quantity III. You can’t accept what you don’t know f. For a contract to be formed, the parties must reach “mutual assent.”
Parties and courts are not mind readers, so we look at the parties external manifestations, rather than the subjective intentions of each party, to determine the existence and terms of the contract. Should Mutual Assent be Judged Objectively or Subjectively? i. Two Elements: 1. They must both intend to contract and they must agree on at least the main terms I. Objective Standard with Subjective Intent I. Current law favors an objective standard for determining a party's intent to be contractually bound. Thus, in general, communications are given the meaning that the recipient of the communication should have reasonably understood. Nevertheless subjective intent is relevant in determining whether the parties intended to be bound - evidence of either party's state of mind can be used to determine the context of the manifestation if said evidence is reliable and compatible with the manifestation in question. Without such subjective intent, there is no contract. I. Lucy v. Zehmer - Drunk farmer selling farm saying he was joking about the sale. Although Zehmer claims that it was all a joke, his subjective understanding of the transaction doesn’t matter. The proper inquiry is whether a person in Lucy’s position would reasonably believe that the transaction was only meant in jest. ii. If it is clear a contract has been made, the focus is on whether their terms were agreed. 1. Raffles v. Wichelhaus – A ship named Peerless. If the parties have in mind different subject matters on a critical term of the K (delivery) and there is no basis for holding one of the parties responsible for knowing the correct term, then there is no contract (no meeting of the minds – court looked at subjective approach). The court held that parties had not mutually assented to the same thing, so no contract had been formed. iii. If the parties have disagreed on minor terms, or have not provided for minor terms, the court may supply the missing terms 1. But the parties still must have intended to contract Assent to Indefinite or Incomplete Agreements i. Indefinite Terms (Agreements to Agree) 1. Traditional Common law I. Restrictive approach - No contract formed if indefinite or incomplete terms 2. Modern Approach I. More flexible
A signed document evidencing terms of a purported agreement IV. Cancellation provision. The document was written in the language of a contract I. Missing. “A contract may be enforced even though some contract terms may be missing or left to be agreed upon. but if the essential terms are so II. Purported to demonstrate terms on which the parties agreed. Uncertain Commitment to the Deal II. Court finds that the parties have a K to keep bargaining in good faith Definite and Certain terms 1. BUT. Missing Terms II. Definite terms I. Academy Chicago Publishers v. Had recitations II. but the cancellation clause contradicted the letter’s obvious intent to be bound for both of the parties. Sufficiently definite to form a K (decision really focuses on intent though) 3. read in the context of this contemplation of a future K. however. I.ii. III. coupled with statement that the letter of intent authorized the work. Short period of time to complete work. American Airlines I. Whether parties intended to be bound is ambiguous. Remanded for jury. contemplation of a formal K between parties indicates that the letter was not binding as to its terms. Some terms missing II. Ambiguity as to whether the parties intended to be bound by the letter of intent. The letter of intent seemed like the parties intended to be bound. Need for a cancellation provision indicates that the letter is binding. Quake v. Some terms vague VI. Required for mutual assent and enables courts to determine remedy 2. Cheever I. would indicate that they intended to be bound. I. . indicates that the letter was not binding. were terms that were sufficiently definite to allow the court to determine whether the agreement had been breached and what the remedy should be for the breach. Courts fill in gaps based on intent and other common business factors (always for UCC Article 2) III. I. V. There was an objectively reasonable intent to make a K.
A contract of indefinite duration is simply a contract at will and may be terminated at any time. As in Cheever.” VII. V. Courts may supply missing terms by looking at the actions. III. Generated a body of law in which the duty of good faith upheld binding . no contract is formed. Vague Terms – filled in by good faith and fair dealing II. “Where…the parties have attempted to put in writing an agreement fixing the rights and duties owing to each other.” I. BLP secured a contract from Hallmark for greeting cards and related products. Duration: I. Parties understood they were working together to get Angelou’s writings into greeting cards II. Thus the law gives a remedy for this indefiniteness. BLP to pay all costs. Partial performance confirms what the language was intended to mean. intention was there to make a contract. courts will not deny relief because of vagueness and uncertainty in the language used. uncertain that there is no basis for deciding whether the agreement has been kept or broken. III. Partial performance by BLP gave contour to the term. Wood v. 50-50 split between A and BLP. Angelou tried to maintain that the terms were too indefinite to have created a contract I. IV. No statement as to quantity of work to be provided by Angelou/No statement of duty owed by BLP to Angelou I. “Although the parties may have had and manifested the intent to make a contract.4. Price: court determined was not indefinite I. if intent of the parties can be ascertained. II. Lucy. there is no contract” I. Angelou I. if the content of their agreement is unduly uncertain and indefinite. Lady Duff-Gordon: duty of good faith performance inherent in every contract requires the use of best efforts to perform. But courts are reluctant to strike down contracts for indefiniteness if the intent of the parties can be ascertained. Subject matter: I. implied payment BPL v. VI.
iii. which Cardozo held were essential terms (traditional common law view – restrictive) I. rather the Restatement section 24 will be the definition of offer under common law and UCC. 5. UCC 2-204 I. iv. Sun Printing v. Terms left for future resolution II. An offer is statement or act that creates a “power of acceptance” ii. Remington I. The offer must invite acceptance. An offer must be communicated to the offeree. agreements with scant details. The offeror is the master of the offer. This applies to both parties and acts as a gapfiller for missing term. Offer i. An offer must contain these elements: 1. Rule: Deficiencies (vagueness) or gaps in the agreement regarding the parties’ obligations may be filled by the obligation of good faith and fair dealing 5. Every offer is a promise and it invites assent. “An offer is the manifestation of willingness to enter into a bargain. Exception when the terms of the ad are clear. II. Time and price were missing in the agreement. Dissent argues the law should compel the parties to contract in the light of fair dealing and terms were not so indefinite (modern approach – more flexible) 6. The offeror decides on the performances to be exchanged and the terms that will govern the relationship. General rule is ads do not constitute offers because they are usually invitations to offer 2. The offer must indicate a desire to enter into a contract. Court held it was an agreement to agree III. No definition of offer in UCC. Advertisements 1. . so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it” 2. VIII. 4. The offer may also describe the manner and time for an effective acceptance.III. a contract will arise without any further approval being required from the offeror v. The offer must create a reasonable understanding that upon acceptance. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties intended to make a contract and there is a reasonably certain basis for remedy Mutual Assent by Offer and Acceptance a. 3. An offer can not take effect unless it is known the offeree 2. Restatement § 24: 1. The offer must be directed at some person or group of persons.
