Professional Documents
Culture Documents
• In your essay.
– The question is whether Rich Rodriquez owes the University of West
Virginia liquidated damages for breaching his contract by leaving for
the University of Michigan
– First, in order to be have damages, there must be a contract. A
contract is an agreement that is enforceable by a court. An
agreement is Mutual assent between parties to promise to fulfill the
same terms at the same time. Mutual assent can be shown via the
objective theory and subjective. Objective…..
• In this case, Rich Rod.
Toolbox to Essay
• The question is whether Rich Rodriquez owes the
University of West Virginia liquidated damages
for breaching his contract by leaving for the
University of Michigan.
– First, in order to be have damages, there must be a
contract. A contract is an agreement that is
enforceable by a court. An agreement is Mutual
assent between parties to promise to fulfill the same
terms at the same time. Mutual assent can be shown
via the objective theory and subjective. Objective…..
• In this case, Rich Rod.
• This could be confused with an offer to deal. …. But would
not be because…..
The 7 Dwarfs
1. Is there an agreement or promise?
2. Is there a legal reason that this agreement
should not be enforced by a court?
3. What are the terms of the contract?
4. Did the contract get performed?
5. Is there an excuse or reason for non-perf?
6. What are the consequences of non-perf?
Remedies?
7. When do people who did not make the K have
rights or duties?
1. Is there an Agreement or Promise
• Look for a manifestation of mutual assent.
• Restatement § 16 :Req of a bargain in which there is a
manifestation of mutual assent.
– Not looking for meeting of the minds (usually evinced by offer and
acceptence)
• Too confusing
• Unilateral mistake
– Looking for intent to be bound
• Unilateral Mistake: only one party is mistaken on the intent (not a basis for relief)
• Subjective: Meeting of the Minds (Provides an "out" if you didn't fully understand the bargain. This
is not current law)
OAC
• Need to look for offer, acceptance, and
consideration as defined earlier.
• H: A contract requires a bilateral meeting of the minds (really mutual assent). There was no mutual assent to do a deal here. The
parties were just in preliminary negotiations. Invitation for an offer: beware of just an invitation. Moulton v. Kershaw (salt dealer
authorized to offer).
• Express authorization
• Implied authorization: tasked with doing something and the only way to accomplish it is to contract
Necessary to objectives: has to do perform his daily job.
• Offer: RS §24 - a manifestation of a commitment to do a deal, an invitation to bargain, to give the other the power of acceptance.
• But remember that a requirements contract does not overcome consideration (all that I buy rather than all that I want to buy)
• Reasonableness of Terms
• Leonard v. Pepsico: advertisement was not an offer b/c the terms were unreasonable.
Context/ Post offer
• Context: The interpretation of the offer. The setting. Where is the offer made? How is the offer made? Izadi v. Machado (Ford ad)
• Advertisement: general rule is that an advertisement is not an offer but an invitation for offers
Exception: Bait and Switch
• Interpretation: what a reasonable person in the position of the parties would have though it meant
• Reward: A reward is considered to be an offer (clear intention that those who see the ad will rely on it) but the person who returns
the item must have known about the reward.
• Rejection by the OFE (instantaneously kills the offer) (3 types of indirect rejection)
•
Counter Offer
Counter-offer: the offeree makes his own offer (which kills the original offer (§39)). Normile v. Miller (Invitation for offer, counter,
revocation)
• Case: Normile v. Miller (house sale with counter offer with option)
F: Miller put her house on market. Normile made an offer with a time option. Miller counter-offered with changes in terms and no
mention of a time option.
H: The counter-offer rejected the offer by Normile and the lack of time option meant that Miller could sell to anyone.
• Qualified or Conditional Acceptance: seller accepts but only if something is done. This is a counter offer.
Look for if, provided, only if, on condition that. If the addition is a new element, it is a deal breaker.
• Common Law: Response must mirror the offer. Can't change or add anything. RS §59
• Article 2 sale of goods: UCC §2-207: Clear acceptance valid even if terms are different provided no conditional acceptance and...
• Watch for this! This is where article 2 differs from common law.
• 1 Clear and timely acceptance can have additional terms provided no conditional acceptance. Knock out rule: the new contradictory
terms knock each other out.
• 2 New terms are proposals for addition to CNT. Btw merchants, new terms part of CNT provided. The additional term will be a part of
the contract unless it is objected to or unless it is a material item.
• Policy: common law rule was last shot wins. Bad b/c everyone now has to read every iteration of the contract and it never gets
contracted b/c each party is trying to be the last one in.
• Watch for this! This is where article 2 differs from common law.
• 1 Clear and timely acceptance can have additional terms provided no conditional acceptance. Knock out rule: the
new contradictory terms knock each other out.
• 2 New terms are proposals for addition to CNT. Btw merchants, new terms part of CNT provided. The additional
term will be a part of the contract unless it is objected to or unless it is a material item.
