Contracts

Settlement Claims are contracts

Accord and Satisfaction is a compromise agreement used to voluntarily settle disputed contracts. See above: A breach (nonperformance of an enforceable K) of contract leads to $1,000 damages. Injured party sues based upon a legitimate dispute. Defendant offers $750 to settle the case ---> the Accord. Plaintiff agrees and Defendant pays $750 ---> the Satisfaction. The second(derivative) promise (offer) = accord. The performance of the second = satisfaction.

Two Parties to a K

An Offeror who demonstrates an objective manifestation of intent to be bound by the reasonably certain terms and conveys the offer to the; and An Offeree who can accept or reject the offer. The Offeree's acceptance must "mirror the terms of the offer." An acceptance not identical to the terms contained in the original offer is considered a rejection and counteroffer. In this case, the original offeree becomes the offeror who conveys a new offer to which the initial offeror can accept or reject. Without an acceptance to an offer there is no contract. An acceptance is the objective manifestation of assent to an offer's reasonably certain terms. That is, the acceptance must be the "mirror image" of the terms of the offer. A reply purporting to be an acceptance which does not reflect the exact terms of the offer constitutes a rejection and counter-offer.

Rejection

Rejection of an Offer by the Offeree - An offer is terminated if the offeree rejects it, even against subsequent acceptances by the offeree. That is no rejection followed by a changed mind and acceptance. Once a rejection, always a rejection unless followed by a renewed offer. Rejection of an Offer by the Offeree - Once an offer is rejected, it stays rejected. In other words, you can't resurrect a rejected offer. But you can create a new offer with same or similar terms

Legal insanity and contractual capacity:

Remember, a contract represents a meeting of at least two minds. When one party is insane, there is no mind to meet. Trust me, there really is a joke in there somewhere. An objective, cognitive understanding test is used to determine legal insanity. Under this test, a person's mental incapacity must render that person incapable of understanding or comprehending the nature and quality of a legal transaction.

Covenants not to compete:

An agreement not to compete is an agreement whereby a person agrees not to engage in a specified business or occupation within a designated geographical area for a specified period of time following the sale. The reasonableness of covenants to compete is examined on a case by case basis. Under California Business and Professions Code §16600 covenants not to compete are unenforceable in California because they violate the public policy of promoting efficient economic efforts. Judge Richard Posner and the Chicago School of Law and Economics rear their market efficiency heads yet again!

K = Offer + Acceptance = Mutual Assent = Agreement, aka "Meeting of the Minds."

An agreement requires an Offer and an Acceptance AGREEMENT: An agreement is the OBJECTIVE manifestation by two or more persons to the substance of a contract.

E

"E2" Executorship: (i) Ks to administer wills and wills themselves must be written.AND bee it further enacted by the authoritie aforesaid That from and after the said fower and tvventyeth day of June noe Action shall be brought whereby to enforce Deviseable either by force of the Statute of Wills or by this Statute or by force of the Custome of Kent or the Custome of any Burrough or any other perticular Custome shall be in Writeing and signed by the partie soe deviseing the same or by some other person in his presence and by his expresse directions and shall be attested and subscribed in the presence of the said Devisor by three or fower credible Witnesses or else they shall be utterly void and of none effect.

G

"G" Ks for sale of goods >$500: Contracts for the sale of goods costing $500 or more must be in writing.AND bee it further enactted by the authority aforesaid That from and after the said fower and twentyeth day of June noe Contract for the Sale of any Goods Wares or Merchandises for the price of ten pounds Sterling or upwards shall be allowed to be good except the Buyer shall accept part of the Goods soe sold and actually receive the same or give some thing in earnest to bind the bargaine or in part of payment, or that some Note or Memorandum in writeing of the said bargaine be made and signed by the partyes to be charged by such Contract or their Agents thereunto lawfully authorized.

L

"L" Sale of land: Contracts that transfer an ownership interestin real property must be in writing under the Statute of Frauds to beenforceable. Real property includes the land itself as well asbuildings, trees, soil, minerals, timber, plants, crops, and otherthings permanently affixed to the land. Fixtures, personal propertythat is permanently affixed to real property, such as built-in cabinetsin a house, become part of real property. Contracts involving mostother interests in real property, such as mortgages, leases, lifeestates, and easements, must be in writing. 1. Land Contracts: Sun Valley Realty wins. Pursuant to the Statute of Frauds, an agreement for the sale of real property is invalid unless the agreement or some note or memorandum thereof be in writing and subscribed (signed) by the party to be charged. Failure to comply with the Statute of Frauds renders an oral agreement unenforceable both in an action at law for damages and in a suit in equity for specific performance. Equal Dignity Rule --requires an authorization for someone performing certain acts for another person to have been appointed with the same formality as required for the act the representative is going to perform. For example, if a principal authorizes someone to sell the principal's house or other real property and the law requires a contract for the sale of real property to be in writing ("L" in MY LEGS), then the authorization for the other person to sign the sales contract and deed must be in writing too. In other words, when a homeowner engages a real estate agent to sell her house because land contracts must be written the agreement between the homeowner and real estate agent must be in writing.

M

"M" Promises Made in Consideration of Marriage - Unilateralpromises to pay money or property in consideration of a promise tomarry must be in writing. Includes pre-nuptial agreements, marriagesettlement agreements (separation of property divorce), spousal supportagreements, child custody agreements, name changes, adoptions, etc.

Y

"Y" Ks that cannot be performed by its own terms within one year: To prevent contract disputes that may occur toward the end of along-term contract, contracts that cannot be performed within one year,by the contract's own terms, must be in writing. If the performance ofthe contract is "technically" possible within one year, the contract may be oral. Oral contracts that are not capable of being performed within one year are unenforceable unless in writing.

Contracts Lacking Consideration

1. Illegal Consideration 2. Illusory Promise 3. Moral Obligation 4. Preexisting Duty 5. Past Consideration 6. Gratuitous Promises

Contracts aka K

A K is a private promise that the courts will enforce. In that sense, a K is "private law."

Bilateral

A bilateral contract is an exchange of promises -- a promise for a promise. Or for you Latin scholars, quid pro quo. The key is, in bilateral contracts the contract is formed when the offeree accepts the offer. Example: D2G, me, is playing in a University faculty golf tournament at Harding Park Golf Course and needs golf instruction. I offer to pay B-Law Survivor Michelle 'Hula Birdie' Condry $10.00 for one golf lesson. Offeror: D2G Offeree: Michelle Terms Essential Terms: Identified Parties: D2G and Michelle; Subject matter: Golf lesson Reasonably Certain: Price: $10.00 Unstated But Implied: Time for performance: Can be implied by the courts if a reliable source or custom and practice is available. If not, courts will imply a reasonable time. Here, the court would probably imply that the lesson was to be given before the faculty golf tournament; Place of performance: Unstated -- can be implied by the courts if a liable source or custom and practice is available. If not, courts will imply a reasonable place. Here, Harding Park Golf Course would be a reasonable place for the lesson.

Infancy doctrine

A legal infant (minor) is a person who has not reached the age of majority, usually age 18. The law treats your 6-month-old cousin and your 17-year-old brother the same -- as an infant. The infancy doctrine's purpose is to protect minors. It allows minors to cancel, aka DISAFFIRM most contracts they have entered into with adults. Public policy holds that minors must be protected from the unscrupulous behavior of adults. A minor may disaffirm a contract orally, in writing, or by the minor's conduct. Important to an understanding of the infancy doctrine is that the law presumes that the minor is incompetent and innocent while the adult with whom they contract are avaricious, cheating, and overreaching. You know that the infancy doctrine protects persons under the legally designated age of adulthood (age 18), from both "crafty adults" (persons aged 18 and older) and their own bad judgment caused by the minor's inherent immaturity.

