How Was Acceptance Invited?

1

Checklist:

1. Assent to be bound
2. Consideration?
3. Reliance?
4. Restitution?
5. Moral Obligation?
6. Offer
7. Acceptance
8. Offer?
9. How was acceptance invited?
10. Did offeree completely perform or promise as invited?
11. Was promise made in manner permitted by offeror?
12. Was notice required?
13. Did offeree provide notice of acceptance?
14. Definite?
15. Requirement of Writing?
16. If not, barred by statute of frauds?
17. Capacity to enter into a bargain?
18. Problems:
19. Duress?
20. Misrepresentation?
21. Mistake?
22. Exculpation clause?
23. Breach?
24. Damages?
25. Avoidability
26. Incomplete / Defective Performance
27. Unforeseeability
28. Uncertainty
29. Liquidated Damages

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1. Bases for Enforcing Promises
2. Consideration
3. Promise or performance bargained for in exchange

1.§72, 74(1)

2.Promisor does not need to be benefitted, nor does a promisee need to experience a detriment

1. Hamer v. Sidway
2. It is sufficient that he restricted his lawful freedom of action within certain prescribed limits upon the faith of his uncle’s agreement
3. It is of no moment whether such performance actually proved a benefit to the promisor

3.Consideration can be given for thing of trifling value if it is bargained for

1. Fiege v. Boehm
2. Promise not to bring a claim is sufficient consideration
3. It is sufficient that the parties entering into an agreement thought at the time that there was a bona fide question between them (even if there was in fact no such question)

1. Distinguishing Bargains from non-bargains

1.Events prior to the promise are not consideration for a promise

1. See Feinberg v. Pfeiffer Co.
2. No consideration because nothing was bargained for
3. Past services are not valid consideration for a promise
4. See Mills v. Wyman (Mass. 1825)
5. Breach of moral obligation (in this case) did not constitute breach of legal obligation
6. Past occurrence not consideration for a promise
7. Williston:
8. If it is unclear whether or not there is a bargain, consider whether there is a benefit or detriment as a GUIDE

2.Conditional Promise to make a gift is not consideration

1. Kirksey v. Kirksey

1. Promises as Consideration

1.§2(1), 202 (1), 205

2.Illusory Promises:

1. Not consideration
2. Strong v. Sheffield
3. Promisor was not to be bound except on the condition that the other party entered into an immediate and reciprocal obligation to do the thing requested
4. w/ out immediately asking the money back, it became a forebearance

3.Implied terms

1. Sufficient consideration
2. Implied in fact
3. Wood v. Lucy, Lady Duff-Gordon

a.Without an implied promise, the transaction cannot have any business efficacy

1. Lake Land Employment Group of Akron v. Columber

a.Presentation of noncompetition agreement by employer to an at-will employee constituted a proposal to renegotiate the terms of parties’ at-will employment

1. Thus, since he didn’t quit and wasn’t fired, non-compete was not void

1. Implied in law
2. Mattei v. Hopper (Cal. 1958)

a.An agreement without mutuality of obligation lacks consideration

b.One that leaves a party free to perform or withdraw at his own pleasure is deemed illusory

c.Here, it’s enforceable because parties inserted provision making π’s performance dependent upon his satisfaction w/ the leases to be obtained by him

1. Reliance – “Promissory Estoppel”
2. Development of Reliance

1.§90

1. Elements of Promissory Estoppel

1.Promise

2.Action/forbearance by promisee

3.Induced by (i.e. taken in reliance on) the promise

4.Reasonably expected by promisor

5.Enforcement necessary to prevent injustice

1. Remedy granted for breach may be limited as justice requires

1. Reliance remains a secondary basis of enforcement (behind consideration)
2. Feinberg v. Pfeiffer Co.

1.The action on the π’s part was her retirement from a lucrative position in reliance upon ∆’s promise to pay her an annuity or pension

