2nd outline for contracts

8/8/2019 2nd Outline for Contracts

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As you can expect, the exam will involve at least one contract. Here are the questions you should be

asking: Does a valid contract actually exist? If so, what are its terms? Has a party breached it? If so, does

he have an excuse? If not, is the contract void for policy considerations? If not, what is the remedy for

the breach? Personally I think most exam questions are fairly straightforward, and youll have to make

strong arguments to distinguish yourself. Just watch out for UCC 2-207.

For my outline, the page was split in half down the middle of the page between UCC and Restatement. If

a particular case followed an approach from either the Restatement or UCC (which typically they did), I

noted that in the relevant provision.

Forks in the law were never so easy. I did well in that class.

Bargain Relationship

Offer

Restatement: an offer is the manifestation of willingness/ to enter into to a bargain/ so made as to

justify another person/ to understand/ that his assent/ to that bargain/ is invited and will conclude it.

A) Mutual Assent?Manifestation of mutual assent usually takes place by

i. One party (the offeror) making an offerto another party (the offeree)ii. Which the offeree accepts

Can be subjective or/and objective test to show mutual assent:

1) Subjective: there must be a meeting of the minds to determine subjective intent. However,this is difficult to determine, so it often has to be we dont use this, its hella old school.

a) Subjective plusthat is if both parties are informed of the facts/ of the conditions the Kwas made under,/ then we can reasonably infer what they were thinking. (Although, its

possible one person may be lying and instead rely on the objective test). This is generally

difficult to prove.

The K can be rendered not enforceable, though if the party admits he knew what the facts

were. (then we can rely on the subjective plus).

y P and D got drunk together. P had wanted to buy Ds farm for a number of years. Dsaid he would sell the farm. Drew up two Ks, had wife sign, the price was

reasonable. P began to get escrow. P then said that he was joking. Found that it

was an offer. The key facts all indicate that an objective person would have thought

it was an offer. If, as hypo, P said that he knew it was a joke, then the test is notsatisfied. Lucy v. Zehmer

2) Objective Test: meeting of the minds is not an unvarying pre-req of a K. But, if it is made clearthat there is no meeting of the minds the party will not be held by the K that varies from his

own understanding of it, UNLESS

A) The parties words and conduct were in a context that


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i) Gave the party reason to know the other party would be mislead. How do we knowthe other party had understanding?

a) Party must be judged in relation to usage and understanding of other people,but

b) More direct and cogent evidence (statements of the party, etc) may be available.y Employee says hell quit if his K is not renewed. Boss says that go ahead youre

alright, get your boys out there, dont let that worry you. A RPP in the situation of

employee had reason to think an offer was given, and his performance was

acceptance. Maybe this isnt totally satisfied so the argument can be bolstered by

looking at the context to see what the boss thought. I) there was a prior contractual

relationship, ii) it was the busy season and he would lose money if the employee

quit. So we can reasonable satisfy that there was mutual assent here. Embry v.

McKittrick Dry Goods

Offer Elements:

I. Invite Acceptance, ANDDoes the words and context invite acceptance or was it merely an intention to deal?

A) Look to the words: difference between Im thinking about selling my watch, and Illsell you this watch for $20.

B) Look to the timeline of the correspondencey D put an ad in the paper to sell a piece of land for a set price. P wrote him inquring

about it. D wrote back giving him information and saying that he better hurry

because others were interested. P wrote back and said he wanted to buy, but D had

already sold it someone else. Ds ad was not an offer, and it is also important that D

first responded to P on a form letter. Lonergan v. Scolnick

II. Definiteness, ANDUsually you are looking to see if the offer has quantity, price, and delivery terms.

y D put an ad in a paper for a specific item for a specific price, then refused to sell to Pwhen P accepted. D claimed it was not an offer, but an invitation to deal. Because

the terms were so definite, it is found to be an offer. Lefkowitz v. Great Minn. Store

y D sent out a letter with specific information regarding land that he was going to sellto P and a few others. D and P had a prior relationship where D knew that P wanted

to buy his land. The form he sent out gave no mention that it was sent to other

interested parties. It was found that because it was so specific and had no

indication of being a form letter, it was an offer. Southwarth v. Oliver

Three main types of terms that are not definite:


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A) Indefinite Terms: parties purport to agree on a material term but leave it too vague orindefinite.

Ex. Ifyou promise toworkformeone yearasaforeman,I promise to pay you afairshareof

the profits.

B) OmittedTerms: the purported agreement is silent on a material term.Ex. A agrees tosellandB agrees tobuy 1000 widgets.

C) Agree to Agree: the parties agree to later agree on a material term.Ex.A lease provides that theleaseeshallhave theright torenewtheleaseforanother5

years,atrent toagreeduponby the currentbusinessstandardsat that time.

