Contracts & Sales--2.0 Fall 2020

U.C.C. § 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.

Requirements for Acceptance by Promise--According to Farnsworth

1)Must be an expression of commitment. Merely acknowledging the receipt of the offer expressing interest in it is not enough. 2)Must not be conditional on any further act by either party. 3)At common law, must not vary, even slightly, from offer's terms. This protects the offeror, who is free from any sort of contract except on the terms of the offer.

Restatement § 12: Capacity To Contract **Incapacity

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 thereby unless he is a)under guardianship, or b)an infant, or c)mentally ill or defective, or d)intoxicated.

Mitigating Doctrines and Exceptions to the Statute of Frauds

1)Restitution 2)Part Performance of Land Transactions 3)In-court Admissions of Sales Contracts 4)Confirmations by Merchants of Sales Contracts Waiver and Estoppel

Williams v. Glash--Mutual Mistake

A contractual release of claims is subject to avoidance when parties to the agreement have contracted under a misconception or ignorance of a material fact.

Carnes v. Sheldon--Illegailty

A court will not recognize an implied contract between unmarried cohabitating parties where common-law marriage is illegal and recognition of the implied contract will have the effect of acknowledging common-law marriage in contravention of the Legislature.

Nisho-Iwai Co. v. Occidental Crude Sales--Impossibility/Impracticability

A party will not be excused from performance due to impossibility unless the party can show that the excusing event was beyond the party's reasonable control.

West v. JPMorgan Chase Bank, N.A.--Fraud

A plaintiff asserting fraud must demonstrate that the defendant knowingly made a false representation intending to deceive the plaintiff, and that the plaintiff justifiably relied on the representation, resulting in damages.

Restatement (Second) of Contracts § 26: Preliminary Negotiation

A preliminary negotiation exists if a person who hears a communication "knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent."

Mills v. Wyman--Past Consideration--Moral Obligation

A promise based on a moral obligation but made without legal consideration does not constitute an enforceable contract unless it is tied to a preexisting legal obligation.

Alden v. Presley--Promissory Estoppel

A promise is not enforceable under a theory of promissory estoppel unless one's reliance thereon is reasonable and detrimental.

Restatement § 89: Modification of an Executory Contract

A promise modifying a duty under a contract not fully performed on either side is binding a)if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or b)to the extent provided by statute; or c)to the extent that justice requires enforcement in view of material change of position in reliance on the promise.

Illusory Promise--Restatement (Second) of Contracts §77

A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performance unless (a) Each of the alternative performances would have been consideration if it alone had been bargained for; or (b) One of the alternative performance would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternative which would not have been consideration.

Schnell v. Nell--Adequacy of Consideration--

A promise to make a gift for nominal consideration or out of moral obligation is unenforceable for lack of consideration.

Totem Marine Tug & Barge v. Alyeska Pipeline Service Co.--Duress

A settlement and release may be rescinded due to the existence of economic duress.

Mutual Assent--Reasonable Prudent User--Meyer v. Uber Technologies

A smartphone app user has reasonably conspicuous notice of the app's terms of service if a reasonably prudent user would have known about the terms and the conduct that would be required to assent to them. A click can suffice to signify acceptance of a contract so long as the layout and language of the site gives the user reasonable notice that a click shows agreement to terms.

Vokes v. Arthur Murray, Inc.--Fraud--Misrepresentation

A statement of opinion may be actionable as a misrepresentation where the party stating his opinion possesses superior knowledge of the truth or falsity of the statement. "A statement of a party having...superior knowledge may be regarded as a statement of fact although it would be considered as opinion if the parties were dealing on equal terms."

Gravamen Test

A test used by the minority where the contract is severed into different parts, with the UCC applying to the goods involved in the contract, but not to the non-goods parts of the contract. instead of looking at the predominant factor in the transaction, look at what allegedly went wrong (i.e., basis for the cause of action), the good or the service, and apply appropriate law.

Voidable Contract

"Voidable" means that one of the parties has a choice about whether or not to enforce it. For example, a person who was the victim of fraud may have a choice as to whether or not to enforce the contract against the wrongdoer.

Webb v. McGowin--Past Consideration

"When the promisee cares for, improves, and preserves the property of the promisor, though done without his request, it is sufficient consideration for the promisor's subsequent agreement to pay for the service, because of the material benefit received."

Restatement Section 46--Newspaper/ads Notice Rule

"Where an offer is made by advertisement in a newspaper or other general notification to the public or to a number of persons whose identity is unknown to the offeror, the offeree's power of acceptance is terminated when a notice of termination is given publicity by advertisement or other general notification equal to that given to the offer and no better means of notification is reasonably available."

Restatement § 261 Impossibility/Impracticability

"Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary."

Restatement § 265 Frustration of purpose

"Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary."

Fujimoto v. Rio Grande Pickle Co.--Acceptance--

"Where, as here, the offer and surrounding circumstances are silent as to permissible modes of acceptance, the law requires only that there be some clear and unmistakable expression of the offeree's intention to accept."

Sherwood v. Walker--Mutual Mistake

"[A] party who has given an apparent consent to a contract of sale may refuse to execute it, or he may avoid it after it has been completed, if the assent was founded, or the contract made, upon the mistake of material fact,--such as the subject-matter of the sale, the price, or some collateral fact materially inducing the agreement; and this can be done when the mistake is mutual." When a contract is made based on the mutual mistake of the parties that relates to a material fact such as the subject matter of the sale, the price, or some other fact which materially affects the agreement, the parties may rescind the contract once they learn of the mistake.

Fiege v. Boehm--Forebearance as Consideration--Give-up Legal right in good faith

"[A] promise not to prosecute a claim which is not founded in good faith does not of itself give a right of action on an agreement to pay for refraining from so acting, because a release from mere annoyance and unfounded litigation does not furnish valuable consideration."

Norcia v. Samsung Telecommunications America, LLC--Acceptance--Silence and Reasonable Notice of Offer

"[C]ourts have rejected the argument that an offeree's silence constitutes consent to a contract when the offeree reasonably did not know that an offer had been made."

Morrison v. Thoelke--Termination of Power of Acceptance--The Mailbox Rule

"[T]he general rule [is] that insofar as the mail is an acceptable medium of communication, a contract is complete and binding upon posting of the letter of acceptance. The offeree makes an "overt manifestation of assent to the proposal" at the time of mailing.

Restatement § 380

"[t]he power of a party to avoid a contract is lost if, after the circumstances that made the contract voidable have ceased to exist, he manifests to the other party his intention to affirm it or acts with respect to anything that he has received in a manner inconsistent with disaffirmance."

Unilateral Contract

"a promise in exchange for the performance of an act."

Executory Accord

"an agreement for the future discharge of an existing claim by substituted performance."

Merger Clauses and Fraud

"integration clause (1941) A contractual provision stating that the contract represents the parties' complete and final agreement and supersedes all informal understandings and oral agreements relating to the subject matter of the contract. — Also termed merger clause; entire-agreement clause..." Most courts will not allow either a merger clause or the parol evidence rule to bar evidence of fraud in relation to the creation of a contract.

Statute of Frauds is ------ kind of defense?

Affirmative, i.e. must be plead

UCC 2-205 Firm Offers

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 is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three moths; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

Loring v. City of Boston--Termination of Power of Acceptance--Lapse of Time

An offer is considered to expire after a reasonable time has passed and the offer has not been accepted.

Dickinson v. Dodds--Termination of Power of Acceptance--Revocation of Offeror

An offer may be revoked by the offeror without an express or actual statement of revocation communicated to the offeree provided there has been no meeting of the minds and the offeree is aware of conduct by the offeror demonstrating intent to revoke the offer.

Option Contract

An option is an agreement in which the offeror promises not to revoke an offer in return for consideration, something of value to the offeror. This is a separate contract. Even though consideration is required at common law, the UCC, in 2-205, has an exception for firm offers from merchants.

Continental Laboratories v. Scott Paper Co.--The Offer--Written Contract to Follow

An oral agreement does not create a binding contract if either party intends not to be bound in the absence of a fully executed written contract.