Like an offer. price. come. The offeree can make a counter-offer. served. Advertisements . ICM. Great Minneapolis Surplus Store – the ad said the first person to show up at store will get a fur stole. explicit. viii.b. price quote limited power of acceptance on further acceptance by home office. The quantity of the item was set forth. explicit (addressed to particular person. expressed through acceptance of. UCC says you pretty much need only quantity and description. definite. but rather suggestions to induce offers I. the completeness of the terms. Carbolic Smoke Ball – Ads offering rewards become binding when anyone who performs the conditions named in the ad. duration) and reasonably appears that assent is all that’s needed to ripen the offer into a contract. an acceptance should be 1. Rewards as offers I. Acceptance was limited to one possible person. the order forms. ICM later removed condition and created a power of acceptance. When an offer is made. and the commercial sought a reciprocal promise.” vi. the offeree gains the “power of acceptance”—the right to complete the process of mutual assent simply by saying “yes” and communicating that affirmative answer to the offeror ii. offer was not definite. or let it lapse iii. Pepsico . gap fillers will fill in the rest Acceptance i. the separate writing did not mention the jet. and leave nothing open for negotiation and if it is seen by an objectively reasonable person as an offer I. and in compliance with. Lefkowitz v. Leonard v. Price quotes 1. quantity. commercial didn’t specify who could accept. PQ for air conditioning control boards. Manifest the party’s willingness to be bound to the . II. and extent of prior inquiry.Harrier jet for Pepsi points. reject the offer. Price quotes are generally not offers. Nordyne v. “first. Exception: unless it is definite. There must be language of commitment for an ad to be an offer like. first. commercial did not specify the steps one had to take to accept. Clear and definite 2.Offer made in jest 1. Look at how many people to whom the price quote is communicated. Anyone who does perform the condition ‘accepts’ the offer vii. There is nothing left to negotiate. An offer which the offeree knows or should know is made in jest is not a valid offer 2. I.
so it was a counteroffer. terms Be communicated to the other party Distinguishing between Acceptance and Counter-offer 1. Offer and acceptance must mirror each other. an acceptance may be valid despite conditional language if the acceptance is clearly independent of the condition (proposal. Restatement (Second) § 39 Counter-offers I. Court held it was an acceptance with a condition (a conditional acceptance). Common Law 1. I. Ardente v. Ardente returned document to confirm furniture was a part of the sale. A counter-offer is therefore both a rejection of the offer and a new offer by the former offeree for a contract on different terms II. request.allows minor changes. Horans offered a bid to Ardente to buy his home through a purchase and sale agreement. unless the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention to the offeree I. Horan I. Mirror-image rule is rigid. Restatement (Second) § 50 Acceptance I. Rule: An acceptance may not impose additional conditions (acting as a qualified acceptance) on the offer. Contemporary approach is to tolerate minor discrepancies and to apply the rule only where the response makes material 3. II. suggestion). II. Mirror image rule I. Horans refused to sell home. . Common law requires that the acceptance assent to nothing more or less than the offer. An offeree can express “grumbling” and still assent to the offer. not may it add any limitations. meaning it is not a counter-offer 3. (1) A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer. v. “A manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer” 2.iv. a contract is formed. However. (2) An offeree’s power of acceptance is terminated by his making of a counter-offer. Modern approach . II. So long as it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer whether such request is granted or not. immaterial changes.
UCC applies only to contracts dealing with sales of goods I. What its terms are. RR co – acceptance didn’t differ in material respect (the parties names changed. changes in the transaction to the proposed offer. whoever sends a form last gets the last shot and its terms are accepted over the parties. UCC does away with two Common Law rules I. 3. and II. UCC 1. Common Law mirror image rule still applies to contracts not governing the sale of goods Last Shot Rule –under the last shot rule. If variation in terms is too great. RI v. One reason for this may be that commercial transactions are frequently concluded by non-lawyers and pre-printed forms are a way of channeling the conduct of salespeople. Pre-printed forms and the mirror image rule are incompatible and the application of the former would make concluding a contract close to impossible.II. III. a party implicitly assented to and thereby accepted a counter-offer by conduct indicating lack of objection to it. IV. and thereby the liability of the company. 2. The UCC gives greater weight to the ability to use pre-printed forms than it does to the exact concurrence of the offer and acceptance on all material points. Basically. That’s where 2-207 comes in. The performance acts as an acceptance of the party that sent the last form’s counteroffer. 2-207 has two parts: . Thus. but not the content) from the offer II. Battle of the Forms I. vi. When a contract has been concluded. I. the last sent document determines the contract terms. Commercial transactions are often governed by standard. pre-printed forms. III. It honors the terms of the party who sends the last form. I. the purported acceptance will be construed as a counter-offer. but the mere addition of a collateral or immaterial matter will not prevent the formation of a contract. III. II.
color. 2-207 only applies if there is some written documentation.4. No: correspondence is a counteroffer or rejection. Look for a purchase order by the buyer (offer) and an acknowledgement form by the seller (acceptance) UCC contains no definition of offer. 8. Steps in definite and seasonable expression analysis I. Definite: language must show a willingness to commit to the contract by accepting the offer. Seasonable: was assent manifested within the time frame specified by the offeror or. item number. in the absence of such specification on the offeror’s part. 2-207(1): has two parts of its own. 6. Look at 2207(3) to determine if parties’ conduct concludes a contract has I. delivery date) II. Rest (2d) § 24: “Manifestation of willingness to enter into a bargain so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it. Yes: move along to the rest of 2207(1) II. applies to two different concepts I. Is correspondence a definite and seasonable expression of acceptance? I. Does both. 2-207(1) looks at whether a contract has been formed II. . Offeree has manifested assent to dickered terms (terms on which the parties negotiated or are not in the pre-printed form language like quantity. price. nature of the good. 7. 2-207 only has applicability when talking about written manifestations of assent to an offeror’s offer or the exchange of documentation following the conclusion of an oral contract. within a reasonable period of time? III. 5. II. but in a different context.” 2-207(1) & 2-207(2) I. 2-207(2) looks at what are the terms of that contract 2-207(3) I. 2-207(1) can be acceptance by language or by writing II. Definite and seasonable expression of acceptance I. so its common law definition applies I.
