I.

THE BARGAIN PROCESS

A. Making OIIers Irrevocable
. Introduction
a. #ules and Notes:
i. all oIIers are revocable
ii. oIIer creates power oI acceptance in oIIeree (oIIeror is susceptible)
iii. prior to acceptance, oIIeree is subject to oIIeror`s power oI termination communicated
directly or indirectly
. Option ontract #ights oI First #eIusal
a. #estatements:
i. V Option ontracts
An option contract is a promise which meets the requirements Ior the Iormation oI a
contract and limits the promisor's power to revoke an oIIer.
ii. V 37 Termination oI Power oI Acceptance Under Option ontract
Notwithstanding VV 38-49, the power oI acceptance under an option contract is not
terminated by rejection or counter-oIIer, by revocation, or by death or incapacity oI the
oIIeror, unless the requirements are met Ior the discharge oI a contractual duty.
b. #ules and Notes:
i. principal purpose oI option contract is to make oIIers irrevocable
ii. option contracts should be supported by consideration (except U Iirm oIIers)
) consideration Ior option can be consideration Ior another promise (new lease-#OF#)
iii. iI optionor changes position as a result oI rejection law, bars optionee Irom asserting
power to accept
iv. eIIect oI option creates duty in optionor to keep oIIer open and not to revoke,
Iurthermore, it strips the power to revoke (historical duty v. modern termination)
v. here no time is speciIied Ior the perIormance oI an act, the law implies that it must be
done within a reasonable time, and what is a reasonable time depends entirely upon the
circumstances oI each case.
) Factors Orlowski court used to determine reasonable time
O was losing money
O house had been up Ior sale when T moved in
O T knew house was Ior sale when he moved in
O T knew house was going to be sold
O T had problems keeping up w rent
O T told he was having trouble securing purchase money
vi. oIIeror as master oI his oIIer should speciIy a time Ior response
vii. #OF# requires condition precedent
3. Irrevocability through #eliance Firm OIIers
a. U Provisions:
i. V - - Firm OIIers
An oIIer 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, Ior lack oI consideration, during the
time stated or iI no time is stated Ior a reasonable time, but in no event may the period oI
irrevocability exceed three months. Any such term oI assurance in a Iorm supplied by the
oIIeree must be separately signed by the oIIeror.
ii. V -4 DeIinitions: 'Merchant
) comment :
O roup I: "who ... by his occupation holds himselI out as having knowledge or skill
peculiar to the practices ... involved in the transaction ..."
Applies to VV -(); -; -7; -9
O roup II: "iI the seller is a merchant with respect to goods oI that kind."
Applies to VV -34; -4(); -43()
O roup III: applies to persons who are merchants under either the "practices" or the
"goods" aspect oI the deIinition oI merchant
Applies to VV -3()(b); -37()(c); -63; -6; -9; -69
b. #estatements:
i. V 87 Option ontracts
() An oIIer is binding as an option contract iI it
(a) is in writing and signed by the oIIeror, recites a purported consideration Ior the
making oI the oIIer, and proposes an exchange on Iair terms within a reasonable time; or
(b) is made irrevocable by statute.
() An oIIer which the oIIeror should reasonably expect to induce action or Iorbearance
oI a substantial character on the part oI the oIIeree beIore acceptance and which does
induce such action or Iorbearance is binding as an option contract to the extent necessary
to avoid injustice.
c. #ules and Notes:
i. Step-by-step requirements oI U Firm OIIer
) OIIer
) by roup I merchant
3) signed writing
O can be letterhead, emailelectronic (UETA)
O U V -(37): 'Signed includes using any symbol executed or adopted with
present intention to adopt or accept a writing
4) words oI assurance
O needs to be a heightened maniIestation
ii. 3 month ceiling
iii. policy Ior U Firm OIIers - V -3(a)(): 'to permit the continued expansion oI
commercial practices through custom, usage, and agreement oI the parties
iv. Mandatory Elements oI IS Art. 6() - Irrevocability
) Must indicate that oIIer is irrevocable
O by either stating a Iixed time
O or otherwise
) Must be between businesses (art. deIines)
3) Must not be Ior personal use (art. deIines), unless seller knew or should have known
intended use
v. #est V 87() protects reasonably Ioreseeable and justiIiable change oI position by the
mechanism oI creating an option contract; theory is rooted in estoppel
4. Irrevocability through Part PerIormance Section 4 oI the #estatements
a. #estatements:
i. V 4 Option ontract reated by Part PerIormance or Tender
() here an oIIer invites an oIIeree to accept by rendering a perIormance and does not
invite a promissory acceptance, an option contract is created when the oIIeree tenders
or begins the invited perIormance or tenders a beginning oI it.
() The oIIeror's duty oI perIormance under any option contract so created is conditional on
completion or tender oI the invited perIormance in accordance with the terms oI the
oIIer.
b. #ules and Notes:
i. Unilateral v. Bilateral ontracts:
) Unilateral promise seeking perIormance; promisor and promisee; right and
correlative duty; requires act oI will
) Bilateral promise seeking promise; promisors and promisees; rights and
correlative duties
ii. allowed revocation oI oIIer prior to completion oI perIormance
iii. Theories oI protecting part perIormance:
) #est st V 4: oIIeror is contractually bound as soon as oIIer oI unilateral contract is
made
) #est d V 4: oIIeror is bound by an option contract that is only created when oIIeree
begins perIormance, not when oIIer oI unilateral contract is made
3) Bilateral Theory: part perIormance is viewed as a promise, thereby taking on a bilateral
character
iv. PerIormance v. Preparations to perIorm
) #est d V 4 protects actual perIormance, cmt I. helps distinguish perI. v. prep.
O extent to which oIIeree`s conduct is clearly reIerable to the oIIer
O deIinite and substantial character oI that conduct
O extent to which conduct is oI actual or prospective beneIit to the oIIeror rather than the
oIIeree
O terms oI communications between parties (P)
O D & TU
) #est d V 87 can protect preparations to perIorm by using reliance theory, cmt. e. helps
determine prep.
O undergo substantial expense
O undertake substantial commitments
O Iorego alternatives
v. Due tender oIIer and present ability
) U V-3 accepts due tender to protect oIIeree
) illiston requires tender 'exhibiting the cash
vi. Indirect #evocation
) requires some deIinite action by oIIeror, and
) oIIeree must receive inIormation
B. The Nature oI Acceptance
. #estatements:
a. V EIIect oI Part PerIormance without Knowledge oI the OIIer
Unless the oIIeror maniIests a contrary intention, an oIIeree who learns oI an oIIer aIter he
has rendered part oI the perIormance requested by the oIIer may accept by completing the
requested perIormance.
b. V 3 Acceptance by PerIormance; ManiIestation oI Intention Not to Accept
() An oIIer can be accepted by the rendering oI a perIormance only iI the oIIer invites such
an acceptance.
() Except as stated in V 69, the rendering oI a perIormance does not constitute an
acceptance iI within a reasonable time the oIIeree exercises reasonable diligence to notiIy
the oIIeror oI non-acceptance.
(3) here an oIIer oI a promise invites acceptance by perIormance and does not invite a
promissory acceptance, the rendering oI the invited perIormance does not constitute an
acceptance iI beIore the oIIeror perIorms his promise the oIIeree maniIests an intention
not to accept.
. #ules and Notes:
a. Knowledge oI oIIer is required Ior private rewards, but perIormance oI the required act
wo knowledge oI the reward may give rise to recovery in public (gov`t) reward cases
b. intent to accept is always presumed
. Manner oI Acceptance
. Modern Analysis
a. #estatements:
i. V 3 Form oI Acceptance Invited
() An oIIer may invite or require acceptance to be made by an aIIirmative answer in
words, or by perIorming or reIraining Irom perIorming a speciIied act, or may empower
the oIIeree to make a selection oI terms in his acceptance.
() Unless otherwise indicated by the language or the circumstances, an oIIer invites
acceptance in any manner and by any medium reasonable in the circumstances.
ii. V 3 Invitation oI Promise or PerIormance
In case oI doubt an oIIer is interpreted as inviting the oIIeree to accept either by promising
to perIorm what the oIIer requests or by rendering the perIormance, as the oIIeree
chooses.
iii. V Acceptance oI OIIer DeIined; Acceptance by PerIormance; Acceptance by
Promise
() Acceptance oI an oIIer is a maniIestation oI assent to the terms thereoI made by the
oIIeree in a manner invited or required by the oIIer.
() Acceptance by perIormance requires that at least part oI what the oIIer requests be
perIormed or tendered and includes acceptance by a perIormance which operates as a
return promise.
(3) Acceptance by a promise requires that the oIIeree complete every act essential to the
making oI the promise.
iv. V 6 EIIect oI PerIormance by OIIeree here OIIer Invites Either PerIormance or
Promise
() here an oIIer invites an oIIeree to choose between acceptance by promise and
acceptance by perIormance, the tender or beginning oI the invited perIormance or a tender
oI a beginning oI it is an acceptance by perIormance.
() Such an acceptance operates as a promise to render complete perIormance.
b. U Provisions:
i. V -6 OIIer and Acceptance in Formation oI ontract
() Unless otherwise unambiguously indicated by the language or circumstances:
(a) an oIIer to make a contract shall be construed as inviting acceptance in any manner
and by any medium reasonable in the circumstances;
(b) an order or other oIIer to buy goods Ior prompt or current shipment shall be
construed as inviting acceptance either by a prompt promise to ship or by the prompt or
current shipment oI conIorming or nonconIorming goods, but the shipment oI
nonconIorming goods is not an acceptance iI the seller seasonably notiIies the buyer that
the shipment is oIIered only as an accommodation to the buyer.
() II the beginning oI a requested perIormance is a reasonable mode oI acceptance, an
oIIeror that is not notiIied oI acceptance within a reasonable time may treat the oIIer as
having lapsed beIore acceptance.
(3) A deIinite and seasonable expression oI acceptance in a record operates as an
acceptance even iI it contains terms additional to or diIIerent Irom the oIIer.
c. #ules and Notes:
i. U V -6 notes
) manner means promise or perIormance
) medium means method oI communication (i.e. letter, Iax, email)
3) seasonable means within a reasonable time, which depends on Iacts and circumstances
ii. mirror image rule
iii. #est. V 4 is similar to V -6
iv. II an oIIer does not speciIy a particular manner oI acceptance, an oIIeree may accept by
perIorming the act contemplated by the oIIer. Under such circumstances, the oIIeree is
regarded as having accepted the contract by beginning perIormance in a way that would
bind him to complete it. Another means by which an oIIeree may be regarded as having
accepted a tendered contract is by accepting the beneIits oI the contracts.
v. ome OIIice approval clause can change analysis signiIicantly
. Silence as Acceptance
a. #estatements:
i. V 69 Acceptance by Silence or Exercise oI Dominion
() here an oIIer invites an oIIeree to choose between acceptance by promise and
acceptance by perIormance, the tender or beginning oI the invited perIormance or a tender
oI a beginning oI it is an acceptance by perIormance.
() Such an acceptance operates as a promise to render complete perIormance.
b. #ules and Notes:
i. IS art. 8() & (3) recognizes silence implicitly through the recognition oI practices
and usages
3. The Notice #equirement
a. #estatements:
i. V 4 Acceptance by PerIormance; Necessity oI NotiIication to OIIeror
() here an oIIer invites an oIIeree to accept by rendering a perIormance, no
notiIication is necessary to make such an acceptance eIIective unless the oIIer requests
such a notiIication.
() II an oIIeree who accepts by rendering a perIormance has reason to know that the
oIIeror has no adequate means oI learning oI the perIormance with reasonable promptness
and certainty, the contractual duty oI the oIIeror is discharged unless
(a) the oIIeree exercises reasonable diligence to notiIy the oIIeror oI acceptance, or
(b) the oIIeror learns oI the perIormance within a reasonable time, or
(c) the oIIer indicates that notiIication oI acceptance is not required.
ii. V 6 Acceptance by Promise; Necessity oI NotiIication to OIIeror
Except as stated in V 69 or where the oIIer maniIests a contrary intention, it is essential to
an acceptance by promise either that the oIIeree exercise reasonable diligence to notiIy the
oIIeror oI acceptance or that the oIIeror receive the acceptance seasonably.
4. arranty
a. U Provisions:
i. V -3 arranty oI Title and Against InIringement; Buyer`s Obligation Against
InIringement
() Subject to subsection (3), there is in a contract Ior sale a warranty by the seller that:
(a) the title conveyed shall be good and its transIer rightIul and shall not unreasonably
expose the buyer to litigation because oI any colorable claim to or interest in the goods;
and
(b) the goods shall be delivered Iree Irom any security interest or other lien or
encumbrance oI which the buyer at the time oI contracting has no knowledge.
() Unless otherwise agreed, a seller that is a merchant regularly dealing in goods oI the
kind warrants that the goods shall be delivered Iree oI the rightIul claim oI any third
person by way oI inIringement or the like but a buyer that Iurnishes speciIications to the
seller must hold the seller harmless against any such claim that arises out oI compliance
with the speciIications.
(3) A warranty under this section may be disclaimed or modiIied only by speciIic
language or by circumstances that give the buyer reason to know that the seller does not
claim title, that the seller is purporting to sell only the right or title as the seller or a third
person may have, or that the seller is selling subject to any claims oI inIringement or the
like.
ii. V -33 Express arranties by AIIirmation, Promise, Description, Sample; #emedial
Promise
() In this section, "immediate buyer" means a buyer that enters into a contract with the
seller.
() Express warranties by the seller to the immediate buyer are created as Iollows:
(a) Any aIIirmation oI Iact or promise made by the seller which relates to the goods
and becomes part oI the basis oI the bargain creates an express warranty that the goods
shall conIorm to the aIIirmation or promise.
(b) Any description oI the goods which is made part oI the basis oI the bargain creates
an express warranty that the goods shall conIorm to the description.
(c) Any sample or model that is made part oI the basis oI the bargain creates an
express warranty that the whole oI the goods shall conIorm to the sample or model.
(3) It is not necessary to the creation oI an express warranty that the seller use Iormal
words such as "warrant" or "guarantee" or that the seller have a speciIic intention to make
a warranty, but an aIIirmation merely oI the value oI the goods or a statement purporting
to be merely the seller's opinion or commendation oI the goods does not create a warranty.
(4) Any remedial promise made by the seller to the immediate buyer creates an obligation
that the promise will be perIormed upon the happening oI the speciIied event.
iii. V -34 Implied arranty: Merchantability; Usage oI Trade
() Unless excluded or modiIied (Section --36), a warranty that the goods shall be
merchantable is implied in a contract Ior their sale iI the seller is a merchant with respect
to goods oI that kind. Under this section the serving Ior value oI Iood or drink to be
consumed either on the premises or elsewhere is a sale.
() oods to be merchantable must be at least such as:
(a) pass without objection in the trade under the contract description;
(b) in the case oI Iungible goods, are oI Iair average quality within the description;
(c) are Iit Ior the ordinary purposes Ior which goods oI that description are used;
(d) run, within the variations permitted by the agreement, oI even kind, quality and
quantity within each unit and among all units involved;
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(I) conIorm to the promise or aIIirmations oI Iact made on the container or label iI
any.
(3) Unless excluded or modiIied (Section --36) other implied warranties may arise Irom
course oI dealing or usage oI trade.
iv. V -3 Implied arranty: Fitness Ior Particular Purpose
here the seller at the time oI contracting has reason to know any particular purpose Ior
which the goods are required and that the buyer is relying on the seller's skill or judgment
to select or Iurnish suitable goods, there is unless excluded or modiIied under the next
section an implied warranty that the goods shall be Iit Ior such purpose.
v. V -36 Exclusion or ModiIication oI arranties
() ords or conduct relevant to the creation oI an express warranty and words or conduct
tending to negate or limit warranty shall be construed wherever reasonable as consistent
with each other; but subject to Section -, negation or limitation is inoperative to the
extent that such construction is unreasonable.
() Subject to subsection (3), to exclude or modiIy the implied warranty oI
merchantability or any part oI it in a consumer contract the language must be in a record,
be conspicuous, and state "The seller undertakes no responsibility Ior the quality oI the
goods except as otherwise provided in this contract," and in any other contract the
language must mention merchantability and in case oI a record must be conspicuous.
Subject to subsection (3), to exclude or modiIy the implied warranty oI Iitness, the
exclusion must be in a record and be conspicuous. anguage to exclude all implied
warranties oI Iitness in a consumer contract must state "The seller assumes no
responsibility that the goods will be Iit Ior any particular purpose Ior which you may be
buying these goods, except as otherwise provided in the contract," and in any other
contract the language is suIIicient iI it states, Ior example, that "There are no warranties
that extend beyond the description on the Iace hereoI." anguage that satisIies the
requirements oI this subsection Ior the exclusion or modiIication oI a warranty in a
consumer contract also satisIies the requirements Ior any other contract.
(3) Notwithstanding subsection ():
(a) unless the circumstances indicate otherwise, all implied warranties are excluded by
expressions like "as is", "with all Iaults" or other language that in common understanding
calls the buyer's attention to the exclusion oI warranties, makes plain that there is no
implied warranty, and, in a consumer contract evidenced by a record, is set Iorth
conspicuously in the record;
(b) iI the buyer beIore entering into the contract has examined the goods or the sample
or model as Iully as desired or has reIused to examine the goods aIter a demand by the
seller there is no implied warranty with regard to deIects that an examination in the
circumstances should have revealed to the buyer; and
(c) an implied warranty may also be excluded or modiIied by course oI dealing or
course oI perIormance or usage oI trade.
(4) #emedies Ior breach oI warranty may be limited in accordance with Sections -78
and -79.
b. #ules and Notes:
i. warranties are rooted in tort
) required actual reliance on a statement made by seller
ii. relates to seller`s obligation oI quality what seller has committed to buyer
iii. warranties Ior goods can arise wo promises; services require promises
iv. VV -34, -3 supplied by the law
v. V -33 can arise Irom aIIirmation; statements regarding quality oI goods
) U presumes descriptions are inducements, but can be rebutted w evidence showing
buyer intended to purchase regardless oI representation
) Iactors used to distinguish aIIirmations Irom opinions
O language
O sophistication
. SelI-Service ontracts
a. U Provisions:
i. V -6(3)&(4) Termination and ancellation
(3) "Termination" occurs when either party pursuant to a power created by agreement or
law puts an end to the contract otherwise than Ior its breach. On "termination" all
obligations which are still executory on both sides are discharged but any right based on
prior breach or perIormance survives.
(4) "ancellation" occurs when either party puts an end to the contract Ior breach by the
other and its eIIect is the same as that oI "termination" except that the cancelling party
also retains any remedy Ior breach oI the whole contract or any unperIormed balance.
ii. V -39 Absence oI SpeciIic Time Provisions; Notice oI Termination
() The time Ior shipment or delivery or any other action under a contract iI not provided
in this Article or agreed upon shall be a reasonable time.
() II the contract provides Ior successive perIormances but is indeIinite in duration, it is
valid Ior a reasonable time but unless otherwise agreed may be terminated at any time by
either party.
(3) Termination oI a contract by one party except on the happening oI an agreed event
requires that reasonable notiIication be received by the other party and an agreement
dispensing with notiIication is invalid iI its operation would be unconscionable. A term
speciIying standards Ior the nature and timing oI notice is enIorceable iI the standards are
not maniIestly unreasonable.
b. #ules and Notes:
i. Barker view (U) is prevailing view oI US law
) implied warranties arise since product placement on shelI constitutes oIIer and
consumer pulling product oII the shelI constitutes acceptance
ii. other theories:
) delivery to counter
) promise to deliver goods to counter
3) promise to deliver upon pulling oII shelI; iI returned, then contract is terminated due to
trade usage
6. Auction ontracts
a. U Provisions:
i. V -38 Sale by Auction
() In a sale by auction, iI goods are put up in lots, each lot is the subject oI a separate
sale.
() A sale by auction is complete when the auctioneer so announces by the Iall oI the
hammer or in other customary manner. II a bid is made during the process oI completing
the sale but beIore a prior bid is accepted, the auctioneer has discretion to reopen the
bidding or to declare the goods sold under the prior bid.
(3) A sale by auction is subject to the seller's right to withdraw the goods unless at the
time the goods are put up or during the course oI the auction it is announced in express
terms that the right to withdraw the goods is not reserved. In an auction in which the right
to withdraw the goods is reserved, the auctioneer may withdraw the goods at any time
until completion oI the sale is announced by the auctioneer. In an auction in which the
right to withdraw the goods is not reserved, aIter the auctioneer calls Ior bids on an article
or lot, the article or lot may not be withdrawn unless no bid is made within a reasonable
time. In either case a bidder may retract a bid until the auctioneer's announcement oI
completion oI the sale, but a bidder's retraction does not revive any previous bid.
(4) II the auctioneer knowingly receives a bid on the seller's behalI or the seller makes or
procures such a bid, and notice has not been given that liberty Ior such bidding is
reserved, the buyer may at the buyer's option avoid the sale or take the goods at the price
oI the last good-Iaith bid prior to the completion oI the sale. This subsection shall not
apply to any bid at an auction required by law.
D. The Deviant Acceptance The 'Battle oI the Forms
. U Provisions:
a. V -7 Terms oI ontract; EIIect oI onIirmation
() A deIinite and seasonable expression oI acceptance or a |written conIirmation| which is
sent within a reasonable time operates as an acceptance even though it states terms
additional to or diIIerent Irom those oIIered |or agreed upon|, / unless acceptance is
expressly made conditional on assent to the additional or diIIerent terms.
() The additional terms are to be construed as proposals Ior addition to the contract.
Between merchants such terms become part oI the contract unless:
(a) the oIIer expressly limits acceptance to the terms oI the oIIer;
(b) they materially alter it; or
(c) notiIication oI objection to them has already been given or is given within a
reasonable time aIter notice oI them is received.
(3) onduct by both parties which recognizes the existence oI a contract is suIIicient to
establish a contract Ior sale although the writings oI the parties do not otherwise establish a
contract. In such case the terms oI the particular contract consist oI those terms on which
the writings oI the parties agree, together with any supplementary terms incorporated under
any other provisions oI this Act.
. #ules and Notes:
a. -7 v.
i. recognized a change in law regarding acceptance
ii. abrogation oI mirror image rule
b. not every acceptance constitutes acceptance under -7
c. dickered Ior terms $, Q, SM, Del
d. two settings oI -7
i. 'oIIer and acceptance setting
ii. 'conIirmation setting
e. Iirst use V-4 and V -6 to decide 'is there a contract?
I. () deals w 'is there a K and is there a conIirmation? iI so, then Y to K
g. () addresses, what are the terms Ior either setting?
h. (3) DOES NOT APPY to contracts based on oIIer & acceptance
i. cmt. 4 gives examples oI material v. immaterial, but obbs doesn`t like them
j. buyer bears burden oI proving the material alteration
k. PO Boilerplate can serve as notice per -7()(c)
l. change to dickered Ior terms in 'acceptance act as a counteroIIer, rather than acceptance
m. Dorton Test:
i. unwillingness to proceed wo express assent
n. knockout rule:
i. diIIerent terms (where they disagree), both knocked out P#EVAIIN VIE
ii. just because two diIIering terms are both express does not mean they are knocked out,
the scope must overlap to knock out.
o. #olling ontract Theory law in 7th ir.
p. SIVE#STEIN`S 'SPEIA V -7 OUTINE