McIntosh v. Murphy--Estoppel, Waiver, and Special Manufacture

An oral employment promise is enforceable, notwithstanding the Statute of Frauds, if the injured party seriously changes his position in reliance on the promise and failing to enforce the promise would result in unconscionable injury.

Sylvan Crest Sand & Gravel Co. v. United States--Illusory Promise--Reasonable Time Limit Understood

An unrestricted power of cancellation does not constitute an illusory promise where a reasonable time limit is understood by the terms of the contract.

UCC 2-104(1) Merchants

(1) "Merchant" 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. Comment 2 "The professional status under the definition may be based upon specialized knowledge as to the goods..."

Formation in General - Sale of Goods: U.C.C. § 2-204

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which 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 the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Restatement § 82 Moral Obligation

(1) A promise to pay all or part of an antecedent contractual or quasi-contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for the effect of a statute of limitations. (2) The following facts operate as such a promise unless other facts indicate a different intention: a) A voluntary acknowledgment to the obligee, admitting the present existence of the antecedent indebtedness; or (b) A voluntary transfer of money, a negotiable instrument, or other thing by the obligor to the obligee, made as interest on or part payment of or collateral security for the antecedent indebtedness; or (c) A statement to the obligee that the statute of limitations will not be pleaded as a defense.

UCC 2-306 Output, Requirements and Exclusive Dealings.

(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded. (2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

Restatement § 164 - When a Misrepresentation 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. ...

Restatement § 164 - when a Misrepresentation 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. ...

Four Factors of the Predominant Purpose Test

(1) The language of the contract; (2) The nature of the business of the supplier of goods and services; (3) The reason the parties entered into the contract and (4) The amounts paid for the rendition of the services and goods, respectively.

Mutual Assent Restatement § 22

(1) The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an 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

§ 2-309. Absence of Specific Time Provisions; Notice of Termination.

(1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time. (2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party. (3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.

Restatement (Second) of Contracts § 62: Choice between acceptance by promise and acceptance by performance

(1) 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. (2) Such an acceptance operates as a promise to render complete performance.

UCC§ 2-201- Part Performance

(3) A contract which does not satisfy the requirements of [the UCC statute of frauds] but which is valid in other respects is enforceable...)(c) with respect to goods for which payment has been made and accepted or which have been received and accepted." Note that acceptance may be through an agent.

UCC 2-311(3)

(3)Where such specification would materially affect the other party's performance but is not seasonably made or where one party's cooperation is necessary to the agreed performance of the other but is not seasonably forthcoming, the other party in addition to all other remedies (a) is excused for any resulting delay in his own performance; and (b) may also either proceed to perform in any reasonable manner or after the time for a material part of his own performance treat the failure to specify or to cooperate as a breach by failure to deliver or accept the goods.

Types of Contracts Typically Covered Under Statutes of Frauds

1)Executor/Administrator Contracts 2)Suretyship Contracts 3)Made in Consideration of Marriage 4)Land Transactions 5)The One-Year Provision 6)Sale of Goods for $500 or More MY LEGS (Marriage, Year, Land transactions, Executor's satisfaction of decedent's debts, goods $500 or more, Sureties

What Constitutes Consideration?--Restatement § 79(a) & (b)

If the requirement of consideration is met, there is no additional requirement of (a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or (b) equivalence in the values exchanged; {Does not have to be equivalent consideration}

UCC 2-509(3): Risk of Loss

If the seller is a merchant, risk of loss passes to the buyer on his receipt of the goods. If the seller is not a merchant, risk of loss passes to the buyer on tender of delivery. See 2-503 on "tender of delivery." That means that the seller holds goods at the buyer's disposition and give the buyer any notice needed to get the goods. If you buy something at a yard sale, don't leave it there. The risk of loss passed to you.

Alt performance 1 year

If there is a promise of two or more alternative performances, any of which may be performed within one year, then the one-year provision is not implicated even if the contract is not actually performed within one year.

Restatement (Second) of Contracts §32--Invitation of Promise or Performance

In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.

Williams v. Ormsby--Sufficiency--Resume a Romantic Relationship

Moving into another person's home to resume a romantic relationship is not sufficient consideration to support a contract granting the moving person an ownership interest in the home. "We will not contractually bind parties to promises based merely on their resumption of a romantic relationship in residing together."

Crabtree v. Elizabeth Arden Sales Corp.--Satisfaction of the Statute Multiple Documents

Multiple documents taken together may constitute a signed writing sufficient to fulfill the statute of frauds if all documents refer to the same subject matter or transaction and at least one is signed by the party to be charged with the contractual obligations.

Allegheny College v. National Chautauqua County Bank--Promissory Estoppel

Must rely to their detriment

McMichael v. Price--Illusory Promise--Requirements Contract "All you can sell"

Mutuality of obligation exists when there is a limitation on the ability of both parties to cancel the contract according to their discretion alone.

Distinguishing Frustration of Purpose from Impracticability

Note the difference between the King's illness in Krell and the fire in Taylor; the former did not make performance impossible. The apartment could still have been rented to Henry for the two days and Henry still could have paid the £50 he owed to Krell. On the other hand, in Taylor, the building burned.

Elements of a Contract

Offer, acceptance, consideration

When does § 2-207 apply?

Official Comment 1 to § 2-207 indicates that it is intended to apply in two situations. 1)The parties reach an agreement orally or through informal correspondence, and later follow up with documentation embodying the terms agreed upon and adding terms not explicitly discussed. -There was a contract formed, but what are its terms? 2)The parties attempt to form the contract through the forms, with the purchase order sent via a written form and the supplier acknowledging receipt of the buyer's purchase order via an invoice or other written form of its own. -Was a contract formed at all?

Restitution

One "exception" to the statute of frauds is restitution for the reasonable value of services rendered in reliance on the oral agreement.

Buffaloe v. Hart--Part Performance

One can enforce a contract falling under the Statute of Frauds when there has been partial performance of the contract. Courts have been unanimous in saying that under §2-201(3)(c) a down payment is sufficient part performance to demonstrate a quantity of one whole item

Implied-in-fact Contract

Requires proof of all elements of a contract. The court infers that the parties assented to the contract by looking at surrounding circumstances, including the parties' conduct and declarations. The plaintiff bears the burden of showing it was reasonably certain that a contract was intended.

UCC Impossiblity/Impracticability

Restatement § 261 tracks U.C.C. § 2-615 (p. 775)

Mitigating Doctrines and Exceptions

Restitution Part Performance Admissions Merchant Confirmations Estoppel, Waiver, and Special Manufacture

Restatement § 181: Effect of Failure to Comply with Licensing or Similar Requirement

If a party is prohibited from doing an act because of his failure to comply with a licensing, registration or similar requirement, a promise in consideration of his doing that act or of his promise to do it is unenforceable on grounds of public policy if a)the requirement has a regulatory purpose, and b)the interest in the enforcement of the promise is clearly outweighed by the public policy behind the requirement. **The policy behind a requirement that has a regulatory purpose may be regarded as sufficiently substantial to preclude enforcement, while the policy behind one that is merely designed to raise revenue will not be.

Phillips v. Moor--Termination of Power of Acceptance--Lapse of Time

If a sale of specific goods or chattel is completed except for the transfer of property from the seller to the buyer, the buyer bears the risk of any loss to the property that occurs before the transfer.

Stambovsky v. Ackley--Fraud--Non-disclosure

If a seller creates a condition that materially impairs the value of a contract and is within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care, nondisclosure of the condition constitutes a basis for rescission of the contract.

Strict Approach

Several jurisdictions take the strict approach exemplified by the Georgia Supreme Court's decision in White and refuse to judicially modify the agreement in any way, holding the entire thing unenforceable. In a few states (i.e., Wisconsin) this rule is set by statute; in others, including Georgia, by judicial opinion. The rationale is that merely editing the agreements provides no discouragement to employers to enter into them, as not all such contracts can be litigated.

Blue penciling

Several other jurisdictions will "blue pencil" non-compete agreements that are unreasonable. Where the offending provisions of the agreement are severable, the court may strike, but not revise them, and then enforce the edited agreement.

Solicitations and Ads--Offers??

Solicitations and advertisements are usually not offers, but rather invitations to enter into negotiations. They could be offers if they are clear, definite, and explicit, and leave nothing open for negotiation.

