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As you can expect, the exam will involve at least one contract.

Here are the questions you should be


asking: Does a valid contract actually exist? If so, what are its terms? Has a party breached it? If so, does
he have an excuse? If not, is the contract void for policy considerations? If not, what is the remedy for
the breach? Personally I think most exam questions are fairly straightforward, and you’ll have to make
strong arguments to distinguish yourself. Just watch out for UCC 2-207.

For my outline, the page was split in half down the middle of the page between UCC and Restatement. If
a particular case followed an approach from either the Restatement or UCC (which typically they did), I
noted that in the relevant provision.

Forks in the law were never so easy. I did well in that class.

Bargain Relationship

Offer
Restatement: an offer is the manifestation of willingness/ to enter into to a bargain/ so made as to
justify another person/ to understand/ that his assent/ to that bargain/ is invited and will conclude it.

A) Mutual Assent?
Manifestation of mutual assent usually takes place by
i. One party (the offeror) making an offer to another party (the offeree)
ii. Which the offeree accepts

Can be subjective or/and objective test to show mutual assent:

1) Subjective: there must be a “meeting of the minds” to determine subjective intent. However,
this is difficult to determine, so it often has to be – we don’t use this, its hella old school.
a) Subjective “plus”—that is if both parties are informed of the facts/ of the conditions the K
was made under,/ then we can reasonably infer what they were thinking. (Although, its
possible one person may be lying and instead rely on the objective test). This is generally
difficult to prove.
The K can be rendered not enforceable, though if the party admits he knew what the facts
were. (then we can rely on the subjective plus).
 P and D got drunk together. P had wanted to buy D’s farm for a number of years. D
said he would sell the farm. Drew up two K’s, had wife sign, the price was
reasonable. P began to get escrow. P then said that he was joking. Found that it
was an offer. The key facts all indicate that an objective person would have thought
it was an offer. If, as hypo, P said that he knew it was a joke, then the test is not
satisfied. –Lucy v. Zehmer

2) Objective Test: meeting of the minds is not an unvarying pre-req of a K. But, if it is made clear
that there is no “meeting of the minds” the party will not be held by the K that varies from his
own understanding of it, UNLESS
A) The parties words and conduct were in a context that
i) Gave the party reason to know the other party would be mislead. How do we know
the other party had understanding?
a) Party must be judged in relation to usage and understanding of other people,
but
b) More direct and cogent evidence (statements of the party, etc) may be
available.
 Employee says he’ll quit if his K is not renewed. Boss says that “go ahead you’re
alright, get your boys out there, don’t let that worry you”. A RPP in the situation of
employee had reason to think an offer was given, and his performance was
acceptance. Maybe this isn’t totally satisfied so the argument can be bolstered by
looking at the context to see what the boss thought. I) there was a prior contractual
relationship, ii) it was the busy season and he would lose money if the employee
quit. So we can reasonable satisfy that there was mutual assent here. –Embry v.
McKittrick Dry Goods

Offer Elements:

I. Invite Acceptance, AND


Does the words and context invite acceptance or was it merely an intention to deal?
A) Look to the words: difference between “I’m thinking about selling my watch”, and “I’ll
sell you this watch for $20.”
B) Look to the timeline of the correspondence
 D put an ad in the paper to sell a piece of land for a set price. P wrote him inquring
about it. D wrote back giving him information and saying that he better hurry
because others were interested. P wrote back and said he wanted to buy, but D had
already sold it someone else. D’s ad was not an offer, and it is also important that D
first responded to P on a form letter. –Lonergan v. Scolnick

II. Definiteness, AND


Usually you are looking to see if the offer has quantity, price, and delivery terms.
 D put an ad in a paper for a specific item for a specific price, then refused to sell to P
when P accepted. D claimed it was not an offer, but an invitation to deal. Because
the terms were so definite, it is found to be an offer. –Lefkowitz v. Great Minn. Store

 D sent out a letter with specific information regarding land that he was going to sell
to P and a few others. D and P had a prior relationship where D knew that P wanted
to buy his land. The form he sent out gave no mention that it was sent to other
interested parties. It was found that because it was so specific and had no
indication of being a form letter, it was an offer. –Southwarth v. Oliver
Three main types of terms that are not definite:
A) Indefinite Terms: parties purport to agree on a material term but leave it too vague or
indefinite.
Ex. If you promise to work for me one year as a foreman, I promise to pay you a fair share of
the profits.
B) Omitted Terms: the purported agreement is silent on a material term.
Ex. A agrees to sell and B agrees to buy 1000 widgets.
C) Agree to Agree: the parties agree to later agree on a material term.
Ex. A lease provides that “the leasee shall have the right to renew the lease for another 5
years, at rent to agreed upon by the current business standards at that time.”

III. Communication of the offer


Test is whether the offer is so made/ as to justify/ the accepting party/ in a belief/ that the offer
is made to him.

Acceptance
Generally, acceptance is the offeree’s manifestation of assent to the offer. It’s the event that brings the
K into existence.

Intent to accept is determined objectively, first thing to look at is, when is the effective date of
acceptance?