Are BOTH parties to the contract merchants? I. Yes: go 2-207(2) II. If yes. A term is different if it is stated in the offeree’s correspondence and IS addressed in the offeror’s offer.IV. If yes: go to 2-207(2)(a)(b)(c) II. I. then the additional term falls away. then the additional term falls away.Has the offeror already given notice of objection to the additional term or does the offeror gives notice of objection within a reasonable time after receiving the additional . If no. If no: then additional terms are mere proposals to the contract Is the term additional? I. the terms of which are contained in the offeror’s offer. III. Distinguishing different terms from additional terms. If yes. VIII. In Itoh v. X. so a contract implied-in-fact was formed. so the court determined it was left out of the contract II.Does the additional term materially alter the offer? You can determine this by looking at how big is the change? Would it create hardship or surprise? I. Does the correspondence state additional terms? I. Jordan II. the court held that the seller’s additional terms (arbitration clause) was not a UCC gap filler. If no. I. been formed. Itoh v. go to 2-207(2)(c) 2-207(2)(c) . II. VI. but their conduct concluded a contract under 2-207(3). V. A term is additional if it is stated in the offeree’s correspondence and is not addressed in the offeror’s offer. No: do they state different terms? No. Jordan – parties’ didn’t create a contract under 2-207(1). then the term is different 2-207(2)(a) . go to 2-207(2)(b) 2-207(2)(b) . IX. You have a contract. II. You have to look at each term of the correspondence independently for this step of the analysis II. go to 2-207(2) I. If no. VII.Did the offeror’s offer expressly limit acceptance to the terms of the offer? I. If yes.
The terms of the correspondence on which the parties agree II.Under the Knock-Out Rule. But as we know. If no. We need to know both. Between Merchants I. Another Approach – apply additional terms application (likely to be found as a material change) II. Courts have not fashioned a definite answer perhaps because situation so rarely arises III. XI. . 2-207(3) I. the different terms cancel each other out and the gaps left behind are replaced by supplementary terms of the UCC. Majority Rule . so they pretend that's what 2207(2) does. then the additional term falls away. the true meaning of 2-207 and the alternative "interpretation" that may be the majority view. Supplementary terms provided by the UCC that are not inconsistent with (1) and (2). II. The additional term or terms. then the additional term becomes part of the contract. If yes: Courts interpret in three ways: I. 9. and we should clearly distinguish them in any exam answer. II. 2-207 does not provide any mechanism whereby different terms in an acceptance become part of the contract automatically or "knock out" the inconsistent term in the offer. The contract is then composed of: I. some commentators and a number of courts think the statute would be better if it provided for knocking out the different terms in both the offer and acceptance. Not Between Merchants I. Is the term different? I. and III.term? If yes. Minority Rule – Under the First-Shot Rule. the offeror as master of the offer prevails and the different terms in the acceptance are dropped III.
If the buyer returns the goods AND informs the seller that the goods are defective. upon the seller’s delivery of the goods. You have to look at each term of the correspondence independently for this step of the I. Supplementary terms include gap fillers provided by UCC or can include any established patterns of performance in the parties’ previous course of dealings and trade customs Written confirmation of concluded contract 1. If the goods are returned. Distinguishing different terms from additional terms in the context of a concluded contract. No: The written confirmation analysis is inapplicable without the existence of a concluded contract. It is important to have both because the buyer. I. The terms of the contract are those terms on which the writings of the parties agreed. This conduct will most often be the seller shipping the goods and the buyer accepting them. Yes: look to see whether it contained additional terms II. III. along with any gap fillers (supplementary terms) provided by the UCC. the buyer may be indicating to the seller that no contract was concluded. Be careful though: there are many reasons why a buyer might return goods. viii. that indicates that there was a contract in the first place (no breach without a contract). You can only get a written confirmation AFTER the contract was formed! Steps in written confirmation analysis 1. I. But the conduct of the parties recognizes that a contract has been formed (implied-in-fact) I. Yes: distinguish between them. or other reason that would otherwise be a breach of the contract.vii. . Does the written confirmation state additional terms or different terms? I. Try analysis through “definite and seasonable expression of acceptance” 2. Applies when no contract formed under 2-207(1) because parties’ writing don’t establish a contract II. I. 2-207(1) also provides for written confirmations that are sent within a reasonable time. Was a contract formed (likely orally) prior to the sending of correspondence? I. that they were not delivered in a timely manner. II. 3. has a right to return the goods. III.
A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it state terms additional to or different from those offered or agreed upon. • 3. 6. Based on the rules governing mutual assent. If yes I. except that (2) (a) does NOT pertain to written confirmations I. In such case the terms of the particular contract consist of those terms on which the writing of the parties agree. If the parties both send confirmations.4. a different term does not become part of the contract unless the other party later assents to it. A term is additional if it is stated in the correspondence under examination and has not been expressly agreed to by the parties. If yes. it must be a different term Is the term different? I. the additional term or terms. together with any supplementary terms incorporated under any other provisions of this act . it falls away [check that with Adams]. comment 6 says that neither differing term becomes part of the contract II. III. A term is different if it is stated in the correspondence under examination and HAS been expressly agreed to by the parties. the contract includes the terms of the correspondence on which the parties agree. analysis. or o Notification of objection to them has already been given or is given within a reasonable time after notice of them is received. unless acceptance is expressly made conditional on assent to the additional or different terms. o They materially alter it. II.” “subject to.” and “provided that” • 2. Between merchants such terms become part of the contract unless: o The offer expressly limits acceptance to the terms of the offer. Are BOTH parties to the contract merchants? I. If no: whether term additional or different. If yes: go to II(d)(iv)(5). and supplementary terms provided by the UCC II. o Express conditions are usually flagged by phrases like “conditional on. 5. The additional terms are to be construed as proposals for addition to the contract. Additional Terms in Acceptance or Confirmation (UCC §2-207): • 1. Is the term additional? I. If it meets the criteria of (2)(b) and (2)(c). If no.” “but only if. go 2-207(2) – Additional terms are governed by the rules in 2-207(2). and those confirmations contain terms that differ with each other. Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract.