• Policy: common law rule was last shot wins. Bad b/c everyone now has to read every iteration of the contract and
it never gets contracted b/c each party is trying to be the last one in.
• Existence
• Must make known to offeree (although doesn't matter how(§43)) Normile v. Miller
– 2 In writing
– 3 Signed
• F: Gimbal put in a bid on a linoleum contract for contractor Baird. He relied on this
quote and was awarded the bid. When Gimbal backed out, he sued for
performance at the listed price. Gimbal had a material mistake in calculating his
bid but Baird didn't know it was a mistake. So no defense of unilateral mistake.
• H: Promissory estoppel did not apply because there was no binding promise.
• Case: Drennan v. Star Paving (paving subcontractor bid too low) Drennan beats
Baird.
• F: Star underbid for the pavement part of a contract. Drennan relied on this price
for his bid on the project.
• H: The bid was deemed to be irrevocable b/c, using §90, the bid was reasonably
expected to induce reliance.
• Part Performance of Unilateral Offer (but only if the offer clearly indicates it can be accepted only by performance)
• Full Performance: At the moment the performance is complete, the offeror is bound to the contract
• Classic View: OFR can revoke at any time Petterson v. Pattberg (Lower cost mortgage for early payment)
• Modern View: Offer becomes an option when OFE begins performance Cook v. Coldwell (offer of bonus for high
commissions)
• Part Performance: RS §45 At the moment the offeree begins performance, the offer becomes irrevocable (like an
option)
• Like any offer, the OFE has a reasonable time to consider the option (he can't sit on his part performance forever)
• Vague Offers: RS §32: for unclear offers (Bi or Uni), the OFE can decide.
• Intent to accept: Default belief that OFE intends to accept unless he makes clear otherwise (bridge T.V. new hypo)
• Not assignable (but the option part of an option contract may be assignable)
• Silence: RS §69 (OFE takes benefit, OFR knows silence may be assent, previous dealings require affirmative rejection)
• Notification: is generally not required. Unless OFR has no adequate means to know
• Verbal/written
• Offer controls: if the offer clearly and unambiguously states how to accept, then use that
• Can be some right, interest, profit or benefit accruing in one party, or some forbearance, detriment, loss or
responsibility undertaken by the other. How do you know if it is not consideration? If the party is doing something
he was not asked to do. There was no bargain for a promise. Then you want to look at promissory estoppel below.
• Bargain for exchange: Requires the promise induce the detriment and the detriment induce the promise (Holmes)
Pennsy v. Am Ash
• Really, you are just checking that each side is promising to do something, whether it be a promise or forbearance.
• Performance is a consideration: it can be bargained for. If you paint the house, I'll renew your lease.
• Case: Hamer v. Sidway (Uncle to pay $5000 if nephew promises not to drink, smoke, or swear)
• F: Uncle offered $5000 if nephew would not drink, smoke, swear, or gamble until 21. Remember, the uncle was
asking the nephew to do this. That was the bargain for exchange.
• H: Consideration met because son had given up those liberties (detriment to one party). Forbearance of the
promisee can be consideration. Look at it promise by promise. If you don't ask for anything in return for the
promise, then there is no consideration.
Consid. contd/.
• Disparity between value is still consideration Batsakis v. Demotsis (Greek drachma case)
• Legal Value: Courts of law won't look at disparity between value but court of equity will take it into
acount
• Sham Consideration: you say $1 or insignificant sum (never paid or intended to be paid)
• Possibility of value: Dueling wills (Promise to bequeath money if you promise to bequeath land)
Exceptions
• Bargain not really required. Pennsy v. Am Ash
• Case: Pennsy v. Am. Ash (repave the school parking lot case)
• F: Am. Ash offered free aggrite to anyone. Pennsy used it in a paving project. But it was defective and caused cracks. Pennsy sued for damages but
Am. Ash said there was no contract because there was no consideration. It was a gift.
• H: But Am. Ash gained value b/c it didn't have to dispose of the hazardous material. So there was a bargain for a promise. You haul this crap away,
and you can have it.
• Gift: no benefit, it is a Gift (a donative promise). Dougherty v. Salt ($3000 if your are good boy - no consid)
• Illusory: The promise cannot be an illusion (I'll do this when I get around to it) (makes performance entirely optional w/ promisor)
• 2 Past consideration
• Past or moral: No consideration if there was no present exchange Plowman v. Indian Refining (Laid off refiners pick up paycheck)
• F: Plowman was notified that he was being forced to retire but that Indian would pay him an amount for the rest of his life as a thank you for years of
service. Indian kept this promise for a year and then cancelled. Plowman sued for the contract. Indian did put this in writing and did not try to induce
Plowman to voluntarily retire.
• H: No consideration for past performance. Plowman didn't have to promise anything. So no contract. But see RS §81