I. Mailbox Rule is one tool we can use.


a) Does the offer expressly or impliedly indicate that acceptance is through an un-
immediate medium, like the mail, fax, or email?
 D and P entered into a deal to buy tods of wool. D’s offer-letter was mis-sent
and ended up getting there on Spt. 8. P put their acceptance in the mail the
same day. D didn’t recive tell Spt. 10. When does it count? It counts when it
was put into the mailbox, not when it was received. –Adams v. Lindsell
b) But if the offer is revoked, was acceptance put in the mail before the revocation?
i) If not, it probably won’t count; look to the timeline:
 P makes an offer for D to buy some property. He tenders the offer to D’s agent
on March 2. On March 3, the offer is signed but not mailed. On March 5, offer
is revoked. This doesn’t count as acceptance, and P still has the right to revoke.
—Henricks v. Behee

II. Does the offer include a stipulation to acceptance by performance?


General Rule: there is no occasion to notify the offeror of the acceptance, just need to
commence performance.

A) Look to the language of the offer. In this case it was a printed ad.
 A company offered to pay anyone $100 if after using their product as prescribed
for two weeks, they caught influenza. A woman did, but she still caught
influenza. Here, the court said there were a few possibilities of what
constituted performance. Was it buying the smoke ball, then using it for two
weeks, then if you caught influenza, the performance was satisfied? Or does it
have to satisfy all of those and then she must catch it within a reasonable
amount of time? In this case, the offeree does not have to notify the offeror
because it was an advertisement. –Carbolic Smoke Ball

B) What if the performance is rendered before the communication of the offer?


If it requires promise not performance, then
i) Then there is no mutual assent, therefore it is not a K. (goes to on the faith of
the offer)

Offer is givenperformance is givenoffer is communicated = no mutual


assent, therefore no K.

 An ad was posted offering a reward in exchange for information leading to the


capture of a certain criminal. A woman gave the information to the police.
After she did so, she saw the ad, and tried to collect the reward. It was ruled
that “it’s impossible for an offeree to assent to an offer unless she actually
knows of its existence.” Her performance does not constitute acceptance. –
Glover v. Jewish War Veterans.

III. Can you accept by performance or promise?


General Rule: you should communicate acceptance if there is no reasonable way for them
to find out that you have commenced performance, (in a reasonable amount of time after
the performance was commenced)
1) The doing of the act is sufficient acceptance, AND

C) Is there a term that stipulates (that doing of the act is sufficient acceptance)? Look at
the term, what does it say? This K was for performance or promise.
 In a K where the document had to be either signed by someone with authority
to accept, or “upon commencing performance of the work”. The person
signing the form did not have authority to accept (“Sweaty Joe” lol). –Ever-Tite
Roofing Corp. v. Green
i) Look to what constitutes a commencement.
 In that case, commencement was found to occur when Ever-Tite loaded up their
trucks to drive over and perform the work. That specific act was acceptance.
Goes to reasonable amount of time. Fork a in the facts.

2) The promisor knows that he is bound when he sees that action has been taken /on the good
faith/ of his offer.
A) The offeree’s motivation doesn’t really weigh in here.
 An ad was posted by a company (Fulton) looking to merger. A phrase said
“brokers fully protected”. Deutsch was a broker working for another company,
BH. He saw the ad and introduced the two companies. They ditched him and
merged. He sues to get broker fees from Fulton. Fulton said that Deutsch had a
pre-existing duty to BH. Did the ad constitute an offer where acceptance was by
performance? –Industrial America v. Fulton Industries (Ask Deb about this case,
it should represent fork in the facts… but I’m not sure how it does)
IV. Does acceptance have to be through promise and not performance?
A) Then performance will not be acceptance
 Scolar Company v. Denney—grain farmer and grain dealer. Have past business
relationship. Farmer asks dealer for specific price for grain that has not yet
grown. Dealer says “price is not available at this time”; farmer then sells grain
to another dealer. Dealer finds third party who will buy at that price; sells to
third party. Sends farmer written confirmation. Farmer doesn’t check his mail,
doesn’t answer his calls. What recourse for dealer? Scouler’s argument was
that he accepted by performance. Denney says that this was an offer for
promise, not performance. Denney wins the day. Said “plow at your own risk”

V. Is there a relationship between offeror and offeree that might imply Acceptance by Silence?
General Rule: you can’t be held to a K you didn’t accept.
Exception: Acceptance by Silence; these are the elements:
a) Offeree takes benefits with reasonable opportunity to reject them, and reason to know
that they need to be paid for.
b) Where there is reason to understand that assent may be manifested by silence
c) Where there are previous dealings that give context.
 D and P had a previous business relationship where P bought shortening from D.
Orders where put in automatically for P. Once an order was put in and he
waited 12 days before saying he didn’t want it. Context implies acceptance by
silence, and that P should pay. 12 days is reasonable opportunity to reject. –
Ammons v. Wilson
BATTLE OF THE FORMS
Acceptance when two forms are almost exactly alike, but contain small differences in terms that
turn out to be important down the line (Battle of the Forms).

Party who breached will argue:

1) Mirror Image Rule:

Valid K = offer and acceptance w. acceptance expressing unconditional assent to the terms of the
offer (that is, mirror image of offer)

“an acceptance” upon terms varying from those offered is a rejection of the offer and puts an end to
the negotiation UNLESS the party who made the original offer renews it or assents to the
modifications suggested.

This acceptance becomes a counter-offer and gives the other party power to accept if the other
party accepts it, they a create a K. If they don’t accept no K UNLESS performance.

Offeree could accept the offer made and thus manifest that assent which was essential to the
creation of a K, or it can reject the offer.