III. Communication of the offerTest is whether the offer is so made/ as to justify/ the accepting party/ in a belief/ that the offer

is made to him.

Acceptance

Generally, acceptance is the offerees manifestation of assent to the offer. Its the event that brings the

K into existence.

Intent to accept is determined objectively, first thing to look at is, when is the effective date of

acceptance?

I. Mailbox Rule is one tool we can use.a) Does the offer expressly or impliedly indicate that acceptance is through an un-

immediate medium, like the mail, fax, or email?

y D and P entered into a deal to buy tods of wool. Ds offer-letter was mis-sentand ended up getting there on Spt. 8. P put their acceptance in the mail the

same day. D didnt recive tell Spt. 10. When does it count? It counts when it

was put into the mailbox, not when it was received. Adams v. Lindsell

b) But if the offer is revoked, was acceptance put in the mailbefore the revocation?i) If not, it probably wont count; look to the timeline:

y P makes an offer for D to buy some property. He tenders the offer to Ds agenton March 2. On March 3, the offer is signed but not mailed. On March 5, offer

is revoked. This doesnt count as acceptance, and P still has the right to revoke.

Henricks v. Behee

II. Does the offer include a stipulation to acceptance by performance?General Rule: there is no occasion to notify the offeror of the acceptance, just need to

commence performance.


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A) Look to the language of the offer. In this case it was a printed ad.y A company offered to pay anyone $100 if after using their product as prescribed

for two weeks, they caught influenza. A woman did, but she still caught

influenza. Here, the court said there were a few possibilities of what

constituted performance. Was it buying the smoke ball, then using it for two

weeks, then if you caught influenza, the performance was satisfied? Or does it

have to satisfy all of those and then she must catch it within a reasonable

amount of time? In this case, the offeree does not have to notify the offeror

because it was an advertisement. Carbolic Smoke Ball

B) What if the performance is rendered before the communication of the offer?If it requires promise not performance, then

i) Then there is no mutual assent, therefore it is not a K. (goes to on the faith ofthe offer)

Offer is givenperformance is givenoffer is communicated = no mutual assent,

therefore no K.

y An ad was posted offering a reward in exchange for information leading to thecapture of a certain criminal. A woman gave the information to the police.

After she did so, she saw the ad, and tried to collect the reward. It was ruled

that its impossible for an offeree to assent to an offer unless she actually

knows of its existence. Her performance does not constitute acceptance.

Gloverv. Jewish WarVeterans.

III. Can you accept by performance or promise?General Rule: you should communicate acceptance if there is no reasonable way for them

to find out that you have commenced performance, (in a reasonable amount of time after

the performance was commenced)

1) The doing of the act is sufficient acceptance, ANDC) Is there a term that stipulates (that doing of the act is sufficient acceptance)? Look at

the term, what does it say? This K was for performance or promise.

y In a K where the document had to be either signed by someone with authorityto accept, or upon commencing performance of the work. The person

signing the form did not have authority to accept (Sweaty Joe lol). Ever-Tite

RoofingCorp. v. Green

i) Look to what constitutes a commencement.


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y In that case, commencement was found to occur when Ever-Tite loaded up theirtrucks to drive over and perform the work. That specific act was acceptance.

Goes to reasonable amount of time. Fork a in the facts.

2) The promisor knows that he is boundwhen he sees that action has been taken /on the goodfaith/ of his offer.

A) The offerees motivation doesnt really weigh in here.y An ad was posted by a company (Fulton) looking to merger. A phrase said

brokers fully protected. Deutsch was a broker working for another company,

BH. He saw the ad and introduced the two companies. They ditched him and

merged. He sues to get broker fees from Fulton. Fulton said that Deutsch had a

pre-existing duty to BH. Did the ad constitute an offer where acceptance was by

performance? IndustrialAmerica v. FultonIndustries(Ask Deb about this case,

it should represent fork in the facts but Im not sure how it does)

IV. Does acceptance have to be through promise and not performance?A) Then performance will not be acceptance

y ScolarCompany v. Denneygrain farmer and grain dealer. Have past businessrelationship. Farmer asks dealer for specific price for grain that has not yet

grown. Dealer says price is not available at this time; farmer then sells grain

to another dealer. Dealer finds third party who will buy at that price; sells to

third party. Sends farmer written confirmation. Farmer doesnt check his mail,

doesnt answer his calls. What recourse for dealer? Scoulers argument was

that he accepted by performance. Denney says that this was an offer for

promise, not performance. Denney wins the day. Said plow at your own risk

V. Is there a relationship between offeror and offeree that might imply Acceptance by Silence?General Rule: you cant be held to a K you didnt accept.