1. Cohen v. Cowles Media Co

1.The long-standing journalistic tradition was what Cohen relied upon in asking for and receiving a promise of anonymity

1. Restitution as an alternative basis for recovery
2. Prevention of unjust enrichment even when there has been no promise  gains produced through another’s loss are unjust and should be restored

1.Callano v. Oakwood Park Homes Corp

1. π not entitled to employ legal fiction of quasi-contract to “substitute one promisor or debtor for another”
2. quasi-contract was to provide a remedy where none existed
3. here, one exists  an action against Pendergast’s estate

1. Syllabus appndx. No. 3
2. Names:

1.Liability for “unjust enrichment”; Quasi-contract; Contract implied in law; Constructive contract; Quantum meruit; Money had and received

1. Those barred from recovery under unjust enrichment:

1.Officious intermeddlers

1. Someone who confers a benefit that was neither asked nor needed
2. e.g. homeless squeegee-er

2.Volunteers

1. Confer benefits with no expectation for compensation thereafter

3.π's w/ other remedies

1. e.g. tort or contractual remedy

1. wealth of those treated cannot be involved in the measurement of recovery

1.Cotnam v. Wisdom (Ark. 1907)

1. Merely requires a reasonable compensation for the services rendered

1. “Moral Obligation” as a basis for enforcement
2. § 83
3. Moral obligation not a general basis for enforcing a promise
4. Courts will enforce a gratuitous new promise reaffirming an old debt that is unenforceable because of:

1.Statute of Limitations has tolled - §82(1)

2.Promisor’s prior discharge in bankruptcy

3.Promisor’s prior infancy - §14, 85

4.A material benefit previously received if necessary to prevent injustice - §86– NOT widely adopted

1. Webb v. McGowin (Ala. App. 1935)
2. Subsequent promises to pay is an affirmance or ratification of the services rendered carrying with it the presumption that a previous request for the service was made
3. It followed that if π saved ∆’s life and he agreed to pay him for services rendered, it became a valid and enforceable contract
4. Dementas v. Tallas did not adopt 86 when a guy who drove his friend around decided to give the friend $50k, but died before he changed his weill

1. Contract Formation
2. Assent
3. Contractual liability is voluntary
4. Intention to be Legally Bound: §21

1.Promise not enforceable if promisor sufficiently indicates that he does not assent to be bound by the promise – roughly

2.Perspectives on assent:

1. Promisor’s  Subjective
2. Promisee’s  subjective
3. Reasonable Person  Objective

3.Promisor has assented if a reasonable person would think promisor assented UNLESS promisee understands promisor did not assent

1. Lucy v. Zehmer (Va. 1954)
2. An “Objective” inetpretation of the contract “outward expression of person, not his secret unexpressed intention”
3. A person cannot set up that he was merely jesting when his conduct and words would warrant a reasonable person in believing that he intended a real agreement
4. UNLESS meaning attached to manifestations are unreasonable (if other party knows he’s joking)

1. Offers
2. Offer Defined - §24

1.Manifestation of willingness to enter a bargain

1. Typical formation of a bargain:

1.Preliminary Negotiations - §26

1. “a tie goes to preliminary negotiations”
2. Owen v. Tunison (Me. 1992)
3. There can be no contract for the sale of property unless there was an offer or proposal of sale
4. Looked at precedent to see what words used in the contract meant (objective ruling)
5. (just preliminary negotiations)
6. Harvey v. Facey (1893)
7. Mere statement of lowest price at which vendor would sell contain no implied contract

2.Offer by Offeror

3.Acceptance by Offeree

1. Price Quotes and Advertisements:

1.General Rule: not offers - §26

1. Reasonable person knows that advertiser would not want a bargain w/ everyone who sees the advertisement
2. Lefkowitz v. Great Minneapolis Surplus Store (1957)
3. Can’t modify an offer once it’s accepted (it becomes a contract)
4. Advertisement as Offer test:

a.Clear, definite, explicit language

b.Leaving nothing open for negotiation

2.Exception: factors negating this expectation / understanding

1. Fairmont Glass Works v. Crunden-Martin Woodenware Co. (Ky. 1899)
2. Each case turns largely on the language there used
3. “we quote you” “for immediate acceptance”
4. ten car loads is an expression used in the trade as equivalent to 1,000 gross

