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Contracts II Outline *Assent (Cont) Chapter 10: Offer and Revocation An acceptance must be definite and unequivocal; it must

t be in clear terms and must not add additional terms or limitations. If it does, then it becomes a counter-offer. Most importantly though, under Williston, acceptance may be valid if the conditional language is clearly independent of the condition. Ardente v. Horan If show unequivocal acceptance but make suggestions, it is ok as long as it is clear that still assent even if request not met. Necessary Changes and those changes that benefit the Plaintiff will not constitute a condition. RI Dept. of Transportation Protest Language does not constitute a change or condition to the terms of the agreement. Price v. Oklahoma College Counter-offer terminates buyers power of acceptance. Livingston v. Evans Landlord will not have to accept requests after acceptance has taken place. Culton v. Gilchrist Offer may be withdrawn by an indirect revocation where the offeree receives reliable information from a 3rd party that the offeror has engaged in conduct indicative to a reasonable man that the offer was withdrawn. Dickinson v. Dodd Preparing to perform and beginning to perform are two different things. Had begun to perform but no option contract. Ragosta v. Wilder Reasonable reliance on a promise binds an offeror even if there is no other consideration. Any bid chopping or chiseling cut off their options with 87(2). Drennan v. Star Paving This case criticizes the holding in Drennan in that the subcontractors are bound to the General contractors, but the Generals are not bound to the subs. As a result, the general is free to bid shop, bid chop, and to encourage bid peddling to the detriment of subcontractors. Pavel Enterprises v. AS Johnson The courts will not allow general contractors to deploy 90 promissory estoppel against a subcontractors bid when the general engaged in bid shopping and bid chiseling. Preload Technology, Inc. v. AB&J Construction Co. Inc Chapter 11: Transacting at a distance Chapter 12: Modes of Acceptance Acceptance by Act When an offeror requests an act as consideration for a unilateral contract, one who does that act with the intent of accepting the offer brings an enforceable contract into being. Klockner Regardless of mindset, conduct is most important. If the tendency of the promise is to induce them to persevere, reliance and detriment may be inferred from the mere fact of performance. The causes of conduct are subtle and varied. One who argues these causes will find it difficult to prove one cause was effective to the exclusion of the others. DiCicco v. Schweizer Acceptance is completed with knowledge of the offer and by rendering performance. Simmons Prior knowledge of a reward should not be a requirement when dispensing a reward when performance has been rendered. Stephen v. Memphis An advertised reward to anyone who performs certain conditions specified in the advertisement is an offer, and the performance of such condition is an acceptance which creates a valid contract. Carbolic Smoke Ball Subjective Acceptance

Contracts II Outline As the offeror is in control of his offer, he may specify the type of acceptance which is required and can dispense with the requirement of its communications. International Filter Acceptance by Conduct When an offer accepts the offerors services without expressing any objection to the offers essential terms, the offer has manifested assent to those terms. If you perform the actions, then you accepted. Polaroid Corp. v. Rollins Environmental Services Effect of Using a Subcontractors Bid A contract is not formed when a general submits a bid on a project and lists the sub as a proposed subcontractor for one aspect of the project, as required by the buyer, then awards to another sub. Holman Erection Co. Mere use of a subs bid by a general contractor bidding on a prime contract does not constitute acceptance of the subcontractors bid and imposes no obligation upon the prime to accept the subs bid. ECM v. Maeda Local custom that if the General contractor used the subcontractors bid and won, they were bound. Industrial Electric-Seattle, Inc. v. Bosko General contractor sued a subcontractor who made an estimate and then refused to enter into contract. The court treated the estimate as an offer and said that acceptance could be found in the following way: act of using the subs estimate in budding. Loranger Construction 90 promissory estoppel test Pavel Enterprises Effect of Failing to Notify an Offeree that his Acceptance is too late When the terms of sale are agreed upon and everything that the seller has to do with the goods is complete, the contract for sale becomes absolute without actual payment or delivery. The risk of accident vests in the buyer even if he has not paid for the goods or taken actual delivery. The acceptance of Ds offer was absolute and unconditional. Phillips v. Moore Silence as Acceptance Silence and inaction do not constitute an acceptance of an offer. Silence is acceptance only when you have a duty to speak. Vogt v. Madden Where the offeree with reasonable opportunity to reject offered services takes the benefit of them under the circumstances which would indicate to a reasonable person that they were offered with the expectation of compensation, he assents to the terms proposed and thus accepts the offer. Laurel Race Courses Delay in communicating action as to the acceptance of an offer may amount to an acceptance itself. Unreasonable Silence. Cole-McIntyre-Norfleet Co. When the very act of making the offer requires one to forgo other opportunities to cover their needs, then an unreasonable response (silence) by the offeree will constitute as acceptance. Hail Insurance Case. Kuska v. Home Mutual If products received do not conform to the contract say something about it. Not saying something about it is acceptance! Hobbs v. Massasoit Whip Acts which assumes control over goods constitutes acceptance. Louisville Tin & Stove v. Lay Newspaper case. Subscription terminated, company kept sending. Defendant kept taking it home. Actions constitute acceptance of the benefit conferred. Austin v. Burge Acceptance by Electronic Agent Chapter 13: Implied in law and in fact contracts; Unilateral Contracts Revisited A contract implied in law is imposed by the courts when one requests services be rendered, and voluntarily and knowing accepts them, except for emergency aid, then it is at the judgment of a competent professional without acceptance on the part of the beneficiary. Nursing Care Service