Sunflower Electric Cooperative, Inc. v. Tomlinson Oil Co.

The appellate court stated the exceptions that would deny relief to the rule of impossibility or impracticability as follows: The impracticability must not have been caused by the promisor (fault). The promisor must have had no reason to know of the impracticability (foreseeability). The language or circumstances may indicate that the promisor not be relieved (assumption of the risk).

Duress and void

The lender argued that a void agreement occurs only when a person is physically compelled to give consent, such as by manually forcing someone to sign a document.

No Undue Hardship on the Employee

The level of hardship placed on the employee's right to work is generally measured by the agreement's: 1)temporal (length of time); 2)spatial limitations (size of geographic area); and 3)the specific business activities prohibited.

Mutual Assent--Objective Standard--Lucy v. Zehmer

The objective, outward expression of a party's intent to be bound in an agreement, as opposed to that party's subjective mental assent to the agreement, is all that matters when determining the existence of a valid and enforceable contract.

Indefiniteness of Contract

The parties may not give verbal expression to such vitally important matters as price, place and time of delivery, time of payment, amount of goods, and yet they may actually have agreed upon them. This may be shown by their antecedent expression, their past action and custom, and other circumstances.

Elements of a Claim Based Upon Impossibility/Impracticability

The party claiming that an event should excuse performance bears the burden to prove: 1)The event made performance as agreed impracticable. 2)The non-occurrence of the event was a basic assumption on which the contract was made. 3)The impracticability was not the fault of the party seeking to be excused. 4)That party did not assume a greater obligation than the law imposes.

Merchant Confirmation

UCC § 2-201 (2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.

Judicial Admission

UCC § 2-201 (3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable ... (b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or Addressed under the UCC Check state law for changes to common law

What is "unconscionability"?

Undefined in UCC The basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. The principle is one of the prevention of oppression and unfair surprise...and not of disturbance of allocation of risks because of superior bargaining power

Commerce & Industry Insurrance Co. v. Bayer Corp--Termination of the Power of Acceptance--The Uniform Commercial Code

Under UCC 2-207(3), where two merchants exchange conflicting forms and one merchant expressly conditions acceptance on the other's assent to his terms, a contract can still be formed based on the parties' subsequent conduct, but the parties will only be bound to the terms they agreed upon.

Thomson Printing Machinery Co. v. B. F. Goodrich Co.

Under the "merchants" exception created by the Uniform Commercial Code, the Statute of Frauds is satisfied where one merchant sends a written confirmation of an oral contract within a reasonable amount of time and the party receiving the written confirmation has reason to know its contents.

UCC Gap Fillers

Under the UCC, the courts to look to the following as -aids to construction of a contract: usage of trade, course of dealing, and course of performance. The UCC § 1-303 has definitions of these terms. -The UCC also has specific gap filling provisions. UCC § 2-305 - Open price term UCC § 2-306 - Output, requirements, and exclusive dealings UCC § 307 - Delivery in single or several lots UCC § 308 - Absence of specified place for delivery UCC §309 - Absence of specific time provisions -Of course, the more terms the parties have left open, the less likely they intended to be bound. This is a big question.

Weaver v. American Oil Co.--Unconscionability

When a party can show that the contract was in fact an unconscionable one due to a prodigious amount of bargaining power on behalf of the stronger party the contract provision, or the contract as a whole, is unenforceable.

Lingenfelder v. Wainwright Brewery Co.--The Pre-existing duty rule

When a party does what he has already obligated himself to do, he cannot demand any additional compensation by taking advantage of the necessities of the other party. "[A] promise to pay a man for doing that which he is already under contract to do is without consideration."

Williams v. Walker-Thomas Furniture Co.

When an element of unconscionability is present at the time of contract formation, the resulting contract is not enforceable.

Davis v. Jacoby--Acceptance--Mode of Acceptance//presumption of bilateral contract

When an offer falls into the "vague field" between obvious bilateral (offer to sell) and obvious unilateral (reward offer), courts should look at "the intent of the offer and the facts and circumstances." Presumption = bilateral contract.

The Mailbox Rule and Option Contracts

When an option contract or a firm offer is involved, the mail box rule does not apply. The acceptance must be received within the option period to be effective.

PFT Roberson, Inc. v. Volvo Trucks North America, Inc.--The Offer--Preliminary Negotiations

When negotiators make clear that agreement is subject to a more definitive and global document, that demonstrates an intent not to be bound until there is such a document signed.

Princess Cruise Lines, Inc. v. General Electric Co.--Termination of the Power of Acceptance--Termination By Counteroffer and the Battle of the Forms

When the predominant purpose of a contract is rendering services, not the furnishing of goods, the UCC is inapplicable, and common-law principles apply. Considerations include: The language of the contract, The nature of the business of the supplier, and The intrinsic worth of the materials. The basis of the complaint (although not dispositive)

Odorizzi v. Bloomfield School District--Undue Influence

Where a dominant party to a transaction uses excessive pressure to persuade a party whose weakened mental state makes him especially susceptible to persuasion, the weaker party may rescind the agreement as obtained by undue influence.

Restatement § 153 - When Mistake of One Party Makes a Contract Voidable

Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in § 154, and (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.

White v. Fletcher/Mayo/Associates--Illegality--Non-Compete

Where a non competition covenant is agreed to ancillary to both continued employment and the sale of an interest in a business, the covenant should be treated like a covenant ancillary to an employment contract and either enforced as written or not at all if it appears that the bargaining capacity of the covenantor is that of a mere employee.

Beard Implement Co. v. Krusa--Acceptance--

Where an offer unambiguously states the method in which it can be accepted, a binding contract will only be formed if the offer is accepted exactly as stated.

Acceptance by Shipment (U.C.C. 2-206(1)(b)) explanation---DO NOT CITE

Where there is an offer by purchase order and the offeree's response is to ship the goods, one of three scenarios occurs: 1)Shipment of conforming goods This is an acceptance by performance. 2)Shipment of non-conforming goods w/ notification of intent as accommodation This is a counteroffer, which the offeror is free to accept or reject. 3)Shipment of non-conforming goods This is an acceptance but the offeree is in breach.

A material fact

one "to which a reasonable man [person] might be expected to attach importance in making his [or her] choice of action."

"reasonably certain basis for giving an appropriate remedy"

provide a basis for determining the existence of a breach and giving a remedy.

Adequacy

refers to the quantities of the consideration exchanged between the parties.

Sufficiency

refers to whether the consideration has any value at all in the eyes of the law.

Walker v. Keith--Indefiniteness--Substantial Certainty Required as to Material Terms

the basic principle of contract law that requires substantial certainty as to the material terms upon which the minds of the parties have met is a sound one and should be adhered to. A renewal option stands on the same footing as any other contract right. Rent is a material term of a lease. If the parties do not fix it with reasonable certainty, it is not the business of courts to do so *UCC does not apply to a realty lease*

Unlikely in 1 year

the majority rule is that a contract that does not specifically state a time greater than one year does not fall within the one-year provision of the statute of frauds. This is so even if the time for the contract's completion is very likely to be more than one year.

Substitute contract

the promise of future performance, not the actual performance itself, which discharges the existing claim.

Duress Test

whether the will of the person induced by the threat was overcome rather than that of a reasonably firm person

Part Performance of Land Transactions •Restatement § 129 - Action in Reliance; Specific Performance

•"A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds 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." •See commend d - "The promisee must act in reasonable reliance on the promise, before the promisor has repudiated it, and the action must be such that the remedy of restitution is inadequate."

FAA's savings clause.

"By its terms, the saving clause allows courts to refuse to enforce arbitration agreements 'upon such grounds as exist at law or in equity for the revocation of any contract'."

Hayes v. Plantations Steel Co.--Past Consideration One week before his retirement, Mainelli told Hayes the company "would take care" of him during his retirement. No amount of money was specified and there was no board authorization.

"Consideration...has no legal effect when rendered in the past and apart from an alleged exchange in the present."

Hamer v. Sidway--Consideration: The Basic Concept--Agreement to Incur a Detriment

"Either some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other." "It is enough that something is promised, done, forborne, or suffered by the party to whom the promise is made as consideration for the promise made to him." A party's agreement to incur a detriment constitutes adequate consideration.