Exception: Acceptance by Silence; these are the elements:

a) Offeree takes benefits with reasonable opportunity to reject them, and reason to knowthat they need to be paid for.

b) Where there is reason to understand that assent may be manifested by silencec) Where there are previous dealings that give context.

y D and P had a previous business relationship where P bought shortening from D.Orders where put in automatically for P. Once an order was put in and he

waited 12 days before saying he didnt want it. Context implies acceptance bysilence, and that P should pay. 12 days is reasonable opportunity to reject.

Ammons v. Wilson


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BATTLEOF THEFORMS

Acceptancewhen two forms are almost exactly alike, but contain small differences in terms that

turn out to be important down the line (Battle of the Forms).

Party who breached will argue:

1) Mirror Image Rule:Valid K = offer and acceptance w. acceptance expressing unconditional assent to the terms of the

offer (that is, mirror image of offer)

an acceptance upon terms varying from those offered is a rejection of the offer and puts an end to

the negotiation UNLESS the party who made the original offer renews it or assents to the

modifications suggested.

This acceptance becomes a counter-offer and gives the other party power to accept if the other

party accepts it, they a create a K. If they dont accept no K UNLESS performance.

Offeree could accept the offer made and thus manifest that assent which was essential to the

creation of a K, or it can reject the offer.

Offeree cant pick and choose which terms they will accept. If they want some terms but not others,

a new offer has to be negotiated. Minneapolis v. Rolling Millp. 330

Rule: Sellers non-conforming response (agreeing with two different forms that are generally the

same, but differ in terms) prevents the acknowledgment from being an acceptance and it make it

not an offer, BUT a counter-offer.

In sum, general rule is if the terms arent the same, no K.

2) Acceptance through silence or conduct:i) Looks to the last communication before acceptance of the goods as the terms of the

Kthis is the Last Shot Rule.

But, this is rooted in common law and ignores commercial reality,

So, go to

3) Battle of the Forms: UCC 2-207 (applies to goodsgenerally means movable things) (go backover with actual

UCCagain)

Terms: an order placed to buy goods is usually considered an offer.

General policy is that the conflicting terms are stripped away, and UCC provisions are put in

their place.

2.207(1)

(i) A definite and seasonable expression of acceptance/ or a written confirmation/ which is sent

within a reasonable amount of time/ operates as an acceptance/ even though it states terms ii)


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additional to or different from/ those offered or agreed upon/ UNLESS iii) acceptance is

expressly made conditional/ on assent/ to the additional or different terms.

(i) A definite and seasonable response (seasonable means within a reasonable time; not tasty)

-May include an additional term that would have no element of reasonable surprise.

- if there is remedy clause addedmust be in a reasonable manner; cant have elements

of surprise or hardship.

-Even if an important term is altered, for example, delivery date, you have to weigh the

context of the surrounding relationship before deciding if there is an acceptance.

ii) Additional or different terms

-additionalterms are those that were not included in the original offer

- differentterms are those that conflict with the terms in the offer.

iii) Expressly conditional language

- The proviso (not certain if this is relevant)

When a partys purported acceptance contains a proviso, then the purported

acceptance is not effective to form a K under 2.207(1) without further response from the other

party. Silence as acceptance will not work.

-The purported acceptance is instead a counter-offer

-If an acceptance has a proviso, it becomes a counter-offer

If the goods are not shipped to and accepted by the buyer:

2.207(3) controls in all cases where no K is formed under 2.207(1) and the seller ships and

buyer accepts the goods.

Acceptance of the counter offer would have to be by words of assent. Silence as acceptance

will not work

A definite and seasonable

Expression of acceptance

|

Operates as an acceptance

/ \

Even though it states unless acceptance is

Terms additional to or expressly made conditional

Different from those offered on assent to the different terms

| |


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Acceptance with different or additional terms No acceptance, counter-offer

UCC 2.207(2) Merchants Provision

The additional terms are construed as proposals for addition to the K Between merchants

Such proposals (terms) become part of the K, UNLESS

a) The offer expressly limits acceptance to the terms of the offerb) They materially alter it, ORc) Notification of the objection to them has already been given or is given within a reasonable time

after notice of them is received.

Only applies if the response to an offer is found to be an acceptance. Does not apply to a counter-offer.

b) they (terms) materially alter itwhat does this mean?

Term must be a significant element of the exchange bargained for by a party. A term is material if it

provides for an important aspect of the contractual performance. The term must be interpreted in

context to decide whether it is material or not.

