I. WHAT IS A CONTRACT?A. §1. CONTRACT DEFINED

i. A contract is a promise or a set of promises for the breach of which the law gives a remedy, or

ii. the performance of which the law in some way recognizes as a duty. B. § 2. PROMISE; PROMISOR; PROMESEE; BENEFICIARY

i. "Promise" - a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

ii. "promisor" - the person manifesting the intentioniii. "promisee" - the person to whom the manifestation iv. "beneficiary" - where performance will benefit a person other than the promisee

C. § 3. AGREEMENT DEFINED; BARGAIN DEFINED i. "Agreement" is a manifestation of mutual assent on the part of two or more

persons. ii. "Bargain" is an agreement to exchange promises/performances.

D. § 4. HOW A PROMISE MAY BE MADE i. A promise may be stated in words either oral or written, or may be inferred wholly

or partly from conduct.II. WHAT LAW GOVERNS THIS SUIT?

A. GENERALi. UCCii. Common Law

B. UCC ARTICLE 1 & 2i. § 2-201. SCOPE: CERTAIN SEC. & OTHER TRANSACTIONS

1. Transactions in goods- i.e. sale of movable tangible goods.ii. § 2-105(1) DEFINITIONS: TRANSERABILITY; "GOODS"

1. "Goods": Tangible and movable things at the time of identification to the contract for sale.

iii. § 2-106 DEFINITION: K, AGREEMENT, K FOR SALE, SALE , PRESENT SALE: 1. "Sale": The passing of title from the seller to buyer for a price. 2. "Merchants": One who regularly deals in goods of the kind sold or who

otherwise by his profession holds himself out as having special knowledge or skills as to the practices of goods involved.  

C. Major diff. from RST:i. Firm Offer Ruleii. 2-207iii. Need New consideration to modify a common law contract but if sale of goods all

you need writing. D. COMMON LAW

i. Anything not goods

E. WHAT IF "MIXED" GOODS/SERVICE CLAIM?i. Predominate Factor Test (Majority Rule)

1. Whether their predominate factor, the THRUST, the purpose, of contract is sale or goods, then apply applicable law.

2. Factors they look at to decide what's predominant: Money, The primary reason to hire the person they hired (Ex. Joe Blow v. a specialist).

ii. Pittsley v. Houser: She didn't like the carpet.1. They ruled the carpet was more predominant than the services and applied

U.C.C.iii. Severance Test (Minority Rule)

1. Allows the contract to split while the goods involved would be covered by UCC and non-goods by the common law.

2. Minority b/c can get confusing and messy. III. WHAT IS THE ROLE OF POLICY IN CONTRACT LAW?

A. WHEN CAN THE COURT FIND A CONTRACT VOIDABLE BECAUSE IT IS AGAINST PUBLIC POLICY?i. It is only when a given policy is so obviously for or against the public health, safety,

morals, or welfare that there is a VIRTUAL UNANIMITY of opinion in regard to it that a court may constitute itself as "Voice of the Community" in declaring such a policy void.1. NOTE: "Against Public Policy" isn't the same as "illegal." It's LEGAL to enter

into such K voluntarily, but the courts won't enforce it.2. CONTRAST: contract to sell "meth" = ILLEGAL

ii. Shaheen v. Knight --- "The blessed event."1. Sterilization issue is not unanimous so not against policy.2. However, allowing for damages for the "blessed event" of birthing and raising

a healthy child is against public policy.iii. Baby "M" ---- “I changed my mind… No you can’t buy my baby!

1. A child being "sold" is similar to slavery and both are against public policy, thus, suing over retraction of adoption is against public policy.

B. WHAT BEHAVIORS DOES CONTRACT LAW INCENTIVIZE OR DISCOURAGE?i. RELIANCE- Mutual benefits of an increase in wealth. If people trust each other

they will be more likely to enter into agreements and further the growth and wealth of the country.

ii. AVOID CONFLICT- Uncertainty. To enforce promises and hold promisor's responsible. Thus, preventing non-breachers from retaliation while promoting them to spend money.

C. WHAT VALUE DOES CONTRACT LAW SEEK TO PROTECT?i. Freedom to Contract: Courts are hesitant to interfere with contracts because you

have right to enter into whatever agreements you chose. The will enforce contracts and only void if against public policy or illegal.

ii. Increase efficiency: Make one person (or both) better off than they were before. IV.WHAT REMEDIES DOES THE P WANT FROM THE LAWSUIT?

A. DAMAGES: A sum of money intended to compensate for the HARM done to the promisee's interests caused by the promisor's failure to perform. i. EXPECTATION (MOST COMMON): Gives the promisee the $ value she would have

received if the promise had been carried out. 1. Hawkins v. McGee Harry Hand Rule: (Guarantee "100 percent good hand")

a. Difference between the value of what he was promised and the value of the hand he received.

b. Plus incidental losses.2. § 347. MEASURE OF DAMAGES IN GENERAL:

a. Subject to the limitations in § 350-353, the injured party has a right to damages based on expectation interest as measured by

i) the loss in the value to him caused by other party's failure or deficiency to perform, PLUS

ii) any other loss, including incidental or consequential loss, caused by the breach, LESS

iii) any cost or other loss that he has avoided by not having to perform. 3. INCIDENTAL & CONSEQUENTIAL DAMAGES:

a. INCIDENTAL damages are extra cost incurred by the aggrieved party in dealing with the breach. (i.e. reshipping an item)

b. CONSEQUENTIAL damages are losses arising as a consequence of the breach. (i.e. lost profits, customers; injury to persons resulting from defective performance)

ii. RELIANCE DAMAGES (COMMON IN PROMISSORY ESTOPPEL)1. Puts the promisee back in the position that she would have been in had the

promise not been made. iii. RESTITUTION DAMAGES (UNCOMMON)

1. Put the promisor in the position she would have been in had the promise not been made.

B. EXTRAORDINARY REMEDIESi. SPECIFIC PERFORMANCE

1. An order from the court to the breaching party to perform.2. When it is applied:

a. UNIQUE Land/ Real Property (i.e. home corner of 5th and May Ave.)b. UNIQUE Goods (i.e. Signed original sketch by Picasso)

i) Rationale: 1) Uniqueness2) Money damages would not make non-breaching party whole3) Cannot just go out and get identical thing on market

3. § 2-716. BUYER'S RIGHT TO SPECIFIC PERFORMANCE OR REPLEVIN a. Spec. Perf. may be ordered where the goods are UNIQUE or in other

proper circumstances.b. The Judgment for Spec. Perf. may include such terms and conditions as

to payment of the price, damages, or other relief as the court may deem just.

c.The buyer has a right of replevin for goods identified to the contract if after REASONABLE EFFORT he is unable to effect cover for such goods OR the circumstances reasonably indicate that such effort will be unavailing OR if the security interest in them has been made or tendered.

ii. INJUNCTION1. A court may refrain a breaching employee from working for a competitor

throughout the duration of the contract.2. Granted if the employee is a person of EXCEPTIONAL SKILL or KNOWLEDGE

and ABILITY in performing the service, AND3. Same service could NOT BE EASILY OBTAINED from another4. Dallas Cowboys v. Harris---- UNIQUE SKILLS AND ABILITIES

a. "But I'm not unique!" because the dictionary term defines unique as "sole" or "the only one" and I am not the only one.

b. COURT: Too narrow "unique" IF same service could not be easily obtained from another in this case other people w/ skill set already signed w/ other teams.