Contracts II Outline Contract in Law was invented for the sake of a remedy. It is a legal fiction. Necessaries furnished in good faith during a time of need. Sceva v. True If a party voluntarily avails himself of valuable services rendered and for his benefit, when he has the option whether to accept or reject them, even if there is no distinct proof that they were rendered by his authority or request, a promise to pay for them may be inferred. Silence in this case is acceptance when ones interests are at stake. Day v. Caton Here, unjust enrichment is irrelevant to recover on the grounds of contract implied in fact. If implied in fact, it is not necessary that the respondent gained a benefit from them. Bastian Contract Implied in fact is based on the intentions of the parties. It arises when the court finds from the surrounding circumstances that the parties intended to make a contract but failed to articulate their promises. Then there would be compensatory damages. Contract implied in Law is based on the maxim that one is unjustly enriched at the expense of another and thus restitution is the required remedy and its limited to the value of the benefit conferred. Intentions are immaterial. Hill v. Waxberg Quantum Meruit based on unjust enrichment but different from it. Unjust enrichment based on inequity of defendant keeping a benefit and not paying for it. QM is is to pay reasonable compensation for services rendered, a contract is thus implied. UE Restitution (benefit conferred) and QM compensation (measured by reasonable value of plaintiffs services). Ramsey v. Ellis UE is based on the value of the benefit conferred when there is not contractual relationship, but is based on the grounds of fairness and justice, the law can compel the performance of a legal and moral duty and analysis is based on equity, not contract. Difference in damages? QM is the value of the benefit value of the service provided by the plaintiff. UE value of what was inequitably retained. plaintiffs labor rather than enhanced value of the property is the proper measure in quantum meruit claims). Paffhausen v. Balano One can be fired from at-will employment for good cause or no cause, but not for bad cause. Cant force someone to do illegal things. Wagenseller v. Scottsdale Memorial Hospital M of O has widely been discredited and the right of one party to terminate at will does not invalidate the contract. Only the requirement(s) of consideration be met. Pine River State Bank

Chapter 14: Preliminary Negotiations, Indefiniteness, and the Duty to bargain in Good Faith There is no bargain unless all the terms that the parties intend to include in the agreement are settled. An agreement to enter into an agreement to be later settled is absurd and contradictory. It is not necessary for a writing to contain every possible contractual provision to cover every contingency in order to qualify as a completed binding agreement. Dont frustrate intentions. (i) courts should fill gaps to ensure fairness where the reasonable expectations of the parties are fairly clear. (ii) On the other hand, courts should not impose upon a party any performance to which he did not and probably would not have agreed. The enforcement of incomplete agreements is a necessary fact of economic life. Business people cannot predict every problem or question that may arise regarding a commercial agreement. Refusing to enforce these agreements is bad for business. In California, a subcontractors bid for work, whether incomplete or not, is binding (Custom). Additional terms cannot impose materially different duties. Plus, custom also determines that additional terms should have been reasonably been expected in the final sub contract. Crook v. Mortenson-Neal