Contracts I

Battle of the Forms Analytical Outline

Professor 1oshua M. Silverstein
University of Arkansas at Little Rock, William H. Bowen School of Law

I Introduction to the 'Battle oI the Forms.
A What is the 'Battle oI the Forms?
There are two -asic situations. See U... V -7, omment .
Type 1: ritten OIIer and ritten 'Purported Acceptance.

a Example:
() X sends a written oIIer containing terms A (type oI good), B
(quantity oI good), (price), and D (warranties).
(a) This document is oIten a 'purchaser order sent by a buyer
to a seller.
() Y sends a 'response that (i) expresses acceptance oI X`s oIIer,
and (ii) contains additional terms Ior example, terms E (no
consequential damages) and F (arbitration provision) or
different terms Ior example, terms (lower or higher price)
and D (disclaimer oI all warranties).
(a) This document is oIten an 'order acknowledgment sent by
the seller to the buyer.
(3) (Usually) Parties -egin performing without resolving the
conIlicts.
3 Type 2: Oral Agreement Iollowed by ritten onIirmation.

a Example:
() X and Y agree to terms A, B, , and D over the phone.
() X (andor Y) then sends a 'conIirming letter or Iorm that (i)
conIirms the existence oI the oral agreement, and (ii) contains
additional (E and F) or diIIerent ( or D) terms.
(3) (Usually) Parties -egin performing without resolving the
conIlicts.
4 ey Question: Are the additional or different terms included in the parties`
contract? That depends on (i) which law applies the traditional common law
rules or U... V -7 and (ii) a number oI additional Iactual questions.

