Chapters 9,10,11 - Contracts

Ch 9,10,11 - Contracts Thursday, April 04, 2019 1:42 PM Class Notes Contract - Agreement or bargain; enforce promise / agreement Implied Contract - implied agreement; found in circumstances; enforce promise / agreement Quasi-Contract - unjust enrichment; no actual agreement but one party confers a benefit and the other knowingly accepts; reasonable value of services Promissory Estoppel - foreseeable reliance; enforce promise and recover reliance loss o o Elements of a Contract 1. Offer 2. Acceptance 3. Consideration (value given by both parties) 4. Writing (sometimes) 5. Voluntary 6. Competency & Capacity 7. Legality Actions 1. Valid 2. Unenforceable - meets some requirements, but is failing for some reason. 3. Voidable 4. Void - fraud; Statutes 1. UCC - tangible and moveable personal property. goods 2. Common Law 3. Hybrid Bilateral v. Unilateral Book Notes Chapter 9 - Contracts The Nature of Contracts o Not every promise is legally enforceable o A Contract is legally enforceable The Functions of Contracts Trapani Construction Co. v. Elliot Group, Inc. Facts: Written agreement. Contract states that it needs to be signed to be valid. Parties acting like they have a valid contract and conducting business. Procedural History: Trapani sues Elliot Group claiming breach of contract. Trial Court rules in favor of plaitniff. Elliot Group appeals. Question/Issue: Is this contract valid. Yes, it's an implied contract Holding(Answer): yes Reasoning: Operating as if there is a real contract. Final Result: Affirmed. Tests: s Relevant Cases: s Basic Contract Concepts and Types o Bilateral Contract - 2 or more parties make a promise o Unilateral Contract - one party makes a promise o Valid - meets all legal requirements for binding contract. This is necessary to be enforceable in court o Unenforcable - meets valid requirements but is failing because of some other rule (fraud, limitations, etc) o Voidable - harmed parties have right to cancel obligations under contract (fraud, etc) o Void - not enforceable to begin with, no obligations and no remedy (hitmen lol) o Express Contract - directly stated written or orally o Implied Contract - it's assumed, parties acting as if there is a contract o Executed Contract - performed duties on contract o Executory Contract - did not perform such duties Sources of Law Governing Contracts o UCC Uniform Commercial Code - for goods o Common Law o Application of Article 2 o Application of Common Law Contracts o Laws Governing "Hybrid Contracts" Audio Visual Artistry v. Tanzer Facts: s Procedural History: s Question/Issue: Are goods predominating of Hybrid? Breach of Contract? Holding(Answer): s Reasoning: s Final Result: s Tests: s Relevant Cases: s Why it matters o common law is not held to the same legal standard as UCC o UCC focuses more on expectations of the party. More likely to finds contract than common law. Also has duty of good faith and conscionable dealing o Basic Differences in Nature of Article 2 and Common Law of Contracts o Influence of Restatement (Second) of Contracts "Noncontract" Obligations o o Quasi-Contracts - unjust enrichment; no actual agreement but one party confers a benefit and the other knowingly accepts; reasonable value of services Example: see someone painting fence cuz they got wrong address by accident. Don’t stop them cuz u like it. You owe em bro Promissory Estoppel - foreseeable reliance; enforce promise and recover reliance loss Thomas v. Archer Facts: Thomas (Patient) pregnant in hospital. Needs to be moved for emergency. Reccomends they move her for insurance coverage. Archer (doctor) assures her they'll cover it. Insurance denied coverage. Procedural History: Thomas sues. Question/Issue: Was there substantial change . Was it foreseeable. Was there an actual promise. Is enfrocement of promise necessary in the interest of justice. Holding(Answer): Depends Reasoning: could go either way Final Result: Summary judgment reversed. Trial Remanded Tests: s Relevant Cases: s Ch 10 - The Agreement: Offer Class o o Parks and Recs Negotiation Negotiating Offer open for 48 hrs  Can they revoke before 48 hr period? Yes at any time Do tom accept right away? No, negotiating.  Each counteroffer is a rejection and a new offer. 20k reward for backpack Ryan Leslie stolen in Germany Offer If someone returns the bag or something, it's an acceptance of the offer  BUT must know theres a reward for the laptop Someone returned laptop, but no IP on it. He still has to pay 1mm LOL Concept of Mutual Agreement Requirements for an Offer o Offer - if you accept, we have a deal Offeror - makes offer Offeree - recieves offer o Intent to Contract - intent to enter into a contract if accepted Objective Standard of Intent   o o Early America subjective intent Objective: what do your words, actions, etc say about intent Definiteness of Terms Standards under Common Law - more specificity Standards under UCC - more flexibility. Filling in of terms because it tries to support the way we do business. Not always negotiating on every single point, sometimes oral, price quantity, etc Communication of Terms to Offeree Domingo v. Mitchell Facts: Domingo and Mitchel play lottery together and agree to split winnings. Skidmore asks Mitchel if she wants to join Lgroup, a lottery pool. Mitchell didn’t ask skidmore if Domingo could participate. Mitchell asks Domingo if she wants to participate. Mitchell offers to cover for her buyin and be reimbursed later. When the group meets to pool money, Mitchell doesn’t have enough for Domingo's portion. Lgroup wins 20mm dollars, Domingo excluded. Sues Mitchell for breach Procedural History: Summary judgment granted to Mitcehll. Domingo appeals Question/Issue: Is there an offer? Holding(Answer): maybe up to jury Reasoning: there was communication. Email proof. There were 2 witnesses from deposition Final Result: judgment reversed; trial remanded Tests: s Relevant Cases: s Special Offer Problem Areas o Advertisements - not offers; invitations to negotiate; customer attempting to