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Mutual Assent________________________

Did the parties intend to be bound by the terms of the K?

Did their communications objectively manifest intent to be bound?

Did the parties really intend to be bound (subjectively)?

Factors to consider:
1. Express reservation of the right to not be bound absent a writing
2. Whether there has been partial performance of the K
3. Whether all terms of alleged K have been formed
4. Whether the agmt at issue is the type usually committed to a writing if consummated

Objective Theory
• What would a R person understand was meant by a communication? (the plain, usual meaning of the words)
• Ex. Lucy v. Zehmer (Zehmer writes that will sell his land to Lucy for $50K, then refuses performance.)
 Did Zehmer really assent to the deal? Lucy had reason to believe the communication was genuine; Zehmer not so
drunk that he couldn't discuss details, deal discussed 40 minutes, Zehmer wrote 2 drafts, Mrs. Zehmer signed also,
Zehmer let Lucy take the paper w/ him; HELD: Court ordered conveyance of the land to Lucy

Subjective Theory
• What does the person understand was meant by a communication? “Meeting of the minds”

• A true meeting of the minds in the subjective sense is too restrictive in the modern reality of business transactions
• Courts prefer to find assent in objective manifestations of intent
o Words
o Conduct

2 common law principles derived from the tension btwn objective and subjective derivation of K
1. Absent expressed intent that no K shall exist, even informal or oral mutual assent btwn the parties to exchange acts or
promises is sufficient to create a K
2. To avoid obligation of a binding K at least one party must express intent to not be bound before execution of a written
agmt
• Ex. Winston v. Mediafare
o 4 factors to help determine if parties intended to be bound

The Offer (Common Law)_________________

Definition of an offer:
Restmt §24: “An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that
his assent to that bargain is invited and will conclude it.”

NOT normally an offer:


• Invitations to deal or bid
o Owen v. Tunison: Selling store for $16,000, not an offer (not specific, really an invitation to negotiate)
o Southworth v. Oliver: (Price quote after discussions about sale=offer; even though it was sent to 4 people, still an offer)
o Fairmont Glass v. Crunden: communication was more than just a price quote, definite on necessary parameters
• Acts of mere preliminary negotiation
• Acts evidently done in jest or w/o intent to create legal relations
Indicia of Offers
• Specificity of language w/ respect to Parties, Price, Quantity, and date/time (R periods implied)
• Specificity of language w/ respect to intent to be bound
Definiteness
• The language of the offer must be definite
o Harvey v. Facey: (“Are you willing to sell? Please send lowest price.”) Response didn’t definitely convey that he was willing to
sell. No conveyance of power of acceptance w/o further communication.
Master of the Offer
• Offeror is the master of the offer, and can dictate specific parameters that will constitute an effective acceptance
• If no parameters are specified, acceptance in any manner and by any medium R under the circumstances is effective. (Restmt §30)
Advertisements
• Advertisements are normally not Offers, but could be if they are specific enough
• Leonard v. PepsiCo. (NOT an offer)
o Offer in the commercial was not definite enough. Simply an invitation to play. UnR to rely on the offer because the price of the
jet was so disproportionate, and it’s a military machine not for consumers.
• Lefkowitz v. Great Minneapolis Surplus (Offer)
o The offer was “clear, definite, and explicit” on time, item, price, and specified class of buyer. Did not specify the house rule on
the offer so it didn’t affect Lefkowitz’ power of acceptance

Duration of the Offer_______________


The offeree’s power of acceptance is terminated by:
1. Rejection or counter-offer by the offeree Restmt §§38, 39
2. Lapse of time (“R time”or time specified) Restmt §41
3. Revocation by the offeror
a. Direct (“I revoke”) Restmt §42
b. Indirect (Offeree learns reliable information of Offeror’s act contrary to continuation of the offer, as in Dickinson v. Dodds)
Restmt §43
4. Death or incapacity of the offeror
a. Ex. Early v. Angell (Aunt Mary offers $5000 plus expenses if early will come to her funeral)
i. If she wants performance, the offer lapsed at her death
ii. If she wanted promise, K completed before death
Option Ks and Firm Offers_______
 Option Ks: Restmt §87
o (1) Binding if it is in writing, signed by offeror, recites a purported consideration for the making of the offer, and proposes an
exchange on fair terms in R time
o (2) R reliance on the offer of the option makes it binding to the extent necessary to prevent injustice
o Courts do not normally look at the adequacy of consideration for options.
Dickinson v. Dodds: No consideration given for holding the offer open, so it terminates when Dickinson reliably learns of the revocation
indirectly.

