Contracts Questions Thread

(Study Tips, Dealing With Stress, Maintaining a Social Life, Financial Aid, Internships, Bar Exam, Careers in Law . . . )
agumon
Posts: 11
Joined: Tue Dec 01, 2009 7:19 pm

Contracts Questions Thread

Postby agumon » Tue Dec 01, 2009 7:39 pm

I figure people could post and answer hypos in this thread?

My question is easy I hope:

Guy writes Gal a signed note saying: "I hereby promise that if Gal delivers $300K to me between the current month of March and July, I will give Gal title to the house."

In May, Guy tells Gal he's putting the house up for sale. Gal says she's almost got the money.

In June Gal goes to Guy with $300K and asks for the title. Guy has already sold the house.

--------------------

What I think: There was a valid offer since it was in writing, clearly stated and under a year (SOF), but there was no contract as acceptance was needed by performance. Power of acceptance was revoked indirectly when Guy told Gal he was selling the house.

Off the mark? Would Gal be entitled to any damages?

Thanks :)

HAMBONE
Posts: 82
Joined: Tue Jul 14, 2009 5:17 pm

Re: Contracts Questions Thread

Postby HAMBONE » Tue Dec 01, 2009 7:46 pm

agumon wrote:I figure people could post and answer hypos in this thread?

My question is easy I hope:

Guy writes Gal a signed note saying: "I hereby promise that if Gal delivers $300K to me between the current month of March and July, I will give Gal title to the house."

In May, Guy tells Gal he's putting the house up for sale. Gal says she's almost got the money.

In June Gal goes to Guy with $300K and asks for the title. Guy has already sold the house.

--------------------

What I think: There was a valid offer since it was in writing, clearly stated and under a year (SOF), but there was no contract as acceptance was needed by performance. Power of acceptance was revoked indirectly when Guy told Gal he was selling the house.

Off the mark? Would Gal be entitled to any damages?

Thanks :)


Look at option K's. In a unilateral k, once part performance begins, the offeror cannot revoke (§45?). the argument would be that the statement by gal saying she is collecting the money is the beginning of performance. But the other side of the argument is that performance doesn't begin until gal actually hands guy the money, and the collection was merely preparation, hence no option k.

User avatar
napolnic
Posts: 375
Joined: Tue Nov 18, 2008 1:17 pm

Re: Contracts Questions Thread

Postby napolnic » Tue Dec 01, 2009 7:50 pm

HAMBONE wrote:
agumon wrote:I figure people could post and answer hypos in this thread?

My question is easy I hope:

Guy writes Gal a signed note saying: "I hereby promise that if Gal delivers $300K to me between the current month of March and July, I will give Gal title to the house."

In May, Guy tells Gal he's putting the house up for sale. Gal says she's almost got the money.

In June Gal goes to Guy with $300K and asks for the title. Guy has already sold the house.

--------------------

What I think: There was a valid offer since it was in writing, clearly stated and under a year (SOF), but there was no contract as acceptance was needed by performance. Power of acceptance was revoked indirectly when Guy told Gal he was selling the house.

Off the mark? Would Gal be entitled to any damages?

Thanks :)


Look at option K's. In a unilateral k, once part performance begins, the offeror cannot revoke (§45?). the argument would be that the statement by gal saying she is collecting the money is the beginning of performance. But the other side of the argument is that performance doesn't begin until gal actually hands guy the money, and the collection was merely preparation, hence no option k.

Also note that he had canceled the option contract by informing her that he has put the house on the market.

HAMBONE
Posts: 82
Joined: Tue Jul 14, 2009 5:17 pm

Re: Contracts Questions Thread

Postby HAMBONE » Tue Dec 01, 2009 7:59 pm

napolnic wrote:
HAMBONE wrote:
agumon wrote:I figure people could post and answer hypos in this thread?

My question is easy I hope:

Guy writes Gal a signed note saying: "I hereby promise that if Gal delivers $300K to me between the current month of March and July, I will give Gal title to the house."

In May, Guy tells Gal he's putting the house up for sale. Gal says she's almost got the money.

In June Gal goes to Guy with $300K and asks for the title. Guy has already sold the house.

--------------------

What I think: There was a valid offer since it was in writing, clearly stated and under a year (SOF), but there was no contract as acceptance was needed by performance. Power of acceptance was revoked indirectly when Guy told Gal he was selling the house.

Off the mark? Would Gal be entitled to any damages?

