Contracts Formative Review

1. Jack and Bubba are old friends.  They have joked for years about Jack selling Bubba his yellow 1972 Camaro (named Honey).  It is the Saturday night before Christmas.  They are sitting at a bar, although they have barely begun to drink.  Talking loudly, they agree that Bubba will buy Honey for $40,000—quite a high price, for those in the know, as such cars generally go for $25,000 to $30,000.  They write down their deal on a napkin and sign it.  They are just joking around, and both know it.  The people sitting near them at the bar overhear, though, and they think it is a real deal.  Is there a contract?

Yes there is a contract.

What theory does contract law generally use?

Objective theory.

What is objective theory in contract law?

The objective theory of contracts is a legal principle stating that the formation and terms of a contract are judged by the outward, observable actions and words of the parties, rather than their secret, unexpressed intentions

What governs the hiring of a manager of a jewelry store?

Common law (not the UCC which only governs sales of goods contracts and not the R 2d)

Is a “memorandum of understanding” which states that it is “subject to execution of final merger documents” binding?

No it is unlikely to be binding but it can be depending on the parties’ other manifestations of intent.

Sam, a real estate developer, makes a written offer to sell a townhouse to Becky for $300,000. He writes a note at the bottom saying that the offer will be good for three days, and he signs and dates it. He hands it to Becky, and she takes it to think about what to do. There are no other relevant facts. Sam may revoke the offer at any time. What authority shows this?

Dickinson v. Dodds (UCC only governs sales of goods!)

Usage of trade, course of dealing, and course of performance are…

equally probative in general with respect to the interpretation of a contract.

Is course of dealing part of a contractual agreement?

Yes - e.g. if dropcovers were included in a painting deal before, they must be part of the painting agreement now.

Oswald v Allen and Raffles v Wichelhaus show…

that if there is neither subjective nor objective agreement, there is no contract.

What do courts consider when deciding whether something is an offer?

how many people it is sent to, how many terms are set, whether the purported offeror has said that the purported offeree should consult other docs, the language used.

how many people it is sent to, how many terms are set, whether the purported offeror has said that the purported offeree should consult other docs, and the language used are all what?

factors to be considered but are not required to determine whether something is an offer.