You can analyze this in context with relation to i) surprise or (AND) ii) hardship

i) surpriselook to the reasonable expectations in light of common practice and usage within a given

industry, or (AND)

ii) hardshipdoes it impose an un-bargained for burden (financial or otherwise).

However, usually terms will cause hardship. Try to satisfy both.

Ammons v Wilson: the context of the business deal gave reason to believe that silence was an

acceptable manner of acceptance.

i) Offeree takes the benefits with reasonable opportunity to reject them and reason to knowthat they were offered with the expectation of compensation

ii) Where there is reason to understand that assent maybe manifested by silence, and byremaining silent, the offeree intends to accept the offer.

iii) Where there are previous dealings and it is reasonable that the offeree should notify theofferor if he doesnt intend to accept.


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IV. IrrevocableOffer and Option Ka) Creates in the offeree a binding option, rule that a counter-offer terminates acceptance

does not apply. Essentially, an option is like a separate K in and unto itself

If option holder declines, they are not invaliding the option K since this waicer of rights is not

supported by consideration. Thus the option will still stay open unless

i) Parties buy their way outii) Party relies

b) Option is a promise to keep an offer open for a stated period of time.c) --Common Law: an option is only binding if it is supported by consideration; usually this

consideration does not have to be as firm as for a K; cant be nominal.

d) i) StarPaving: reliance by P a forbearance or detriment to P, therefore can constituteconsideration and support the option. But actually, the option doesnt exist because there

was no consideration.

UCC 2.205: Merchant Firm Offers:

An offer by a merchant /to buy or sell goods /in a signed record /that by its terms gives

assurance that it will be held open/ is not revocable for lack of consideration,/ during the time

stated or if no time is stated for a reasonable amount of time,/ but in no event may such period

of irrevocability exceed three months. Any such term of assurance in a form supplied by the

offeree must be separately signed by the offeror

V. Irrevocable Offer: Non-destructible Power of AcceptanceHumble Oil& Refining v. WestsideInvestment

Drennen v. StarPaving

VI. Defective Formation and Expression of AgreementRaffles v. Wochelhaus

Konic InternationalCorporation v. SpokaneComputerServices

VII. Indefinite AgreementsGeneral rule: An apparent bargain will not be enforced if it is found to be too indefinite.

A)

Ask yourself, can a court figure out a remedyon these terms?B) Too indefinite if:

i) Its terms are so incomplete or uncertain that they show that parties did notregard themselves as having completed a K, OR

y An advertisement stating that there is a special on fur coats worth up to $100;not specific enough for court to find remedy. Lefkowitz v. Great Minn. Surplus

Store(the first one)


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ii) Even if it seems that the parties regarded themselves as having completed a K, itis so indefinite that a courtcannot determine its material terms with

reasonable certainty or fashion an appropriate remedy for breach.

y a fair share of the profitstwo terms of indefinateness; profits and fairsharenot definite enough for a court to establish a material element, or

fashion an appropriate remedy for breach.Varney v. Ditmars

VIII. Incompleteness and Deferred AgreementA) Was there a Missing Term?

i) Ask, can it be clarified by context? (objective test industry standard)ii) Courts will substitute the term if it is material.

y D was an actor who filmed a pilot with P, they never articulated a starting datefor the TV series if it was picked up. Court found that there was an industrystandard that could be filled in to substitute for the missing term. Metro-

Goldwyn-Mayerv. Scheider

B) Was there an Indefinite Term? (agree to agree later)i. Schumacher Rule: If the term is material then the contract is unenforceable (court will

not substitute terms)

Rationale is courts cannot force parties to agree nor determine what they would agree

upon.

y Where D and P attempted to K, and the rent is to be agreed upon. Notenforceable.--Joseph Martin Jr. Delicatessen v. Schumacher

y Letter of intent between partites, looks like an offer. One party signs, butbottom of form says, not intended to be a lease. Court finds not enforceable.-

-168th

andDodge v. Rave ReviewsCinemas(where the hell does this go?)

Consideration

I.

Must be bargained forA) Was there quidproquo?

y If someone promises to do something, that alone in itself is not enough, therehas to be a return promise, if not, its a gift promise and therefore un-

enforcableKirksey

II. The performanceof the promise may be1) An act,


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2) A forbearance, ORy Someone has a right to smoke, drink, swear, and gamble; giving up this right is a

forbearanceHamerv. Sidway. Not the same as if he wouldve just behaved,

i.e. stopped doing those things of this own accord without Uncle specifically

saying so.

y P retired from working for D. After retiring, D told P that they would pay him anadditional pension. A term in the letter informing P of this included the phrase

as long as you harbor good will towards the company and (dont give away any

of our trade secrets) and not to work at any other similar companies. P did

those things (not clear if by design), D stopped paying the extra pension. It was

found that it was enforceable, because the term asked P to forbear from doing

something, and he did. Langerv. SuperiorSteelCorp.

y Where P lived in a house that belonged to her late husband. The provision wasthat she was to pay ground rent and make repairs; this was found to be

adequate consideration. We dont need to look to what the motivation for

entering into the K was, we just have to see if there was a benefit or detriment.