Offeree can’t pick and choose which terms they will accept. If they want some terms but not others,
a new offer has to be negotiated. Minneapolis v. Rolling Mill p. 330

Rule: Seller’s non-conforming response (agreeing with two different forms that are generally the
same, but differ in terms) prevents the acknowledgment from being an acceptance and it make it
not an offer, BUT a counter-offer.

In sum, general rule is if the terms aren’t the same, no K.

2) Acceptance through silence or conduct:


i) Looks to the last communication before acceptance of the goods as the terms of the K
—this is the Last Shot Rule.

But, this is rooted in common law and ignores commercial reality,

So, go to…
3) Battle of the Forms: UCC 2-207 (applies to “goods”—generally means movable things) (go back
over with actual UCC again)
Terms: an “order” placed to buy goods is usually considered an offer.
General policy is that the conflicting terms are stripped away, and UCC provisions are put in
their place.
2.207(1)
(i) A definite and seasonable expression of acceptance/ or a written confirmation/ which is sent
within a reasonable amount of time/ operates as an acceptance/ even though it states terms ii)
additional to or different from/ those offered or agreed upon/ UNLESS iii) acceptance is
expressly made conditional/ on assent/ to the additional or different terms.

(i) A definite and seasonable response (seasonable means within a reasonable time; not tasty)
-May include an additional term that would have no element of reasonable surprise.
- if there is remedy clause added—must be in a reasonable manner; can’t have elements
of surprise or hardship.
-Even if an important term is altered, for example, delivery date, you have to weigh the
context of the surrounding relationship before deciding if there is an acceptance.

ii) Additional or different terms

-additional terms are those that were not included in the original offer

- different terms are those that conflict with the terms in the offer.

iii) Expressly conditional language

- The proviso (not certain if this is relevant)

When a party’s purported acceptance contains a proviso, then the purported


acceptance is not effective to form a K under 2.207(1) without further response from the other
party. Silence as acceptance will not work.

-The purported acceptance is instead a counter-offer

-If an acceptance has a proviso, it becomes a counter-offer

If the goods are not shipped to and accepted by the buyer:

 2.207(3) controls in all cases where no K is formed under 2.207(1) and the seller ships and
buyer accepts the goods.

 Acceptance of the counter offer would have to be by words of assent. Silence as acceptance
will not work

A definite and seasonable


Expression of acceptance
|
Operates as an acceptance
/ \
Even though it states unless acceptance is
Terms additional to or expressly made conditional
Different from those offered on assent to the different terms
| |
Acceptance with different or additional terms No acceptance, counter-offer

UCC 2.207(2) Merchant’s Provision

The additional terms are construed as proposals for addition to the K  Between merchants 

Such proposals (terms) become part of the K, UNLESS

a) The offer expressly limits acceptance to the terms of the offer


b) They materially alter it, OR
c) Notification of the objection to them has already been given or is given within a reasonable time
after notice of them is received.

Only applies if the response to an offer is found to be an acceptance. Does not apply to a counter-offer.

b) they (terms) materially alter it—what does this mean?

Term must be a significant element of the exchange bargained for by a party. A term is material if it
provides for an important aspect of the contractual performance. The term must be interpreted in
context to decide whether it is material or not.

You can analyze this in context with relation to i) surprise or (AND) ii) hardship

i) surprise—look to the reasonable expectations in light of common practice and usage within a given
industry, or (AND)

ii) hardship—does it impose an un-bargained for burden (financial or otherwise).

However, usually terms will cause hardship. Try to satisfy both.

Ammons v Wilson: the context of the business deal gave reason to believe that silence was an
acceptable manner of acceptance.

i) Offeree takes the benefits with reasonable opportunity to reject them and reason to know
that they were offered with the expectation of compensation
ii) Where there is reason to understand that assent maybe manifested by silence, and by
remaining silent, the offeree intends to accept the offer.
iii) Where there are previous dealings and it is reasonable that the offeree should notify the
offeror if he doesn’t intend to accept.
IV. Irrevocable Offer and Option K
a) Creates in the offeree a “binding option”, rule that a counter-offer terminates acceptance
does not apply. Essentially, an option is like a separate K in and unto itself

If option holder declines, they are not invaliding the option K since this waicer of rights is not
supported by consideration. Thus the option will still stay open unless

i) Parties buy their way out


ii) Party relies
b) Option is a promise to keep an offer open for a stated period of time.
c) --Common Law: an option is only binding if it is supported by consideration; usually this
consideration does not have to be as “firm” as for a K; can’t be nominal.
d) i) Star Paving: reliance by P  a forbearance or detriment to P, therefore can constitute
consideration and support the option. But actually, the option doesn’t exist because there
was no consideration.

UCC 2.205: Merchant Firm Offers:

An offer by a merchant /to buy or sell goods /in a signed record /that by its terms gives
assurance that it will be held open/ is not revocable for lack of consideration,/ during the time
stated or if no time is stated for a reasonable amount of time,/ but in no event may such period
of irrevocability exceed three months. Any such term of assurance in a form supplied by the
offeree must be separately signed by the offeror

V. Irrevocable Offer: Non-destructible Power of Acceptance


Humble Oil & Refining v. Westside Investment
Drennen v. Star Paving

VI. Defective Formation and Expression of Agreement


Raffles v. Wochelhaus
Konic International Corporation v. Spokane Computer Services

VII. Indefinite Agreements

General rule: An apparent bargain will not be enforced if it is found to be too indefinite.