 Option K created by part performance (Restmt §45)


(1) If an offer invites acceptance by performance only, an option K is created when the offeree begins performance, and Offeror cannot
revoke before the completion of the act
(2) Offeror’s duty under the K is conditional upon completion of the performance
Preparations for performance are NOT enough
 Ragosta v. Wilder (Obtaining of financing to pay the requested $88,000 were not part performance, but merely preparations for
performance. No consideration for the option)
 Preparations for performance may constitute justifiable reliance under §87(2)
Firm Offers under the UCC (Sale of Goods ONLY) UCC §2-205
 Merchants can make offers that will not be revocable for lack of consideration, for any period specified or for a “R period” not more than 3
months.
o If buyer’s form includes such a tem of assurance, seller must separately agree
The Acceptance (Common Law)____________
Restmt §50
• Acceptance of an offer is a manifestation of assent to the terms thereof made in a manner invited or required by the offer

Is notice of Acceptance required?


• Restmt §56: “Unless the offer manifests a contrary intention, offeree who accepts by promise must exercise due diligence to notify the
offeror of acceptance or offeror must receive the acceptance seasonably.”
o Int’l Filter v. Conroe: The K spelled out that the K (bilateral) would become effective upon approval by Chicago office. Even if
notice were required, the letter they sent asking for a sample to calibrate w/ would be notice.
o White v. Corlies & Tift: Unlike above, terms of acceptance not spelled out, so it falls into the rule of §56; Offeree must take steps
to communicate the acceptance “in some R time” to offeror before starting work (Unilateral.

Acceptance by performance
• Restmt §54:
o If offer invites acceptance by performance, no notice is required unless the offer specifies that it is.
o Ever-Tite Roofing v. Green: “…becomes binding on start of performance. Court located start of performance at loading of men &
material, before revocation communicated to Ever-Tite: Binding)
o If offeree has reason to believe that offeror has no adequate means of learning of his performance, Kual duty of offeror is
discharged unless:
 Due diligence to communicate acceptance
 Offeror learns of the performance in a R time
 Offer doesn’t require notification (explicit or implicit waiver)
 Carlill v. Carbolic smoke (court finds that Carbolic waived notice)

What if offer invites acceptance by either promise or performance?


Restmt §62: “…tender or beginning of invited performance of the beginning of it is an acceptance by performance…which operates as a
promise to render complete performance”
The bridge example (Can’t revoke once performance has begun)
Mirror image rule (Restmt §§58, 59)
Mailbox rule (Restmt §63)
Last-shot rule: If an offeree’s acceptance contains additional or different terms, and the offeror accepts by performing, the terms of the last offer
govern the relationship
MPS v. Dresser-Rand (D-R excepted from MPS’s non-solicitation clause, MPS performed anyways, so Non-Solicitation clause not
included)

Acceptance under the UCC _______

2-206

Unless unambiguously indicated by the language or circumstances,

a. An offer to make a K invites acceptance in any manner and by any R medium.

b. An order or other offer to buy goods invites acceptance by promise to ship or the prompt shipment of conforming or non-
conforming goods. If non-conforming, the shipment does not indicate acceptance if the seller seasonably notifies the buyer that it is
offered only as an accommodation.

i. Ex. Corinthian v. Lederle Labs: (shipment of non-conforming goods ≠ acceptance because there was notice that it
was offered as an accommodation only)

(2) If beginning performance would be acceptance, an offeror who is not notified of the acceptance in R time
may treat the offer as lapsed.

