Source: http://essaydocs.org/does-party-entering-into-agreement-have-authority-to-do-so.html?page=4
Timestamp: 2020-05-26 12:14:43
Document Index: 95488118

Matched Legal Cases: ['§ 110', '§ 131', '§ 132', '§ 133', '§ 139', '§2', '§8', '§ 132', '§ 133', '§ 133', '§ 132', '§ 134', '§139', '§2', '§33', '§2', '§2', '§2', '§2', '§2', '§2', '§1', '§2', '§ 201', '§ 201', '§ 202', '§ 203', '§ 203', '§ 203', '§ 203', '§ 202', '§ 203', '§ 203', '§1']

Rest. 2d § 110 Classes of Contracts Covered
Rest. 2d § 131 General Requisites of a Memorandum
Rest. 2d § 132 Several Writings
Rest. 2d § 133 Memorandum Not Made as Such
Rest. 2d § 139 Enforcement by Virtue of Action in Reliance
a contract of an executor or administrator to answer for a duty of his decedent (the executor-administrator provision):
a contract t hat is not to be performed within one year from the making thereof (the one-year provision).
a contract for the sale of goods for the price of $500 or more (UCC §2-201);
a contract for the sale of securities (UCC §8-319);
In addition the Uniform Commercial Code requires a writing signed by the debtor for an agreement which creates or provides for a security interest in personal property or fixtures not in the possession of the secured party.
Statutes in most states provide that no acknowledgment or promise is sufficient evidence of a new or continuing contract to take a case out of the operation of a statute of limitations unless made in some writing signed by the party to be charged, but that the statute does not alter the effect of any payment of principal or interest.
In many states other classes of contracts are subject to a requirement of a writing.
Requirements of Signed Writing - Restatement 2d – liberal view
§ 132 several writings may be combined as long as one is signed and all relate to same transaction
§ 133 signed writing may have been made for any purpose, not necessarily manifestation of assent to contract
§ 133 signed writing may be purely a memorialization made after the fact
Crabtree v. Elizabeth Arden (NY 1953)
breach of contract within one year not the same as performance within one year for purposes of Statute of Frauds
signature requirement - only party against whom Statute of Frauds asserted must have signed – nonmutual obligation
Court concerned that Statute of Frauds applied in narrow way, form over substance, would prevent meritorious claims, so adopts liberal Restatement view allowing several writings (§ 132) to be read together
Rest. 2d § 134 Signature
examples: company letterhead; signature of authorized agent for principal
promissory estoppel (§139) used to provide some remedy for failure to satisfy Statute of Frauds; broader than part performance, not limited to land
remedy under promissory estoppel limited as justice requires (not entire contract but only reliance interest), so court has great deal of discretion in determining extent of reliance
court ignores Statute of Frauds one-year completion provision and instead creates whole alternative theory where Statute of Frauds presents overly formalistic barrier to legitimate claims, thereby eliminates Statute of Frauds as bar to recovery except for purely executory contract – any time there is some performance can use promissory estoppel to enforce
Missing Material Terms
Agreements to Agree are unenforceable, unless parties agree to some method to calculate term.
Walker v. Keith (KY, 1964)
Option to extend 10-year lease with monthly rental to be determined upon renewal based on “comparable business conditions”; not dealt with under UCC §2-204(3) because real estate very different from goods
Court refuses to uphold agreement to agree because parties never agreed how rent would be determined so court cannot fix term by stepping in when parties themselves failed to set term; otherwise court would be making an agreement rather than finding one to enforce.
Why parties might Agree to Agree, or make Letter of Intent:
Lower transaction costs – option to renew allows most terms to be carried over to save cost of renegotiating entire contract though cannot agree on certain term at present
Preserve flexibility in the event of adverse market movement
Cultivate relationship – option to renew adds value to present contract
Obtain some level of commitment (Letter of Intent) before going forward with expensive and time-consuming negotiations, but may want to get out of deal later if can’t agree on rest of terms, or change mind after due diligence.
(Current practice is not to use Letters of Intent or to make them extremely detailed because substantial risk that they will be enforceable, and would prefer upfront costs over risk of being bound later when do not want to be.)
Why a Court might enforce:
Protect interests of lessee due to structural disparity in bargaining relationship. Renewal option is for benefit of lessee who is less able to relocate and make new contract
Parties intended to come to later agreement, not enter into unenforceable deal. There must be some purpose to clause (bargaining chip).
Courts don’t like to intrude into bargain by writing clause out of contract.
Rest. 2d Contracts §33 Certainty
UCC – Open terms not necessarily fatal
UCC §2-204 (3) Formation in General
Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract [Comment: The more terms the parties leave open, the less likely it is that they have intended to conclude a binding agreement, but their actions may be frequently conclusive on the matter despite the omissions.] and there is a reasonably certain basis for giving an appropriate remedy [Comment: Test is not certainty as to what parties were to do nor as to the exact amount of damages. Rather, commercial standards on the point of indefiniteness are to be applied, with the Act making provisions for missing terms.].