accept is an offer and an intent to contract o Bids and Auctions o Rewards - offer for unilateral contract. If offeree performs requested act, its accepted Termination of Offers o Terms of the Offer General Rule: Offerees are bound by the terms of which they have actual or reasonable notice o Lapse of Time Fail to specify time limit - only open for reasonable time if not clearly stated o Revocation General rule: offeror can revoke at any time prior to acceptance even if not promised to revoke Exceptions:  Options - someone pays money for an option to keep an offer open  Offers for Unilateral Contracts - cant revoke an offer while it's in progress  Promissory Estoppel - you make an offer and someone relies on it. Example: general contractors bid and then you use those to subcontract to a home builders, cant revoke because they rely on your promise to do that deal/work  Firm Offer - UCC; for sale of products; limit 3 months Offeror is a merchant Contained in signed writing Gives assurances offer will be kept open Time of Effectiveness o o Rejection Can expressly reject an offer by just saying it Counteroffer is a rejection (terms materially different) Revocations and Rejections General Rules Revocations/rejection effective when received (sometimes sent depends) Offeree who rejects offer, cant accept it later Counter Offer - a rejection. Terminates ability to accept Cordas v. Uber Technologies, Inc. Facts: Uber charging people for cancellation of rides that never show up Procedural History: s Question/Issue: s Holding(Answer): s Reasoning: s Final Result: s Tests: s Relevant Cases: s Termination as a Matter of Law o Death or Insanity of Either Party o Destruction of Subject Matter If you make an offer for a house and it burns down, its cancelled you cant accept WHO BEARS RISK OF LOSS, FIGURE OUT YOUR TERMS o Intervening Illegality - offer becomes illegal before it is accepted (embargo example) Chapter 11 - The Agreement: Acceptance Class stuff o Nathan For You Can legally say cheapest gas in the country, but make it based on a rebate Can make acceptance at a dropbox at the top of a mountain Acceptance - manifestation of assent to the terms of the offer made by the offeree in the manner invited or required by the offer o Intention to Accept o On the Offerors Terms Offeror is 'master of offer' - can make conditions as you please Common Law: "Mirror Image Rule" - acceptance must be mirror image of the offer. Any attempt to change is a counter offer o Tendency applying mirror image rule more liberally recently and avoid finding counteroffer in following: Inquiries regarding terms Grumbling acceptances Non-material variances in an acceptance Pena v. Fox Facts: Pena says release liability. Fox accepts but it would release more than 1 party. Pena sues Procedural History: s Question/Issue: s Holding(Answer): s Reasoning: sAcceptance materially changed. Said only going to release of liability for one person, by changing that during acceptance the deal is changed and is a counteroffer Final Result: Reversed and remanded Tests: s Relevant Cases: s UCC Standard for Acceptance on the Offeror's Terms: The "Battle of the Forms" Did parties mean to contract? Duro Textiles, LLC v. Sunbelt Corporation 2-207 (1) - Contract? Offeree's communication of definite and seasonable accaeptance  No > no contract  Yes > made expressly conditional on offeree's assent to new or different terms? Yes > no contract No> contract IF contract under 2-207(1) > go to 2-207(2) 2-207(2) - Terms: BOTH parties merchants  Additional terms part of agreement UNLESS: Offer expressly limited to own terms Additional terms would materially alter Offeror dejects within a reasonable time One or both NOT merchants > additional terms not part of contract unless other party expressly agrees Different terms> Knock out rule Code UCC gap fills No contract under 2-207(1) > still look at 2-207(3) Conduct 2-207(3) Conduct Conduct recognizing agreement Terms agree on Gap fill o o Class Acceptance in Unilateral contracts Requirements for acceptance of an offer for a unilateral contract (promise for performance) - offeree must perform act Reverse (LOOK AT SLIDES) Silence as Acceptance Silence not acceptance  Cant impose duty on offeree to respond Exceptions:  If silence as acceptance is customary practice  Offeree indicates silence is acceptance "if u don’t hear form me"  Offeree accepts offerors performance "last shot" see someone doing something u didn’t agree to and don’t stop them Code Different 2-207(3) Acceptance when a writing is anticipated When a reasonable person, familiar with circumstances of negotiations, would conclude that parties be bound Acceptance of Ambiguous offers Acceptance by Shipment UCC 2-206(1)(b) - offers requiring prompt or current shipment may be accepted by a promise to ship OR a prompt or current shipment of goods Shipping nonconforming goods - must notify buyer, otherwise its an acceptance and a breach of contract.  Counteroffer that buyer can accept or rejetc Who can Accept an Offer? - only the offeree Common Law Mailbox Rule Sometimes an acceptance may be effective when dispatched, even if never receieved by offeror Traditional common law - applies when offeree uses authorized form of communication Modern Rule (Restatement) Applies when any reasonable means of communication are used Acceptance must be properly dispatched (correctly addressed, adequate postage) Remember revocations are not effective until received Kid delivers letter in reasonable amount of time, its accepted Mailbox Rule Example Traditional Rule contract - no Norbin rule? Contract - Yes UCC - Yes Notes  Revocation upon receipt at 11 AM  Acceptance at 11 AM The United States Life Insurance Company in the City of New York v. Wilson Facts: s Procedural History: s Question/Issue: s Holding(Answer): s Reasoning: s Final Result: s Tests: s Relevant Cases: s Answered reasonable foreseeability in archer case Participation Stated evidence for domingo case Question about ryan leslie intent to contract; sparked more questions by class