U.C.C. § 2-204(3) Indefiniteness

"Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy."

Restatement § 174: When Duress by Physical Compulsion Prevents Formation of a Contract

"If conduct that appears to be a manifestation of assent by a party who does not intend to engage in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent."

§ 174: When Duress by Physical Compulsion Prevents Formation of a Contract

"If conduct that appears to be a manifestation of assent by a party who does not intend to engage in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent."

Predominant Purpose Test [Majority]

"If the predominant assets to be transferred are goods, the U.C.C. governs, but if the predominant assets are non-goods, the U.C.C. has no application."

Higgins v. Oil, Chemical and Atomic Workers Int'l Union--Indefiniteness--"Taken Care of" language

"It is fundamental that for a contract to be enforceable, it must be of sufficient explicitness so that a court can perceive what are the respective obligations of the parties." "Taken care of" is too vague

Restatement § 27 (emphasis added): Written Contract to Follow

"Manifestations of intent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a memorial thereof; but the circumstances may show that the agreements are preliminary negotiations." Factors: 1)[T]he extent to which express agreement has been reached on all the terms to be included; 2)whether the contract is of a type usually put in writing; 3)whether it needs a formal writing for its full expression; 4)whether it has few or many details; 5)whether it is a common or unusual contract; 6)whether a standard form of contract is widely used in similar transactions; and 7)whether either party takes any action in preparation for performance during the negotiation.

Restatement § 132: Several Writings

"The memorandum may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction." This represents the modern view of Crabtree: court will tack together various writings if they: they obviously refer to the same transaction, one is signed by the party to be charged, and they collectively reflect all essential terms. There are policy benefits to this: otherwise, defendants could use a formality to escape a contract that is in writing, albeit separate ones.

Substantive and Procedural Unconscionability

"The prevailing view is that these two elements must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability."

Infancy

"Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person's eighteenth birthday." Restatement § 14. In other words, minors (in most jurisdictions, those under 18), lack the capacity to contract and may disaffirm contracts into which they have entered. This is a per se rule: the court will not inquire into the sophistication, or lack thereof, of the minor. The power of avoidance may only be exercised by the minor or his/her legal representatives. In order to disaffirm, the minor need only indicate that he/she no longer wants to be bound.

Void Contract

"Void" means that no one can enforce the contract. For example, an illegal contract, one that is against the law, such as gambling, is void and can't be enforced by anyone.

UCC - Special Manufacture

2-201 ... (3)(a) - A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable (a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement

Day v. Caton--Acceptance--Acceptance by Silence: Benefit Received

A party impliedly accepts an offer by permitting the other party to perform a valuable service without objection, knowing that the other party expects payment in return.

Wood v. Boynton--Mutual Mistake Bears the risk

A party may rescind a contract for the sale of a good if she can establish either fraud or mistake.

U.C.C. Provisions on Modification

Modification, Recision, and Waiver (1) An agreement modifying a contract within this Article needs no consideration to be binding. . . . Official Comment This section seeks to protect and make effective all necessary and desirable modifications of sales contracts without regard to the technicalities which at present hamper such adjustments. Subsection (1) provides that an agreement modifying a sales contract needs no consideration to be binding. However, modifications made thereunder must meet the test of good faith imposed by the Act. 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. "Every contract or duty within [the Uniform Commercial Code] imposes an obligation of good faith in its performance and enforcement." U.C.C. § 1-304.

Definition of Goods UCC § 2-105(1)

" 'Goods' means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. 'Goods' also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2-107)."

UCC 1-201(37) Signed Rule

"'Signed' includes using any symbol executed or adopted with present intention to adopt or accept a writing." Comment - "[A]s the term 'signed' is used in the Uniform Commercial Code, a complete signature is not necessary. The symbol may be printed, stamped or written; it may be by initials or by thumbprint. It may be on any part of the document and in appropriate cases may be found in a billhead or letterhead. No catalog of possible situations can be complete and the court must use common sense and commercial experience in passing upon these matters. The question always is whether the symbol was executed or adopted by the party with present intention to adopt or accept the writing."

Restatement § 130 One Year Provision

"...The one-year period ends at midnight of the anniversary of the day on which the contract is made, on the theory that fractions of a day are disregarded in the way most favorable to the enforceability of the contract. If complete performance is possible before that time, the contract is not within the one-year provision, regardless of what hour of the day the contract is entered into."

U.C.C. § 2-204(1)

"A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract."

Restatement (Second) of Contracts § 1.

"A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty."

Restatement §§ 189 & 190

"A promise is unenforceable on grounds of public policy if it is unreasonably in restraint of marriage." Restatement § 189 1)A promise that tends unreasonably to encourage divorce or separation is unenforceable on grounds of public policy. Restatement § 190

U.C.C. § 2-204(2) Mutual Assent

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

Restatement § 87(1)(a)

"An offer is binding as an option contract if it (a)Is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time..." •Comment - "[A] nominal consideration is regularly held sufficient to support a short-time option proposing an exchange on fair terms." Minority Approach

Restatement § 24: Offer

"An offer is the manifestation of willingness to enter into a bargain so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it."

Restatement § 48: Death or Incapacity of Offeror or Offeree

"An offeree's power of acceptance is terminated when the offeree or offeror dies or is deprived of legal capacity to enter into the proposed contract."

Restatement § 43: Indirect Communication of Revocation

"An offeree's power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect." ....... "d.) Definite action; reliable information. This Section does not apply to cases where the offeror takes no action or takes equivocal action. Thus mere negotiations with a third person, or even a definite offer to a second offeree, may be consistent with an intention on the part of the offeror to honor an acceptance by the original offeree. Even a binding contract with a third person may be expressly subject to any rights arising under the outstanding offer. Moreover, a mere rumor does not terminate the power of acceptance, if the offeree disbelieves it and is reasonable in doing so, even though the rumor is later verified. The basic standard to which the offeree is held is that of a reasonable person acting in good faith."

Bait-and-Switch Advertisements--16 C.F.R. § 238.0

"Bait advertising is an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised."

UCC 3-311: Accord and Satisfaction

(a) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply. (b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. (c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies: (1) The claimant, if an organization, proves that (i) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place. (2) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This paragraph does not apply if the claimant is an organization that that sent a statement complying with paragraph (1)(i). (d) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.

TCA 29-2-101

(a) No action shall be brought: (1) To charge any executor or administrator upon any special promise to answer any debt or damages out of such person's own estate; (2) To charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person; (3) To charge any person upon any agreement made upon consideration of marriage; (4) Upon any contract for the sale of lands, tenements, or hereditaments, or the making of any lease thereof for a longer term than one (1) year; or (5) Upon any agreement or contract which is not to be performed within the space of one (1) year from the making of the agreement or contract; unless the promise or agreement, upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person lawfully authorized by such party. In a contract for the sale of lands, tenements, or hereditaments, the party to be charged is the party against whom enforcement of the contract is sought. (b)(1) No action shall be brought against a lender or creditor upon any promise or commitment to lend money or to extend credit, or upon any promise or commitment to alter, amend, renew, extend or otherwise modify or supplement any written promise, agreement or commitment to lend money or extend credit, unless the promise or agreement, upon which such action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the lender or creditor, or some other person lawfully authorized by such lender or creditor.

Review: Consideration

-A gratuitous promise is not enforceable. -To form a contract, parties must exchange something of value that is bargained for. -This is the requirement of consideration. -The consideration may take the form of either a return promise or performance. -If consideration is by performance, it may consist of: "(1) an act other than a promise, or (2) a forbearance, or (3) the creation, modification, or destruction of a legal relation." *Restatement § 71(3).