1. Acceptance
2. § 60, 69(1)
3. Offeror is “Master of the Bargain”
4. Checklist to determine Acceptance:

1.What was the offer? (§24)

2.How did the offeror invite the offeree to accept? (§32)

1. By complete performance
2. Unilateral K (as in Hamer)
3. Carlill v. Carbolic Smoke Ball Co.
4. If the person making an offer, expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating acceptance of it to himself, performance of the condition is a sufficient acceptance without notification
5. By making a promise to perform
6. Bilateral K

3.Did the offeree completely perform or promise as invited by the offer?

1. Implicit promise to perform (by e.g. starting work?) - §4

4.If offeree promised to perform, was the promise made in a manner permitted by the offer? - §30(2)

5.Was notice of acceptance required?

1. Complete performance
2. No, unless requested §54(1)
3. Promise to Perform
4. Yes, unless waived §56

6.Did offeree provide notice of acceptance?

1. International Filter Co. v. Conroe Gin, Ice & Light Co. (Tx. Comm. Ap. 1925)
2. Existence of contractual capacity imports the right of the offeror to dispense with notification
3. Acceptance of “offer” was actually an extension of an offer, which was then accepted
4. White v. Corlies & Tift (NY 1871)
5. No notice of acceptance offered: no K
6. If White would have dispatched notice of acceptance, K would have been bound
7. Ever-tite Roofing Corp. v. Green (La. App. 1955)
8. Acceptance would occur upon “commencement of work”
9. By sending workers to job site, Roofing “dispatched notice” of acceptance

1. Can offeree’s silence be acceptance?

1.General rule: no

2.Exceptions:§69

1. Offeree takes services
2. Allied Steel and Conveyors, Inc v. Ford Motor Co.
3. If an offeror merely suggests a permitted method of acceptance, other methods of acceptance are not precluded
4. Acceptance of an offer by part performance in accordance w/ the terms of the offer is sufficient to complete the contract
5. Offer says silence is acceptance and offeree intends to accept
6. Previous dealings
7. Hobbs v. Massasoit Whip Co.
8. Silence coupled with retention of the skins for an unreasonable time might warrant the jury to find π accepting
9. Offeree uses offered property

1. Lapse, Revocation, Death, and Rejection
2. § 38, 39, 59
3. Termination of Offers (§36)

1.Lapse §41

1. Specified
2. If unspecified, open for a “reasonable time”  question of fact

2.Revocation

3.Death by offeror

4.Rejection by Offeree§38

1. Revocation by Offeror §42, 43

1.Generally possible any time before acceptance

1. Dickinson v. Dodds (1876)
2. No consideration for initial promise to keep offer open  revocation allowed
3. To make a contract, the two minds must be in agreement at some one time, that is, at the time of the acceptance

2.Effective only if offeree directly or indirectly receives communication of revocation before acceptance

1. Does not need to personally communicate w/ offeree
2. When offeror takes action inconsistent w/ willingness to enter into a bargain

3.Not possible if offeror has made a binding promise to keep the offer open 

1. Option Contract
2. Binding promise to keep an offer open for a period of time

1. Death of Offeror §48

1.Terminates unaccepted offers (but not most contracts)

1. Earle v. Angell
2. Paper signed by aunt saying she’d pay him $5k for coming to her funeral  binding if she doesn’t change her will?

