Contracts Spring 2006

1. ContractsSpring 2006 Professor Robert Chang

2. Class 1, January 10, 2006 • 1 handout + index card • Review syllabus and other administrative details • Begin discussion of today’s cases Next assignment: Read pp. 161-77. classes 1

3. front back classes 1

4. Contact Info • Office: Burns 419 • Phone: 213.736.1460 • E-mail: robert.chang@lls.edu You may also reach me through Amy Nakano in Faculty Support on the 3rd floor of Burns. Her extension is 1081. classes 1

5. Office Hours • Tuesday 12:10pm-1:00pm • Thursday 12:10pm-1:00pm • Friday 12:10pm-1:00pm Or by appointment classes 1

6. Required Texts • Knapp, Crystal & Prince, Problems in Contract Law: Cases and Materials (5th edition, 2003, Aspen) • Knapp, Crystal & Prince, Rules of Contract Law, 2003-4 (Aspen) classes 1

7. Recommended Texts • Farnsworth, Contracts (4th ed., 2004, Aspen) • Blum, Contracts: Examples & Explanations (any edition, Aspen) classes 1

8. Class Recording Policy • Each class is audiotaped by the Instructional Media Center and may be accessed, usually within a day or two, via streaming audio through my course web page. • You may use your own personal recording devices in class. • Any recording of my lectures may be used only for educational purposes and may not be disseminated beyond the members of this class. classes 1

9. Course Web Page • http://classes.lls.edu/spring2006/contracts-chang/index.html This page may also be accessed by navigating through Loyola Law School’s intranet and accessing Spring 2006 Course Web Pages. classes 1

10. Attendance Policy • You are required to attend. • Laptop use is permitted for notetaking. classes 1

11. Grading Policy • Your final grade for the course will be based on your performance on two Midterm Examinations (10% + 20%) and one Final Examination (70%). • I seldom give participation points (+/-) but may do so in exceptional cases. • Grades in the class will be normalized to conform with the first year mandatory curve. classes 1

12. Exams • All exams are closed book. • Notebook computers may be used for the essay portion of the final. classes 1

13. Reading Cases Ray v. William G. Eurice & Bros. Inc. Maryland Court of Appeals 201 Md. 115, 93 A.2d 272 (1952) classes 1

14. Typical Executory K prelim. executory negotiations period -----------------|-------------------------|---------------------- t K formation performance due (1) mutual assent (2) consideration classes 1

15. Baseline Briefing Questions • Who is suing whom? • For what kind of damages? • What is the legal basis of the claim? • What is the factual basis of the claim? • What defenses or arguments does  assert? • Who won at trial? On appeal? classes 1

16. Baseline Q (continued) • What is the legal issue facing this court? • What authorities does the court look to? • What rule does the court apply? • What policies does this rule further? • What policies might it ignore? **In addition, please note the jurisdiction, the court, and the year. classes 1

17. Issue? • Any issue or rule can be stated at different levels of generality or specificity. • An important skill to develop is to be able to be able to articulate and work through issues and rules at different levels of generality and specifity. classes 1

18. Issue Candidate 1 • Did the trial court err in allowing the unilateral mistake by the Eurices to negate the manifestation of mutual assent indicated by the signature of John Eurice on the contract? classes 1

19. Issue Candidate 2 • Did the trial court err in finding that there had been unilateral mistake by the Eurices in their understanding of what specifications they were bound to under the contract? classes 1

20. Issue Candidate 3 • Did the trial court err in finding that there was no meeting of the minds and therefore no mutual assent based on the Eurices’s unilateral mistake? classes 1

21. Issue Candidate 4 • Did the trial court err in applying a subjective test to mutual assent? classes 1

22. Rule(s) classes 1

23. Rule(s) “The law is clear, absent fraud, duress, or mutual mistake, that one having the capacity to understand a written document who reads and signs it, or without reading it or having it read to him, signs it, is bound by his signature in law, at least” classes 1

24. Authorities classes 1

25. Authorities 1. Williston classes 1

26. Authorities • Williston • Restatement of Contracts classes 1

27. Authorities • Williston • Restatement of Contracts • Judge Learned Hand classes 1

28. Synthesizing Rules classes 1

29. Synthesizing Rules • For K formation, there must be mutual assent. classes 1

30. Synthesizing Rules • For K formation, there must be mutual assent. • What is required is not a subjective meeting of the minds, but rather, a manifestation of mutual assent. classes 1

31. Synthesizing Rules • For K formation, there must be mutual assent. • What is required is not a subjective meeting of the minds, but rather, a manifestation of mutual assent. • This is based on an objective standard—what a reasonable person in the position of the parties would have thought it meant. classes 1

32. More specific formulation • Absent fraud, duress or mutual mistake, that one having the capacity to understand a written document who reads and signs it, or without reading it or having it read to him, signs it, is bound by his signature in law, at least. classes 1

33. Revised Rule classes 1

34. Policies behind rule classes 1

35. Did the court get it right? classes 1

36. Hypo 1 • 1. P and D are in a bar having drinks. P has been trying to buy D’s farm foryears. While they’re having drinks, D says, “I’ll sell you my farm for $10,000. P accepts and D writes on a napkin, “I hereby agree to sell to P my farm, complete, for $10,000, title satisfactory to buyer.” D signs the napkin and gives it to P. Next day, P says to D, “Title is satisfactory. I’ll have the money by this afternoon. D says “You know I wasn’t serious.” D comes to you for help. classes 1

37. Hypo 1 (cont.) • Evaluate the following information or arguments: • a. I was three sheets to the wind • b. I was bluffing. I didn’t think P was serious or would be able to come up with the money. • c. I was joking. • d. I was joking and P knew it. • e. The fair market value of the farm, which was common knowledge known to both parties, was $500,000. classes 1

38. Note 5, Leonard v. Pepsico 15 Pepsi points + $700,000 for a $23 million jet classes 1

39. Hypo 2 • 2. A seller sends an offer by telegram and the telegraph company makes an error transmitting it so that it reads “fifty thousand” boxes rather than fifteen thousand as the seller had instructed. Suppose buyer accepts. Is there mutual assent sufficient to create a contract? classes 1

40. Lessons so far 1. Contract rules: K formation requires mutual assent and consideration. In deciding whether mutual assent exists, the court will apply an objective standard whereby you do not need a literal subjective meeting of the minds. Each party is responsible for their words and conduct as understood by a reasonable person in the position of the other party. classes 1

41. Lessons (cont) Contract rules (cont) Thus, if you sign a written document, under circumstances that indicate that it constitutes an agreement, you are bound to the terms contained therein, unless you can prove fraud, duress, mutual mistake, lack of capacity, or some other legally recognized defense. Sometimes, this is described as a duty to read. Failure to read or understand what you are signing will not, absent other circumstances, give you an out. classes 1

42. Lessons (cont) • 2. Beyond the rules, I want to emphasize the use of my baseline questions for analyzing any case. The questions provide the baseline for briefing cases. Also, if you remove the questions and just look at the responses, you have basically an essay discussion of the case. classes 1

43. Lessons (cont) 3. Other lessons • Kinds of damages--substitutional (typically monetary) versus specific (to do or not do something) • Distinction between law and equity • Start thinking about legally significant facts • Start organizing facts around legal concepts (e.g.--K formation; breach) classes 1