Intro to Contract Law
Bargain Theory
an agreement to exchange one thing for another gives rise to mutual obligations, vs. a promise to give a gift
The three variations of the Reasonable Person tests (in order from least subjective to most subjective.
Universal Reasonable Person
Positioned reasonable person
Socially situated reasonable person
*Note that there is the pure subjective standard, that looks at actual intent*
Process of analysis for what law applies to a contract (steps with associated rules, any factors, or relevant information)
Step 1) What type of Contract?
1 UCC(sale of goods)(legal realism)
2 Common Law (services, sale or lease of real estate; sale of intangible property)(legal formalism)
3 Hybrid
Step 2) Stop of U.C.C or CL. If hybrid, what is the predominant purpose?
Using the four factors from the Tanzer case for the rule; (1) language of the contract/circumstances, (2) nature of business of supplier of goods and services, (3) reason the parties entered into the contract, (4) amounts paid for the rendition of services and goods, respectively
1. sale of goods does not predominates
2. sale of goods predominates
3. If SOG predominates use U.C.C for entirety of the contract. If SOG does not predominate use U.C.C for aspects involving SOG and CL for aspects involving Services.
On January 8, Betty, a school teacher, told Joe via telephone, "I will sell you my limited edition, Elvis Presley, collectable china plates (complete set) for $480, and I will hold this offer open through January 20." On January 16, Betty called Joe and told him that she sold the plates to Gladys. She had in fact not sold the plates to anyone but she did not think Joe deserved them anymore. He did not recognize that Gladys was in fact Elvis's mothers name so he was not a true fan. On January 20, Joe learned of her deceit and and that she in fact still owned the plates, and so he called Betty and said "I'm coming over to your house with $480 to buy your precious plates" to which Betty replied, "Don't bother. I have decided to keep my beautiful plates" Joe sues Vic for breach of contract. Was there a breach of contract or termination of offer?
Termination.
There was no contract (and therefore no breach), because on January 16 Betty effectively revoked his offer of January 8.
Revocation: Offeror can revoke any time prior to acceptance even if she promised not to revoke. Exceptions: Firm offer (sale of goods) doesn't need additional consideration to hold an offer open if seller is merchant, just needs to be in a writing signed by offeror. Not a merchant, offer not in writing, not signed by offeror
Erika promises to show sell Chelsea a painting for $200. Chelsea agrees. However, Erika's main motive is fame and recognition from the painting and does not care about the money. Is there valid consideration?
The two alternative remedies for the principles of contract law
Reliance Theory: involves promises to give gifts. seeks to protect those who reasonably rely on others.
Restitution Theory: one should pay for any benefit unjustly retained. Goal is to prevent unjust enrichment.
Relevant evidence for Socially Situated Reasonable Person
Words and surrounding circumstances plus the social identity of the person hearing the words
factors from the specific rule for objective test: clarity of representation, definiteness/level of detail, relationship of the parties, prior dealings, industry custom, time sensitivity of request, seriousness, other contect
Kaden recently finished a rough draft of his collection of short stories; titled "The book of 3's." He wanted a second opinion so he had his author friend, Paulo give him a second opinion. However, Paulo decided that he liked it so much he was going to recreate it. As Paulo is also fluent in Spanish, he wrote it in Spanish and sold it to a different market than Kaden. Kaden later found out of Paulo's deceit and is now filing a copyright intellectual property suit for breach of verbal contract. What law applies?
Common Law.
is for: services; sale or lease of real estate; sale of intangible property
On January 10, Zac, a bar owner realized that his current stock of 12 6-packs of Zombie Dust would not last until the first of next month due to the increase of Law Students taking professor Mott's class. He saw an advertisement from a brewery of Zombie Dust in a local newspaper listing a price of $20 per 6 pack with delivery in 3 days. Zac emailed the address listed in the advertisement with an order of 100 6-packs. There were no other communications between Zac and the brewery. By January 22, Zac realized that the brewery was not going to deliver the Zombie Dust. As a result, he was forced to pay express shipping from a brewery a state away and pay up charges and fees for an additional $17 per six pack. Zac is bringing a breach of contract against the brewery. Who will prevail and why.
The brewery will prevail, because they never accepted the offer contained in Zac's email.
silence is not valid acceptance.