2-606

Acceptance of goods occurs when after a R opportunity to inspect the buyer signifies to the seller that they are conforming, or if they are non-
conforming, he will accept them despite nonconformity

Or if the buyer fails to effectively reject the goods

Or if the buyer does any act inconsistent w/ the seller’s ownership

Silent Acceptance____________________

• Silent Acceptance (Restmt §69)


o If an offeree is silent and inactive, it is not an acceptance unless:
• Offeree takes benefit of offered service after a R opportunity to reject them and has reason to know that the Offeror
expected compensation for them
• Offeror has stated or given offeree reason to understand that assent may be manifested by silence or inaction, and
offeree intends to accept by remaining silent or inactive
• If previous dealing or circumstances make it R that offeree should notify the offeror if he does not intend to accept

UCC 2-207 Ks for the Sale of Goods___


Rejects the common law Last Shot and Mirror Image rules
Uses the Common-law indicia of offers

2-207(1) – Acceptance, rejection, counteroffer


1. Was there a definite and seasonable expression of acceptance?
 Yes – keep going
 No – Move directly to 2-207(3) [dealing w/ conduct recognizing existence of K]
2. Does the acceptance add different or additional terms?
 Yes – keep going
 No – Mirror Image K (no conflicting terms + definite acceptance=K)
3. Is acceptance expressly conditional on assent to the different or additional terms?
• Yes, and assent given – K complete
• Yes, and assent not given – go to 2-207(3)
• No – go to 2-207(2)

2-207(2) – What are the terms of the K?


1. Are both parties merchants? (if one or both is not a merchant, 2-207 does NOT APPLY)
• Yes – keep going
• No –Additional or different terms construed as proposals for addition
o Is there express consent?
 Yes – K concluded, including new or different terms
 No – Move to 2-207(3)
2. Are the terms additional?
 Additional terms become part of the K unless
o The offer expressly limits acceptance to the terms of the offer
o The additional terms “materially alter” the offer
o Notification of objection to the terms is given in a R time
3. Are the terms different (conflicting?)
o Different terms are treated 3 ways
i. Same as additional terms
ii. Ignored (left out of the K)
iii. Same as under 2-207(3) [knock-out rule-the best solution]

2-207(3) – The effect of mutual performance when no K is formed by the parties’ writings
1. Was there conduct that recognized the existence of a K?
o Yes – keep going
o No – No K formed
2. Do the terms of the writings agree?
o Yes – Terms are included in the K
o No – Conflicting Terms are knocked-out and replaced w/ gap-fillers from the UCC

Materiality__(UCC 2-207 comment 4, 5)__

• Terms are material if their inclusion would result in “surprise or hardship if incorporated w/o the express awareness of the other party”
• Jx split concerning the materiality of arbitration clauses
• Typical “material alterations”:
o Clauses negating standard warranties of merchantability or fitness where such a warranty would normally apply
o Clause requiring guaranty of 90% or 100% deliveries in an industry where the custom is greater quantity leeway
o Requirement that complaints be made in a shorter than R or customary time
A clause will probably not be deemed “material” if it falls w/in normal trade practice parameters, because that is not “surprising” to a
party operating in the trade.

Definition of a Merchant__________

UCC 2-104: A merchant is a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or
particular skill of the practices or goods involved in the transaction. A party could be deemed a merchant if he employs a broker or intermediary as
his agent and the intermediary possesses such knowledge or skill

Restitution___________________
AKA
unjust enrichment
quasi K
implied in law K
quantum meruit

Even if no K was formed, the law implies a K so that the party in breach may be made to pay some money that would be unjust for him to keep

1. Gratuitousness
Was the service/product given as a gift? Did the donor expect or want to be paid?
2. Officiousness
Did the Donee want the service?
Requests the service?
i. Can't be forced to pay for a service or item if it was given deliberately but w/o request of the Donee
b. Was it an emergency situation?
0. Professionals who render service in emergencies can seek restitution for their time and energy expended

1. The cases concerning restitution have some common threads


a. Plaintiff must expect remuneration from D, or if the true facts were known to P he would expect remuneration, at the time the
benefit was conferred
b. Quasi-K recovery involves some direct relationship btwn the parties or a mistake on the part of the person conferring the
benefit.

