contracts

offer

R2 § 24: A manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

Mailbox Rule

A rule providing that an acceptance of an offer becomes effective on dispatch. §63: Time when acceptance takes effect - unless the offer provides otherwise: a. An acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but b. An accept under an option contract is not operative until receive by the offeror.

ex mailbox rule

Adams v. Lindsell P. 315 (mailbox rule only deals with acceptance) · Acceptance occurs when it is mailed · The mailbox rule is a default rule because you can contract around it, you have a choice. o The offeror can always require receipt of the acceptance before the contract is formed · This case, origin of mailbox rule, holding seems to be that because the seller misdirected the offer, he should be bound by the acceptance that would have arrived in due course of post.

Procedural Unconscionability

arises when one party to the contract lacks or is deprive of any meaningful choice regarding the terms of the contract due to, for example: o Inconspicuousness or fine print o Unintelligible language · This results to lack of opportunity to read the contract before signing it, deprived of meaningful choice

altering rule

the necessary and sufficient requirements for opting out of it when a rule is merely a default

Quantum Merit Damages

the value of the benefit conferred on the defendant (the measure of recovery if restitution is justified)

§ 20 - 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. · Misunderstanding: involved not an erroneous belief about the world, but parties who attach different meanings to the same word or words. o Rather than a voidable contract, where there is a material misunderstanding, no contract comes into existence at all.

default rules

: Rules that can be altered by agreement of the parties "gap-filling" - govern when parties have remained silent

duress

A K is voidable on the ground of Duress when it is established that the party making the claim was forced to agree to it by means of a wrongful threat precluding the exercise of his free will. · Duress by its nature can make a K voidable.

Unconciousability

A doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has superior bargaining power, that they are contrary to good conscience. · unconscionability is tested when the contract is formed. o If it turns out to be horrible after, that alone does not make it unconscionable. · Policing substantive unfairness: where there is no fraud, duress, or mistake. · Doctrine is designed to prevent oppression and unfair surprises, not to disturb the parties allocation of risk due to superior bargaining power. · Question of law for the court (not for the jury)

ex of pre existing

Alaska Packers v. Domenico (p.135) P's entered in K to be boat hands on a fishing boat. While they were at sea, the P's demanded more money for their services, saying that if they didn't get more money they would stop their work. P's allegedly signed a new K with D's gent. Upon return, D informed he was only paying P the original agreed upon payment. D won in court because P's already promised to perform in original K the same service that was allegedly consideration for second K. · Under new promise he was not to do anything more or anything differently took advantage of necessities and extorted the promise. · A promise to pay a man for doing that which he is already under contract to do is without consideration. Ex: where they asked for extra money upfront at remote location and it was given to them, the extra money given is a gratuitous gift.

§ 42 REVOCATION by communication from offeror receive by Offeree

An offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.

Mutuality of Obligation

Consideration must exist on both sides of the contract; that is, promises must be mutually obligatory. There are agreements where one party has become bound but the other has not. Such agreements lack mutuality (ex: at least one of the promises is "illusory"). If so, consideration fails. · This boils down to the question of whether a promise is real or illusory. o Illusory: one party has a way out · There is no consideration unless each side of the contract could potentially breach · If a party is "free to perform or to withdraw from the agreement at his own unrestricted pleasure, the promise is likely deemed illusory and provides no consideration." · The parties do not have a "free way out" if there is some check on their discretion, such as the duty of good faith · If no quid pro quo, no mutuality of obligation, and have an illusory promise. · Ex: p. 147 - he states "if I feel like it", in the attempted bilateral contract, there was no mutuality of obligation, and therefore no consideration o she should not be bound if the other has a free way out

Parol Evidence Rule

Evidence of alleged terms not incorporated into the written agreement but claimed by one of the parties to have been agreed to orally or in writing before or at the time of it's execution. · Hence, we are concerned here not with whether a contract has been formed, or whether there is a misunderstanding (peerless) or mistake in reducing the oral agreement to writing, but rather: o Firstly, assuming that we have a written expression of the agreement, the issue is whether one party may prove prior or contemporaneously agreed terms or conditions which alter or add to the writing (parol evidence). o and secondly, how a court determines the meaning or language in dispute, which admittedly is part of the bargain-that is, interpretation - the ascertainment of the meaning to be given contract language. · PAROL EVIDENCE is always allowed in cases of fraud and mistake and duress. · The rule only applies when a written agreement has been executed. · The writing must have been adopted by both parties. Need not be signed by them as long as it is shown to be mutual document. · The rule contemplates a two-stage process o 1. When the parole evidence is proffered the judge makes an initial finding of admissibility - if he finds evidence admissible, then o 2. It is presented to the jury that hears the testimony and makes the ultimate finding of credibility, if they see it does then it becomes part of the terms of the contract o Exception: Fraud, mistake, or duress: the judge will want to hear extrinsic evidence.

express contract

Formed by language, oral or written.