Necessities/Necessaries of Life:

A minor may enter agreements for necessaries of life: the reasonable value of food, clothing, shelter, medical care, public transportation, and other items considered necessary to the maintenance of life. Necessities do not include iPhones, nights at the El Rio, or cases of Four Lokos. a minor may not avoid a contract for goods or services necessary for his health and sustenance. (Sustenance = food, shelter, medical attention, education(school book), rent, clothing but not mobile/smartphones!)

Ratification:

A minor must disaffirm within a reasonable time after reaching majority (18) otherwise the courts will find that he/she "ratified" the contract and will enforce the contract.

DUTY OF RESTITUTION:

A minor who enters into a contract with a competent person (adult) but lies (misrepresents) about his or her age can still disaffirm the contract. However the lying minor owes a duty of restoration and restitution(status quo - time of disaffirmance) when disaffirming the contract. That is, the misrepresenting minor is only entitled to the value of the subject matter at the time of disaffirmance(status quo)

Mutual Mistake of Value(MoneTARY vALUE)

A mutual mistake of value exists if both parties know the object of the contract but are mistaken as to its value. Here, the contract remains enforceable by either party because the identity of the subject matter of the contract is not at issue. If the rule were different, almost all contracts could later be rescinded by the party who got the "worst" of the deal. Helen cleans her attic and finds a red and green silkscreen painting of a tomato soup can. She has no use for the painting, so she offers to sell it to Qian for $100. Qian, who thinks that the painting is "cute," accepts the offer and pays Helen $100. It is later discovered that the painting is worth $2 million because it was painted by the famous American pop artist Andy Warhol. Neither party knew this at the time they entered into the contract. It is a mistake of value. Helen can- not recover the painting. A mutual mistake occurs where both parties to a contract are mistaken as to a fact which is essential to the contract and constitutes the basis of the agreement. Generally in such cases, the contract is voidable by either party. Moreover, negligent failure of a party to know or to discover the facts to which both parties are mistaken does not preclude rescission.

mutual mistake of a material fact

A party may rescind a contract if there has been a mutual mistake of a material fact. A material fact is a fact that is important to the subject matter of a contract. An ambiguity in a contract may constitute a mutual mistake of a material fact. An ambiguity occurs where a word or term in the contract is susceptible to more than one logical interpretation. If there has been a mutual mistake, the contract may be rescinded on the grounds that no contract has been formed because there has been no "meeting of the minds" between the parties. LUCY THE COW WHO WAS SUPPOSED TO BE BARREN WAS PREGNANT. In the celebrated case Raffles v. Wichelhaus,3 which has become better known as the case of the good ship Peerless, the parties agreed on a sale of cotton that was to be delivered from Bombay (now Mumbai) by the ship. There were two ships named Peerless, however, and each party, in agreeing to the sale, was refer- ring to a different ship. Because the sailing time of the two ships was materially different, neither party was willing to agree to shipment by the other Peerless. The court ruled that there was no binding contract because each party had a dif- ferent ship in mind when the contract was formed.

Valid Acceptance

A valid acceptance of an offer must be absolute and unqualified. A qualified acceptance is one that contains terms or conditions materially different from those in the original offer. Qualified acceptances are not enforceable, rather they constitute a counteroffer that terminates the power of the original offeree to accept the offer. Stated differently, counter offers are a rejection of the original offer and an entirely new offer that the original offeror can accept or reject.

EXAMPLES:

A. No Misrepresentation: Your 17-year-old sister buys a car for $5,000 from an adult without misrepresenting her age. If your sister disaffirms before she turns 18 or a reasonable time thereafter, the parties owe each other a duty of restoration and are returned to their original positions, status quo ante: the adult (competent party) must give your sister (minor) back $5,000 (RESTORE) and your sister must return (RESTORE) the car. Now suppose that your sister accidentally wrecked the car and it is now valued at $500. Your sister can still disaffirm and receive her $5,000 back. This is because the law protects minors (your sister) and imposes the risk-of-loss on the adult. In each example the parties are restored to their status quo ante -- the positions they occupied before the agreement was entered: sister had $5,000, adult had a car. Note -- the minor is still responsible for any damages he causes to third persons. B. Misrepresentation: However, a minor who lies (misrepresents) his or her age when entering into a contract owes a duty of restoration and RESTITUTION when disaffirming the contract. That is, the misrepresenting minor must pay the adult the value of the subject matter at the time of disaffirmance, status quo. Suppose that your UC Santa Clara bound 17-year-old friend misrepresents his age (lies) and tells the car seller that he is 18 years old. Your friend buys the car for $5,000. He wrecks the car before he turns 18. The value of the car is now $500. Your friend's son can disaffirm BUT instead of getting back $5,000 he only gets back the value of the car at the time of disaffirmance (status quo), $500 (RESTITUTION).

TWO TIMES VOIDED CONTRACTS

ADJUDGED AND ILLEGAL

Requirements Contract

The buyer contracts to purchase all of its requirements from a single source, assuring the buyer a uniform supply and the seller, reduced expenses.

Implied -in-Law

An implied in law contract is created when: one person bestows a benefit upon another person; the bestower of the benefit expected to be paid; for reasons beyond the bestower's control the benefitted party could not express willingness to accept or reject the benefit; a reasonable person would have accepted the benefit; and injustice can only be avoided by finding that contract exists. For example, a pedestrian is hit by a car and is rendered unconscious. Someone summons an ambulance. The ambulance arrives and transports the injured person to the hospital and the pedestrian's life is saved. The Ambulance Company expected to be paid. Ninety days later the pedestrian receives a bill from the Ambulance Company. The pedestrian refuses to pay claiming that he never agreed to be transported to the hospital - that is, there was no binding contract. In this case, the Court would substitute a reasonable person for the unconscious pedestrian. If a reasonable person would have accepted the ambulance ride to the hospital to have his/her life saved, the pedestrian is deemed to have accepted the ambulance's services and to have entered into a contract with the ambulance company. An implied in contract is created when: 1. A benefit/service is rendered to someone -- Ambulance transportation to the hospital to save a person's life 2. The benefit/service provider expected to be paid -- Ambulance company is a fee for service provider 3. The beneficiary was unable to expressly accept the benefit of services -- Unconscious person in need of ambulance service 4. A reasonable person would have accepted the benefit or service rendered -- Your Dumb Cousin would have wanted his life saved 5. An injustice would occur if the benefit/service provider was not paid -- The ambulance company would be unjustly deprived and the injured person would be unjustly enriched if a contract is not found and fee for service paid to the ambulance company.

