Restatement Second of Contracts.docx
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Restatement Second of Contracts.docx
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RestatementSecondofContracts
RESTATEMENT(SECOND)OFCONTRACTS
§1.CONTRACTDEFINED
Acontractisapromiseorasetofpromisesforthebreachofwhichthelawgivesaremedy,ortheperformanceofwhichthelawinsomewayrecognizesasaduty.
§2.PROMISE;PROMISOR;PROMISEE...
(1)Apromiseisamanifestationofintentiontoactorrefrainfromactinginaspecifiedway,somadeastojustifyapromiseeinunderstandingthatacommitmenthasbeenmade.
(2)Thepersonmanifestingtheintentionisthepromisor.
(3)Thepersontowhomthemanifestationisaddressedisthepromisee....
Comments
b.Manifestationofintention....Thephrase"manifestationofintention"adoptsanexternalorobjectivestandardforinterpretingconduct;itmeanstheexternalexpressionofintentionasdistinguishedfromundisclosedintention.Apromisormanifestsanintentionifhebelievesorhasreasontobelievethatthepromiseewillinferthatintentionfromhiswordsorconduct.
e.Illusorypromises;merestatementsofintention.Wordsofpromisewhichbytheirtermsmakeperformanceentirelyoptionalwiththe"promisor"whatevermayhappen,orwhatevercourseofconductinotherrespectshemaypursue,donotconstituteapromise....Ontheotherhand,apromisemaybemadeeventhoughnodutyofperformancecanariseunlesssomeeventoccurs(see§§224,225
(1)).Suchaconditionalpromiseisnolessapromisebecausethereissmalllikelihoodthatanydutyofperformancewillarise,asinthecaseofapromisetoinsureagainstfireathoroughlyfireproofbuilding.Theremaybeapromiseinsuchacaseeventhoughthedutytoperformdependsonastateofmindofthepromisorotherthanhisownunfetteredwish(see§228),oronaneventwithinthepromisor'scontrol.
§17.REQUIREMENTOFABARGAIN
(1)ExceptasstatedinSubsection
(2),theformationofacontractrequiresabargaininwhichthereisamanifestationofmutualassenttotheexchangeandaconsideration.
(2)Whetherornotthereisabargainacontractmaybeformedunderspecialrulesapplicabletoformalcontractsorundertherulesstatedin§§82-94.
Comments
b.Bargains....Thetypicalcontractisabargain,andisbindingwithoutregardtoform.Thegoverningprincipleinthetypicalcaseisthatbargainsareenforceableunlesssomeotherprincipleconflicts.Thischapterandthenextdealwiththetwoessentialelementsofabargain:
agreementandexchange.
c."Meetingoftheminds."Theelementofagreementissometimesreferredtoasa"meeting"oftheminds."Thepartiestomostcontractsgiveactualaswellasapparentassent,butitisclearthatamentalreservationofapartytoabargaindoesnotimpairtheobligationhepurportstoundertake.Thephraseusedhere,therefore,is"manifestationofmutualassent,"asinthedefinitionof"agreement"in§3....
e.Informalcontractwithoutbargain.Therearenumerousatypicalcaseswhereinformalpromisesarebindingthoughnotmadeaspartofabargain.Insuchcasesitisoftensaidthatthereisconsiderationbyvirtueofrelianceonthepromiseorbyvirtueofsomecircumstance,suchasa"pastconsideration,"whichdoesnotinvolvetheelementofexchange....Thereisnorequirementofagreementforsuchcontracts.Theyarethesubjectof§§82-94.
§20.EFFECTOFMISUNDERSTANDING
(1)Thereisnomanifestationofmutualassenttoanexchangeifthepartiesattachmateriallydifferentmeaningstotheirmanifestationsand
(a)neitherpartyknowsorhasreasontoknowthemeaningattachedbytheother;or
(b)eachpartyknowsoreachpartyhasreasontoknowthemeaningattachedbytheother.
(2)Themanifestationsofthepartiesareoperativeinaccordancewiththemeaningattachedtothembyoneofthepartiesif
(a)thatpartydoesnotknowofanydifferentmeaningattachedbytheother,andtheotherknowsthemeaningattachedbythefirstparty;or
(b)thatpartyhasnoreasontoknowofanydifferentmeaningattachedbytheother,andtheotherhasreasontoknowthemeaningattachedbythefirstparty.
§21.INTENTIONTOBELEGALLYBOUND
Neitherrealnorapparentintentionthatapromisebelegallybindingisessentialtotheformationofacontract,butamanifestationofintentionthatapromiseshallnotaffectlegalrelationsmaypreventtheformationofacontract.
Comments:
b.Agreementnottobelegallybound.Partiestowhatwouldotherwisebeabargainandacontractsometimesagreethattheirlegalrelationsarenottobeaffected.Intheabsenceofanyinvalidatingcause,suchatermisrespectedbythelawlikeanyotherterm,butsuchanagreementmaypresentdifficultquestionsofinterpretation:
itmaymeanthatnobargainhasbeenreached,orthataparticularmanifestationofintentionisnotapromise;itmayreserveapowertorevokeorterminateapromiseundercertaincircumstancesbutnotothers.Inawrittendocumentpreparedbyonepartyitmayraiseaquestionofmisrepresentationormistakeoroverreaching;toavoidsuchquestionsitmaybereadagainstthepartywhopreparedit.