Here that was satisfied. Thomas v. Thomas

3. The creation, modification or destruction of a legal duty?y A promise to surrender the (legal) right ot enforce a contract is sufficient

consideration to support another binding contract, even if the original contract

is found to be unenforceable (also goes to good faith).Browning v. Johnson

Ask Deb about this

Must be bargained for (i) andii) aresatisfied) (what is this?)

III. Was the exchange adequate?a) Was it nominal? --Not adequate.

y Giving of $1 in exchange for a house and living stipend is not adequate. Theperformance of giving $1 does not constitute consideration because it is not

detriment, loss, or responsibility taken on.In Re Greene

b) If it was a forbearance from asserting a legal claim?i) If so, was it made in good faith? Then it is adequate

y Even if the legal claim turns out to be unfounded, if it was made in good faith then itconstitutes a detriment for the party.Fiege

c) Was it unconscionable? Couldbe not adequatei) Is there a community norm to price?ii) What was the quality of the bargaining process?

y Where a door to door salesman sold a refrigerator to welfare recipients. The fridgewas way outside community norms, and the bargaining process was tainted because

the buyers were presumably ignorant, and didnt have the opportunity to shop

around.Jones v. StarCredit


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Even if these are all satisfied, consideration might still be negated

IV. Was there a Pre-Exising Duty to perform what was already promised in another K with thesame party?

What were the terms of the original K? Consideration that was already given cant be given

again for a new K.

a) Did someone break a K, then make another K (with the same people) using the sameconsideration they did for the earlier one?

y Discharge ofObligation: will only work if you void the existing K, new K isnt formedjust because of new terms. If D leases to P a rental space for $500 per month for 5

years. P goes bankrupt after the first year, tells D Ill make another K with you, let

me pay $200 a month for the remainder of the lease, D agrees. This is not a new K.

P is promising to do what he already said he would do in the first K. First K is still

enforceable.Levine v. Blumenthal

y Modification to change terms: Was one party under K to perform certain services,but then asked for more pay to do the exact same job for the same length of time.

No new consideration to support the new K. Also, Policy: was one party under

duress from the other? This is a result we seek to prevent. No new KAlaska

Packers

b) If the same consideration was used, can we apply the Exception to Pre-Existing Duty Rule?i) Was the promise that modified the original K made before complete performance

on both sides? AND

ii) Were the underlying circumstances which prompted the modification unanticipatedby both parties? AND

iii) Was the modification fair and equitable? (no duress)y When people entered into a K that would last 30 years for P to pick up garbage

for the city of X for a set fee. The garbage increased dramatically before 30

years was up. The parties negotiated to modify the K to increase Ps fee.Angel

v. MurrayUCC Sales 2.209

V. Was there Mutuality ofObligation? both partiesmustbeboundorneitherisboundGeneral Rule: if one person has a free way out, there is no mutuality of obligation.

Is the undertaking on both sides real and meaningful?

A) What does the language of the K say?i. Is it so vague as to not really bind one party?

y Where one party could be released from their promise if they lost by fire theirproduct or factory; the other party could be released from their promise for


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any unforeseen reason they find they cannot use the full amount of the above

named goods. This aint no KRehm-Zeiher

ii. Was it an output K? this is where one person says they will buy all of what theother person can sell. This is a K.

y Where one party promised to buy all the sand that P could deliver. This is a K.all the is different than any unforeseen reason; cant escape liability even

by going out of business, K still exists.

iii. Is the K exclusive? That is, can we use Best Efforts for Consideration?Best Efforts should require that level of effort necessary to maximize the joint net

product flowing from the relationship.

y if we imply into Woods undertaking a promise to use best efforts to market hername, we impose a detriment upon him and cure the lack of commitment.

Therefore he is not liable for breach of contract if he tries to market her name and

fails, he breaches the contract if he fails to make a reasonable attempt.Woodv.

Lady Duff-Gordon

Exception:

B) Was there a personal satisfaction clause?i) Does notrender a promise illusory even if the satisfaction required is that of

the promissory (subjective) rather than what would be acceptable to a

reasonable person (objective)

y A company who was going to buy property; the seller says you can buy if you get anengineers and architects feasibility report, i.e. personal satisfaction clause. Omni

doesnt want to get one because the report is for their own benefit; they just want

to buy property. This is enforceable because the promisor has an implied obligation

to exercise its personal satisfaction power in good faith.Omni Group.