Implied-In-Fact

An implied-in-fact contract arises when one person bestows a benefit on another; the bestower intended to be compensated; the person receiving the benefit had the opportunity to refuse the benefit but did not; and injustice would occur if a contract is not found. For example, a person enters a barbershop and sits down in the hairstylist's chair for a haircut. A contract is created between the customer and the hairstylist, which means that, even though the hairstylist never asked for any money in exchange for a haircut and the customer never promised to pay any money in exchange for the haircut, once the customer's hair has been cut the customer owes the hairstylist money. In this case, the hairstylist bestowed a benefit to the customer (haircut); the hairstylist expected to be paid for her effort; the customer had an opportunity to refuse the haircut but did not; and injustice would occur if a contract is not found. ------------------------------------------- An implied-in-fact contract existed between the parties. An implied-in-fact contract is created by conduct of the parties. Recovery of damages for a breach of an implied-in-fact contract is allowed when: (1) economically valuable goods or services are bestowed upon the recipient (defendant); (2) the recipient (defendant) had the opportunity to refuse or reject the goods or services; (3) the benefit provider (plaintiff) expected to be compensated for the benefits bestowed; and (4) manifest unjust enrichment and/or detriment can only be avoided by enforcing the implied contract. In this case, Defendant Selchow & Richter (S&R) owned the trademark to the famous board game Scrabble. Plaintiff Landsberg wrote a book how to win at Scrabble and asked S&R permission to use the Scrabble trademark. In response to S&R's request, Landsberg provided S&R a copy of his manuscript. After prolonged negotiations between the parties regarding the possibility of S&R's publication of the manuscript broke off, S&R brought out its own Scrabble strategy book. No express contract was ever entered into between Landsberg and S&R. Landsberg sued S&R and Scrabble for damages.The court found that Landsberg had bestowed upon Scrabble a valuable good -- his manuscript. Scrabble had the opportunity to not use the confidentially conveyed information contained in the manuscript. Scrabble knew that Landsberg intended to sell his manuscript and that Scrabble's use of the manuscript was conditioned on payment. On these facts the Court of Appeals held that an implied-in-fact contract had been formed between the parties and that defendant Scrabble had breached the implied contract. Landsberg was awarded the profits that S&R made on the sale of the book plus $100,000 punitive damages, bringing the total award to $440,300. Landsberg v. Selchow & Richter Company, 802 F.2d 1193, Web 1986 U.S. App. Lexis 32453 (United States Court of Appeals for the Ninth Circuit)

Communication

An offer must be communicated (manifested) to the offeree before it can be accepted. No communication to an offeree --> no power to accept ---> No K

Unilateral Contract in depth:

An offer to pay a reward is treated as a unilateral contract* - a promise for an act. The only way to accept a unilateral contract is to know about the reward and perform the requested act. No Knowledge → No Acceptance → No Contract No performance → No Acceptance → No Contract Two elements must be satisfied in order to be able to execute a unilateral (reward) contract: (2) the offeree must have knowledge of the offer; and (2) must have performed the requested act in response to the offer. TAKE HOME MESSAGE: If someone found and returned Lucky to his owner without knowing of the offeror's promise ---> no claim to the reward because the act of finding and returning Lucky was not performed in reliance of the offeror's promise to pay a $50 reward -- it was a gratuitous voluntary act. Volunteers are thanked but not paid!

Rewards

An offer to pay a reward is treated as a unilateral contract. In order to be able to collect the reward, the offeree must have knowledge of the offer before performing the requested action.

Option Contracts

An offeree can prevent the offeror from revoking his or her offer by paying the offeror compensation to keep the offer open for an agreed upon period of time. Comment: options are a separate K to hold an offer open for a certain period of time. Like the underlying K, it requires an Offer + Acceptance + Consideration ...

Unilateral contracts

Are promises for an Act. The only way the contract can be formed is for the offeree to know about the offer and to perform the required act with the intention of accepting the contract. The key is, in unilateral contracts the only way an Offeree can accept the offer is by knowing about it and then performing the requested act. If a person does not know about the offer but performs the act, no contract is formed. As my Contracts professor taught way back in the day, volunteers are thanked, not paid. Example: D2G offers to pay Hula Birdie $1,000,000 if she scores a hole-in-one on the 13th hole at the S.F. Olympic Club. Offeror: D2G Offeree: Hula Birdie Terms Essential: Identified Parties: D2G and Hula Birdie; Subject matter: hole-in-one Reasonably Certain: Stated Price: $1,000,000; Stated Place: 13th hole at the S.F. Olympic Club Unstated But Implied: Time for performance: Can be implied by the courts if a liable source or custom and practice is available. If not, courts will imply a reasonable time The only way that Hula Birdie can accept the offer and form the contract is by hitting a hole-in-one on the13th hole at the S.F. Olympic Club with the intention of collecting $1,000,000.

Two Types of Auctions

Auctions-with-reserve, Auctions-without-reserve

Two types of Ks

Bilateral Promises and Unilateral Contracts

C = Consideration

CONSIDERATION IS THE SUBJECT MATTER! DETRIMENT AND BENEFIT! Consideration is anything of legal value given in exchange for the other party's promise. There must be a Bargained-for exchange of promises between the parties. Bargained for exchange is the "subject matter" of the offer and acceptance. For instance, you agree to purchase my Cheeseman textbook for $25.00. The only reason you give me $25.00 is to get Cheeseman; the only reason I give you Cheeseman is for your $25.00. The subject matter consists of my Cheeseman and your $25.00. What is bargained for must have legal value. That is, the subject matter of the promises must be legal. Contracts involving illegal subject matter are void and unenforceable. We now know that consideration is something of legal value given in exchange for the other person's promise.

Capacity

Capacity is the ability to enter contracts. A person lacks contractual capacity if they are: an infant (minor); insane (adjudged or not adjudged); or intoxicated to the extent they do not appreciate the nature and quality of their contractual obligations.

Illegal Consideration

Contracts cannot be supported by a promise to perform or refrain from doing an illegal act. These contracts are unenforceable/void. Thus there is no suing the neighborhood dope dealer for breach of contract.

Intoxication and contractual capacity:

Contracts entered into by intoxicated persons are voidable by the intoxicated person. This includes intoxication to the point of incapacity because of alcohol or drugs, legal or illegal. The contract is not voidable by the other party if that party had contractual capacity. That is, the competent party is bound by the terms of the agreement. Intoxication is judged by a subjective standard -- was the person so intoxicated that he/she did not appreciate the nature and quality of their actions. That is, was he/she: FDD + UTFKI (falling down drunk and unable to form contractual intent)

Illegal contracts that violate public policy

Contracts whose objective is considered immoral by society, such as a contract based on sexual favors (quid pro quo sexual harassment), are void. Contracts that restrain trade can be held to be unlawful as against public policy.

Type 1: Express Contracts

Express contracts are "Words" contracts that set forth the essential terms of the agreement between the Offeror and Offeree.

Destruction

Destruction of the Subject Matter - An offer terminates if the subject of the offer is destroyed prior to the acceptance by the offeree. If the subject matter is irreparably damaged, so is the offer,

Termination of an Offer by Operation of Law( Precipitating Events )

Destruction, Death or Incompetency, Supervening Illegality , Lapse of Time -Flannery O'Connor

Components of consideration

Detriment & Benefit Consideration may be a return promise for (1) an act; or (2) forbearance (refraining from action). A person can incur legal detriment by: (1) doing or promising to do something that he or she had no prior legal duty to do (an act); or (2) refraining from or promising to refrain from doing something that he or she had no prior legal duty to abstain from doing (forbearance). Courts don't give a damn about value. damn is a piece of soldering metal that is super small that is worth less than 1/2 a penny. A peppercorn can even secure the value of an agreement if bargained for by the parties.

TWO TERMS

EXPRESS & IMPLIED

fraud in the inception

Fraud in the inception, aka factum: "Opps, I signed what? That's not what I was told I was signing!" If a person is deceived as to the nature of their act and does not know what he or she is signing, that is fraud in the inception. The contract is void. Fraud in the inception, or fraud in the factum, occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing. Contracts involving fraud in the inception are void rather than just voidable. Heather brings her professor a grade card to sign. The professor signs the grade card on the front without reading the grade card. On the front, however, are contract terms that transfer all of the professor's property to Heather. Here, there is fraud in the inception. The contract is void. Fraud in the inception, aka "I signed WHAT?!?" Is contract fraud that occurs when a person is deceived as to the nature of his or her act and does not know what he or she is signing. An example of fraud in the factum involved a 27-year-old grandson telling his grandfather to sign a letter when the document was, in fact, an addendum to his will, altering it to leave all of his assets to the grandson.