UCC Gap Filler--Realty and Quantity

-UCC does not apply to realty -UCC gap filler non-existent for quantity

Pre-existing duty rule

1) A promise to perform, or the performance of, an existing legal duty is not sufficient consideration 2) Applies only to common law contracts. 3) Exception: New or different consideration promised, voidable obligation, and when pre-existing duty is owed third party, honest dispute as to duty, unforeseen circumstances, and modificatioin of contract for the sale of goods

Avoidance of a Contract

1) Mistake 2) Fraud 3) Duress 4) Undue Influence 5) Illegality 6) Incapacity 7) Unconscionability 8) Impossibility/Impracticability

Acceptance Where Contract is for the Sale of Goods: U.C.C. § 2-206

1) Unless otherwise unambiguously indicated by the language or circumstances: a) an offer to make a contract shall be construed as i inviting acceptance in any manner and by any medium reasonable in the circumstances; b) an order or other offer to buy goods for prompt or current shipment shall be 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 such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer. 2)Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

Restatement (Second) of Contracts §45--Option Contract Created by Part Performance or Tender

1) Where an offer incites 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. 2) The offeror's duty if 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.

Restatement (Second) of Contracts §62--Effect of Performance by Offeree Where Offer Invites Either Performance or Promise

1) 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. 2) Such an acceptance operates as a promise to render complete performance.

Restatement § 39: Counteroffers Common Law Mirror Image Rule

1)"A counteroffer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer. 2)An offeree's power of acceptance is terminated by his making of a counteroffer, unless the offeror has manifested a contrary intention or unless the counteroffer manifests a contrary intention of the offeree."

Restatement § 188: Ancillary Restraints On Competition

1)"A promise to refrain from competition that imposes a restraint that is ancillary to an otherwise valid transaction or relationship is unreasonably in restraint of trade if a)the restraint is greater than is needed to protect the promisee's legitimate interest, or b)the promisee's need is outweighed by the hardship to the promisor and the likely injury to the public. 2)Promises imposing restraints that are ancillary to a valid transaction or relationship include the following: a)a promise by the seller of a business not to compete with the buyer in such a way as to injure the value of the business sold; b)a promise by an employee or other agent not to compete with his employer or other principal; c)a promise by a partner not to compete with the partnership."

Restatement § 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."

Restatement § 74: Settlement of Claims

1)... 2)The execution of a written instrument surrendering a claim or defense by one who is under no duty to execute it is consideration if the execution of the written instrument is bargained for even though he is not asserting the claim or defense and believes that no valid claim or defense exists.

UCC § 2-207. Additional Terms in Acceptance or Confirmation

1)A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. 2)The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: a)the offer expressly limits acceptance to the terms of the offer; b)they materially alter it; or c)notification of objection to them has already been given or is given within a reasonable time after notice of them is received. 3)Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

Restatement § 162: When A Misrepresentation Is Fraudulent Or Material

1)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, or c)knows that he does not have the basis that he states or implies for the assertion. 2)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. "A misrepresentation is an assertion that is not in accord with the facts." Restatement § 159.

Restatement § 15: Mental Illness Or Defect

1)A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness 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 Subsection (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.

Restatement § 86: Promise for Benefit Received

1)A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. 2)A promise is not binding under Subsection (1) a)if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or b)to the extent that its value is disproportionate to the benefit.

Restatement § 178: When A Term Is Unenforceable On Grounds Of Public Policy

1)A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms. 2)In weighing the interest in the enforcement of a term, account is taken of a)the parties' justified expectations, b)any forfeiture that would result if enforcement were denied, and c)any special public interest in the enforcement of the particular term. 3)In weighing a public policy against enforcement of a term, account is taken of a)the strength of that policy as manifested by legislation or judicial decisions, b)the likelihood that a refusal to enforce the term will further that policy, c)the seriousness of any misconduct involved and the extent to which it was deliberate, and d)the directness of the connection between that misconduct and the term.

Restatement (Second) § 90: Promise Reasonably Inducing Action or Forbearance

1)A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. 2)A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.

Restatement § 139: Enforcement by Virtue of Action in Reliance

1)A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires. 2)In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant: a)the availability and adequacy of other remedies, particularly cancellation and restitution; b)the definite and substantial character of the action or forbearance in relation to the remedy sought; c)the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence; d)the reasonableness of the action or forbearance; e)the extent to which the action or forbearance was foreseeable by the promisor.

UCC § 2-306. Output, Requirements and Exclusive Dealings

1)A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded. 2)A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

Restatement § 176: When A Threat Is Improper

1)A 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 obtaining property, b)what is threatened is a criminal prosecution, c)what is threatened is the use of civil process and the threat is made in bad faith, or d)the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient. 2)A threat is improper if the resulting exchange is not on fair terms, and a)the threatened act would harm the recipient and 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 ends.

Acceptance at Common Law: Restatement § 50

1)Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. 2)Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise. 3)Acceptance by a promise requires that the offeree complete every act essential to the making of the promise.

Lapse of Time: Restatement § 41

1)An offeree's power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time. 2)What is a reasonable time is a question of fact, depending on all the circumstances existing when the offer and attempted acceptance are made. 3)Unless otherwise indicated by the language or the circumstances, and subject to the rule stated in § 49, an offer sent by mail is seasonably accepted if an acceptance is mailed at any time before midnight on the day on which the offer is received.

Restatement § 38: Rejection

1)An offeree's power of acceptance is terminated by his rejection of the offer, unless the offeror has manifested a contrary intention. 2)A manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it under further advisement.

Restatement § 36: Methods of Termination of the Power of the Acceptance

1)An offeree's power of acceptance may be terminated by a)Rejection or counter-offer by the offeree, or b)Lapse of time, or c)Revocation by the offeror, or d)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.

Elements of a claim for rescission based upon innocent misrepresentation:

1)Did the buyer rely on the statements? 2)Were the statements material to this transaction? 3)Was the buyer's reliance on the statements justified?

Restatement § 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.

Common Law Impossibility Doctrine

1)Supervening illegality Governmental action that prohibited performance by a party or otherwise made that party's performance impossible would excuse it. 2)Supervening death or disability If the existence or presence of a particular person is needed for performance of a duty (i.e., a unique service), and the person dies or is disabled prior to or during performance, the duty is discharged. Whether that person is actually necessary for the performance is determined by the agreement itself or the circumstances. This exception is described at some length in Taylor. 3)Supervening destruction The destruction or deterioration of a particular thing, the existence of which is necessary for performance, may excuse a party's duties under the contract.

Three Requirements for Proving Mutual Mistake

1)The mistake was "made as to a basic assumption on which the contract was made." 2)The mistake "has a material effect on the agreed exchange of performances." 3)The party adversely affected did not bear the risk of mistake. The party adversely affected by the mistake (and now attempting to void the contract) bears the burden of proof on the issue.

promissory estoppel (detrimental reliance)

1)The promisor reasonably expects his promise to induce action or forbearance by promisee or a third person (i.e., it is foreseeable). 2)The promise actually does induce such action or forbearance (i.e., there is detrimental reliance). 3) Injustice can be avoided only by enforcement of the promise (i.e., the reliance is reasonable). **Usually awards reliance damages

Restatement § 20: Effect of Misunderstanding

1)There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and a)neither party knows or has reason to know the meaning attached by the other; or b)each party knows or each party has reason to know the meaning attached by the other. 2)The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if a)that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or b)that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.

Restatement § 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, or b)a forbearance, or c)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.

Restatement § 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 who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare. 2)If a party's manifestation of assent is induced by undue influence by the other party, the contract is voidable by the victim. 3)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 undue influence either gives value or relies materially on the transaction.

Restatement § 152: When Mistake of Both Parties Makes a Contract Voidable

1)Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154...

Restatement § 69(1): Acceptance by Silence

1)Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only: a) 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. b) Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer. c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.

There are three principal factors to the doctrine of part performance:

1)delivery and assumption of actual and exclusive possession of the land; 2)payment or tender of the consideration, whether in money, property, or other services; and 3)the making of permanent, substantial, and valuable improvements, referable to the contract.

ProCD, Inc. v. Zeidenberg--Acceptance--Shrinkwrap and Manifesting Assent to An Offer

A buyer may accept by performing the acts the vendor proposes to treat as acceptance. {Accepted by both Buying and Using}

Cousineau v. Walker--Fraud--Misrepresentation

A buyer of land is entitled to rescission of the contract because of misrepresentations made by the seller where the buyer relies on the misrepresentations, the misrepresentations are material to the contract, and the buyer's reliance is justified.

exculpatory clause

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault. Unconscionable as a matter of law

Stilk v. Myrick--The Pre-existing duty rule

A contract for services cannot be modified without the payment of additional consideration.