Pennsylvania Co. v. Wilmington Trust Co. (DE, 1960)
Court applies UCC §2-204(3) by analogy because excludes investment securities
Court allows a substantial amount of indefiniteness (how TPW would continue to be operated as independent company) and upholds parties’ intention to be bound
UCC §2-306 Requirements Contract
A term which measures the quantity by the output of the seller or the requirements of the buyer means that such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
1. commercial background and intent read into language of agreement; demands good faith performance
2. not too indefinite . . . actual good faith output or requirements
mutual obligation . . . party who will determine quantity is required to operate his plant or conduct his business in good faith and according to commercial standards of fair dealing in the trade . . . reasonably foreseeable figure.
3. if estimate agreed upon, no quantity unreasonably disproportionate allowed
4. if enterprise sold and contract assumed, continue under normal operation
5. if exclusive, implied obligation to use reasonable diligence as well as good faith in performance, expansion of market or promotion of product
Court found no requirements contract under UCC §2-306 because no obligation from Shoney’s to purchase exclusively from Mid-South, therefore no consideration.
Seller runs risk that Buyer will go out of business but preferable to losing business to other Seller. Market fluctuations allocated over time for both parties.
UCC §2-305 Open Price Term
The parties if they so intend [Comment 2: question for trier of fact] can conclude a contract for sale even though the price is not settled. [Comment 1: rejects common-law formulas that “an agreement to agree is unenforceable” and “indefiniteness” based on dominant intention of the parties to have the deal continue to be binding upon both; usually “reasonably certain basis for granting an appropriate remedy for breach” so does not fail for indefiniteness under §2-204(3)] In such a case the price is a reasonable price at the time for delivery if
the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded. [Comment 4: if no market standard, particular person’s judgment may be essential condition]
A price to be fixed by the seller or by the buyer means a price for him to fix in good faith. [Comment 3: in observance of reasonable commercial standards of fair dealing in the trade if the party is a merchant]
Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. [Comment 6: purpose is to give effect to agreement which has been made, conditioned by requirement of good faith] In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at time of delivery and the seller must return any portion of the price paid on account.
UCC §1-203 Obligation of Good Faith
Every contract of duty within this Act imposes an obligation of good faith in its performance or enforcement.
UCC §2-103(b) “Good faith” in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.
Subjective – Intent regardless of words or conduct
Each party entitled to exercise individual will as to what that party intended. If no meeting of the minds, then mutual mistake, therefore no contract.
Policy - free will, autonomy.
Practical Effect – more difficult to enforce agreements
Objective – Words or conduct regardless of intent
Reasonable person’s understanding of actual exchange of words, objective manifestation of assent.
Policy - fairness (unfair to allow parties to escape meaning); efficiency (keep transaction costs down by holding parties to reasonable meaning)
Modified Objectivist (Rest. 2d §§ 201-204)
Reasonable meaning will govern but evidence of intent will overcome objective meaning.
Rest. 2d § 201 Whose Meaning Prevails
Where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning.
Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.
Rest. 2d § 202 Rules in Aid of Interpretation
Rest. 2d § 203 Standards of Preference in Interpretation
express terms course of performance course of dealing usage of trade
Prof. Patterson’s Maxims of Interpretation:
Noscitur a sociis. Series of words read together; word affected by immediate context.
Ejusdem generis. Specific term defines limits on more general term. Rest. 2d § 203(c)
Expressio unius exclusio alterius. Specific term excludes other more general terms not specifically included (why contracts often state “including but not limited to”) Rest. 2d § 203(c)
Ut magis valeat quam pereat. Interpretation that validates contract is preferable to one that invalidates contract. Rest. 2d § 203(a)
Omnia praesumuntur contra proferentem. Ambiguity construed against drafter.
Joyner v. Adams (1987)
Interpret contract as a whole. Term read consistently throughout documents in combined contract. Rest. 2d 202(2)
“Purpose of the parties.” Principal apparent purpose given great weight in determining meaning of manifestation of intent. Rest. 2d § 202(1)
Specific provision is exception to a general one. Rest. 2d § 203(c)
Handwritten or typed provisions control printed provisions. Rest. 2d § 203(d)
Public interest preferred.
UCC §1-205 Course of Dealing and Usage of Trade
A course of dealing is a sequence of previous conduct between the parties [Comment 2: literally, before the agreement] to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
A usage of trade is any practice or method of dealing having such regularity of observance [Comment 7: universality not required] in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court. [Comment 3: intended to fill in points which parties have not considered and in fact agreed upon; yield to contrary agreement of the parties; framework of common understanding which hold only when there is no such understanding.]
A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement. [Comment 1: Meaning of agreement to be determined by language used by them and by their action, interpreted in light of commercial practices. Background for interpretation set by commercial context, which may explain and supplement even the language of a formal or final writing.]
Frigaliment Importing Co. v. B.N.S. International Sales Corp. (1960)