Detriment & Benefit

Referring to the purchase and sale of Cheeseman: My detriment is giving-up Cheeseman; My benefit is receiving your $25.00 Your detriment is giving-up $25.00; Your benefit is receiving Cheeseman. In classical model forbearance is not considered but it is in the modern model

Hunt v. McIlory Bank and Trust

Hunt v. McIlory Bank and Trust, 616 S.W.2d 759. Ben Hunt and others operated a farm under the name of S.B.H. Farms. Hunt went to McIlory Bank and Trust and requested a loan to build hog houses, buy livestock and expand farming operations, The bank agreed to loan S.B.H. Farms $175,000, for which short-term promissory notes were signed by Hunt and the other owners of S.B.H. Farms. At that time, oral discussions were held with the bank officer regarding long-term financing of S.B.H.'s farming operations: no dollar amount; interest rate; or repayment schedule was discussed. When the owners of S.B.H. Farms defaulted on the promissory notes, the bank filed for foreclosure on the farm and other collateral. S.B.H. Farms counterclaimed for $750,000 damages, alleging that the bank had breached its oral contract for long-term financing. Is there an oral contract for long-term financing? "Missing Minimum Minds" For a court to enforce a promise there must be a meeting of the minds regarding all the essential terms. A court cannot make acontractfor the parties. The absolutely essential terms are the identities of the parties to the contract and the subject matter. Here the parties never identified the subject matter: the total amount of loan,theinterest rate, the term of the loan, and the repayment amounts were never agreed upon. Because thecontract's essential subject matter terms were left out and a reliable third party source was unavailable, a court could not determine the intentions of the parties. Thus at a minimum, if essential terms are missing -------------> there isnomeeting of the minds and noenforceablecontract.

INFANCY DOCTRINE - VOIDABLE CONTRACTS

INFANCY DOCTRINE - VOIDABLE CONTRACTS: In the Spring of 2003 Lindsey Stroupes ("Lindsey") was sixteen years old and a sophomore at Soddy-Daisy High School. Anthony Bradley ("Bradley"), the manager of Finish Line's retail store in the mall, offered Lindsey a position as a sales associate at Finish Line's store in the mall which she accepted. Lindsey signed an employment contract that required that all claims against Finish Line be submitted to binding arbitration. Shortly after being hired, Lindsay quit and she and her parents filed a civil action against Finish Line, Inc., in the United States District Court alleging that Bradley had sexually harassed Lindsey in violation of Title VII of the Civil Rights Act of1964 by touching her and making crude sexual jokes.. Finish Line filed a motion to dismiss Lindsey's lawsuit and to compel arbitration of her complaint. Lindsay argued that the arbitration agreement was voidable by her under the infancy doctrine because she was a minor when she signed the contract. Is Finish Line's arbitration agreement enforceable against Lindsay? Stroupes v. The Finish Line, Inc. 2005 WL 5610231 (ED Tenn. Mar. 16, 2005). REGARDLESS OF AGE, THERE'S NOTHING FUNNY ABOUT SEXUAL HARASSMENT: Finish Line's arbitration agreement is voidable by Lindsey under the infancy doctrine. The general law regarding the validity of minor's contracts is clear: Minor's contracts, generally speaking, are voidable. The minor can repudiate such contracts or can elect to claim their advantage. The party contracting with a minor, however, is bound on such voidable contracts if the minor elects to enforce them. Based on the infancy doctrine, because Lindsey was sixteen years old when she began working for Finish Line, her Finish Line employment contract was voidable. Lindsey effectively voided the contract by filing the lawsuit. Filing suit in court effectively repudiated Lindsey's employment contract with Finish Line. Therefore, the arbitration clause of the employment contract is not enforceable against Lindsey and the plaintiffs can pursue their lawsuit against Finish Line, Inc. in federal court. Stroupes v. The Finish Line, Inc., Web 2005 U.S. Dist. Lexis 6975 (United States District Court for the Eastern District of Tennessee, 2005)

Under contract law, insanity comes in two flavors: Adjudged and Not Adjudged:

If a person is ADJUDGED legally insane, their contracts are void. Neither party can enforce them.A person is adjudged insane when a judge finds them unable to grasp,and appreciate the nature and quality of their contractual acts. That is, the person did not know what they were doing. If a person is insane, but NOT ADJUDGED insane, the contract is voidable by the insane person. The competent party cannot void the contract and is bound under terms of the agreement. (Catch 22)

You need to be serious when making an offer

If a reasonable person would think that the offer was made in jest -- no contract is formed.

Preexisting Duty

If the person that promises to perform an act was already under a duty to perform it, the promise lacks consideration. Frequent issue involving appreciating goods or scarce services. Example 1. I pay a merchant $500 for a computer. The next day the merchant demands that I pay $600 for the exact same computer. I agree. I never pay the merchant the additional $100 and the merchant sues me. Under the classical model of consideration: My detriment, paying an additional $100 for the computer; My benefit, nothing Merchants benefit, additional $100; Merchant's detriment, nothing No corresponding benefit/detriment = No consideration = no K Example 2. A police officer cannot collect a reward for the recovery of lost or stolen property because she has the "pre-existing duty" to perform that act. Unforeseen Difficulties: When a party runs into extraordinary difficulties that were unforeseen at the time the contract was formed, courts often will enforce a subsequent agreement to pay more. ---------------------------------------------------------- Pre-existing duty: You and I agree that I will sell you my book for $25.00. I then threaten not to deliver the book unless you pay an additional $10. You agree. Your new promise is unenforceable because I had a preexisting duty to sell you the book for $25.00. Unforeseen Difficulty Not Contemplated At the Time of Contract: You agree to buy my book for $25 and I agree to walk to your house to deliver it the next day. The weather is sunny when we enter the agreement. The next day brings a terrible snowstorm and I call to tell you I need an additional $10.00 to pay for an Uber ride to deliver the book. You agree. Your second promise is likely enforceable because neither you nor I contemplated the snowstorm and the extra expense necessary to deliver the book to you. Change the facts: After you and I agree that you'll pay me $25.00 for the book, I tell you that for $10.00 more I will highlight the most important sections of the book. You agree. The second promise is enforceable because new consideration is present: my detriment is spending time highlighting the book, my benefit is your $10.00; your detriment is $10.00, your benefit is a highlighted book. ------------------------------------------------ An agreement on the part of one to do what he is already legally bound to do is not sufficient consideration for the promise of another. Here, Gough assumed no new obligation or duty (no new consideration) that he was not bound to perform under the terms of the original contract. Under both agreements Gough agreed to erect and properly place the same number of trusses. That is, he had a pre-existing duty to erect the trusses contemplated in the second agreement. Accordingly, Gough is not entitled to any sum not contemplated by the original contract.

Illegal contracts:

Illegal contracts are void and unenforceable. Absent policy reasons, courts will almost always refuse to hear such cases. Rather the principle of in pari delicto prevails. Great Latin phrase that means "the parties are in equal fault." When this happens, the Court will not involve itself in resolving one side's claim over the other, and whoever possesses whatever is in dispute may continue to do so in the absence of a superior claim. Essentially the Court says, "The Court won't get involved because you are both knuckleheads." Thus a breached contract to perform a murder will not be entertained by the Court. Same result in Killing Them Softly, Brad Pitt didn't entertain, though he nearly bored his audience to death!