Implied-in-law Contract (a/k/a Quasi-contract)

A legal fiction created to effect equitable result. Not a contract; elements don't have to be proven.

Non-Compete--Reformation MAJORITY

A majority of states have shifted from the blue pencil doctrine to reformation. This allows courts to modify covenants not to compete, even if the agreement is not clearly divisible, and enforce the revised agreement. Tennessee falls in this category.

Preliminary Negotiations

A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

Valencia v. White

A minor who disaffirms a contract may be held liable for benefits received even though the benefits are not necessaries and even though the benefits cannot be returned in kind.

Mutual Mistakes

A mistake occurs when the parties agree on the identity of the benefit to be exchanged, but one or both are mistaken at the time the contract is made as to facts affecting the nature of that benefit. Courts may grant rescission

Restatement § 154 - When a Party Bears the Risk of a Mistake

A party bears the risk of a mistake when (a) the risk is allocated to him by agreement of the parties, or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

Restatement § 154: When a Party Bears the Risk of Mistake

A party bears the risk of a mistake when (a) the risk is allocated to him by agreement of the parties, or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so. Illustration: 1. "A contracts to sell and B to buy a tract of land. A and B both believe that A has good title, but neither has made a title search. The contract provides that A will convey only such title as he has, and A makes no representation with respect to title. In fact, A's title is defective. The contract is not voidable by B, because the risk of the mistake is allocated to B by agreement of the parties."

Restatement § 154: When A Party Bears The Risk Of A Mistake

A party bears the risk of a mistake when a)the risk is allocated to him by agreement of the parties, or b)he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or c)the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

Bilateral Contract

A type of contract that arises when a promise is given in exchange for a return promise.

Klocek v. Gateway, Inc.--Termination of the Power of Acceptance--The Uniform Commercial Code

Additional or different terms provided in the acceptance do not become terms of the contract unless acceptance is made expressly conditional upon acceptance of the additional terms or the non-merchant offeror expressly agrees to the additional terms.

UCC 2-205 Firm Offers

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 is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

Batsakis v. Demotsis--Adequacy of Consideration--Mere Inadequacy

Although a valid contract requires all parties to provide consideration, mere inadequacy of consideration will not void a contract.

Lefkowitz v. Greater Minneapolis Surplus Store, Inc.--The Offer--Solicitations

An advertisement constitutes a binding offer if it is clear, definite, and explicit, and leaves nothing open for negotiation.

Kolodziej v. Mason--Mutual Assent--Circumstances, Conduct, Indefiniteness

An enforceable contract requires mutual assent by both parties to agree to perform an act or forbearance with a full understanding of the terms of the agreement. Language may be looked at to determine whether or not the party had the intent to be bound--for example an exaggeration may show a joke, thereby the person had no intent to be bound, meaning no contract. Conduct, circumstances, indefiniteness, etc. may also be looked at. Examples of indefiniteness are starting/ending points, seating in a crowded plane, exact location of the hotel, etc.

Reformation

An equitable remedy that occurs when the court is asked to rewrite a contract to represent the "true" agreement between the parties. This is most often used to correct a "scrivener's error." It can also be used to correct a unilateral mistake if the other side knew of the mistake and remained silent in order to benefit from it. It may be used to correct contracts where there is some wrongdoing such as fraud, duress, undue influence, and unconscionability. Under the parol evidence rule, extrinsic evidence may not be used to vary the terms of an unambiguous written document. But that is a rule of interpretation which has no direct application to actions for reformations where it is claimed that the document does not express what the parties meant.

Petterson v. Pattberg--Termination of the Power of Acceptance--Revocation of Offers to Enter into Unilateral Contracts

Any offer to enter into a unilateral contract may be withdrawn before the act requested to be done has been performed.

Unilateral Mistake

Arise most commonly when one party makes a mechanical error in computation. If only one of the parties is mistaken about facts relating to the agreement, the mistake will not prevent formation of a contract. However, if the non-mistaken party knew or had reason to know of the mistake made by the other party, the contract is voidable by the mistaken party.

UCC Article 2: Sale of Goods

Article 2 of the U.C.C. applies to transactions in goods, or "all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale ...." Unless a particular provision denotes otherwise, Article 2 applies to ALL such transactions (between merchants, merchant/consumer, and between consumers). The majority rule for "hybrid" cases is to view the transaction as a whole and determine whether the "predominant purpose" of the contract is for goods or not.

Acceptance by Silence

As a general rule, a promise will not be inferred from mere inaction or silence by the offeree. Silence in the face of the offer gives the offeror no reason to believe that the offeree intends to buy; thus, it is usually not acceptance. Restatement § 69(1) is, therefore an exception: certain enumerated circumstances in which a binding promise may be inferred by silence. Q: What type of contract is formed when the offeree accepts by silence? A: An implied-in-fact contract; there is no express offer and acceptance.

Knockout Rule

As applied in many states, the view that when a buyer and seller engage in a battle of the forms and different terms are exchanged, both the seller's and buyer's differing terms drop out and substitute UCC gap fillers complete the contract.

Common Law on Sufficiency and Adequacy

At common law, courts inquire into sufficiency or "want" of consideration (whether it meets the threshold of some legal value), but not adequacy of consideration (whether its value is "enough").

Browsewrap Agreements

Browsewrap agreements do not require the user to assent. Here, terms and conditions are just posted on a website via a hyperlink. Because no affirmative action is required by the user, validity of these depends on whether the user has actual or constructive knowledge of a website's terms and conditions.

(1) Executor/Administrator Contracts

Contracts by an executor or administrator of an estate to pay the debts of the decedent out of the executor/administrator's own personal assets must be in writing.

Stirlen v. Supercuts--Unconscionability

Courts may refuse to enforce as unconscionable one-sided contract terms disfavoring one party who had no meaningful choice but to accept them.

DIRECTV, Inc. v. Imburgia--Unconscionability--The Use of Mandatory Arbitration Provision in Contracts and the FAA

Discover Bank rule stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress embodied in the Federal Arbitration Act. The Federal Arbitration Act therefore preempts and invalidates that rule. Although ambiguous language in a contract should be construed against drafter, no court has ever held that the phrase "the law of your state" includes invalid state law.

U.C.C. § 2-201(1) Statute of Frauds

Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.

Everbank Marini--Duress

Duress experienced during the bargaining process can render an agreement void or voidable depending on the circumstances.

Lost Writing

Even though a once sufficient writing is later lost, that writing may be used to satisfy the statute of frauds.

U.C.C. § 2-615(a): Excuse by Failure of Presupposed Conditions

Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance: a)Delay in delivery or non-delivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid. Comment 4 - "Increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the essential nature of the performance. Neither is a rise or a collapse in the market in itself a justification, for that is exactly the type of business risk which business contracts made at fixed prices are intended to cover. But a severe shortage of raw materials or of supplies due to a contingency such as war, embargo, local crop failure, unforeseen shutdown of major sources of supply or the like, which either causes a marked increase in cost or altogether prevents the seller form securing supplies necessary to his performance, is within the contemplation of this section."

Harris v. Watson--The Pre-existing Duty Rule

For policy reasons, a promise to pay additional money during times of danger does not constitute adequate consideration to support a contract and will not be upheld.

Bennett v. Hayes--The Effect of Illegality **Violation of a statute

If a contract is in violation of the law, the contract will be rendered illegal and unenforceable.

Taylor v. Caldwell--Impossibility/Impracticability

In contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing or destruction of the person or thing shall excuse the performance.

Undue Influence

In contrast to the common law notion of duress, the essence of which was simple fear induced by threat, the equitable concept of undue influence [is] aimed at the protection of those with a weakness short of incapacity, against improper persuasion, short of misrepresentation or duress, by those in a special position to exercise such persuasion." Farnsworth on Contracts, § 4.20. Undue influence may afford protection where incapacity, misrepresentation, and duress do not. Rescission based on this theory may be awarded where: 1)There is a special relationship between parties that makes one susceptible to persuasion by the other. Odorizzi: A confidential relationship may not be a prerequisite "when the undue influence involves unfair advantage taken of another's weakness or distress." 2)The stronger party improperly persuades the weaker.

