[MUSIC] From here on, I'll structure my talk by tracing how contract law approaches each stage in the life and death of a deal. Which I'll do with reference to the examples of five seminal cases in contracts. I'll start with how we know when we've got a contract, move on to how we know what's in the contract, identify which promises the law cares about and which it does not, and then discuss what legal enforcement of a contract looks like. We start at the beginning, in the basic case of a bi lateral contract we have two parties, each of whom want something from the other. Who agree to a deal? In the traditional view, what was required for contracts was a meeting of the minds. So, this is the straightforward case, right? Joe has a leaky pipe in his kitchen, he calls a plumber. The plumber comes out and promises to fix it in return for a $100. Joe and the plumber look one another in the eye and shake hands, their minds have met. At a single instant in time, they both agreed and understood each other to agree to the deal. In fact, this meeting of the minds happens even if the party's agreements are staggered in time. So, let's imagine, for a minute, that Joe solicits bids for his plumbing work, via some online service. This plumber emails Joe at 9 AM, and says, I'll do it for $100, let me know. The plumber then waits by his computer, ready and willing to get to work. Joe checks his email at 9:30, sees the offer, and replies, it's a deal. Their minds have still met there. At 9:30, the plumber was ready to go. Joe knew he was ready to go, because the plumber had made the offer and hadn't taken it back. So, when Joe agreed at 9:30, there was a meeting of the minds. In fact though, although it's nice when it happens, meeting of the minds is not always actually necessary. So, now let's make things a bit more complicated, which we will do in the traditional way, namely by getting everybody drunk. So in 1952 in a rural Virginia tavern, A.H. Zehmer wrote this contract to sell his farm to an acquaintance, W.O. Lucy, for $50,000. When Lucy tried to enforce the contract, Zehmer responded that when he wrote the deal up, he was high as a Georgia pine, and that in fact, they were just a bunch of two doggone drunks bluffing to see who could talk the biggest and say the most. Well, what now? Assume that Zimmer is telling the truth, that he was essentially just kidding the whole time that he wrote that contract up. If that's the case, then there is no real meeting of the minds because when Lucy assented Zimmer did not. He was thinking to himself no contract. If we're serious about contract as voluntary obligations you might say, look, you can't hold Zimmer to this contract that he didn't really want to be a part of. And that's essentially what Zimmer argued in court. But here's the problem. No one forced Zimmer to write and sign this contract to tell Lucy that he was ready to sell the farm. Zimmer has voluntarily assumed the obligations of this deal in so far as he has done the things that a person does to indicate that they agree to something. The court says, mutual assent is of course essential to a valid contract but the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts. Which is to say, as long as Zimmer's communication, him writing and signing that deal, is reasonably interpreted as a cent then it it is a cent. People are bound by the normal rules of human discourse, promising and then saying you don't mean it, is not a way of getting around voluntariness. In American contract law, this threshold question in whether or not the parties consented to be legally bound is determinative. If you don't have it, you don't have an action in contract. You can imagine situations, I think, where this seems unfair. The parties are negotiating for a long time, spending lots of money on research and legal fees, trying to work out a deal that they both seem to want, and then one party quits negotiating altogether with no obvious reason. In many civil law jurisdictions, we might actually see recovery of damages based on the idea that one of the parties is at fault for the failure to contract, which means even in pre-contractual negotiations, the parties owe each other some kind of duty. But not in the US, holding aside very rare recovery and promissory estoppel, even reasonably relying on the prospect of a deal does not create an action in contract in the US. In American law, the availability of remedies and contract is essentially switched on by the manifestations of assent. If you think about it, the way we talk about assent and contract law is actually sort of odd. Because in regular conversation, usually we don't talk about agreeing, full stop. Usually, we talk about agreeing to something. In fact though, contract doctrine essentially deals with the form and the substance separately. That is, we ask if there's an agreement first and then we ask what there was an agreement to. So, there's a question of whether or not the parties manifested intent to be legally bound to an agreement, and then a separate set of doctrines that are about the content of the deal. And we talk about those documents as questions of contract interpretation. Interpretations of big deal because it bears on assent on breach and on damages. If we know that Jack and Jill have agreed to a joint irrigation venture, we can't hold Jack liable for failure to perform until we know exactly what he agreed to. In American contract law, we don't have much in the way of background principles about what the content of a contract should be. Mostly the court is only in the business of enforcing the will of the parties. Interpretation tells us whether or not the parties have made a deal, whether they have breached the deal, and what the liability for breach should be. So, I'm going to make a somewhat unusual claim that many of the doctrines in this area are actually very easy. Rules about, for example, when to permit outside evidence to help interpret a contract, when a court should supply terms that are missing from a contract, how a court should fix mistakes. The various contract doctrines that deal with these issues boil down to the courts attempt to create a reasonable reconstruction of what the parties actually meant to do. And if that's not possible, then what the parties would have done, had they thought about it. The tough cases are going to be where the parties appear to each have had different views of what the contract meant. That is they were agreeing to two different deals. If a court cares about enforcing voluntary obligations and voluntary obligations only, this puts the court in difficult position. So, let's compare two cases. In case number one, we have a contract for the sale of cotton being delivered on board the ship Peerless. Only surprise, Peerless has a peer indeed and it's also named Peerless. So, what does the court do? The court says, if there's no way to prefer one Peerless ship to the other and which ship the cotton is on matters, then there's actually no contract. The parties agreed to two different things, which means that they didn't actually assent to a single deal. Notice here that the court ultimately decides to under enforce. So, this is a case in which nobody is going to get the benefit of the bargain he thought he was making. Rather than let one party be subjected to a contract he didn't agree to and had to reason to think he was agreeing to, the court chooses not to enforce at all. 300 years later, we see the same argument come up when two parties realized that they had different things in mind when they made their contract for the sale of chicken. The seller of chicken thought that they just meant chicken. The buyer thought that that they meant young chicken, fryers or boilers, rather than stewing hens. The court said, actually, if you want to use a word in a particular way that wouldn't be obvious to your counter party, the onus is on you to make that clear. This isn't like Peerless, it seems to be true that if the court is going to hold the buyer liable for a contract he didn't agree to, but it says, you had reason to know, that you were agreeing to whatever kind of chicken came your way. One of the functions of contract law, as I said earlier, is to permit parties to rely on the deal over time. To protect a party, who's made herself vulnerable by trusting that the deal will happen. We see this come up in the context of assent and interpretation too. In order to make deals with one another, we need to be able to use a common language and each party needs to be able to trust that the other is using language in a normal way. And the court can then be a bit more expansive about holding the parties liable, given that they had clearly manifested an intent to be legally bound but botched it enough that now the court is forced to get involved. [MUSIC]