• Ex. Cotnam v. Wisdom (Dr. stops at scene of an accident, patient must pay for his services even though he was unconscious)
But, if he wasn’t a doctor, his stopping is presumed to be gratuituous (he by profession does not provide medical care, so
expectation of remuneration is absent. Unless the services performed are excessively expensive or burdensome as to require
compensation to prevent injustice.
• Callano v. Oakwood park (Ct. says Callano should pursue his claim against pendergast, and restitution is a last-ditch effort if there is no
other way to prevent injustice)
• Pyeatte v. Pyeatte (Restitution usually denied in marital context, no recovery for services as housewife)
o Express agmt
o Extraordinary/unilateral effort by one spouse
o Benefit has inured only to the other at the time of the dissolution of the marriage
CA has bright-line rule: no recovery if the expense is more than 10 years old; benefits deemed to have accrued to the marriage by
then.

General policy against recovery in restitution suits arising out of a sexual relationship

Consideration____________________

Restmt §71
• Bargained-for exchange
• Of promise for return promise or performance
• Performance may consist of: An act other than a promise; forbearance from a legal right (Hamer v. Sidway); Creation, modification, or
destruction of a legal relationship
• Performance or return promise may be given to promisor or some 3rd party, may be given by promisee or 3rd party.
Quid pro quo; Something of value exchanged for something of value
Courts don’t normally inquire into the adequacy of consideration, unless there is an obviously nominal exchange (i.e. $1000 for a book
worth <$1

Ex. Hamer v. Sidway


• Uncle promises $5000 in exchange for promise to forbear from vice.
• Doesn’t matter that the forbearance was good for the nephew
o Matters that it was a legal right to smoke, drink, gamble. If he were underage, would not be valid because he had no
right to give up.

Ex. Shadwell v. Shadwell


• Court found no consideration because uncle simply encouraged behavior already happening, no bargain to do anything new or different

Family agmts are presumed to be gratuitous, and w/o consideration.


• Outside of scope of proper judicial intervention
• Presumption that it is a gift motivated by altruism, not bargain motivated by gain
• Exchange is missing in many family agmts that are really disguised gifts
• Presumption of gratuity is rebuttable (Hamer v. Sidway)

Ex. Fiege v. Boehm (Rule from Restmt §74: forbearance from rights not possessed but believed in good faith to be possessed is consideration)
• P forbears from pressing bastardy claim in exchange for money support. D wasn’t actually the father, but P’s good faith makes the
exchange valid

Promissory Estoppel_________________

Restmt §90
• A promise, which the promisor should reasonably expect to induce action or forbearance by the promisee or 3rd party, and does induce such
action or forbearance is binding if injustice can only be avoided through enforcement
4-Part Test:
o 4-part test:
1. Was there a promise?
1. Look to the language, was it specific? Uncertain?
2. Should the promisor have reasonably expected the other party to rely?
1. "Inducement"
2. Analyzed in the totality of the circumstances
3. Was there actual reliance?
1. Could be in the form of either forbearance or affirmative action
a. If yes, was it R under the circumstances?
4. Can injustice only be avoided by enforcement?
1. Will the reliance, if not compensated, cause an injustice to the relying party?

