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Contracts Outline

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Brian Stimson

on 18 April 2013

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Transcript of Contracts Outline

Recovery without Contract Subject 2 use overview to show relations is here is important is important too is important zoom in, and add details to these Frames Contract zoom in, and add details to these Frames The fact of agreement (the enforceable promise) – a bargain for exchange in which there is manifestation of mutual assent and consideration by both parties.
The manifestation of agreement (usually the written document, but can also include verbal agreements and conduct)
The rights and duties associated with the agreement Mutual Assent Offer Acceptance AN offer is the manifestation of willingness to enter into a bargain, with definite description of how to accept, so made that another person understands that his assent into that bargain is invited and will conclude it. What is an offer?  Acceptance must be in legally effective way
Acceptance by silence-- when takes advantage of offered services; reason to understand silence is acceptable; previous dealings.
 Acceptance must be considered serious. If one party believed the offer to be true, then acceptance could be valid.
 Mailbox Rule: an acceptance is legally enforceable upon dispatch, unless the offeror specifies in the offer an alternate form of acceptance would only be acceptable. In option contracts, the mailbox rule doesn’t apply. Acceptance by a certain time is expected to reach the offeror by the specified time. • Advertisements are usually not considered offers, but merely invitations for an offer.
• Where a clear means of acceptance are laid out in the ad, it can be considered an offer.
• Move by courts to treat advertisements as offers.
• Difference with Catalogue orders – the offer is usually the shipping of the item. Acceptance is keeping the item. Advertisements What Isn't Usually An Offer •If “acceptance” brings in new terms – qualified or conditional acceptance -- to be agreed upon by the original offeror, it is a new offer and thus rejection of the original offer.
•Original terms of the offer are void. Counter Offer Option Contracts Common Law UCC • Acceptance by performance;
• Classic interpretation: acceptance upon completion
• New interpretation: once performance has been started or substantially performed in reliance on the offer. Unilateral Contracts • Mirror Image Rule – Unless a form of acceptance matches the offeror’s form exactly, those additional terms form a counter offer and can be accepted by silence, conduct. •Deals in tangible goods – all things moveable including crops. DOES NOT include information, money, investment securities,
•2-207 (2) – if conduct by both parties recognizes the existence of a contract although their records do not otherwise establish a contract;
a contract is formed by an offer and acceptance;
a contract formed in any manner is confirmed by a record that contains terms additional to or different from those in the contract being confirmed, the terms are: IF one party insists that its own conditions are condition to contract formation and the other party does not subsequently perform or otherwise acknowledge the existence of a contract, if the other party does not agree to those terms, then no contract has been formed
Terms that are materially the same, but contain minor discrepancies, will reflect what both parties had in their own docs. Consideration Making of a promise is insufficient by iteself to result in the formatoin of a contract Exceptions Promissory Estoppel (Detrimental Reliance) Goods Revocation *Conduct
*Oral Agreements
*2-204 Contract for sale of goods may be made in any manner sufficient to show agreement including offer and acceptance, conduct by both parties which recognizes the existence of a contract, the interaction f electronic agenst and the interaction of an electronic agent and an individual. an agreement sufficient to constitute a contract for sale may be found even if the moment of its making is undetermined.
Does not fail for indefiniteness, so long as the parties intended to make a contract Can be the abandonment of a legal right or limiting a freedom of action in the future