What if its not really a K? Is something more like a

Quasi-Contract: a fiction that courts can find in order to serving a policy of justice and

equity.

1) has no reference to the intentions or expression of the parties;2) neither promise nor privity, real or imagined, is necessary.3) The act, or acts from which the law implies the contract must, however be voluntary.General Rule: court will not find a quasi-contract/ unless such party is under legalobligation paramount to his will to perform some duty,/ and he is not under legal obligation

unless there is a demand in equity and conscience that he should perform the duty.

Implied-In-Fact Contract: established by conduct (Cardozo opinion pg. 136)

1) Where D requests P to perform work, AND2) P expected D to compensate him for those services, AND


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Oylerthis only goes to MoralObligation, which is not sufficient for

consideration.

vii) Will find Quasi-K if, no opportunity to decline, BUT was there a pastperformance that had psychological aspects?

a) Psychological aspects being somewhat limited, like saving someones life.b) Also, the promisor did not change his mind later.

y P saved the life of his boss and in the process severely injured himself,making him disabled and unable to work. The boss verabally promised

to pay him a stipend for the rest of his life. When the boss died, D

didnt want to pay him anymore. It is found that Ps action is sufficient

consideration and there is a contract. Webb v. McGowin

Avoidance ofContract

I. A purchase contract by a minor is voidablea) Even if theres an adult presenty P (a minor) bought a car from D in the presence of this grandmother

and aunt. The car was defective. D voided the K and wanted his money

back. Was able to do so because he was a minor regardless of the fact

that adults were with him when he bought it. Bowling v. Sperry

b) An exception is necessities, i.e. medical, food, shelter, etc.I. Mistake

Belief that is not in accordance with the facts.

General Rule: the modern rule is that where parties enter into a contract under a mutualmistake as to a basic assumption of fact, and the mistake has a material effect on the agreed

upon exchange, the K is voidable by the adversely affected party.

A) Misunderstanding: does the agreement that was objectively manifested have anambiguous meaning? If so, how many meanings are there?

i) Restatement: there is no manifestation/ of mutual assent/ to an exchange/ ifthe parties/ attach materially different meanings/ to their manifestations and

a) Neither party knows or has reason to know the meaning attached bythe other, OR

y Peerless caseb) Each party knows or each party has reason to know the meaning

attached by the other.

ii) The manifestations/ of the parties/ are operative in accordance/ with themeaning attached to them/ by one of the parties/ IF

a) That party does not know of any different meaning attached by theother and the other knows the meaning attached by the first party, OR


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1) Fraudulent: Made with scienter and intent to mislead2) Negligent: made without scienter but would have know it was false if they have used best

efforts, (breached a duty of care).

3) Innocent: made without scienter but used best efforts (didnt breach duty of care).Laidlawv. Organ

Vokes v. ArthurMurry

Hillv. Jones

IV. UnconscionabltilityGeneral Rule: one who signs a K has a duty to read it and is obliged to its terms.

Rule: Absence of meaningful choice on the part of one of the parties together with contract

terms which are unreasonably favorable to the other party.

Restatement: If a court as a matter of law finds a contract or any clause of the contract to

have been unconscionable / at the time of K-ing:

1) The court may refuse to enforce the K, OR2) It may enforce the remainder of the contract without the unconscionable clause, OR3) It may so limit the application of any unconscionable clause as to avoid any

unconscionable result.

A) Usually goes to enforcing a public policy ofprotecting ignorant people;conversely, wehave to worry about the other policy ofnot being too paternalistic.

B) As stated, have to analyze the context of the formation of the K.C) If the term is the source of unconscionability, then the remedy can be the throwing out

of that term and the enforcement of the rest of the K.

V. Illegality: AgreementsUnenforceable on Grounds of Public Policy

P

romissory EstoppelGeneral Rule: A promise coupled with detrimental reliance on that promise.

The Black Letter Rule:

I. The party to be stopped must be given notice of the facts.II. He must intend that his conduct shall be acted upon, AND


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III. Must so act that the party asserting the estoppels has a right to believe it was so intendedIV. The other party must be ignorant of the true state of facts

Objective testwhat where the words of the promise?

V. And the other party must rely upon the conduct to his injury.y Here, the court considered the magnitude of Scothorns good faith reliance on

her grandfathers promise and held that her actions were consistent with that

reliance and therefore constituted a sufficient consideration. Ricketts v.

