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CONTRACTS 2
RALPH STONE, SECTION 2
WESLEY WALKER
SPRING 2016
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1. How to Form A Contract § 24


a. Contracts Arise by Offer and Acceptance
i. Parties mutually assent to a bargain that pulls from each other some consideration.
ii. There must be an OFFER AND AN ACCEPTANCE
b. The meaning of an Offer
i. A manifestation
1. Outward showing
2. Of communication
3. Of speech, writing, or behavior
ii. Of a willingness to enter to bargain
1. Communication of wanting to bargain for something
2. And what each part is specifically expected to do
iii. So made as to justify another in believing his assent is invited and will conclude it
1. Would cause a RPP to think that they had an exchange proposed
2. This would seal the deal
c. The General Significance and Insignificance of Writings and Signatures
i. Look to SoF for this.
d. Meaning of Acceptance, Power to Accept, and Identify of the Offeree
i. Acceptance
1. § 50
a. Manifestation of the assent
2. One accepts when he does anything that would lead a reasonable person in the
offerors position to believe that he has assented unconditionally to all terms of
the offerors proposal.
ii. Power to Accept
1. Has be to the person who the offer was made to
iii. Identity of the Offeree
1. Turns on the Manifest intent
a. What a reasonable person would believe when interpreting the offerors
acts
2. § 29(1)
a. The manifested intention of the Offeror determines the persons or person
in whom is created a power of acceptance
3. § 29(b)
a. An offer may create a power of acceptance in a specified person or in one
or more of a specified group or class of person's acting separately or
together or to anyone or everyone who makes a specified promise or
renders a specified performance
 STONEISM HERE OFFEREOR IS MASTER OF HIS OWN
OFFER
e. Acceptance by Silence
i. If circumstances are such that a reasonable offeror should interpret the offeree's silence
as assent the SILENCE IS ACCEPTANCE
1. However, this is rare
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ii. §26 Silence is not acceptance


1. Where an offeree fails to reply to an offer, his silence and inaction operate as an
acceptance if because of previous dealings or otherwise, it is reasonable that the
offeree should notify the offeror if he does not intend to accept
f. Acceptance by dominion
i. Only counts as acceptance if under the prevailing circumstances, a reasonable person
in the offeror's position, by the offoree's actions, would believe that he had assented to
the offeror' proposed bargain.
ii. Bailee and Bailor Law
1. If the offeree keeps the property without payment he becomes a bailee
a. When you give someone something for safe keeping you are the bailee
b. Common law implies (implied in law K) bailment when you loose your
property and another finds it. Your are the bailor and they are the bailee.
Finder has the obligation to care for your property until you come and
claim it.
iii. § 69
1. An offeree who does any act inconsistent with the offereor's ownership of
offered property is bound in accordance with the offered terms unless they are
manifestly unreasonable.
iv. Mailbox Rule
1. If you take possession you have to exercise reasonable care of the item
a. After a time you may discard it with no penalty
v. Summary
1. If other than by US MAIL without any request, one party receives property
together with the owners' offer to sell it then the recipient may
a. Leave the property where he finds it and be free of any responsibility
b. Take custody, hold it as a bailee, and after a reasonable time, discard it
c. Exercise dominion by using it, selling it, gifting it, or otherwise treating it
as his own
 If this, he has accepted the offer and must pay the owner's price
2. Relationship of O+A+C=K
a. Manifest Intention
i. What a reasonable person would attribute to upon the offeror's words/actions upon the
offeror making them
b. Objective Theory of Contracts
i. "a party's intentions are not those that she subjectively carries in her own mind but
rather those that an objective RP would under all the surrounding circumstances,
attribute to her words and behavior"
c. Meeting of the Minds
i. Each party is entitled to enjoy his reasonable expectations and beliefs
1. But aren't all words susceptible to may reasonable interpretations?
a. No
b. Must be a "material misunderstanding"
 If material then the parties do not form a K
2. Peerless Case
a. There was no meeting of the minds even though the terms were reasonable
and clear as there was a material difference in the meanings assigned to
them.
b. § 20
 Different meaning to material terms
 K is void
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 STONE HERE BE CLEAR FOLKS COST OF BEING


STUPID
 PLAN
 WHO IS LCP?