Thepartiestosuchanagreementmayintendtodenylegaleffecttotheirsubsequentacts.Butwhereabargainhasbeenfullyorpartlyperformedononeside,afailuretoperformontheothersidemayresultinunjustenrichment,andthetermmaythenbeunenforceableasaprovisionforapenaltyorforfeiture....
§24.OFFERDEFINED
Anofferisthemanifestationofwillingnesstoenterintoabargain,somadeastojustifyanotherpersoninunderstandingthathisassenttothatbargainisinvitedandwillconcludeit.
§26.PRELIMINARYNEGOTIATIONS
Amanifestationofwillingnesstoenterintoabargainisnotanofferifthepersontowhomitisaddressedknowsorhasreasontoknowthatthepersonmakingitdoesnotintendtoconcludeabargainuntilhehasmadeafurthermanifestationofassent.
Illustration
1.A,aclothingmerchant,advertisesovercoatsofacertainkindforsaleat$50.Thisisnotanoffer,butaninvitationtothepublictocomeandpurchase.Theadditionofthewords“OuttheygoSaturday;FirstCome,FirstServe”mightmaketheadvertisementanoffer.
§30.FORMOFACCEPTANCEINVITED
(1)Anoffermayinviteorrequireacceptancetobemadebyanaffirmativeanswerinwords,orbyperformingorrefrainingfromperformingaspecifiedact,ormayempowertheoffereetomakeaselectionoftermsinhisacceptance.
(2)Unlessotherwiseindicatedbythelanguageorthecircumstances,anofferinvitesacceptanceinanymannerandbyanymediumreasonableinthecircumstances.
Comments:
a.Requiredform.Theofferoristhemasterofhisoffer....Theformofacceptanceislesslikelytoaffectthesubstanceofthebargainthantheidentityoftheofferee,andisoftenquiteimmaterial.Buttheofferorisentitledtoinsistonaparticularmodeofmanifestationofassent....
b.Invitedform.Insistenceonaparticularformofacceptanceisunusual.Offersoftenmakenoexpressreferencetotheformofacceptance;sometimesambiguouslanguageisused.Languagereferringtoaparticularmodeofacceptanceisoftenintendedandunderstoodassuggestionratherthanlimitation;thesuggestedmodeisthenauthorized,butothermodesarenotprecluded.
§32.INVITATIONOFPROMISEORPERFORMANCE
Incaseofdoubtanofferisinterpretedasinvitingtheoffereetoaccepteitherbypromisingtoperformwhattheofferrequestsorbyrenderingtheperformance,astheoffereechooses.
Comments:
a.....Theofferorisoftenindifferentastowhetheracceptancetakestheformofwordsofpromiseoractsofperformance,andhiswordsliterallyreferringtooneareoftenintendedandunderstoodtorefertoeither.Whereperformancetakestime,however,thebeginningofperformancemayconstituteapromisetocompleteit.See§62.
b.Offerlimitedtoacceptancebyperformanceonly.Languageorcircumstancessometimesmakeitclearthattheoffereeisnottobindhimselfinadvanceofperformance.Hispromisemaybeworthlesstotheofferor,orthecircumstancesmaymakeitunreasonablefortheofferortoexpectafirmcommitmentfromtheofferee.Insuchcases,theofferdoesnotinviteapromissoryacceptance,andapromiseisineffectiveasanacceptance.Examplesarefoundinoffersofrewardorofprizesinacontest,madetoalargenumberofpeoplebuttobeacceptedbyonlyone.
§33.CERTAINTY
(1)Eventhoughamanifestationofintentionisintendedtobeunderstoodasanoffer,itcannotbeacceptedsoastoformacontractunlessthetermsofthecontractarereasonablycertain.
(2)Thetermsofacontractarereasonablycertainiftheyprovideabasisfordeterminingtheexistenceofabreachandforgivinganappropriateremedy.
(3)Thefactthatoneormoretermsofaproposedbargainareleftopenoruncertainmayshowthatamanifestationofintentionisnotintendedtobeunderstoodasanofferorasanacceptance.
Comment:
a.Certaintyofterms.Itissometimessaidthattheagreementmustbecapableofbeinggivenanexactmeaningandthatalltheperformancestoberenderedmustbecertain.Suchstatementsmay beappropriateindeterminingwhetheramanifestationofintentionisintendedtobeunderstoodasanoffer.Buttheactionsofthepartiesmayshowconclusivelythattheyhaveintendedtoconcludeabindingagreement,eventhoughoneormoretermsaremissingorarelefttobeagreedupon.Insuchcasescourtsendeavor,ifpossible,toattachasufficientlydefinitemeaningtothebargain.
Anofferwhichappearstobeindefinitemaybegivenprecisionbyusageoftradeorbycourseofdealingbetweentheparties.Termsmaybesuppliedbyfactualimplication,andinrecurringsituationsthelawoftensuppliesatermintheabsenceofagreementtothecontrary....Wherethepartieshaveintendedtoconcludeabargain,un
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