Promise must induce the detriment and the detriment must induce the promise (promisee doesn't have to be aware of detriment to have consideration Benefit to the promisor or a detriment to the promisee A condition on the obtainment of a bargain is no consideration Consideration is not required under international contracts What terminates the power of acceptance? Communication that the offer is no longer valid.
Does not have to be communicated through the offeror Timeliness -- In option contracts, must be by date specified or reasonable amount of time Merchant -- a person that deals in goods of the kind or otherwise holds itself out by occupation as having knowledge or skill peculiar to the practices or goods involved in the transaction Firm Offers (Merchants Only or CISG) Irrevocability Option contracts with paid consideration Detrimental Reliance Uncertainty of terms Counteroffer by offeree; rejection Action by offeror inconsistent with an intention to enter into the contract and that action is communicated in some way to the offeree Death or incapacity by offeror Past consideration is no consideration at all CAN NOT be a mere good feeling for the promisor (as in a gift (executory gifts, donative promises) wHAT IS NOT CONSIDERATION: No equivalency test (so long as it is not "nominal," no need for Consideration to be equal Gross inadequacy might trigger a look into whether the contract was forged out of duress, fraud, mistake, lack of capacity or undue influence BUT Illusory Promises Where optional performance by the promisor does not make a contract bc consideration is absent Under Restatements sec. 90 --A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only be enforcement of the promise. 2-205 -- an offer by a merchant to buy or sell goods in a signed record that by its terms gives assurance that it will be held open is not revokable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may the period of irrevocability exceed three months. Any such term of assurance in a form suppled by the offeree must be separately signed by the offeror Last Shot rule -- a party impliedly assented to and thereby accepted a counter offer by conduct indicating a lack of objection to it. Favors sellers over buyers... one who sends the last form Conditional Acceptances under the UCC Must be clear that an order confirmation or follow-up form will not be an acceptance without acceptance of the additional terms Agreement to Agree Did the parties intend to be bound?
Were they engaged in preliminary negotiations only?
Everything decided except for formality of contract signatures?
Waiting on expert opinion on matters that could affect the entire contract?
must be significantly definite; or provide a method for determining the thing to be agreed FACTORS:
Writing required by statute?
Large sums of money
Many Details
Unusual contract without standard form
Parties not prepared to perform until formal document prepped and signed Is it binding? Electronic Contracts Shrinkwrap Terms Clickwrap (clickthrough) Terms Browsewrap Terms Purchaser orders product, terms of contract (warranty, etc.) contained in the box.
Activated by using, keeping item.
Reasonable time to examine and return.
Offer is the order Before completing sale, buyer must agree to terms of sale.
Often applies to software. Often involves information on websites
Does not involve an explicit clicking of terms, but through the browsing of the site
Four terms must be met:
a) user is given adequate notice of the existence of such terms
b) meaningful opportunity to review the terms
c) provided with adequate notice that taking a specified action manifests assent to the terms
d) user takes the specified action in the latter notice Within the Family Definition Promises within family members can be enforceable
Can be an implicit promise, by intention and comittment, as in a parent/child relationship
Can be implied
Detriment is still needed Charitable Subscriptions Inequitable conduct by the promisee (contractor usually) can preclude the use of PE Must be in writing and signed by the offeror;
Recites purported consideration;
Proposes exchange on fair terms within a reasonable time (Restatements)
Requires consideration to hold the option offer open (common law)
Consideration can be small to hold the offer, since all you're buying is time.
If option is conditioned on performance, that performance can consitute consideration
Performance consideration is NOT valid if: not intended to benefit the optionor or wasn't incurred on behalf of optionor.

Communication must be made before set time (in writing), reasonable time, or deadline established, or three months in UCC (see Firm Offer).

Statutes can make them irrevocable Loss must be of a definite nature
Express Promise must be clear, definite See also Detrimental Reliance. Replace "Offer" for "Promise" in the definition, and "substantial" for "definite" Battle of Forms Unilateral Contract--substantial performance Indirect revocation The "Firm Offer" terms that appear in the records of both parties
terms whther in a record or no, to which both agree
terms supplied or incorporated under any provision of this act 1) Where there are different(conflicting) terms:
Double knockouts of both terms;
Then, the court will look to Gap-fillers--different provision of the UCC.

2) Where there are additional terms:
Are they both merchants? if not, knockoutthe additional terms, if so, sentence 2 of 2-207(2), they are part of contract unless you meet one of the three exceptions:
offer expressly limits acceptance to terms of offer.
they materially alter it (to cause surprise or hardship)
notification of objection to them has already been given or is given within a reasonable time after notice of them is received. • Takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
• Where the offeror has stated or given offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.
• Where because of previous dealins or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept. By Silence Services Restatement 59 COMMENT a) A qualified or conditional acceptance proposes an exchange different from that proposed by the original offeror. Such a proposal is a counter offer and ordinarily terminates the power of acceptance of the original offeree. But a definite and seasonable expression of acceptance is operative despite the statemnet of additional or different terms if the acceptance is not made to depend on assent to the additional or different terms. Price Quotes
invitation for negotiations Orders 2-207(1) 2-207(2) Nominal CISG Additions, limitations or modifications creates a counter offer
a reply purporting to be acceptance with additional or different terms that doesn't materially alter the terms constitutes an acceptance unless the offeror objects orally and dispatches a notice.
with no objection the modifications become part of the original offer/contract For Pensioners: Was the decision to retire made on a promise of benefits?
Did that decision create a detriment? Consideration/Reliance on the pledge of some kind needed (in King case, it was hiring of personnel, holding of events, protecting of documents);
ONLY Iowa has adopted the Sec. 90 of Restatements that doesn't require consideration for Charitable Subscriptions Material Alterations:
What is standard practice?
Surprise or hardship 2-207 (1)
Acceptance: Definite and seasonable or by written notice, even though there are additional terms=K
---------UNLESS, there is express condition upon assent to additional or different terms