§174 (When Duress by Physical Compulsion prevents formation of a K)

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.

example of requirement contract

McMichael v. Price (p. 150) Whether a requirement contract would satisfy the consideration requirement? · A contract lacks mutuality of obligation if one party has a free way out. · P in agreement to buy various sands (all that P required) from D. P is suing D failed to supply P sand, making P lose money. Court found a Requirement K was made and therefore satisfies the consideration requirement. In K there was a duty from P to buy all sand from seller, so if P bough from someone else, it would be a breach of contract, bring about mutuality of obligation. o Requirement contract (exception to mutuality of obligation)

promise

PROMISE R2 § 2(1): a promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify the recipient of the promise (the "promisee") in understanding that a commitment has been made. · Promisor: a person who makes a promise · Promisee: a person to whom a promise is made

§ 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 specia skill, judgment or objectively with respect to the subject matter, OR c. Is for some oth4er special reason particularly susceptible to a misrepresentation of the type involved.

what is required for modification of a contract

UCC 2.209: ALL THAT IS REQUIRED FOR A MODIFICATION OF CONTRACT UNDER UCC IS GOOD FAITH. (NOT CONSIDERATION)

Material Benefit Rule

Under a modern trend, some courts will enforce a promise if: 1. it is based on a material benefit that was previously conferred by the promisee on the promisor, and 2. the promisee did not intend to confer the benefit as a gift. includes situations in which the promisee performed an unrequested act during an emergency. MATERIAL BENEFIT RULE (Exception to Moral Obligation) R2 § 86 1. A promise made in recognition of a benefit previously received by the promisor form the promisee is binding to the extent necessary to prevent injustice. (Subsequent Promise) 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. A new promise to pay a fixed sum in discharge of a preexsiting duty arising from services or material benefit rendered is enforable without new consideration :

Bilateral Contract

a contract in which there are promises due by both parties at the time of formation. (an exchange of promises - still outstanding). Promise for a promise. · A promise for a promise that is still outstanding. · Contract formed after both parties promise · Ex: I'll give you $10 if you promise to mow my lawn tomorrow) · A bilateral agreement may exist though one of the mutual promises be a promise implied in fact, an inference from conduct as opposed to an inference in words.

materiality

a matter is material if it is one to which a reasonable person would attach importance in determining his choice of action in the transaction in question. · Duty may have arisen because of the explicit question about termites · In general no duty to disclose, but asking a question creates a duty

§ 214 - Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish

a) That the writing is or is not an integrated agreement; b) That the integrated agreement, if any, is completely or partially integrated; c) The meaning of the writing, whether or not integrated d) Illegality, fraud, duress, mistake, lack of consideration, or other invalidating cause; e) Ground for granting or denying rescission, reformation, specific performance, or other remedy.

Contextual approach (modern trend)

a. Inquiry into the context in which the agreement was written b. In deciding the question of integration, a modern court is likely to go beyond the face value of the writing and entertain EXTRINSIC evidence that may be helpful in revealing that an apparently integrated writing was in fact not so intended or contains an ambiguity that is not otherwise obvious. c. EXTRINSIC EVIDENCE ALLOWED

1. The FOUR Corners (Plain Meaning Rule)

a. Prevalent during the classical period of contract law b. Emphasis on objective test of assent of the parties c. NO EXTRINSIC EVIDENCE ALLOWED: the judge decides the parties intent purely from the "four corners" of the written document.

Replevin

an action brought by owner, for repossession of goods from someone who has wrongfully detained him.

caveat emptor

buyer beware

· Contemporaneous written agreement:

presents a trickier issue and tends to be ambiguous, when two writings are executed at about the same time, it is not obvious that either is the final written memorial of the agreement.

expectation damages

the money required to put one party in the position she would have been in had the other side performed the contract put plaintiff where he/she would have been had the contract been performed. · compensation awarded for the loss of what a person reasonably anticipated from a transaction that was not completed. · Make you whole again, put you where you would have been if contract would have been performed

mandatory rule

those contract rules that cannot be changed.