V. MANIFESTATION OF MUTUAL ASSENT (Offer + Acceptance + Consideration = Contract) Have these parties reached an agreement?A. Was there Mutual Assent?-

i. TO ENFORCE K, PARTY SEEKING ENFORCEMENT MUST SHOW: 1. Objective Theory of Mutual Assent :

a. The promissor's expressed MANIFESTATION of intent (i.e. Objective Manifestation), AND

b. The Promisee's ACTUAL BELIEF that the promissor meant what was expressed. (i.e. Subjective Understanding)

ii. SATISFIED BY:1. Objective Manifestation AND Subjective Understanding is Satisfied:

a. Would a reasonable person conclude the words and actions constituted an offer? (Objective)

b. Did the party seeking enforcement ACTUALLY BELIEVE the wrongdoer assented to terms? (Subjective)

iii. RULE OF SUBJECTIVE UNDERSTANDING1. Embry v. McKittrick- "Go ahead, you're all right; get your men out and don't let

that worry you."a. If the conduct is such that a REASONABLE person would BELIEVE that

he was AGREEING to the terms proposed by another party and that party UPON THAT BELIEF ENTERS into the contract that man would be equally BOUND REGARDLESS of SUBJECTIVE INTENT.

b. EXCEPTION if subjective or undisclosed INTENT is KNOWN to party seeking enforcement, then K is NOT BINDING because he does not enter K "on the belief" so NO MUTUAL ASSENT

iv. RULE OF OBJECTIVE MANIFESTATION: 1. Lucy v. Zehmer- "But I was joking!"

a. The WORDS and ACTIONS of the party are interpreted using a REASONABLE PERSONSTANDARD.

b. If the words or acts of the wrongdoer have but ONE REASONABLE MEANING, his undisclosed INTENTION is IMMATERIAL.

c.The court looks to the , OUTWARD EXPRESSION of a person and NOT to their SECRET and UNEXPRESSED subjective intent. Would a reasonable person conclude that the words and actions constituted an offer.

v. § 17. REQUIREMENT OF A BARGAIN - (Mutual Assent + Consideration)1. Except as stated in Subsection (2), the formation of a contract requires a

bargain in which there is a MANIFESTATION OF MUTUAL ASSENT AND CONSIDERATION.

2. Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§ 82-94.

vi. § 18. MANIFESTATION OF MUTUAL ASSENT - 1. Manifestation of mutual assent to an exchange requires that EACH PARTY

either make a PROMISE or begin or render a PERFORMANCE.vii. § 19. CONDUCT AS MANIFESTATION OF ASSENT –

1. The manifestation of assent may be made wholly or partly by WRITTEN or SPOKEN words or by other ACTS or by FAILURE TO ACT.

2. The conduct of a party is NOT EFFECTIVE as a manifestation of his assent UNLESS the party INTENDS to engage in the conduct and knows or has REASON TO KNOW that the OTHER PARTY may INFER from his conduct that he ASSENTS.

3. The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be VOIDABLE because of fraud, duress, mistake, or other invalidating cause.

VI.WAS THERE AN OFFER?An offer creates a power of acceptance in the offeree and a corresponding liability on the part of the offeror.

i. § 22. MODE OF ASSENT: OFFER AND ACCEPTANCE 1. The manifestation of mutual assent to an exchange ordinarily takes the form of

an offer or proposal by one party followed by acceptance by the other party or parties.

2. A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.

ii. § 24. OFFER DEFINED:

1. Offer is [ MANIFESTATION OF IMMEDIATE WILLINGNESS TO ENTER BARGAINS ], so as to JUSTIFY another person to believe his assent is invited; thus, completing the bargain.

B. WHAT CONSITUTES AN OFFER?i. It must create a reasonable expectation in offeree that the offeror is willing to enter

into a K on basis of offered terms.  ii. AN OFFER MUST BE:

1. Clear, definite, and explicit, and2. Leaves nothing open for negotiation

a. Specific Terms: who offer is to, quantity, price, etc.3. Must be reasonable to assume offer4. Objective manifestation of offeror must justify the reasonable belief of the

offeree iii. LOOK AT 2 FACTORS TO HELP:

1. Content a. Was there certainty and definiteness in the essential terms?b. Were all of the Essential Terms present?

2. Communication (Objective REASONABLE PERSON Test)a. Was communication reasonable to believe offeror intended to enter in

contract?b. By the content AND (2) setting reasonable to believe offer

iv. Communications that are NOT Offers:1. Preliminary Negotiations2. Request for Bids3. Advertisements4. Invitations to make and offer 5. Invitation to trade6. Statement of price

C. IS IT AN OFFER OR PRELIMINARY NEGOTIATIONS?i. § 26. PRELIMINARY NEGOTIATIONS:

1. A MANIFESTATION of willingness to enter into a BARGAIN is NOT an offer IF the person to whom is addressed KNOWS/REASON TO KNOW that the person making it does NOT INTEND to conclude a bargain UNTIL he has made FURTHER manifestation of assent.

ii. § 33. CERTAINTY: 1. Even though a manifestation of intention is intended to be understood as an

offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.

2. The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.

3. The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

iii. PRELIMINARY NEGOTIATIONS LACK:1. Lack Reasonably Certain terms to contract, MUST:

a. provide a basis for determining the existence of a breach ANDb. for giving an appropriate remedy.

2. Party shows NO INDICATION of a present intent to be legally bound a. Often if lacks one or more “essential” terms shows lack of intent

iv. INVITATION TO NEGOTIATE----LACK OF DEFINITE TERMS1. Nebraska Seed v Harsh-

a. General Adv. Letter for seed lacking definite quantity & buyerb. RULE: TO CONSTITUTE AS AN OFFER THE COMMUNICATION MUST

BE SPECIFIC.c.Harsh not indicative of a present intent to be legally bound.d. If a proposal is nothing more than an invitation to make an offer, it is

not such an offer that can be turned into an agreement by acceptance. These are just invitations to trade.

e. Such inquiries may lead to bargains, but do not make them.D. ADVERTISEMENTS

i. Generally: An advertisement is usually not an offer. They are generally thought to be “invitations to make an offer.”1. HOWEVER, if the ad is so explicit, clear, definite, and leaves nothing open for

negotiation. It’s an exception to the rule.2. Must be reasonable to assume an offer—can’t be joke/outrageous

ii. ADVERTISEMENT & CATALOG----OBJECTIVE REASONABLE PERSON TEST1. Leonard v PepsiCo- "I'm getting a Harrier Jet from PepsiCo Catalog for only

7,000,000 points!"2. RULE: A ADV. IS ONLY AN OFFER IF REASONABLE PERSON WOULD

CONSIDER IT ONE. 3. An objective reasonable person would consider a jet for $7,000,000 Pepsi

points to be in jest 4. Adv. Commercial is NOT clear, definite, explicit because it is referring to a

catalog.5. Whether an offer made dep. on objective reasonableness of offeree’s belief that

the advertisement was intended to be an offer.iii. ADVERTISEMENT OFFER EXCEPTION----WHOM OFFER IS ADDRESSED

1. Leftkowitz v Great Minn Surplus- "3 Mink Coats-- First Come First Serve $1 a. RULE: ADV FOR SALE OF GOODS IS AN OFFER WHEN IT IS CLEAR,

DEFINITE, AND EXPLICIT, AND LEAVES NOTHING OPEN FOR NEGOTIATION.

b. DIFFERENT: Offer to FIRST THREE TO ARRIVE--it is clear to whom offer is addressed.

iv. § 29. TO WHOM AN OFFER IS ADDRESSED: 1. The manifested intention of the offeror determines the person or persons in

whom is created a power of acceptance.2. An offer may create a power of acceptance in a specified person or in one or

more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance.