2.No communication required

3.Option contract can prevent termination

1. Possible Responses to an Offer:

1.Acceptance

2.Inquiry, comment, silence

3.REJECTION §38(1)

1. Once an offer is rejected, power of acceptance is terminated

4.Counter-offer §39(1)(2)

1. Presumed to be a rejection and new offer

5.Purported Acceptance w/ Qualifications

1. Operates as counter-offer
2. Mirror-Image rule §59
3. If purported acceptance changes the terms or adds terms IN ANY WAY, it is NOT an acceptance
4. Rejection and counter-offer
5. Minneapolis & St. Louis Railway Co. v. Columbus Rolling-Mill Co. (US 1886)
6. The other party having once rejected the offer cannot afterwards revive it by tendering an acceptance of it

1. Mailbox Rule
2. General Rule:

1.After dispatch of acceptance, offeror cannot revoke and offeree cannot reject

1. Exceptions:

1.Offer indicates otherwise (extremely common)

2.Offer subject to an option contract §63(b)

3.Offeree attempts to reject after dispatch of acceptance

1. Offeror agrees to cancel (waiver)
2. Offeror relies on attempted rejection (estoppel)

1. Rule applies only to acceptances, not rejections

1.Revocations / rejections effective UPON RECEIPT

1. Applies to any form of dispatch (not just mail)

1.Even to lost acceptances that never arrive

1. Liability despite apparently failed negotiations
2. §87(2)
3. General Rule:

1.No liability

1. Owen – no offer ;White – no acceptance; Dickinson – offer was revoked before it was accepted
2. Contractual Liability is voluntary

2.Possible bases for exceptions:

1. Breach of implied promise not to revoke offer
2. Drennan v. Star Paving Co. (Cal. 1958)
3. Implied subsidiary promise to keep the offer open
4. Enforceable based on promissory estoppel
5. § 90 RST 2nd: “A promise which the promisor should reasonably expect to induce action or forbearance … on the part of the promisee and which does … is binding if injustice can be avoided only enforcement of the promise”
6. it is reasonable to suppose that ∆ submitted its bid to obtain the subcontract
7. §45 – Option contract created by part performance or tender (Prof. Wormser’sBrookly Bridge hypothetical)
8. breach of assurances during negotiations
9. Hoffman v. Red Owl Stores (Wisc. 1965)
10. There would be injustice if π were not granted some relief due to the failure of ∆s to keep their promises which induced πs to their detriment
11. Damages calculated based upon what was lost in reliance of assurances made during negotiations
12. Breach of contract to negotiate in a particular manner
13. Channel v. Grossman
14. In exchange for promises to negotiate, received a letter of intent as consideration

a.Letter of intent conferred a bargain for benefit on ∆ which was valid consideration for ∆’s return promise to negotiate in good faith

1. No general duty of good faith in contract negotiations (in the US)

1. Definiteness
2. §33 – terms must be “reasonably certain”

1.defining what is breach;

2.what is an appropriate remedy

1. Reluctance to find indefiniteness

1.Fairmont, Hoffman, Channel, Toys

2.Varney v. Ditmars (NY 1916)

1. Too indefinite to determine if there was a breach
2. Pure conjecture as to what would be “fair share”

3.Toys Inc. v. F.M. Burlington Co. (Vt. 1990)

1. While choice of wording could have been more precise, because of clear explanation of what “prevailing rate” was, that did not allow for a “clean slate” for renegotiations
2. Test is whether the option agreement contained all material and essential terms to be incorporated in the subsequent document

1. Requirement of Writing for Enforceability
2. Intro to the Statute of Frauds
3. Extraordinary promises may or should require extraordinary proof
4. Famous for having unintended consequences