Thanks :)


Look at option K's. In a unilateral k, once part performance begins, the offeror cannot revoke (§45?). the argument would be that the statement by gal saying she is collecting the money is the beginning of performance. But the other side of the argument is that performance doesn't begin until gal actually hands guy the money, and the collection was merely preparation, hence no option k.

Also note that he had canceled the option contract by informing her that he has put the house on the market.


yeah now that I look at it, the offer was destroyed even before gal informed guy that she had started collecting money, so you don't even have to address the option k stuff.

freegaladvice
Posts: 11
Joined: Tue Oct 06, 2009 8:41 pm

Re: Contracts Questions Thread

Postby freegaladvice » Tue Dec 01, 2009 8:10 pm

Someone call m311, because I personally think Gal had 300,000 different ways to accept and I'm positive one is valid, I just don't have time to spell out why you all don't see it.

User avatar
napolnic
Posts: 375
Joined: Tue Nov 18, 2008 1:17 pm

Re: Contracts Questions Thread

Postby napolnic » Tue Dec 01, 2009 10:02 pm

freegaladvice wrote:Someone call m311, because I personally think Gal had 300,000 different ways to accept and I'm positive one is valid, I just don't have time to spell out why you all don't see it.

Why thank you for being so wonderful as not to deign to help us out, lord.

User avatar
superserial
Posts: 376
Joined: Fri Sep 11, 2009 2:57 pm

Re: Contracts Questions Thread

Postby superserial » Tue Dec 01, 2009 10:21 pm

freegaladvice wrote:Someone call m311, because I personally think Gal had 300,000 different ways to accept and I'm positive one is valid, I just don't have time to spell out why you all don't see it.


that's obviously correct because his professor who wrote the restatement told him so.

tikitavi
Posts: 20
Joined: Tue Dec 30, 2008 12:55 pm

Re: Contracts Questions Thread

Postby tikitavi » Tue Dec 01, 2009 10:33 pm

-The offer may purport to be irrevocable until July. You should mention that despite what the offer says it is revocable because an option contract, supported by separate consideration, has not been created.

-Next is whether acceptance can be made only by performance, or by promise also. Seems like it is looking to a uni-lateral contract.

-'She almost has the money': can be part performance which creates an option and makes the offer irrevocable. But can argue that Guy is not looking for Gal to 'almost get the money' he just wants $300k delivered to him and that anything less than that is mere preparation and not part performance. But on the other hand, not many people have $300k sitting around in their sock drawer, getting together that type of money necessarily entails some effort(and possibly risk) on part of Gal, so she should be protected during the time she is getting the money together. Thus, equities might favor viewing 'almost got the money' as part performance that creates an option.

-Guy says he is putting the house up for sale: This can be a revocation(assuming the offer isn't already irrevocable). But I think you should at least try to argue both ways. Putting the house up for sale might not be totally inconsistent with his intent to keep the offer to Gal open. He might want to keep Gals' offer open but just see what else is out there.

-Gal shows up with $300k: if the offer was irrevocable then Gal has accepted and Guy is in breach. Not sure what damages she'd be entitled to. The house has already been sold so the normal remedy of specific performance doesn't seem to be available.

sts45
Posts: 4
Joined: Sun Oct 19, 2008 2:14 am

Re: Contracts Questions Thread

Postby sts45 » Tue Dec 01, 2009 10:39 pm

Reminds me of Dickenson v. Dodds, or Petterson v. Pattberg. There was no option K since no consideration was shown. If it is a unilateral K, then you might argue that performance began, but the two aforementioned cases have fact patterns that contradict that argument. Therefore, its probable that the offeror made an offer, and revoked it before the offeree accepted...

User avatar
superserial
Posts: 376
Joined: Fri Sep 11, 2009 2:57 pm

Re: Contracts Questions Thread

Postby superserial » Tue Dec 01, 2009 10:54 pm

tikitavi wrote:'She almost has the money': can be part performance which creates an option and makes the offer irrevocable. But can argue that Guy is not looking for Gal to 'almost get the money' he just wants $300k delivered to him and that anything less than that is mere preparation and not part performance. But on the other hand, not many people have $300k sitting around in their sock drawer, getting together that type of money necessarily entails some effort(and possibly risk) on part of Gal, so she should be protected during the time she is getting the money together. Thus, equities might favor viewing 'almost got the money' as part performance that creates an option.


she'd have a better case if she had notified him in a timely manner that she was getting the money together.

pandacot
Posts: 167
Joined: Fri Aug 14, 2009 11:39 pm

Re: Contracts Questions Thread

Postby pandacot » Wed Dec 02, 2009 12:37 am

agumon wrote:Guy writes Gal a signed note saying: "I hereby promise that if Gal delivers $300K to me between the current month of March and July, I will give Gal title to the house."

