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George Mason School of Law

George Mason School of Law. Contracts I Formation F.H. Buckley fbuckley@gmu.edu. How are contracts formed?. Offer and Acceptance Consideration Promissory Estoppel. Suppose you were a reporter…. What would you want to know about a contract?. The Five W’s. Who What Where When Why.

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George Mason School of Law

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  1. George Mason School of Law Contracts I Formation F.H. Buckley fbuckley@gmu.edu

  2. How are contracts formed? • Offer and Acceptance • Consideration • Promissory Estoppel

  3. Suppose you were a reporter… • What would you want to know about a contract?

  4. The Five W’s • Who • What • Where • When • Why

  5. Basic Questions of Formation • Who are the parties • What happens to non-parties? • What • Where • When • Why

  6. Basic Questions of Formation • Who are the parties • What did they agree to? • What are the terms and conditions • Where • When • Why

  7. Basic Questions of Formation • Who are the parties • What did they agree to? • Where was the contract formed? • Under which law • When • Why

  8. Basic Questions of Formation • Who are the parties • What did they agree to? • Where was the contract formed? • When was it formed? • Pre-contractual rights • Limitation periods • Why

  9. Basic Questions of Formation • Who are the parties • What did they agree to? • Where was the contract formed? • When was it formed? • Why did they enter into the contract The doctrine of consideration

  10. Some basics • Who are the parties: Restatement § 2 • Promisors • Promisees • Beneficiaries

  11. Some basics • Not an intention but a manifestation of intention

  12. Some basics • Agreements and Bargains: Rest. § 3 • Agreements: mutual assent • Bargains: Consideration

  13. Some basics • Bargains: Consideration • Exchange of Promises • Promise for performance or Performance for performance Exchange of spies, Glienicke Bridge, 1986

  14. Some basics • Different kinds of liability: • Tortious • Contractual • Quasi-contract • Unjust Enrichment • Restitution • Action for money had and received etc.

  15. Bailey v. West

  16. Bailey v. West • Was there a contract? • Express and Implied Contracts

  17. Bailey v. West • Was there a contract? • Express and Implied Contracts • Restatement § 19(1) (“by other acts”)

  18. Bailey v. West • Was there a implied contract? • Restatement § 19(2) • What did Kelly tell the plaintiff? • Was Kelly the defendant’s agent?

  19. Bailey v. West • When is quasi-contractual liability imposed?

  20. Bailey v. West • When is quasi-contractual liability imposed? • Benefit conferred on defendant by plaintiff • Appreciation by defendant of the benefit • Acceptance and retention of benefit by defendant

  21. What is a benefit? • I think orange aluminum siding is neat. When you are on holiday I cover your house with it. A benefit?

  22. What is a benefit? • No recovery for “officious” benefits • And just how do you tell?

  23. What is a benefit? • What about the Good Samaritan?

  24. What is a benefit? • What’s the difference between aluminum siding and the Good Samaritan?

  25. What is a benefit? • What’s the difference between aluminum siding and the Good Samaritan? • The informational problem • Could the informational problem be cured by negotiation?

  26. What is a benefit? • So was the care of Bascom’s Folly officious?

  27. What is a benefit? • How about splitting it down the middle?

  28. What is a benefit? • How about splitting it down the middle? • Why do you think the common law has a preference for clear signals?

  29. Contractual Liability • When is there a manifestation of an intent to be bound to a contract?

  30. Lucy v. Zehmer Back on State 40 about a half mile from the junction with County 613 the traveler comes upon the FERGUSON PLACE; … The two sections are connected by a passageway—commonly called a colonnade, though quite innocent of columns. The wide-boarded floors, flat-head nails, massive locks, H and L hinges, and hand-carved mantels attest the antiquity of a house well worth the restoration it has not received.

  31. Lucy v. Zehmer • Did Zehmer have the capacity to contract? Restatement § 16.

  32. Lucy v. Zehmer • Did Zehmer intend to create legal relations?

  33. Lucy v. Zehmer • Do secret reservations negative consent?

  34. Lucy v. Zehmer • How would you apply Rest. §§ 19, 21, 24

  35. Lucy v. Zehmer • How would you apply Rest. §§ 19, 21, 24 • The “objective theory” of contract • So much for mere acts of will…

  36. Secret Reservations: Equivocation

  37. Lucy v. Zehmer • How would you apply Rest. §§ 19, 21, 24 • What remedy is sought and why did that matter?

  38. Leonard v. Pepsico

  39. George Mason School of Law Contracts I Formation F.H. Buckley fbuckley@gmu.edu

  40. Next Day • Next two classes: Consideration • On using a computer for the exam…

  41. Formation as a Coordination Game • You have to meet someone here in the United States. You don’t know anything about him and he knows nothing of you. You don’t know where or when to meet. It could be anywhere in the US and it could be any day or any time.

  42. Formation as a Coordination Game • You have to meet someone here in the United States. You don’t know anything about him and he knows nothing of you. You don’t know where or when to meet. It could be anywhere in the US and it could be any day or any time. • What day?

  43. Formation as a Coordination Game • You have to meet someone here in the United States. You don’t know anything about him and he knows nothing of you. You don’t know where or when to meet. It could be anywhere in the US and it could be any day or any time. • What city?

  44. Formation as a Coordination Game • You have to meet someone here in the United States. You don’t know anything about him and he knows nothing of you. You don’t know where or when to meet. It could be anywhere in the US and it could be any day or any time. • Where in NYC?

  45. Formation as a Coordination Game • You have to meet someone here in the United States. You don’t know anything about him and he knows nothing of you. You don’t know where or when to meet. It could be anywhere in the US and it could be any day or any time. • What time?

  46. Formation as a Coordination Game • You have to meet someone here in the United States. You don’t know anything about him and he knows nothing of you. You don’t know where or when to meet. It could be anywhere in the US and it could be any day or any time. • What time?

  47. What side of the road to drive on?Coordination Games Player 2 Player 1

  48. Formation as a coordination game Player 2 Player 1

  49. Bargaining errors as an avoidable accident What we got here is a failure to communicate

  50. Two kinds of Promissory Accidents • Type I: Promisors are found to promise when they really didn’t intend to do so (false positive) • Type II: Promisors are not found to promise where they intended to do so (true negative)

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