Contracts II Outline A mere agreement to agree, in which a material term is left for future negotiations or is uncertain, is unenforceable. Joseph Martin, Jr., Delicatessen, Inc. v. Schumacher An option clause intends renewal at a reasonable rate (minority but rising rule). Better supports parties intentions and valuable consideration has been paid for the clause. Moolenarr v. Build Companies Inc. Where the parties exchanges promises of value to each other, they can be found to have provided consideration sufficient to support a binding agreement to negotiate in good faith. This is a binding preliminary agreement. Channel Home Centers v. Grossman Letter of intent did not create a binding contract. Its purpose is to provide an initial framework from which the parties might later negotiate a final agreement of the deal works out. It did, however, impose upon the parties an obligation to negotiate in good faith. A/S Apothekernes Laboratorium a binding preliminary commitment obligates both sides to negotiate in good faith towards the conclusion of a final judgment. Teachers Insurance v. Tribune Co. Damages for breach of an agreement to negotiate (go over) Venture Associates. v. Zenith Data Damages for breach of an agreement to negotiate in good faith may be the same as the damages for breach of the final contract that the parties would have signed had it not been for the bad faith of the defendant (Gas Co.) KMGA v. Vesta Promises that a party can reasonably expect will be relied upon, are relied upon may be enforced to prevent injustice even if the promise itself would not be sufficiently definite to meet the requirements to form an offer for a binding contract (Reliance). Hoffman v. Red Owl Conditions to Establish Promissory Estoppel (go over). Gruen Industries v. Biller Promissory Estoppel can apply, under appropriate circumstances, to promises that are indefinite or incomplete, including agreements to agree, for two reasons (go over). Neiss v. Ehlers Normally, there is no duty to bargain in good faith. But, during the course of negotiations, things may be done which do then impose a duty of continued bargaining only in good faith. Racine & Laramie

Chapter 15: The Parole Evidence Rule and the Interpretation of Written Contracts The Parole Evidence Rule Under the parol evidence rule, written or oral evidence that contradicts a final written agreement is not admissible in a court of law unless it constitutes a parol collateral agreement that is completely distinct from and independent of the final written agreement. Mitchill v. Lath When determining if an oral agreement would naturally have been included in writing, the trial court is not limited to only the writing, other circumstances may be considered. Parties with business experience are more likely to have complete writings as oppose to parties who dont have such experience, also parties with counsel on both sides are more likely to have complete writings. Second, the relative bargaining strength of the parties, since a bargain that is not negotiated at arms length may result in an incomplete writing. Yet, courts should still assume that the writing is the best intention of a complete agreement unless there is substantial evidence to the contrary. Hatley v. Stafford Williston legal relation based on the forms. Judge would impose upon the parties the terms of the contract as a reasonable person would understand them. Ordinary and naturally occurring additional terms would be included. Corbin - Judge should fix the legal relations with the parties according to their intentions, even when the forms they employ suggest otherwise. Judge would impose upon the parties the agreement that the evidence indicates that they in fact reached. Interform v. Mitchill Co.

Contracts II Outline Evidence of oral collateral agreements should be excluded only when the fact finder is likely to be misled. Masterson v. Sine 2-202 - confirmatory memoranda, focus on the intentions of the parties Interform v. Mitchill The parol evidence rule bars the introduction of evidence of a prior or contemporaneous oral agreement that contradicts a written memoranda intended as the final agreement between the parties. Hunt Foods v. Doliner The court held that parol evidence of a contractual right to unilateral rescission was inconsistent with a written agreement for the sale and installation of carpeting. 2-202(b). Alaska Northern Integration Clause (nothing can be added to written agreement), can be upheld when there is no other evidence to the contrary, negotiations are among professionally sophisticated parties, and more specifically here, length of the contract, extensive detail of the contract, and the long negotiation process. ARB v. E-Systems 2-202 overcomes merger clauses and disclaimers when they are inconspicuous, if the intention of the parties is in-fact the written agreement. Also not enforce a contract that has an unconscionable result. Especially with regard to warranties. Seibel v. Layne & Bowler, Inc. The Interpretation of Written Contracts If the words of a contract are clear and unambiguous, the intent is to be discovered only from the express language of the agreement. Stewart v. McChesney Role of the Judge when interpreting term of the contract. If ambiguous? Find objectiveness from the proffered evidence. Mellon Bank Judge must first consider the circumstances and purposes surrounding the making of the writing before he can determine if it is ambiguous. Consider commercial setting. Under 2-202, writing is not the final intentions unless there is express intent that the contract is completely integrated. Amoco Production v. Western Slope Gas The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. Pacific Gas v. Drayage Parol evidence rule does not come into play until it is first determined what the true agreement of the parties is what they meant by what they wrote down. Garden State Plaza Corp Under California law, a contract must be interpreted in light of any relevant evidence of the parties intent, including evidence extrinsic to the written agreement itself, even if the agreement is clear and unambiguous on its face. Trident Center v. Connecticut Life Ins. Co. Plain meaning rule Berg v. Hudesman (Read). Trade Usages, Course of Performance and Course of Dealing as Part of a Written Contract Under the Uniform Commercial Code, a trade usage or course of dealing may be used to explain or supplement the express terms of a written contract. A trade usage will be binding on a person who is either a member of the trade or is a person who knows or should know of the trade usage. Nankuli Paving and Rock v. Shell Oil Under the UCC 2-202 the language of the contract does not have to be ambiguous to bring in evidence of trade usages. Even a complete contract may be supplemented by the parol evidence of trade usages. C-Thru Containter v. Midland Form Contracts in a Commercial and Consumer Setting Chapter 16: Contract Formation in a Form-Contract Setting Battle of the Forms: The Basic Issues