Illusory Promises

Illusory promises look like enforceable contracts but when examined closely the consideration, like the above "illusion," is not definite. Such promises are created by statement(s) that appears to assure a performance and to form a contract but, when scrutinized, leaves to the promisor the choice to perform or not perform. The result ---> the promisor does not legally bind himself or herself to act and thus, no consideration. No obligation to act = no consideration = no enforceable K When the provisions of the purported promise render the performance of the person who makes the promise optional or completely within his or her discretion, pleasure, and control, nothing absolute is promised; and the promise is said to be illusory. Examples: 1. Tios Restaurant promises to buy from PMK, Inc., such ingredients as we may wish to order from PMK, Inc. Tios promise is illusory, because performance depends solely on the discretion of Tios. There is no bargained-for consideration because may not wish to order ingredients; 2. SBC, Inc. agrees to purchase optical cable but reserves the complete right to reject the cable for any reason and to cancel the agreement if the cable does not meet with its subjective approval. Under these circumstances the buyer has not suffered a legal detriment because it can reject/cancel the cable/agreement for any reason and the contract fails for lack of consideration. 3. A court decided that a promise contained in an agreement between a railroad and an iron producer whereby the railroad promised to purchase as much iron as its board of directors might order was illusory and did not form a contract.

What does Objective mean?

In legalize, Objective means: In determining if the offer was objective the courts apply a reasonable theory of intent whereby one party's intention is deemed to be that meaning a reasonable person in the position of the other contracting party would ascribe to the first party's manifestations of assent; in making that determination, the circumstances surrounding the making of the contract, such as correspondence and discussions, are relevant in deciding if there was mutual assent to an agreement, and courts are free to consider such extrinsic evidence. In plain language, Objective means: would your Dumb Cousin, the ultimate reasonable person, believe that the Offeror was serious when making the offer.

Contract Equation

K = O + A + C + LP + Cap + Form - Defenses K = Offer +Acceptance + Consideration +Legal Purpose + Capacity +Form - Defenses The term "contract" is really a conclusion of law. That is, it presumes that all of the elements necessary for a court to enforce a private promise are present. Like an equation (and negligence) if one variable is missing ---> no contract.

Moral Obligations

Kindness toward those in need is encouraged but does not constitute consideration ("It's not what you have at the end of the day, it's what you shared along the way that counts." Prof. Eamonn Barrett, S.J..), because no obligation to perform is created. Thus agreements based without more than a moral sense lack consideration. Example 1: Every Wednesday before I arrive at work at 5:45 a.m. I purchase two cups of coffee: one for me; and one for Max who sleeps in front of my Montgomery Street office. I feel a sense of moral obligation to give Max a coffee because I must wake him up and have him leave. Query: Could Max sue me if I don't bring him coffee? No obligation to perform = no consideration = no K Example 2: I promise Max that I will bring him a cup of coffee every Wednesday morning if he agrees to sleep in front of my office. Query: Could Max sue me if I don't bring him coffee? My detriment, giving Max a cup of coffee; My benefit, Max sleeping in front of my office Max's detriment, obligated to sleep in front of my office; Max's benefit, a cup of coffee Obligation to perform = consideration = K Review of contract law -- unilateral acts motivated by a sense of "it's the right thing to do," aka moral correctness, do not constitute consideration in the contract context because they are not performed in exchange for another promise. That is, they lack the essential "Bargained-for Exchange" requirement of contracts (consideration). And because they lack the "glue that binds a contract" (consideration), promises made out of a sense of moral obligation are unenforceable in contract. the law permits you to ignore a person in need notwithstanding the certainty that the person would die without your intervention. The rule is different if you caused the peril that placed the person in danger or if you have a special relationship with the endangered person, i.e. parent and child; or husband and wife; student and teacher

Client Files

Marna Balin was retained by Norman Kallen to represent her in litigation resulting from two automobile accidents. She later became dissatisfied with Kallen and hired Samuel Delug to represent her. Kallen refused to transfer Balen's files to Delug. Instead, Kallen told Delug that he had done basically all the work that had to be done on the files and that he wanted a firm written agreement assuring him that he would receive his share of the fees before he would deliver the files to Delug. Delug received the files after he signed a written agreement drafted by Kallen. When Delug later refused to pay fees totaling $324,000, Kallen sued for breach of contract. California law provides that client files belong to the client, not the attorney handling the case. Who wins? Yet Another Reason To Be Proud Of My Profession (Not!): The fee splitting agreement between Kallen and Delug is unenforceable because it is not supported by consideration. Consideration is the bargained for exchange of something of legal value in exchange for another person's promise. A contract cannot be supported by a promise to do or refrain from doing an illegal act. Such contracts are void. It is contrary to law or public policy for an individual who has acted unlawfully to receive a benefit or suffer a detriment (receive or give consideration) for relinquishing such conduct. Moreover, an unsatisfied client has the absolute right to discharge his/her attorney -- that is, fire his A _ _ Here under the California Rules of Professional Conduct, an attorney must promptly return a client's case files upon discharge, i.e. having his/her "A _ _" fired by the client. The agreement between Kallen and Delug reveals that returning Balin's files was the sole consideration offered for Delug's agreement to split fees. The agreement was nothing more than Kallen's promise to do what he was under a legal obligation to do -- return his client's files after he had his "A _ _" fired.

MYLEGS

Marriage, more than one Year, Land, Executorship, sale of Goods > 500, Surety

Gratuitous Promises

NOT CONSIDERATION Promises to give your favorite Business Law professor a present on his birthday are unenforceable because they fail the legal detriment/benefit test. One promisee gains a benefit without suffering a benefit. Student detriment, cost of birthday present; D2G's benefit, birthday present Student's benefit, nothing; D2G's detriment, nothing No corresponding benefit/detriment = No consideration = no K

Covenants not to compete

Non-competition clauses are often found in employment agreements drafted by employers. A non-compete clause prevents an employee from competing with the employer in a certain region for a specified period of time. The purpose of the clause is that a former employee should not be able to exploit the employer's proprietary information for future personal gain. The clause cannot be so broad, however, that it prohibits the employee from working at all. In the majority of states a non-competition clause is effective if it is reasonable to distance (region) and duration (time). However, in California non-competition clauses have long been unenforceable and void as against public policy. The history of voiding non-compete clauses in California employment contracts dates back to 1941 when the California legislature passed Section 16600 of the Business and Professions Code. This section of the Code makes it illegal to enforce any contract that is in "restraint of trade," i.e., any contract by which the employee is restrained from engaging in a lawful profession, trade, or business of any kind. In 2008, the California Supreme Court held this restriction on restraint of trade clauses applies to all employment contracts. Since then it has been clear that non-compete agreements in California employment contracts are unenforceable. Employers assert that covenants not to compete are justified because it permits a business to plan for the future by training, retaining, and investing its employees with an assurance that they will stick around to provide a return on the investment. The University of Chicago Booth School of Business, asserts that such agreements restrict the ability of an economy to grow by inhibiting talent and innovation. Remember the Chicago School of Law and Economics' theory of economic efficiency: laws restraining economic activity are inefficient and should be discouraged; and laws encouraging economic growth are efficient and should be promoted. !!!!TWO EXCEPTIONS!!!: 1) allows a buyer of an existing business to require the seller not to compete with the acquiring company. This section permits agreements not to compete made by a party selling the goodwill of a business or all of the shares of stock in a corporation. 2)allows a partnership to prevent a departing partner from competing with the continuing entity at dissolution. Conclusion: While the majority of states permit covenants not to compete agreements if they are reasonable as to distance and time, in California these agreements are void if "anyone is restrained from engaging in a lawful profession, trade, or business of any kind."

Expiration of Time

Offers expire according to the terms of the Offers. If the offer is silent as to when the offer expires, the offer lapses (expires) after a reasonable period of time

Lapse of Time

Offers expire. If a specific date is given, they expire on that date; if the offer is for a certain number of days, the days start to run when the offer is received. If no time is stated, then it is for a "reasonable time" period.