A Type case could involve an oral oIIer and a written acceptance. owever, Ior purposes oI this class,
do not worry about that possibility.

A Type case could involve a written oIIer and an oral acceptance. owever, Ior purposes oI this class,
do not worry about that possibility.

B Why is there ever a 'Battle oI the Forms?
3

First, because it is not cost-eIIective Ior the parties to careIully negotiate all
terms to their contracts. 'Time is money and lawyers are expensive.
Second, because parties like to include Iavorable boilerplate language in
agreements (e.g., disclaimers oI warranties, choice-oI-Iorum provisions),
hoping that the boilerplate will beneIit them in some way.
II Traditional Common Law Approach to a Battle oI the Forms.
4

A The irror-Image #ule.
The Rule: An OIIeree`s 'response to an oIIer constitutes an 'acceptance iI it
perIectly 'mirrors the oIIer. II terms oI the oIIer are |i| changed or |ii| new
ones are added, then the 'response is a 'counter-oIIer. ormille v. Miller,
p. 46; accord Princess Cruises, Inc. v. General Electric Co., p. 49 ('Under
the common law, an acceptance that varies the terms oI the oIIer is a
counteroIIer which rejects the original oIIer.) (citing #est. d ontracts V 9).
a See also #est. d ontracts V 8 ('An acceptance must comply with the
requirements oI the oIIer as to the promise to be made or the
perIormance to be rendered.); #est. d ontracts V 9 ('A reply to an
oIIer which purports to accept it but is conditional on the oIIeror`s assent
to terms additional to or diIIerent Irom those oIIered is not an acceptance
but is a counter-oIIer.).

Examples: #esponse Acceptance:
a X: 'I oIIer to paint your house Ior $,.
b Y: 'I accept. or:
c Y: 'Fine. I will pay you $, iI you paint my house.
d Analysis: In both situations, Y`s acceptance perIectly mirrors X`s oIIer.
Thus, in both situations X and Y have a contract.
3 Example: #esponse ounter-OIIer:

3
One possible answer: torture lawyers, law proIessors, and law students.

4
This summary oI the common law regarding oIIer and acceptance is % comprehensive. It is LY
meant to lay out the key rules necessary to an understanding oI a battle oI the Iorms and U... V -7. There are
many other legal rules and aspects oI the oIIer-and-acceptance cases that are not discussed here. Moreover, some
subjects covered in the battle-oI-the-Iorms reading are not discussed in this Outline because they do not concern the
battle oI the Iorms 5er se (Ior example, the Princess Cruises predominant purpose test, pp. 47-49, addressing
whether the U or common law applies to mixed contracts). You ARE responsible Ior such material even though
it is excluded Irom this Outline.

Note , p. , suggests that the #estatement approach to the Battle oI the Forms is somewhere in between
the traditional common law approach and the U. Id. (citing #est. d ontracts V 9 cmt. a). owever, it is
diIIicult to ascertain precisely what approach the #estatement has adopted. Accordingly, this outline Iocuses on the
traditional common law approach and the U approach, and cites only those portions oI the #estatement that are
directly relevant to one oI these two approaches to the Battle oI the Forms. For purposes oI this class, you may
assume that the common law approach and the U approach are the only approaches to the Battle oI the Forms.
a X: 'I oIIer to paint your house Ior $,.
b Y: 'I accept, but the price must be $9,? or:
c Y: 'Ok. But you must Iinish by next Tuesday.
d Analysis: In both situation, Y`s 'acceptance does not perIectly mirror
X`s oIIer. Thus, in each case X and Y do not have a contract. Instead, Y
has made a counter-oIIer.
4 Example: #esponse ounter-OIIer: ormille v. Miller, pp. 46-47.
a DeIendant Miller signed the PlaintiIIs` written oIIer, but changed a
number oI terms. Thus, DeIendant did not accept PlaintiIIs` oIIer;
rather, DeIendant made a counter-oIIer.
B The Last-Shot #ule.
The Rule: A party impliedly assents to and thereby accepts a counter-oIIer by
conduct indicating a lack oI objection to the counter-oIIer. See Note 3, p. ;
accord Princess Cruises, Inc. v. G.E., p. 49 ('At common law, an oIIeror who
proceeds under a contract aIter receiving the counteroIIer can accept the terms
oI the counteroIIer by perIormance.).
a General Rule upon which the ast-Shot #ule is based: #est. d
ontracts V 9() ('The maniIestation oI assent may be made wholly or
partly by written or spoken words or -y other acts performance] or by
Iailure to act.)
Example:
a X sends a letter to Y oIIering to sing at Y`s birthday party Ior $,.
b Y sends a letter to X that states as Iollows: 'I accept your oIIer, but the
price must be $9,. (Note: this is a counter-oIIer.)
c X does nothing between his receipt oI Y`s letter and Y`s birthday.
d X shows up at Y`s birthday party and sings.
e X`s perIormance at Y`s birthday is conduct maniIesting acceptance oI
the counter-oIIer. Thus, Y owes X only $9,.
3 Analysis:
a The ast-Shot #ule comes into play aIter the Mirror-Image #ule is
invoked by a counter-oIIer. It is called the 'ast-Shot rule because the
last shot the last counter-oIIer prior to perIormance oI the contract by
the counter-oIIeree governs.
b The last counter-oIIer governs Ior the Iollowing reasons. A counter-
oIIer constitutes a rejection oI the original oIIer. See #est. d ontracts
V 39(). Thus, a counter-counter-oIIer constitutes a rejection oI the
counter-oIIer. Id. This continues ad infinitum, until there is
performance -y the counter-offeree oI the last counter-offer.
PerIormance by the counter-oIIeree constitutes acceptance oI the last
counter-oIIer. See, e.g., #est. d ontracts V 9().
() Note: performance -y the counter-offeror is not sufficient.
onsider:
(a) Example: X sends a purchase order Ior goods to Y. Y sends
an order acknowledgment containing additional or diIIerent
terms. Y then sends the goods. Y (the counter-oIIeror)
sending the goods cannot constitute acceptance oI the
counter-oIIer (the order acknowledgment) by the counter-
oIIeree (X, the buyer). X is the party that must accept by
perIormance. ere, that would be X accepting the goods
upon delivery.
c In sum, prior to perIormance, every counter-oIIer constitutes a rejection
oI the prior oIIer or counter-oIIer. Thus, a contract does not Iorm until
the last counter-oIIer (i.e., the last shot) is accepted by perIormance
by the last counter-oIIeree. Such perIormance is the Iirst time any party
does anything constituting acceptance oI an oIIer.
A omprehensive Example oI the Traditional Common Law Approach to the
Battle oI the Forms: Princess Cruises, Inc. v. G.E.
Facts:
a Princess sent a 'Purchase Order with boilerplate terms and conditions.
Knapp, p. 4.
b E responded with a 'Final Price Quotation that (i) rejected Princess`s
terms and conditions, (ii) included its own terms and conditions, and (iii)
changed the price. Knapp, p. 4.
c Princess did not expressly assent to the conIlicting terms and conditions
in E`s Final Price Quotation. Knapp, p. .
d But, (i) Princess did give E the go-ahead to perIorm the requested
services, (ii) E sent a conIirming letter reiterating the price and terms
and conditions Irom the Final Price Quotation, and (iii) Princess paid the
price Irom the Final Price Quotation. Knapp, pp. 4-46.
Application oI 'Mirror Image #ule: 'DeIendant E`s Final Price Quotation
. altered the terms oI Princess`s Purchase Order by oIIering a diIIerent price,
limiting damages and liability, and excluding warranties. Thus, E`s Final
Price Quotation was a counteroIIer rejecting Princess`s Purchase Order.
Knapp, p. 49.
3 Application oI ast-Shot #ule: 'Princess accepted the Final Price Quotation |i|
by giving E permission to proceed with the . . . services, |ii| by not objecting
to the conIirmatory letter sent by E, and |iii| by paying the amount set Iorth
in E`s Final Price Quotation rather than the price in Princess`s purchase
order. Knapp, p. 49.
4 onclusion: The terms oI E`s Final Price Quotation constituted the contract
between the parties. Knapp, p. .
D Impact oI Traditional ommon aw Approach:
Under the 'ast-Shot #ule the Seller Usually Wins.
a As noted above, under the ast-Shot #ule, the terms in the last document
sent (the last counter-oIIer) are the terms oI the contract.
b This Iavors sellers because the buyer usually sends the Iirst document
typically a purchaser order while the seller typically sends the last
document usually an order acknowledgment.
Under the 'Mirror-Image #ule Sometimes No Contract is Formed - Buyer
or Seller is Treated Unfairly.
a Example: Buyer sends a purchaser order, Seller responds with an order
acknowledgment with diIIerent or additional terms. Seller has not
shipped the goods yet.
() Question: II the buyer calls up the seller and says 'don`t send the
goods, can the seller respond by saying 'hey, we have a contract,
so I`m sending the goods?
() Answer: NO. Under the Mirror-Image #ule, Seller`s order
acknowledgment is a counter-oIIer. But Buyer has not done
anything to accept that counter-oIIer. A contract requires oIIer
and acceptance. There is an oIIer (a counter-oIIer), but no
acceptance. Thus, there is no contract.
b Problem: This result enables buyers and sellers to take advantage oI
price changes in the market by backing out oI deals.
() Example: Same Iacts as the immediately previous example. AIter
the exchange oI the purchase order and order acknowledgment,
both Buyer and Seller mistakenly believe that they have a
contract. The market price oI the goods drops beIore Seller ships.
Under the traditional common law approach, Buyer can back-out
oI the parties` deal and demand that Seller ship the goods at a
lower price reIlecting the change in the market. II Seller reIuses,
Buyer can obtain the goods Irom an alternative supplier willing to
sell at the new, lower market price. In other words, Buyer is able
to take unIair advantage oI seller by using the mirror-image rule.
III U.C.C. 2-207 Approach to a Battle oI the Forms.
A Purpose oI U... V -7.
The draIters oI the U... did not like the impact oI the Traditional ommon-
aw Approach to the Battle oI the Forms. They saw no reason why (i) the
sender oI the last Iorm (typically the seller) should generally 'win, or (ii) a
court should Iind no contract existed when the parties clearly thought there was
a contract (enabling one party to back out oI the deal and obtain more
Iavorable terms).
U... V -7 is designed to avoid these results by overturning the Mirror-
Image and ast-Shot #ules. Section -7 changes the common law.
B Operation of 2-207. U... V -7 has multiple components that Iit together in a
variety oI ways. This portion oI the outline is intended to present a detailed analysis
oI the steps one should Iollow in analyzing a battle oI the Iorms under -7.
Step I. Has a Contract Been Formed under U.C.C. 2-207(1)?
Step I.A. hat type oI 'Battle oI the Forms do you have?
a #ecall that the 'battle oI the Iorms comes in two types. Type 1
involves a written oIIer and a written response that may constitute an
acceptance. Type 2 involves an oral contract and written conIirmations.
See Part I.A. above.
6

b The Iirst step is to determine which type oI battle oI the Iorms you are
Iaced with. II you have a %ype 1, go to Step I.B. II you have a Type 2,
go to Step I.C.
Step I.B. Type 1 'Battle oI the Forms (ritten OIIer, ritten #esponse).
a Step I.B.. as an Offer actually made?
() U... V -7 does not mention the need Ior an oIIer. It simply
assumes one has been made. AIter all, how could one send a
'deIinite and seasonable expression oI acceptance, U... V -
7(), iI there is no oIIer to accept? Thus, it must be determined
whether an oIIer was made. |This is implied Irom ()|
() Governing Law: hether an oIIer was made is governed by (i)
common law rules oI contract Iormation, see Brown Machine, Inc.
v. Hercules, Inc., p. 6 (citing #est. d ontracts V 4), and (ii)
the U... provisions we discussed in Assignment 9, see ProCD,
Note , p. (relying upon U... V -4 in analyzing what
constituted the oIIer and acceptance).
(3) Example: Brown Machine.
(a) Brown`s 'Original Proposal (the original price quotation)
re. the trim press was not an oIIer because, among other
reasons, (i) the cover letter mentioned that Brown would
contact ercules to discuss the quote, (ii) the price was
variable depending on ercules`s desire Ior the mechanical
ejector, and, most importantly, (iii) the terms and conditions
oI the Original Proposal stated that no proposal is binding on
Brown until Brown accepts on its standard acknowledgment
Iorm. iven these Iacts, the Original Proposal was not an