Wood v. Lucy, Lady Duff-Gordon--Illusory Promise--Exclusive Dealings and Implied-in-fact

In exclusive dealings contracts or other bilateral contracts such as this one, one or more of the promises may be implied in fact even if not explicitly stated in the contract.

2949 Inc v. McCorkle--Termination of the Power of Acceptance--Limits on the Power to Revoke: Opinion Contracts and Firm Offers

In general, irrevocable firm offers and option contracts require separate consideration. {There was no option contract under common law because there was no consideration. The consideration for the option contract needs to be separate from the consideration that supports the main contract. There was no option contract under the UCC because the McCorkles, as offerors, needed to separately sign the form prepared by the offeree.}

Bailey v. Ewing--Mutual Mistake

In order for the doctrine of mutual mistake to apply, both parties must be mistaken as to the same basic assumption or vital fact otherwise two unilateral mistakes, instead of one mutual mistake would result. The court declines to apply the "conscious ignorance" doctrine to bar recovery, as the mistake was beyond the scope of the assumed risk. No one thought the line was as far east as it was.

Duress

In order to obtain rescission based upon a showing of duress by threat, a plaintiff must prove: 1)There was a threat (a manifestation of an intent to inflict some loss or harm on the other party); 2)The threat was improper (see Restatement § 176); 3)The victim's manifestation of assent to the agreement was induced by the improper threat; and 4)The threat was sufficiently grave to justify the victim's assent (the victim has "no reasonable alternative").

boilerplate

In purchasing, standard terms and conditions of contract, covering major generic risks.

The Offer--According to Laughlin's PPT

It occurs when the promisor manifests her intent, either through words, actions, writing, or implication, such that it is reasonable for the promisee to believe an offer was made.

Termination of the Power of Acceptance

Lapse of the offer Revocation of the offer Death or incapacity of the offeror Rejection by the offeree

United Nations Convention on Contracts for the International Sale of Goods

Makes irrevocable any offer stating a period of time for acceptance. There is no requirement that the statement be in writing or that it be made by a merchant.

MAJORITY APPROACH TO NOMINAL CONSIDERATION

Nominal consideration, even though it is nominal, must be paid in order for there to be an option contract

When Non-Disclosure is Equivalent to an AssertionRestatement § 161 page 669

Non-disclosure can be an equivalent to an assertion when: To correct a previous assertion To correct a mistake and avoid bad faith To correct a mistake as to the contents or effect of a writing evidencing an agreement When a person should be told because of a relation of trust and confidence

Wagers v. Associated Mortgage Investors--Part Performance

Oral agreements involving the sale of land may satisfy the statute of frauds where writings between the parties detail the terms of the agreement or where there has been part performance of the agreement.

Varying Treatment of Employee Non-Compete Agreements

Other jurisdictions take one of three approaches to restraints on trade that they deem unreasonable: 1) Strict Approach 2) Blue penciling 3) Reformation

Procedural Unconscionability

Procedural unconscionability refers to defects in the bargaining process and formation of the contract. It "encompass[es] not only the employment of sharp bargaining practices and the use of fine print and convoluted language, but a lack of understanding and an inequality of bargaining power, a term that is often used to include bargaining skill."

Restatement (Second) of Contracts §82

Promise to Pay Indebtedness; Effect on the Statute of Limitations (1) A promise to pay all or part of an antecedent contractual or quasi-contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for the effect of a statute of limitations. (2) The following facts operate as such a promise unless other facts indicate a different intention: (a) A voluntary acknowledgment to the obligee, admitting the present existence of the antecedent indebtedness; or (b) A voluntary transfer of money, a negotiable instrument, or other thing by the obligor to the obligee, made as interest on or part

If an enforceable contract exists

Promissory estoppel is not available

In re Baby

Pursuant to state law, a biological birth mother, including a surrogate, may not use a contract to avoid attaining the status of a legal parent or to negate parental status prior to childbirth.

Express Contract

Requires proof of all elements of a contract. Assent to the terms of the contract is actually expressed in terms of an offer and an acceptance.

Substantive Unconscionability

Substantive unconscionability refers to the actual terms of the contract. It is a bit harder to define than procedural unconscionability: in the context of the sale of goods, it could mean inequality, or price disparity. However, because it is very difficult for courts to tell whether a particular price is unfair or too high (there are too many factors involved), analyses of unconscionability usually focus on non-price terms. Courts will isolate the offending term or terms and ask whether they are one-sided or overly harsh; in other words, whether they are unfairly skewed against the weaker or less sophisticated party.

Universal Computer systems v. Medical Services Association of Pennsylvania--Promissory Estoppel

Test: whether "a man of ordinary prudence, diligence an discretion would have a right to believe and would actually believe that the agent possessed the authority he purported to exercise." A principal will be estopped from denying that a contract exists when an agent with apparent authority to enter into a contract on behalf of the principal makes a promise to another party reasonably anticipating that they will rely on that promise and the other party acts in reliance on that promise to their detriment.

FCC Cooling-Off Rule

The FTC's Cooling-Off Rule gives you a 3-day right to cancel a sale made at your home, workplace or dormitory, or at a seller's temporary location, like a hotel or motel room, convention center, fairground or restaurant. It also applies when you invite a salesperson to make a presentation in your home. But not all sales are covered.

AT&T Mobility v. Concepcion--Unconscionability

The Federal Arbitration Act preempts any state law that conflicts with it. The FAA preempts California's Discover Bank rule because it applies the doctrine of unconscionability in a way that disfavored arbitration.

Estoppel, Waiver, and Special Manufacture

The Statute of Frauds is an affirmative defense. Under Fed. R. Civ. P. 8(c)(1) and Tenn. R. Civ. P. 8.03, the party claiming an affirmative defense must raise it in its responsive pleading or else waive it for the litigation. Courts may apply principles of equitable estoppel to prevent a party from asserting a SoF defense if there is misrepresentation giving rise to detrimental reliance. A misrepresentation can be shown by evidence that the party relying on the statute had misrepresented whether a writing was needed or would be executed. Traditionally, mere promissory estoppel has not been enough. Some courts have chipped away at this, however.

(2) Suretyship Contracts

The Tennessee statute (which, like, that of other states, is derived from the original English version) describes this as a "special promise to answer for the debt, default, or miscarriage of another person." A surety is a person who assumes secondary liability for the duties of another person (the principal). The provision applies, with some exceptions, to all suretyship contracts or promises to sign such. The provision serves an evidentiary function to be sure, but it also serves a cautionary function by guarding the promisor (the surety) against ill-considered action on behalf of another.

UCC 2-602

The UCC says that nonconforming goods may be rejected within a "reasonable" time

UCC 2-721

The UCC, however, recognizes that in cases of fraud, expectancy damages can be recovered even if rescission is sought.

U.C.C. § 1-103(a)

The Uniform Commercial Code must be liberally construed and applied to promote its underlying purposes and policies, which are: 1)to simplify, clarify, and modernize the law governing commercial transactions; 2)to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and 3)to make uniform the law among the various jurisdictions.

UETA

The Uniform Electronic Transactions Act ("UETA") was adopted in Tennessee in 2001, and governs transactions between parties who have agreed to conduct transactions by electronic means. Under the UETA, if a law requires a signature or record to be in writing, an electronic signature or record satisfies the law.

Stepp v. Freeman--Mutual Assent--Implied-In-Fact Contract

The circumstances surrounding the transaction make it reasonably certain that an agreement was intended between the parties. "inferable that a contract existed as a matter of tacit understanding."

Filo v. Liberato--Leading Object Rule

The court finds promissory estoppel can be used as a cause of action to get around the SoF. It next finds the "leading object" exception applies here, because the purpose of the owner's promise was to benefit himself (to get the work done). "[W]here it is readily apparent that it is the promisor who will benefit from this seemingly altruistic act, the statute of frauds and its protections need not be invoked." "Unlike the doctrine of promissory estoppel, which creates a remedy for parties who could not otherwise recover because they acted to their detriment on an unenforceable oral promise, the 'leading object' rule excuses the writing requirement of the statute of frauds and, in effect, makes an oral promise into an enforceable contract."

