Class 23: Mid-Year Review I: Formation + Consideration

Foundations · Nov 23

By the end of class, you can

Apply the offer, acceptance, and consideration tests sequentially to an unseen fact pattern and identify the controlling defect.
Distinguish bargained-for exchange from gift and from past consideration on a comparative fact pattern.
Apply the objective theory of manifestation to fact patterns testing offer-versus-invitation-to-deal and the mailbox rule.

Today

Floor. ~40 min: R2d § 2 + Pappas. The doctrine the next class assumes you have covered.

Target. ~75 min: Floor + Steinberg + R2d § 17 + synthesis.

R2d § 2: Promise; Promisor; Promisee; Beneficiary

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

R2d § 17: Requirement of a Bargain

(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.

UCC § 2-102: Scope: Transactions in Goods

Unless the context otherwise requires, this Article applies to transactions in goods.

Pappas v. Bever

219 N.W.2d 720 (Iowa 1974)
Supreme Court of Iowa

Rule. A statement of present intention to act in the future is not a promise; the language of intent does not become a binding commitment merely because the speaker later behaves as if it were.

Steinberg v. Chicago Medical School

69 Ill. 2d 320, 371 N.E.2d 634 (1977)
Supreme Court of Illinois

Rule. A contract may be formed through a sequence of acts when one party invites performance, the other performs, and the conduct objectively manifests assent; the offeror's undisclosed intent is immaterial.

Lucy v. Zehmer

196 Va. 493, 84 S.E.2d 516 (1954)
Supreme Court of Appeals of Virginia

Rule. The mental assent of the parties is not requisite for the formation of a contract; the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts. A secret joking intent is no defense when a reasonable person would believe the words and conduct manifested a serious bargain.

Raffles v. Wichelhaus

2 Hurl. & C. 906, 159 Eng. Rep. 375 (Ex. 1864)
Court of Exchequer

Rule. Where two parties attach materially different meanings to a critical term and neither has reason to know of the other's meaning, no contract is formed for want of mutual assent.

Worked example: Run the formation gates

A homeowner posts on Craigslist: "Selling 2018 Toyota Corolla. $14,000 firm. Cash only, this weekend." A buyer texts: "I''ll take it. Coming Saturday at noon." Saturday at noon, the buyer arrives with cash. The seller has sold to someone else who offered $14,500.

Q. Walk the formation gates. Was there a contract?

Stretch: second hypothetical

Year-arc variation. Take Hawkins v. McGee from Day 1. The same surgeon, same warranty, same hairy hand. But the patient signed a medical-services contract with a 'no warranties of result' integration clause. Does the clause defeat Hawkins's recovery?

Stretch: practice problem

Stretch problems from the chapter.

Problem 2.1. Contract, Agreement, or Bargain?. See casebook Chapter 2.

Problem 2.2. The Monster and the Beast. See casebook Chapter 2.

Walk through the analysis on the board. Hit the rule, the elements, the line of authority, the answer.

Class summary

Mid-year synthesis I: formation and consideration as a unified gate. Today's review: the formation cases (Steinberg, Pappas, Lucy, Lefkowitz, Leonard, Smaligo, Flender) and the consideration cases (Hamer, Pennsy, Conrad, Ricketts) all answer one question: does the law have a promise it will enforce. Class 24 reviews the defenses (Module IV) that override formation; Module V opens with interpretation.

Next time

Next class: Mid-Year Review II: Defenses + Synthesis

_Mid-Year Review II_ · Nov 19

Review Module IV through the Pappas v. Bever fact pattern, run forward this time against SoF, mistake, misrepresentation, duress, incapacity, and unconscionability. One question across the whole review: when the contract is voidable, which party gets the choice, and what restitution follows? Come ready to answer. You may be called.