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27 Cards in this Set
- Front
- Back
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What is mutual assent?
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• Parties must intend to have a contract
• Objective meeting of the minds → each party much act in a which would lead a person to reasonably believe that a contract has been formed (different from subjective meeting of the minds) • Parties must agree on the essential terms of the contract o If they didn’t agree on minor terms/didn’t provide them → courts may conclude that one party’s interpretation governs or they may decide to fill the gaps |
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Objective Theory (Mutual Assent)
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existence and terms of the contract are determined by the manifestations made by each of the parties (usually a question of fact)
-Use Objective Theory to: o Determine whether the mutual assent was sufficient to form a contract o Determine the terms of the contract |
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Test for intent
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What a reasonable person in the position of the other party would conclude that his objective manifestations of intent meant
o Intentions of the parties depends largely on the context of their agreement (business setting → more likely the parties intended there to be a K, social settings → less likely) |
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Embry v. McKittrick Dry Goods
{OFFER/ASSENT and the Objective Test} |
o Embry’s (P) employment contract with D expired. P told D that he would quit if he didn’t get another contract. D said “Go ahead, you’re alright, get your men out and don’t worry about that.” P thought contract was renewed and made no effort to find other work, Embry fired a few months later.
o HOLDING: Meeting of the minds to be determined by expressed (not inner) intent. Even though D may not have intended to re-employ P, if a reasonable person could take what he said as an offer of employment renewal (and P so understood it), there is a valid contract. (No reasonable man would respond to Embry’s demand the way D did unless they intended to renew the contract.) o Intention can only be found in express words/actions. So based on his statement, D entered a contract even if he didn’t mean to. (A promisor may be bound to perform something which he did not intend to promise.) o Liability should fall with D because: (1) he is in the best position to clear up the ambiguity (Least Cost Avoider) ,(2) D unjustly benefitted from this |
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Lucy v. Zehmer
{Offers made in “jest”/Assent and the Objective Test} |
o Zehmer (D) sold his land to Lucy (P) after consuming a series of drinks and then claimed that the offer was made as a joke to see if Lucy really had 50k. Lucy told D (Zehmer) to write up an agreement for the sale of D’s land (but no promise to buy written), D re-wrote agreement to include D wife (at P’s request), and after 30-40 minutes of discussion, all parties signed; next day P got brother to put up half of the money; D refused to give land; P sues for specific performance.
o ISSUE: Is a contract binding when it is made in jest but believed by the agreeing party? Yes, according to express manifestations of intent. o HOLDING: The Court held that a reasonable person could interpret D’s actions as a manifestation of intention to sell; therefore a K was formed when Lucy accepted the offer. It doesn’t matter if D intended offer as a bluff; what matters is that the P reasonably believed there was a contract; (Lucy had his brother put up 25k for the farm) o The agreement contained price, signatures, and title satisfactory to the buyer (completeness of terms). The more complete the terms, the more likely a court is to find an enforceable contract. o Seems to have been an acceptance before he left bar; assent to pay implicit in contract to buy. Any statement made after contract was made is irrelevant and would constitute a repudiation by the D if contract were found to have existed. o If he wasn’t justified in thinking there was a contract, then we ask if he relied reasonably for promissory estoppel to apply. |
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§24 (definition of an offer)
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An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude [the bargain].
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§26 – Preliminary Negotiations
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A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.
o Use Objective Test → whether a reasonable person in the other party’s shoes would have understood that the offeror was merely seeking to invite bids or to start preliminary negotiations o Statement of Future Intent → an announcement by a person that he intends to contract in the future will typically not be considered as an offer |
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Questions to determine if there was an offer:
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1. Was there expression of a promise/commitment to enter into a contract?
2. Was there certainty and definiteness in the essential terms? (p. 9) 3. Were the above communicated to the offeree? (p.13) |
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Examples of situations granting an OFFER
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o Price Quotations
o Offers made in jest o Advertisements as Offers o Expressions of Opinion o Auctions o Invitations to bid o Memorialize agreements in writings |
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How do you determine if an expression of a promise exists?