E. AGREEMENTS TO AGREE-- When are they Contracts?i. § 27. EXISTENCE OF K WHERE MEMORIAL CONTEMPLATED

1. Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating

2. by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof;

3. But the circumstances may show that the agreements are preliminary negotiations.

ii. Determined by: 1. Actions and Words – OBJECTIVELY2. The more SPECIFIC the better3. Must have ALL ESSENTIAL TERMS agreed upon4. If objectively, actions show an intent to be bound

a. i.e. press release, arrangements with finances to pay

5. “Subject to” can often show an intention to NOT be boundiii. Empro v Ball- ‘valve component sale subject to board approval’

1. Intent in contract law is evaluated by an objective standard. If it says subject to it shows their intent not to be bound.

iv. Texaco v. Penzoil- “I accept your offer!! Actually never mind!1. All of the essential terms were agreed upon including price, amount, ownership2. Whether the complexity or magnitude such that formal writing expected3. Court looks at intent, the letter was sent, then counteroffer, the counteroffer

was ACCEPTED, press release about mergeF. UCC APPLICATION TO OFFER: (**Biggest diff. is NO INTENT needed)

i. § 2-204. FORMATION IN GENERAL 1. A contract for sale of goods may be made in any manner sufficient to show

agreement, a. including conduct by both parties which b. recognizes the existence of such a contract.

2. An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined

3. Even though one or more terms are left open, a contract for sale does not fail for indefiniteness if:

a. the parties have intended to make a contract; ANDb. there is a reasonably certain basis for giving an appropriate remedy

ii. § 2-206. OFFER AND ACCEPTANCE IN FORMATION OF K 1. Unless indicated by language or circumstances2. an offer to make a contract is construed as inviting acceptance in any manner

by any medium reasonable in the circumstances;3. an order or other offer to buy goods for prompt or current shipment is

construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming OR non-conforming goods; BUT

4. such a shipment of non-conforming goods does not constitute an acceptance IFa. seller seasonably notifies the buyer that the shipment is offered only as

an accommodation to the buyer5. If acceptance by starting performance is a reasonable mode --- an offeror not

notified within a reasonable time may treat offer as having lapsed before acceptance.

iii. § 2-305. OPEN PRICE TERM 1. The parties if they so intend can conclude a contract for sale even though the

price is not settled. In such a case the price is a reasonable price at the time for delivery IF

a. nothing is said as to price; orb. the price is left to be agreed by the parties and they fail to agree; orc.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.

2. A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.

3. When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.

4. Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay

their reasonable value at the time of delivery and the seller must return any portion of the price paid on account

iv. § 2-308. ABSENCE OF SPECIFIED PLACE FOR DELIVERY 1. Unless otherwise agreed:

a. sellers place of business is place for delivery of goods OR if not place or business à his residence; BUT

b. in contract for sale of identified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; AND

c.documents of title may be delivered through customary banking channelsv. § 2-309. ABSENCE OF SPECIFIC TIME PROVISTIONS; NOTICE OF

TERMINATION1. Time for shipment or delivery if no other time has been agreed on is “a

reasonable time”2. Termination by a party requires “reasonable notification” be received by the

other partyvi. § 2-310. OPEN TIME FOR PAYMT OR RUNNING OF CREDIT; AUTH. TO SHIP U/

RESERVATION1. Unless otherwise agreed2. payment is due at the time and place at which the buyer is to receive the goods

even though the place of shipment is the place of delivery; AND3. if the seller is authorized to send the goods he may ship them under

reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract (Section 2-513); AND

4. if delivery is authorized and made by way of documents of title otherwise than by subsection (b) then payment is due at the time and place at which the buyer is to receive the documents regardless of where the goods are to be received; AND

5. where the seller is required or authorized to ship the goods on credit the credit period runs from the time of shipment but post-dating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.

VII. THE POWER OF ACCEPTANCE & REVOCATION: A. Definitions

i. § 35. THE OFFEREE'S POWER OF ACCEPTANCE 1. An offer gives to the offeree a continuing power to complete the manifestation

of mutual assent by acceptance of the offer.2. A contract cannot be created by acceptance of an offer after the power of

acceptance has been terminated in one of the ways listed in §36. ii. § 36. METHODS OF TERMINATION OF THE POWER OF ACCEPTANCE

1. An offeree’s power of acceptance may be terminated by:a. rejection or counter-offer by the offeree; orb. lapse of time; orc.revocation by the offeror; ord. death or incapacity of the offeror or offeree.

2. In addition, an offeree’s power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer.

B. POWER OF THE OFFERORi. Dieii. Revoke / withdraw

1. Offer not kept open without consideration2. Revocation effective at moment notification is received by offeree3. Notification can be direct or indirect communication

iii. REVOCATION OF AN OFFER VS. OPTION CONTRACT1. Dickson v Dodds - "I will hold house open for you to decide...Oops, out of luck I

sold it!a. An open offer to sell terminates when the offeree learns that the offeror

has already agreed to sell to someone else.b. Acceptance is meaningless if the offer no longer exists.

2. § 42. REVOKING BY COMM. FROM OFFEROR REC. BY OFFEREE 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.

3. § 43. INDIRECT COMMUNICATION OF REVOCATION a. An offeree’s power of acceptance is terminated when the offeror takes

definite action inconsistent with an intention to enter into the prosed contract AND

b. the offeree acquires reliable information to that effect.iv. LIMITATIONS on Revocation

1. Option Contract (Common Law) – a. MUST have Manifestation AND Consideration  

2. § 25. OPTION CONTRACT a. An option contract is

i) a promise (§ 3 manifestation of mutual assent on the part of two or more persons)

b. which c.meets the requirements for the formation of a contract

i) (per § 17, K formation requires a bargain in which there isa) a manifestation of mutual assent ANDb) a consideration)

d. ANDi) limits the promisor’s power to revoke an offer.

3. § 37 TERMIN. OF POWER OF ACCEPTANCE UNDER OPTION K a. Notwithstanding §§38-49, the power of acceptance under an option

contract is not terminated by rejection or counter-offer, by revocation, or by death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty.  

v. FIRM OFFER (UCC)— 1. § 2-205. FIRM OFFERS

a. REQUIREMENTS?i) An offer ii) by a merchant iii) to buy or sell goodsiv) in a signed writing which v) gives assurance that it will be held open vi) AND - if offeree's form - term separately signed by offeree 

b. RESULT?i) Then the offer is not revocable for lack of consideration

c.LIMITATIONS OR EXCEPTIONS?i) (not revocable) during the time stated OR A REASONABLE TIME --ii) BUT

1) Not to exceed 3 months.C. POWER OF THE OFFEREE

i. 4 TYPES

1. Acceptance2. Rejection3. Counter Offer4. Terminate from Lapse Through Time

ii. ACCEPTANCE1. In a bilateral contract the offeree must COMMUNICATE ACCEPTANCE to the

offeror BEFORE it is binding.2. the acceptance must be clearly communicated3. to be effective the acceptance must be clear and unequivocal (leaving no

doubt)4. the offeror controls the manner of acceptance5. The offer and acceptance must MIRROR each other

iii. COUNTER OFFER & "MIRROR IMAGE RULE"1. If the reply to an offer is CONDITIONED on the additional terms, and therefore

a REJECTION of the d’s offera. Mirror: the language of acceptance and the offer must be the same

i) “mere inquiry" is not a counter offerb. If additional considerations are present this is a counter-offer and

requires acceptance by the original offeror before a contract exists. c.If conditional language exists the only way for a valid contract is if the

acceptance is clearly independent of the conditiond. STILL ACCEPTANCE IF…

i) “Mere inquiry”- If contract is accepted and also a further inquiry not conditioned for the acceptance

ii) Acceptance plus a NEW offer2. THE MIRROR IMAGE RULE”

a. Ardente v Horan- ‘buying a house accept but want you to throw in the tapestries”

i) An acceptance must be definite and unequivocal to be effective. The terms of the letter conditioned acceptance upon the inclusion of the tapestries and other items. An acceptance may not impose additional conditions on the offer or add limitations.

ii) If additional considerations are present this is a counter-offer and requires acceptance by the original offeror before a contract exists.

iii) If conditional language exists the only way for a valid contract is if the acceptance is clearly independent of the condition

3. § 61. ACCEPTANCE THAT REQUEST CHANGE OF TERMS a. An acceptance which requests a change or addition to the terms of the

offer is not thereby invalidated b. UNLESS

i) the acceptance is made to depend on an assent to the changed or added terms.

