Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 3

FACTS Robert Steinberg applied for admission to the Chicago Medical School as a first-year student and paid an application fee of $15. The school, a private educational institution, rejected his application. Steinberg brought an action against the school, claiming that it did not evaluate his and other applications according to the academic entrance criteria printed in the school's bulletin. Instead, he argues, the school based its decisions primarily on nonacademic considerations, such as family connections between the applicant and the school's faculty and members of its board of trustees and the ability of the applicant or his family to donate large sums of money to the school. Steinberg asserts that by evaluating his application according to these unpublished criteria, the school breached the contract it had created when it accepted his application fee. The trial court granted the defendant's motion to dismiss, and Steinberg appealed.
DECISION Trial court's dismissal reversed and case remanded.
OPINION Dempsey, J. A contract is an agreement between competent parties, based upon a consideration sufficient in law, to do or not do a particular thing. It is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. [Citation.] A contract's essential requirements are: competent parties, valid subject matter, legal consideration, mutuality of obligation and mutuality of agreement. Generally, parties may contract in any situation where there is no legal prohibition, since the law acts by restraint and not by conferring rights. [Citation.] However, it is basic contract law that in order for a contract to be binding the terms of the contract must be reasonably certain and definite. [Citation.]
A contract, in order to be legally binding, must be based on consideration. [Citation.] Consideration has been defined to consist of some right, interest, profit or benefit accruing to one party or some forbearance, disadvantage, detriment, loss or responsibility given, suffered, or undertaken by the other. [Citation.] Money is a valuable consideration and its transfer or payment or promises to pay it or the benefit from the right to its use, will support a contract.
In forming a contract, it is required that both parties assent to the same thing in the same sense [citation] and that their minds meet on the essential terms and conditions. [Citation.] Furthermore, the mutual consent essential to the formation of a contract must be gathered from the language employed by the parties or manifested by their words or acts. The intention of the parties gives character to the transaction, and if either party contracts in good faith he is entitled to the benefit of his contract no matter what may have been the secret purpose or intention of the other party. [Citation.]
Steinberg contends that the Chicago Medical School's informational brochure constituted an invitation to make an offer; that his subsequent application and the submission of his $15 fee to the school amounted to an offer; that the school's voluntary reception of his fee constituted an acceptance and because of these events a contract was created between the school and himself. He contends that the school was duty bound under the terms of the contract to evaluate his application according to its stated standards and that the deviation from these standards not only breached the contract, but amounted to an arbitrary selection which constituted a violation of due process and equal protection. He concludes that such a breach did in fact take place each and every time during the past ten years that the school evaluated applicants according to their relationship to the school's faculty members or members of its board of trustees, or in accordance with their ability to make or pledge large sums of money to the school. Finally, he asserts that he is a member and a proper representative of the class that has been damaged by the school's practice.
The school counters that no contract came into being because informational brochures, such as its bulletin, do not constitute offers, but are construed by the courts to be general proposals to consider, examine and negotiate. The school points out that this doctrine has been specifically applied in Illinois to university informational publications.
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We agree with Steinberg's position. We believe that he and the school entered into an enforceable contract; that the school's obligation under the contract was stated in the school's bulletin in a definitive manner and that by accepting his application fee-a valuable consideration- the school bound itself to fulfill its promises. Steinberg accepted the school's promises in good faith and he was entitled to have his application judged according to the school's stated criteria.
INTERPRETATION An agreement meeting all of the requirements of a contract is binding and legally enforceable.
ETHICAL QUESTION Is it ethical for a school to consider any factors other than an applicant's merit? Explain.
CRITICAL THINKING QUESTION Should the courts resolve this type of dispute on the basis of contract law? Explain.