Scouthorn

A) An exception for proving 4) reliance in promissory estoppel are charitable organizations:it is binding without proof that the promise induced action or forbearance in the

recipient. p. 141 note 3

B) Also, you cant use promissory estoppel if there is adequate consideration.y Illustrating both A and B, is when a rich old lady gave a college a gift of $1,000,

which the college then used for scholarships. After she died, the executors said

there was not adequate consideration to support the gift. The college couldnt

get promissory estoppel because there was adequate consideration (the donor

made the gift on the condition that the scholarship would use her name)

AlleghenyCollege. (Ask Deb about this)

C) What if the elements are met in an At-Will Employment situation? usually cant use iti) Both parties can terminate, no real detriment

y When an at-will employee got another job offer, he asked his current employerif he should stay or go. The employer told him there was at least five more

years of work for them to do, then, less than a year later, they fired him. He

couldnt get promissory estoppel. Even though he had relied on the promise to

his detriment, he was entering into an at-will situation. Blinn v. Beatrice

Hospital.

So, if we can get Promissary Estoppel, what are the Remedies?

a) Usually goes to full enforcement of the promise

Statute of Frauds

Promises can be binding as Ks without consideration if they fall under the Statute of Frauds (pg. 48 51

is where it doesnt need consideration)

Policy Reasons: encourage people to put their Ks in writing; to prevent fraud and protect people to wish

to make Ks.


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(dont know where this goes): First ask, is the promise

1) in writing (or under seal), AND2) is document containing the promise delivered AND3) Are the promisor and promisee named in the document, or described, when it is delivered?

What category does the promise fall into?

1) Is it for the transfer of land? (this can include leases, renting, or buying)i) If yes, then is there a sufficient writing (or writings)?ii) If no, then go to something outside of Statute of Frauds to enforce the promise, here,

Past Performance Doctrine:

y When there was no writing for the sale of land,y but there was a K between the parties, ANDy the party seeking to enforce it partially performed it, ANDy the partys performance was induced by the other partys misrepresentation,

which may include acquiescence or silence.

Sullivanin this case, specific performance was the remedy for breach.

2) Is the promise for a performancethat can be completedwithin one year?i) If yes, then is there a sufficient writing?enforceableii) If there is not a sufficient writing, then can a string of writings be used as one writing?

a) Is the string of writings bound together by oral testimony?Crabtreepayment term was written, and oral testimony was used to link the

different writings together. Oral testimony can link documents together to make a

writing, but cannot be used to establish a K.

3) Is the promise for a sale of goods over $500 and between merchants? (goods are movablecommodities) (merchants means a person who deals in goods of the kind or otherwise by his

occupation holds himself out as having knowledge or skill peculiar to the practices or goods

involved in the transaction or to whom such knowledge or skill may be attributed by his

employment of an agent or broker or other intermediary who by his occupation holds himself

out as having such knowledge or skill.)

i) Is there a sufficient writing? If yes, then (if no, go down to ii)a) Is it signed by the person (or agent) who claims there is no K?

Then it is enforceable.

To find out remedies, ask:


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b) Does the writing have a quantity term?i) K is not enforceable beyond the quantity ofgoods shown in writing.ii) If it states that it is for the buyers output, then look to what the past output was.iii) If the quantity term was decided orally, and not written down, then the K is not

enforceable beyond

y the goods for which payment has been made and accepted ORy goods which have been received and accepted

ii) If there is no writing, is it oral?a) Then, is the sale between merchants? (be careful, what is considered a merchant

can be tricky)

b) If it is oral and between merchants then,i) Was there a written confirmation of the K that was received within a

reasonable time (goes to context of the industry), sufficient against the

seller, AND

ii) The party receiving it has reason to know its contentsc) If yes, then it is enforceabled) UNLESS written notice of objection is sent within 10 days after written confirmation

is received.

If the promise doesnt fall within any of these things, it can still be enforceable. Ask:

4) Are they specially made goodsi) Are they specially made for the other party, ANDii) Cannot be sold to anyone else, ANDiii) Has party A started production or made commitments to start their manufacturingiv) Before a cancellation notice from the other party

Then it can be enforceable

5) Has one party admitted under oath that there was a K?i) Then, only enforceable up to the quantity term the party admits.

6) Have goods already been paid for, AND payment has already been accepted.i) Then enforceable.

Sullivan v. Porter

Crabtree v. Elizabeth Arden


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Remedies

Ask, 1) Is there a K between the two parties? 2) Did D breach it? THEN 3)What damages are owed?

Dont think about these in terms of static terms, for the exam phrase: generally, there are three

interests that a P could ask to protect when trying to get money damages.

Generally, contract enforcement is liability based. This means its almost as if its ok to breach as long as

its economically beneficial.