D. ACCEPTANCE- MANNER AND MEDIUMS1. In What MANNER & MEDIUM should an Offeree Notify an Offeror of

Acceptance?ii. MANNER OF ACCEPTANCE

1. The offeror can state the manner of acceptance2. Often offer does not specify how to accept so you may choose any medium

reasonable in the circumstances. 3. Acceptance by: Performance; Promise; Silence4. § 30. FORM OF ACCEPTANCE INVITED

a. A offer may

b. invite or require acceptance to be madei) by an affirmative answer in words, orii) by performing or refraining from performing a specified act, OR

c.may empower the offeree to make a selection of terms in his acceptance.d. Unless otherwise indicated by the language or the circumstances, an

offer invites acceptance in any manner and by any medium reasonable in the circumstances

5. § 32. INVITATION OF PROMISE OR PERFORMANCE a. In case of doubt an offer is interpreted as inviting the offeree to b. accept either by promising to perform what the offer requests OR c.by rendering the performance, as the offeree chooses.

6. § 45 OPTION K CREATED BY PART PERFORMANCE OR TENDER a. Where an offer invites an offeree to accept by rendering a performance

and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.

b. The offeror’s duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.

7. § 19. CONDUCT AS MANIFESTATION OF ASSENT a. The manifestation of assent may be made wholly or partly by written or

spoken words or by other acts or by failure to act.b. The conduct of a party is not effective as a manifestation of his assent

unless:i) he intends to engage in the conduct; ANDii) knows or has reason to know that the other party may infer from

his conduct that he assents.8. §62 EFFECT OF PERFORMANCE BY OFFEREE

a. Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance.

b. Such an acceptance operates as a promise to render complete performance.

9. NOTE: DIFFERENCE B/T § 45 AND § 62 IS:a. § 45—Offer specifies acceptance by perf.—start of perf. Creates OPTION

but offeree can still revoke (not offeror)b. § 62 – Offer does NOT specify promise or perf. Acceptance – start of

perf. Is an ACCEPTANCE which operates as a promise to COMPLETE PERFORMANCE – offeree cannot revoke.

10. § 54 ACCEPTANCE BY PERF.; NECESSITY OF NOTICE TO OFFEROR: a. (1)Where an offer invites an offeree to accept by rendering a

performance, NO notification is necessary to make such an acceptance effective unless the offer request such a notification.

b. In an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless:

i) the offeree exercises reasonable diligence to notify the offeror of acceptance, or

ii) the offeror learns of the performance w/in a reasonable time, oriii) the offer indicates the notification of acceptance is not required

iii. ACCEPTANCE BY PERFORMANCE1. The manner of acceptance by offeree is determined based on the form required

by the offeror2. If impossible to notify of acceptance then completing performance is

acceptable3. Carbolic Smoke Ball-

a. Carbolic indicated that they were serious by the deposit in the bank. (an affirmative action that proves it was more than mere puff)

b. This was a unilateral offer that could not be accepted by promise. Offeree accepted it by performing the requested action.

iv. ACCEPTANCE BY SILENCE (Very uncommon)1. When is it allowed?

a. Usually only applied to sale of goodsb. If offeree takes benefit of offered servicesc.If prior dealings b/t partiesd. Offeror has reasonable expectation that silence rep. acceptancee. Offeror has reasonable

i) If offeree does not intend to accept, must notify offeror2. § 69. ACCEPTANCE BY SILENCE OR EXERCISE OF DOMINION

a. Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:

i) Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.

ii) Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and offeree in remaining silent and inactive intends to accept the offer..

iii) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.

b. An offeree who does any act inconsistent with the offeror’s ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him.

3. Hobbs v Massasoit Whip Co- “eel skins”

a. previous dealings between the parties can create the expectation with the offeror that the silence of the offeree implies acceptance.

E. E-COMMERCE: CONTRACTING WITH THE WWW.i. 3 TYPES OF E-COMMERCE AGREEMENTS:

1. SHRINKWRAP: wrapping that seals software which bind the consumer to the terms of the agreement upon removal of the shrink-wrap.

2. CLICKWRAP: Users have to read terms and accept by clicking on a button that says "I agree" or "I accept," BEFORE download

3. BROWSE-WRAP : Terms of use are listed on a web site page. They can be on page downloading or a link to terms on page

ii. Elements of e-commerce contract:1. Need Mutual Assent to form a K2. Terms must be so obvious that upon download it can’t be missed3. Consumer clicking DL comm. assent ONLY IF offeror makes clear to consumer

that downloading means consent to terms4. An offeree, regardless of “apparent” manifestation of assent, is NOT BOUND if

assent contained in a manner whose contractual obligation is unknown.5. If it is conspicuous & found easily, most likely held accountable for contract.

iii. EXCEPTION1. After the first DL, user is bound if aware of terms2. If browse-wrap is so obvious it can’t be missed

iv. Specht v Netscape- Scroll, click, another pg, THEN terms---assent…right?1. This is a browse wrap, the notification of terms was only visible if one scrolled

down the page, one could download without seeing the terms.2. Not liable because one must have reasonable knowledge that the terms exist to

assent to them.v. Register.com v Verio- Ha Ha… I never clicked accept---I’m not bound!!!

1. Verio was bound by the terms not because he downloaded them once but because they downloaded multiple times a day and saw the terms many times

VIII. ENFORCEABILITY: Is this the type of agreement the law will enforce?A. IS THE CONTRACT ENFORCEABLE?B. DOCTRIN OF CONSIDERATION

i. What is Consideration?1. Exchange in promises in which both parties are getting something out of it. 2. Consideration (or an alternative ) is required for enforcement of a K3. Reason is to attempt to establish an enforceable vs. unenforceable contract.

ii. ELEMENTS1. Bargain-for exchange between the parties2. A detriment to promisee and/ or a benefit to promisor

iii. §71 REQUIREMENT OF EXCHANGE; TYPES OF EXCHANGE 1. To constitute consideration, a performance or a return promise must be

bargained for.2. A performance or return promise is bargained for if it is sought by the

promisor in exchange for his promise and is given by the promisee in exchange for that promise

3. The performance may consist of:a. an act other than a promise; orb. a forbearance; orc.the creation, modification, or destruction of a legal relation.

4. The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

iv. §17 REQUIREMENT OF A BARGAIN 1. Except as stated in subsection (2), the formation of a contract requires a

bargain in which there is a manifestation of mutual assent to the exchange and a consideration.

