Contract 1: Chapter 1 (Introduction) and 2 (Promise and Assent)

Bargain

An agreement to exchange promises or to exchange a promise for a performance or to exchange performances. - Is ordinarily made by an offer by one party and an acceptance by the other party or parties, the offer specifying the two subjects of exchange to which the offeror is manifesting assent.

Challenges of Studying Contract Law

- Determining the rights and liabilities of parties to an alleged contract, which often requires a sequential analysis of the entire contract relationship between them. - Cannot determine whether a remedy exists for an alleged breach without considering whether the parties manifested assent, whether any defenses might be plausibly claimed to exist, whether any writing required for enforcement exists, what terms the parties agreed to, whether and how seriously one or both parties breached, and what remedies might be available and appropriate.

Examples of those foundational principles that operate to support (or challenge) outcomes of disputes include:

1. Freedom of contract: Parties should decide for themselves what responsibilities to undertake, with only the smallest of restrictions, and should not ask the court to choose for them; 2. Predictability and security: Parties operate more effectively when they can comfortably predict and order their lives according to the legal implications of their actions; 3. Commercial reasonableness: Rules should reflect the way parties actually conduct business; 4. Fairness: Parties should be protected from being misled, unreasonably pressured, or otherwise led into contracts that do not represent their true choices or that shock the conscience.

Sources of Contract Law and Authority

1. Judicial Opinions 2. Restatements of the Law 3. Statutory Law

Contract

A legally binding agreement between two or more parties. - Legal Definition: A promise or set of promises for the breach of which the law gives a remedy. - Agreement or Bargain. - Alternative from UCC: "The total legal obligation which results from the parties' agreement".

Remedy

A legally binding obligation arising from a promise. - A court-ordered resolution to one party's breach of contract.

Agreement

A mutual understanding or meeting of the minds between two or more individuals regarding the terms of a contract. - A manifestation of mutual assent on the part of two or more persons. - A decision reached by two or more peoples. - Has a wider meaning that just contract, bargain, or promise. - Applies to transactions executed on one or both sides, and also to those that are wholly executory.

Persuasive Precedent

A precedent that a court does not have to follow but can be very influential when determining a case. - Precedents from other jurisdictions - Influential but not binding.

Promise

A statement of commitment to the person on the receiving end of the promise—the promisee—that the promisor will do (or, sometimes, refrain from doing) some specified act. - Contracts are grounded in ___________________ - ___________________ must have sufficient content and certainty to justify the promisee in understanding that a commitment has been made and may be relied upon. - The promise must be communicated to the promisee. Defined as a "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." That definition encompasses those same requirements—that there be a communication of commitment with sufficient certainty to justify reliance. - The manifestation of commitment is at the core of contract, because it means the parties themselves create obligations to each other. Manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that the commitment has been made.

According to Lawrence Friedman, contract law is _____________________.

Abstraction. - Indeed, contract law often purports to provide a one-size-fits-all rule, even though the same rule may not fit comfortably with respect to the wide variety of parties (e.g., consumers, small businesses, large corporations), transaction types (e.g., small purchase, large commercial transaction), party relationships (e.g., one-time transaction, repeat players), and economic landscape (e.g., free market, lightly or heavily regulated). - Sometimes, however, the general rule is stated in broad terms, allowing it to be applied differently when the particular circumstances of the type identified above justify different treatment.

Objective/Subjective Standard

Because contract law is grounded in the notion of enforcing parties' voluntarily created rights and obligations, it involves a search for the intent of the parties. - That intent must be found in the communications between the parties to an alleged contract, including the words used in the agreement. But sometimes there are multiple meanings—what a party was thinking at the time of the communication (her subjective meaning), what the other party understood (his subjective meaning), and what a reasonable person would have understood (an objective meaning). - The objective meaning is most important in analyzing whether a contractual promise exists, with subjective meaning playing a subsidiary role.

Objective Standard

Comparison of a defendant's conduct to that of a reasonable person

Judicial Opinions

Contract law in the United States is, in its origins, foundations, and implementation, a creature of the common law. - That means the legal rules are primarily derived from and stated in judicial opinions. State judges determine the common law contract rules for that jurisdiction. Contract law is also predominantly a matter of state, not federal, law. - Judges generally rely on prior decisions by other judges—case precedents—in reaching their decisions, and they favor precedent from their own jurisdiction over precedent from other states and from federal courts.

Embry vs McKittrick

Facts: Embry (P) was an employee of Hargadine, McKittrick Dry Goods [textile, fabric company] (D). He was paid $2,000 per year and was responsible for the sample department. A written employment contract between the parties expired on December 15, 1903. A meeting occurred eight days later at which Embry said that he would seek work elsewhere unless his contract was renewed. Hargadine's president, McKittrick, told Embry 'Go ahead, you're all right. Get your men out and don't let that worry you.' Embry remained with the company until he was fired on February 15th. McKittrick denied having told Embry not to worry about his employment contract. At trial the court gave a jury instruction regarding contract formation and refused Embry's proposed instructions. The jury was instructed that it was necessary for both parties to have had a subjective intent to contract or there would be no contract. The jury returned a verdict in favor of D and P appealed based on the jury instruction. Issue: May a contract be formed without reference to the subjective intentions of either party? Holding and Rule: Yes. A contract may be formed without reference to the subjective intentions of either party. To form a valid contract there must be a meeting of the minds and both parties must agree to the same thing in the same sense. If a man conducts himself such that a reasonable person would believe that he was assenting to the terms proposed by another party, and that other party upon that belief enters into the contract, that man would be equally bound whether or not he had actual subjective intent. Therefore if what McKittrick said would have been taken by a reasonable man to be an employment contract, and P understood it as such, it constituted a valid contract of employment for the ensuing year. McKittrick's subjective intent was not relevant. Conclusion: Reversed and remanded. Court said Embry had a right to rely on the response and actions of Mr. Ms.Kittricks. If you manifest an intent to do something, then the expectation is that people will have to rely on it.

Statutory Law

Law passed by the U.S. Congress or state legislatures. - Body of law enacted by legislative bodies. Always supersedes common law rules on the same subject matter because legislative enactments have greater authority than judicial common law decisions. The statute most referenced in these materials is the Uniform Commercial Code (the UCC). The UCC purports to be what its name suggests—a uniform statute for all commercial matters, encompassing the activities of consumers as well as merchants and other commercial entities.

American Law Institute

Organization of American legal scholars who develop "restatements" and assists in uniformity of state laws. - purpose of bringing clarity and consistency to the common law. Over the years since its creation as a private nonprofit organization, the ALI has—among a variety of law reform projects—produced a series of subject-specific "Restatements" that seek to state the principles and rules of the common law as reflected in judicial opinions and, sometimes, statutory enactments.

Mandatory Precedent

Precedent from a court's own jurisdiction.

How Contracts are made

Spoken of as either Express or Implied. - May be stated in words either oral or written ,or may be inferred wholly or partly from conduct. - Quasi-Contract: Not based on the apparent intention of the parties to undertake the performances in question, nor are they promises. -- Obligations created by law for reasons of justice.

Subjective Standard

What the person was thinking at the time.

How to Communicate Promises

You may communicate ("manifest") commitment by words (spoken or written), by conduct (e.g., the nod of a head, or a handshake, or other act that shows commitment is intended), or by a combination of words and conduct. - Even if it appears at first that only words are involved, we will see that spoken or written words can be understood fully only in a context that includes conduct, as well as tone of voice and other surrounding circumstances. Before you can determine whether a statement constitutes a promise—especially whether it communicates intent to commit—we must first consider a preliminary question: by what standard should the meaning of the communication be evaluated?