LSB 3213 1st Edition Lecture 12 Today Finish terminology from chapter 11 Apply chapter 12 Bilateral vs Unilateral Bilateral o Most common o promise for a promise o Example If you drive my car from New York to California I will pay you 1 000 Unilateral o One party promises something other party can t promise but must act o Example If you paint my house while I am out of town I will pay you 5 000 when I get back Contests most common form of unilateral agreements o Texas A M vs South Carolina example A furniture store in College Station TX promised customers that if Texas A M beat South Carolina by at least 10 points they would refund all furniture purchases made within a certain week T A M won by 24 points and the store refunded over a million dollars worth of furniture purchases The store made very specific guidelines for their promise included a specific date number of points etc For a regular bilateral contract you are the master of your contract and can take it back at anytime For a unilateral contract once the act is in process you can t take back or revoke the promise Express vs Implied Contracts Express words of the contract Implied conduct not words o Example someone mows your lawn every Saturday for years and you pay them 15 each time o This is implied as the conduct is repeated and so that makes a contract Example late payments on rent These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute o The contract says that there is a fee for late payments after the 5 th of the month o You always pay your bill the 10th of the month for two years that you live at the apartment complex and your landlord never charges you a fee o Later the landlord gets fed up with you always paying late and decides to start charging you and making you pay for all of the late fees he didn t charge you o Your conduct rewrites the contract to say that you pay rent on the tenth of the month 4 Elements of a Contract AGREEMENT meeting of the minds reasonable person standard Would a reasonable person think there was an agreement a meeting of the minds Would two reasonable people reading the contract be in agreement of what the contract means Components of an Agreement Agreement Offer Acceptance Valid offer o Intent There is a serious intent to make the offer or contract o Definiteness How concrete specific is the agreement o Communication The agreement has to be communicated to the other person In writing orally etc Scenario 1 I ll buy your house for a fair price You ve got a deal Enforceable contract o No Lacks definiteness o Would a reasonable person conclude there was a meeting of the minds Definiteness Definiteness depends on facts of each case Key items to look for o Subject matter o Quantity o Price o Timing Scenario 2 Entrepreneurship Case A factory produces industrial products and a new company comes and buys the factory consolidating two factories into one and moving everything to just one factory including employees They tell the factory employees that they have two choices They can either move to work at the new factory or they can take a severance package six months pay to leave Two workers that work in the grinding department are trying to decide whether they should leave or not The managers tell them that they are so good at their grinding work that they should open up their own shop and the company will send them all of the work that they can handle 10 000 worth of work a month and will send them all of the grinding work that they had been sending to another company So the two workers decide to take the severance package and invest the money to start up a grinding shop After they are set up the company is only sending them 1 000 worth of business a month and eventually they have to shut down because they don t have enough business to keep the shop going They later find out that the company was sending grinding work to the other company instead of to them and decide to sue Valid contract Argument for the company o They could have already written a contract with the other grinding company o The start up could have taken too long so they had to use the other company o Not specific enough on the timing of when the company would be set up be taking orders etc Argument for the entrepreneurs o Met all of the requirements for a valid offer contract Court promises were too vague so no contract o The court would only have forced the company to keep its word if the contract agreement was more definite or specific Fairness vs Law ethics vs legality Scenario 3 Sopranos Case In the formation stages of the Sopranos tv show an aspiring writer came to a well known producer with an idea and scripts for a new show The producer likes the idea and asks the writer to send him the scripts for a few more episodes The producer then offers to pay the writer an hourly wage to keep writing episodes and they will make the show The writer declines the offer asking instead just to be part of the success of the show and get the value that he contributed to the success of the show to which the producer agrees Once the success of the show is evident the producer does not acknowledge the writer or send him any money for his contributions The writer sues and the producer tries to take all of the credit for the show without acknowledging the work of the writer Contract No Also too vague But what about unjust enrichment Unjust Enrichment A doctrine to remedy unjust treatment No contract but unfair result Shows the flexibility of common law equitable remedy Is seen when one party benefits at the expense of another Unjust enrichment is only applicable if there is no contract o Or the contract is not seen as void The Sopranos writer should have sued for unjust enrichment not breach of contract Scenario 4 Bob and Jane are having breakfast at their kitchen table and commenting on how their backyard is in bad shape and really needs to be cleaned up Out of nowhere a landscape company comes and cleans up the yard and leaves a bill in Bob and Jane s mailbox for their services It turns out that the landscape company went to the wrong address Bob and Jane refuse to pay the bill Do they have to pay for the landscape services Yes Unjust enrichment o There was abenefit given o Bob and Jane had an opportunity to reject they watched the landscape workers and did not try to stop them o The landscape company had an expectation of payment for their