Contracts - Mutual Assent, Offers, and Acceptance

The Foundation Series

Mutual Assent - The Big Picture

What is mutual assent? Mutual assent is often called a "meeting of the minds" by legal folk. It is a difficult concept to distill down to a one liner.

I like to think, "What happens when you agree with someone?" Both of you are agreeing. If one of you agrees and the other does not I don't think of that as agreement.

Okay. So both people have to "agree" for there to be "agreement." Both "minds" are "meeting." The difficult bit happens when you take the concept of "agreement" or "mutual assent" and apply it to contracts. For a contract to exist, mutual assent must exist. There must be a meeting of the minds between the two people.

How does this apply to my problem? When you are attempting to prove a contract exists between two people you have to look for mutual assent. It needs to be somewhere for the contract to exist. We need to find it and show it for all the world to see.

Contrast this with tort law. Contracts are a law of voluntary exchange. A tort is a wrong which happened to someone against their will. Without their consent or agreement. That's their thing. That's what they do. Torts are the opposite of contract law because the foundation of contract law is mutual assent--agreement.

Now that the foundation of a contract is out of the way. We need to give mutual assent some shape and some texture. We need some case law to cite.

Hold up! First. Remember to respect your statutory elders. CONSIDER THE UCC

Does the UCC Apply?

THE UCC APPLIES TO TRANSACTIONS IN GOODS.

GOODS ARE MOVEABLE.

* BANANA PEPPERS ARE MOVEABLE.

THUS, THE UCC APPLIES.

* Or whichever good you prefer as long as you can move it...Macedonian Rezah peppers, for example.

Okay, case law.

Embry v. Hargadine: The meeting of the minds essential for a contract is not determined by the secret intention of the parties but by their expressed intention, by their words and actions. The words had but one meaning to Embry, a reasonable man.

Lucy v. Zehmer: Zehmer sold the farm as a joke. No jokes in contracts. If the acts of one person have but one reasonable meaning, the intent doesn't matter.

Empro v. Ball-Co: Intent is always objective in contracts and letters of intent are not binding. If anything is "subject to" later agreement is not binding.

International Casings Group (ICG) v. Premium Standard Farms: The parties reached a contract and they performed that contract while waiting on a signature. UCC 2-204 "contract for sale does not fail for indefiniteness if the parties have intended to make a contractr That was substantial evidence and a meeting of the minds.

Jospeh Martin Deli v. Schumacher: The certainty rule. A court has to be reasonably certain as to what the promise was to enforce a remedy. An agreement to agree is not a contract

Hold up again! These cases are all about deciding if a contract exists. Each judge details reasons why each purported contract is valid or invalid. What if we can skip some steps and look for things that would immediately disqualify the agreement in question as a contract?

Not a contract. The Statute of Frauds.

A couple of things. One.

We know what a contract is and before we go any further we should take a look at what a contract is not. If the whole point is to find a contract it would be helpful to know if the contract is void from the get-go.

The Statute of Frauds is rule which requires certain types of contracts to be in writing. If they are not in writing they are not enforceable. These types of contracts are:

The Statute of Frauds R.2d §110

Contract of an executor to answer for a duty of his decedent. (the executor-administrator provision).
Contract to answer for the duty of another. (the suretyship provision). If you say you will answer for someone's debt, you have to do so in writing.
Contract made upon consideration of marriage I will buy you a house if you marry Bobby-Joe Brandon, Jr.! Will not work.
Contract for the sale of an interest in land Chomicky v. Buttolph is a great example.
Contract that is not to be performed within on e year from the making thereof For some reason this was a problem at some point. Read C.R. Klewin, Inc. v. Flagship Properties, Inc.

HONOR THE UCC

UCC §2-201 (a) a contract for the sale of goods for the price of $500 or more. Check the state statutes because it could be more. Or just put your contracts in writing, silly.

General rules for the written contract. R.2d §131

As long as we're talking about a contract in writing we should state the rules for the writing. What does it need to be acceptable?

Unless the state rules are different, the contract is enforceable if it is evidenced by any writing, signed by or on behalf of the party charged.

(a) reasonably identifies the subject matter of the contract
(b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and
(c) states with reasonable certainty the essential terms for the unperformed promises in the contract.

Contract Formation:
In the contractual justice system, the people are represented by two separate yet equally important concepts: The offer, who initiates the contract, and the accpetance, who completes the process. These are their stories.

So what constitutes a contract? Mutual assent, yes, however, we can think of it as a formula. K = O + A + C.