A) Ask yourself, can a court figure out a remedy on these terms?


B) Too indefinite if:
i) Its terms are so incomplete or uncertain that they show that parties did not
regard themselves as having completed a K, OR
 An advertisement stating that there is a special on “fur coats worth up to $100”;
not specific enough for court to find remedy. –Lefkowitz v. Great Minn. Surplus
Store (the first one)

ii) Even if it seems that the parties regarded themselves as having completed a K, it
is so indefinite that a court cannot determine its material terms with
reasonable certainty or fashion an appropriate remedy for breach.
 “a fair share of the profits”—two terms of indefinateness; “profits” and “fair
share”—not definite enough for a court to establish a material element, or
fashion an appropriate remedy for breach.—Varney v. Ditmars

VIII. Incompleteness and Deferred Agreement


A) Was there a Missing Term?
i) Ask, can it be clarified by context? (objective test industry standard)
ii) Courts will substitute the term if it is material.
 D was an actor who filmed a pilot with P, they never articulated a starting date
for the TV series if it was picked up. Court found that there was an industry
standard that could be filled in to substitute for the missing term. – Metro-
Goldwyn-Mayer v. Scheider

B) Was there an Indefinite Term? (agree to agree later)


i. Schumacher Rule: If the term is material then the contract is unenforceable (court will
not substitute terms)
Rationale is courts cannot force parties to agree nor determine what they would agree
upon.
 Where D and P attempted to K, and the rent is “to be agreed upon”. Not
enforceable.--Joseph Martin Jr. Delicatessen v. Schumacher

 Letter of intent between partites, looks like an offer. One party signs, but
bottom of form says, “not intended to be a lease”. Court finds not
enforceable.--168th and Dodge v. Rave Reviews Cinemas (where the hell does
this go?)

Consideration
I. Must be bargained for
A) Was there quid pro quo?
 If someone promises to do something, that alone in itself is not enough, there
has to be a return promise, if not, it’s a gift promise and therefore un-enforcable
—Kirksey
II. The performance of the promise may be
1) An act,
2) A forbearance, OR
 Someone has a right to smoke, drink, swear, and gamble; giving up this right is a
forbearance—Hamer v. Sidway. Not the same as if he would’ve just “behaved”,
i.e. stopped doing those things of this own accord without Uncle specifically
saying so.
 P retired from working for D. After retiring, D told P that they would pay him an
additional pension. A term in the letter informing P of this included the phrase
“as long as you harbor good will towards the company and (don’t give away any
of our trade secrets) and not to work at any other similar companies. P did
those things (not clear if by design), D stopped paying the extra pension. It was
found that it was enforceable, because the term asked P to forbear from doing
something, and he did. –Langer v. Superior Steel Corp.
 Where P lived in a house that belonged to her late husband. The provision was
that she was to “pay ground rent and make repairs”; this was found to be
adequate consideration. We don’t need to look to what the motivation for
entering into the K was, we just have to see if there was a benefit or detriment.
Here that was satisfied. –Thomas v. Thomas

3. The creation, modification or destruction of a legal duty?


 A promise to surrender the (legal) right ot enforce a contract is sufficient
consideration to support another binding contract, even if the original contract
is found to be unenforceable (also goes to good faith).—Browning v. Johnson
Ask Deb about this
Must be bargained for (i) and ii) are satisfied) (what is this?)

III. Was the exchange adequate?


a) Was it nominal? --Not adequate.
 Giving of $1 in exchange for a house and living stipend is not adequate. The
performance of giving $1 does not constitute consideration because it is not
detriment, loss, or responsibility taken on.—In Re Greene
b) If it was a forbearance from asserting a legal claim?
i) If so, was it made in good faith? Then it is adequate
 Even if the legal claim turns out to be unfounded, if it was made in good faith then it
constitutes a detriment for the party.—Fiege
c) Was it unconscionable? Could be not adequate
i) Is there a community norm to price?
ii) What was the quality of the bargaining process?
 Where a door to door salesman sold a refrigerator to welfare recipients. The fridge
was way outside community norms, and the bargaining process was tainted because
the buyers were presumably ignorant, and didn’t have the opportunity to shop
around.—Jones v. Star Credit

Even if these are all satisfied, consideration might still be negated

IV. Was there a Pre-Exising Duty to perform what was already promised in another K with the
same party?
What were the terms of the original K? Consideration that was already given can’t be given
again for a new K.

a) Did someone break a K, then make another K (with the same people) using the same
consideration they did for the earlier one?
 Discharge of Obligation: will only work if you void the existing K, new K isn’t formed
just because of new terms. If D leases to P a rental space for $500 per month for 5
years. P goes bankrupt after the first year, tells D “I’ll make another K with you, let
me pay $200 a month for the remainder of the lease”, D agrees. This is not a new K.
P is promising to do what he already said he would do in the first K. First K is still
enforceable.—Levine v. Blumenthal
 Modification to change terms: Was one party under K to perform certain services,
but then asked for more pay to do the exact same job for the same length of time.
No new consideration to support the “new K”. Also, Policy: was one party under
duress from the other? This is a result we seek to prevent. No new K—Alaska
Packers

b) If the same consideration was used, can we apply the Exception to Pre-Existing Duty Rule?
i) Was the promise that modified the original K made before complete performance
on both sides? AND
ii) Were the underlying circumstances which prompted the modification unanticipated
by both parties? AND
iii) Was the modification fair and equitable? (no duress)
 When people entered into a K that would last 30 years for P to pick up garbage
for the city of X for a set fee. The garbage increased dramatically before 30
years was up. The parties negotiated to modify the K to increase P’s fee.—
Angel v. Murray UCC Sales 2.209