 WHO SHOULD INTERNALIZE THE COSTS
 IF SO IMPORTANT TO COTTON BUYER SHOULD
HAVE BEEN CLEAR
3. Latent Ambiguity
a. Same as lack of meeting of the minds
b. There was not a clear meaning to a material K term
4. What to know
a. K never really requires any true meeting of the minds
b. When K fails for lack of meeting of the minds, they mean that some
material term has different meanings, both reasonable under the
circumstances
c. But if one party has a reason to know of the other party's interpretation,
then the knowing party's belief of the K terms is not unreasonable and the
K is Valid.
3. Invitations to Deal and Indefiniteness
a. Invitations to deal
i. Invitation to deal as a circumstance
1. It is a circumstance that might turn some subsequent communication into an
offer
2. Offer or invitation to deal? Sometimes its arguable
a. There is no bright line
b. "tendering performance"
 One tenders performance when he shows that he is ready, willing,
and able to deliver it. "I'm ready to begin"= tender
b. Contracts void for Vagueness, Indefiniteness, or Uncertainty
i. Vagueness
1. Terms are insufficiently specific
ii. Indefinite
1. If not reasonably certain as to the material terms
iii. §33(1)
1. Even though a manifestation of intention is intended to be understood as an
offer; it cannot be accepted so as to form a K unless the terms are reasonably
certain
c. When Material Terms Aren't explicitly Specified: "Gap Fillers"
i. Court supplies a reasonable K term WHO'S K IS IT ANYWAY
1. Why the Law Fills Gaps
a. Have to look at the circumstances of the K
 "in light of surrounding circumstance with inference and intuition"
 BUT HOW FAR IS TOO FAR ACCORING TO STONE?
DOES THE COURT SUBSTITUTE ITS BUSINESS
JUDGEMENT FOR THE PARTIES?
2. Gap Filling under UCC
a. 2-204(3)
 "even if one or more terms are left open, a K for sale does not fail
for indefiniteness if the parties have intended to make a K and there
is a reasonably certain basis for giving an appropriate remedy"
b. 2-305(1)
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 The parties if they intend can conclude a K for sale even though the
price is not settled. In such a case the price is reasonable at the time
of delivery
 IS PRICE NOT A MATERIAL TERM OF A K?
3. Agreement to Agree
a. Not a contract. Where 2 parties purport to have reached a final binding
agreement, but leave material terms for later negotiation or agreement they
form only an agreement to agree.
 No offer
 No acceptance
 There are not terms
b. Under UCC 2-305(1)
 Can find that if for a good there is a K
 Even if there is no price
 Or the price is left to the parties to agree on and they fail to be
agreed upon
 The price is to be fixed in terms of some agreed market or
other standard as set or recorded by a third person or agency
and It is not so set or recorded.
 STONE WOULD KILL GLANNON HERE
 WWPD?
4. Gap filling goes only so far
a. Deli Case
 Gap filling has its limits
 Doesn’t specific reasonable quantity
 Often times cant find reasonable price
4. Advertisements, Solicitations, and Signatures
a. Advertisements, Rewards, and Price Tags
 § 24
 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
For that reason the Ordinary Advertisement is not an Offer
1. Lefkowitz
a. "first come first served, coat for a $1"
 Court ruled this was a contract because there was a specific offer to
one person
 This is not the usual rule
2. Rule
a. Ads are not offers, merely an invitation to deal, but an ad is an offer, if it
leads a reasonable person to understand that acceptance is limited to
 A discrete group of persons
 Persons who perform some specific act.
ii. Offers of reward
1. A reward off is an advertisement but not a normal one
2. Every person who knows of the add is reasonable in believing that he could be
an offeree.