2. Whether or not there is a bargain, a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§82-94.

v. SUMMARY OF RESTATEMENT APPROACH 1. A contract is an enforceable promise (§§ 1 and 3); 2. With some exceptions (§ 17 (2)) A contract requires a

a. Bargain andb. consideration. (§17 (1)):

3. A promise is supported by consideration if it is bargained for. (§71 (1));4. A promise is bargained for

a. “if it is sought by the promisor in exchange for his promise andb. is given by the promisee in exchange for that promise.” (§ 71 (2))

C. WHAT IS CONSIDERATION?i. Benefit to the promisorii. Detriment to the promisseeiii. Sought-for (performance)

1. Acts, forbearance, return promise to act or forbeariv. Examples

1. DUTY- 2. forbearance - giving up legal right -RESTRICTED HIS LAWFUL FREEDOM OF

ACTIONa. Hamer v. Sidway- uncle promise to pay if refrain from drinking,

smoking, gamble until age 21 (but nephew was of legal age already to do those things)

3. Waiver of legal right constitutes as a detriment4. Debts incurred by minors.5. Prior debts-even if barred by statute of limitations6. Debts of bankruptcy (If SOL has run out and then you promise to pay back. It

counts). 7. Obligations which form consideration (Legal obligations) at one time or

another. 8. Benefit previously rejected BY promisor FROM promisee to the extent

necessary to prevent injustices. 9. A new contract (modification) due to unforeseen circumstances.

D. APPROACHES TO CONSIDERATIONi. BENEFIT/DETRIMENT ANALYSIS

1. There must be a benefit to the Promisor and/or2. A detriment to the promisee3. A court will still use benefit/detriment analysis to determine if an act or

promise was bargained -forii. BARGAIN-FOR RESTATEMENT ANALYSIS

1. If it is sought for by promissor in exchange for promise, and2. Given by promisee in exchange for promise

a. Dahl v. HEM Pharm- THE P incurred a detriment of being tested and HEM received the benefit of testing their drugs on people = VALID CONSIDERATION.

E. WHAT IS NOT CONSIDERATION?i. GIFTS/ GRATUITOUS PROMISE

1. The commitment to use funds to pay off pre-existing debt it not consideration because there is no advantage to promisor and no detriment to promisee.

2. A promise to pay money AS A GIFT may be revoked at any time BEFORE PAYMENT. (Johnson v. Otterbein)

a. Johnson v. Otterbein University: Δ wrote note promising $100. It was a gratuitous promise and they are only effective upon actual delivery of the thing that was promised.

b. Dahl v. Hem Pharmacy: Pharmacy company promised medication for a year in exchange for being tested on. There was a detriment in time and discomfort= consideration.

ii. PAST CONSIDERATION1. consideration executed (already completed) will not support a promise made at

a later time (Moore v. Elmore)2. RST § 71(1): To constitute consideration, a performance or return promise

must be bargained for.3. Cannot sought something that has already happened—THERE IS NO

INDUCEMENT TO PROMISEa. §81 CONSIDERATION AS MOTIVE OR INDUCING CAUSE

i) The fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise.

ii) The fact that a promise does not of itself induce a performance or return promise does not prevent the performance or return promise from being consideration for the promise.

4. Moore v. Elmer :a. There is not valid consideration, because pay off of the mortgage was

not sought in exchange for the performance of the readings, this is past consideration

b. The attachment of the pay out of the mortgage after the fact is an example of past consideration

c.There was already the performance of the sittingsi) Decedent would have had to promise first as well, because he

wasn’t seeking the readings in exchange for relief of the mortgageiii. PRE-EXISTING DUTY & CONTRACT MODIFICATION

1. Doing something you are already legally obligated to do is not consideration. 2. No new detriment3. A promise to pay for work that is already contracted is not enforceable. (Alaska

Packers)

4. Under common law. You need new consideration for contract modification. VS. NOT THE RULE UNDER U.C.C. Which just needs writing to modify.

a. Stilk v. Myric: Seamen deserted mid-voyage. i) There is no valid consideration, because the a pre-existing

obligation is past consideration and can’t be used in the formation of a new agreement

ii) Part of the original agreement was to uphold the duties in the even that there were deserters, which is common, so the sailors don’t have anything left to give that they weren’t already obligated to perform

b. Brian Construction and Development Co. v. Brighenti: i) The modification of the contract was binding (even though

technically there is no consideration) because the unforeseen work constitutes the new consideration

ii) Brian promised to pay more money to clear up debris that was not visible at the time the original promise was made.

c.§ 89: MODIFICATION OF EXECUTORY CONTRACT : i) A promise modifying a duty under a contract not fully performed on

either side is binding: 1) If the modification is fair and equitable in view of circumstances

not anticipated by the parties when the contract was made; or2) To the extent provided by statute; or3) To the extent that justice requires enforcement in view of

material change of position in reliance on the promise. d. Elements of § 89 MODIFICATION:

i) Voluntary Promiseii) Neither party has fully performed. iii) Fair Equitable (Only enough to cover costs) iv) Unanticipated Circumstances

5. UCC MODIFYING A CONTRACT: a. An agr. modifying a K needs no consideration to be binding.

F. ADEQUACY OF CONSIDERATIONi. Law does not req. consideration be adequate, just that it be in proportion with what

the parties accepting are giving up1. Pretend Exchange - such as a sham or nominal consideration does not satisfy

the requirement of RST § 79.2. Consideration that is worth nothing is not consideration.

a. § 79 ADEQUACY OF CONSIDERATION i) If the requirement of consideration is met, there is no additional

requirements of1) gain, advantage, or benefit to the promisor or a loss,

disadvantage, or detriment to the promisee; or2) Equivalence in the values exchanged; or3) “Mutuality of obligation”

ii. MORAL CONSIDERATION: 1. Usually not sufficient consideration due to lacking the “bargain-for” element.2. EXCEPTIONS:

a. DEBT BARRED BY TECHNICAL DIFFICULTIESi) If past obligation would be enforceable except for the fact that a

technical defense to enforcement stands in the way, the courts will enforce a new promise if it is either1) In writing2) Partially performed

Modification of Terms!!!!

b. MATERIAL BENEFIT RULEi) A moral obligation is sufficient consideration to support a

subsequent promise to pay where the promisor has received a material benefit.

c.§ 86 only enforced to extent to prevent injustice3. § 86: PROMISE FOR BENEFIT RECEIVED

a. Benefit previously received by the promisor from the promisee will be enforced to the extent necessary to prevent injustice.

b. A promise is not binding under Subsection (1)i) if the promisee conferred the benefit as a gift or for other reasons

the promisor has not been unjustly enriched; orii) to the extent that its value is disproportionate to the benefit.

4. BENEFITS ALREADY RECEIVED a. Debts of minor childrenb. Obligations of a bankrupt entityc.Debts that are now barred by the statute of limitationsd. Mills v. Wyman:

i) Someone took in the Δ's dying son and took care of him. Δ promised to repay. There is not a binding obligation because it does not fall under one of the exceptions of promises to pay for benefits already received

e. Webb v. McGowan—i) saving mans life in exchange for your body. The D promised to pay

him weekly stipend but when D died his estate stopped the payment.

ii) A moral obligation is sufficient consideration… for a MATERIAL BENEFIT although there was no original duty or liability resting on the promisor.

G. HOW TO ESTABLISH CONSIDERATION?i. First you look who is the promise breaker? Typically the Δ. ii. Second, did that promise breaker ask for anything in return for her promise? If not

then no consideration. If there was then there is consideration. (Hamer v. Sidway- Forbearance from legal duties you are allowed to do then it's consideration) 1. Ex. Uncle says "Nephew I'm so proud, I'll give you $5000.00 when you turn 21.