1.Hostile judicial interpretation of statutes

2.Allow courts to create doctrines to circumvent Statutes

1. At least 2,500 Statutes of Frauds in the US
2. 6 Famous Types of promises covered

1.Marriage - §124

2.Year - §130

1. If exactly one year, no need for writing
2. One year + one day, DO need writing
3. Lifetime: do NOT need writing
4. Many states have added statutes that say you DO need writing
5. Promise to pay $ over multi-year period
6. Could possible be completed in < 1 year, no requirement
7. One Party will take > 1 year
8. Requirement of writing
9. Both parties need to be able to complete w/in one year to be free from statute of frauds
10. One party already complete performance
11. No requirement of writing
12. Realistically will take more than 1 year, but contract does not PREVENT performance in < 1 year
13. No requirement
14. C.R. Klewin, Inc v. Flagship Properties, Inc
15. Unless it appear from the agreement itself that it is NOT to be performed within a year, that statute does NOT apply 
16. does not extend to those things that MAY be performed within a year
17. Contract could be terminated in 1 year but not fully performed
18. Must be complete performance w/in a year to be free from writing requirement
19. Almost any K could be terminated w/in 1 year

3.Land - §125

1. Exception: after land has already been conveyed
2. Langman v. Alumni Association of U. of Va (Va. 1994)
3. Once the deed has been conveyed, a promise to pay no longer applies

a.A grantee who accepts a deed becomes contractually bound by its provisions and is not a surety

1. NOT a suretyship promise

a.They received a direct benefit and did not merely act as a surety for the grantors

4.Executors - §111

5.Goods ≥ $500

6.Suretyship - §112

1. Requisites of Writing and Signing
2. Essential Terms - §131

1.Does not need to contain all terms, only essential terms

1. Reasonably IDs subject-matter
2. Indicate that a K has been made
3. States w/ reasonable certainty essential terms

1. Signed by Party to be Charged

1.Depends on who the ∆ is

2.“statute of frauds can create a one-way street”

1. Lucy v. Zehmer

1. Lost Writings

1.Not necessary to actually have the piece of paper

2.Only necessary to prove that there was at one time a piece of paper that was signed

1. Electronic Writings

1.Does count as signing

1. Relationship to other Requirements

1.Having a writing does not sufficiently make a promise enforceable

1. Still need offer & acceptance, consideration, definiteness

1. Exceptions to the writing requirement
2. Restitution - §375
3. Equitable estoppel

1.Equitably estopped from saying that is no signed writing if ∆ had said that there WAS a signed writing (when there wasn’t); or

2.That there was a reliance on a statement of fact that the ∆ claims there wasn’t

3.Allows π to enforce K, not merely recover

1. Part-performance doctrine for land buyers - §129

1.Like equitable estoppel for land buyers

1. Pay part price of the land; And
2. Taking possession
3. Making Improvements
4. (or all of the above)
5. Richard v. Richard (R.I. 2006)
6. Relied on contract regardless of statute of frauds barring its enforcement
7. Made improvements that could not be carried away; “sweat equity”
8. Took possession of property

1. Promissory Estoppel - §139

1.Only adopted by about 20 states

1. Because promissory estoppel is common law while statute of frauds is a STATUTE

2.Monarco v. Lo Greco (Cal. 1950)

1. Promise that the K will be performed is what is relied upon (not just equitable estoppel)
2. In the case of partly performed oral contracts, its denial would result in a fraud on the π who has gone into possession or made improvements in reliance on the contract

1. Policing the Bargain
2. Capacity
3. Infancy

1.Contracts:

1. Defense on the basis of recission
2. But infants CAN enforce (K is voidable, not void)
3. Voidable:
4. When one or more parties have power to avoid legal relations of a K
5. Keifer v. Fred Howe Motors, Inc. (Wi. 1968)
6. Could still void K even though he lied about his age
7. His lie was not w/ the intent to defraud, it was just to be able to buy the car

a.thus no tort of deceit

2.Restitution:

1. Generally required if contract is voided
2. Not required if subject matter is unavailable
3. e.g. if infant wrecks car, can’t return it
4. Required for necessaries if infant is emancipated
5. Food; medical; housing; clothing; others in some jurisdictions (but NOT education)
6. Otherwise, nobody would sell them anything because they could always just void the K w/ no need for restitution

3.Torts