a. But to accept have to have performed the required act
b. Bid Solicitations and Auctions
i. A bid is an offer
ii. K is formed when the Auctioneer bang the gavel
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c. Written proposals and the significance of signatures


i. Offer or invitation to deal
1. A written proposal with signature lines should ordinarily cause the reasonable
person to realize that the proposer intends the signatures to serve as the final
showing of assent
ii. Ordinarily doesn’t mean always
5. Death of an Offer
a. Termination by the offeror's Revocation
i. Can An Offeror take his offer back
1. Yes. At any time before an offeree accepts an offeror is free to revoke.
2. § 42
a. An offeree's power of acceptance is terminated when the offeree receives
from the offeror a manifestation of an intention not to enter into the
proposed contract. An offer is revocable even though it expressly states the
contrary.
 If one party is bound then both parties are bound.
b. The option K
i. The offeree may "purchase" an irrevocable offer by forming with the offeror an option
K
1. § 25
a. For some consideration, can K for the right to K.
c. Termination by the Offeree's Rejection
i. §38 (2)
1. An offeree rejects an offer and thereby terminates it when she leas the offeror
reasonably to believe that she has decided not to accept
ii. §39(2)
1. An offeree's power of acceptance is terminated by his rejection of the offer
d. Passage of Time
i. Can put a timeline into an offer
1. As long as its reasonable
e. Death or incapacity of Offeror or Offeree
i. If one dies his estate must carry on the Contacts he made during his life.
1. § 48
a. An offeree's power of acceptance is terminated when the offeree or offeror
dies or is deprived of legal capacity to enter into the proposed Contract.
6. Counteroffer and the Mirror Image Rule
a. Counteroffer as Rejection
i. § 39
1. With respect to any offer, a counteroffer is an offer made by the original offeree
to the original offeror, similar in subject matter but different in terms.
ii. § 39(2)
1. An offeree's power of acceptance is terminated by his making of a counter offer
unless the offeror has manifested a contrary intention or unless the counteroffer
manifests a contrary intention of the offeree
 Basically, counter offer rejects first offer unless,
The original offeree wished to keep the first offer under
consideration
The original offeror manifests his intention not to treat the
counteroffer as a rejection
The Mirror Image Rule
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To accept an offer, the offeree must manifest an assent that mirrors the offeror's
proposal in any and every respect. She must show agreement to each and every one of
the offeror's proposed terms without alteration.
§ 59
A reply to an offer which purports to accept it but is conditional on the offeror's
assent to terms additional to or different from those offered is not an acceptance,
but a counteroffer.
A Mere Inquiry Doesn’t Reject
Rule:
§39 cmt. B
a. A mere inquiry regarding the possibility of different terms, a request for a
better offer, or a comment upon the terms of the offer is ordinarily not a
counteroffer
7. When Acceptance, revocation, and Rejection Take Effect
a. Acceptance is effective on dispatch; revocation and rejection on receipt
i. § 63(a)
1. An acceptance is effective as soon as put out of the offeree's possession without
regard to whether it ever reaches the offeror
ii. § 42
1. An offeree's power of acceptance is terminated when the offeree receives from
the offeror a manifestation of an intention not to enter into the proposed contract.
iii. § 40
1. Rejection or counteroffer sent by mail does not terminate the power of
acceptance until received by the offeror
iv. §68
1. A written revocation or rejection is received when the writing comes into the
possession of the person addressed or some person authorized by him to receive
it for him, or when it is deposited in some place which he has authorized as the
place for this similar communications to be deposited for him.
b. Exception: Acceptance that follows rejection is Not effective on Dispatch
i. Acceptance is effective on dispatch unless the offeree first dispatches a rejection and
then an acceptance, in which case the message received first by the offeror dictates the
outcome.
c. Revocation by indirect Message
i. Effective revocation requires no direct communication from offeror to the offeree. If
an offeree learns not from the offeror but from some other source that the offeror will
not honor her offer, then the offer is effectively revoked.