Notes on UCC §2-207 • Remember that the exceptions for when additional terms become a part of a contract only apply to dealings between merchants • Conditioned acceptances (i. the court is still convinced that the parties intended to agree. expressly limiting acceptance to the terms stated within the offer) prevent additional terms from becoming a part of a contract between merchants. I. it is a counter-offer and not an acceptance. Which manner of acceptance is effective? i. No contract is formed until the offeree completes the performance. courts have adopted a variety of resolutions: o Infer that the different terms were never accepted and thus are not a part of the contract and not enforceable o Knockout Rule – the two different terms cancel each other out and the court inserts gap fillers to determine a reasonable term c. despite the indefiniteness of the provisions. That means the offeror can withdrawal the offer at any time before the offeree has fully performed d. a contract is created and both parties are bound iii. the offeror may specify the exclusive manner of acceptance. If there is a conditioned acceptance in a form. Unilateral contract – a contract formed by one party making a promise and the other party performing the specified act 1. that phone call is a counter-offer and now the offeror can accept) ii. Gap fillers: o Trade Usage o Course of Dealing o Course of Performance • UCC 2-207 usually applies in a battle of the forms when the two parties are using boilerplate forms • When different terms are involved between merchants instead of additional terms. (If you say acceptance only through email and I call you to accept. If the offer is silent on how to accept or if it includes only a preference or suggestion. At the moment the promises are exchanged. . then the offeree is free to accept in any reasonable manner that is not precluded by the offer Acceptance by Promise or by Performance i.e. Restatement 32 – if an offer is ambiguous in terms of how offeree can accept as to whether it requests a promise or performance. offeree can accept by either promise or performance ii. • “Express” assent – must be very clear that you are assenting to the specific terms • “Seasonable” – within the time agreed upon or within a reasonable time • “Materially alter” – under 2-207(2)(b) means the additional term would “result in surprise or hardship” • Subsection 3 – if. As the master of the offer. Bilateral contract – a contract formed by a mutual exchange of promises 1. the court can take the terms which the parties agreed upon and fill in the gaps to make the contract.
Brooklyn Bridge Hypothetical Ex. Under 62 – if offer is explicit and gives a choice. If offeree accepts by promise in consideration for an offer. Courts have fashioned two ways to deal with unilateral contracts and the Brooklyn Bridge Hypothetical 1. If you have accepted by performance. the offeror must allow the offeree a reasonable time to finish performing. or Hamer v. I. you are bound to do that thing.e. Ex. In effect. This is what Restatement 62 says. Assume bilateral unless expressly stated that unilateral is desired 2. but once the offeree begins performance (by tendering part of the consideration requested). and part of the consideration requested in the offer is given or tendered by the offeree in response thereto. within a reasonable time. the offeree is not bound to perform. I. then the offeree can be protected from withdrawal of the offer prematurely 1. If performance is not completely performed. . the duty of immediate performance of which is conditional on the full consideration being given or tendered within the time stated in the offer. offeror has no duty to perform. then beginning a performance. the offeror is bound to perform. So. II. the offeree is accepting the offer’s terms and promising that performance will be completed. If performance is completed. or tendering a beginning… This applies to situations where offeree is given a choice. III. which means that by performing or beginning to perform. Restatement 45 – Revocation of Offer for Unilateral Contract. So. that acts like a promise that he is going to finish it (acts kind of like a promise) v. you are bound to performance because when you being tendering. If offeree clearly specifies that only performance will count as an acceptance. both parties are bound. offeree can accept by express promise or by implied promise. or an offer to an employee if they remain for a period of time at their job. the offeror is bound by a contract. they will get a bonus. if no time is stated therein. this makes an offer for a unilateral contract temporarily irrevocable once the offeree begins performance. “If an offer for a unilateral contract is made. Sidway iv. Offer for rewards like Carbolic Smoke BallI. not preparation for performance will do! Silence or Inaction as Acceptance 2. Effect of Part Performance or Tender I. Only performance. or. Once the offeree begins performance.
Revocation on becomes effective when it is communicated to the offeree I. is effective only on receipt 6. I. Revocation by the Offeror 1. Option Contracts (Restatement) 1. for separate consideration to be supplied by the offeree (usually in the form of money. The offeror has the power to revoke the offer at any time before acceptance II. When the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.h. An offeree’s power of acceptance is terminated at the time specified by the offeror. for a stated period of time. This is a rule about termination of an offer. A rejection or counteroffer sent by the offeree. When the offeree receives notification of revocation from the offeror. Revocation can be express or implied (by conduct) I. If offeror dies before contract is created. Mailbox rule only applies to acceptances. Death of Incapacity of Offeror or Offeree 1. or it can be revoked indirectly if the offeror takes action clearly inconsistent with the continued intent to enter a contract. Rejection can be express or implied (by conduct) or by virtue of a counter-offer iv. and if no time is specified. If offeror dies after contract is created. i. Lapse of Offer 1. An offer can not be accepted after it lapses I. not a contract I. An offeree’s power of acceptance is terminated upon the death or incapacity of either the offeror or the offeree I. Courts will often consider what looks like nominal consideration (5 or 10 dollars. Both of which say acceptance is effective when “the indication of assent reaches the offeror” Terminating the Power of Acceptance i. acceptance takes effect only on receipt – the writing must come into the possession of the addressee 7. BUT CAN BE A PROMISE since a promise can be consideration just like money can be consideration) I. the offer terminates II. Can arise when one party makes an offer to enter a contract and also offers to keep the underlying contract offer open. Rejection by Offeree 1. at the end of a reasonable time iii. . and the offeree obtains reliable information of this action Which Offers are Irrevocable? i. CISG and UNIDROIT don’t follow mailbox rule I. If mailbox rule DOES NOT APPLY. the contract survives the death ii. or even a promise 5. and a revocation sent by the offeror.
