Contracts Outline

1. Contract Defined
A contract is a promise or set of promises for the breach of which the law gives a remedy,
or the performance of which the law in some way recognizes as a duty
Have the parties reached an agreement?
Lucy v. Zehmer
Intent of the parties is determined by their actions and conduct and what a reasonable
person would believe in that situation
Undisclosed intention is immaterial except when an unreasonable meaning which he
attaches to his manifestations is known to the other party
Objective theory of assent:
1. Would a reasonable person in the position of the promisee understand from the
promisors words and conduct an intent to be bound
2. Did the promisee in fact so believe
Leonard v. Pepsico
Can an advertisement constitute an offer?
Depends what an objective reasonable person would have understood the commercial to
convey. In this case, the advertisement was not an offer because:
1. Tongue in cheek, no reasonable person would believe defendant would give away a
fighter plane
2. Commercial was an advertisement; a reasonable person would not have believed it
was a unilateral offer
Gleason v. Freeman
When the contract leaves the intent doubtful, courts consider the situation, acts, and
conduct of the parties and the attendant circumstances
Parties were still negotiating which showed there was no intent to be bound and therefore
no mutual assent
24. Offer defined
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 it
26. Preliminary Negotiations
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
Problems on mutual assent-What is an offer?
Lonergan v. Scolnick
There can be no contract unless the minds of the parties have met and mutually agreed on
some specific thing
If you know or have reason to know that the person making the offer does not intend it as
an expression of fixed purpose until he had given a further expression of assent, an offer
had not been made
In this case, the defendants statement requested an offer from the plaintiff, indicating to
the plaintiff that he intended to sell to the first-comer and was reserving the right to do so
Maryland Supreme Corp. v. Black Co.
An offer is a conditional promise and may become a contract by an acceptance, it must be
made under circumstances evidencing an express or implied intention that its acceptance
shall constitute a binding contract
In this case, the letter by the plaintiff constituted a definite and certain offer with the
intent that if accepted would result in a contract. It was a conditional promise that the
defendant would be the successful bidder. That offer was verbally accepted when the
condition was fulfilled. Letter was not a quotation or an invitation to negotiate
Sateriale v. R.J Reynolds Tobacco Company
General rule: advertisements are not offers
Exception to the rule: when there is a reward for the redemption of coupons
Advertisements constitute offers when they invite the performance of a specific act
without further communication and leave nothing for negotiation
Advertiser promises to render performance in exchange for something they request and if
the recipient of the advertisement reasonably might have concluded by acting in
accordance of the request, a contract would be formed