Also known as: part of the contract
Written by attorneys — see sources below.
A contractual provision or preliminary communication that forms part of the parties' final agreement. Such a provision becomes binding when the parties manifest assent to it as an element of their exchange, whether through incorporation into a later offer or through conduct recognizing the existence of a contract.
Prairie Grain Partners hired attorney Laura Mills to form a marketing cooperative. Mills emailed an unsigned draft engagement letter containing a sentence about resolving disputes with a grain elevator. The farmers accepted the representation and Mills began work. When a payment dispute later arose, the sentence operated as a binding allocation of duties because the parties' conduct incorporated the preliminary language into their agreement.
Orion Motors sent a supply agreement to Valley Auto that was silent on returns. Valley responded with an acceptance adding an end-of-quarter return term. The parties performed under the agreement for months. The return term became part of the contract because the merchants' course of dealing and trade usage incorporated the additional provision.
A borrower executed a mortgage containing a twelve-month redemption period required by state statute at the time of signing. After default the lender sought foreclosure under federal court rules allowing only six months. The statutory redemption period remained part of the contract because it was in force when the parties formed their agreement.
The Blaisdells executed a mortgage on their property in Minneapolis to the Home Building & Loan Association on August 1, 1928. The mortgage contained a valid power of sale by advertisement. After default, the mortgage was foreclosed and the property sold to the Association on May 2, 1932, for $3700.98. The period of redemption under the law then in effect was set to expire on May 2, 1933. On April 18, 1933, Minnesota enacted Chapter 339 of the Laws of 1933, known as the Mortgage Moratorium Law. The statute authorized district courts to extend the period of redemption from foreclosure sales for such additional time as the court deemed just and equitable, not beyond May 1, 1935, upon condition that the mortgagor pay a reasonable part of the income or rental value toward taxes, insurance, interest, and principal. The Blaisdells applied to the District Court of Hennepin County for an extension of the redemption period. The district court found that the reasonable rental value of the property was $40 per month and the present market value was $6000. It extended the redemption period to May 1, 1935, requiring the Blaisdells to pay $40 per month to the Association. The Supreme Court of Minnesota affirmed the order. The Home Building & Loan Association appealed to the United States Supreme Court, which reviewed the judgment sustaining the statute as applied to the preexisting mortgage.
View caseA landlord leased an apartment without an express warranty of habitability. The tenant discovered serious defects that rendered the unit uninhabitable. The warranty of habitability operated as part of the lease because the parties' agreement incorporated the legal obligation to provide a livable premises.
Several tenants rented apartments in Clifton Terrace, a three-building apartment complex in Northwest Washington, by separate written leases with First National Realty Corporation. On April 8, 1968, the landlord filed separate actions in the Landlord and Tenant Branch of the Court of General Sessions seeking possession on the ground that each tenant had defaulted in the payment of rent due for the month of April. The tenants admitted that they had not paid the landlord any rent for April but alleged numerous violations of the Housing Regulations as an equitable defense or claim by way of recoupment or set-off. The tenants offered to prove that there are approximately 1500 violations of the Housing Regulations of the District of Columbia in the building at Clifton Terrace, where the defendant resides, some affecting the premises of the defendant directly, others indirectly, and all tending to establish a course of conduct of violation of the Housing Regulations to the damage of defendants. They conceded at trial that this offer of proof reached only violations which had arisen since the term of the lease had commenced. The Court of General Sessions refused the offer of proof and entered judgment for the landlord. The District of Columbia Court of Appeals affirmed, rejecting the argument that the landlord was under a contractual duty to maintain the premises in compliance with the Housing Regulations. Because of the importance of the question presented, the United States Court of Appeals for the District of Columbia Circuit granted the tenants' petitions for leave to appeal.
View caseA buyer contracted to purchase cotton arriving on a ship named Peerless. Two ships bore that name and sailed from Bombay in different months. The buyer refused the later shipment. The contract term specifying the October Peerless remained part of the agreement because the parties manifested assent to that particular vessel.