6
This document contains an 'outline within an outline. II I reIer to a 'Part, I am reIerring to the main
outline headings created by the MicrosoIt ord outlining Iunction the roman numerals, letters and numbers that
are separated by tabs Irom the text. II I reIer to a 'Step, I am reIerring to the internal outline oI U... V -7.

oIIer under #est. d ontracts V 4 ('An oIIer is the
maniIestation oI willingness to enter into a bargain, so made
as to justiIy another person in understanding that his assent
to that bargain is invited and will conclude it.) (emphasis
added).
7
See generally Knapp, pp. 6-7.
(b) ercules`s 'Purchase Order constituted an oIIer because
'|a|s a general rule, orders are considered as oIIers to
purchase. Knapp, p. 7.
(4) Result:
(a) No Offer ade. II there is no oIIer, then there is no
additional analysis necessary.
8
END.
9

(b) Offer ade. II an oIIer is made, turn to Step I.B.2.
b Step I.B.. as the oIIer seasona-ly accepted?
() Rule: U... V -7() and () only apply to a Type Battle oI
the Forms where (i) there is language in the oIIeree`s response
indicating acceptance oI the terms oI the oIIer, and (ii) the
response is sent within a 'seasona-le i.e., reasona-le time
period. See U... V -7() ('A deIinite and seasona-le
expression of acceptance . . . sent within a reasona-le time|.|).
() Result:
(a) II the oIIeree`s response does not contain language
expressing acceptance or is not sent within a reasonable
amount oI time, -7() and () do not apply. In such
cases:
i. II the parties have not performed, the analysis is over.
END.
ii. II the parties have performed, then you must apply
U... V -7(3) go to Step III.
(b) II the oIIeree`s response does contain an 'expression oI
acceptance and it is sent within a reasonable amount oI
time, turn to Step I.B.3.

7
The Brown court also noted that price quotations are generally not considered oIIers; they merely constitute
invitations Ior oIIers. Knapp, p. 6 (also noting that price quotes may constitute oIIers in certain circumstances);
accord #est. V 6, cmt. c.

8
Actually, it is conceivable that U... V -7(3) could come into play even iI there is no oIIer. But that is
uncommon, and not worth Iurther discussion Ior purposes oI this class.

9
henever the term 'END is used, it means that the 'Battle oI the Forms analysis under U... V -7 is
over. There is no need to address any other steps, in theory. OI course, on an exam, it may not be so clear whether
you should end your analysis. It may, Ior example, be ambiguous whether an oIIer was made. II so, you should
address both sides and then continue with the other steps on the assumption that an oIIer was made.

c Step I.B.3. hat type oI acceptance has occurred?
() Introduction: The oIIeree may accept the oIIer in two basic ways:
a 'mirror-imaging acceptance or a 'modiIying acceptance.
() irror-Imaging Acceptance. A 'mirror-imaging acceptance
is an acceptance oI an oIIer that contains no additional or diIIerent
terms.
(a) Example: hange the Iacts oI Brown. ercules submitted a
Purchase Order Ior a trim press. ercules included an
acceptance Iorm with the same terms as the Purchase Order.
Suppose that Brown had simply signed ercules`s
acceptance Iorm rather than sending its own 'Order
Acknowledgment Iorm. In other words, suppose that
Brown had accepted the oIIer made by ercules that
Brown had accepted the 'mirror image oI the oIIer. In such
circumstances, Brown and ercules would have had a
contract under the terms oI the Purchase Order and there
would have been no battle oI the Iorms.
(b) U... V -7 only applies to a Type 1 situation iI the
'acceptance contains additional or diIIerent terms. See
U... V -7() ('expression oI acceptance . . . operates as
an acceptance even though it states terms additional to or
different from those oIIered . . .). Since a 'mirror-imaging
acceptance contains no additional or diIIerent terms, there is
no battle oI the Iorms, and thus there is no need to conduct
any Iurther analysis. END.
(3) odifying Acceptance. A 'modiIying acceptance is an
acceptance oI an oIIer that contains additional or diIIerent terms.
(a) Example: In Brown, ercules submitted a Purchase Order
(an oIIer) Ior a trim press. Brown responded with an Order
Acknowledgment purporting to accept ercules`s Purchase
Order. But the Order Acknowledgment contained an
indemnity provision that was not a part oI ercules`s
Purchase Order. Thus, Brown responded to ercules with a
'modiIying acceptance.
(b) II you are dealing with a odifying Acceptance, go to Step
I.B.4.
d Step I.B.4. Is the modifying acceptance treated as a true
acceptance or a counter-offer (also referred to here as a
conditional acceptance).
() Rule: A 'modiIying acceptance by an oIIeree is treated as a 'true
acceptance unless the acceptance is expressly conditioned upon
the offeror assenting to the additional or diIIerent terms. In the
latter situation, the modiIying acceptance is treated as a counter-
offer or a 'conditional acceptance. Brown, p. 7.
(a) Legal Basis: This rule is derived Irom U... V -7():
'A deIinite and seasonable expression oI acceptance . . .
operates as an acceptance even though it states terms
additional to or diIIerent Irom those oIIered . . . , unless
acceptance is expressly made conditional on assent to the
additional or diIIerent terms. |oIIeror is master oI his
oIIer. so iI you O, you have the right to make it
conditional on assent|
(b) Policy Basis: The draIters oI U... did not want to overturn
Ireedom oI contract. II an oIIeree`s actions genuinely
indicate that it does not mean to accept an oIIer, it would
violate Ireedom oI contract principles to interpret the
oIIeree`s actions otherwise.
() Su--Issue: hat does 'expressly made conditional mean?
(a) ajority Approach - Su--Rule: A modiIying acceptance is
'expressly made conditional on the assent oI the oIIeror
only iI the acceptance 'uses very clear language to that
eIIect. Note 3, p. 6.


(b) Example ModiIying Acceptance Counter-Offer (i.e.,
Conditional Acceptance). Diamond Fruit Growers, Inc. v.
Krack Cor5., Note 3, p. 6 (seller used language that
tracked the language oI -7(); acceptance stated that it is
'hereby expressly made conditional on
purchaser`soIIeror`s acceptance oI terms on the order
acknowledgment Iorm). |II you want to make it conditional,
use -7`s language!|
(c) Example ModiIying Acceptance True Acceptance.
Dorton v. Ollins & Aikman Cor5., Note 3, p. 6 (oIIeree`s
Iorm simply stated that its acceptance is 'su-ect to the
Iollowing terms and conditions).
(3) Result:
(a) II the ModiIying Acceptance is a Counter-Offer, go to Step
I.B.5.
(b) II the ModiIying Acceptance is a True Acceptance, go to
Step II.
e Step I.B.. as the Counter-Offer been accepted by the ounter-
OIIeree (i.e., the original OIIeror)?
() General Principles. Under general principles oI contract law, the

You may ignore the minority approach discussed in Note 3, pp. 6-6.

counter-oIIeree is Iree to accept the counter-oIIer.
() Rule: ourts will Iind acceptance on the part oI the counter-oIIeree
only iI the counter-oIIeree expressly accepts the counter-oIIer;
mere performance by the counter-oIIeree is not sufficient to
constitute acceptance. Note 6, p. 6.
(a) Example: In re Mostek Cor5., Note 6, p. 6 (seller |the
counter-oIIeree| signed buyer`s purchase order Iorm |the
counter-oIIer| containing an arbitration clause; this
constituted 'express acceptance oI the arbitration clause).
(3) Reason for the Rule: 'To Iind assent to a counter-oIIer in mere
perIormance is to continue in eIIect the common law`s last-shot`
approach, which the draIters oI -7 clearly were attempting to
abrogate. Note 6, p. 6.
(4) Result:
(a) II the ounter-OIIer has been expressly accepted, the
analysis is over. END.
(b) II the ounter-OIIer has not been expressly accepted, then:
i. II the parties have not performed, the analysis is over.
END.
ii. II the parties have performed, then you must apply
U... V -7(3) go to Step III.
3 Step I.. Type 2 'Battle oI the Forms (Oral ontract and ritten
onIirmation(s))
a Step I... ave the parties entered into an oral contract?
() Governing Law: hether the parties entered into an oral contract
is governed by (i) common law rules oI contract Iormation, and
(ii) the U... provisions we discussed in Assignment 9 (Ior
example, -4 and -6).
() Rule: II the parties enter into an oral agreement, and then send
written conIirmations, a contract has been Iormed under -7().
(3) Result:
(a) No Oral Contract. II there is no oral contract, then there is
no additional analysis necessary, even iI a document
purporting to 'conIirm the oral agreement has been sent by
one oI the parties. END.

(b) Oral Contract Formed. II an oral contract has been
Iormed, turn to Step I.C.2.