Now, the different terms in the K are knocked out.
Non-Merchants=additional terms are proposals. Any term lacking assent is knocked out, which leads to "gap-fillers"

Merchants=the additional terms become part of the offer
-------------UNLESS a)the offer expressly limits acceptance
b) there is a material alteration
c) notification of objection in a seasonable time Parol Evidence Rule Written Contract Requirements: Final Expression Complete Integration Subsequent agreements made subsequent to the written contract;
Explaining/Interpreting evidence that is solely for explaining or interpreting terms in the writing;
Fraud, Duress, undue influence, etc. evidence;
Oral condition precedent evidence showing the agreement was effective on oral condition precedent;
Collateral agreement evidence;
No Final Expression -- agreement was not intended to be the final expression;
Equitable remedy Where the Parol evidence Does not apply, and the evidence can come in: NO OUtside Evidence allowed = If the written agreement was partially integrated: The judge decides whether:
it is an integration;
if it's total or partial; Evidence that ADDS to partial integration is admissable; evidence that contradicts is not. Rules of Interpretation: Contract terms-what is language
Separately negotiated or added terms
Specific terms (over general)
Other express contract terms
Course of performance
Course of dealing
Trade usage order of preference: If one party knows or has reason to know the other party has a different meaning in mind for a certain term, the court will side with the innocent party Reasonable Expectations Doctrine:
Applied almost uniquely to the insurance document world, where there is a Contract of Adhesion.
Really, really need an absence of choice WRITTEN REQUIREMENTS:
Signed writing by the party to be charged, which:
identifies the subject matter of the contract;
sufficient to indicate a contract was made b/t the parties
states with reasonable certainty the essential terms of the unperformed promises. When PER will look kindly on fraud:
OK=fraud in the inducement: where you know you're signing a contract (sherrod)-assurances were made but not followed through.
NOT OK=you don't know what you're signing up for; concealed the true nature of what you were agreeing Bringing Trade Usage in (Some courts Always do; Others only when price term is ambiguous):

Does the trade usage exist?
According to the UCC, how does one demonstrate the relevant usage?
What was the evidence in Nankuli?
Is the usage binding on the party against whom it is offered?
How did the court define the trade in Nanakuli?
Was Shell a member of this trade?
Does it matter whether Shell was actually aware of the usage?
Is the trade usage evidence admissible under the PER?
What test did the Nanakuli court apply when determining whether the trade usage evidence would be considered? To use trade usage in a final expression document:
Must not contradict terms
Can supplement terms;
Look to: course of performance, course of dealing, trade usage, consistent additional terms;
Using performance, dealing, trade can be used without a finding of ambiguousness Trade Usage Statute of Frauds Contracts for the following subjects won't be enforced unless memorialized in writing (MY LEGS):

Promises to Marry
Contracts that can't be performed within 1 Year
Conveyances to Land
Agreements to personally pay an Estate's debts
Goods of $500 or more
Agreements to pay the debts of another as a Surety (Cosigner) Regular Goods (UCC) A contract is required for sale of goods over $500 (or $5,000 for revised UCC -- not all jurisdictions adopted),
Signed by the party against whom enforcement sought,
Record is not insufficient for misstating a term. notice of objection within 10 days Exceptions (UCC) If the goods are specially manufactured for the buyer and not suitable for sale to others;
if party admits under oath, pleading that there was a contract;
where goods are received and accepted.
The one-year provision doesn't apply.
pg 119 of supp When Signed Writing is Required UCC Unjust Enrichment (action at equity) Sufficient Writing --
Identifies subject matter
Between relevant parties
States essential terms of contract C collateral agreement
R remedy in equity
I invalid due to fraud
P precedent on oral condition
S subsequent 2-202 --
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