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Lecture 8

LAW 201 Lecture Notes - Lecture 8: Kaustinen, Specific Performance, ContractPremium

5 pages144 viewsSummer 2018

Department
Law
Course Code
LAW 201
Professor
Mary Jo- Maur
Lecture
8

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LAW 201: Module 8 Amy Kaustinen
Contracts Law July 13th, 2018
Lecture Notes:
Contract Law Part I:
18th Century Scottish Philosopher David Hume
o Told the story of two highly rational farmers have crops ready to harvest
o Lack of trust
Renders the non-simultaneous exchange especially between strangers
Contracts allow us to create binding obligations, making non-simultaneous
transactions possible
Always a gap between one and another’s performance
Main function of contract is to permit people who are strangers to one another to
make non-simultaneous exchanges
o Permits us to make contracts
o A contract is an agreement that the law will enforce
An agreement is formed by an offer followed by an acceptance
o An offer is the communication by one party (the offeror) to another party
(the offeree) of an intention to be bound to certain terms, upon the payment
by the offeree of a certain “price”
Offer can be communicated in any form
Places offeree in position of accepting it
An invitation to treat is different, it is an invitation to offer
“If you were to offer to hire me for $20/hour, I would accept”
Idea of offer turns on the idea of intention
Trickiest part in practice
Did the speaker intend to be bound to certain terms?
Look at what someone said or did and try to interpret the
intention behind those words and actions
o An acceptance is the signification by an offeree of an unconditional intention
to be bound precisely to the terms of the offer
A counter-offer is different
This ends the original offer
Conditional acceptance is still a counter-offer
Line between acceptance and conditional acceptance can be
very unclear
Acceptance has to be an exact reflection of the offer’s terms
Can be tricky to determine, too
Contract Law Part II:
Whether a communicative act is an offer or not turns on speaker’s intention
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LAW 201: Module 8 Amy Kaustinen
Contracts Law July 13th, 2018
o Can be hard to determine
Carlill v Carbolic Smoke Ball (1893)
o Famous English case re contract formation
o Carbolic smoke ball posted an advertisement said they would pay 100
pounds to anyone who got sick after using the smoke ball 3 times a day
o Mrs. Carlill used the ball as directed and still got sick, company refused to pay
her, she sued
Had to prove that the ad was an offer, an intention to be bound by
certain terms
o Smokeball company argued:
Ad was puffery (extravagant claims not taken literally)
100 pounds lot of money at the time
Court disagreed, because if they chose to make an extravagant
promise, they would benefit from it
Ad was too vague
No limit placed on how long after using the ball the person
could get sick and still benefit
Court disagreed
No contract because a contract cannot be made with everyone, has to
be made with an ascertainable person
Ad wasn’t contract, but was an offer
Court disagreed
Acceptance wasn’t communicated
Acceptances don’t necessarily have to be communicated
Offeror is master of offer, has to lay out terms of acceptance
Carbolic stipulated acceptance as using the ball 3x a day then
catching the flu
Court disagreed
o This was known as a unilateral contract
One party who makes a promise, other party performs an act
Bilateral contract is where both parties make promises
Advertisements are normally merely invitations to treat
o This presumption isn’t true when the wording in an ad suggests a serious
intention to be bound to terms
Not all contracts are bilateral
An offer can be made to the world
The offeror is the master of the offer
o If they want to dispense with the requirement of communication, they are
able to do so
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