Contracts: Restatement & UCC

Contract Defined: §1

A contract is a promise ot a set of promise for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty

Promise; Promisor; Promisee; Beneficiary: §2

1. A promise is a manifestation of intention to act or refrain from acting in a sepcified way, so made as to justify a promisee in understanding that a commitment has been made.

2. The person manifesting the intention is the promisor.

3. The person to whom the manifestation is addressed is the promisee.

4. Where performance will benefit a person other than the promisee, that person is a beneficiary.

Agreement Defined; Bargain Defined: §3

An agreement is a manifestation of mutual assent on the part of two or more persons. A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.

How a Promise May Be Made: §4

A promise may be stated in woeds either oral or written, or may be inferred wholly or partly from conduct.

Requirement of a Bargain: §17

1. The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.

2. Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts.

Manifestation of Mutual Assent: §18

Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render a performance

Conduct as Manifestation of Assent: §19

1. The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act.

2. The conduct of a part is not effective as a manifestation of mutual assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.

3. The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, durress, mistake, or other invalidating cause.

Mode of Assent: Offer and Acceptance: §22

1. The manifestation of mutual assent to an exchange ordinarily takes the from of odder or porposal y one party followed by an acceptance by the other party or parties.

2. A manifestation of mutual assent may be made even though the offer nor acceptance can be identified and even though the moment of formation cannot be determined .

Offer Defined: §24

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 the bargain is invited and will conclude it.

Option Contracts: §25

An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor’s power to revoke an offer.

Preliminary Negotiations: §26

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.

The Existence of a Contract Where Written Memorial is Contemplated: §27

Manifestation of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial: these discussions however may prove to be preliminary negotiation and not binding on the parties.

To Whom an Offer is Addressed: §29

1. The manifested intention of the offeror determines the person or persons who are granted the power of acceptance.

2. An offer may create the power of acceptance in a specified person, persons, or specific group or class of people, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance.

Form of Acceptance Invited: §30

1. An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his acceptance.

2. Unless otherwise indicated by the language or the circumstance an offer invites acceptance in any manner and by any medium reasonable in the circumstances.

Invitation of Promise or Performance: §32

In case of doubt an offer is interpreted as inviting the Offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.

Certainty: §33

1. Even though a manifestation of intention is intended to be understoof as an offer, it cannot be accepted so as to form a contract unless the terms of a contract are reasonably certain.

2. The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.

3. The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

Certainty and Choice of Terms; Effect of Performance or Reliance: §34

1. The terms of a contract may be reasonably certain even though it empowers one or bojth parties to make a selection of terms in the course of performance.

2. Part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed.

3. Action in reliance on an agreement may make a contractual remedy approproiate even though uncertainty is not removed.

The Offeree’s Power of Acceptance: §35

1. An offer gives the Offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer.

2. A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated.

Methods of Termination of the Power of Acceptance: §36

An Offeree’s power of acceptance may be terminated by the following:

1. A rejection or counter-offer by the Offeree

2. Lapse of time

3. Revocation of the offer by the Offeror prior to acceptance

4. The death or incapacity of either Offeror or Offeree

5. Not meeting the conditions of acceptance required by the offer

Termination of Power of Acceptance Under Option Contract: §37

Offers cannot be revoked in the presence of an option contract, unless the requirements are met for the discharge of a contractual duty (time lapses).

Revocation by Communication From Offeror Received by Offeree: §42

An Offeree’s power of acceptance is terminated when the offeree recives from the offeror a manifestation of an intention not to enter into the proposed contract.

Indirect Communication of Revocation: §43

An Offeree’s power of acceptance is terminated when the offeror takes a definite action inconsistent with the intention to enter into the proposed contract and the offeree acquires reliable information to that effect.

Option Contract Created by Part Performance or Tender: §45

1. Where an offer invites an Offeree to accept by performance and does not provide promissory acceptance, the beginning or partial performance of an actor creates an option contract, enabling them to finish the performance if they chose to do so.

2. The Offeror’s duty of performance under any option contract is conditional on completion or tender of the invited performance. If the performance is completed, the Offeror must complete their side of the bargain.

Acceptance by Performance; Necessity of Notification to Offeror: §54

1. Where an offer invites an offer to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests a notification

2. If an offeree who accepts by rendering a performance has reason to know that the offeror has not adequate means of learning of the performance within a reasonable time and with reasonable certainty, the contraction duty of the offeror is discharged..