A promise to buy a $300 painting from B for $500. Is there valid consideration?
yes. because it could have sentiment, it could be the only avenue to purchase. It is not so insufficient as to trigger adequacy.
Contracts are integral to market economies in three ways
Importance of Assent / Freedom of contract
doesn't matter if terms seem unfair, as long as the parties agreed to them
but: people don't read contracts and are still held to them if they agree (sign)
Importance of Market Function / Exchange
courts focus on exchanges of goods and services in the marketplace <- (what is not exchanged through the marketplace)
Market Neutrality
Relevant Evidence for Universal Reasonable Person
specific words being interpreted
Factors for the specific rule for objective test: clarity of representation, level of detail
Case Creations is a company that manufactures and sells unique phone, tablet, computer, and other accessory cases. Ray, one of their summer interns, has an idea for a new type of interactive case that will include gadgets like pop tables, squeeze devices, moving sand and more. Unfortunately, Case Creations does not currently have the equipment to make these cases. They want to do a trial run before investing in the equipment, so they reach out to Fred's Fidgets. Fred's Fidgets is a company that manufactures and sells fidget toys, like the one that Ray wants to have in or on the cases. Fred's Fidgets and Case Creations form a contract. (Relevant details of the contract are as follows)
- Concept Development: Fred's Fidget's will meet with Case Creations representatives to discuss their needs and goals for the case designs. The designer will develop initial design concepts based on Case Creations specifications. For these services, Case Creations will pay Fred's Fidgets $3,000.
- Prototype Design: Based on feedback from Case creations, designer will create detailed design specifications, drawings, and 3D renderings of the prototype product. For these services, Case Creations will pay Fred's Fidget's $6,000.
The contract was signed and agreed to by both parties.
However, After finding out that Case Creations owner, Alec has been having a secret affair with Fred's Fidgets wife, Jamie. Fred's Fidgets is refusing to make the designs.
What law will apply to this transaction.
Common Law,
services
Jackson makes and sells unique ceramic figures. Rice's Redecorating has a VIP client that is in need of Jackson's works. On October 1, Rice emailed Jackson requesting a price quote for 23 unique ceramic figures. On October 4, emails him back with a written proposal as a .pdf attachment that includes a photo's of some of his most recent figures and a price quote of $50 each, with a delivery date of December 9. The proposal form also includes language saying that delivery dates are estimates only and may vary by 60 days due to the creative process involved. On October 5, Rice sends an email response that reads: "My client loves those creates, and remember I really need them no later than December 9, time is extremely important on this deal!!". On October 6, Jackson writes back and says that firm delivery on December 9 will not be possible. What is their contractual relationship on October 6.
NO CONTRACT!!!
problem with acceptance:
Their bargained for terms do not agree. This is a U.C.C contract so its bargained for terms must agree and the quantity (term) must be included/agreed to.
Kristy promises to sell her car to Amanda for $300 unless she decides she does not want to. Amanda says okay. Is there valid consideration?
No illusory promise. Performance is entirely optional
A contract is...
Rest. 2d section 1: A promise or 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.
Private, binding agreement between two or more parties.
Relevant evidence for Positioned Reasonable Person
words, plus all circumstances surrounding the communication
factors from the specific rule for objective test: clarity of representation, definiteness/level of detail, relationship of the parties, prior dealings, industry custom, time sensitivity of request, seriousness
Ava and Ryan currently live together in an apartment in the city. However, Ryan is annoyed by Ava's yappy, crusty dog and is looking to lease a new apartment down the street. There are no available leases, but his brother-in-law Chris is willing to sublet their apartment to him. Ryan has entered into a contract with Chris. What law applies?
common law.
sale or lease of real estate
Suzi's Spicy Shack has a long standing contest: The shack offers free spicy enchiladas for life to any guest who consumes, in its entirety, a "The Chupacabra". One day, Carswell, a hot-dog-eating-contest champion, ordered the "Chupacabra", as his competitive nature causes him to enter into food contests frequently. He was 3/4 of the way through "The Chupacabra" when Suzi frantically announced "The offer is revoked, we do not have the money for free meals for life! Leave my restaurant glizzy-dog boy." Carswell, standing firm in need to finish "The Chupacabra" ate it in its entirety.