Supervening Illegality

Offers terminate if the object of an offer is made illegal prior to the offer's acceptance. All those outstanding "Spice" offers were terminated when they were deemed illegal on March 1, 2011 by the Drug Enforcement Administration. "According to a statement circulated by DEA, the synthetic drugs or "cannabinoids" found in blend brand names such as "Spice" are illegal to possess or sell on a year-long temporary basis while federal health and safety officials examine their effects on people before issuing a final scheduling." Offers terminate when a statute or regulation or court decision makes the object of an offer illegal. An old-time law school example is Avery v Bowden (1856), in which a ship was supposed to pick up some cargo. With the outbreak of the Crimean War, the United States government made it illegal to load belligerents' (warring factions) cargo ships, so all offers to load ships of warring parties were terminated due to supervening illegality.

Exception:

Options Contracts -- An offeree can prevent the offeror from revoking his or her offer by paying the offeror compensation to keep the offer. This "option K" is a derivative K to the underlying Offer.

Oral Contracts

Oral contracts are those created by spoken, not written, words. Oral contracts are just as enforceable as written agreements as long as they do not involve MY LEGS: Marriage; Agreements that cannot be performed within one Year; Land; Executive agreements (promises to administer the estate of a decedent; Sales of Goods valued at more than $500; Surety agreements (promises to be responsible for the debts of another). Under the Statute of Frauds (SOF) those contracts must be written and signed by the party to be charged. (the party that resists performance, aka 'Defendant'.) More on the SOF in several weeks.

Contracts that Look Illusory But Aren't

Output Contracts, Requirement Contract, Settlement of Claims

Past Consideration

Past Consideration: Past consideration is consideration that has already flowed from the promisee to the promisor. For instance, you and I enter into a contract: I promise to sell you my book for $25.00 and you promise to give me $25.00. The consideration: my book and your $25.00. Under the Classical benefit/detriment model: my detriment is giving you the book, my benefit is your $25.00; your detriment is giving me $25.00, your benefit is the book. The day after I deliver the book to you, I then tell you that I need $10.00 more for the book and you agree. Your promise is unenforceable because the new agreement lacks consideration: You already received the book and I received $25.00. Thus, I suffer no new detriment; and you receive no new benefit. The agreement fails for lack of consideration, no consideration ---> no contract. Promises for prior actions are not supportable as consideration. Promises made with respect to events that have already taken place are unenforceable. Sullivan vs. Big Blue. Sullivan involved a computer executive who retired after 30 years with the company. At Sullvian's retirement she was presented with a ceremonial check signed by the company's CEO: The memo line of the check revealed the Company's reason for presenting Sullivan the check, "For 30 years of faithful service." Sullivan accepted the check and when a formal check was not forthcoming she contacted the Company. The Company refused to honor the check on the grounds that it was unenforceable -- it lacked consideration. Company's detriment, $100,000; Company's benefit, nothing - it had already received and paid for Sullivan's service Sullivan's benefit, $100,000; Sullivan's detriment, nothing - she had already been paid for 30 years of service No corresponding benefit/detriment = No consideration = no K Sullivan's right hand (breach of contract action) failed to prevail but her left hand (gift cause of action) did! ------------------------------------------------------ Events which occur prior to the making of the promise and not with the purpose of inducing the promise in exchange are viewed as "past consideration" and are the legal equivalent of no consideration. Here, Tallas made his promise because of Dementas' past services, not because he wanted Dementas' present or future services. A benefit conferred or detriment incurred in the past is not adequate consideration for a present bargain.

Four Terms that can be implied

Price; Performance - Quality/quantity of goods or services; Place and Time of performance;

Promissory estoppel

Promissory estoppel is an equitable doctrine that prevents the withdrawal of an offer by an offeror if it will adversely affect an offeree who has adjusted his or her position in justifiable reliance on the offer. As above, if the limb-hanger reasonably relied on the rescuer's promise (offer to help) and declined another person's assistance in reliance of the promise ---> the rescuer cannot revoke the offer even if the limb-hanger failed to immediately accept it. Comment: The court will first inquire whether the offeree justifiably relied on the withdrawn offer. Then it looks to whether the offeree was harmed (changed his/her position) in relying on the offer. If yes, the court will fashion an equitable remedy to the extent the offeree is not unjustly harmed.

Type 2: Implied Contracts

Quasi-contracts based on conduct Two Types: Implied-In-Fact & Implied-in-Law

Employee Non-solicitation clauses

Recognizing that non-compete provisions are invalid under California law, employers in California have long used employee non-solicitation provisions in their employment agreements as an alternative strategy to limit competition for employees. Now, courts are making clear that this work-around is unacceptable, and that employee non-solicitation clauses are impermissible in California. Under California Business & Professions Code Section 16600, "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." "Section 16600 expresses California's strong public policy of protecting the right of its citizens to pursue any lawful employment and enterprise of their choice," see Dowell v. Biosense Webster, 179 Cal. App. 4th 564, 575 (2009). California courts have consistently confirmed that Section 16600 "evinces a settled legislative policy in favor of open competition and employee mobility," as in Edwards v. Arthur Andersen, 44 Cal. 4th 937, 946 (2008). With that strong public policy as a guide, California courts have explicitly held that non-competition provisions, which prohibit former employees from working at a competitor for some period of time, violate Section 16600 because they impede employee mobility. As a result, most California employers no longer include non-competes in their employment contracts. Instead, many include an employee non-solicitation clause, which prohibits former employees from reaching out to former coworkers to try to hire them at their new workplace. Employers are unlikely to be able to continue to use existing non-solicitation clauses as a tool to prevent other companies from competing for their employees or to discourage current employees from leaving. This should have positive implications for employees, who will no longer feel hindered from following a former colleague to a new job, or recruiting former colleagues to a new venture. Further, if employers want to prevent such departures, they will need to convince employees to stay through incentives—such as increased pay or benefits, or improved work experience—rather than through threats and restraints. Although it took a decade after Edwards, courts have finally reached the logical conclusion compelled by California's strong public policy in favor of employee mobility: employee non-solicitation agreements may no longer be enforced.

Revocation

Revocation of an Offer by the Offeror - An offer may be revoked at any time prior to its acceptance by the offeree by an express statement or an act that is inconsistent with the offer. The revocation is generally not effective until it has been received by the offeree or their agent. Revocation by the Offeror -- The revocation must be received by the Offeree before the offer is accepted CANNOT ACCEPT AFTER TERMINATION

Termination of Offers By Conduct of the Parties

Revocation, Rejection, Counteroffer, Expiration of Time

S

S" Surety/Guaranty Ks aka "Co-Signing a Loan" aka Placing Your X (signature) next to the Debtor's X" (more on than metaphor in another email.) A guaranty contract or collateral contract occurs where one person agrees to answer for the debts or duties of another person. Collateral promises must be in writing under the Statute of Frauds. The Wests are not liable. Under the Statute of Frauds, agreements to be responsible for the debts of another person or entity must be in writing and signed by the person/entity to be charged. Here, the Bank sent a written guarantee note to the Wests setting forth the surety agreement. The Wests never returned the note to the Bank. The effect of the non-return was to negate the West's obligation to act as a guarantor/surety of deadbeat Brown's loan. Caution -- "If the Bank doesn't trust your friend to pay back the loan, why should you? " For example, you co-sign for your "friend's" new $75,000 Tesla S auto loan. Your friend assures you that he will faithfully make the monthly car payments. A month later your friend moves to Mexico and stops making his car payments. Three months later, the Bank looks to you to make your friend's car payments because you co-signed the loan. Ouch!