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o Always use the objective/reasonable person standard.
o Look at the language; is there a specific person/addressee; surrounding circumstances; prior practice and relationships between the parties; custom of industry; certainty and definiteness of terms. • The more certain and definite the terms are, the more reasonable it is for the other party to think that there is an offer |
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Distinguishing Price Quotations and Offers
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One person requests a quote from another. Is the person giving the quote making an offer?
a. Quantity: offer if it, or the request to which is a response, makes clear the quantity in question. A quotation listing the per unit price with no reference to the number of units the seller is willing to sell at that price is not an offer. b. Addressee: if the quote is not addressed to a specific person, but is merely part of a general price list or a large mailing, it is unlikely to constitute an offer. c. Use of the term “quote” or “offer”: precise words matter, quotation is less likely to be an offer if there is no such reference d. Need for further expression of assent: a proposal/ quotation is not an offer if it reserves to the proposer the power to close the deal. On the other hand, an offer creates the power of acceptance in the offeree. e. Reluctance to find contract: if the offer presents a lot of grey area, the court will generally find that there was no offer. Whereas, once a contract has been found to exist, courts will be quite willing to supplement the actual terms with provisions on which the parties have not explicitly agreed, they are much less willing to take liberties with the language of what is asserted to be an offer (before a contract is formed). |
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Lonergan v. Scolnick
{Offer: Creation of Power of Acceptance} |
→ no power of acceptance conferred here!
• D (Scolnick) placed a newspaper ad saying he was going to sell his land. P (Lonergan) responded to the ad with interest. D responded with a letter describing the property, giving P directions, and giving his rock bottom price. When P replied asking for a legal description of land, D replied saying that if he wanted to buy it, he would have to act fast b/c he expected to have another buyer. D sold property to 3rd Party before P could respond stating his intention to buy. P sues for specific performance, claiming that D’s letter was an offer for sale. • HOLDING: D and P’s communication was PURELY PRELIMINARY. “$2500 as rock bottom price” leaves room for negotiation. • Newspaper ad was merely a solicitation of offer presented to the entire public. P should’ve reasonably known what D was giving was an expression of further required assent (by D) rather than a definite offer. (Doesn’t specify who, price, or fixed purpose -no definite offer.) • Ad was missing price term; couldn’t reasonably believe it was an offer without definite terms. And, the statement that he expected to have a buyer in the next week would cause a reasonable person to believe that D intended to sell to the first-comer, and indicates that seller’s assent was still needed. • Seller would be unlikely to give descriptions if obligated to make offer at this point. • *Freedom to contract = includes FREEDOM FROM CONTRACT! (Don’t impinge on autonomy of parties.) |
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Offers made in jest
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An offer that the offeree knows or should reasonably know to be made in jest is not a valid offer, even if accepted.
o Counter-Example: Lucy v. Zehmer → even though offer was claimed to be a joke, it could reasonably be understood as an offer, so it was binding on the offeror. |
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Advertisements as Offers
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most advertisements in the mass media, in store windows (etc) are not offers to sell, because they do not contain sufficient words of commitment to sell.
o CASE STUDY: Lonergan v. Scolnick→ solicitation of an offer, not mutually agreed upon o ****Exception is when there is a specific terms or promise**** • If the advertisement contains words, expressing the advertiser’s commitment or promise to sell a particular number of units, or to sell the items in a particular manner, there may be an offer. • Ex- wool coats $100, 15 coats available at this price, to be sold first come first served starting this Saturday at 9am. |
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Lefkowitz v. Great Minneapolis Surplus Store
{example of clear, definite, and explicit ad - nothing is left open for negotiation!} |
• D put ad in newspaper offering fur coats and lapin stole for sale for $1 on first come, first served basis on Saturday. P was first one to get to counter on Sat morning, offered payment, but was denied items based on ‘house rule’ that items were normally sold to women. D argues that ad was merely an invitation for an offer
• HOLDING: offer for sale was clear, definite, explicit, and left nothing open for negotiation (though general ads aren’t usually offers). • P accepted the offer when he showed up first, ready to pay, so D could no longer modify offer. D could’ve modified offer (i.e. put in house rule) before P accepted, but could not modify after P’s acceptance. • Refusing to sell because of an unstated house rule would serve as a repudiation of the offer; house rule should’ve been stated in ad. • “First come, First server”= risk of multiple acceptances is negated here bc offer specifies that there’s a specific amount and will be granted to the first person who comes. • Policy consideration: There should be an offer with specific/definite terms bc crts will encourage bad behavior if they don't enforce it. --Allowing arbitrary or false rules not stated in ad or will foster false advertising and fraudulent seller behavior! • The court couldn’t issue damages for the mink coat (because the value is speculative). Gets expectancy for the lapin stole (actual value minus what he expected to pay ($1)) |
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Offer distinguished from expression of an Opinion
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An offer must contain a promise or commitment rather than merely an opinion. Objective TEST: Whether a reasonable person in the position of the offeree would’ve understood the offeror as having proposed a bargain, rather than merely stating an opinion.