In May, Guy tells Gal he's putting the house up for sale. Gal says she's almost got the money.

In June Gal goes to Guy with $300K and asks for the title. Guy has already sold the house.

My analysis would be along the same lines as tiki's. There's some issues I missed, but its too late to try for a full analysis.

Use CL

SoF satisfied? argue on signature: no signature v. any marking will be sufficient and construed as signature

Offer: Yes, nothing to really argue here.

Option K? Bilateral- no consideration and good arguments for language not explicit enough to convey leaving open, only looking for promise. Unilateral - Offer looks to performance=45, beginning performance v. mere preparation = stronger argument for preparation because the money raised could be used for anything

Revocation: revocation doesn't have to state "I revoke" as long as can be implied from words -- this is not INDIRECT revocation, that applies when offeree hears from a reasonable source that offeror is acting contradictory to offer

Acceptance: acceptance after revocation = counter-offer. Too late

87(2) or 90? Could raise to show aware of issue, but there is no substantial reliance

HipSquare
Posts: 3
Joined: Tue Oct 27, 2009 8:26 am

Re: Contracts Questions Thread

Postby HipSquare » Wed Dec 02, 2009 12:54 am

You could also argue that the note was merely a letter of intent and only could be enforceable if the parties intended for them to be contractually binding (Quake v. American). The fact that Gal also didn't sign the note may be evidence that she did not intend for it to eventually be an enforceable contract in which case her best bet seems to be Section 90 reliance. Not the strongest argument, but probably not a bad kitchen sink argument to throw in.

Also I would add that my prof is very skeptical of Unilateral contracts and it's ambiguous whether this is one or not. Is her only method of acceptance the actual deliverance of the $300K or is that merely consideration and she could have also accepted by saying "I accept" or by signing the note? Unilateral contracts are exceptional (again, my prof doesn't like them so he specifically said he didn't want us to go finding them all over the place) and the vast majority of contracts are bilateral. If it's not unilateral then it looks like she never accepted and he was free to revoke at any time which he did in May.

User avatar
m311
Posts: 32
Joined: Sat Aug 29, 2009 4:41 pm

Re: Contracts Questions Thread

Postby m311 » Wed Dec 02, 2009 2:04 am

superserial wrote:
freegaladvice wrote:Someone call m311, because I personally think Gal had 300,000 different ways to accept and I'm positive one is valid, I just don't have time to spell out why you all don't see it.


that's obviously correct because his professor who wrote the restatement told him so.
Not clearly stating my reasoning is not something I can be accused of. I went over and over it. More than I should have actually. You all ridiculed it, but lo and behold every academic authority used my reasoning exactly. Get your panties out of your ass. Sometimes you're just wrong and sometimes people see things you don't.

User avatar
Brawndo
Posts: 36
Joined: Sat Nov 14, 2009 3:48 pm

Re: Contracts Questions Thread

Postby Brawndo » Wed Dec 02, 2009 2:09 am

Sorry, I instantly forgot everything I learned about contracts the second time was called for my exam today

User avatar
superserial
Posts: 376
Joined: Fri Sep 11, 2009 2:57 pm

Re: Contracts Questions Thread

Postby superserial » Wed Dec 02, 2009 2:12 am

m311 wrote:
superserial wrote:
freegaladvice wrote:Someone call m311, because I personally think Gal had 300,000 different ways to accept and I'm positive one is valid, I just don't have time to spell out why you all don't see it.


that's obviously correct because his professor who wrote the restatement told him so.
Not clearly stating my reasoning is not something I can be accused of. I went over and over it. More than I should have actually. You all ridiculed it, but lo and behold every academic authority used my reasoning exactly. Get your panties out of your ass. Sometimes you're just wrong and sometimes people see things you don't.


this reaction is proportionate to my comment's level of seriousness.

and when did I say you don't clearly state your reasoning?

User avatar
m311
Posts: 32
Joined: Sat Aug 29, 2009 4:41 pm

Re: Contracts Questions Thread

Postby m311 » Wed Dec 02, 2009 2:25 am

Just glancing at this hypo, I'm pretty sure the issue you're wanted to discuss is whether A telling B he was putting the house on the market was actually a revocation of the offer. It's not clear. Can go both ways.