ii. c. Court said this was sufficient consideration under benefit-detriment and inadequacy of consideration is no ground for avoiding the contract. Test developed by the common law for determining the enforceability of promises is the doctrine of consideration. It is somehow demonstrated. A promise that is too vague may be no promise at all iv.$700 dollar note given from Sheldon Clark to Charles Clark and his wife after he died for services rendered while he was sick. “Any benefit accruing to him who makes the promise. or any loss. To intend to refrain from acting in a specified way iii. Pavel v. Benefit-Detriment 1. so made as to justify a promisee in understanding that a commitment has been made. Contracts are grounded in promises – assurances or declarations that one will do (or refrain from doing) some act i. is sufficient consideration” (a benefit to the promisor or a detriment to the promisee) 2. A promise leads a promisee to understand that the promisor has made a commitment to him ii. To intend to act in a specified way 2. the act or forbearance has not yet been performed v.Mere recitation that . trouble. How is the commitment made? 1. but in no event may such period of irrevocability exceed three months. Thus. Options are not governed by the mailbox rule and so is effective only when it reaches the offeror ii.” i. the act of forbearance is intended.IV. 3. Firm Offers (UCC) 2-205 1. Consideration i. Note the act of forbearance is specific. Johnson Consideration a. to pay that amount) to be sufficient to create a contract because the value of the right to take time to consider the offer is hard to quantify 2. for lack of consideration. Appeal of Clark . during the time stated or if no time is stated for a reasonable time. Note also. An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that will be held open is not revocable. But some promises are desirable to enforce b. Promise: Restatement § 2: “A manifestation of intention to act or refrain from acting in a specified way. A commitment to do what? 1. but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror 2. Salt . A mere promise does not give rise to an action. It is manifested: It may be oral or written or may be inferred wholly or partly from the conduct of the promisor. Dougherty v. or disadvantage undergone by or charge imposed upon him to whom the promise is made.
the promisee was contractually obligated to fulfill the promise. The consideration does not have to also provide a benefit to the promisor. Meadors’s signature wasn’t bargained for. a performance or a return promise must be bargained for. … then I promise that…” . Hamer v. USA v. note said “value received. she received no benefit because the loan would have been made anyway and the . The Court agrees that this may be consideration. 5.” Although a note states that value has been received. using tobacco. The forbearance of legal rights by Story II. Bargained-for-Exchange 1. and playing cards or billiards for money until he should become 21 years of age" constituted consideration in exchange for the promise given by Story I.” A promise serving as consideration is most common because contracts are formed by an exchange of promises. 2. but under these facts. consideration has been received is not sufficient for consideration. 4. Sidway . have a change in her financial situation later on – so the law is protecting her) 4. Penn-O-Texx Oil – “If … (consideration is given). The promise must induce the detriment and the detriment must induce the promise. Baehr v.Relinquishing a legal right constitutes consideration because it includes a detriment and forbearance.Plaintiff argues that agreeing not to sue or to delay bringing suit is sufficient consideration.iii. Meadors – “A promise to teach the daughter or the actual teaching of the daughter can count as consideration. each for the other. Restatement § 71: Requirement of Exchange: – “To constitute consideration. if value has not in fact been received. The Court focuses on the fact that Defendant did not ask Plaintiff to delay in bringing the suit and that it is likely that Plaintiff’s delay was motivated by personal convenience. namely the consensual abstinence from "drinking liquor. Also. A performance or a return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. between consideration and promise” Oliver Wendell Holmes 3. the Court determined that it is not consideration. the note is unenforceable as a contract for lack of consideration because it was considered an executory gift (a gift promised but not yet delivered). Because the forbearance was valid consideration given by a party (Story II) in exchange for a promise to perform by another party (Story I). Benefit-detriment replaced by “bargain” theory. A “reciprocal conventional inducement”. A promise to make a future gift at some date is not enforceable (bc the party could change its mind. swearing.
Once cent will not suffice as consideration unless the penny was rare. etc. Nell – Nominal consideration won’t due because it is a pretense to make it look like promise supported by consideration. Schnell v. Demotsis – “Mere inadequacy of consideration will not void a contract” A promise is enforceable even if the consideration is inadequate. If a thing is already done. Past performance cannot constitute consideration. Past consideration and moral considerations don’t suffice either. I. National By-Products – P lost foot on job and . 2. v. or duress. (A conditional gift is where an action is undertaken in order to receive a promised gift) 2. unique. Distinguishing Bargain from Conditional Gift 1. The consideration of $25 was not a disguised gift. Dyer v. but that in the event that the tramp going to the shop the promisor would make a gift. past consideration is without present value and cannot induce the promisor’s promise.iv. A promise to make a gift is not supported by consideration because the promise is not part of the bargain and because there is not detriment suffered by the promisee. Williston’s tramp – If you walk around the corner to the clothing shop. 3. A gratuitous conditional promise is unenforceable. The walk was not requested as the price of the promise. An aid to help determine a conditional gift…Will the happening of the condition be a benefit to the promisor? If so. government suffered no detriment. No reasonable person would understand that the short walk was requested as consideration for the promise.The plaintiff provided consideration because the promise of the free aggregate was intended to induce the promise of disposing of the aggregate. Batsakis v. Koochiching – The County promises to gratuitously provide a pump on condition that the Ts would operate the pump (which was of no benefit to the county). it is not a future act and so cannot be a promise. thus relieving the defendant of the disposal costs. Also. it is a fair inference that the happening was requested as consideration. but a court will not attempt to discern the value of the consideration to the bargainers at the time of the bargain. Pennsy v. 3. but was merely the condition of a gratuitous promise. Refining the Requirement for Consideration 1. Tomczak v. The promisor didn’t seek for her walk around the corner in exchange for the coat. It is not nominal because there was a bargained for exchange and a manifestation of mutual assent. American Ash . fraud. Typically the inadequacy of consideration may be relevant in the application of capacity. you can purchase a coat on my credit.