Actually, it is conceivable that U... V -7(3) could come into play in a Type case even iI there is
actually no oral contract. But that is rare, and not worth Iurther discussion Ior purposes oI this class.
b Step I... as any party to the oral contract sent, within a reasona-le
amount oI time, a written confirmation with additional or different
terms?
() Basis Ior Question: U V -7() ('. . . a written confirmation
which is sent within a reasona-le time operates as an acceptance
even though it states terms additional to or different Irom . . . those
agreed upon).
() NO. II (i) no written conIirmation has been sent, (ii) the written
conIirmation was not sent within a reasonable amount oI time, or
(iii) the written conIirmation sent contains no additional or
diIIerent terms, then no Iurther analysis is necessary there is no
battle oI the Iorms. END.
(3) ES. II a (i) conIirmation with (iii) additional or diIIerent terms
has been sent (ii) within a reasonable amount oI time, go to Step
II.
c ey Distinction Between Type 1 and Type 2 Battles of the Forms:
There probably can be no counter-oIIer or 'conditional acceptance in a
Type Battle oI the Forms. That is because once an oral contract is
Iormed, it is not possible to make a counter-oIIer. In other words, even
iI the conIirming letter contains language indicating that going Iorward
with the contract is 'expressly conditioned on additional or diIIerent
terms in the conIirming letter, this language should not destroy the oral
contract that has already been Iormed.
() Thus, there is no analog to Step I.B.4. (or Step I.B.5.) Ior a Type
Battle oI the Forms. 'Expressly conditioned language in a
conIirming letter is irrelevant in a Type case.
(a) You can`t make a O iI there`s already a K. You can only
make a O to an oIIer.
D Step II. Are the Additional or Different Terms Part of the Contract under 2-
207(2)?
Introduction. At this point, we have established that there is a contract. It is
either a Type contract (exchange oI writings) or a Type contract (oral
contract and written conIirmation(s)). II there is no contract, the analysis is
either over or you must move on to Step III., which concerns the application
oI U... V -7(3). But, since we have established that a contract exists, we
must now apply U... V 2-207(2).
Step II.A. Are the new terms proposed in the true acceptance (Type ) or
conIirming letter (Type ) additional terms or different terms?
a Additional Terms DeIined.
() Type Battle oI the Forms: Additional terms are new terms
contained in the acceptance that do not conflict with any terms in
the oIIer.
(a) Example: II the oIIer says nothing about warranties and the
modiIying acceptance disclaims warranties, the disclaimer
constitutes an 'additional term.
() Type Battle oI the Forms: Additional terms are new terms
contained in the conIirming letter that do not conIlict with any
terms oI the oral contract.
b DiIIerent Terms DeIined. DiIIerent terms are the opposite oI
additional terms they are new terms that do conflict with the terms oI
the oIIer (Type ) or the terms oI the oral contract (Type ).
() Example (Type ): II Buyer`s oIIer indicates that Seller must
provide a warranty and Seller`s acceptance disclaims warranties,
the disclaimer is a 'diIIerent term because it directly conIlicts
with the Buyer`s oIIer.
c According to the majority oI courts, additional and diIIerent terms
should not be treated the same under U... V -7().
() Accordingly, you must Iirst determine which type oI new terms
you are dealing with. II you are Iaced with additional terms, go to
Step II.B. II you are Iaced with different terms, go to Step II.C.
3 Step II.B. Are the Additional Terms ontained in a True Acceptance (Type )
or a ritten onIirmation (Type ) Part oI the ontract?
a General Legal Principles:
() U... V -7() determines whether additional terms become
part oI the contract in -oth types oI situations Type and Type
.
() Under -7(), the additional terms are considered to be
'proposals Ior addition to the contract.
b Step II.B.. as the other party 'expressly accepted the additional
terms? (i.e., has the other party 'expressly accepted the 'proposals Ior
addition to the contract?)
() Rule: II the oIIeror (Type ) or non-conIirming party (Type ) has
expressly accepted the additional terms, then the additional terms
become part oI the contract. Brown, p. 8; Note 4, p. 6.
(a) Examples:
i. Type : Suppose that in Brown, an employee oI
ercules had called Brown aIter ercules received the
Order Acknowledgment with the indemnity provision
and had said 'we have no problem with the indemnity
provision. That would constitute 'expressly
accepting the indemnity provision. In such
circumstances, the indemnity provision would have
become part oI the contract between Brown and
ercules. owever, ercules did nothing comparable
to this. In Iact, ercules sent a letter in response to the
Order Acknowledgment in which it accepted only the
'speciIications Ior the trim press, with no mention oI
the 'terms and conditions. Accordingly, the court
ruled that ercules had not expressly accepted the
indemnity provision contained in the terms and
conditions. Brown, pp. 8-9.
ii. Type : Suppose that X and Y enter into an oral
contract. X and Y then send conIirming letters that
contain the same additional terms. In such
circumstances, the additional terms in the conIirming
letters would become part oI the contract. See U...
V -7, omment 6 ('The contract then consists oI
the terms originally expressly agreed to, terms on
which the confirmations agree, and terms supplied by
this Act |i.e., the U| including subsection () |oI -
7|.). That is because we can interpret each side to
be expressly agreeing to the other side`s additional
terms.
() Legal Bases for this Rule. This rule is derived Irom several
sources.
(a) eneral ontract aw. The proposed additional terms are a
type oI oIIer an oIIer to modiIy the contract. The recipient
oI that oIIer is Iree to accept it under general principles oI
contract law.
(b) U... V -7, omment 3 ('II |the terms| are such as to
materially alter the original bargain, they will not be
included unless expressly agreed to by the other party.) &
omment 6 (quoted immediately above in the Type
example).
(3) Corollary to Rule: Because the oIIeror (Type ) or non-
conIirming party (Type ) must 'expressly accept the additional
terms, a Iailure to object Iollowed by perIormance by the oIIeror or
non-conIirming party does not constitute acceptance oI the
additional terms. Brown, p. 9.
(a) Reason for the Rule: As with acceptance oI a counter-
oIIerconditional acceptance (see Step I.B.5., above), iI
silence perIormance could acceptance, then we would be
back to a version oI the 'last shot rule; the last set oI
proposed terms would always become part oI the contract
upon perIormance by the recipient oI the proposal. This is
precisely the result that -7 is trying to eliminate.
(4) Result:
(a) II the (original) oIIeror (Type ) or non-conIirming party
(Type ) has expressly accepted the additional terms, then
the additional terms become part oI the contract and there is
no need to consider any other aspect oI U... V -7().
END.
(b) II the oIIeror (Type ) or non-conIirming party (Type ) has
not expressly accepted the additional terms, go to Step
II.B.2.
c Step II.B.. Are both parties merchants?
() See U... V -4() & cmts. , , and 3 Ior who is a merchant.
() NO. II at least one oI the parties is not a merchant, then the
additional terms (i.e., the proposed new terms) do NOT become
part oI the contract. U... V -7() ('Between merchants,
such terms become part oI the contract unless: . . .). In other
words, unless both parties are merchants, express acceptance (Step
II.B.1.) is the only way that additional terms can be included in a
contract. END.
(a) Example: onsumer sends an order to purchase a tool.
Seller returns order acknowledgment containing a disclaimer
oI warranties. Seller subsequently sends tool to onsumer,
which onsumer accepts and uses. II the tool is deIective,
Seller`s disclaimer oI warranty clause will not be part oI the
contract under U... V -7() because the contract was
not between merchants.
(3) ES. II both parties are merchants, the terms DO become part oI
the contract, unless one oI three exceptions is met. U... V -
7() ('Between merchants, such terms become part oI the
contract unless: . . .). Those exceptions are addressed in Step
II.B.3. o to that step.
d Step II.B.3. Does one oI the exceptions in U... V -7() keep the
additional terms out the contract?
() Exception 1 - Offer Expressly Limits Acceptance To Terms of
Offer.
(a) Rule: II the original oIIer 'expressly limits acceptance to the
terms oI the oIIer, U... V -7()(a), then the additional
terms in any order acknowledgment are not part oI the
contract.
(b) Example: In Brown, ercules`s Purchase Order expressly
limited acceptance to the terms oI the Purchase Order (which
was the oIIer). Knapp, pp. 4 ('This order expressly limits
acceptance to the terms stated herein . . .) & 8. As a
result, any additional terms in Brown`s Order
Acknowledgment did not become part oI the parties`
contract under -7()(a).
() Exception 2 Additional Terms aterially Alter ontract.
(a) Rule: II the proposed additional terms 'materially alter the
contract, U... V -7()(-), then the additional terms are
not part oI the contract.
(b) Su--Rule DeIinition oI Materiality: An additional term
materially alters a contract iI its inclusion in the contract,
without express awareness by the other party, would result
in surprise or hardship. U... V -7, omment 4.
i. The 'or is emphasized because either Iactor, alone, is
generally suIIicient Ior the provision to be material.
(c) Terms that Are Typically 'Material Alterations:
i. Disclaimers oI standard warranties oI
merchantability or Iitness Ior a particular purpose.
U... V -7, omment 4.
ii. A contractual clause granting seller the power to
cancel a contract upon buyer`s Iailure to meet any
invoice when due. U... V -7, omment 4.
iii. A clause requiring that complaints (re. the goods
delivered) be made in a time materially shorter than is
customary or reasonable. U... V -7, omment 4.
iv. Attorney Fee clauses.
(d) Terms that Are Not Typically 'Material Alterations:
i. A clause Iixing a reasonable time Ior complaints (re.
the quality oI goods delivered) 'within customary
limits. U... V -7, omment .
ii. A clause providing Ior interest on overdue invoices.
U... V -7, omment .
iii. A provision that limits a remedy 'in a reasonable
manner. U... V -7, omment .
(e) Terms that ay be 'Material Alterations. ourts are split
with regard to whether certain types oI contractual
provisions are material.
i. imits on onsequential Damages.
ii. hoice oI aw Provisions
iii. Forum Selection Provisions.
(I) ateriality Law is Complicated: As the authors oI a
diIIerent casebook note, '|t|here has been extensive
litigation as to whether particular terms . . . constitute a
material alternation, resulting in a -ewildering array oI
precedent. (emphasis added because this is no
exaggeration).
(3) Exception 3 Recipient O-jects to the Additional Terms.
(a) Rule: II the oIIeror (Type ) or the other party to the oral
contract (Type ) gives 'notification of o-jection to the
additional terms, either -efore or within a reasona-le
amount of time after receiving the acceptance or conIirming
letter, U... V -7()(c), then the additional terms do not
become part oI the contract.
(b) Examples:
i. Type : Suppose that in Brown, an employee oI
ercules had called Brown immediately aIter ercules
received the Order Acknowledgment with the
indemnity provision and had said 'there is no way we
can accept the indemnity provision. That would
constitute a 'notiIication oI objection. In such
circumstances, the indemnity provision would not be
part oI the contract between Brown and ercules under
-7()(c).
ii. Type : The parties to an oral contract X and Y
each send conIirming Iorms. Both X`s Iorm and Y`s
Iorm contain additional terms beyond the oral contract.
X adds a warranty provision; Y adds a disclaimer oI
warranties. 'here clauses on conIirming Iorms sent
by both parties conIlict, each party must be assumed to
object to a clause oI the other conIlicting with one on
the conIirmation sent by himselI. U... V -7,
omment 6. As a result, X`s warranty provision and
Y`s disclaimer would be dropped Irom the contract.
The contract would thus contain (i) the terms oI the
oral agreement, (ii) any terms contained in both
conIirmation letters (because this constitutes express
acceptance by each party oI the other party`s terms, see
Step II.B.1), and (iii) any terms supplied by the
UniIorm ommercial ode, including any other terms
supplied by -7(). U... V -7, omment 6.
e END. Once you have completed Step II.B.3., your analysis is complete.
4 Step II.. Are Different Terms ontained in a True Acceptance or a ritten
onIirmation Part oI the ontract?
a Step II... as the other party 'expressly accepted the diIIerent
terms?
() Introduction: DiIIerent terms are treated the same as additional
terms Ior purposes oI 'express acceptance. In other words, the
rules in Step II.B.1. apply to diIIerent terms in substantially the
same way they apply to additional terms.
() Rule: II the oIIeror (Type ) or non-conIirming party (Type ) has
expressly accepted the diIIerent terms, then the diIIerent terms
become part oI the contract. See eneral ontract aw; U... V
-7, omment 3.
(a) Example Type : Suppose that X and Y enter into an oral
contract Ior widgets at $ per widget. X and Y then
send conIirming letters each stating that the price is 9$ per
widget i.e., the conIirming letters contain the same term
that alters the original oral contract. ere, the price would
be 9$. That is because we can interpret each side to be
expressly agreeing to the other side`s diIIerent term.
(3) For additional details re. express acceptance, see Step II.B.1. The
rest oI the principles set Iorth in that step apply here.
(4) Result
(a) II the oIIeror (Type ) or non-conIirming party (Type ) has
expressly accepted a diIIerent term, then the term become
part oI the contract and there is no need to consider any other
aspect oI -7(). END.
(b) II the oIIeror (Type ) or non-conIirming party (Type ) has
not expressly accepted the diIIerent term, go to Step II.C.2.
b Step II... Are both parties merchants?
() See U... V -4() & cmts. , , and 3 Ior who is a merchant.
() NO. II at least one oI the parties is not a merchant, then the
diIIerent terms do NOT become part oI the contract. See U V
-7(). END.
(3) ES. II both parties are merchants, go to Step II.C.3.
c Step II..3. The next question is whether and how the rest oI -7()
applies to the diIIerent terms.
() Introduction. There is a split in the courts regarding whether
diIIerent terms should be treated the same as additional terms
under U... V -7()`s rules re. merchants. owever, I only
want you to know the majority approach.
() Type 1 Cases - ajority Approach: The 'DiIIerent Terms
Knock-Out #ule i.e., nock-Out Rule #1. In a Type case,
diIIerent terms contained in the oIIer and acceptance knock each
other out oI the agreement. The contract then consists oI (i) the
terms on which the oIIer and acceptance agree, (ii) any additional
terms that are incorporated into the contract under -7(), and
(iii) any terms that would be implied as a matter oI law under other
parts oI the U (e.g., certain warranties). See Note 8, p. 63.
(3) Type 2 Cases - ajority Approach: DiIIerent Terms Out. In a
Type case, terms in a conIirming memo that conIlict with the
oral contract are not part oI the parties` agreement. The contract
then consists oI (i) the terms oI the oral agreement, (ii) any
additional terms in any conIirming memos that are incorporated
into the contract under -7(), and (iii) any terms that would be
implied as a matter oI law under other parts oI the U.
d END. Once you have completed Step II.C.3., your analysis is complete.
E Step III. If a Contract is Formed -y Conduct What are the Terms Under 2-
207(3)?
Introduction. II the parties documents (andor oral communication) indicate
that no contract was Iormed, then Step III is implicated.
lassic ircumstance: The classic circumstance requiring the application oI
Step III is a Type 1 situation oI the Iollowing Iorm: (i) the OIIeree`s
ModiIying Acceptance is a Counter-Offer (i.e., a onditional Acceptance)
rather than a True Acceptance, (ii) the OIIeror does not expressly accept the
ounter-OIIer, and (iii) the parties proceed to perform the contract anyway.
See generally Step I.B.5. above.
3 Rule oI U... V -7(3).
a Part 1: 'Conduct by both parties which recognizes the existence of a
contract is suIIicient to establish a contract Ior sale although the
writings oI the parties do not otherwise establish a contract.
() This 'conduct is oIten Iull perIormance oI the contract. owever,
it may also be partial perIormance or perhaps even merely
substantial preparation Ior perIormance.
b Part 2: '|T|he terms oI the . . . contract consist oI |i| those terms on
which the writings oI the parties agree, |ii| together with any
supplementary terms incorporated under any other provisions oI |the
U...|.
() Note: Part is oIten reIerred to as a 'Knock-Out #ule. You may
reIer to this rule as the 'Step 3 nock-Out Rule or as 'nock-
Out Rule #2.
() 'Supplementary terms include, among other things, various
warranties, remedies provisions, and course oI perIormance, course
oI dealing, and usages oI trade.