B saying she is getting the money ready is NOT the beginning of performance. You will be expected to know this. Preparation to perform does not make an offer irrevocable and one of the major cases addresses this point (getting money together)- I think Dickinson. It may however be an acceptance of his offer by way of promise. Modern trend doesn't find unilateral offers unless it is explicit in the offer that a promise will not suffice. This is the second thing that can go both ways.

If all else fails she has a promissory estoppel claim. When she said she was getting the money together, he didn't stop her. He knew she was acting under the assumption she could buy for 300k and knew she was probably incurring costs.
Last edited by m311 on Wed Dec 02, 2009 2:35 am, edited 1 time in total.

solidsnake
Posts: 531
Joined: Fri Apr 25, 2008 2:08 am

Re: Contracts Questions Thread

Postby solidsnake » Wed Dec 02, 2009 2:33 am

Well I take back that m311 was right. There is no contract and there is no promissory estoppel claim for any reliance incurred AFTER she learned that he put the house up for sale in May, UNLESS "up for sale" means offered to a limited number of people, whom she had reliable information that none would accept. Barring this assumption see below.

when "guy" told her he put up house for sale in May, this created a duty to inquire in girl. Her getting money together (but not tendering it) was not beginning performance; guy didn't technically specify performance as only means of acceptance of his offer, if she was serious she could have just return-promised and if she needed time to think about it/ get money together, the parties could have modified the offer with paid consideration creating a bonafide option; knowing this, "relying" on an unsupported promise is probably unreasonable, since there is nothing in the facts (like the history between them) telling us otherwise, and this was just her non-committal way of having her cake and eating it to. And you want to argue that HE had the burden to stop her from gathering money? Good luck. She shouldn't have ignored the first-hand info that tells her he's current position is that he is ready to sell, now. In may. Don't run to R2d87 every fucking time you can.
Last edited by solidsnake on Wed Dec 02, 2009 3:51 am, edited 3 times in total.

User avatar
m311
Posts: 32
Joined: Sat Aug 29, 2009 4:41 pm

Re: Contracts Questions Thread

Postby m311 » Wed Dec 02, 2009 2:47 am

To make the distinction clear- think about what it is the offeror wants. Here, he wants money. He doesn't want her to get loans or whatever. If she had tendered any money, it would be the beginning of performance. If the offer were to climb a mountain, buying equipment to do so is not the beginning of performance because it's not what the offeror wants. Taking a step onto the trail is however.

User avatar
vanwinkle
Posts: 9740
Joined: Sun Dec 21, 2008 3:02 am

Re: Contracts Questions Thread

Postby vanwinkle » Wed Dec 02, 2009 2:59 am

agumon wrote:Guy writes Gal a signed note saying: "I hereby promise that if Gal delivers $300K to me between the current month of March and July, I will give Gal title to the house."


Restatement § 45: (1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.

The way it's worded, it's not something that can really be accepted by a promise. It's not inviting a return promise (such as "I'll come up with the money"), it's inviting a performance (She accepts by giving him the money). Given that, the question is where performance begins. If she began performance before he revoked, then the Restatement says she has an irrevocable option to complete her performance.

If performance begins with her gathering up the money, then (assuming she was telling the truth) she had already begun performing when he told her he was putting the house up for sale (and revoking). I think that argument might be supported by Ever-Tite Roofing, where performance was found to have started not when they began the work on a roof but when they took substantial steps toward performance (hiring workers, loading the truck, driving to the work location).

The thing is, in that case, Ever-Tite spent money they couldn't get back on the workers. I don't think "Gal" has anything she can say she's lost. She's got whatever money she's raised, but I don't think that would be seen the same way as loading a truck in Ever-Tite would. Simply raising money in itself isn't something that seems like an act of performing. On the other hand, it takes some work to raise that much money, and the Restatement says once the offeree begins the invited performance... and perhaps the "performance" isn't just "handing over the money" but since this part is implied, "raising the money and handing it over".

I think the important part is that the question tries to invoke Restatement 45 to see how you interpret the temporal relationship between revoking and beginning performance. As long as you recognize that there's an issue of partial performance and it could affect whether the revocation was in time, you've probably addressed what the question is looking for.

