CONTRACT CONTINUUM Bargained for

Expectation Damages
Breach of Contract: Put in position as if K not breached Exchange Test
Non-Promissory Restitution (Quasi-contract)
Benefit conferred - no promise MODIFICATIO
Quantum Meruit
N
EXECUTION
SOF
apply?
CONTRACT = MUTUAL ASSENT + CONSIDERATION

PRELIMINARY
OFFER + ACCEPTANCE
NEGOTIATIONS

PROMISE PROMISE
Reliance Damages Restitution Damages
Enforce Promise Promissory Restitution – promise
Promissory Estoppel: prevent for benefit already received
claim of no consideration (no
bargain
- amount necessary to
TERMS TERMS
compensate the promisee for Parole Evidence (PE)
expenses or costs incurred in • Only Applies when written agreement has been executed
reliance on the existence of a (1) Is contract final expression (partially integrated; PE to
promise supplement)or complete & Exclusive (total integration; PE excluded)
(2) if Is evidence offered to add or change contract term not
admitted
 Additional Terms UCC 2-207 (1) & (2) BETWEEN NON-MERCHANT (BUYER)-MERCHANT
(SELLER) - SALE OF GOODS
BETWEEN MERCHANTS – SALE OF GOODS

Seasonable & Definite Expression of Acceptance With Seasonable & Definite Expression of Acceptance With
Different or Additional Terms – 2-207(1) Different or Additional Terms – 2-207(1)

OFFER ACCEPTED Conditional

Acceptance OFFER ACCEPTED

Different Terms Additional Terms Viewed

Additional Terms Become
Part of K Unless - 2-207(2)
(1) Offer Expressly Limits
Acceptance new Terms.
(2) Terms Materially Alter Offer
Unfair Surprise/ Undue Hardship
(3) Notice of Objection Already
Given/ Given Within Reasonable
Time
Two Main Approaches
Acceptance made
as Proposals - 2-207(2)
1. Treat like Additional Terms expressly
Permits terms of offeror to conditional on
control – minority rule assent to
added/diff. terms NO K FORMED
2. Conflicting Terms Cancel Unless
Each Other Out; different
terms are treated as additional NO K FORMED Unless Consumer
terms
Expressly Assents to
“Knock-Out” Rule Additional Terms By
Conduct
Consumer Expressly Assents to
UCC Gap Fillers Apply –
Additional Terms
majority rule (such as conduct (Retention of Goods)
prior to K or general rules of
trade) In Writing

Failure to respond w/in

reasonable time as assent to add.
terms
 Additional Terms UCC 2-207 (3) & Common Law
CONDUCT RECOGNIZING EXISTENCE OF CONTRACT (2-
207(3)) COMMON LAW FOR MERCHANTS AND SELLERS
Party Writings Not Sufficient to Establish Contract (ONLY applies when UCC doesn’t have a rule)

DOES PARTY CONDUCT RECOGNIZE EXISTENCE OF

AGREEMENT? DETERMINING APPLICABLE TERMS OF K
i.e. Seller Ships Goods/Buyer Pays
Subsequent Dispute Arises

Mirror Image Rule - which requires that an

acceptance manifest assent to all of the terms if the
DETERMINING APPLICABLE TERMS OF K offer without varying or adding to them

1. This rule can have an effect of denying the existence of a

K even where the parties themselves believe and act as if
there was a K

Contract Made Up of Terms 2. Exception: the grumbling acceptance was still

Contract Made Up of
acceptance because the additional language it included
Upon Which Parties Agree Supplementary UCC Terms
merely made explicitly an implied term of the offer

“Knock Out” Rule - Conflicting

Provisions cancel each other out Last Shot Doctrine – the terms of the party who sent
the last form, typically the seller, would become the
GAP FILLERS
terms of the parties K
Open price terms – 2-
305
Place of delivery – 2-
308
Implied Warranties –
2-314, 2-315
 UCC 2-207 • Confirmation
• Then we have a contract by
the exchange of the writings
never operates as Was acceptance
Did offeree make acceptance “expressly made • It “operates as an acceptance
a definite and Yes conditional on No even though it includes
seasonable
assent to the
expression of additional or different terms” 2-
additional or
acceptance? 2- 207(1) with terms per 2-207(2)
different terms”?
207(1)* • Additional Terms are mere
2-207(1)
proposals when
Electronic Contracts 1. Offer has clearly limited
• Once shrinkwrap is cracked, No
UCC Gap Fillers acceptance to the terms of
consumer accepts licensing • 2-308 (delivery takes place at the offer
agreement seller’s premises
Yes 2. Additional terms materially
• Vendor is Master of Offer • 2-310 requires payment on alter the offer
• Burden on Consumer to: delivery
1. Ask for copy before
No Is the 3. Offeror objected in advance
communication • 2-314 Implied Warranty: to additional terms; or
buying Merchantability; usage of trade
2. Consult public sources a counter offer? objects in a reasonable time
• 2-315 Implied Warranty:
(computer magazines, 4. Whether additional terms
Fitness for Particular Use
vendor website) are common in the industry
No Yes • Different terms in
3. Inspect the documents
Contract acceptance should not
after delivery (30 day )
return policy become part of K
Did offeree Yes • Court will knock out
Seller Advocates Arguments Contract with terms different terms and use UCC
expressly agree
4. Impractical for seller to of counter offer to fill gap
to counteroffer?
disclose all terms before
buyer gets goods in
“rolling-K” (telephone
orders) No
5. In the case of rolling-
through K, its impractical
for seller to insist buyer No Only used when the writings of the parties do not
Did the “CONDUCT
read and be aware of establish a contract
of both
terms; most it can do is to Yes •Use the terms on which writings agree
parties..recognize[]
insist on a “formal” • Add to them the UCC Gap fillers for terms where
the existence of a
expression of assent of
contract”? 2-
writings do not agree
condition to going • Knockout rule knocks out both additional terms
207(3)
forward and different terms
Battle of Forms Where either Party is NOT a Merchant
Terms
Jurisdiction Different
No
Conflicting Terms follow CA (materially
Rule? alter*) or
Additional? Different

