Contracts outline haley fall 2004 Is there a deal? Was a deal made?



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CONTRACTS OUTLINE HALEY FALL 2004


  • Is there a deal? Was a deal made?

  • If there is a deal, how do courts enforce deals?

  • Assuming there is a deal, is there any reason for the court not to enforce the deal?

  • Exactly what is the deal?

  • Once we know what the deal is, did anyone not do what he agreed to do?

  • Is there any legally recognized excuse for not doing what you promised?

I.Introduction


    1. Contract: An exchange reltnshp, created by agreement containing at least one promise recognized as enforceable in law

      1. Offer, Acceptance, Consideration

    2. What Makes an Agreement into a Contract?

      1. Cohen v. Cowles Media: Moral and ethical obligation alone does not create a contract. Not every promise is a K. The lack of belief by either party that they had entered into a legally binding K is why this is not a K.

    3. The Enforcement of Contracts: Introduction to Remedies

      1. You can breach a K; you just have to pay.

      2. Expectation damages: the amount of money required to put the victim in the position she would have been in had the K not been breached. (e.g. difference between K price and substitute price)

        1. Direct Damages: actual loss under the contract itself
        2. Consequential Damages: recoupment of losses beyond the K that resulted from the breach (e.g. store could not open in time)


        3. Incidental Damages: Expenses incurred in dealing with effects of breach (e.g. negotiation costs, expense in finding new contractor)

      3. Specific Performance – compels D to perform (most often deals with sale of land)

      4. Judgment for damages is merely an adjudication that the breacher owes that amt to the victim. The enforcement of it is separate and may never be recovered.

      5. Keltner v. Washington County: Emotional distress damages are not recoverable under K law. In some jurisdictions, the rule has been modified to allow for some of the considerations of RST 2d.

  1. Statutory Law Method: UCC Article 2 and the Sale of Goods

    1. Introduction to Article 2

      1. Creation of the UCC

        1. Most Ks are governed by rules and principles of common law (when UCC does not apply); there are some areas in which legislatures have enacted statutory rules for Ks in general or particular types of Ks

        2. Uniform state commercial laws were desirable b/c variations (1) created confusion and uncertainty in interstate transactions; and (2) impeded interstate commerce

        3. Uniform model statutes were drafted and recommended to state legislatures; first model law was enacted by many state legislature and needed updating, which led to promulgation of the UCC (actual law) in the ‘50s

      2. UCC Article 2
        1. Applies to sale of goods but not services (some transactions include both)


        2. Where UCC does not apply, state’s common law of contracts would apply (or common law of torts). Statutory law and UCC are mandatory rules; common law rules are default rules

        3. Pass v. Shelby

          1. UCC would not apply if K was primarily for services rather than goods (contract for sale of goods would protect warranty)

            1. Gravaman test – looks to portion of transaction upon which the complaint is based. (Problem with gravaman test the case will be the same every time; P will win b/c he can point to faulty part of transaction)

            2. Predominant purpose test – looks at the transaction as a whole to determine whether the predominant purpose of the transaction was the provision of services or the sale of goods

          2. In this case the court found that the predominant purpose test was better (as have most courts).

        4. Custom Communications Engineering, Inc. v. E.F. Johnson Co.

          1. Issue: 4-year statute of limitations applies to this dealership agreement b/c it falls under the UCC. If not, the 6-year statute of limitations under common law would apply.

          2. Uses predominant purpose test in deciding whether K deals w/ the sale of goods or services.

        5. Gatekeeping function of UCC

          1. Courts can strategically use UCC to determine whether case will go forward (does it merit a trial?). Increases court system efficiency, saves time and resources.

          2. Some rules become so fact-fact-specific in their application that they give judge ultimate discretion in what goes forward

II.Contractual Assent and the Objective Test

A.Objective Standard for Determining Assent

      1. Ks are formed by mutual consent; both parties must intend to enter the K and agree on its terms. Legal assent is determined by apparent intent shown by overt acts and words (obj. test), rather than subjective state of mind.


        1. Economic efficiency is achieved by using the objective test (allows for reasonable reliance). You discourage people from entering contracts if they cannot rely on outward manifestations.

        2. Toward the end of the 19th century, the objective standard became more widely used (along with the formalist classical conception of contract law). As classicism passed its apex, more flexibility was allowed into the system to reflect how people act and gives effect to reasonable expectations

      2. Kabil Development Corp. v. Mignot: Subjective evidence is admissible as support for objective test of K (testimony re state of mind is acceptable)

B.Determination of Objective Meaning


      1. Four factors for determining reasonableness:

        1. Attributes (experience, training, commercial sophistication)

        2. Background information actor possessed

        3. Relationship between the parties

        4. Context of the transaction

C.Deliberate Undisclosed Intent

      1. Lucy v. Zehmer: internal assent of the parties is not necessary for K formation provided manifest words and actions can reasonably be interpreted to indicate intent to K


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