V. Was there Mutuality of Obligation? both parties must be bound or neither is bound
General Rule: if one person “has a free way out”, there is no mutuality of obligation.
Is the undertaking on both sides real and meaningful?
A) What does the language of the K say?
i. Is it so vague as to not really bind one party?
 Where one party could be released from their promise if “they lost by fire” their
product or factory; the other party could be released from their promise for
“any unforeseen reason they find they cannot use the full amount of the above
named goods”. This ain’t no K—Rehm-Zeiher
ii. Was it an output K? this is where one person says they will buy all of what the
other person can sell. This is a K.
 Where one party promised to buy “all the sand that P could deliver.” This is a K.
“all the…” is different than “any unforeseen reason”; can’t escape liability even
by going out of business, K still exists.
iii. Is the K exclusive? That is, can we use Best Efforts for Consideration?
Best Efforts should require that level of effort “necessary to maximize the joint net
product flowing from the relationship.”
 if we imply into Wood’s undertaking a promise to use best efforts to market her
name, we impose a detriment upon him and cure the lack of commitment.
Therefore he is not liable for breach of contract if he tries to market her name and
fails, he breaches the contract if he fails to make a reasonable attempt.—Wood v.
Lady Duff-Gordon

Exception:
B) Was there a personal satisfaction clause?
i) Does not render a promise illusory even if the satisfaction required is that of
the promissory (subjective) rather than what would be acceptable to a
reasonable person (objective)
 A company who was going to buy property; the seller says you can buy if you get an
“engineers and architect’s feasibility report”, i.e. personal satisfaction clause. Omni
doesn’t want to get one because the report is for their own benefit; they just want
to buy property. This is enforceable because the promisor has an implied obligation
to exercise its personal satisfaction power in good faith.—Omni Group.

What if it’s not really a K? Is something more like a…

Quasi-Contract: a fiction that courts can “find” in order to serving a policy of justice and
equity.
1) has no reference to the intentions or expression of the parties;
2) neither promise nor privity, real or imagined, is necessary.
3) The act, or acts from which the law implies the contract must, however be voluntary.

General Rule: court will not find a quasi-contract/ unless such party is under legal
obligation paramount to his will to perform some duty,/ and he is not under legal obligation
unless there is a demand in equity and conscience that he should perform the duty.
Implied-In-Fact Contract: established by conduct (Cardozo opinion pg. 136)
1) Where D requests P to perform work, AND
2) P expected D to compensate him for those services, AND
3) The D knew or should have known that P expected compensation
Goes to charitable organizations are an exception; gift promises will be enforced for
policy reasons.

Then, it’s possible we can still enforce it, in some instances, if there is…

I. Moral Obligation
General Rule: is not consideration; damages go to restitution if moral obligation elements
are satisfied.
A) Was there a Implied-In-Fact; non-contractual exchange?
i) Was a measurable benefit given
ii) With the expectation of compensation? AND
iii) Did the party that received the benefit keep it?
iv) Did the party that gave the benefit give the other party opportunity to decline
before it was given? This can go either way—look to context
 Where P took care of D’s horse, when D said that he didn’t own it. P
wanted restitution damages for taking care of the horse. P told D he
would take care of the horse before commencing performance; D said it
wasn’t his horse. This can be inferred as declining benefits.—Bailey v.
West.
 Where P saved D from injury in the midst of a domestic dispute. P’s
hand was badly damaged. D said he would pay her for her injury, gave
her a nominal amount. She sues. Court finds that her past act is not
sufficient for consideration.—Harrington v. Taylor

Not Enforcanble:

v) No opportunity to decline, BUT involves legal duty


 Where P took care of D’s son, unbeknownst to D. D later said he would
pay for the services P gave to D’s son. Then, D didn’t pay. Here the
son’s age was a critical issue. The son was over 18, therefore there was
no legal duty. If the son was under 18, D would have a legal
responsibility and restitution damages would be enforced. –Mills v.
Wyman—no quasi-contract because no legal duty
vi) OR is a verbal promise made after a contract has expired? (Statute of
Limitations)
 P and D contacted earlier, and D defaulted in payments to P. P couldn’t
get the widgets back because of the statute of limitations. D then
verbally promised that he would pay P back, but no K. D didn’t pay
back. Here, moral obligation served as consideration, and the court
found that in actuality the formation of a K could be established. –
Manwill v. Oyler—this only goes to Moral Obligation, which is not
sufficient for consideration.
vii) Will find Quasi-K if, no opportunity to decline, BUT was there a past
performance that had psychological aspects?
a) Psychological aspects being somewhat limited, like saving someone’s life.
b) Also, the promisor did not change his mind later.
 P saved the life of his boss and in the process severely injured himself,
making him disabled and unable to work. The boss verabally promised
to pay him a stipend for the rest of his life. When the boss died, D
didn’t want to pay him anymore. It is found that P’s action is sufficient
consideration and there is a contract. –Webb v. McGowin

Avoidance of Contract
I. A purchase contract by a minor is voidable
a) Even if there’s an adult present
 P (a minor) bought a car from D in the presence of this grandmother
and aunt. The car was defective. D voided the K and wanted his money
back. Was able to do so because he was a minor regardless of the fact
that adults were with him when he bought it. –Bowling v. Sperry
b) An exception is “necessities”, i.e. medical, food, shelter, etc.