UNLESS

1. The Offeree exercises reasonable diligence to notify the offeror of acceptance.

OR

2. The offeror learns of the performance within a reasonable time.

OR

3. The offer indicates the notification of acceptance is not required.

Acceptance Which Requests Change of Terms: §61

An acceptance which requests a change or addition to the terms of the offer is not invalidated unless the acceptance is made to depend on an assent to the changed or added terms.

Effect of Performance by Offeree Where Offer Invites Either Performance or Promise: §62

1. Where an offer invites an Offeree to choose between acceptance by performance or by promise, the tender or beginning of a performance is an acceptance by performance.

2. Such an acceptance operates as a promise to render a complete performance.

Time When Acceptance Takes Effect: §63

Unless the offer provides otherwise

1. The offer is accepted when the acceptance leaves the Offeree’s hand, regardless if it reaches the Offeror.

BUT

2. An offer is not accepted alongside an option contract until it reaches the Offeror.

Acceptance by Telephone or Teletype: §64

Acceptance given by telephone or other medium of substantially instantaneous two-way communication is governed bt the principles applicable t o acceptances where the parties are in the presence of each other.

Reasonableness of Medium of Acceptance: §65

Unless circumstances known to the Offeree indicate otherwise, a medium of acceptance is reasonable if it is the one used by the offeror or is one that is customary in similar transaction at the time and place the offer is received.

Acceptance Must Be Properly Dispatched: §66

An acceptance sent by mail or otherwise from a distance is not operative when dispatched unless is it properly addressed and precautions have been taken that are ordinarily observed to ensure the transmission of similar messages.

Acceptance by Silence or Exercise of Dominion: §69

Where an Offeree fails to reply to an offer, his silence will operate as an acceptance in the following cases:

1. Where an Offeree takes the benefit of the offered services with reasonable opportunity to reject them and with reasonable knowledge that the benefits were offered with the expectation of compensation.

2. Where the Offeror has states or given the Offeree reason to understand that assent may be manifested by silence or inaction and such circumstances would signal assent.

3. Where previous dealings make it reasonable that an Offeree should notify the Offeror if the party does not intend to accept.

If the offeree utilizes the benefits of the offer in a manner that is similar to if they purchased it, they have accepted the offer, and they are then bound by the terms of the offer unless the terms are not reasonable. However, if their utilization is illegal or wrongful, they do not get a free pass; instead, they are only bound if the offeror chooses to hold them to the contract anyway.

The Interpretation of Promise or Agreement: §200

Interpretation of a promise or agreement or a term thereof is the ascertainment of its meaning.

Whose Meaning Prevails: §201

1. Where the parties have attached the same meaning to a promise or agreement of a term thereof, it is interpreted in accordance with that meaning.

2. Where the parties have attached different meanings to a promise or agreement or a term thereof it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made in the following circumstances were met:

   1. One party did not know of any different meaning attached by the other party, and the other party knew the meaning attached by the first party.

   2. One party had no reason to know of any different meaning attached by the other, and the other party has reason to know the meaning attached by the first party (the interpretation is then given to the party that did not know of the other interpretation and the onus of completing the obligation is given to the individual party that knew of the disconnect)

3. Neither party is bound by the meaning attached by the other (unless one party knew of the meaning attached by the other party and proceeded anyway), even though the result may be failure of mutual assent.

Rules in Aid of Interpretation: §202

1. Words and other conduct are interpreted in light of all of the circumstances and if the primary purpose of the parties is ascertainable it is given great weight.

2. A writing is interpreted as a whole alongside any other documents that are part of the same transaction.

3. Unless a different intention is manifested the generally understood meaning of a term is the one interpreted.

4. Unless a different intention is manifested technical terms are given their technical meaning when utilized within their technical field.

5. Where an agreement involved repeated occasions of performance and the nature of such performance is understood by the Offeror and Offeree, and with opportunity for objection, the course of performance accepted or allowed without objection is given great weight (when a young man agrees to mow the lawn and you do not object when he omits the ditch, until one day when you say that he has broken the contract. The many times that you did not object can change the understanding of the agreement).

6. Wherever reasonable, the manifestation of intention to a promise or agreement are interpreted as consistent with one another.

Supplying an Omitted Essential Term: §204

When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstance is supplied by the court.