Contracts Chapter 7 189 219 A contract is a promise the law will enforce Promisee the party to whom the promise is made Promisor the party who made it The basic law of contracts in common law judge made Uniform Commercial Code consists of 9 articles governing commercial transactions If parties do not intend to be legally bound their promises are not legally enforceable Contractual intent is determined objectively by examining the parties observable behavior words conduct The Bargain Theory of Contracts o Offer made by the offeror and gives the offeree the power to bind the offeror by accepting the offer The objective theory is used to determine whether an offer has been made The test is whether a reasonable person in the position of the offeree would interpret the offer as signifying the offer s intent to be bound Offers must be distinguished from invitations to negotiate Reward Cases ie lost dog are ads that should be enforced as an offer An offer is not effective unless in is communicated to the offeree If someone finds something not knowing there is a reward they are not entitled to the reward An offer may specify its expiration date If it doesn t the offer terminates after a reasonable amount of time Death of the offeror rejection of the offer and a counteroffer all reject the original offer Lefkowitz v Great Minneapolis Surplus Store o Issue Does an ad in the newspaper for goods or service qualify as an offer o Holding Yes the ad is an offer The plaintiff being the first one to appear at the sellers place and offering the purchase price was entitled to performance on the part of the defendant o Facts Lekfowitz was the first to show up to receive a coat for 1 the store told him that house rules only allow women to qualify for the deal The court however struck this down as this was never mentioned in the original advertisement o Acceptance Consists of words or actions by which an offeree signifies his or her intention to be bound by the offer Acceptance binds the offeree and offeror Must occur before the offer is terminated An offer may only be accepted by its offeror Must signify the offeree s intent to be bound Mirror image rule At common law the acceptance must mirror the offer If it adds new terms or changes any terms it is not an acceptance but a counteroffer UCC changes this common law rule It provides that a document intended to be acceptance is acceptance even though it has terms different than those in the offer Unilateral contract offeree makes no promise not obligated to perform However if the offeree performs the offeror is obligated to perform Bilateral contract Both offeree and offeror are obligated to perform Mailbox rule a mailed acceptance is effective on its deposit in the mailbox The rule protects the offeree from unknown revocations Refers to the requirement that a promise be part of a bargained for exchange in order to be enforceable Defined as legal detriment bargained and given in exchange for a promise Past consideration is not bargained for and therefore cannot provide consideration for a present contract Preexisting Duty Rule a promise to perform a preexisting legal duty is not detriment and therefore is not consideration When the consideration for a promise is another promise the parties must be under mutual duties to perform o Consideration Statue of Frauds o Generally oral contracts are enforceable although their existence may o Certain types of contracts are not enforceable unless they are be difficult to prove evidenced by a writing Made in consideration of marriage For sales of goods priced 500 or more Transfers of real property other than a lease of less than 1 year Contracts that cannot by their terms be performed in 1 year Contracts that answer the debt of another Only applies to promises made by creditor o Note The Statue of Frauds doesn t require that the contract be in writing it requires that there be written evidence of the contract signed by the party to be charged with enforcement Davies V Martel Laboratory Services Inc o Issue Is an oral contract promising permanent employment enforceable o Holding Yes the oral contract is enforceable There was consideration Davies gave something up the time and money to obtain her MBA under the impression that doing so would make her VP o Facts Davies was promised permanent employment a salary and other benefits if she would go forth and earn her MBA She was fired before she could complete the MBA Promissory Estoppel o Courts have enforced promises that lacked consideration and oral promises that would otherwise be unenforceable under the statue or frauds o Three conditions must be met for promissory estoppel to apply There must be a promise from the promisor to a promisee There must be reliance by the promisee upon the promise The reliance must be to the promisee s substantial economic detriment o Newton Tractor V Kubota questioned whether promissory estoppel which is usually used by the defendant be used by the plaintiff Court said it could It gave back the money spent on warranty repairs but didn t enforce the contract as it only relates to economic detriment Moral obligation to keep a promise is not sufficient to make the promise legally enforceable Quasi Contract even if no contract is in place where services are rendered with a reasonable expectation of payment payment should occur Policing the bargain o Capacity mental state age o Defects in bargaining process Misrepresentation if something is misrepresented the contract can be rescinded Duress ones act over comes the free will of another Can also be economic pressure Mistake Unconscionably a contract that is very clearly one sided may not be enforceable Illegality contracts that promise illegals acts or the like are unenforceable Art s Flower Shop V C P Telephone CO o Issue Can a monopoly limit liability when a breach of contract occurs o Holding No o Facts Art s bought space C P didn t put it in but limited liability court overturned limited liability due to them being a monopoly and Art s having had no one else to turn to Wiley V Royal Cup Inc restrictions o Issue Is a noncompeting contract enforceable with territorial o Holding Royal cup cannot enforce territorial restrictions as they do not strive to promote their own business interests but instead limit competition The justice goes on to say that the entire convent not to solicit is void The court holds that nondisclosure can be enforced however Parol Evidence Rule provides that if a