I. Mistake
Belief that is not in accordance with the facts.
General Rule: the modern rule is that where parties enter into a contract under a mutual
mistake as to a basic assumption of fact, and the mistake has a material effect on the agreed
upon exchange, the K is voidable by the adversely affected party.

A) Misunderstanding: does the agreement that was objectively manifested have an


ambiguous meaning? If so, how many meanings are there?
i) Restatement: there is no manifestation/ of mutual assent/ to an exchange/ if
the parties/ attach materially different meanings/ to their manifestations and
a) Neither party knows or has reason to know the meaning attached by
the other, OR
 Peerless case
b) Each party knows or each party has reason to know the meaning
attached by the other.
ii) The manifestations/ of the parties/ are operative in accordance/ with the
meaning attached to them/ by one of the parties/ IF
a) That party does not know of any different meaning attached by the
other and the other knows the meaning attached by the first party, OR
b) That party has no reason to know of any different meaning attached
by the other, and the other has reason to know that meaning attached
by the first party. (notice the bold is the only difference here)

B) Mutual Mistake: look to the beliefs of both parties, do they accord with the outside
world?
i) Old way is that the K could be rescinded if the mistake went to the substance of
the K
 P contacted to sell D a cow that they both thought was barren. It
turned out, that she was with calf. The K was able to be rescinded
because both parties made a mutual mistake as to the substance of the
K.—Sherwood v. Walker
ii) Modern Rule: elements that a party must prove to claim Mistake as a defense
(to rescind K formation)
a) There is a mistake
b) It is present at the time of K-ing
c) It relates to a basic assumption
d) It has a material effect on the exchange
e) Party seeking relief did not bear the risk
 D entered a bid for the building of a school for P. They won the bid, but
found that their bid was in error. They were allowed to rescind because
D’s mistake was material, and it went to the essence of the contract,
and the mistake was made in good faith, finally, P would not incur any
hardship if the contract was rescinded.--Boise Junior College District v.
Mattefs Construction Co.

Lenawee Country Board of Health v. Messerly

II. Duress
A) Economic duress is a valid defense if:
i) One party commits or threatens to commit/ a wrongful act/ (including breach of
K) that would place the other person in a position that would seriously threaten
his property or finances unless the other party enters into a K, AND
ii) No adequate means are available to avoid or prevent the threatened loss.

III. Misrepresentation and Fraud


General Rule: caveat emptor; buyer beware

Misrepresentation: an assertion not in accordance with the truth.

1) Fraudulent: Made with scienter and intent to mislead

2) Negligent: made without scienter but would have know it was false if they have used best
efforts, (breached a duty of care).
3) Innocent: made without scienter but used best efforts (didn’t breach duty of care).
Laidlaw v. Organ
Vokes v. Arthur Murry
Hill v. Jones

IV. Unconscionabltility
General Rule: one who signs a K has a duty to read it and is obliged to its terms.

Rule: Absence of meaningful choice on the part of one of the parties together with contract
terms which are unreasonably favorable to the other party.

Restatement: If a court as a matter of law finds a contract or any clause of the contract to
have been unconscionable / at the time of K-ing:
1) The court may refuse to enforce the K, OR
2) It may enforce the remainder of the contract without the unconscionable clause, OR
3) It may so limit the application of any unconscionable clause as to avoid any
unconscionable result.

A) Usually goes to enforcing a public policy of protecting ignorant people; conversely, we


have to worry about the other policy of not being too paternalistic.
B) As stated, have to analyze the context of the formation of the K.
C) If the term is the source of unconscionability, then the remedy can be the throwing out
of that term and the enforcement of the rest of the K.

V. Illegality: Agreements Unenforceable on Grounds of Public Policy

Promissory Estoppel
General Rule: A promise coupled with detrimental reliance on that promise.

The Black Letter Rule:


I. The party to be stopped must be given notice of the facts.

II. He must intend that his conduct shall be acted upon, AND
III. Must so act that the party asserting the estoppels has a right to believe it was so intended

IV. The other party must be ignorant of the true state of facts
Objective test—what where the words of the promise?

V. And the other party must rely upon the conduct to his injury.
 Here, the court considered the magnitude of Scothorn’s good faith reliance on
her grandfather’s promise and held that her actions were consistent with that
reliance and therefore constituted a sufficient consideration. –Ricketts v.
Scouthorn

A) An exception for proving 4) reliance in promissory estoppel are charitable


organizations: “it is binding without proof that the promise induced action or
forbearance in the recipient.” p. 141 note 3
B) Also, you can’t use promissory estoppel if there is adequate consideration.
 Illustrating both A and B, is when a rich old lady gave a college a gift of $1,000,
which the college then used for scholarships. After she died, the executors said
there was not adequate consideration to support the gift. The college couldn’t
get promissory estoppel because there was adequate consideration (the donor
made the gift on the condition that the scholarship would use her name)—
Allegheny College. (Ask Deb about this)
C) What if the elements are met in an At-Will Employment situation? –usually can’t use it
i) Both parties can terminate, no real detriment
 When an at-will employee got another job offer, he asked his current employer
if he should stay or go. The employer told him there was “at least five more
years of work for them to do”, then, less than a year later, they fired him. He
couldn’t get promissory estoppel. Even though he had relied on the promise to
his detriment, he was entering into an at-will situation. —Blinn v. Beatrice
Hospital.

