1 George Mason School of Law Contracts I Formation F.H. Buckley [email protected].

*George Mason School of Law

Contracts I

Formation

F.H. [email protected]

ExamWriting on your laptop*

Next dayConsiderationScott 41-52, 127-47Restatement 17, 21, 71, 72-74, 79, 81, 86, 95-98

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How are contracts formed?Quasi-contract

Offer and Acceptance

Consideration

Promissory Estoppel

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Contract and Quasi-contract

Unjust enrichmentRestitution*

Bailey v. West: p. 5

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Bailey v. West*

Was there a contract?

Bailey v. West*

Was there a contract?Express and Implied ContractsRestatement 4 (inferred from conduct)Restatement 19(1) (by other acts)

Bailey v. West*

Was there a implied contract?Restatement 19(2)What did Kelly tell the plaintiff?What did the tell Kelly?

Bailey v. West*

When is quasi-contractual liability imposed?

Bailey v. West*

When is quasi-contractual liability imposed?Benefit conferred on defendant by plaintiffAppreciation by defendant of the benefitAcceptance and retention of benefit by defendant

What counts as a benefit?*

I think orange aluminum siding is neat. When you are on holiday I cover your house with it. A benefit?

What is a benefit?*

No recovery for officious benefitsAnd just how do you tell?

What is a benefit?*What about the Good Samaritan?

What is a benefit?*

Whats the difference between aluminum siding and the Good Samaritan?

What is a benefit?*

Whats the difference between aluminum siding and the Good Samaritan?The informational problemCould the informational problem be cured by negotiation?

Bailey v. West*

When is quasi-contractual liability imposed?Levmore, 71 Va. L. Rev. 65

What is a benefit?*

So was the care of Bascoms Folly officious?

Contract Formation: Offer and Acceptance

Suppose you were a reporterWhat would you want to know about a contract?*

The Five Ws

WhoWhatWhereWhenWhy

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Basic Questions of Formation

Who are the partiesWhat happens to non-parties?WhatWhereWhenWhy

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Who are the partiesWhat did they agree to?What are the terms and conditionsWhereWhenWhy

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Who are the partiesWhat did they agree to?Where was the contract formed?Under which lawWhenWhy

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Who are the partiesWhat did they agree to?Where was the contract formed?When was it formed?Pre-contractual rightsLimitation periodsWhy

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Who are the partiesWhat did they agree to?Where was the contract formed?When was it formed?Why did they enter into the contract The doctrine of consideration

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Who are the parties?

Restatement 2PromisorsPromiseesBeneficiariesAbolition of doctrine of privity of contract

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What makes a contract

Restatement 2Not an intention but a manifestation of intention

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Agreements and Bargains: Rest. 3Agreements: mutual assentBargains: ConsiderationContracts (which are binding)

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Agreements and Bargains: Rest. 3Agreements which arent Contracts Eg no consideration

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Agreements and Bargains: Rest. 3Contracts which arent agreementsComment a: promissory estoppel

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Agreements and Bargains: Rest. 3Contracts which arent bargains:Promises to make a gift, under seal

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Agreements and Bargains: Rest. 3Bargains which arent Contracts: Comment c: illegal contracts

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Agreements and Bargains: Rest. 3Agreements which arent bargains: No consideration

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A Bargain, a manifesation of mutual assent, consideration: Rest. 17

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What makes a contractBargains: ConsiderationExchange of PromisesPromise for performance or Performance for performance

*Exchange of spies, Glienicke Bridge, 1986

Offer and AcceptanceOffer + Acceptance = Binding Contract: Restatement 22Restatement 50(1)meeting of the mindsConsensus ad idem*

Formation as a Coordination Game*Ideally both parties should know at what moment the contract is binding

What side of the road to drive on?Coordination Games*Player 1Player 2

RightLeftRightBliss, BlissDeath, DeathLeftDeath, DeathBliss, Bliss

Formation as a coordination game*Player 1Player 2

PromiseNo PromisePromise10, 10 -10, 0No Promise0, -100, 0

Bargaining errors and efficiency considerations*

Who is in the best position to cure the problem?

What counts as a offer? Three Problems

The necessity of an intention to create legal relations

Offers vs Invitations to TreatOffers to the PublicOffers vs Preliminary Agreements*

Intention to Create Legal Relations*

When is there a manifestation of an offerors intention to be bound to a contract?

Lucy v. Zehmer p.13*Back on State 40 about a half mile from the junction with County 613 the traveler comes upon the FERGUSON PLACE; The two sections are connected by a passagewaycommonly called a colonnade, though quite innocent of columns. The wide-boarded floors, flat-head nails, massive locks, and hand-carved mantels attest the antiquity of a house well worth the restoration it has not received.