If contracting parties appear to have reached an agreement of economic substance.” a reflected in the Woodfield case. no matter how small. For A. Workers comp law says he has no tort claim. He lost his job and sued. If the party could end the contract at any time. such as long-tern distributorship arrangement between a manufacturer and distributor of goods. and there is no overreaching (as there was in Woodfield). courts may try to uphold the agreement by looking for any real commitment. or a promise of such forbearance.do not serve as consideration because it is a promise that does not actually require that the promisor do something. Common in contracts of indefinite duration. Pose special challenges because of the danger that the contract promises will be considered “illusory. based on false pretenses) . claims oral agreement with D that he would have a job for life if he didn’t press a tort claim.A. Compromise of a doubtful (uncertain) right asserted in good faith is sufficient consideration for a promise. I. but P had to arbitrate any of her claims. Termination-for-convenience clauses – gives one or both parties the right to end performance obligations for any reason. I. Illusory promise . Illusory promises (deceptive. In contrast.” Common in loan documents where creditor can accelerate payments upon events such as debtor’s conduct that makes the creditor concerned the debtor is losing credit-worthiness III. Forbearance to press a claim. Nissan’s promise to arbitrate was an empty one because it exempted itself from arbitration in almost every instance. Woodfield Nissan – Plaintiff waived right to sue Woodfield in court of law. so the would-be contract would be void for lack of consideration. however.promise conditioned on an event within the promisor's control. may be sufficient consideration even thought the claim is wholly unfounded/invalid (P must have a good faith belief and be reasonable that he does have a claim). for example: I will give you ten dollars if I feel like it II. And “agreement at will” is an illusory promise.4. but Dyer didn’t know his claim was invalid. to support a finding that . In this case. that party may have made no commitment to any performance or promise. Woodfield retained the right to sue for many reasons. Vassilvoska v. Termination-for-cause clauses – gives one or both parties the right to end performance obligations when the party has “cause.. employer needs to limit its legal freedom.
not influenced by coercion or duress. The promisee gave up something of value. he made his promise in exchange for the promisee’s giving of value or circumscribing of liberty (this is the bargain requirement) Contract Modification and the Pre-Existing Duty Rule i. one party agrees to a change in responsibility (ex. it can not serve as consideration for a new promise to pay more than originally pledged under the contract). due to performance being unexpectedly burdensome to one of the parties. Easy to find consideration if both parties to the contract change their duties because each party’s promise to undertake new responsibilities is supported by the other party’s promise to perform new duties (ex. Courts will hold parties to their original contract regardless of whether it is profitable or unprofitable. 2. ii. If both promises are executory (not fully performed) both parties can agree to modify the contract. I. the preexisting duty + the something more can be consideration (in reality though. The promisor made his promise as part of the bargain. Contract to build a new structure – builder agrees to add another interior wall to original plans and owner agrees to pay for additional amount of work). (Modern Rule . courts have been reluctant to apply to pre-existing duty rule when a party to a contract encounters unanticipated difficulties and the other party. Pre-existing duty rule is to prevent to “hold-up game. it’s just the something more that’s the consideration). consideration exists. A pre-existing duty cannot be consideration. but also to its modification. Under traditional common law. voluntarily agrees to pay additional compensation for work vi. 3. The work already promised under the original contract—the structure promised by the builder —is already owed to the other party. because the agreement to modify is itself a contract that must satisfy that must satisfy the rules on contract formation (modification must have consideration). If you do something more than the existing duty (and that something more is not merely a pretense). but homebuilder agreed to fixed price at the outset. that is. It is a pre-existing duty and under traditional common law principles.” deterring parties from using coercion and duress to obtain additional compensation. .d. the requirement that a promise have consideration to be enforceable applies not only to formation of a contract. Modification Under Traditional Common Law 1. Natural disaster causes lumber prices to rise and costs for construction contractor become more expensive.However. But sometimes. or circumscribed her liberty in some way (this is called the legal detriment requirement) vii.
Angel v." The brokers could not subsequently recover against the sellers just because their bargain turned out to be bad. (horse. instead of money. An obligation is discharged by accord and satisfaction where performance other than that originally agreed to is accepted as full satisfaction of a claim. Birdsall v. Saucier – The assignment of the note constituted new and valid consideration because the brokers were receiving an amount greater than the commission due because of the interest and were content with the arrangement until the third party defaulted. Murray – Maher contracted a 5-year contract with city to remove waste. I. whereas ''satisfaction'' refers to the performance of the terms of the accord. I. the consideration must be of a different type. are still executory (not yet fully been performed) (3) the underlying circumstances which prompted the modification were unanticipated by the parties (unexpected and unforeseeable difficulties arise) (4) modification was fair and equitable. he asked for more money because of the increase in houses that was unanticipated. UCC – an agreement modifying a contract (for the sale of goods) needs no consideration to be binding. i. Modification must meet the test of good faith and can’t be obtained by coercion. hawk. Restatement 89 – Enforces a modification if (1) the parties voluntarily agree and (2) If both promises. An ''accord'' is an agreement for substituted performance. offer and acceptance. The city agreed. or (5) to the extent that justice requires enforcement in light of a material change of position in reliance on the modification. A failed modification may . Neither party intended that the original debt would continue after assignment of the note.iii. In accord contracts that require an amount of consideration that is less than the original. In an accord contract it is typical that the consideration supplied is less than bargained for in the original contract. debtor offers a car or a boat. There was an accord and satisfaction when the brokers signed the receipt "paid in full.e. Modification Under Modern Common Law 1. already required to be performed under the contract. Did Maher have a preexisting duty to remove the extra waste? Court used modern rule by looking at Restatement 89. II. I. In year three.) 4. Modification requires the consent of each contracting party and must be supported by consideration. or robe). Waiver – UCC.