So nephew is really good. No consideration. He was never asked to do that" 2. Detriment wasn't bargained for. (§ 17)

iii. Say there was consideration, and it was bargained for. Look for Past consideration and pre-existing legal duty.1. RULE: In order for the promise to be consideration, it has to be reasonably

believed in. Consideration that is worth nothing is not consideration. H. SUMMARY OF CONSIDERATION

i. Consideration1. Waiver of legal right2. Modification due to unforeseen circumstances3. Past consideration – to prevent injustice under section 864. Previous obligations

a. Debts of minorsb. Obligations of bankruptcyc.Debts barred by the statute of limitations

ii. Not consideration1. Pre-existing obligations2. Gifts

a. Even conditional gifts3. Past consideration

a. Unless encompassed under section 864. Sham consideration

a. Worth literally nothing IX.ALTERNATIVES TO BARGAINED-FOR CONSIDERATION

A. PROMISSORY ESTOPPELi. benefit previously received BY promissor FROM promisee (to the extent necessary

to prevent injustice) Rest. 2d Contracts § 86ii. Elements of Promissory Estoppel

1. Promisea. the content of the promise must be clearb. the promise must be substantial and definitec.the promisor reasonably anticipate that the promise will lead the

promisee to act or forebear. 2. Reliance

a. it is reasonable for the promisee to rely on the promiseb. the promisee actually relied on the promisec.except charitable subscriptions and marriage settlements

3. Injusticea. injustice can only be avoided by enforcementb. damages limited to amount acted upon, not amount promised

iii. All about Induced Reliance1. RULE: A promise can be enforced even if it was given without consideration if

the promisee has REASONABLY RELIED on the promise to her detriment.2. §90 PROMISE REASONABLY INDUCING ACTION OR FORBEARANCE

a. (1) A promise which the promisor should reasonably expect to induce action; or

i) forbearance on the part of the promisee or a third person; andii) which does induce such action or forbearance is binding ifiii) injustice can be avoided only by enforcement of the promise – the

remedy granted for breach may be limited as justice requiresb. (2) A charitable subscription or a marriage settlement is binding under

subsection (1) without proof that the promise induced action or forbearance.

B. EQUITABLE VS. PROMISSORY ESTOPPELi. Promissory Estoppel

1. Promisor makes a promise2. Promisee changes position in reliance on the promise and3. The change is to the detriment of the promisee

ii. Equitable Estoppel1. There must be conduct – acts, language, or silence – amounting to a

representation or concealment of material facts2. These facts must be known to the party estopped at the time of his said

conduct, or at least the circumstances must be such that knowledge of them is necessarily imputed to him

3. The truth concerning these facts must be unknown to the other party claiming the benefit of the estoppel, at the time when such conduct was done, and at the time when it was acted upon by him

4. The conduct must be done with the intention, or at least with the expectation, that it will be acted upon by the other party, or under such circumstances that it is both natural and probable that it will be so acted upon. There are several

familiar species in which it is simply impossible to ascribe any intention or even expectation to the party estopped that his conduct will be acted upon by the one who afterwards claims the benefit of the estoppel

5. The conduct must be relied upon by the other party, and, thus relying, he must be led to act upon it

6. He must in fact act upon it in such a manner as to change his position for the worse; in other words, he must so act that he would suffer a loss if he were compelled to surrender or forego or alter what he has done by reason of the first party being permitted to repudiate his conduct and to assert rights inconsistent with it

iii. As a substitute for consideration, or an alternative to consideration:1. precursor: Ricketts v. Scotthorn (Equitable Estoppel)

a. The doctrine of promissory estoppel serves as a substitute for consideration and in this case is considered adequate to serve as consideration.

b. The granddaughter acted in reliance on the promise And this act was to her detriment as a result of reliance on the promise

2. Feinberg v. Pfeiffer a. Promissory Estoppel serves as a substitute for consideration because

the plaintiffb. Quit her job in reliance on the promise made by the defendant andc.Suffered a detriment as a result of acting in reliance on that promised. This is the old rule, however, detriment, if any, will be used in

evaluation of injusticee. Promisor , defendant, had reason to believe that the plaintiff would act

in relianceiv. Family Promises

1. Rickets v. Scothorn- (Grandfather promises to give granddaughter $2000 because he felt she should not have to work, he did not make her quit work. There is no consideration but the promise is still binding because the promise was made in such a way that it suggested she quit working. Thus it would be inequitable to not enforce the promise because consideration is lacking.

2. RULE: A promise without consideration can be binding if the promisee has reasonably relied on the promise to her detriment. This “equitable estoppel case is a precursor to promissory estoppel.

v. Promises to Convey Land 1. Greiner v. Greiner-(Mom promised 80 acres to son, he lived there and made

improvements, she then told him leave. The court said the promise is binding) 2. RULE: A promise which the promisor should reasonably expect to induce

action or forbearance and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The mom intended to keep the promise and the son relied on it.

vi. Charitable Subscriptions 1. Allegheny College v. Bank of Jamestown- (Alumni promised to give money to

college for a fund in her name, but she then repudiated the promise before she died) Can enforcement of a charitable subscription be squared with the doctrine of consideration as qualified by the doctrine of promissory estoppel. Cardozo found for the college as the deceased had already turned over $1000 and the college had already established the fund, which showed their performance, Cardozo doesn’t use detrimental reliance.

2. Under the detrimental reliance we could still find for the college because RS 90 (2) promises of charitable donations do not need proof of inducement.

vii. Promises of a Pension

1. Feinberg v. Pfeiffer Co. – ( Good employee we are gonna pay you for life when you decide to retire.) An employer who promises a pension, inducing the employee to quit a lucrative position in reliance on the pension is bound by their promise. Detrimental reliance was a factor in determining injustice here.

viii. Construction Bids 1. Drennan v. Star Paving- Reasonable reliance may replace the need for

consideration which is normally required to make an offer binding.  2. When the defendant bid on the contract, he should have expected that the

plaintiff would place a bid relying on those amounts bid by the subcontractor.  3. The only way to remove the injustice is to enforce the promise made by

defendant.. ix. § 87 – OPTION CONTRACT

1. An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.

C. Promissory Estoppel as an Alternative to Breach of Contract: Not a simple consideration substitute. A new kind of claim. i. Hoffman v. Red Owl: Hoffman wanted to open a red owl store. Red Owl kept

changing the deal and asking him for new promises. He justifiably relied on the promises multiple times to his detriment. It would be unjust to deny remedy. 1. RS. 90 promissory estoppel can be applied even though the promise is not

definite enough to create a contract if there was consideration2. RS. 90 just requires a promise that the promisor reasonably believes will be

relied on, and is relied on.3. The definiteness of the promise can be a factor

a. A promise could be so vague that no one could expect it to be relied upon.

4. There is no mutual assent, because the terms of the deal were still too uncertain to constitute an offer, thus no acceptance was possible.

5. Thus, the promissory estoppel does not serve as a substitute for consideration. 6. However, there is reliance at the detriment of the plaintiff and this is unjust not

to hold the promisor accountablea. We want to keep people in checkb. Keep people who would attempt to back out of their promises

i) Keep morals in checkii) Keep careless promisors from making these types of promises

7. There must be a significant relationship betweena. The reliance on the promise andb. The detriment suffered by the promisee as a result of the reliance

8. There must also be good reason for the promisor to believe his words will be relied upon

9. In this casea. The Red Owl agent had good reason to believe his words would be

relied uponb. There was a significant relationship between the reliance of Hoffman

and the detriment suffered by Hoffman as a result of the reliance on the Red Owl agent

c.Definiteness of promise can be a factor, as it could be so vague that no one could reasonably rely upon it, but it doesn’t require that there be an actual offer and acceptance

ii. Illusory Promises 1. Promises that sound like they have value but may actually not have value.

iii. Establishing the Elements of Promissory Estoppel1. Promise

a. Spooner v. Reserve Life Insurancei) The promise necessary for promissory estoppel cannot be illusoryii) Company promised to give bonuses, but said they could withhold

them if they felt like itiii) Cannot depend on illusory promise for Estoppel

2. Reasonable Reliancea. Alden v. Vernon Presley-mom of Elvis’s former girlfriend suing because

Elvis said he would pay off her mortgage, she went ahead with her divorce relying that Elvis was going to pay, but he died.

