19 March 2012 1

The Essentials

➲ Common Law of Contract

➲ Freitag, 12:00 to 13:30

➲ Matt LeMieux

➲ Contact● lemieux@uni-muenster.de

19 March 2012 2

The Essentials

➲ Common Law of Contract

➲ Freitag, 12:00 to 13:30

➲ Matt LeMieux

➲ Contact● lemieux@uni-muenster.de

19 March 2012 3

The Website

➲ Syllabus, readings, lecture notes, additional material can be found here.

➲ Password Protected

➲ http://class.mblemieux.com● Username = commonlaw

● Password = ffa

19 March 2012 4

Subject and Purpose

➲ Subject● title: common law of contract

● principles of contract law common to common law jurisdictions

➲ Purpose● familiarize students with the basic principles and

● to enable them to apply the law to factual situations

19 March 2012 5

Reading Material

➲ Common Law Tort & Contract by Prof. Thomas Lundmark

● assignments by page will be listed on class website.

➲ Also occasional case posted on class website as pdf. or link to external site.

19 March 2012 6

Klausur

➲ Wörterbuch NICHT erlaubt, keine Bücher bzw. Unterlagen

➲ 90 Minuten (sind mehr als genug)

➲ Klausurvorbereitung● an der Vorlesung teilnehmen

● Vor- und Nachbearbeiten

➲ Termine: TBA

19 March 2012 7

Common Law of Contract

The Meaning of Contract and the Basic Attributes of the Contractual

Relationship

19 March 2012 8

Contract Defined

➲ Oxford Dictionary of Law:● “a legally binding agreement”

➲ Black’s Law Dictionary:● “An agreement between two or more persons which

creates an obligation to do or not to do a particular thing”

19 March 2012 9

Contract Defined

➲ Restatement (Second) Contracts, § 3:

● “A contract is a promise or a 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”

19 March 2012 10

Contract Defined: Traditional Approach

➲ A contract contains the following three elements:

● Offer

● Acceptance

● Consideration

19 March 2012 11

The Legal Meaning of Contract

Contract may be defined as an:

➲ exchange relationship

➲ created by an oral or written agreement

➲ between two or more persons

➲ containing at least one promise

➲ and recognized in law as enforceable

19 March 2012 12

An Oral or Written Agreement

➲ Voluntary and consensual relationship.

● As opposed to other relationships created by law

➲ What is a legally sufficient Agreement?

● Object test

➲ Volition – does it have to be totally voluntary?

19 March 2012 13

The Involvement of Two or More Persons

➲ One doesn't really make a contract with oneself.

➲ NOTE – there can be as many parties to a contract as the needs of the trans-action dictate.

19 March 2012 14

An Exchange Relationship

➲ Relationships can vary in length of time

➲ Essential purpose is an exchange

➲ Reciprocal relationship

➲ Tangible things and/or intangible rights.

➲ basic formula = bargain reached leading to exchange for betterment of both parties.

19 March 2012 15

Promise

➲ Must have at least one outstanding prom-ise.

➲ No promises = nothing to enforce = no K

➲ Promise = undertaking to act or refrain from acting in a specified way at some future time.

● This can be expressed or implied

19 March 2012 16

Bilateral vs. Unilateral

➲ Only need one promise for K to exist.

● But what about “reciprocal relationship”?

➲ Unilateral = at instant of contracting, one party completes performance & all that remains is promise of the other.

➲ Bilateral = both parties have outstanding promises when contract is formed.

19 March 2012 17

Instantaneous Exchange

➲ No Contract!

Eddy Rockykayak “as is”

$400

19 March 2012 18

Promissory Exchange: Bilateral Contract

Eddy Rocky

kayakwith

promise

promiseto pay$400

19 March 2012 19

Unilateral Contract

Eddy Rocky

kayak“as is”

delivered

check--promise of

payment

executed

promiseoutstanding

19 March 2012 20

To Sum Up

➲ Valid K must have at least one outstanding promise.

➲ The promise can be expressed or implied.

➲ NOTE – today a truly instantaneous exchange is rare.

● What about when I sold my cars in St. Louis?

19 March 2012 21

Legal Recognition of Enforceability

➲ Goal of contract law is to ensure the promise is upheld.

➲ Contracts are an act of private law making.

➲ Role of the Court:

● Determine whether there is a contract.

● Resolve disputes over the terms/breach.

● Enforce the promise by giving a remedy.

19 March 2012 22

Enforceability Example

➲ Eddy's promises to give Rocky the kayak tomorrow in exchange for $400.

➲ The next day Rocky arrives with $400 but Eddy has changed his mind. He won't hand over the kayak.

➲ If Rocky sued Eddy, what is the remedy?

19 March 2012 23

World Series of Poker Example

➲ Is there a contract?

➲ What is Mr. Leyser's best arguments?

➲ What are Mr. Gold's best arguments?

Jamie Gold 2006 WorldSeries of Poker Champion

19 March 2012 24

➲ Questions concerning formation or contents of contract are resolved using the rules of offer and acceptance.

➲ These are not firm rules. ● There are sometimes statutes or court ruling that

provide guidance, but often courts must apply these rules to new facts and come up with new rules.

Introduction to Offers

19 March 2012 25

When are Questions Presented?

● Was a K formed?

● What terms are included in the K?

● Which Jurisdiction Governs?

19 March 2012 26

The Basic Modelwithout revocation

Offer

Acceptance Rejection Counteroffer

OfferorAccepts

OfferorRejects

offerormakes c-offer

Contract formedon terms of offer No Contract

K on terms ofcounteroffer

No Contract

and so on

= rejection+ new offer

19 March 2012 27

Next Week

➲ pp. 124-129● Carbolic Smokeball Case

● Livingstone v. Evans

➲ Lucy v. Zehmer – please come prepared to tell me about:● The facts

● The Legal Issue

● The Rule Applied by the Court

● The Result