iii. Damages a. unless there has been material and reasonable reliance by the other party First determine whether the contract is supported by consideration. courts can award varied remedies to VI. conditioned on plaintiff moving to that residence. Kirksey v. Flexible. Unlike a modification which is binding. ii. If it is not. The amount putting the promisee in the position she would have been if the promise had been performed b. Putting the promisee in the position she would be in today if the promise had not been made c. Promissory estoppel is a contract implied in law In addition to taking action to obtain the promised gift (conditional gift . I.something that does not constitute consideration). a court may award to the other party the value of those benefits to the recipient Alternative to Consideration a. V. Clear and definite promise 2. The promisee actually relied on the promise and thereby incurred some detriment 4. Courts were somehow convinced that the unbargainedfor promise should be enforced Elements 1. Restitution Damages i. Promissory Estoppel i. D made a promise to give a gift of a place to live. he . A waiver is the voluntary relinquishment or abandonment-express or implied-of a legal right or advantage. Justice demands that the promise be enforced. provide the best fit for fairness and justice A promise exists. Expectation Damages i. then look at the exceptions to consideration to see if those will work to make the contract enforceable. but courts may (and often do) award full expectation damages rather than eliminating the award “as justice requires” to reliance damages as invited in § 90. so it constituted a conditional gift. Kirksey – Court held a promise by a man to give his sister-in-law a house if she would move to his land was not a valid contract because it lacked consideration. but lacks consideration. a promisee may incur expenses or in other ways act in reliance on the promise that the gift will be delivered 1. a waiver can be retracted by the party who waived the right. iv. Theory of liability that rests on reliance damages. If benefits have been conferred on one party.operate as a waiver. She moved after two years. Reliance Damages i. Promisor intended to induce reliance by the promisee and should have reasonably expected the promisee to rely on the promise 3.
Conrad v. “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. Court found she met the elements of promissory estoppel because it was reasonable for her to rely on the promise. I. as evidenced by its continuance of the fund-raising campaign. should not put the promisee in a better position than performance of the promise would have put him in. She quit her job to attend law school. ix.The charitable pledge by the D. She suffered loss and inconvenience in reliance on the promise of 2000 when she went without unemployment. Ramone v. A modern court would most likely say that the sister-in-law could get damages based on the doctrine of promissory estoppel II. Damages. Scothurn – Katie quit her job because he grandpa gave her a promissory note. Restatement (Second) Section 90 1. Differs from Restatement First § 90 I. The remedy granted for breach may be limited as justice requires. In Re Fields Estate . viii.” I. Grandpa’s actions induced Katie to quit. Alternatives to Consideration – No contract. the quintessential remedy for PE.v. The promise did not induce his action or forbearance and Plantations Steel’s promise did not shape his thinking. having been relied on and accepted by P. Plantations Steel – (Pension) A promise must induce reasonable reliance upon it in order for promissory estoppel to apply. became a valid (contract?) enforceable against the decedent in his lifetime. Hayes v. no consideration! . vi. Fields – (Law School Tuition) D offered to pay for P’s law school tuition if she went to law school (conditional gift). The promise also did not induce reliance by Hayes because he had decided to retire before any promise that he would receive a pension was made. P entitled to reliance damages. the court says. Ricketts v. The defendant’s promise was given as a token of appreciation and without consideration from the plaintiff. P met elements of PE. Lang – (Swimming pool case) PE used to compensate for pre-contractual reliance. U of Chicago. kicked her off his land. and it would be unjust to not have him pay the note. Enhancing recovery damages is also limited. Second § 90 limits definite and substantial reliance and creates a situation in which we start with expectation damages but court can limit those damages to reliance damages. vii.
or (b) to the extent that its value is disproportionate to the benefit. Past consideration is thus an oxymoron. (2) A promise is NOT binding under (a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched. or on a value previously had (promisor never had an obligation. Then defendant died and payments stopped. i. Promissory Restitution a. Plaintiff was crippled and subsequently unable physically or mentally to work. Elements . c. Defendant promised to pay him a stipend every two weeks for the rest of plaintiff’s life.VII. Drake just thought it was the guy who hired him. Defendant’s subsequent promise to pay for the benefit implies that he requested it to begin with.). Saving another’s life constitutes a material benefit (wages. Can be invoked when a promise is made not to induce action by the promisee. Yet courts concluded that some promises of this kind were worthy of enforcement. etc. Promise can not be gratuitous significant time lapse between event and promise and partial performance of promise in Webb are both evidence that promise was . Bell – Mechanic repaired wrong house and work that was done was irrevocable like plastering and painting. The advantage of promissory restitution is that it simplifies so many questions. Was there intent to charge the owner of this house? The answer is yes and no. b. ii. It depends on how you look at it. but moral obligations usually do not suffice. but to reward or compensate the promisee for actions already taken or expenses already occurred. McGowin . i. To be consideration. The key is that you couldn’t remove what was installed. the benefit must be in the future. pine block from an upper deck to the floor to avoid dropping the block on the defendant and seriously injuring him. but received an antecedent valuable consideration) from the promisee is binding. Third parties can’t promise! (ex. There was intent to charge the owner of the house that he worked on. (Note if it was delivery of a fridge. Officious intermeddler – would it be unjust to allow the homeowner to keep these benefits? We know these are improvements that can’t be returned. Benefits already incurred by the promisee cannot constitute consideration. A moral obligation is sufficient consideration if the defendant received a material benefit. Restatement 86 – (1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. What if owner had never promised. Father promising to pay woman after she took care of his adult son is not enforceable). Webb v. Drake v.) Court says a subsequent promise founded on a former enforceable obligation (which obligation it revives).(1) benefit conferred (2) party who benefit was conferred upon make a promise to pay for that benefit (3) justice and fairness iii. How would the case turn out if there was no promise? It would be unlikely that the court would uphold a restitution remedy. we would just give back the fridge.Plaintiff fell with a 75 lb. would Drake have a restitution claim? Some courts talk about intent to charge this person.
prevents unjust enrichment. then that person who confers is not an officious intermeddler (Classic example is doctor because he intends to charge and is acting unofficiously) (People who save other people’s pets. “A person that has been unjustly enriched at the expense of another is required to make restitution to the other. Dobos was clearly in need of emergency care.VIII. restore the benefit to its rightful owner. however beneficial it may be. AKA quantum meruit. he cannot recover therefore. Nursing Care v. when. Not based on the existence of a promise – there is no promise! b. Where services are rendered by one person for another which are knowingly and voluntarily accepted. when no promise was ever made? 1. the law presumes that such services are given and received in expectation of being paid for. If no contract exists.” (that is. the plaintiff) d. Dobos would have been unjustly enriched if Nursing Care was not compensated for the services that saved her life. This is promissory restitution WITHOUT the promise i. The defendant would be unjustly enriched at the expense of the plaintiff if she were allowed to escape payment for services rendered or work performed. and will imply a promise to pay what they are reasonably worth. not gratuitous Restitution a. there is sufficient evidence to support a contract implied in law entitling plaintiff to recovery.if there is an emergency and immediate action is required to prevent harm or destruction and the conferor has no reason to believe. quasi-contract. I. and advanced assent is impossible. Emergency Aid Exception . if ever. Officious Intermeddler Doctrine . although a promise is absent e. so the courts will apply a quasi-contract c. However. Exceptions I. should that individual. I. (1) benefit conferred (2) justice and fairness requires compensation. II. but an individual confers a benefit on another without being asked. implied in law – applies to absence of a contract.Where a person performs labor for another without the latter’s request or implied consent. and there was no question of her doctor's professional judgment. there is no real contract between the parties. they conferred a benefit upon the pet owner) Moral Obligation Exception – A .Nursing Care failed to prove an express contract or a contract implied in fact. Dobos .