b. To enforce a promise through promissory estoppel, the reliance must be reasonable.

c.Initial reliance was reasonable, but she had a chance to change the reliance without detriment to herself.

i) I.E. she could have gotten the divorce decree modified because of a change in circumstances

X. ARE THERE ANY DEFENSES? A. Statutes to defer fraud. Concerned π's will come to court and fraudulent allege existent

of a contract when there was not one. We don't want the state to participate in the fraud. It's like a fence or barrier to keep the plaintiff from getting in court. It's the possibility for Δ to move for summary judgment on the basis of the statute of frauds. Deserving plaintiff's can get around the fence. i. Two questions you should be able to answer about the Statute of Fraud:

1. What contracts are within the Statute of Frauds 2. When do I have to worry about the statute of frauds?)

ii. RESTATEMENT § 110 CLASSES OF CONTRACTS COVERED 1. The following classes of contracts are subject to a statute, the Statute of

Frauds, forbidding enforcement unless there is a written memorandum or an applicable exception

a. a contract of an executor or an administrator to answer for a duty of his decedent (The executor-administrator provision)

b. a contract ot answer for the duty of another (The suretyship provision)c.a contract made upon consideration of marriage (The marriage provision)d. a contract for the sale of an interest in land (The land contract

provision)e. a contract that is not to be performed within one year from the making

thereof (The one year provision)f. A contract for the sale of goods for $500 or more is covered by the UCC §

2-201B. THE SCOPE OF THE STATUTE

i. Laymans Terms What has to be in writing MYLEGS1. Marriage2. Year provison3. Land4. Executor5. Goods over $5006. Surety

ii. Klewin v. Flagship Properties- (D orally hired P to do construction on a 10 year project. D became dissatisfied with P work and replaced him) 1. A contract is only within the scope of the SOF if by “its terms” it is impossible

for it to be fully performed within one year.

2. The SOF does not make an oral contract unenforceable unless it explicitly says by its terms that the contract cannot be performed within a year.

3. The court thinks that the one year provision is pretty useless today but they lack the authority to change it thus they must enforce it.

4. This case has a narrow scopeiii. Clark v. Larkin-

1. ( D wrote a check to buy property from P but stopped the payment saying the writing was not sufficient because it had the street address for the property to be purchased but did not list the city, state)

2. If the writing contains the names of the parties, the signature of the one to be charged(the person challenging the existence of the contract) , the terms and conditions of the contract, and a description of the property sufficient to render it capable of identification, then it meets the writing requirement. The writing must be complete in and of itself but we can use parol evidence to explain ambiguities.

iv. Crabtree v. Elizabeth Arden-1. To satisfy the SOF the writing does not have to be contained in one document,

but there must be a reference in the signed writing to the unsigned sufficient to connect the two.

2. Oral testimony is admissible to show the connection between the documents, but additional terms cannot be supplied by oral testimony.

C. Exceptions to the SOFi. Boone v. Coe-

1. (Boone entered into a agreement with Coe that Boone would rent Coe’s farm for 12 months. Coe was supposed to provide materials and Boone would build a barn and house. Coe didn’t and refused to allow Boone to cultivate land.)

2. Partial performances, don’t recover on the contract, but “recover for money paid by him, or properly delivered, or services rendered in accordance with and upon the faith of the contract.”

3. Can only recover if could do so without express contract. It must appear that the defendant has actually received, or will receive some benefit from the acts of partial performance.

4. Services rendered during the life on a promise for receiving something after the life of the promisor. In this case the P merely sustained a loss.

5. D received no benefit. Had he received a benefit the law would have obliged him to pay.

6. Damages cannot be recovered for a violation of the contract within the SOF.ii. RESTATEMENT § 129 ACTION IN RELIANCE; SPECIFIC PERFORMANCE

1. A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the SOF if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement.

iii. RESTATEMENT § 130 CONTRACT NOT TO BE PERFORMED WITHIN A YEAR 1. Where any promise in contract cannot be fully performed within a year form

the time the contract is made, all promises in the contract are within the SOF until one party completes his performance.

2. When one party to a contract has completed his performance, the one-year provision of the SOF does not prevent enforcement of the promises of other parties.

D. Exceptions to SOF Goods i. UCC § 2-201 SALES CONTRACTS

1. Sale of goods $500 or more, must be signed by the party against whom enforcement is sought, the writing is not insufficient because it misstates a term but it is not enforceable beyond the quantity in writing.

2. between merchants within a reasonable time, confirmation is valid if the recipient has reason to know what is in the confirmation, then it is valid unless an objection is sent

3. SOF doesn’t apply when a. goods are specially manufactured and not suitable for sale to others before repudiation is received, and there is an indication it is for the buyer

ii. ( Needs a substantial beginning in manufacture, b. party admits to contract (only enforceable to the extent of the admission, c. goods have been paid for, or received and accepted.

iii. Riley v. Capital Airlines-1. (Riley alleged a 5 year contract to supply water methanol to Capital Airlines.

The P attempted to argue that the doctrine of part performance removes the contract form the SOF.)

2. Partial performance does not take an executory portion of a contract out of the SOF. But P is entitled to recover reliance damages even where the remaining portion of the executory contract is void under the SOF.

iv. Illustrations:1. Oral agreement to buy and sell 1000 b Dry corn on sale at $3.

a. Clerk fills in purchase order but accidently puts 100bb. 3 witnesses hear the parties agree to 1000bc.Seller delivers 100bd. Buyer protestse. Result? Buyer only has to deliver 100b.

2. Farmer agrees to sell farm for $100000 including a $10000 down paymenta. Buyer gives farmer a $10000 check but check does not link itself to

purchase of the farmb. Farmer cashes the check and refuses to deliver title and keys invokes

the SOFc.Result? SOF says that he cannot enforce the contract, but he can recoup

money via restitutionXI.Defenses Based on the Status of a Contracting Party

A. Capacity Defensesi. RESTATEMENT § 12 CAPACITY TO CONTRACT

1. No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. Capacity to contract may be partial and its existence in respect of a particular transaction may depend upon the nature of the transaction or upon other circumstances

2. A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties unless he is

a. under guardianship, orb. an infant, orc.mentally ill or defective, ord. intoxicated

B. Incompetencei. RESTATEMENT § 15 MENTAL ILLNESS OR DEFECT

1. A person incurs only voidable contractual duties by entering into a transaction if by reason of mental disease or defect

a. he is unable to understand in a reasonable manner the nature and consequences of the transaction or

b. he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition

2. Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect the power of avoidance under (1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. In such a case a court may grant relief as justice requires.

ii. Ortelere v. Teacher’s Retirement- 1. ( Wife of P her life insurance to allow no death payout but larger monthly

checks but she suddenly died and her husband sought to have her election void based on mental incompetence.) The court said that the traditional cognitive standard fails on account of one who by reason of mental illness is unable to control their conduct even though their cognitive ability seems unimpaired.

2. RULE: Contracts of a mentally incompetent person are voidable. This is a policy decision to protect certain individuals from themselves.