owever, critically, it does not

include -7(), contrary to (i) the 'Different Terms nock-Out
Rule discussed at Step II.C.3 (ii) the Type example in Step
II.B.1., or (iii) the Type example under Exception 3 in Step
II.B.3.
(a) If you jump to 2-207(3) (2) does not apply.
4 END. Once you have completed Step III., your analysis is complete.
Appendix: U.C.C. 2-207. Additional Terms in Acceptance or Confirmation.
(1) A deIinite and seasonable expression oI acceptance or a written conIirmation which is sent within a reasonable
time operates as an acceptance even though it states terms additional to or diIIerent Irom those oIIered or agreed
upon, unless acceptance is expressly made conditional on assent to the additional or diIIerent terms.
(2) The additional terms are to be construed as proposals Ior addition to the contract. Between merchants, such
terms become part oI the contract unless:
(a) the oIIer expressly limits acceptance to the terms oI the oIIer;
(-) they materially alter it; or
(c) notiIication oI objection to them has already been given or is given within a reasonable time aIter notice
oI them is received.
(3) onduct by both parties which recognizes the existence oI a contract is suIIicient to establish a contract Ior sale
although the writings oI the parties do not otherwise establish a contract. In such case, the terms oI the particular
contract consist oI those terms on which the writings oI the parties agree, together with any supplementary terms
incorporated under any other provisions oI this Act.
-. This section is intended to deal with two typical situations. The one is the written conIirmation, where an
agreement has been reached either orally or by inIormal correspondence between the parties and is Iollowed by one
or both oI the parties sending Iormal memoranda embodying the terms so Iar as agreed upon and adding terms not
discussed. The other situation is oIIer and acceptance, in which a wire or letter expressed and intended as an
acceptance or the closing oI an agreement adds Iurther minor suggestions or proposals such as "ship by Tuesday,"
"rush," "ship draIt against bill oI lading inspection allowed," or the like. A Irequent example oI the second situation
is the exchange oI printed purchase order and acceptance (sometimes called "acknowledgment") Iorms. Because the
Iorms are oriented to the thinking oI the respective draIting parties, the terms contained in them oIten do not
correspond. OIten the seller's Iorm contains terms diIIerent Irom or additional to those set Iorth in the buyer's Iorm.
Nevertheless, the parties proceed with the transaction.
-. Under this Article a proposed deal which in commercial understanding has in Iact been closed is recognized as
a contract. ThereIore, any additional matter contained in the conIirmation or in the acceptance Ialls within
subsection () and must be regarded as a proposal Ior an added term unless the acceptance is made conditional on
the acceptance oI the additional or diIIerent terms.
-3. hether or not additional or diIIerent terms will become part oI the agreement depends upon the provisions oI
subsection (). II they are such as materially to alter the original bargain, they will not be included unless expressly
agreed to by the other party. II, however, they are terms which would not so change the bargain they will be
incorporated unless notice oI objection to them has already been given or is given within a reasonable time.
-4. Examples oI typical clauses which would normally "materially alter" the contract and so result in surprise or