So, if we can get Promissary Estoppel, what are the Remedies?

a) Usually goes to full enforcement of the promise

Statute of Frauds
Promises can be binding as K’s without consideration if they fall under the Statute of Frauds (pg. 48 – 51
is where it doesn’t need consideration)
Policy Reasons: encourage people to put their K’s in writing; to prevent fraud and protect people to wish
to make K’s.

(don’t know where this goes): First ask, is the promise

1) in writing (or under seal), AND


2) is document containing the promise delivered AND
3) Are the promisor and promisee named in the document, or described, when it is delivered?

What category does the promise fall into?

1) Is it for the transfer of land? (this can include leases, renting, or buying)
i) If yes, then is there a sufficient writing (or writings)?
ii) If no, then go to something outside of Statute of Frauds to enforce the promise, here,
Past Performance Doctrine:
 When there was no writing for the sale of land,
 but there was a K between the parties, AND
 the party seeking to enforce it partially performed it, AND
 the party’s performance was induced by the other party’s misrepresentation,
which may include acquiescence or silence.
Sullivan—in this case, specific performance was the remedy for breach.

2) Is the promise for a performance that can be completed within one year?
i) If yes, then is there a sufficient writing?—enforceable
ii) If there is not a sufficient writing, then can a string of writings be used as one writing?
a) Is the string of writings bound together by oral testimony?
Crabtree—payment term was written, and oral testimony was used to link the
different writings together. Oral testimony can link documents together to make a
writing, but cannot be used to establish a K.

3) Is the promise for a sale of goods over $500 and between merchants? (goods are movable
commodities) (merchants means a person who deals in goods of the kind or otherwise by his
occupation holds himself out as having knowledge or skill peculiar to the practices or goods
involved in the transaction or to whom such knowledge or skill may be attributed by his
employment of an agent or broker or other intermediary who by his occupation holds himself
out as having such knowledge or skill.)

i) Is there a sufficient writing? If yes, then… (if no, go down to ii)


a) Is it signed by the person (or agent) who claims there is no K?
Then it is enforceable.
To find out remedies, ask:
b) Does the writing have a quantity term?
i) K is not enforceable beyond the quantity of goods shown in writing.
ii) If it states that it is for the buyer’s output, then look to what the past output was.
iii) If the quantity term was decided orally, and not written down, then the K is not
enforceable beyond
 the goods for which payment has been made and accepted OR
 goods which have been received and accepted

ii) If there is no writing, is it oral?


a) Then, is the sale between merchants? (be careful, what is considered a merchant
can be tricky)
b) If it is oral and between merchants then,
i) Was there a written confirmation of the K that was received within a
reasonable time (goes to context of the industry), sufficient against the
seller, AND
ii) The party receiving it has reason to know its contents
c) If yes, then it is enforceable…
d) UNLESS written notice of objection is sent within 10 days after written confirmation
is received.

If the promise doesn’t fall within any of these things, it can still be enforceable. Ask:

4) Are they specially made goods


i) Are they specially made for the other party, AND
ii) Cannot be sold to anyone else, AND
iii) Has party A started production or made commitments to start their manufacturing
iv) Before a cancellation notice from the other party
Then it can be enforceable
5) Has one party admitted under oath that there was a K?
i) Then, only enforceable up to the quantity term the party admits.
6) Have goods already been paid for, AND payment has already been accepted.
i) Then enforceable.

Sullivan v. Porter

Crabtree v. Elizabeth Arden


Remedies
Ask, 1) Is there a K between the two parties? 2) Did D breach it? THEN 3) What damages are owed?

Don’t think about these in terms of static terms, for the exam phrase: “generally, there are three
interests that a P could ask to protect when trying to get money damages.”

Generally, contract enforcement is liability based. This means its almost as if its ok to breach as long as
its economically beneficial.

Remedies for Breach of K: monetary or specific performance:

1) Restitution: General; restores any benefit (money) back to the non-breaching party that they
have conferred to the breaching party. Based on the concept of unfair enrichment; we don’t
want D to be unduly enriched.
a. An example is if I buy tires from Sears and they blow out while im driving to the LSAT, if
Sears is liable for restitution damages, then they will have to pay back the price of the
tires, not for the time lost to me to re-study, or the money I might’ve made as an
attorney.

2) Reliance Damages: intermediate; reimbursed for loss caused by reliance on the contract by
being put in as good of position as he would have been had the contract not been made. Not
based on what D unfairly got, it’s based on what P spent in reliance.
 Sullivan v. O’Connor—where a plastic surgeon gave a woman a new nose, and promised
her he would make it better than it was before. It ended up being horribly disfigured.
What damages are owed to P? She got out-of-pocket expenses (i.e. restitution) and
pain and suffering with respect to the third operation, and compensation for worsening
of her condition from a “good” nose to a “bad” nose.

3) Expectation Damages: amount of money that will put the non-breaching party in as good a
position as he or she would be in had the K been performed.
A) The amount of damages awarded is limited by
i) Purpose of damages is to compensate, not punish
ii) Damages must be established to a reasonable certainty
iii) Non-breaching party must mitigate damages
B) Can be determined objectively or subjectively.
i) Objectively: what is the market value?
ii) Subjectively: what is the value to the party that was to receive the benefit? (i.e.
what is the value of O’Connor’s nose to her?)
 Sullivan v. O’Connor—where a plastic surgeon gave a woman a new nose, and
promised her he would make it better than it was before. Expectation is too
excessive here because she’s will claim that the nose could made her millions in her
job as an actress. This is pretty subjective.