C. Infancyi. RESTATEMENT § 14 INFANTS

1. Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning on the day before the person’s 18th birthday.

ii. Rule on Infancy: Contracts entered into by minors are voidable unless:1. for necessities and other statutory exceptions: insurance, educational loans,

banking, military enlistments2. benefit received unjustly (may be voidable but must give the stuff back)3. express ratification4. ratification by conduct5. failure to disaffirm within a reasonable time after reaching age of majority

iii. General Rule: One may rescind or disaffirm contracts made while a minor1. *Policy: protecting youth from being young and dumb

iv. Kiefer v Fred Howe Motors-1. (Married minor contracts and defaults on a car loan.) A contract entered into

by a minor is voidable unless it is for certain things (see list above) XII. Defenses Based on Flaws in Mutual Assent

A. Misrepresentation

i. RESTATEMENT § 159 MISREPRESENTATION DEFINED 1. A misrepresentation is an assertion that is not in accord with the facts.

ii. RESTATEMENT § 162 WHEN A MISREPRESENTAION IS FRAUDULENT OR MATERIAL1. A misrepresentation is fraudulent if the maker intends his assertion to induce a

party to manifest his assent and the maker a. knows or believes that the assertion is not in accord with the facts, or b. does not have the confidence that he states or implies in the truth of the

assertion, orc.knows that he does not have the basis that he states or implies for the

assertion2. A misrepresentation is material if it would be likely to induce a reasonable

person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so.

iii. RESTATEMENT § 164 WHEN A MISREPRESENTAION MAKES A CONTRACT VOIDABLE

1. If a party’s manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient.

2. If a party’s manifestation of assent is induced by either a fraudulent or a material representation by one who is not a party to the transaction upon which the recipient is justified in relying, the contract is voidable by the recipient, unless the other party to the transaction in good faith and without reason to know of the misrepresentation either gives value or relies materially on the transaction.

iv. RESTATEMENT § 167 WHEN A MISREPRESENTATION IS AN INDUCING CAUSE 1. A misrepresentation induces a party’s manifestation of assent if it substantially

contributes to his decision to manifest his assent.v. Halpert v. Rosenthal-

1. (D refused to go through with an agreement for the purchase of P’s termite infested house.)

2. RULE: When one induces another to enter into a contract by means of a material misrepresentation, the induced person may rescind the contract. It does not matter if the misrepresentation was innocent or fraudulent. A misrepresentation, even if innocently made, may be actionable if made and relied on as a positive statement of fact.

vi. Byers v. Federal Land Co.-1. (Byers entered into a written contract to purchase land in Wyoming sight

unseen from Fed land Co.)2. RULE: An honest opinion as to the monetary value of property, stated as

opinion, is not a fraudulent misrepresentation.B. Duress

i. § 175 WHEN DURESS BY THREAT MAKES A CONTRACT VOIDABLE 1. If a party’s manifestation of assent is induced by an improper threat by the

other party that leaves the victim no reasonable alternative the contract is voidable by the victim.

2. If a 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

ii. RESTATEMENT § 176 WHEN A THREAT IS IMPROPER 1. The threat is improper if

a. what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in gaining property,

b. what is threatened is a criminal prosecutionc.what is threatened is the use of a civil process and the threat is made in

bad faith, ord. the threat is a breach of the duty of good faith and fair dealing under a

contract with the recipient2. A threat is improper if the resulting exchange is not on fair terms, and

a. would not significantly benefit the party making the threat,b. the effectiveness of the threat in inducing the manifestation of assent is

significantly increased by prior unfair dealing by the party making the threat, or

c.what is threatened is otherwise a use of power for illegitimate endsiii. Austin Instrument v. Loral Corp-

1. (Austin threatened to withhold delivery of parts from a first contract if Loral Corp did not meet their demands in negotiating a second contract. A contract

is voidable on the ground of duress when a party making the claim was forced to agree against their freewill.

2. The existence of economic duress is demonstrated by proof that” immediate possession of needful goods is threatened.”

3. Requirements:a. a threat by one party to breach the contract by not delivering the

required items b. The threatened party must not be able to obtain the goods from another

source, c.the ordinary activity of an action for breach of contract was not

adequate.iv. United States v. Progressive Enterprises-

1. (action brought to recover the unpaid balance due for the purchase of cast iron deaerator supplied by the P (Crane Comp) to the D to be installed as part of the D’s contract with the U.S.)

2. RULE: The effective use of bad faith to escape performance on the original contract terms is barred, and the extortion of a modification without legitimate commercial reason is ineffective as a violation of the duty of good faith. UCC 2-209 provides that an agreement modifying a contract for the sale of goods does not require additional consideration in order to be enforceable as long as it is executed in good faith

v. Distinguishing these two cases: Austin= duress, Progressive not duress1. Similarities: Not much choice in suppliers, Govt contracts, under a schedule2. Differences: Progressive didn’t state they had a problem with the price

increase and submitted its bid to the govt before it got the bid from Crane, No relieance.

C. Undue Influencei. § 177 WHEN UNDUE INFLUENCE MAKES A CONTRACT VOIDABLE

1. Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or by virtue of the relation between them is justified in assuming that the person will not act in a manner inconsistent with his welfare.

a. If a party’s manifestation of assent is induced by undue influence by the other party, the contract is voidable by the victim.

b. If a party’s manifestation of assent is induced by one who is not a party to the transaction, the be without reason to know of the undue influence either gives value or relies materially on the transaction

ii. Odorizzi v. Bloomfield School District- 1. P sought to rescind his resignation from his teaching job on the basis that it

was only given as a result of duress, undue influence, fraud and mistake.) Court said no fraud, duress, or mistake but found there was undue influence.

2. RULE: Undue influence is exerted when the injured party’s independent will is overpowered by that of a superior party, or his agents, at a time at which the victim was particularly vulnerable

iii. ELEMENTS:1. Undue influence involves the use of excessive pressure to persuade one

vulnerable to such pressure, pressure by a dominate subject to a servient object.

a. Lessened Capacity2. It is possible that exhaustion and emotional turmoil may wholly incapacitate a

person from exercising his judgment.3. Excessive strength

a. Unusual or inappropriate time

b. Unusual placec.Insistent demand to finish at onced. Emphasis on consequencese. Multiple persuadersf. Absence of advisorsg. Statements that is no time to consult financial advisors or attorneys

D. Unconscionabilityi. UCC § 2-302 UNCONSCIONABLE CONTRACT OR CLAUSE

1. If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

2. When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

ii. RESTATEMENT § 208 UNCONSCIONABLE CONTRACT OR TERM 1. If a contract or term thereof is unconscionable at the time the contract is made

the court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or it may so limit the application of any unconscionable term as to avoid any unconscionable result.

iii. Substantive v. Procedural Unconscionability1. Sliding Scale- The more substantially oppressive the contract term, the less

evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable and vice versa

2. Procedurala. surprise- the extent to which the supposedly agreed upon terms of the

bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms

b. disproportionate bargaining powerc.contract of adhesion

3. Substantivea. the substantive element of unconscionability analysis focuses on overly

harsh or one sided resultsiv. Meaningful Choice

1. Whether a meaningful choice is present in a particular case can only be determined by consideration of all the circumstance surrounding the transaction.

v. Reasonability1. The terms are to be considered in the light of the general commercial

background and commercial needs of the particular trade or case.2. Where the terms are so extreme as to appear unconscionable according to the

mores and business practices of the time and place.vi. Williams v. Walker Thomas Furniture Co.-

1. (Woman purchase a number of items from Walker over a period of time by paying in installment, the contract stated that the payments would be put to her balance on a pro rata basis, She defaulted and they sought to replevin all the items.)

2. RULE: Where elements of unconscionability are present at the time a contract is made, the contract should not be enforced.

vii. DEFINITION: Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.1. Gatton v. T-Mobile-

a. (P entered into service agreement with D that included an arbitration agreement and a no class action agreement. The agreements called for a $200 early termination fee and the cell phone was blocked from being used by another cell provider.) Is a consumer contract of adhesion that contains an arbitration clause and a class action waiver unconscionable where the customers have the choice of alternative providers?

b. RULE: The adhesive nature of the service agreement established a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives and that the high degree of substantive unconscionability arising from the class action waiver rendered the arbitration provisions unenforceable.