Elements for Fraud

The defendant made a false representation as to a past or existing material fact. The defendant knew the representation was false at the time it was made. In making the representation, the defendant intended to deceive the plaintiff. The plaintiff justifiably relied on the representation. The plaintiff suffered resulting damages.

Elements for Negligent Misrepresentation

The defendant made a false representation as to a past or existing material fact. The defendant made the representation without reasonable ground for believing it to be true. In making the representation, the defendant intended to deceive the plaintiff. The plaintiff justifiably relied on the representation. The plaintiff suffered resulting damages.

James Baird Co. v. Gimbel Bros.--Promissory Estoppel

The doctrine of promissory estoppel cannot be asserted to compel performance if the promisee has not provided consideration to the promisor. "That offer could become a promise to deliver only when the equivalent was received...when the plaintiff promised to take and pay for it." "There is no room in such a situation for the doctrine of 'promissory estoppel'."

1464-Eight, Ltd. v. Joppich--Option Contract Consideration

The failure to deliver nominal consideration recited in an option contract does not preclude enforcement of the option contract. Minority approach

Restatement § 37 Termination of Power of Acceptance Under Option Contract

The power of acceptance under an option contract is not generally terminated by rejection or counter-offer, by revocation, or by death or incapacity of the offeror.

(3) Made in Consideration of Marriage

The primary point to remember here is that the provision has been interpreted to apply only to promises in which marriage is the bargained-for consideration, and not to mutual promises to marry.

Epic Systems Corp. v. Lewis--Unconscionability--The Use of Mandatory Arbitration Provision in Contracts and the FAA

The right in the National Labor Relations Act to bargain collectively refers to the right to unionize, not the right to arbitrate collectively. The claims at issue effectively arise under the Fair Labor Standards Act, and precedent establishes that the Act allows agreements for individualized arbitration. The court refuses to defer to the interpretation of the National Labor Relations Board suggesting that the NLRA displaces the Arbitration Act.

Waddle v. Elrod--SoF--Land Transactions

The statute of frauds applies to the transfer of an interest in real property.

Modificaton

The text says that if the parties to an existing contract modify it, the modification must also be in writing if the original contract needed to be in writing meet the statute. Farnsworth, section 6.2, says that no additional writing should be required so long as essential terms were not involved. Check individual state law here. Also, if the contract as modified falls within the statute, the contract with modification must comply with the writing requirement.

The "Leading Object" Exception

There is a "leading object" or "main purpose" exception to the suretyship provision. Where the leading object of a person promising to pay the debt of another is actually to protect his own interest, that promise if supported by sufficient consideration is valid, even though it is oral. In other words, if the surety's actual purpose in making the promise is to protect his or her own interests, the law does not require the promise to be in writing.

Raffles v. Wichelhaus--Misunderstanding Mutual Misunderstanding

There is no contract if there is a mutual misunderstanding by both parties as to the meaning of a term of an agreement. **Voidable

Limitations on the Infancy Rule

There most notable exception is where the purpose of the minor's contract is for "necessaries" (food, water, shelter, etc.). Also, the minor may ratify the agreement upon reaching the age of majority. Finally, many jurisdictions (some by statute, others by common law rule) will order restitution to the party who contracted with the minor, if it is at all possible to do so, for the value of any benefits conferred on the minor.

Force Majeure Clauses

These provisions allocate risk if performance later becomes impossible or impracticable due to the occurrence of an act of God or man that parties could not have anticipated or controlled

(5) The One-Year Provision

This covers contracts "not to be performed" within one year of their making. As we will discuss, "not to be performed" is interpreted as "not performable." The two key dates are the date the contract is made (not the date of the offer or the date performance begins) and the date the performance could be completed.

(4) Land Transactions

Transactions in land are significant enough as to warrant the evidentiary formality of a writing. It also creates a bright-line test to determine which transactions in land are enforceable. An "interest" in land includes "any right, privilege, power or immunity, or combination thereof."

American Express Co. v. Italian Colors Restaurant--Unconscionability--The Use of Mandatory Arbitration Provision in Contracts and the FAA

This text reflects the overarching principle that arbitration is a matter of contract. And consistent with that text, courts must "rigorously enforce" arbitration agreements according to their terms, including terms that specify with whom the parties choose to arbitrate their disputes and the rules under which that arbitration will be conducted. That holds true for claims that allege a violation of a federal statute, unless the FAA's mandate has been overridden by a contrary congressional command

Eastern Dental Corp. v. Isaac Masel Co.--SoF

To satisfy the statute of frauds, the quantity term in a requirements contract need not be numerically stated, but there must be some writing that indicates that the quantity to be delivered under the contract is a party's requirements or output.

Hoffman v. Red Owl Stores--Promissory Estoppel--Limits of the Doctrine

To support an action for promissory estoppel, a promise need not contain all of the essential details of the proposed transaction between the promisor and the promisee, so as to be equivalent to an offer that would result in a binding contract between the parties if accepted by the promisee.

Rego v Decker--Indefiniteness--Reasonable Expectations

To the extent possible, where a contract contains uncertain terms, the court should fill in the gaps in the contract to ensure the reasonable expectations of the parties have been met.

Restatement § 169: When Reliance On An Assertion Of Opinion Is Not Justified

To the extent that an assertion is one of opinion only, the recipient is not justified in relying on it unless the recipient a)stands in such a relation of trust and confidence to the person whose opinion is asserted that the recipient is reasonable in relying on it, or b)reasonably believes that, as compared with himself, the person whose opinion is asserted has special skill, judgment or objectivity with respect to the subject matter, or c)is for some other special reason particularly susceptible to a misrepresentation of the type involved.

Dixon v. Wells Fargo Bank--Promissory Estoppel--Limits of the Doctrine

Under the doctrine of promissory estoppel, a negotiating party to an agreement may not break a promise made during negotiations if the other party has relied on the promise to their detriment. **This goes beyond the idea that promissory estoppel is only a substitute for consideration. The court discusses where promissory estoppel may permit reliance recovery even where there is no mutual assent (terms are too indefinite, there is an "agreement to agree").

Northrop Corp. v. Litronic Industries--Termination of the Power of Acceptance--The Uniform Commercial Code

Under the knockout rule, if an acceptance contains terms that are additional to or different from those in the offer, the conflicting terms in both the offer and acceptance are replaced with neutral provisions from the Uniform Commercial Code.

Branco Enterprises, Inc. v. Delta Roofing, Inc.--Promissory Estoppel

Under the theory of promissory estoppel, a contract exists where a contractor reasonably relies on a subcontractor's oral bid in making an overall bid for a project.

Illegality of contracts

Unenforceable on the grounds of public policy -Illegal contracts and licensing regimes -Licensing violations -Contracts in restraint of trade (covenants not to compete)

Zippysack LLC v. Ontel Products Corp.--Unilateral Mistake

Unilateral mistake requires the proponent to show a material mistake, made despite due care, that makes enforcement of contract terms unconscionable, and that rescission will restore the other party to the status quo.

Restatement § 131: General Requisites of a Memorandum

Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which a)reasonably identifies the subject matter of the contract, b)is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and c)states with reasonable certainty the essential terms of the unperformed promises in the contract.

Adequacy of Consideration

Unless the thing given in exchange is of so little value that it fails for "want" of consideration, courts generally will not inquire into adequacy. Exceptions: fraud, oppression, unconscionability. So long as there is a real exchange, whether the items involved in the exchange are of equivalent value is the parties' concern, not the court's.

Clark v. Elza--Pre-existing Duty--Past Monetary Debts

Unless there is clear evidence to the contrary, an agreement to discharge a pre-existing claim will be regarded as an executory accord, which will suspend the duty created under the pre-existing claim during the period fixed for performance of the accord.

Krell v. Henry--Frustration of Purpose

When a condition that is not expressly mentioned in a contract can nevertheless be implied from extrinsic evidence as being understood by both parties to be the subject matter of the contract, the nonoccurrence of the condition may excuse nonperformance of the contract by both parties.

Discover Bank Rule

a California unconscionability doctrine that denies enforcement to arbitration agreements requiring consumers to waive any right to bring a class action unless the agreement also provides for class arbitration.