Ex. Ricketts c. Scothorn (Grandpa promises 2K to gdaughter “so you don’t have to work.”)
• No consideration for the promise of money, it was a gratuity; court could have found that her quitting her job was consideration, but the
language was “so you “can” quit.)
• Enforced because she was induced to change her position in reliance on the promised gift, and it was his intention and desire that she do so.
o Was it R for her to do so? She was making $500/year as book keeper, but 6% interest on $2000 is only $120/year.
Ex. Feinberg v. Pfeiffer
• Where recovery was denied due to a lack of consideration, Feinberg can recover under promissory estoppel because she relied reasonably
on the promise by retiring
Ex. Cohen v. Cowles Media Co. (Staffer for Gov. spilled dirt on candidate to a reporter, who had promised confidentiality, but newspaper printed his
name, staffer was fired.
• US S.Ct. finds agmt must be enforced to prevent injustice. Cohen relied on the industry standard of protecting the anonymity of sources, to
his detriment
Ex. Vastoler v. American Can Co (Vastoler took promotion, relying on promise of greater pension benefits)
• Rule: absorbance of stress and anxiety of higher position could be a detriment
Ex. D&G Stout v. Bacardi (D&G [General] started negotiating to be acquired by a larger liquor distributor. Knowing this, Bacardi promised to stay
w/ General as its exclusive distributor (month-to month agmt, at-will). In reliance on promise, General turns down an offer. Bacardi w/draws.
General forced to accept lower offer due to compromised bargaining position.
• Bacardi must pay difference in purchase price, because D&G stout relied reasonably on the promise in turning down the higher offer.

Past performance and Moral Obligation____

Past performance cannot be consideration for a present or future promise because it was, by definition, not bargained-for.
o Ex. Feinberg v. Pfeiffer Co. (P worked for D, D gave her raise and pension "in recognition" of past good work)
• Past services not consideration because she didn't bargain to do it in exchange for the Co's promise
• P's continued service also not consideration b/c she didn't bargain to give up the right to work at some point in
exchange for the promised pension
o Ex. Mills v. Wyman (D's son fell ill, P cared for him; later D promised money to P for cost of care, didn't pay)
• P's performance was not bargained-for in exchange for D's promise to pay
• If nothing paid/promised, leaves execution of it to the conscience of the promisor
• Moral Obligation to pay is BY ITSELF not enough to establish legally enforceable K
o Ex. Webb v. McGowin (P falls w/, redirects block to not fall on Boss. P paralyzed, D promised to pay)
• Consideration valid even though promise made after the fact
• During lifetime McGowin did pay on his promise, amount paid not so much as to be ridiculous
• Moral obligation to pay does establish enforceable K if Pr received a Material Benefit
 Not all courts follow the "Material Benefit Rule"
• CA. DOES NOT; still uses Wyman rule, but may be leaning toward the Material Benefit Rule
• Restmt 2nd §86 has not been adopted by many states, most favor (1) Wyman rule or the (2) the
Material Benefit Rule (judicial liberalization)
 Exceptions to the Moral Obligation rule (K formed in exceptions; in Wyman, no K)
• Promise to pay a debt on which the Statute of Limitations has run.
• Promise made as a minor enforceable when promisor becomes an adult
• Promise made after start of bankruptcy proceedings to pay a dischargeable debt
o Rewards - must know of the offer of an award in order to claim it, otherwise performance not bargained-for
• Ex. Kirksey v. Kirskey (Presumption of gratuity, not clear that the 60 mile move was bargained-for…no consideration)
o But, she may have a reliance claim

Illusory Promises________________

• Restmt §77
A promise is not consideration if the promisor reserves a choid of alternative performances unless:
a. Each of the alternatives would be consideration by itself
b. Or
c. There appears to be a substantial possibility that events will eliminate the alternatives that would not be consideration before the
promisor’s choice of action is made.

o Ex. Strong v. Sheffield (Wife signs promissory note, payable at once; owner of note agrees not to request payment "until such
time as I want my money." Fails to collect for 2 years. Consideration?
• No consideration. Even though he waited 2 years to collect, that period was not bargained-for.
• The words of his promise make it illusory, meaning he was not really giving up any right; could ask for the money the
next week, day, or moment, at his whim.
 If one party is not bound then neither is

o Ex. Mattei v. Hopper (P makes deal w/ D, D will sell land so P can develop it as long as P makes $1K deposit and is satisfied w/
deal w/in 120 days. D reneges, argues that satisfaction clause made the promise illusory.)
• Not illusory, and thus the promise was consideration
 Standard of satisfaction is in "fancy, taste, or judgment" is subjective "good faith standard"
• This one applies
 Standard of satisfaction in commercial judgment is the objective "R man standard"