· Contemporaneous oral agreement:

when oral evidence is in issue, the same reasoning excludes testimony of claimed oral agreement made contemporaneously with the execution of the writing.

Legal Adequacy

which concerns the relative value of the consideration for the promise

Legal Sufficiency

which is concerned with whether consideration was a detriment to the promisee.

Duty of Good Faith & Fair Dealing

§ 205 every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

The "Collateral Agreement" Rule

§ 216 - 1. Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated. 2. An agreement is not completely integrated if the writing omits a consistent additional agreed term which is a. Agreed to for separate consideration, OR b. Such a term as in the circumstances might naturally be omitted from the writing. · Evidence is not subject to the parol evidence rule (not subject to exclusion) if it relates, not directly to the subject matter of the agreement reflected in the writing, but to some collateral agreement. · In other words, the collateral agreement is sufficiently distinct from scope of the writing, · The collateral term offered relates to a subject matter that is not covered by the writing per se, (hence writing should be treated as partial integration), thereby allowing the collateral agreement in, so long as it is consistent with the writing. · Therefore such collateral agreement should not be excluded by PER - i.e., not subject to the PER.

Partial Integration

· If the writing is not a complete and final record of the agreement, it is said to be partially integrated. · That is, some aspects or terms of the agreement may not be integrated either because they are not dealt with at all, or because they are not expressed with sufficient clarity. · PE is admissible to supplement or explain the writing, provided... it does not contradict nor vary anything in the writing.

Total Integration

· If the written memorandum is complete and final, and a certain record of the parties' agreement (that is, it unambiguously clearly expresses every term in the agreement, and it is intended to be the exclusive statement of everything that was agreed), it is said to be totally (or completely) integrated. · Thus, a truly total integration means... no term can exist beyond those terms set out in the writing. Which means neither party will be allowed to offer the evidence. · Extrinsic evidence is not admissible.

When do contractual acts become effective?

· Offer : when received · Acceptance : when sent (§63) · Counteroffer : when received (§40) · Revocation : when received (§42)

Defenses to SOF

· The statute can be satisfied by full or part performance. · However, a K is enforceable only to the extent of the performance rendered.

UNCONSCIONABILITY

· Unconscionability doctrine is most useful when there are some elements of pressure, deception or unfair persuasion present in the formation process, but not sufficient to qualify as duress, fraud, or undue influence. · Better suited to the task of policing substantive unfairness · Concern with process where there is no fraud, duress or mistakebro o Common in consumer transactions o A consumer is a person who buys goods or services for personal, family, or household consumption. · Court generally require both substantive and procedural unconscionability.

signature

· What would qualify as a signature? o Any symbol that can be signed by you or your agent, as long as the agent has authority to do so. o Form: any symbol made or adopted with an intent to authenticate o Signer: a writing may be signed by an agent of the party against whom enforcement is sought Professional Bull Riders, Inc v. Autozone p.437 · P gave D a K that stated that D be the sponsor for two years, it had an option after the first season to stay on for the second or leave after the first. D never signed and left in the middle of the first season. P sued D for breach of K. D contended that since the K was to be performed over 2 years it had to be in writing and since it wasn't it was unenforceable. Court held that because it was an option K it was 2 one year Ks and did not fall within the SOF. P was victorious. · Ex: exception to rule is admittance in pleadings or in court · Oral should trigger exceptions and SOF

requirements contract

(Buyer = I require) · if the contract provides the Buyer will BUY ALL, or a fixed percentage of Buyer's needs or requirements from Seller, then a REQUIREMENTS contract has been formed, even though not for a specific amount. · Buyer can only buy from seller (but seller can sell to others)

output contract

(Seller = out) · If the contract provides for SELLER to SELL ALL, or a fixed percentage of her output to Buyer, this is an OUTPUT contract. · Seller can only sell to buyer (but buyer can buy from other people)

Exception to Mailbox Rule

-If acceptance is not properly dispatched by the Offeree. -If Offeror specifies that acceptance will not be effective until it is received. -If acceptance is sent after rejection, whichever is received first is given effect Exception to MAILBOX RULE: · ***RACE*** = rejection goes out first, acceptance is preceded by a rejection then it depends on what gets there first o § 40 - a letter or telegram of acceptance dispatched after the sending of an otherwise effective rejection or counteroffer only operates as an acceptance if the acceptance is received by the offeror before she receives the rejection or counteroffer. o when rejection or counter offer is put in the mail first and acceptance is put in second, it becomes a RACE and the first one to reach the offeror is legally binding (whichever gets there first) o Thus, S.40 announces an exception to the mailbox rule: o Acceptance does not take place at the time of mailing if offeree has previously sent a counteroffer or rejection. o If offeree has previously sent a counteroffer or rejection, acceptance takes place at time of receipt.