If a person enters into contract while he is a minor. Ratification terminates your power to avoid can be by an express action or by an implied ratification. Rationale 1. intent to charge (not officious intermeddler) Defenses f. they are not fully capable of making choices for themselves ii. Family members are not intermeddlers. It’s possible that if a person entered into a contract as a minor. (Ex. it is not objectively reasonably for you to give aid to your dying parent and expect to be paid – this would be gratuitous. And. and once he turns of-age. he can disaffirm in a reasonable amount of time. imposed (officious intermeddler). Minor can disaffirm any contract into which he enters. Estate of Cleveland v. I. II. iii. iv. Infancy i. Necessity 1. She kept detailed records of expenses incurred and her help to her aunt was not gratuitous. Minors deserve protection because they can be taken advantage of by adults and so will be discouraged from trying if courts will not enforce resulting contract 2. It is more than a desire to be charitable. (Kobe Bryant). the niece expected to be reimbursed. Disaffirmance 1. They are generally precluded from recovering for services provided to their close relatives because the law presumes that they were a gratuitous part of the relationship when the relatives live together as part of the same family. III. Ratification means K was voidable. In family situations. and she was not close at all with her aunt. Watch out for gratuitous. 1. but now I have affirmed in some way that I want this contract to say in place. but be careful because if you get too close in proximity. but performed on the contract in some way after reaching the age of majority that the performance could ratify the contract and extinguish the person’s right to disaffirm. Gordon – Moral Obligation. so disaffirmance happens after reaching age of majority.) ii.moral obligation is a duty that cannot be legally enforced. Total bright line – age of majority in your jurisdiction. Something that minor has an actual need for and has to . Exception: in this case. General Rule I.
He is liable under a quasi-contract theory. If he gave 500 for tv. dental services. Minor emancipated? --. ii. were you mentally incapacitated. Law isn’t as draconian on mental incompetence as it is on agerelated invalidation. Nec Liablity III. He is unable to act like a reasonable person in the transaction. incapacity. that will also implicate mental incapacity. sometimes it’s as a result of a disease and so is not. Lemke case – doesn’t have to take into account depreciation . A person incurs a voidable contractual duty if the person cant understand what he’s doing OR understand what the consequences of what he’s doing are that is going to implicate mental incapacity. but rather is about protecting policies of the state that serve . damage the property. There are varying degrees of mental incapacitation. intentionally. they can be exploited. the minor has no liability. b . Rationale 1. transportation to and from work. If it is not a necessity. In either circumstance.Yes. i. he can receive 500 back. the contract is voidable by the intoxicated person he is so drunk that 1. 4. Parents liability IV. Minor is entitled under general rule. Minor Liable 3. this defense is not about protecting a vulnerable individual. People who are incompetent mentally deserve to be protected. iii.g. to recover everything that the minor gave to the adult. Mentally incapacitated people are easily taken advantage of. Food.adult can still maintain a tort claim against the child if you were negligent. ii. He is unable to understand what he’s doing or the consequences of his actions. he has to return what is left of the consideration exchange. Unlike minority. You have to give the beat up tv once you disaffirm. OR 2. Minor remains liable for necessities. You can have full possession of your mental faculties and three days later you can be without those faculties. a – cognitive 2. Mental Incapacity i. Public Policy i. Minor is expected to return consideration as much as he has.volitional Intoxication i. Different than a minor. Sometimes intoxication is voluntary. useful and suitable to actual need. clothing. I. II. 2. medical services. or intoxication. 1.No. Minor emancipated? --. grossly negligent. get for himself. shelter. If the person is not able to act in a reasonable manner (so out of character) and if the party with whom that mentally incapacitated person has reason to know there is some mental illness or defect. h. When a minor avoids a contract. At the time of contracting.
ii. If it requires that the applicant pass a test of one or more skills related to the work to be performed.) I. Will denial of enforcement support the policy. Licensing statutes: whether a statute that requires a person to have a license to do a particular kind of work can be the basis for determining a violation of public policy depends on the purpose of the statute I. Judicial decisions (in some jurisdictions) 3. Find the entire agreement void 2. Importance of policy I. II. Find the specific provision void 3. If the purpose is raise revenue for the state. Balancing Test I. III. What are the bases for a violation of public policy I. it may do so. II. Remedies – a court can 1. Impact of avoidance on contracting party I. How strongly does the law favor this policy? II. Administrative agency regulations (in some jurisdictions) IV. Application 1. then it will fall under (b). What will the party denied enforcement lose? 2. If the purpose is certify skill or fitness to perform the work. How can you tell? Look at what the statute requires of the applicant for the license. Reform the provision via the blue-pencil rule I. . ordinances. non-offensive agreement. iii. I. Legislative action (statutes. then it falls under (a). then a violation of the statute will likely be a valid basis for finding a violation of public policy. Would the party have agreed to the term absent the bargaining misconduct? II. The policies that animate the statute II. What were justified expectations of the parties? II. What the statute specifically makes illegal II. Was there any bargaining misconduct involved? IV. Blue-pencil rule: if the court can strike out the language that violates public policy and leave an intelligible. 2. it’s void. Constitution (state and federal) III. etc. then a violation of the statute will likely not be a valid basis for finding a violation of public policy. If the contract calls for the performance of an illegal act. the public. further its goals? III. If it just requires the filling out of a form and paying over some money to the certifying agency.