• Requirements Ks
o Ex. Eastern Airlines v. Gulf Oil Co. (K that Gulf will supply fuel as required, not a specific amount)
• UCC rule 2-306(1): Requirements Ks will be upheld, and not illusory, as long as there is a good faith effort and the
amount required is not disproportionate to any stated estimate
• Court may refuse to enforce a K if doing so would bankrupt one company
• Exclusive agmts
o Wood v. Lucy, Lady Duff-Gordon (P and D enter exclusive agmt for P to market D's name using his "best efforts." D then makes
agmt w/ Sears. Breach of K? Was there Consideration?)
• Yes, consideration. She did not retain the right to make any endorsements of her own, court constructs a good faith
standard for evaluating his promise
• Best efforts obligation UCC §2-306(2)

Shrink/Click-wrap Ks_________

The "Battle of the form (singular)"


• Ks w/ post-purchase terms (typified by seller's terms contained inside shrink-wrapped or sealed containers,
which condition assent to the sale on buyer's acceptance of the terms
• ProCD v. Zeidenberg
• Judge determines that 2-207 does not apply bc one of the parties is not a merchant and there is only one form
• A "rolling K" approach
• K not complete at the point of sale, it is pending while buyer has R opportunity to inspect the goods and if he
fails to reject them, the terms of the click/shrink wrap agmt will be binding (Sort of like a test-drive, if you take
the car home you've bought it)

• Hill v. Gateway
• Customer's ordered computer, dissatisfied w/ its performance they sued. Sought to distinguish from ProCD
because the box did not notify that there were additional terms enclosed
• Held on appeal for D; P had opportunity to return the computer, and the fact that it didn't created a K w/ the
terms included

Pre-Kual Liability

Option K created by part performance


Brooklyn Bridge example

If a general Kor relies on a subKor’s bid, it becomes irrevocable


Drennan v. Star Paving

Failed Negotiations
Promise relied on can give rise to liability, if it was R
Ex. Hoffman v. Red Owl

Tribune 1 agmts: Fully formed, but parties have agreed to memorialize them formally

Tribune 2 agmts: Some terms are complete and parties make a separate agmt to continue negotiating in good faith
K w/ independent consideration to continue negotiations in good faith
Channel Home Centers v. Grossman
May not be able to ultimately reach an agmt on all terms, but is obliged to negotiate in good faith

The Statute of Frauds

Step 1: Does the statute apply?


• Suretyship?
• Sale of real property?
• Agmts which cannot be performed in 1 year?
• Agmts made on consideration of marriage

Step 2: Is there a writing and does it satisfy the statute?


• Is the writing signed by the party to be charged?
• Does the writing contain all of the essential terms of the deal w/ sufficient definiteness?
• Was there consideration and mutual assent?

Step 3: If statute applies and the writing is insufficient, K is unenforceable UNLESS


1. Parties have begun performance (satisfies the statute’s evidentiary function)
2. Party charged admits the existence of the K
3. Equitable Estoppel: A factual misrepresentation led the other to rely to his detriment
4. Promissory Estoppel: Justifiable reliance on a promise

Main Purpose Doctrine: Removes agmts from the statute of frauds if the assumption of a debt was to benefit oneself, rather than to benefit the
original debtor

Does NOT apply to oral agmts for lifetime employment

Under the UCC


Sale of goods of $500+
Does NOT have to include all material terms, only Quantity
Must be signed by the charged party
Must have enough info to seem like a real, agreed-upon transaction
Written confirmation can be sufficient even if not signed by charged party if:
Sent w/in R time after completion of agmt
Writing signed by the plaintiff and enforceable against him
Confirms an agmt
Not objected-to w/in 10 days of receipt, and D had reason to know of its contents
Even if it doesn’t satisfy that standard, could be enforceable
1. Against buyer if goods were made specially for the buyer
2. If payment for goods made and accepted, or goods were shipped and accepted
3. The charged party admits there was a K