Is Suzi bound to give Carswell a lifetime supply of spicy enchiladas?
yes.
because Carswel had already begun performance, therefore, the owner was prevented from revoking the offer and the attempted revocation was ineffective.
The offer is to enter into a unilateral contract. Therefore acceptance does not occur until performance is complete. Revocation can occur at any time before acceptance unless its and Option Contract, UCC firm offer or in some cases reasonable reliance or part performance. Here suzi attempted revocation was ineffective because he revoked after carswell was 3/4 done. (part performance of a unilateral contract) so suzi had to allow carswell a reasonable amount of time to finish. after he complete the dish it was acceptance of the offer.
Lisa owed Henry $900. Lisa offered to pay Henry the $900 if Henry promised to remove the rotting tree from Lisa's backyard. Henry has charged $300 for tree removal in the past. Was Lisa's offer of $900 valid consideration for Henry's promise to remove the rotting tree?
NO!!!! (pre-exsisting duty) (legal detriment)
because Lisa's promise to pay a debt she already owed to Henry cannot be consideration for an additional promise or performance by Henry.
Neo-Classical Economics values...
Efficiency and profit-making.
Most closely associate with bargain theory (A deal's a deal)
Assumptions (pg. 37-38)
People act in their own self interest, people act rationally, people have access to perfect info, people and resources are freely movable, there are no artificial restrictions on entry to the market
Rules for the Objective Test
Generally, held to the reasonable meaning of their outward expression as manifesting intention (not party's unexpressed inner intention)
Specifically, when considering the reasonable meaning of one's words and acts, the court will consider: clarity of representation, definiteness/level of detail, relationship of the parties, prior dealings, industry custom, time sensitivity of request, seriousness, and other context.
Nick is planning to upgrade his kitchen appliances. He has picked out a dishwasher that he thinks will look best with his rustic decor. The dishwasher is from Rusty's Rustic Resell. The dishwasher cost $500 and includes home installation. Which law applies to this transaction? (List the steps of analysis and relevant information to why you came to this conclusion)
U.C.C
A hybrid contract. U.C.C would predominate. Language of the contract/circumstances, nature of business of supplier of goods and services, reason the parties entered into the contract, amounts paid for the rendition of services and goods, respectively would be for the sale of the dishwasher because without the dishwasher there would be no need for its installation.
The following advertisement was placed in the LMU newsletter.
"Come on down to 'Masons Military Match Up.' The first 10 people who can beat Mason's time in an ultimate obstacle course will receive a private boot camp training session. The training session will be held on the following Saturday from 9 a.m to 12 p.m. I'm excited to meet my opponents. Event details are as follows. Date October 11th. Start time 9-11 a.m. Location Lincoln Memorial University Duncan School of Law Parking Lot"
On October 11th, Dominick was so jazzed about the opportunity to show Mason up that he slept in and and woke up at 10:01. He quickly shotgunned a Redbull and made his way to the school. He arrived at 10:40 and only 5 other people had beaten Mason at the obstacle course. Mason and Dominick battled it out on the course. They finished at 11 and Dominick prevailed over Mason on the obstacle course. However, Mason refused to allow Dominick to come to the training session because the event was over. Dominick sued for breach of contract. Was the ad a valid offer?
Yes.
Prove me wrong offers are generally considered valid offers. when looking at the fact that it limited the number of people, invited performance, and showed a willingness to commit. It was detailed constituted a valid offer.
A homeowner, Sal, employed a gardener on a weekly basis. For 10 weeks, the homeowner has paid the gardener, Brock $50 per week to weed and mow his lawn. The homeowner asked the Gardner whether the gardener could remove a large tree from his property. Brock told Sal that it would cost $1,000 to remove the tree. Sal told the gardener, "I've really been underpaying you for all the work you've done for me. Most people charge $100 a week for the type of work you do. I figure I owe you $500, so I'll pay you $1,500 to cut down the tree." Brock accepted and started cutting down the tree. Is there valid consideration?
Yes.
The $1,500 was for the cut down of the tree. even though Sal may have felt bad or wanted to give him back for his work, but it is not past consideration because the $1,500 is to cut down the tree.