Contracts II Outline 2-207 only applies to form contract The battle of preprinted, standardized contracts to finalize the bargain, which use boilerplate language, and omit material terms. 2-207 does not apply when there are a series of negotiations. Columbia Hyundai v. Carll Hyundai When a contract for the sale of goods is formed under 2-207 of the Uniform Commercial Code (UCC), any conflicting terms in the offer and acceptance cancel each other out and are replaced by existing applicable provisions of the UCC. (Gap Filler) Gardner Zemke v. Dunham A response form issued by one party that contains different terms than the offer to purchase issued by another party may constitute sufficient acceptance to permit inclusion of the different terms in any contract formed between the parties if the response form contains a definite and seasonable expression of acceptance, or, if the definite and seasonable expression of acceptance is conditioned on the offeror's assent, the offeror specifically and unequivocally assents to the different terms. Diamond Fruit Growers v. Krack Supplementary Terms contemplated by 2-207(3) are limited to those supplied by the standardized gapfiller provisions of Article II. A seller can still put additional conditional terms in his sales acknowledgement and even walk away if he wants to (2-207(1)), so long as the buyer has not assented to those additional terms. The seller can also protect himself, by not delivering the goods unless the conditional terms are assented to, by the buyer (2-207(3)). Since seller injected ambiguity, he should then bear the consequences. C. Itoh v. Jordan International Acknowledgement form had different terms (waiver of liability) to which the seller did not expressly assent to. Thus, use gap filler from the UCC. Transwester v. Monsanto Three main avenues of Contract formation under 2-207 (go over) JOM Inc. v. Adelle Plastics Rolling Contracts Shrinkwrap licenses included within a product's packaging are enforceable unless their terms are objectionable on grounds applicable to contracts in general, such as violating a positive rule of law or being unconscionable. Pro-CD v. Zeidenberg Under the Uniform Commercial Code, a purchaser may be bound to terms included in product packaging if the purchaser has an opportunity to review the agreement and reject it by returning the product. Must do so in a reasonable time. Hill v. Gateway Forum selection clauses in shipping invoices between international parties are invalid and unenforceable when a prior oral contract between the parties did not include such clauses. Use CSIG. Chateau des Charmes v. Sabate 2-204 contract for the sale of goods may be made in any manner to show an agreement, including conduct by the parties recognizing the existence of a contract. And such a contract will be found even though the moment of its making is undetermined. Arizona Cartridge v. Lexmark An offeree, regardless of apparent manifestation of his consent, is not bound by or charged with having "inquiry notice" of inconspicuous contractual provisions of which he is unaware, displayed in a format whose contractual nature is not obvious when judged according to a "reasonably prudent offeree" standard. Specht v. Netscape Communications Corp. When a benefit is offered subject to stated conditions, and the offeree accepts the benefit with knowledge of the terms, the taking constitutes a binding acceptance of the terms. Chapter 17: Interpretation and Unconscionability in a Form Contract Setting A written contract can only be reformed if there has been a mutual mistake in putting the terms of the parties' agreement into writing. (Old Rule Willistonian, not look at intentions) Sardo When a party can show that the contract was in fact an unconscionable one due to a prodigious amount of bargaining power on behalf of the stronger party the contract provision, or the contract as a whole, is unenforceable. Weaver v. American Oil

Contracts II Outline In a contract of adhesion, where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement. Evidence of assurances overcomes the boilerplate terms. Darner Motors Arizona courts will not enforce even unambiguous boilerplate terms in standardized insurance contracts in a limited variety of situations: Where contract terms cannot be understood by the reasonably intelligent consumer, even if unambiguous to the court, the terms will be interpreted by the court according to the reasonable expectations of the average insured. Insured did not receive full and adequate notice of the term in question and the provision is quirky, unexpected, and emasculates coverage. Where an activity by the insurer creates an objective impression of coverage in the mind of the reasonably insured. Where some activity by the insurer induced the insured to reasonably believe that a particular coverage existed even though that coverage is expressly and unambiguously denied by the policy. Gordinier v. Aetna Casualty Co. Rationale of the reasonable expectations doctrine is that in an adhesion contract, such as an insurance policy, form cannot be exalted over substance. The reasonable expectations of the insured must not be frustrated even though a painful examination would have negated those expectations. Farm Bureau Insurance


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Mistake and Unexpected Circumstances Chapter 18: Mistake Unilateral Mistakes (Mechanical Errors Mistakes in Transcription; Reformation Mutual Mistakes (Shared Mistaken Assumptions) Non-Disclosure Chapter 19: The Effect of Unexpected Circumstances