ii. § 43
1. An offeree's power of acceptance is terminated when the offeror takes a definite
action inconsistent with an intention to enter into the proposed contract and the
offeree acquires reliable information to that effect
8. Mode and Manner of Acceptance: Unilateral and Bilateral Contracts
a. Master or Mistress of the Offer
i. §50(1)
1. "in a manner invited or required by the offer"
a. Can be anything they want it to be
ii. §60
1. If an offer prescribes the place, time, or manner of acceptance its terms in this
respect must be complied with in order to create a contract.
b. When the offeror does not designate a mode of acceptance
i. § 30(2)
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1. Any acceptance can be any manner and by any medium reasonable in the
circumstances
ii. § 60
1. Unless circumstances known to the offeree indicate otherwise a medium if
acceptance is reasonable if it is the one used by the offeror
c. Bilateral and unilateral contracts: What they are and how they differ
i. Bilateral Contracts
1. Are contracts that are at the moment of formation, are executory on both sides
ii. Unilateral Contracts
1. Arises when an offeror allows an offeree to accept only by full performance
from the moment of formation the contract is executory only on the offeror's part
d. Unilateral and Bilateral Contracts: Vocabulary and Warning
i. Offer for unilateral contract
1. Is an offer in which the offeror allows the offeree to accept only by delivering all
(not part) of the performance asked of her.
a. If this happens three events occur in the same instant
 The offeree fulfils her side of the bargain
 The contract arises
 An executory duty is created on the offeror's side only
2. Bilateral Offer
a. Anything but full performance can be done by the offeree
ii. Watch out for "promise in exchange for an act" and "promise in exchange for a
promise"
1. Bilateral k does not equal promise in exchange for a promise
e. Offers for Unilateral vs. Bilateral Contracts: Why do we Care?
i. The construction of an offer is important
1. Typical Controversy around
a. An offer
b. The offeree's attempt to accept
c. The offeror's attempt to revoke of the offeree's attempt to reject
 How to avoid unjust enrichment here
f. Notice to the Offeror
i. Where an offeree who accepts by performance should understand that the offeror has
no meaningful way to know that she has done so, she must notify the offeree that she
has in fact, performed. If within reasonable time, she fails to give such notice, the
offeror is discharged from his contractual obligation
ii. § 62(2)
1. The contractual duty of the offeror is discharged unless
a. Offeree exercises reasonable diligence to notify the offeror of acceptance
b. The offeror learns of the performance within a reasonable time
c. The offer indicated that notification of acceptance is not required
g. Reward Offers look to Unilateral Contracts
i. To receive reward you have to know about it
ii. Unilateral contract
9. Offeree who accepts by Performing an Act
a. When the offeror requires acceptance by act
i. Injustice and unjust enrichment can be found generally when an offeror allows an
offeree to accept only by performing some act and the offeree begins to perform, the
offeror looses his right to revoke.
ii. Similar to § 45
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1. Where an offer invites an offeree to accept by rendering a performance and does


not invite a promissory acceptance, an option contract us created when the
offeree begins the invited performance
b. When the offeror allows the offeree to accept by promise or performance
i. § 62
1. Where an offer invites an offeree to choose between acceptance by promise and
acceptance by performance the beginning of the invited performance is
acceptance
2. Such an acceptance operates as a promise to render complete performance
10. UCC on Offer and Acceptance
a. "Firm offer"
i. UCC 2-205
1. Provides that an offer proclaiming itself irrevocable for any time is irrevocable
for that time only if:
a. Made by a merchant
b. Offering to buy or sell goods
c. In a signed writing
ii. The three Month Limitation
1. Cant be irrevocable for more than 3 months
iii. What if they didn’t prescribe a time period for irrevocability
1. Whatever is reasonable
b. The Mirror-Image Rule, § 2-207(1), and the "battle of the forms"
i. UCC 2-207(1)
1. The expression of Acceptance
a. Sounds like assent and under the UCC it is
2. An expression of Acceptance is an acceptance even if it fails to mirror the offer
a. An expression of acceptance operates as an acceptance even though it
states terms additional to or different from those offered
3. Doesn’t include the word merchant
4. Can save yourself from this shit
a. "Unless" means "but not if"
 Makes your contract not enforceable unless your terms are met
c. Modification of existing Contract: UCC 2-207(2)
i. Modifying K's as they are made
ii. Doesn't really make any sense
d. Offeror's Silence as Acceptance of Offeree's additional terms
i. If an offeree responds to an offer with an expression of acceptance that fails to mirror
the offer and thus proposes to modify the contract thus formed, the offeror's silence
constitutes an acceptance of that proposal if the answers are yes, no, and no.