Yes
Does
Offeree Use No
Expressly Additional
Conditional
Language? (a) Does the offer expressly
limit acceptance to terms of
Knockout Rule Yes offer?
Applies (b) Do the conflicting terms
materially alter K?
Conduct by (c) IS notification of the
Yes the Parties objection to the conflicting
Indicate term given in reasonable
Existence of time
Yes
Contract Knockout Rule
Generally Applies

No

No
No Contract
Offerees inconsistent terms
Offeree inconsistent terms become part of the contract
do not become part of the because they are not a
K material alteration

*Material Alterations:
-Indemnification (shifting liability for any court claims
-- Destruction of warranties
Statute of Frauds (SOF) – Common Law

* Oral Contract is enforceable

Contract for sale of No where the subject matter is not
land, or contract > 1
covered by SOF
year?

Yes
SOF not applied

Does contract fit

within one
No
exceptions in the
SOF so no writing is
required?

Yes

Contract not Yes Is Writing Sufficient No

Contract not
enforceable in to satisfy the SOF enforceable in
requirements?
court court
Statute of Frauds (SOF) – Sale of Goods UCC § 2-201 Yes
Is Contract
Between
Merchants
Contract for sale of Yes
No
goods $500
(revised $5,000) or No
more?

Do ALL these 3
conditions apply?
Do ANY of these 3 conditions apply? 1.Was a written
1.Are the goods specially confirmation of the order
manufactured for the buyer and received within a
are not suitable for sale to others, reasonable time
and seller has made a substantial 2.Did the recipient have
beginning of their manufacture or reason to know the
procurement? UCC § 2-201(3)(a) contents?
2. Has party to be charged admitted 3.Was there no written
notice to the contents Yes
during litigation the contract for
sale was made. UCC § 2-201(3)(b) No given within 10 days of it’s
3. Has payment been made and receipt by recipient? UCC
accepted or have goods been § 2-201(2)
received and accepted? UCC § 2- No
201(3)(c)

The agreement is A writing signed by

enforceable w/o a the party to be
signed writing by the charged is requires *
party to be charged Will not get expectation damage, however may get reliance damages to extent
you relied on agreement
Gap Fillers: Common Law & UCC
Common Law
•If the parties to an employment contract do specify
its duration, it is deemed terminable at will
• If the parties do not state the rights under the
contract are personal to the obligee, the obligee my
transfer (assign) those rights to another person
• If contract does not provide for the sequence of
performance, it is presumed that when both
performances are a single instantaneous act, they
must be made concurrently. But if one performance
is instantaneous and the other needs time to
perform, it is presumed that that the longer
performance must take place first
UCC: Sale of Goods
• Warranties
• UCC 2-312 – implies title conveyed is good, transfer is
rightful, free from any security interest or lien
• UCC 2-314 – implies good be merchantable
• UCC 2-315 – implies goods shall be fit for such purpose as
the seller is aware of
•Price of Goods
• UCC 2-305 – implies reasonable price at time of delivery
•Payment Terms
• UCC 2-307 – implies all goods must be tendered in a single
delivery and payment is due only on such tender
• UCC 2-310 – payment is due at time and place which the
buyer is to receive the goods (Assume COD sale.
•Delivery
• UCC 2-308 – place of delivery is seller’s place of business or if
none his residence
• UCC 2-309 – implies a reasonable time
•Requirements/Output K
• UCC 2-306(1) - implies both a good faith and a
reasonableness obligation on the party who is to determine
the quantity of goods ordered or supplied
• UCC 2-306(2) –implies an obligation of best efforts on both
parties when the K imposes an obligation on one of them to
deal exclusively with the other