Oregon Law School 1L Study Guide for Contracts

I. OFFER AND ACCEPTANCE

A. Offer
An offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his or her assent to that bargain is invited and will conclude it. Key cases include:

1. Lucy v. Zehmer (1954): The court applied an objective test to determine whether a contract was formed, relying on outward expressions rather than internal thought.
2. Leonard v. PepsiCo (1999): The court found that no reasonable person could have believed that the commercial was a serious offer.

B. Acceptance
Acceptance is an unqualified assent to the terms of the offer which can be expressed or implied. Key cases include:

1. Ever-Tite Roofing Corp. v. Green (1955): The court found that contractual obligations can begin before the formal contract is signed if there is sufficient agreement on the terms.
2. Carlill v. Carbolic Smoke Ball Co. (1892): The court held that an advertisement making certain promises was a unilateral contract.

II. CONSIDERATION

In Oregon, consideration is an act or promise of act that is the price paid for the other party’s promise. It could be a benefit to the promisor or detriment to the promisee.

1. Hamer v. Sidway (1891): The court found that abstaining from a legal right can be a valid consideration.
2. St. Peter v. Pioneer Theatre Corporation (1982): The court held that consideration must be of some value, though it need not be commensurate with the promise made.

III. CAPACITY

The capacity to contract refers to the legal competence of a person to enter into a valid contract.

1. Doyle v. Doyle (1940): The court held that a person suffering from a mental illness at the time of contract formation may lack capacity to contract.
2. Odorizzi v. Bloomfield School District (1966): The court held that undue influence can make a contract voidable.

IV. DEFENSES

There are several defenses that can be raised to the enforcement of a contract, including:

A. Duress
Duress involves a situation where a person is forced into a contract through the wrongful threat of another.

1. Austin Instrument, Inc. v. Loral Corp (1971): The court held that economic duress can render a contract unenforceable.

B. Fraud
Fraud is a deliberate deception intended to secure an unfair or unlawful gain.

1. Stambovsky v. Ackley (1991): The court held that a seller’s failure to disclose that a property was reputed to be haunted amounted to fraudulent misrepresentation.

C. Mistake
Contract law recognizes two types of mistakes: unilateral (by one party) and mutual (by both parties).

1. Sherwood v. Walker (1887): The court held that a mutual mistake about a central fact can void a contract.

V. BREACH OF CONTRACT

Breach occurs when a party to a contract fails to fulfill its obligation as described in the contract.

1. Hadley v. Baxendale (1854): The court established a rule for determining consequential damages.
2. Jacob & Youngs v. Kent (1921): The court held that “substantial performance” with minor variances can still be acceptable, and damages should be measured accordingly.

VI. DAMAGES

Damages are awarded to a party injured by a breach of contract.

1. Restatement (Second) of Contracts: This refers to the measure of damages for breach of contract, including expectation, reliance, and restitution damages.
2. Sullivan v. O’Connor (1973): The court allowed the plaintiff to recover out-of-pocket expenses (reliance damages) and damages for mental distress.

VII. SPECIFIC PERFORMANCE

Specific performance is a specialized remedy used by courts when no other remedy (such as money) will adequately compensate the other party.

1. Laclede Gas Co. v. Amoco Oil Co. (1986): The court held that specific performance may be awarded if damages are inadequate or impracticable to determine.

Remember, Oregon recognizes the Uniform Commercial Code (UCC) in relation to the sale of goods, and the Restatement (Second) of Contracts in relation to services. Always consider this distinction in your contract analysis.