Lucy v. Zehmer*Did Zehmer have the capacity to contract? Restatement 16.

Lucy v. Zehmer*Did Zehmer intend to create legal relations?

Lucy v. Zehmer*Do secret reservations negative consent?

Lucy v. Zehmer*Do secret reservations negative consent?The objective theory of contracts

Lucy v. Zehmer*How would you apply Rest. 21, 24Rest. 19, illustration 2Rest. 21, illustrations 1, 5

Lucy v. Zehmer*

What remedy is sought and why did that matter?

Lucy v. Zehmer*

What remedy is sought and why did that matter?Common law and equity

Leonard v. Pepsico*Harrier Fighter

Leonard v. Pepsico*

Two kinds of Promissory Accidents*

Type I: Promisors are found to promise when they really didnt intend to do so (false positive)

Type II: Promisors are not found to promise where they intended to do so (true negative)

How to reduce promissory accidents?*


What if we could identify the party who could at least cost eliminate the accident?


What if we could identify the party who could at least cost eliminate the accident?Who was this in Bailey?


What if we could identify the party who could at least cost eliminate the accident?And in Zehmer?

Offers vs. Invitations to Treat:Dyno v McWane p. 205*

Offers vs. Invitations to Treat: Dyno v. McWane

Was the Nov. 8 (13) price list an offer?*

Offers vs. Invitations to Treat: Dyno v. McWane

Was the Nov. 8 (13) price list an offer?If so, what was the effect of the Nov. 22 telephone call?And would there have been a warranty?Gap fillers*

Offers vs. Invitations to Treat: Dyno v. McWaneWas the Nov. 8 (13) price list an offer?What was the effect of the Nov. 22 telephone call?Offers vs Invitations to treatRestatement 26*

Offers vs. Invitations to Treat: Dyno v. McWaneSo what was the contract?*

Invitations to Treat:Offers to the Public*

Audio Visual v. Sharp at 213Why might a presumptive rule that ads or flyers are not offers make sense?

Invitations to Treat:Offers to the Public*

Audio Visual v. Sharp at 213Why might a presumptive rule that ads or flyers are not offers make sense? Cf. Newspaper Ad on 212

Invitations to Treat:Lefkowitz*Suppose that the had written to the and said I accept?Could it be accepted in that way?

Invitations to Treat:Lefkowitz*Suppose that the had written to the and said I accept?Could it be accepted in that way?Offeror as master of form of acceptanceRestatement 50(1)

Offers to the PublicCarlill v. Carbolic Smoke Ball at 224*

Offers to the PublicCarlill v. Carbolic Smoke Ball at 224*Should this have been seen as anInvitation to Treat?

How do you tell?

Offers to the PublicCarlill v. Carbolic Smoke Ball at 224*How did the accept the offer?

Restatement 54(1)

The Need for Communication of AcceptanceBuyer is in SF and Seller in NYC. Buyer asks seller to custom make a product for buyer. On receiving the order, seller begins work on it immediately. A month passes before seller notifies buyer that seller has begun work. Has seller accepted the contract?Restatement 56, 54(2)*

When does silence constitute acceptance?

Seller sends you goods. You dont respond but keep them. Must you pay the price?Restatement 69, illustration 1 and 2*

The Mailbox RuleOfferor mails offer to offeree on Sept. 1*

The Mailbox RuleOfferor mails offer to offeree on Sept. 1Offeree receives offer on Sept. 10 and mails letter accepting the offer the same day.*

The Mailbox RuleOfferor mails offer to offeree on Sept. 1Offeree receives offer on Sept. 10 and sends letter accepting the offer the same day.Offeror telephones offeree on Sept. 11 to revoke the offer*

The Mailbox RuleOfferor mails offer to offeree on Sept. 1Offeree receives offer on Sept. 10 and sends letter accepting the offer the same day.Offeror telephones offeree on Sept. 11 to revoke the offerOfferor receives offerees acceptance letter Sept. 13Is there a contract?*

The Mailbox RuleOfferor mails offer to offeree on Sept. 1Offeree received offer on Sept. 10 and send letters accepting the offer the same day.Offeror telephones offeree on Sept. 11 to revoke the offerOfferor receives offerees letter Sept. 13Is there a contract? Restatement 63, 65*

The Mailbox RuleOfferor mails offer to offeree on Sept. 1Qu. If offeree accepts by Fedex?Restatement 63, 67*

The Mailbox RuleWhat if the offeree had communicated his acceptance by email and it ends up in a spam folder?Restatement 64, Illus. 2*