K(Contract) =(Equals) O(Offer) + A(Acceptance) + C(Consideration).

It all started with an offer.

R.2d Contracts § 22 | R.2d § 24

Okay. An agreement is struck and mutual assent achieved. The foundation of contract law: voluntary exchange.

You're probably asking yourself, "Well then what is the first step in forming an agreement?" Excellent question!

Offer

Someone makes an offer. Most of the time the concept of mutual assent takes the form of an offer from one party and an acceptance by the other.

Great. We have something to work with. We are on the lookout for an offer. In order to be successful we should probably define an offer. Legally. That's what lawyers do.

The Restatement on Contracts tells us an offer is (R.2d §22(1)):

"the manifestation of willingness to enter into a bargain with another person in understanding that her assent to that bargain is invited and will conclude it,"

so that's helpful...

Would a reasonable (normal) person believe that their agreement to your offer will be the end of it (the deal or exchange)?

Let us look to case law for some examples to flesh this out.

Interstate v. Barclay: Interstate sent Barclay a letter with price quotes for fiberglass panels. Barclay sends to purchase orders and sued for breach when Interstate didn't deliver for stated price. Was the price quotation an offer? No. Merely a price quote. The quote did not mention quantity. The UCC needs quantity.

Nordyne, Inc. v. International Controls (ICM): ICM made a new control board and marketed it to Nordyne. Nordyne requested customization and ICM obliged sending multiple examples of the custom model with quotation for manufacturing and instructions to purchase requiring a signature. Nordyne signed. Nordyne tried to say no contract because that was merely a price quote. Court held that there was a contract. The negotiations made, the quote was sent ONLY to Nordyne, and it included quantity.

Craft v. Elder & Johnston Co.: Elder & Johnson advertise a $175 sewing machine for $26 as a Thursday only special. Craft tries to pay $26 for a sewing machine and is refused. Court held that advertisements are not offers. They are offers to negotiate.

Lefkowitz v. Great Minneapolis Surplus Store, Inc.: Store advertises sale on certain items with first-come-first-serve stipulations. Lefkowitz shows up first and tries to buy the items but is refused. Court held that some ads were offers. UNILATERAL CONTRACT OFFERS. Unilateral offers can only be accepted by full and complete performance. Because one of the items was advertised with price and quantity and the offer had stipulations it was unilateral and Lefkowitz accepted by performance.

We have a contract. Our contract is an agreement. Now we ask ourselves, an agreement to do what? Exchange.

A contract is an exchange that people bargain for. A bargained-for exchange. In order for there to be an exchange, there has to be something exchanged. I will give you money for that coffee. We just bargained and exchanged money for coffee.

In contacts law, we call the items you bargain for, consideration. For a contract to work both people have to give something up. The thing they give up is their consideration.

Important Adverse Possession Case Law

Fulkerson v. Van Buren

Folks find a church and start using it as a church. Being proud of their church the folks improved the land. Farmer who owns the land on which the church sits and thus the church itself, tries to eject the congregation. Congregation claims adverse possession. Lo and behold the court finds their *state of mind* lacking. They were not aggressive trespassers for the duration of the statute.

Hollander v. World Mission Church of Washington, D.C.

Family had thought they owned the disputed land for 15 years and had used it as a true owner for that time. Church filed for ejection and Hollander claimed adverse possession. What was the state of mind? Was their hostile, adverse intent? Court finds that because they based claim not only on the deed descriptions, but also on their belief that the property line ran to the woods. That shows adverse or hostile intent enough.

Howard v. Kunto

Kunto buys a vacation home and decides to build a deck. He hires a surveyor who discovers that the original survey was, uh, *quite* incorrect and all of the lots in the area were off by 50 feet. The deed that Kunto purchased described a lot 50 feet adjacent. Kunto's house wasn't on his lot so he claims adverse possession to quiet title. Trial court fails him, finds he doesn't meet the statutory time period--he bought the place only a few months ago. Appellate judge declares that they can tack! Kunto can combine the time the previous owners adversely possessed with his own. Also! Vacation homes get around the continuous use because their use is intended to be seasonal, at least according to the court.

O'Keeffe v. Snyder

The discovery rule! Georgia discovers some of her work that had been stolen many years before. The present owner had purchased them and claimed adverse possession. The statute had lapsed. Courts find in favor of O'Keefee, saying that the statute is tolled until she reasonably discovered the paintings. If you are wronged you generally get to start the statute when you discover the wrong, not when the wrong itself took place. The discovery rule applies to chattels.