e. UCC 2-207 as a model of poor draftsmanship: "different" and "additional" terms
i. Ways to interpret this
1. No distinction between "different and Additional terms" carry on
2. There is a difference, between the terns
3. Change in terms makes it a counter offer
4. "knockout rule"
a. Knocks out the K's terms and replaces it with a "reasonable term"
 STONE WTF IS THIS? NOT COURTS K
 GRANT GILMORE= GREATEST STATUTORY MESS OF ALL
TIME
f. 2-207(1): Written Confirmation
i. Cant act as acceptance of the offers, just a memorialization of the agreement
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11. Incapacity to form a Contract


a. Recession, Status Quo Ante, and unjust enrichment
i. Making the contract go away
ii. Must have parties in same position ex ante of contract.
iii. § 65
1. Return of any benefits conferred
b. When minors form contracts
i. Unless reached the age of capacity or have been emancipated cant consent
ii. A contract formed between a minor and adult is voidable at the minor's option which
means that the minor may if she chooses rescind it. If this happens then by law the K is
void, and the adult must return or make payment for any value she has received from
the minor
iii. A minor who disaffirms her contract need not return the adult to full status quo ante.
1. Just what its worth at the current time, just at the time of disaffirming
iv. Can once minor hits majority age, affirm the K
c. When mentally ill people form contracts
i. § 15
1. Those that do not understand the nature or consequence of the action
2. Do not understand their agreement, but as to the relevant subject matter
demonstrate an inability to behave reasonably
d. When incompetent persons contract for necessaries
i. If one of the about makes a K then rescinds it, have to pay fair market value of the
goods.
12. Illegal Contracts
a. The basics
i. Not really "illegal" but contrary to public policy
1. "health, safety, or welfare"
b. Recovery in relation to illegal contracts; recovery for Unjust Enrichment
i. Party seeking recovery depends on whether his participation in the contract violates
public policy. If did any of the following cant recover
1. His performance under the K was not contrary to public opinion
2. His wish to induce the other party's performance
ii. Illegal contracts are Void not Voidable
1. They don’t exist
13. How we interpret Contracts
a. Interpretation
i. Usage of trade
1. § 222(1)
a. Having such regularity of observance in a place as to justify that it will be
observed with respect to a specific meaning
ii. Course of dealing
1. § 223(1)
a. Based on previous dealings, what the parties have a common
understanding for that expression
iii. Course of performance
1. § 202 (4)
a. Where they have done this multiple times before they will use the same
meaning, or interpret the same meaning as they have done before
iv. A hierarchy
1. § 2-208(2)
a. Black an white terms of k
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b. Course of performance
c. Course of dealings
d. Usage of trade
b. Interpretation of writings
i. Draft contracts
1. Only the final signed document is the valid one
a. Drafts are drafts
 Can only define the K terms with evidence
ii. Printed and handwritten terms
1. § 202 (d)
a. Separately negotiated terms are given higher weight than standardized
terms
iii. Writings are considered against the drafter
1. § 206
a. Writes are LCP and they are writing it so they should know what it means.