Under the CISG: The CISG has NO Statute of Frauds


Pre-existing duty rule
CL rule was that any alteration to an existing agmt required new consideration (exemplified by Alaska Packers v. Domenico)

The restmt has changed this (section 89)


Modern rule is to enforce modifications w/o consideration as long as the “sincerity of the obligation is clear and the commitment is freely made”
If an agmt has not yet been fully performed, a modification is binding IF:
1. The modification is fair and equitable in view of circumstances not anticipated by the parties at the time of formation
2. To the extent provided by statute
3. To the extent that justice requires enforcement (in the case of R reliance on the modification)
Only Executory Ks can be modified, and then only if they have not been fully performed

Under the UCC (2-209)


No consideration is needed to modify an existing unperformed agmt
However, modifications obtained by duress are unenforceable and there is a duty of good faith.
If a writing is signed and excludes modification other than by signed writing, it cannot be modified except by signed writing
If the agmt is btwn merchants, such a term on a form supplied MUST be signed by the other party

Form Ks (Ks of Adhesion)


Typified by:
Huge disparity of economic power
Take-it or leave-it terms
Used by parties w/ time and expert drafting advice. Adhering parties may lack both
- Did the adhering party see the unfavorable terms?
- Did the adhering party understand the unfavorable terms?
- Did the adhering party Assent to be bound by the terms?
Restmt Section 211
Doctrine of R expectations
If a party manifests assent to be bound to a standardized agmt, & other party has reason to believe that if he had known of some term he
would not have assented, the term is not part of the agmt

Policing the Bargain


Capacity
Infants (under the age of majority) incur duties voidable at the infant’s discretion
Except for “necessaries” like food, drink, clothing, education, shelter (if parents can’t provide)
Supposed to be a Shield, not a Sword
Old Age
Penalty enhancement for criminal exploitation of the elderly, but their power to K is not restricted

Mental Infirmity
Presumption of capacity for people of majority age
If a person is
4. Unable to act reasonably in relation to the transaction AND
5. Other party has reason to know of his condition
He incurs voidable duties
Drug or Alcohol abuse: Intoxication severe enough to impair capacity will be apparent to the other party, and exploitation by the other
party can be inferred
Duress
o R degree of resistance required before capitulation
o Threat must be to life, limb, or legit business interest; must be wrongful; it is never duress to threaten to exercise a legal right
A promise obtained by duress is not enforceable and money or property transferred will be disgorged

Undue Influence
• “overbargaining” in a relationship of trust
• 7 typical factors: Disadvantageous timing, location, absence of advisors, urgency, emphasis on bad consequences of delay,
pressured party outnumbered, stmts that there is no time to consult outside advisors

Unconscionability
• Unfair bargaining positions (procedural unconscionability)
• Resulting in unfair or oppressive terms (Substantive unconscionability)

Covenants Not to Compete P. 19


Remedies
Specific Performance
Common Law – For unique items, typically reserved for the sale of land or real property

UCC 2-716: SP may be decreed when the goods are unique or in “other proper circumstances”
“other proper circumstances” means when there is little certainty as to damages, alternate perform may be difficult to procure w/ $$
damages, or there is likelihood that damage award might not be collected

CISG: A court has discretion to order SP, but does not have to if its home jurisdiction would not under similar circumstances (In practice,
injured parties get to elect what they want)

Expectation Damages
(Loss in value (AKA profit)) + (Other Loss) – (Cost Avoided) – (Loss avoided)

Loss in value = Performance expected –performance received

Other Loss= expenses incurred in attempt to cover

Cost avoided = Materials that could be salvaged and sold

Loss avoided = revenue from mitigation

Try to put the person where he would have been if he’d gotten full performance

Reliance damages
Try to put the party back where he was before he relied to his detriment
No recovery of lost profits, but can recover costs incurred in R reliance (planned advertising, building supplies, etc.)
Restitution
Self explanatory