Remedies for Breach of K: monetary or specific performance:

1) Restitution: General; restores any benefit (money) back to the non-breaching party that theyhave conferred to the breaching party. Based on the concept of unfair enrichment; we dont

want D to be unduly enriched.

a. An example is if I buy tires from Sears and they blow out while im driving to the LSAT, ifSears is liable for restitution damages, then they will have to pay back the price of the

tires, not for the time lost to me to re-study, or the money I mightve made as anattorney.

2) RelianceDamages: intermediate; reimbursed for loss caused by reliance on the contract bybeing put in as good of position as he would have been had the contract not been made. Not

based on what D unfairly got, its based on what P spent in reliance.

y Sullivan v. OConnorwhere a plastic surgeon gave a woman a new nose, and promisedher he would make it better than it was before. It ended up being horribly disfigured.

What damages are owed to P? She got out-of-pocket expenses (i.e. restitution) and

pain and suffering with respect to the third operation, and compensation for worsening

of her condition from a good nose to a bad nose.

3) ExpectationDamages: amount of money that will put the non-breaching party in as good aposition as he or she would be in had the K been performed.

A) The amount of damages awarded is limited byi) Purpose of damages is to compensate, not punishii) Damages must be established to a reasonable certaintyiii) Non-breaching party must mitigate damages

B) Can be determined objectively or subjectively.i) Objectively: what is the market value?ii) Subjectively: what is the value to the party that was to receive the benefit? (i.e.

what is the value of OConnors nose to her?)

y Sullivan v. OConnorwhere a plastic surgeon gave a woman a new nose, andpromised her he would make it better than it was before. Expectation is too

excessive here because shes will claim that the nose could made her millions in her

job as an actress. This is pretty subjective.


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would be much more expensive. Court found specific performance.Curtice

Brothers.

5) Efficient Breach and Cosse Theorem: serves the economic goals of Ks: dont punish (no punitivedamages in Ks) but to compensate. No presumption of morality in Ks.

A) Is it less cost to breach/ then it would be/ for both parties/ if the K was enforced?

RemediesUCC 2.711- 717

1) UCC 2.711Buyers RemediesA) Did the seller breach the K? Ask did the seller:

i) Wrongful failure to deliver or perform a contractual obligationii) Not tendering delivery or performanceiii) Repudiation (refusal of performing a duty)

If so, then what can the buyer do about it?

2) UCC 2-717: deduct all or any part of damages from the price, ifa) It results from the breach of the K, ANDb) Still due under the same K, ANDc) The buyer has notified the seller of his intention to do so

3) Buyer can cancel UCC 2.7114) If Seller doesnt deliver, Buyer can cover, by

a) Making with good faith ANDb) Without reasonable delayc) Any reasonable purchase or K ofgoods in substitution of those due from the seller

AND damages in this case are the difference between the cost of cover and the K price

together with

i) Incidental damagescost of transportation, inspection, care, custody of goods, etc.AND

ii) Consequentialdamagesloss resulting from requirements and needs that areasonable person in the shoes of the seller had reason to know (forseeability) AND

couldnt be prevented by cover.

5) If Seller doesnt deliver or fails to repudiate, damages are the difference betweena) The market price/ at the time of tender under the K/ AND

i) Market price: determined as of the place of tender.b) The price of the K, ANDc) Any incidental or consequential damages.


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THINGS I DONT KNOWWHERE THEY GO

B) Manifested IntentionNot to be Bound: partys intention not to be bound may preventthe formation of a K. ex. If one person intends to be reasonably bound, the other person

must know about it.

There is no mutual assent where the parties attach materially different meanings to what isagreed upon if

i) Neither party knows or has reason to know of the other partys meaning ORii) Both know or have reason to know of the other persons meaning.

1.205FirmOffers:An offer/ by a merchant/ to buy or sell goods/ in a signed writing/ which by its terms gives

assurance that it will be held open/ for lack of consideration/ during the time stated or if no

time is stated for a reasonable time/ BUT any such term of assurance on a form supplied by

the offeree must be separately signed by the offeror.

If under Common Law, a counter offer terminates the offerees power of acceptance and

creates a new power of acceptance in the former offeror. If the offeror elects to exercise that

power, it can accept the counter-offer, creating a K on the offerees terms. If not, no K comes

into being unless the parties go ahead and perform.

UCC definition of Sign" means, with present intent to authenticate or adopt a record:

(i) to execute or adopt a tangible symbol; or

(ii) to attach to or logically associate with the record an electronic sound, symbol, or process.

Under UCC 2.207doesnt assume that acceptance can be inferred because of performance.

The counter-offer is accepted only if it is clear that the offeror is aware of the alteration in terms

and has manifest intent.

Avoidance ofContract

I. Capacity

2nd outline for contracts

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