Do not worry about the discussion oI ourse oI PerIormance, ourse oI Dealing, and Usage oI Trade in
Note 7, p. 6-63. e will consider these concepts in more detail when we get to contract interpretation.
hardship iI incorporated without express awareness by the other party are: a clause negating such standard
warranties as that oI merchantability or Iitness Ior a particular purpose in circumstances in which either warranty
normally attaches; a clause requiring a guaranty oI 9 or deliveries in a case such as a contract by cannery,
where the usage oI the trade allows greater quantity leeways; a clause reserving to the seller the power to cancel
upon the buyer's Iailure to meet any invoice when due; a clause requiring that complaints be made in a time
materially shorter than customary or reasonable.
-. Examples oI clauses which involve no element oI unreasonable surprise and which thereIore are to be
incorporated in the contract unless notice oI objection is seasonably given are: a clause setting Iorth and perhaps
enlarging slightly upon the seller's exemption due to supervening causes beyond his control, similar to those covered
by the provision oI this Article on merchant's excuse by Iailure oI presupposed conditions or a clause Iixing in
advance any reasonable Iormula oI proration under such circumstances; a clause Iixing a reasonable time Ior
complaints within customary limits, or in the case oI a purchase Ior sub-sale, providing Ior inspection by the sub-
purchaser; a clause providing Ior interest on overdue invoices or Iixing the seller's standard credit terms where they
are within the range oI trade practice and do not limit any credit bargained Ior; a clause limiting the right oI rejection
Ior deIects which Iall within the customary trade tolerances Ior acceptance "with adjustment" or otherwise limiting
remedy in a reasonable manner (see Sections -78 and -79).
-6. II no answer is received within a reasonable time aIter additional terms are proposed, it is both Iair and
commercially sound to assume that their inclusion has been assented to. here clauses on conIirming Iorms sent by
both parties conIlict each party must be assumed to object to a clause oI the other conIlicting with one on the
conIirmation sent by himselI. As a result the requirement that there be notice oI objection which is Iound in
subsection () is satisIied and the conIlicting terms do not become a part oI the contract. The contract then consists
oI the terms originally expressly agreed to, terms on which the conIirmations agree, and terms supplied by this Act,
including subsection (). The written conIirmation is also subject to Section -. Under that section a Iailure to
respond permits enIorcement oI a prior oral agreement; under this section a Iailure to respond permits additional
terms to become part oI the agreement.
-7. In many cases, as where goods are shipped, accepted and paid Ior beIore any dispute arises, there is no
question whether a contract has been made. In such cases, where the writings oI the parties do not establish a
contract, it is not necessary to determine which act or document constituted the oIIer and which the acceptance. See
Section -4. The only question is what terms are included in the contract, and subsection (3) Iurnishes the
governing rule.
II. 'ALIDATION DE'ICES OTHER THAN CONSIDERATION
A. Promissory Estoppel
. #estatements:
a. V 9 Promise #easonably Inducing Action or Forbearance
() A promise which the promisor should reasonably expect to induce action or
Iorbearance on the part oI the promisee or a third person and which does induce such action
or Iorbearance is binding iI injustice can be avoided only by enIorcement oI the promise.
The remedy granted Ior breach may be limited as justice requires.
() A charitable subscription or a marriage settlement is binding under Subsection ()
without prooI that the promise induced action or Iorbearance.
. #ules and Notes:
a. 'reasonable, Ioreseeable, change oI position
b. Factors to consider in determining whether enIorcement must be necessary to avoid
injustice (cmt. b)
i. reasonableness oI the promisee`s reliance,
ii. on its deIinite and substantial character in relation to the remedy sought,
iii. on the Iormality with which the promise is made,
iv. on the extent to which the evidentiary, cautionary, deterrent and channeling Iunctions oI
Iorm are met by the commercial setting or otherwise,
v. on the extent to which such other policies as the enIorcement oI bargains and the
prevention oI unjust enrichment are relevant
c. some jurisdictions do not limit V9 to a promise, whereas some others do
d. must have a causal connection between promise and reliance
e. reason to award expectation interest v. reliance interest
i. disparity between large expectation and reliance oI small value
ii. diIIiculty in calculating interest
iii. indeIiniteness oI promise may make expectation interest diIIicult to determine
B. Moral Obligation Past onsideration
. #estatements:
a. V 8 Promise to Pay Indebtedness; EIIect on the Statute oI imitations
() A promise to pay all or part oI an antecedent contractual or quasi-contractual
indebtedness owed by the promisor is binding iI the indebtedness is still enIorceable or
would be except Ior the eIIect oI a statute oI limitations.
() The Iollowing Iacts operate as such a promise unless other Iacts indicate a diIIerent
intention:
(a) A voluntary acknowledgment to the obligee, admitting the present existence oI the
antecedent indebtedness; or
(b) A voluntary transIer oI money, a negotiable instrument, or other thing by the
obligor to the obligee, made as interest on or part payment oI or collateral security Ior the
antecedent indebtedness; or
(c) A statement to the obligee that the statute oI limitations will not be pleaded as a
deIense.
b. V 83 Promise to Pay Indebtedness Discharged in Bankruptcy
i. An express promise to pay all or part oI an indebtedness oI the promisor, discharged or
dischargeable in bankruptcy proceedings begun beIore the promise is made, is binding.
c. V 86 Promise Ior BeneIit #eceived
() A promise made in recognition oI a beneIit previously received by the promisor Irom
the promisee is binding to the extent necessary to prevent injustice.
() A promise is not binding under Subsection ()
(a) iI the promisee conIerred the beneIit as a giIt or Ior other reasons the promisor has
not been unjustly enriched; or
(b) to the extent that its value is disproportionate to the beneIit.
. #ules and Notes:
a. Iactors to consider:
i. deIinite and substantial character
ii. Iormality
iii. suIIiciency oI terms
iv. part perIormance
v. reliance on promise
vi. probability oI reliance
b. donative intent will help determine iI beneIit was a giIt (V 86)
i. requires reIlection
c. estoppel look Ior causal connection; consideration look Ior exchange
. #estitution
. #ules and Notes:
a. Promissory #estitution
i. purpose is to prevent unjust enrichment
ii. creates a legal obligation where none exists
b. general measure oI restitution
i. 'reasonable value oI services
c. additional measure (usually arises Irom building on another`s land)
i. increase in wealth or value
d. money claims seeking to prevent unjust enrichment
i. quantum meruit:
) claim Ior money asserted Ior services which have been provided
) circumstances:
O claimant expects remuneration Irom deIendant at time beneIit was conIerred
O deIendant had knowledge oI beneIit or appreciated it
O deIendant accepted and retained beneIit knowing claimant expected remuneration
O circumstances make it unjust Ior deIendant to retain beneIit without paying Ior it
ii. quantum valebat:
) claim Ior reasonable value oI goods that have been delivered
e. when restitution may be used as recovery theory when parties DO Iorm a contract
i. unenIorceable (SF)
ii. illegal agreements (limited use)
iii. voidable contract (minor, Iraud, duress)
iv. contracts discharged because non-occurrence oI condition
III. OPERATI'E EXPRESSIONS OF ASSENT
A. Introduction
. #estatements:
a. V lasses oI ontracts overed
() The Iollowing classes oI contracts are subject to a statute, commonly called the Statute
oI Frauds, Iorbidding enIorcement unless there is a written memorandum or an applicable
exception:
(a) a contract oI an executor or administrator to answer Ior a duty oI his decedent (the
executoradministrator provision);
(b) a contract to answer Ior the duty oI another (the suretyship provision);
(c) a contract made upon consideration oI marriage (the marriage provision);
(d) a contract Ior the sale oI an interest in land (the land contract provision);
(e) a contract that is not to be perIormed within one year Irom the making thereoI (the
one-year provision).
() The Iollowing classes oI contracts, which were traditionally subject to the Statute oI
Frauds, are now governed by Statute oI Frauds provisions oI the UniIorm ommercial
ode:
(a) a contract Ior the sale oI goods Ior the price oI $ or more (UniIorm ommercial
ode V -);
(b) a contract Ior the sale oI securities (UniIorm ommercial ode V 8-39);
(c) a contract Ior the sale oI personal property not otherwise covered, to the extent oI
enIorcement by way oI action or deIense beyond $ , in amount or value oI remedy
(UniIorm ommercial ode V -6).
(3) In addition the UniIorm ommercial ode requires a writing signed by the debtor Ior
an agreement which creates or provides Ior a security interest in personal property or
Iixtures not in the possession oI the secured party.
(4) Statutes in most states provide that no acknowledgment or promise is suIIicient
evidence oI a new or continuing contract to take a case out oI the operation oI a statute oI
limitations unless made in some writing signed by the party to be charged, but that the
statute does not alter the eIIect oI any payment oI principal or interest.
() In many states other classes oI contracts are subject to a requirement oI a writing.
. #ules and Notes:
a. To what extent will the law give eIIect to the objective maniIestations oI assent?
b. Analysis oI SF problem
i. is there a K?
ii. is it within SF?
iii. how to comply with SF? when is memorandum suIIicient?
iv. what doctrineexception minimizes eIIect oI Iailing to satisIy SF?
c. justiIications oI writing:
i. evidentiary Iunction
) discourages perjury
) prooI oI agreement
ii. cautionary Iunction
) signiIicance oI act
) prevents ill-conceived and poorly considered promises
iii. channeling Iunction
) separatesprovides easy line oI demarcation between enIorceable and unenIorceable
agreements
B. The Statute oI Frauds
. Suretyship Promises
a. #estatements:
i. V #equirement oI Suretyship
A contract is not within the Statute oI Frauds as a contract to answer Ior the duty oI
another unless the promisee is an obligee oI the other's duty, the promisor is a surety Ior
the other, and the promisee knows or has reason to know oI the suretyship relation.
ii. V 6 Main Purpose; Advantage to Surety
A contract that all or part oI a duty oI a third person to the promisee shall be satisIied is
not within the Statute oI Frauds as a promise to answer Ior the duty oI another iI the
consideration Ior the promise is in Iact or apparently desired by the promisor mainly Ior
his own economic advantage, rather than in order to beneIit the third person. II, however,
the consideration is merely a premium Ior insurance, the contract is within the Statute.
b. #ules and Notes:
i. suretyship tri-partite relationship where one promisor is responsible Ior debt oI another
ii. historically, surety promise to answer Ior the debt oI another
iii. Evidentiary Iunction is very important bc no direct beneIit Ior surety and want to make
sure promise was made
iv. cautionary Iunction is also important because sureties are usually Iamily
membersgratuitous
v. sureties can be compensated or gratuitous
vi. creditor must know that obligor is a surety
vii. Main Purposeeading object is exception to suretyship req. oI SF
. Marriage Agreements
a. #estatements:
i. V 4 ontract Made Upon onsideration oI Marriage
A promise Ior which all or part oI the consideration is either marriage or a promise to
marry is within the Statute oI Frauds, except in the case oI an agreement which consists
only oI mutual promises oI two persons to marry each other.
b. #ules and Notes:
i. part perIormance doctrine:
) equitable doctrine which provides the remedies oI damages or speciIic perIormance Ior
agreements that would otherwise be barred by the SF
O requires that the contract must be proven by clear, cogent, and convincing evidence
O acts relied upon as constituting part perIormance must unmistakably point to the
existence oI the claimed agreement; iI they can be accounted Ior on some other basis,
they are insuIIicient
3. ontracts Ior the Sale oI and
a. #estatements:
i. V ontract to TransIer, Buy, or Pay Ior an Interest in and
() A promise to transIer to any person any interest in land is within the Statute oI Frauds.
() A promise to buy any interest in land is within the Statute oI Frauds, irrespective oI
the person to whom the transIer is to be made.
(3) hen a transIer oI an interest in land has been made, a promise to pay the price, iI
originally within the Statute oI Frauds, ceases to be within it unless the promised price is
itselI in whole or in part an interest in land.
(4) Statutes in most states except Irom the land contract and one-year provisions oI the
Statute oI Frauds short-term leases and contracts to lease, usually Ior a term not longer
than one year.
b. #ules and Notes:
i. part perIormance exception:
) buyer must take possession oI the property
) pay the purchase money (in whole or in part)
3) and make improvements to the land or change the property in some way in reliance on
the oral agreement
4. ontracts not PerIormable ithin One Year Irom Formation
a. #ules and Notes:
i. analysis oI problems
) what are the terms?
) can the duty promised be perIormed within a year
ii. contracts Ialling outside SF
) contract oI indeIinite duration
) terminable at will
3) uncertain duration
4) alternative promises
) deIinite time subject to contingency that could occur within a year
O A agrees to work Ior B Ior A`s liIetime (not within)
O A agrees to support B Ior rest oI B`s liIe (not within)
O Permanent employment generally terminable at will
O where death is a contingency, A# says Iull perIormance, TX says not Iull perIormance
O MAJO#ITY treats some contingency as deIeasance (deIeating obligation oI
perIormance)
iii. restatement Iollows MINO#ITY view oI termination alternative perIormances (death
as deIeasance)
iv. MAJO#ITY says terms oI promise is what dictates, subject to deIeasance (promisor has
option)
v. calculate period Irom time contract is made to time perIormance is completed
vi. Iull perIormance exception
) MAJO#ITY iI one promise is Iully perIormed at the making or thereaIter, then
contract is not within SF
O (even iI side`s perIormance occurs beyond one year)
O MINO#ITY iI Iull perIormance is beyond one year, then within SF
vii. justiIications:
) evidentiary Iunction
) valuation courts want to avoid valuation problem
O one who has perIormed is entitled to restitution (limited to reasonable value)
. ontracts Ior the Sale oI oods
a. U Provisions:
i. V - Formal #equirements; Statute oI Frauds
() A contract Ior the sale oI goods Ior the price oI $ , or more is not enIorceable by
way oI action or deIense unless there is some record suIIicient to indicate that a contract
Ior sale has been made between the parties and signed by the party against which
enIorcement is sought or by the party's authorized agent or broker. A record is not
insuIIicient because it omits or incorrectly states a term agreed upon, but the contract is
not enIorceable under this subsection beyond the quantity oI goods shown in the record.
() Between merchants iI within a reasonable time a record in conIirmation oI the contract
and suIIicient against the sender is received and the party receiving it has reason to know
its contents, it satisIies the requirements oI subsection () against the recipient unless
notice oI objection to its contents is given in a record within days aIter it is received.
(3) A contract that does not satisIy the requirements oI subsection () but which is valid in
other respects is enIorceable:
(a) iI the goods are to be specially manuIactured Ior the buyer and are not suitable Ior
sale to others in the ordinary course oI the seller's business and the seller, beIore notice oI
repudiation is received and under circumstances that reasonably indicate that the goods
are Ior the buyer, has made either a substantial beginning oI their manuIacture or
commitments Ior their procurement;
(b) iI the party against which enIorcement is sought admits in the party's pleading, or
in the party's testimony or otherwise under oath that a contract Ior sale was made, but the
contract is not enIorceable under this paragraph beyond the quantity oI goods admitted; or
(c) with respect to goods Ior which payment has been made and accepted or which
have been received and accepted (Sec. --66).
(4) A contract that is enIorceable under this section is not unenIorceable merely because it
is not capable oI being perIormed within one year or any other period aIter its making.
b. #ules and Notes:
i. purpose oI SF is to protect those who DIDN`T enter into an oral contract, not to protect
someone who has
ii. negative shouldn`t be subject to cost oI trial to assert SF
6. Electronic #ecords (ritings) and Electronic Signatures
a. UETA Provisions:
i. V DeIinitions
() "Electronic" means relating to technology having electrical, digital, magnetic,
wireless, optical, electromagnetic, or similar capabilities.
(7) "Electronic record" means a record created, generated, sent, communicated, received,
or stored by electronic means.
(8) "Electronic signature" means an electronic sound, symbol, or process attached to or
logically associated with a record and executed or adopted by a person with the intent to
sign the record.
(3) "#ecord" means inIormation that is inscribed on a tangible medium or that is stored
in an electronic or other medium and is retrievable in perceivable Iorm.
ii. V Use oI Electronic #ecords and Electronic Signatures; Variation by Agreement
(a) This |Act| does not require a record or signature to be created, generated, sent,
communicated, received, stored, or otherwise processed or used by electronic means or in
electronic Iorm.
(b) This |Act| applies only to transactions between parties each oI which has agreed to
conduct transactions by electronic means. hether the parties agree to conduct a
transaction by electronic means is determined Irom the context and surrounding
circumstances, including the parties' conduct.
