Assent
Contracts – Prof. Merges
Feb. 3, 2011
Pyeatte v. Pyeatte
• History
• Facts
Why a restitution claim?
• Contract “indefiniteness”
• Still relevant?
What can be claimed?
• Amount of claim in Pyeatte?
• Time limits on claim?
•  Cal Fam Code § 2641 (10 years or
more, no separate recovery)
Dementas v. Tallas
• Good case to suggest need for reform?
• Is the result unfair?
“Seminar Topic”
• Balfour v. Balfour: “where the King’s
writ shall not run . . .”
• Marvin v. Marvin: bringing contracts
into the “intimate” sphere
You lookin' for trouble,
Doniphan?
You aimin' to help me
find some?
Assent
Lucy v. Zehmer
Lucy v. Zehmer
Lucy v. Zehmer
• Procedural history
Lucy v. Zehmer
• Facts
Lucy v. Zehmer
• Facts
• What are the uncontested facts?
Lucy v. Zehmer
• Facts
• What are the uncontested facts?
• The signed document
“We hereby agree to sell to W.O
Lucy the Ferguson Farm
complete for $50,000.00 title
satisfactory to the buyer.”
/s/ AH Zemer
Ida P. Zehmer
We hereby agree to sell to
W.O Lucy the Ferguson
Farm complete for
$50,000.00 title satisfactory
to the buyer
The story surrounding the
document
• Seller’s story (The
Zehmers)
The story surrounding the
document
• Seller’s story (The
Zehmers)
• Drinking, bluffing, not
sober enough to drive
• No serious intent to K; “it
was all a joke”
The story surrounding the
document
• Buyer’s story (The Lucys)
The story surrounding the
document
• Buyer’s story (The Lucys)
• Two drafts of the document
(naming both Zehmers, as
coowners; provision for
inspection of the title)
• Lucy allowed to keep the
document
Aside: 2 consideration issues
• Issue spotting
Aside: 2 consideration issues
• Zehmer thought it wise to pay over
$5 to “seal the deal”
• Wood/Mattei v Hopper : Illusory
promise due to title “satisfactory”
clause? (“Title satisfactory to the
buyer”)
Legal status of the parties’
dealings
• “The answer admitted . . .”
[P. 118, 1st full ¶ ]
Legal status of the parties’
dealings
• “The answer admitted . . .” [P. 118, 1st
full ¶ ]
• Lucy’s “offer” was a joke, so the
Zehmer’s actions must be seen in that
light
What remedy was sought?
• Specific performance
• Why? Land/real estate is presumed to
be unique, difficult to find clear market
value, hard to award expectation
damages
Who has the burden of proof
here?
Who has the burden of proof
here?
• Plaintiff, of course
• BUT: The defendant’s defense of
unenforceability must overcome
plaintiff’s introduction of the document
signed by the defendants – by “clear
and convincing evidence”
Statute of frauds
• Transactions involving property usually
have to be in writing
• A signed writing will create a
presumption of enforceability of the
agreement
Zehmer’s “drunk” defense
• What is the argument?
Zehmer’s “drunk” defense
• Legally, what is the
standard?
• “unable to comprehend the
nature and consequences”
Facts
• Mrs. Z suggested that Mr. Z
drive Lucy home
• So how could Mr. Z be too
intoxicated to understand
the “nature and
consequences” of the
writing?
Focus on the document
• P. 119, ¶ 3:
• “Appearance of the document, 40
minute discussion, redrafting,
examination of title, discussion of what
was to be included, Lucy’s taking
possession of it . . .”
What if Zehmer had been
joking?
What if Zehmer had been
joking?
• “The evidence shows that Lucy did not
so understand it”
• Subsequent actions, completing
transaction
Lucy’s belief
• How relevant?
• What if he had badly misread
the situation?
Lucy’s belief
“Not only did Lucy actually believe, but
the evidence shows that he was
warranted in believing that the K
represented a serious business
transaction . . . .”
-- P. 119, ¶ 5
“Outward manifestation of
intention”
• It is not that intention is not important;
it is that the objective, observable,
outward manifestation of intent is all
we have to go on (reliably) to determine
what the intent really is
Why is there a K here?
Why is there a K here?
“There had been what appeared
to be a good faith offer and a
good faith acceptance, followed
by the execution and delivery
of a written K.”
P 120, ¶ 2
What does this mean?
What does this mean?
• “The mental assent of the parties
is not requisite for the formation of
a K.”
•?
So what of this?
• “An agreement or mutual
assent is of course essential to
a valid contract . . .”
Mutual assent
• To be judged objectively, from the point
of view of a disinterested spectator or
observer
• Would the reasonable observer believe
that K behavior was occurring?
Role of price/payment
• Why might it make a difference
if the farm had been sold for $
5.00, or $50?
Judge Learned Hand
Formal K Contemplated
• P. 124
• Letter of intent/“Deal Points” – vs.
formal, executed, binding K
• Contracting as a process or spectrum
Intent not to be bound
• Will be honored
• If it is clearly and consistently
expressed
Consarc, Stein v. Gelfand
Stein v. Gelfand, 476 F.Supp.2d 427
(S.D.N.Y., 2007): No intent to be bound
2 drafts of deal points offered by
potential partner, but never accepted;
Cellular phone licenses at issue, complex
subject matter – usually in writing
Empro Manufacturing Co, Inc v Ball-Co
Manufacturing, Inc, 870 F2d 423 (7th Cir
1989).
The 3-page agreement “will be subject to
and incorporated in a formal, definitive
Asset Purchase Agreement signed by
both parties.”
No binding K; “agreement in stages is a
valuable business tool”
Proposal
• Omri Ben-Shahar, Preclosing Liability,
77 U. Chi. L. Rev. 977 (2010)
• Proposing “intermediate liability”: as
each term is agreed to in negotiations,
it becomes binding