Auctions

Sellers can offer goods for sale through an auctioneer. These auctions with reserve are usually considered as an invitation to make an offer. The seller may refuse the highest bid and withdraw the goods, and the bidder may withdraw their bid at any time prior to when the gavel is brought down by the auctioneer. If the highest bid does not meet the minimum set, the seller does not have to sell the item. If the auction is announced as an auction without reserve, the seller is considered the offeror, and the bidders, the offeree. The seller must accept the highest bid.

Silence as Acceptance

Silence is not an acceptance unless the offeree has indicated that silence means assent, they have signed an agreement indicating acceptance of delivery as in the case of CD-of-the-month club, there were prior dealings between the parties indicating that silence means acceptance, or if the offeree takes the benefit of the goods knowing that the offeror expects to be compensated. I'm still pondering how Mr. VanBrackin collected such a large Heavy Metal CD collection!

Unconscionable contracts:

Some contracts are so oppressive or manifestly unfair that they are unjust. Such contracts are called unconscionable contracts or contracts of adhesion. The following are the elements of an unconscionable contract: The parties possessed severely unequal bargaining power; the dominant party unreasonably used its unequal bargaining power to obtain oppressive or manifestly unfair contract terms; the adhering (weak) party had no reasonable alternative. If a court finds that a contract is unconscionable, it may refuse to enforce the contract, refuse to enforce the unconscionable clause but enforce the remainder of the contract, or limit the applicability of any unconscionable clause so as to avoid an unconscionable result.

First Step: Offer

Terms: The Offeror is the person making the offer. The Offeree is the person receiving the offer. Only the intended Offeree can accept the offer. There are three elements for an offer to be effective: (1) the offeror must have intended to have been bound by the offer; (2) the terms must be reasonably certain, and the offer must have been communicated to an identified offeree (which could be the public-at-large, e.g. reward). Stated differently, "an offer is an objective manifestation of intent to be bound by reasonably certain terms." TWO COMPONENTS: Subject Matter and Parties

Forbearance Example(Modern Example)

The Princeton uncle case illustrates the forbearance principle: An uncle promised to pay his nephew $50,000 if he graduated from Princeton in four years without indulging in "wine, wild women and song." Nephew agreed. After the nephew spent the longest and most boring four years of his life and graduating from Princeton, Uncle refused to pay. Uncle claimed his promise was not supported by consideration, that it was a "gratuitous promise," an unenforceable promise to make a gift. Nephew sued. Uncle applied the classical Detriment:Benefit model: Nephew's detriment -- giving-up (forbearance) four years of wine, wild women and song; benefit -- $50,000 Uncle's detriment: $50,000; benefit -- nothing tangible No reciprocal benefit, no consideration, no contract Holding for the nephew, the Court first found that that nephew had the right to engage in "wine, wild women and song." It then substituted nephew's forbearance of "wine, wild women and song" for uncle's benefit: Nephew's detriment -- forbearance four years of wine, wild women and song; benefit -- $50,000 Uncle's detriment: $50,000; benefit -- nephew's forbearance

Mode of Acceptance

The acceptance may have to be by express authorization, which means that it is made by a specified means of communications. If the offers states that acceptance can only be made by overnight Fed Ex delivery or smoke signals, any other form of acceptance is ineffective. If there are no specified terms, then implied authorization will be inferred from the customary methods for that type of transactions.

Output Contracts

The seller agrees to sell all of his production to a single buyer, assuring the buyer a steady supply and the seller an easy market.

Promissory Estoppel

The enforcement of promises lacking consideration to prevent injustice Promissory estoppel starts with an unenforceable promise. The party seeking estoppel to prove the existence of a contract must show the agreement was supported by adequate consideration, and that the parties have a mutuality of obligation. "Consideration" in this sense means either a benefit to the maker of the promise or a detriment to, or obligation upon, the promise. so INSTEAD OF consideration there is reasonable expectation of reliance and justifiable reliance/unfair injury

unequivocal acceptance

The mirror image rule establishes that the offeree must accept the terms as stated in the offer. There is no acceptance if the acceptance deviates any degree from the offer. Mr. Hu's response "I'll pay you $9.99 for your Cheeseman" response does not constitute an acceptance because it does not "mirror" my offer to sell Cheeseman for $10.00. - otherwise it is a counteroffer

Objective Intent

The objective theory of contracts asks the question, "Would a reasonable person (your Dumb Cousin) conclude that the offeror and offeree (the contracting parties) intended to be bound by the terms of their agreement. Stated differently, no joking around! objective -real, concerete

Acceptance

The offeree's assent to the terms of the offer is considered an acceptance. Who Can Accept an Offer? - Only the offeree can accept an offer and form a legally binding contract. Thus, if I offer to sell Cheeseman to Mr. Liang for $10.00, Ms. Chan cannot say "I accept."

Express Terms

The terms of a contract must be clear and unambiguous, including the names of the parties, the subject matter.(words contract)

AdvertisementS

These are treated as invitations to make an offer, unless they are so definite as to make it apparent that the advertiser had a present intent to bind themselves by the advertisement. If a car dealer advertised a single-car identified by its vehicle identification number for a certain price, a court would likely find it to be an offer. Advertisements are usually not Offers because they lack sufficient words of commitment to sell, instead, advertisements are simply invitations to potential buyers to make an offer to buy the advertised product at the advertised price. An exception to the advertisement rule occurs when it is "clear, definite, and explicit, and leaves nothing open for negotiation." That is when the quantity offered for sale is specified and contains words of promise, such as "first come, first served" or states the quantity available (above), courts enforce the contract where the store refuses to sell the product when the price is tendered. Where the offer is clear, definite, and explicit, and no matters remain open for negotiation, acceptance of it completes the contract. Think automobile advertisements where the vehicle identification number (VIN) and a certain price is stated. Each automobile has a unique VIN. Thus an acceptance of an advertisement to buy a car identified by its VIN and for the price stated constitutes a contract. Puffery is a legal term refers to promotional statements and claims that express subjective rather than objective views, such that no reasonable person would take them literally. Puffery serves to "puff up" an exaggerated image of what is being described and is especially featured in testimonials;