The plaintiff and the defendants entered into an agreement at Liverpool. Under this agreement, the plaintiff agreed to sell to the defendants, and the defendants agreed to buy from the plaintiff, 125 bales of Surat cotton guaranteed middling fair merchant's Dhollorah, to arrive ex "Peerless" from Bombay. The cotton was to be taken from the quay. The defendants agreed to pay the plaintiff for the cotton at the rate of 17 d. per pound within a certain time agreed upon after the arrival of the goods in England. The goods arrived by the ship from Bombay at Liverpool. The plaintiff was ready, willing, and offered to deliver the goods to the defendants. However, the defendants refused to accept the goods or pay for them. The defendants filed a plea stating that they meant the ship called the "Peerless" which sailed from Bombay in October. The plaintiff offered cotton from a different ship also called the "Peerless" which sailed in December. The matter came before the Court of Exchequer on demurrer to this plea. Milward argued in support of the demurrer. Mellish argued in support of the plea.
View caseA dealer sold a new car under a purchase order that limited the warranty to replacement of defective parts for sixty days and excluded all implied warranties. The buyer later discovered a latent defect. The disclaimer operated as part of the contract because the parties expressly incorporated the limitation into their agreement at formation.
In May 1955, Claus H. Henningsen purchased a new 1955 Plymouth Plaza Club Sedan from Bloomfield Motors, Inc., an authorized De Soto and Plymouth dealer for Chrysler Corporation. Mr. Henningsen intended the car as a Mother's Day gift for his wife, Helen Henningsen, and communicated that intention to the dealer. He alone signed a one-page printed purchase-order form. The reverse side contained, in fine six-point script type, a warranty clause limiting the manufacturer's obligation to replacement of defective parts within ninety days or four thousand miles and disclaiming all other warranties, express or implied. The front of the form contained two even smaller paragraphs directing attention to the back-side conditions. The form was a standardized document prepared by the manufacturer and used by all its dealers. No one called the fine-print provisions to Mr. Henningsen's attention, and he did not read them. The car was delivered on May 9, 1955, after the dealer performed the items listed in Chrysler's New Car Preparation Service Guide. On May 19, 1955, while Mrs. Henningsen was driving north on Route 36 in Highlands, New Jersey, at twenty to twenty-two miles per hour on a smooth, paved highway, she heard a loud noise from the front of the car. The steering wheel spun in her hands and the vehicle veered sharply into a highway sign and brick wall. The car had been driven only 468 miles, had required no servicing, and had exhibited no unusual behavior before the accident. An insurance appraiser with eleven years of experience examined the wrecked vehicle and concluded that something in the steering mechanism from the wheel down to the front wheels had broken or dropped off. Plaintiffs also presented expert testimony that the steering failure resulted from a latent manufacturing defect that could not have been discovered by reasonable inspection. The negligence counts against both defendants were dismissed at trial. The case was submitted to the jury solely on the implied-warranty claims. The jury returned verdicts for both plaintiffs against Chrysler Corporation and Bloomfield Motors, Inc. Defendants appealed and plaintiffs cross-appealed from the dismissal of the negligence claim. The Supreme Court of New Jersey certified the matter directly before consideration by the Appellate Division.
View caseA preliminary communication becomes part of the contract when the parties later manifest assent to it as a term of their agreement. The Restatement explains that even a non-offer communication can supply promises or representations that are incorporated into a subsequent offer and accepted. Conduct recognizing the existence of a contract can also integrate the earlier language.
Supporting sources
No. Contract law focuses on the objective manifestation of assent and the resulting legal relationship rather than any separate declaration that a clause is intended to have legal effect. A sentence that allocates rights or duties on a particular subject functions as a term once the parties form an overall agreement that includes it.
Supporting sources
Additional terms in a merchant acceptance are construed as proposals for addition to the contract. Between merchants they become part of the contract unless the offer expressly limits acceptance, they materially alter the deal, or the offeror objects. The parties' performance can also integrate the terms through conduct.
Supporting sources
Yes. When the engagement letter expressly incorporates the spreadsheet and ties the scope of services to the listed items, the spreadsheet manifests assent about which matters are covered and therefore constitutes a contract term on that subject.
Supporting sources
…will be imposed by the court against their consent, still such stipulation will not be given effect unless fairly made as a part of the contract of sale. Such a stipulation, relieving, as it does, the manufacturer from duties imposed by law, will be conclusively presumed to have been inserted in the contract of sale for the sole…