b. Approach is to interpret the K in favor of the other party
14. Duress, Undue influence, and Unscionability
a. The Doctrine of Duress
i. § 175
1. If a party's manifestation of assent is induced by an improper threat by the other
party that leaves the victim not reasonable alternative, the contract is voidable by
the victim
ii. When is a threat "improper"
1. When there is "no legal right to make one"
a. Threat of a tort
2. What if the threat comes from a 3rd party?
a. § 175(2)
 Party's manifestation of assent is induced by one who is not a party
to the transaction the contract is voidable by the victim unless the
other party to the transaction in good faith and without reason to
know of the duress either gives value or relies materially on the
transaction
b. The Doctrine of Undue Influence
i. Exploitation of trust
1. Exactly what it sounds like
ii. Abuse of Dominant Position
1. Position must be one of dominance
2. Have to have induced acceptance
3. Makes the K voidable
c. The Doctrine of Unconscionablitity
 § 208
If a contract term is unconscionable, the term may be not enforced, or may be
enforced as a whole without the unconscionable term
 § 2-302
Same at § 208
i. How and by who is it decided that a Contract us unconscionable?
 This belongs to the judge
 Unfairness of the bargaining process
"procedural unconscionablitity"
 Oppression of one party
"substantive unconscionablitity"
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Unfairness in the Bargaining Process: Procedural Unfairness


a. "unfair surprise"
b. "pressure"
c. "contract of adhesion"
d. A knew that B was subject to some infirmity or weakness
 Court will weigh all four factors for
If it sees some critical "quantity" of total unfairness, whether or not
all 4 factors are there, then the resulting K has been "infected" and
can be invalid
Oppression: Substantive Unconscionablitity
a. A contract or its terms are oppressive, meaning substantively
unconscionable, if that the court finds that under the circumstances that
surround formation, the terms are so harsh or one-sided as to shock the
conscience of the court.
ii. Unequal Bargaining Power
1. One party is "holding all of the cards"
a. § 208
 Comment B
 This is not unfair
b. § 2-302
 Comment 1
 This is not unfiar BUT
 Could be according to them, look to 4 factors of
Unscionability
iii. Unconscionability in the equity courts
1. "invoke the Court's Equitable Jurisdiction"
2. "clean hands" rule
a. Must come to the Court of equity faultless to be given relief
15. Condition and Contingency
a. Conditional and Unconditional Duties: Conditions Precedent, Subsequent, Concurrent
i. Difference b/w Conditional and Unconditional Contractual Duties
1. Unconditonal = no ifs ands or buts
2. Conditional = If x, and only if Y, then….
ii. Conditons Precedent and Subsequent
1. Precedent
a. Duty is not fully mature
b. "if" or "But only if"
2. Subsequent
a. Duty exists as soon as the promise is made, but on the occurance of that
thing happening the duty is gone
b. Not subject to a condition precedent
c. "i will unless…"
iii. Significance of Conditions Precedent and Subsequent: Burden of Proof
1. If a duty is subject to a condition precedent, the burden of proving that the
condition occured is on the party asserting the breach,
2. If the duty is subject to a condition subsequent, the burden of proving that the
condition occured is on the party who denies the breach.
iv. Conditons Concurrent
1. When a contract fails, expressly or impliedly, to provide that one of the parties
will perform before the other, then the law provides that neither party perform
until the other first Tenders his performance
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a. A party tenders when his is "ready willing and able to perform the
contract"
b. Conditions "intended to Benefit" one or both parties
i. One party
1. Most conditions precedent or subsequent are meant to benefit one party
ii. Both Parties
1. Just look at what a reasonable person would see as the parties intention
iii. Only the party intended to benefit may insist on the Condition
1. The party whom the condition's benefit is intended has the power to insit on the
condition or the "waive it" as she chooses
c. Excuse of a Conditon: Obstruction, Waiver, Estoppel
i. Condition excused by obstruction
1. A and B agree that A will mow B's grass using B's lawnmower and B will pay A
$50, on the condition that A refill the lawnmowers gas tank. If B will not let A
use the lawnmower when A returns to fill the tank, B's obstruction excuses the
condition precedent.
ii. Conditions Excused by waiver
1. Once the party whom the benefit is for has waived that right, it cannot be taken
back
iii. Waiver is Nonretractable Only if the condition is immaterial to the Contract's essence
1. She is bound by the waiver once the other party has reasonably, forseeably, and
detrementally relied upon it.