User avatar
vanwinkle
Posts: 9740
Joined: Sun Dec 21, 2008 3:02 am

Re: Contracts Questions Thread

Postby vanwinkle » Wed Dec 02, 2009 3:14 am

m311 wrote:If all else fails she has a promissory estoppel claim. When she said she was getting the money together, he didn't stop her. He knew she was acting under the assumption she could buy for 300k and knew she was probably incurring costs.


I don't think a court would buy this. If they're resorting to promissory estoppel it means they already accepted his statement of putting the house up for sale as a revocation (otherwise they'd still be trying to enforce a breach of express contract). If they're accepting that statement as a revocation... what else could he have said to stop her besides telling her he was revoking?

User avatar
Goal
Posts: 15
Joined: Wed Jul 08, 2009 2:34 pm

Re: Contracts Questions Thread

Postby Goal » Thu Dec 03, 2009 12:15 pm

napolnic wrote:Also note that he had canceled the option contract by informing her that he has put the house on the market.


You can't terminate an option contract. (§ 37).

HAMBONE
Posts: 82
Joined: Tue Jul 14, 2009 5:17 pm

Re: Contracts Questions Thread

Postby HAMBONE » Thu Dec 03, 2009 12:35 pm

Goal wrote:
napolnic wrote:Also note that he had canceled the option contract by informing her that he has put the house on the market.


You can't terminate an option contract. (§ 37).


I think he meant offer and not the option K. The option K can only be destroyed by the promisee by a counteroffer, outright rejection or bid shopping (in reliance options)

User avatar
Goal
Posts: 15
Joined: Wed Jul 08, 2009 2:34 pm

Re: Contracts Questions Thread

Postby Goal » Thu Dec 03, 2009 12:47 pm

HAMBONE wrote:
Goal wrote:
napolnic wrote:Also note that he had canceled the option contract by informing her that he has put the house on the market.


You can't terminate an option contract. (§ 37).


I think he meant offer and not the option K. The option K can only be destroyed by the promisee by a counteroffer, outright rejection or bid shopping (in reliance options)


Even the promisee can't terminate an option K by rejecting the offer. If the promisee rejects the offer and then later changes his mind, the option K would still be effective if the option K has not expired. Neither side can terminate an option K. The only way is to let it expire or accept the offer.

So if there was indeed an option K created here in this fact pattern, then Gal had the option to accept/pay until the end of July, even if she had manifested an intention to not accept the offer prior to that acceptance.

HAMBONE
Posts: 82
Joined: Tue Jul 14, 2009 5:17 pm

Re: Contracts Questions Thread

Postby HAMBONE » Thu Dec 03, 2009 1:09 pm

Goal wrote:
HAMBONE wrote:
Goal wrote:
napolnic wrote:Also note that he had canceled the option contract by informing her that he has put the house on the market.


You can't terminate an option contract. (§ 37).


I think he meant offer and not the option K. The option K can only be destroyed by the promisee by a counteroffer, outright rejection or bid shopping (in reliance options)


Even the promisee can't terminate an option K by rejecting the offer. If the promisee rejects the offer and then later changes his mind, the option K would still be effective if the option K has not expired. Neither side can terminate an option K. The only way is to let it expire or accept the offer.

So if there was indeed an option K created here in this fact pattern, then Gal had the option to accept/pay until the end of July, even if she had manifested an intention to not accept the offer prior to that acceptance.


I think that's limited to an express option where even nominal consideration has been paid for the exclusive window for negotiation. In a standard option K or reliance based K (contractors usually) counteroffers destroy the option. maybe I am misremembering this. I will know for sure once I spend today with the UCC

User avatar
Goal
Posts: 15
Joined: Wed Jul 08, 2009 2:34 pm

Re: Contracts Questions Thread

Postby Goal » Thu Dec 03, 2009 1:31 pm

HAMBONE wrote:
I think that's limited to an express option where even nominal consideration has been paid for the exclusive window for negotiation. In a standard option K or reliance based K (contractors usually) counteroffers destroy the option. maybe I am misremembering this. I will know for sure once I spend today with the UCC


That is an interesting point and it had me flying straight to Wexis to double check. I couldn't find any supporting section though. Could you expand on your reasoning? I'm honestly curious to learn more because I believe my prof made it clear to us that only lapse of time is the sure way to terminate an option K.

By the way, are you implying that the UCC governs this fact pattern?




Return to “Forum for Law School Students”

Who is online

Users browsing this forum: AT9 and 17 guests