C) Must take into account Forseeability, this limits the damages the breaching party has to pay
i) The general damages, AND
ii) Consequential Damages:
1) any loss /resulting from/ general or particular requirements and needs/ of
which the seller at the time of K-ing/ had reason to know/ AND
2) which could not reasonably /be prevented/ by cover or otherwise/ and injury to
person or property/ resulting from any breach.
Translates as: Only those damages that/ at the time of the K-ing/ could be foreseen
by a reasonable person/ in the shoes of the breaching party/ as a probable result of
the breach.
A) This is objective test: it goes to the context that the K was made in.
Look to words that were said, or the kind of party you’re selling to.
 So, if I say I will sell you a widget for $1,000 and you say yes, and we form a K. Then
I sell it to someone else. You say “I was going to sell it to someone else for $2,000”;
I say, “well I didn’t know that”—I am not liable for your lost profit. But if I’m selling
to a widget emporium, than it is foreseeable that there would be more damages.

Restitution Reliance Expectation

Restore value of benefit Put P back into status quo ante Goal: put plaintiff in the position
conferred on D | as if K had been formed.
| based on the contact |
Based off the contract—theory (affirmative) Based on the contract
of unjust enrichment. (affirmative)

4) Specific Performance: Can be used if there is no adequate monetary remedy for the breach,
usually used for very specific items or services (for example a K to buy a piano owned by
Chopin); it is not a right, only awarded to prevent injustice.
A) Mostly for breach of K involving property
 Where one party relied upon the existence of a K and made significant
improvement to the land, AND had given D a down payment, AND D had been
silent and acquiescent. P got specific performance through Part Performance
Doctrine--Sullivan
B) Can be for breach of K involving personality (personal property, chattels)
i) Would money be inadequate solution for breach?
a) Was there a timing issue involved as to price?
 Where D and P entered into a K for delivery of tomatoes. The P relied on the
tomatoes; they were a necessary component of making a brief 6 week packing
period successful. Not enough time here to find other tomatoes, and if found,
would be much more expensive. Court found specific performance.—Curtice
Brothers.

5) Efficient Breach and Cosse Theorem: serves the economic goals of K’s: don’t punish (no punitive
damages in K’s) but to compensate. No presumption of morality in K’s.
A) Is it less cost to breach/ then it would be/ for both parties/ if the K was enforced?

Remedies—UCC 2.711- 717

1) UCC 2.711 Buyer’s Remedies


A) Did the seller breach the K? Ask did the seller:
i) Wrongful failure to deliver or perform a contractual obligation
ii) Not tendering delivery or performance
iii) Repudiation (refusal of performing a duty)

If so, then what can the buyer do about it?

2) UCC 2-717: deduct all or any part of damages from the price, if
a) It results from the breach of the K, AND
b) Still due under the same K, AND
c) The buyer has notified the seller of his intention to do so

3) Buyer can cancel –UCC 2.711

4) If Seller doesn’t deliver, Buyer can “cover”, by –


a) Making with good faith AND
b) Without reasonable delay
c) Any reasonable purchase or K of goods in substitution of those due from the seller
AND damages in this case are the difference between the cost of cover and the K price
together with
i) Incidental damages—cost of transportation, inspection, care, custody of goods, etc.
AND
ii) Consequential damages—loss resulting from requirements and needs that a
reasonable person in the shoes of the seller had reason to know (forseeability) AND
couldn’t be prevented by cover.

5) If Seller doesn’t deliver or fails to repudiate, damages are the difference between
a) The market price/ at the time of tender under the K/ AND
i) Market price: determined as of the place of tender.
b) The price of the K, AND
c) Any incidental or consequential damages.

THINGS I DON’T KNOW WHERE THEY GO

B) Manifested Intention Not to be Bound: party’s intention not to be bound “may” prevent
the formation of a K. ex. If one person intends to be reasonably bound, the other person
must know about it.
There is no mutual assent where the parties attach materially different meanings to what is
agreed upon if
i) Neither party knows or has reason to know of the other party’s meaning OR
ii) Both know or have reason to know of the other person’s meaning.

I.205 Firm Offers:


An offer/ by a merchant/ to buy or sell goods/ in a signed writing/ which by its terms gives
assurance that it will be held open/ for lack of consideration/ during the time stated or if no
time is stated for a reasonable time/ BUT any such term of assurance on a form supplied by
the offeree must be separately signed by the offeror.

If under Common Law, a counter offer terminates the offeree’s power of acceptance and
creates a new power of acceptance in the former offeror. If the offeror elects to exercise that
power, it can accept the counter-offer, creating a K on the offeree’s terms. If not, no K comes
into being unless the parties go ahead and perform.

UCC definition of “Sign" means, with present intent to authenticate or adopt a record:

(i) to execute or adopt a tangible symbol; or

(ii) to attach to or logically associate with the record an electronic sound, symbol, or process.

Under UCC 2.207—doesn’t assume that acceptance can be inferred because of performance.
The counter-offer is accepted only if it is clear that the offeror is aware of the alteration in terms
and has manifest intent.
Avoidance of Contract
I. Capacity

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