2. § 84
iv. The Doctrine of Estoppel Touches on the Nonretractable Waiver
1. Cant enduce to do something, if the other party has relied upon it
d. An Implied Condition Precedent: Substantial Performance, Total Breach, and Partial Breach
i. Conditions Implied by Law Call only for Substantial Fulfillment
1. Where a contract provides that party 1 is to perfrom first in time and party 2 is to
perform second in time, the law implies as a condition precedent to Party 2's
duty that Party 1 shall timely deliver a substantial performance
a. What is substantial performamce
 Who really knows its up to the court
2. Material Breach, Partial Breach
a. Basically defintions, and then restitution here
3. Seller's Substantial Performance is not enough to trigger Buyer's duty
a. Under UCC 2-206 perfect tender
 Can reject if not what they wanted
16. Interpretation as to Allocation of Risk: Mistake, Frustration, and Impracticability
a. Interpretation as to Allocation of Risk
i. Parties allocate risk where they feel that they have it
b. Mutual Mistake
i. §§ 152 and 153
1. A mistake is a belief that is not in accord with the facts and where a mistake of
both parties a the time of a contract was made as to a basic assumption on which
the contract was made has a material effect on the agreed exchange of
performances, the contract is voidable by the adversly affected party.
2. Summary
a. When forming their contract the parties manifest thier mutual belief to the
point of absolute fact, that some set of circumstances is in place
b. B should understand but for that belief, A would be unwilling to enter the
contract
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c. That belief is mistaken


c. Frustrartion of Purpose
i. § 265
1. Where after a contract is made, a party's principle purpose is substantially
frustrated without his fault by the occurrence of an event the non-occurance of
which was a basic assumption on which the contract was made, his remaning
duties to render performance are discharged
d. Impracticability
i. If the supervening event renders on of the party's performance far more costly,
burdensome, or difficult than he justifiably anticipated, it may indeed render
performance impossible.
e. Unilateral Mistake
i. Three kinds
1. When two parties give materailly different interoretations to the words on which
they purport to agree, bthh of them reasonable, then there is no "unilateral
mistake"; they failed to have a "meeting of the minds" and should have no K.
Like the Peerless Case
2. When two parties form a K with one beleiving to the point of certanity or "basic
assumption" that some fact or circumstance is then in place in fact when it is not.
This mistake never makes a contract voidable
3. Careless error, where one party knows or should have known of the error, is
voidable
17. Warranty
a. What is a warranty
i. A contractual promise that the commodity will be of some specific quality concerning
function, utility, or durability.
b. Warraties as to service
i. Nonprofessional sellers of service: Express warranties
1. Here, the law implies no warranties
a. But if they make an express warranty they are bound to it.
 If the seller reasonably leads the buyer to believe in some fact
pertaining to its nature, quality, or durability
2. Professional Sellers if Service: Implied Warranties
a. Deoending on the Jurisdiction, Seller has an a "good and workmanlike"
warranty
 Standard of the profession
c. Express warranties relating to goods
i. UCC 2-313
1. Express warranties by the seller are created as follows:
a. Any affirmation of fact or promise made by the seller to the buyer
which relates to the goods and becomes part of the basis of the bargain
creates an express warranty that the goods shall conform to the
affirmation or promise.
b. Any description of the goods which is made part of the basis of the
bargain creates an express warranty that the goods shall conform to the
description.
c. Any sample or model which is made part of the basis of the bargain
creates an express warranty that the whole of the goods shall conform
to the sample or model.