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Offers at Auction
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The auctioneer by opening the bidding on an item, does not make an offer. Instead, he solicits bids from the audience. UCC § 2-328, Rest § 28
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Intent to Memorialize in Writing
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Look for an intent to be bound. Does the communication b/w the parties suggest that there is an intent, or is there an intent for there to be more negotiations down the road
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Invitations to Bid
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Solicited through the sending out of invitations to submit bids, the invitation is not an offer unless it contains language so indicating. In the usual case, the invitation is simply a solicitation of offers, the bids are offers, and it is up to the inviter to decide which, if any, of the bids to accept. (Construction K’s)
• If the invitation to submit a bid contains language indicating a commitment on the part of the inviter (i.e. To award the contract or sale to the lowest bidder), the invitation may be held to constitute an offer, and the inviter will be bound to a contract with the highest bidder. |
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Southworth v. Oliver
{Offer: definitive terms to specific party w/i context of circumstance!} |
• D approached P to determine if he was interested in buying grazing land near his property; P expresses interest. D sends a letter to P and 3 other specific people (neighbors) stating the market value of the land, financial terms, and alternative sale dates, etc. P responds and accepts the offer. D refuses, saying the letter was only for informational purposes (to provide a starting point for negotiations) and not an offer.
• ISSUE: Was the letter with specific terms addressed to specific people an offer? YES. • Although it is difficult to distinguish preliminary negotiations from offers, PRICE QUOTATIONS considered together with facts and circumstances may constitute an offer (and a binding K if accepted). • Letter was definitive! (price, specific terms, and fact that it was addressed to 4 particular people). What matters is what’s actually manifested, not secret intent. • *Looks at entire context of circumstance, not just specific language! Very FACT BASED! (ie. D initiated things and solicited P for an offer early, which shows a sense of urgency and seller is in the mindset to sell → crt looks at who approached whom, etc; contextualized to each specific case) Makes it more reasonable for P to believe it was an offer! |
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GUIDES to interpret people’s expressions
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o #1 STRONGEST guide: particular expression is to be judged on the basis of what a reasonable person in the position of offeree has been lead to believe (objective guide)
o Other guides: • Language used • Determination of parties or party being addressed • Definitiveness of proposal itself |
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Freedom to contract (also includes..)
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...includes FREEDOM FROM CONTRACT! (Don’t impinge on autonomy of parties.)
-We can't say everything is an offer! EX) Lonergan v. Scolnick |
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Ad with “First come, First server”
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-Usually an offer bc risk of multiple acceptances is negated here since offer specifies that there’s a specific amount and will be granted to the first person who comes.
EX) Lefkowitz v. Great Minneapolis Surplus Store |
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Advertising (ie. Lefkowitz v. Great Minneapolis)
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Policy consideration: There should be an offer with specific/definite terms bc cts will encourage bad behavior if they don't enforce it.
-Allowing arbitrary or false rules not stated in ad or will foster false advertising and fraudulent seller behavior! |
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Court's Goal in Interfering with Bargain Relationship (determining offer and acceptance, etc)
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**We want to foster a healthy relationship between the seller and buyer so that each party can trust the other and effectively contract (with negotiating)**
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Hypothetical: IBM places an employment ad in newspaper that says, “We will hire the best computer programmer in the country.” Should IBM be bound when more than one individual shows up making the claim that they are the best?
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No. Requires IBM’s ASSENT, since IBM needs to decide who’s best.
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Offer revocable??
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Yes, an offer is always revocable until it's accepted! (unless it's an option K)
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