unilateral mistake

USUALLY NOT GROUNDS FOR RECISION A unilateral mistake occurs when only one party is mistaken about a material fact regarding the subject matter of the contract. In most cases of unilateral mis- take, the mistaken party is not permitted to rescind the contract. The contract is enforced on its terms. There are three types of situations in which a contract may not be enforced due to a unilateral mistake: 1)One party makes a unilateral mistake of fact, and the other party knew (or should have known) that a mistake was made. 2) A unilateral mistake occurs because of a clerical or mathematical error that is not the result of gross negligence. 3) The mistake is so serious that enforcing the contract would be unconscionable. 1)One party makes a unilateral mistake of fact and the other party knew or should have known that a mistake was made and did not alert the mistaken party. Years ago I was involved in a case where a California apple grower and Japanese apple distributor, who maintained a California office, entered into an agreement whereby the grower was to supply 10,000 bushels of apples at $0.76 p/kg on December 15th. The variety of apples was not stated in the written agreement (Sales of Goods > $500 must be written -- you knew that). The Distributor expected Fuji apples; the Grower sent Gala apples. The price was roughly the same for both Gala and Fuji varieties. The Japanese distributor refused delivery and to pay for the Gala apples and litigation followed. Both the Grower and Distributor conceded that they had not expressly stated the variety of apples in the contract. However, the Distributor claimed "unilateral mistake" in that it should have stated Fiji apples in the written agreement and that the "Grower knew of the Distributor's mistake." The Distributor's contemporaneous notes reflected "Grower offered Fujis at $.76 p/kg." Moreover, the Distributor had a five-year history of purchasing Fuji apples from the Grower in the month of December and had never purchased Gala apples. Based on the notes and the parties' history, the Court found that the Grower knew that the Distributor was mistaken (expected Fuji apples) and that it did not alert the Distributor of the mistake. On this basis, the Court allowed the Distributor to void the contract based on the Distributor's unilateral mistake. 2)A unilateral mistake occurs because of a mathematical or clerical error aka "scrivener's error" that is not the result of gross negligence. A scrivener in medieval times was a literate person employed to take notes of ceremonial events, aka "scribe." Today's scriveners are secretaries, stenographers, court reporters, and journalists. An aircraft broker and buyer negotiated the purchase and sale of a Gulfstream G550 for $51 million. Broker was located in California, Buyer in Indonesia. Given the distances, the parties hired a licensed and disinterested Notary Public to draft a written agreement. The Notary inadvertently transposed the purchase price, stating $15 million instead of the negotiated amount, $51 million. The mistake went unnoticed by the parties. The draft agreement was first signed by the Broker and then transmitted to the Buyer. Neither party mentioned the error until the day before the aircraft was to be delivered to the Buyer in Indonesia. It was then that the Broker discovered the mistake and refused to deliver the G550. When alerted to the "scrivener's error" the Buyer correctly conceded that a unilateral mistake was made by the Notary, that the writing did not memorialize the terms of the agreement, and that the contract was voidable. A subsequent written agreement was signed by the parties and the contract was executed (completed: Broker delivered the G550 to Buyer and Buyer tendered $51 million to Broker) 3)The mistake is so serious that enforcing the contract would be unconscionable. Unconscionable describes a contract that is so unfair or oppressive to one party such that it suggests abuses during its formation. If a court concludes that a contract is unconscionable, it may refuse to enforce it. A contract is most likely to be found unconscionable if both unfair bargaining and unfair substantive terms are shown. An absence of meaningful choice by the disadvantaged party is often used to prove unfair bargaining. In legalize, it's known as a "contract of adhesion," the disadvantaged party had no choice but to accept the unfair and inequitable terms of the agreement. Unilateral mistakes may be grounds to rescind a contract upon a showing that (1) the other party knew, or should have known, of the mistake but took no action to cure the mistake, (2) the mistake is a result of a third party clerical or mathematical error not the result of gross negligence (scrivener's error), or (3) the mistake is so serious as to make enforcement of the contract unconscionable. Here there was no evidence that the unmistaken party was aware that the other party was mistake; no scrivener error was involved; and the mistake was not so serious to make the contract unconscionable,

Time of Acceptance

Under common law, acceptance occurs when the offeree has been properly dispatched the acceptance. This is called the Mailbox Rule -- absent express terms in the offer to the contrary, acceptance occurs when the offeree puts it in the mailbox properly addressed and postage paid even if the letter is lost in the mail.(even if they never receive it). The offeror could have avoided this problem by have proper dispatch terms. Acceptance must comply with the terms of offer aka PROPER DISPATCH RULE. The offer must be accepted by an authorized means of communication. The offer can stipulate a specified means of communication.

Implied Terms

Under common law, if an essential term was omitted from the contract, the courts held that no contract had been made. Under the modern rules stated in the Restatement of Contracts, the terms need only be "reasonably certain." The court can imply missing terms if there is a reliable third-party source, e.g. Kelley Blue Book for car value, through discernible past customs and practices of the industry or parties, or through the "Rule of Reason."

DUTY OF RESTORATION:

When a contracting minor without misrepresenting his/her age has transferred money, property, or other valuables to the competent party (adult) before disaffirming the contract, the adult must restore the minor to status quo ante. What did the parties have the moment before executing the contract? Generally, a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmation. Restoration at time of disaffirmance.

undue influence

When you read the articles look for the four elements that must be shown to establish undue influence: (1) there must be a confidential or fiduciary relationship between the perpetrator and the victim. Courts have found opportunity for undue influence in confidential relationships between Husband and Wife, Parent and Child, trustee and beneficiary, administrator and legatee, Guardian and Ward, attorney and client, accountant and client, doctor and patient, and pastor and parishioner (Dominant Party); (2) the victim (Servient Party) must be susceptible to overreaching. Such conditions as mental, psychological, or physical disability or dependency may be used to show susceptibility; (3) there must be an opportunity for exercising undue influence and evidence that the perpetrator exercised undue influence over the victim; and (4) an untoward result -- the susceptible person suffers harm. Defendants who aggressively initiate a transaction, insulate a relationship from outside supervision, or discourage a weaker party from seeking independent advice may be attempting to exercise undue influence. That is, there must be a suspicious transaction. Courts look for people who make abrupt changes to their wills after being diagnosed with a terminal illness or being declared incompetent, especially if the changes are made at the behest of a beneficiary who stands to benefit from the new or revised testamentary disposition.

Special Offers

advertisements, rewards, auctions

mutual mistake

mutual mistake of a material fact or of Value of an essential term of the agreement. No meeting of the minds.

Exculpatory clauses:

o Bull!!! an exculpatory clause in a contract relieves one (or both) parties to the contract from tort liability for ordinary negligence. They cannot be used in situations involving willful conduct, intentional torts, fraud, recklessness, or gross negligence. I hope that you appreciate the lengths that your favorite B-Law Professor (the BLG) goes to ensure that you understand the law. At "Big Bubba's Bad BAR-B-QUE" (B4) the BLG risked his life and more than a little dignity when he mounted a mechanical bull. Before doing so B4 required him to sign a contract containing a "waiver" (exculpatory clause) of liability before he was allowed to demonstrate his bull riding prowess. Under the waiver the BLG waives his right to sue B4 should he be injured while riding the bull. The waiver: the restaurant promised to allow the BLG to ride its mechanical bull in exchange for the BLG's promise to pay a fee and not to sue if he were injure

Death or Incompetency (Insanity)

of the Offeror or Offeree - Because capacity is a requirement for a valid contract, death or incompetency will terminate an offer. The offer expires with the expiration of either the Offeror or Offeree,

Statute of Frauds

prevent injury from fraudulent conduct Again, the Statute of Frauds does not of itself render a contract "void." Instead, the statute makes certain contracts "voidable" by one of the parties, in the event that the party does not wish to follow through on the agreement. Recall that a void contract is one that cannot be enforced. A contract that is voidable remains valid unless one of the parties chooses to void it (sometimes called 'avoidable'). Finally, the Statute of Frauds only applies to executory contracts -- that is, contracts that have not yet been fully performed. If a contract has been executed (fully performed) the Statute of Frauds is inapplicable.

Counteroffer

rejection and brand new offer Counteroffer by the Offeree - Counteroffers simultaneously terminate an offeror's offer and create a new offer. Counter Offer = rejection of O + new O that the original offeror can accept or reject. Counteroffer by the Offeree -- Counteroffers terminate offers and create new ones;

Auctions-without-reserve

the Owner/Seller cannot withdraw the goods and he/she must sell the goods to the highest bidder. In this case, because the goods must be sold to the highest bidder, the Owner/Seller is the offeror.

Auctions-with-reserve

the Owner/Seller reserves the right to reject the highest bid. The owner may withdraw the goods any time before the auctioneer closes the sale. Because there is no obligation to sell in auctions-with-reserve, and the seller may refuse the highest bid, the bidder (potential Buyer) is actually the offeror. Auctions are assumed to be with reserve.

Types of Acceptance

unequivocal acceptance, silence as acceptance