(c) A party that agrees to conduct a transaction by electronic means may reIuse to conduct
other transactions by electronic means. The right granted by this subsection may not be
waived by agreement.
(d) Except as otherwise provided in this |Act|, the eIIect oI any oI its provisions may be
varied by agreement. The presence in certain provisions oI this |Act| oI the words "unless
otherwise agreed", or words oI similar import, does not imply that the eIIect oI other
provisions may not be varied by agreement.
(e) hether an electronic record or electronic signature has legal consequences is
determined by this |Act| and other applicable law.
iii. V 7 egal #ecognition oI Electronic #ecords, Electronic Signatures, and Electronic
ontracts
(a) A record or signature may not be denied legal eIIect or enIorceability solely because it
is in electronic Iorm.
(b) A contract may not be denied legal eIIect or enIorceability solely because an electronic
record was used in its Iormation.
(c) II a law requires a record to be in writing, an electronic record satisIies the law.
(d) II a law requires a signature, an electronic signature satisIies the law.
iv. V 9 Attribution and EIIect oI Electronic #ecord and Electronic Signature
(a) An electronic record or electronic signature is attributable to a person iI it was the act
oI the person. The act oI the person may be shown in any manner, including a showing oI
the eIIicacy oI any security procedure applied to determine the person to which the
electronic record or electronic signature was attributable.
(b) The eIIect oI an electronic record or electronic signature attributed to a person under
subsection (a) is determined Irom the context and surrounding circumstances at the time
oI its creation, execution, or adoption, including the parties' agreement, iI any, and
otherwise as provided by law.
7. Estoppel and the Statute oI Frauds
a. #estatements:
i. V 39 EnIorcement by Virtue oI Action in #eliance
() A promise which the promisor should reasonably expect to induce action or
Iorbearance on the part oI the promisee or a third person and which does induce the action
or Iorbearance is enIorceable notwithstanding the Statute oI Frauds iI injustice can be
avoided only by enIorcement oI the promise. The remedy granted Ior breach is to be
limited as justice requires.
() In determining whether injustice can be avoided only by enIorcement oI the promise,
the Iollowing circumstances are signiIicant:
(a) the availability and adequacy oI other remedies, particularly cancellation and
restitution;
(b) the deIinite and substantial character oI the action or Iorbearance in relation to the
remedy sought;
(c) the extent to which the action or Iorbearance corroborates evidence oI the making
and terms oI the promise, or the making and terms are otherwise established by clear and
convincing evidence;
(d) the reasonableness oI the action or Iorbearance;
(e) the extent to which the action or Iorbearance was Ioreseeable by the promisor.
b. #ules and Notes:
i. (c) is the key Iactor
ii. split oI authority allowing estoppel exception to V -
8. Admission that ontract was Made
a. #ules and Notes:
i. exception to U SF (-)
ii. MAJO#ITY says buyer has a right to obtain admission, some limit to discovery, others
allow trial
iii. some jurisdictions say summary judgment admissions are technical admissions that
don`t satisIy -(3)(b)
9. EIIect oI Noncompliance Pleading the Statute
a. #ules and Notes:
i. ow to deal with several writings:
) II all signed by party to be charged and each reIers to contract, all writings can be used
) All parts or several writings are physically attached at time oI signing, all writings can
be used
3) ritings enclosed in an envelope; will accept writings pinned together, but better in
envelope (some courts require the signed document reIer to the unsigned)
4) signed and unsigned contain internal evidence which shows they were drawn together,
then all writings can be used
I'. REEDIES FOR BREACH
A. Introduction
. #ules and Notes:
a. goal oI contract remedies is to protect injured party`s expectation interest measured by the
beneIit oI the bargain
b. law promotes substitutionary recovery (damages)
c. Iacilitates movement oI goods and services to highest valued use
d. interests:
i. expectation measured by beneIit oI the bargain
ii. reliance protects injured party by restoring them to pre-contract position
iii. restitution protects injured party by preventing unjust enrichment by breaching party
e. restatement requires total breach; allowed material breach
B. SpeciIic #elieI
. #estatements:
a. V 39 EIIect oI Adequacy oI Damages
() SpeciIic perIormance or an injunction will not be ordered iI damages would be adequate
to protect the expectation interest oI the injured party.
() The adequacy oI the damage remedy Ior Iailure to render one part oI the perIormance
due does not preclude speciIic perIormance or injunction as to the contract as a whole.
(3) SpeciIic perIormance or an injunction will not be reIused merely because there is a
remedy Ior breach other than damages, but such a remedy may be considered in exercising
discretion under the rule stated in V 37.
b. V 36 Factors AIIecting Adequacy oI Damages
In determining whether the remedy in damages would be adequate, the Iollowing
circumstances are signiIicant:
(a) the diIIiculty oI proving damages with reasonable certainty,
(b) the diIIiculty oI procuring a suitable substitute perIormance by means oI money
awarded as damages, and
(c) the likelihood that an award oI damages could not be collected.
c. V 36 EIIect oI Uncertainty oI Terms
i. SpeciIic perIormance or an injunction will not be granted unless the terms oI the contract
are suIIiciently certain to provide a basis Ior an appropriate order.
. U Provisions:
a. V -76 SpeciIic PerIormance; Buyer`s #ight to #eplevin
() SpeciIic perIormance may be decreed iI the goods are unique or in other proper
circumstances. In a contract other than a consumer contract, speciIic perIormance may be
decreed iI the parties have agreed to that remedy. owever, even iI the parties agree to
speciIic perIormance, speciIic perIormance may not be decreed iI the breaching party's sole
remaining contractual obligation is the payment oI money.
() The decree Ior speciIic perIormance may include such terms and conditions as to
payment oI the price, damages, or other relieI as the court may deem just.
(3) The buyer has a right oI replevin or similar remedy Ior goods identiIied to the contract iI
aIter reasonable eIIort the buyer is unable to eIIect cover Ior such goods or the
circumstances reasonably indicate that such eIIort will be unavailing or iI the goods have
been shipped under reservation and satisIaction oI the security interest in them has been
made or tendered.
(4) The buyer's right under subsection (3) vests upon acquisition oI a special property, even
iI the seller had not then repudiated or Iailed to deliver.
. Measuring Expectation
. U Provisions:
a. Buyer`s #emedies
i. V -7 Buyer`s #emedies in eneral; Buyer`s Security Interest in #ejected oods
() A breach oI contract by the seller includes the seller's wrongIul Iailure to deliver or to
perIorm a contractual obligation, making oI a nonconIorming tender oI delivery or
perIormance, and repudiation.
() II the seller is in breach oI contract under subsection (), the buyer, to the extent
provided Ior by this Act or other law, may:
(a) in the case oI rightIul cancellation, rightIul rejection, or justiIiable revocation oI
acceptance, recover so much oI the price as has been paid;
(b) deduct damages Irom any part oI the price still due under Section -77;
(c) cancel;
(d) cover and have damages under Section -7 as to all goods aIIected whether or
not they have been identiIied to the contract;
(e) recover damages Ior nondelivery or repudiation under Section -73;
(I) recover damages Ior breach with regard to accepted goods or breach with regard to
a remedial promise under Section -74;
(g) recover identiIied goods under Section -;
(h) obtain speciIic perIormance or obtain the goods by replevin or similar remedy
under Section -76;
(i) recover liquidated damages under Section -78;
(j) in other cases, recover damages in any manner that is reasonable under the
circumstances.
(3) On rightIul rejection or justiIiable revocation oI acceptance a buyer has a security
interest in goods in the buyer's possession or control Ior any payments made on their price
and any expenses reasonably incurred in their inspection, receipt, transportation, care and
custody and may hold such goods and resell them in like manner as an aggrieved seller
(Section --76).
ii. V -7 'over; Buyer`s Procurement oI Substitute oods
() II the seller wrongIully Iails to deliver or repudiates or the buyer rightIully rejects or
justiIiably revokes acceptance, the buyer may "cover" by making in good Iaith and
without unreasonable delay any reasonable purchase oI or contract to purchase goods in
substitution Ior those due Irom the seller.
() A buyer may recover Irom the seller as damages the diIIerence between the cost oI
cover and the contract price together with any incidental or consequential damages under
Section -7, but less expenses saved in consequence oI the seller's breach.
(3) Failure oI the buyer to eIIect cover within this section does not bar the buyer Irom any
other remedy.
iii. V -73 Buyer`s Damages Ior Nondelivery or #epudiation
() Subject to Section -73, iI the seller wrongIully Iails to deliver or repudiates or the
buyer rightIully rejects or justiIiably revokes acceptance:
(a) the measure oI damages in the case oI wrongIul Iailure to deliver by the seller or
rightIul rejection or justiIiable revocation oI acceptance by the buyer is the diIIerence
between the market price at the time Ior tender under the contract and the contract price
together with any incidental or consequential damages under Section -7, but less
expenses saved in consequence oI the seller's breach; and
(b) the measure oI damages Ior repudiation by the seller is the diIIerence between the
market price at the expiration oI a commercially reasonable time aIter the buyer learned oI
the repudiation, but no later than the time stated in paragraph (a), and the contract price
together with any incidental or consequential damages provided in this Article (Section -
-7), less expenses saved in consequence oI the seller's breach.
() Market price is to be determined as oI the place Ior tender or, in cases oI rejection aIter
arrival or revocation oI acceptance, as oI the place oI arrival.
iv. V -7 Buyer`s Incidental and onsequential Damages
() Incidental damages resulting Irom the seller's breach include expenses reasonably
incurred in inspection, receipt, transportation and care and custody oI goods rightIully
rejected, any commercially reasonable charges, expenses or commissions in connection
with eIIecting cover and any other reasonable expense incident to the delay or other
breach.
() onsequential damages resulting Irom the seller's breach include
(a) any loss resulting Irom general or particular requirements and needs oI which the
seller at the time oI contracting had reason to know and which could not reasonably be
prevented by cover or otherwise; and
(b) injury to person or property proximately resulting Irom any breach oI warranty.
b. Seller`s #emedies
i. V -73 Seller`s #emedies in eneral
() A breach oI contract by the buyer includes the buyer's wrongIul rejection or wrongIul
attempt to revoke acceptance oI goods, wrongIul Iailure to perIorm a contractual
obligation, Iailure to make a payment when due, and repudiation.
() II the buyer is in breach oI contract the seller, to the extent provided Ior by this Act or
other law, may:
(a) withhold delivery oI the goods;
(b) stop delivery oI the goods under Section -7;
(c) proceed under Section -74 with respect to goods unidentiIied to the contract or
unIinished;
(d) reclaim the goods under Section -7() or -7();
(e) require payment directly Irom the buyer under Section -3(c);
(I) cancel;
(g) resell and recover damages under Section -76;
(h) recover damages Ior nonacceptance or repudiation under Section -78();
(i) recover lost proIits under Section -78();
(j) recover the price under Section -79;
(k) obtain speciIic perIormance under Section -76;
(l) recover liquidated damages under Section -78;
(m) in other cases, recover damages in any manner that is reasonable under the
circumstances.
(3) II the buyer becomes insolvent, the seller may:
(a) withhold delivery under Section -7();
(b) stop delivery oI the goods under Section -7;
(c) reclaim the goods under Section -7().
ii. V -76 Seller`s #esale Including ontracts Ior #esale
() In an appropriate case involving breach by the buyer, the seller may resell the goods
concerned or the undelivered balance thereoI. II the resale is made in good Iaith and in a
commercially reasonable manner, the seller may recover the diIIerence between the
contract price and the resale price together with any incidental or consequential damages
allowed under Section -7, but less expenses saved in consequence oI the buyer's
breach.
() Except as otherwise provided in subsection (3) or unless otherwise agreed, resale may
be at public or private sale including sale by way oI one or more contracts to sell or oI
identiIication to an existing contract oI the seller. Sale may be as a unit or in parcels and at
any time and place, and on any terms, but every aspect oI the sale including the method,
manner, time, place and terms must be commercially reasonable. The resale must be
reasonably identiIied as reIerring to the broken contract, but it is not necessary that the
goods be in existence or that any or all oI them have been identiIied to the contract beIore
the breach.
(3) II the resale is at private sale, the seller must give the buyer reasonable notiIication oI
an intention to resell.
(4) II the resale is at public sale:
(a) only identiIied goods may be sold unless there is a recognized market Ior a public
sale oI Iutures in goods oI the kind;
(b) it must be made at a usual place or market Ior public sale iI one is reasonably
available and except in the case oI goods which are perishable or threaten to decline in
value speedily the seller must give the buyer reasonable notice oI the time and place oI the
resale;
(c) iI the goods are not to be within the view oI those attending the sale, the
notiIication oI sale must state the place where the goods are located and provide Ior their
reasonable inspection by prospective bidders; and
(d) the seller may buy.
() A purchaser that buys in good Iaith at a resale takes the goods Iree oI any rights oI the
original buyer even iI the seller Iails to comply with one or more oI the requirements oI
this section.
(6) The seller is not accountable to the buyer Ior any proIit made on any resale. A person
in the position oI a seller (Section --77) or a buyer that has rightIully rejected or
justiIiably revoked acceptance must account Ior any excess over the amount oI the buyer's
security interest under Section -7(3).
(7) Failure oI a seller to resell under this section does not bar the seller Irom any other
remedy.
iii. V -78 Seller`s Damages Ior Nonacceptance or #epudiation
() Subject to subsection () and to Section -73:
(a) the measure oI damages Ior nonacceptance by the buyer is the diIIerence between
the contract price and the market price at the time and place Ior tender together with any
incidental or consequential damages provided in Section -7, but less expenses saved in
consequence oI the buyer's breach; and
(b) the measure oI damages Ior repudiation by the buyer is the diIIerence between the
contract price and the market price at the place Ior tender at the expiration oI a
commercially reasonable time aIter the seller learned oI the repudiation, but no later than
the time stated in paragraph (a), together with any incidental or consequential damages
provided in Section --7, less expenses saved in consequence oI the buyer's breach.
() II the measure oI damages provided in subsection () or in Section -76 is inadequate
to put the seller in as good a position as perIormance would have done, the measure oI
damages is the proIit (including reasonable overhead) that the seller would have made
Irom Iull perIormance by the buyer, together with any incidental or consequential
damages provided in this Article (Section --7).
. #ules and Notes:
a. general Iormula Ior damages:
i. DAMAES loss in value (perIormance to be received; generally Kp) cost avoided
other loss (incidental costs incurred aIter breach) loss avoided
ii. also can state Iormula as, DAMAES proIit reliance (actual cost incurred in
perIorming or preparing to perIorm)
b. substitute recovery Iormula (U)
i. DAMAES p Kp other loss (incidental damages consequential damages
savings)
c. Iormula Ior cover
i. DAMAES p Kp incidental damages consequential damages (special damages)
savings (loss avoided; could include cost avoided)
d. seller`s resale Iormula
i. DAMAES Kp #sp
D. imitations on Damages
. Foreseeability
a. #ules and Notes:
i. general damages are damages that are Ioreseeable to a reasonable person
ii. special damages are those that a party would not have reason to Ioresee as natural and
probable consequences oI the breach when the contract was made
) to be liable Ior special damages, a party would have to be notiIied oI the otherwise
unIoreseeable circumstances at the time oI Iormation
. ertainty
a. #ules and Notes:
i. plaintiII must show item oI damage was caused by breach (Iact oI losscausal connection)
ii. loss must be established with reasonable certainty
) can use evidence oI past perIormance
) evidence oI Iuture proIit margins
3) Iuture revenues and expenses
4) Iormulamethod Ior determining projections or calculations; prospective proIits
iii. new business rule non-recovery oI Iuture proIits
) historically, proIits were too uncertain
) modern trend rule oI evidentiary suIIiciency; 'prooI beyond opinion not Iounded on
Iacts
iv. more evidence accepted in establishing new business rule
) prooI oI Iact; proIit based on market Iorecasts by employee specializing in economic
Iorecasting
) projected revenues
3) expert testimony
4) market surveys, economic and Iinancial data
) business records oI a similar enterprise
6) comparison oI perIormance oI business similar size, nature, and location
7) comparison oI proIit history Irom plaintiII`s predecessor, successor
8) comparison oI proIit history oI similar businesses owned by plaintiII
3. Avoidability
a. #ules and Notes:
i. non-breaching party must take aIIirmative reasonable steps to avoid loss; amount
recoverable will be limited or reduced by amount they could have avoided