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2. It is not necessary to the creation of an express warranty that the seller use
formal words such as “warrant” or “guarantee” or that he have a specific
intention to make a warranty, but an affirmation merely of the value of the
goods or a statement purporting to be merely the seller’s opinion or
commendation of the goods does not create a warranty.
d. Implied Waranties relating to goods
i. Merchantability
1. UCC 2-314
a. As ordinarily characterizes that same product when sold in industry
b. As renders it suitabe to that purpose
ii. Fitness for a Particular Purpose
1. If a commercial seller of any good knows or should know
a. Of a specific purpose of the goods
b. That the buyer is looking to seller's expertise that the good will serve that
specific purpose
2. UCC 2-315
Where the seller at the time of contracting has reason to know any
particular purpose for which the goods are required and that the buyer
is relying on the seller’s skill or judgment to select or furnish suitable
goods, there is unless excluded or modified under the next section an
implied warranty that the goods shall be fit for such purpose.
3. UCC 2-316
a. Can get rid of implied warranties of Merchantability
i. Can do so
1. Orally
2. Conspicous writing
3. "as is"
18. Third Party Beneficiaries, Assignment, and Delegation
a. Third party Beneficiaries
i. Intended and Incidental beneficiaries
1. Third party to a contract formed between 2 others may sustain an action for
breach if he is an "intended beneficairy" but not if he is an "incidential
beneficary"
a. Intended= meant to benefit from the contract
b. Incidental= one who parties have no reason to understand any benefit is
intended
 § 302
 The beneficiary of a promise is an intended beneficiary if
recognition of a right to performance in the beneficiary is
appropriate to effectuate the intention of the parties and the
circumstances indicates that the promisee intends to give the
beneficiary the benefit of the promised performance… an
incidental beneficiary is a beneficary who is not an intended
beneficiary.
 § 304
 A promise in a contract creates a duty in the promisor to any
intended beneficiary to perform the promise, an the intended
beneficiary may enforce the duty
 § 315
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 An incidental beneficiary acquires by virtue of the promise no


right against the promisor of the promise
2. Creditor Beneficiaries and Donee Beneficiaries
a. Third party creditor beneficiary could sustain an action for breach
b. Third party donee beneficiary could not sustain an action for breach.
b. Assignment
i. When a first party manifests his intention presently to transfer his existing contractual
right to a second party
1. Party that originally had the right is the assignor
2. The party that takes the assignor's right is the assignee
ii. A contract right is Property

1. Ordinarily, a contracting party may assign his contractual rights, and if he does so,
with notice to the obligor, then
a. The obligor must perform for the assignee;
b. If the obligor fails to perform the assignee has an action against her for breach,
but he assignor does not.
2. § 317
a. An assignment of a right is a manifestation of the assignors intention to transfer
it, by virtue of which the assignors right to performance by the obligor is
extinguished, and the assignee acquires a right to such performance.

Obligor
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1. Delegation
a. Each party to a contract is entitled to receive the performance promised by the other, but
neither has, generally, a right to have that other party jimself provide it, wherefore if one
contracting party delegates his duty and the delegatee does in fact perform, the delegator is
not in breach.
i. § 318
1. Delegation of performance does not discharge any duty or liability of the
delegator.
ii. UCC 2-210
1. Same as § 318
2. Assignment and Delegation Together: Assignment of K
a. See Glannon Page 413
b. UCC 2-210 (5)
i. An assignment of "the contract" or of "all my rights under the contract" or an
assignment in similar terms is an assignment of rights and unless the language or the
circumstances indicate the contrary, it is a delegation of performance of the duties of
the assignor and its acceptance by the assignee constitutes a promise by him to perform
those duties.
c. Novation is where both parties agree to relase each other from their original contract becuase
the contract has been delegated to one other party
3. Delegation and the Personal Service Contract
a. § 318
i. Comment C
1. Delegation of performance is a normal and permissible incident of many types of
contract.. The Principal excetions relate to contracts for personal services and to
contracts for the exercise of personal skill or discretion.
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