RevocationRestatement 35(2), 36, 42 *

Revocation Offeror mails offer to offeree on Sept. 1Offeree receives offer on Sept. 10 and sends letter accepting the offer the same day.Offeror mails revocation on Sept. 9 to revoke the offer; offeree receives this Sept. 11.Is there a contract? Restatement 42 *

Revocation Offeror mails offer to offeree on Sept. 1Offeree receives offer on Sept. 10 and mails letter accepting the offer the same day.Offeror telephones offeree on Sept. 9 to revoke the offerIs there a contract?*

Revocation Offeror mails offer to offeree on Sept. 1Offeree mails a rejection on Sept. 10.Offeree accepts the original offer by phone on Sept. 11.Offeror receives the counter-offer on Sept. 12. Is there a contract? Restatement 40, illus. 1 *

Revocation The Brooklyn Bridge example on p. 232.Offeror terminates when offeree is halfway across the bridge.

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Revocation The Brooklyn Bridge example. Offeror terminates when offeree is halfway across the bridge.Restatement 25, 45Promissory estoppel

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Contracts I

Formation


Next dayPromissory EstoppelScott 147-84, 191-200Restatement 90, 86, 82Irrevocable OffersScott 232-45Restatement 90, 25, 32, 34, 37, 45UCC 2-205

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Offer and AcceptanceAcceptance is effective on dispatch, if the mailbox rule is satisfiedThereafter the offeror cant revoke the offerIf offeree rejects and offeror receives the rejection, thereafter the offeree cant accept the original offer

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Offer and Acceptance: Three questions

Where there is an attempted revocation, we need to know when the offer was acceptedWhat counts as a rejection (counter-offers)The Battle of the Forms, where there is a contract

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When does acceptance take place?Green 216

Was the rejection in time?a reasonable time?:Restatement 41(1)Restatement 45(1)

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When does acceptance take place? Ciaramella p. 218

Why did Brieant hold that there was a deal?Could Eisenberg accept for Ciaramella?

Why did the Circuit Court reverse?*


Why did the Circuit Court reverse?Relevance of clauses 10 and 13?*


Is this consistent with the Leval test of Adjustrite on 227?*

Acceptance vs. Counter-offerWhat happens when the offeree adds or varies terms of the offer?Restatement 36(1)(a), 39*

Acceptance vs. Counter-offerCorinthian Pharmaceutical at 225Was the delivery of 50 vials an acceptance of the offer?

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Acceptance vs. Counter-offerCorinthian Pharmaceutical at 225Common Law mirror image rule: Restatement 59Counter-offers are rejections of the initial offer and constitute a fresh offer: Restatement 39*

Offer and Counteroffer

After a counter-offer, can an offeree unilaterally revive the contract?Restatement 38(1)But not option contracts: Restatement 37

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Counteroffer as Rejection: Dataserv Equipment p. 245When was the purported acceptance/

Had the offeree counter-offered before this?

Could the counter-offer be revoked?

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Revoking a revocation

Offeror mails offer and offeree counter-offers by mail.Before offeror receives the revocation letter, offeree telephones his acceptanceRestatement 40, illus. 1

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The Battle of the Forms

What happens where:There is performance and indisputably a contractThere has been a Battle of the Forms*

The Battle of the Forms

What happens where:There is performance and indisputably a contractThere has been a Battle of the Forms

The Last Shot Doctrine as a corollary of the mirror image rule*

Counteroffers under Article 2

Where there is a Battle of the Forms, what are the possibilities under UCC 2-207?*

Counteroffers under UCC 2-207

Where there is a Battle of the Forms, what are the possibilities under 2-207?The contract is based on the offer 2-207(1) before the comma*


Where there is a Battle of the Forms, what are the possibilities under 2-207?The contract is based on the counter-offer 2-207(1) after the comma: Roto-Lith (?!?)The old last shot doctrine, rejected in Ionics*


What are the possibilities under 2-207?The contract is based on the counter-offer: 2-207(2) if between merchantsNo material changeOfferor hasnt limited acceptance or has objected to the new terms*


What are the possibilities under 2-207?The contract is based on the terms common to both plus terms implied by law: Ionics2-207(3)*


Can the offeree opt out of 2-207Clause 5 in the box top license in Step-Saver p. 263*


Can the offeree opt out of 2-207Clause 5 in the box top license in Step-Saver p. 263The third approach at p. 266: not a willingness to forego the transcation*


Can the offeree opt out of 2-207What if there is no real battle of the forms?Gateway p. 268*


Contracts I

Consideration


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1 George Mason School of Law Contracts I Formation F.H. Buckley [email protected].

Documents

contract formation

privity of contract

arent bargains

arent contracts

retention of benefit

quasicontractual liability

illegal contracts

good samaritan