Recission

proper remedy for unilateral mistake.

§ 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.

§ 87 OPTION CONTRACT

1. 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; or b. Is made irrevocable by statute 2. An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.

R2 § 28 Auctions

1. At an auction, unless a contrary intention is manifest, a. The auctioneer invites the offers from successive bidders which he may accept or reject; b. When goods are put up without reserve, the auctioneer makes an offer to sell at any price bid by the highest bidder, and after the auctioneer calls for bids the goods cannot be withdrawn unless no bid is made within a reasonable time; c. Whether or not the auction is without reserve, a bidder may withdraw his bid until the auctioneer's announcement of completion of the sale, but a bidder's retraction does not revive any previous bid. 2. Unless a contrary intention is manifested, bids at an auction embody terms made known by advertisement, posting or other publication of which bidders are or should be aware, as modified by any announcement made by the auctioneer when the goods are put up. · BID = OFFER · Banging of gavel = acceptance of offer · Auction w/out reserve: must sell, no matter how pathetic the bid · Default Rule: advertisement (lays out terms of sale for auction) is merely a solicitation of offers. · Before Gavel comes down, can always revoke offer

§175 (When Duress by Threat makes a K 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.

§ 69 - (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. Ammons v. Wilson P. 268 (Silence as Acceptance) P ordered through agent of D certain # of shortening, (this was an offer) after ten days P did not hear back from D, he called and found out D rejected offer. Court held that D was in breach because their past dealings showed that D was always silent after an order and would ship shortening 7 days later. In this situation it was reasonable for P to rely on the silence as an acceptance and therefore D's silence constituted a legal acceptance. · Silence can act as an acceptance based on a course of prior dealings

§ 36 METHODS OF TERMNATION OF THE POWER OF ACCEPTANCE

1. an offeree's power of acceptance may be terminated by a. rejection or counter-offer by the offeree b. lapse of time c. revocation by the offeror d. death or incapacity of the offeror or offeree 2. in addition, an offeree's power of acceptance is terminate by the non-occurrence of any condition of acceptance under the terms of the offer Offers may be destroyed: (lots of multiple choice on this) o If offeror revokes (R2 36) o If unreasonable lapse of time (R2 36) o If offeror die or incapacity of offeror (R2 48) o If offeree rejects (R2 38) · If contractual relationship has already been established, there is no reason for the above.

Statues of Frauds

1. contract for an interest in real estate 2. contract where performance is over 12 months away 3. contract for the sale of goods over $500 In most instances, an oral contract is valid. However, certain agreements, by statute, must be evidence by a writing signed by the party sought to be bound. · Used as a defense against enforceability of the contract, the non-signing party can use it against a defense for enforceability · R2 110 - contracts subject to the SOF o Contracts for the sale of goods for price of $500 or more (now governed by UCC 2-201) o Contracts that can not be fully performed within one year (effective date = date of agreement, not date of performance) o Contracts to answer for the debts of another (surety of Guarantee) · Satisfied by a writing that: o 1. Reasonably identify the subject matter of the contract o 2. Indicate that a contract has been made between two parties o 3. State with reasonable certainty the essential terms of the unperformed promises o SIGNED · Examples: prenup agreement · Contract for sale of land

R2 § 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. Lefkowitz v. Great Minneapolis Surplus Store p. 219 (ambiguous offer) First ad: " sat 9am , 3 brand new coats worth to $100, first come first serve, $1 each." -This is solicitation of offer because it is ambiguous, stating fur coat wotht up to $100 and not enforced, have to ask question of what seller intended. Second ad" " ... 1 black lapin beautiful worh $139.50... $1 first come frist serve" -offer, it is definite and nothing is ambiguous · Newspaper advertisements are usually solicitations to offer, they are not offers. · Advertisements are only offers when they are clear, definite, explicit, and leaves nothing for negotiation, acceptance of which completes the K. · The test of whether a binding obligation may originate in advertisements addressed to general public is whether he facts show that some performance was promised in positive terms in return for something requested. · Acceptance will create an obligation in the offeror to perform according to the terms of the published offer. · While an advertiser has the right at any time before acceptance to modify his offer, he does not have the right after acceptance, to impose new or arbitrary conditions not contained in the published offer. · Are the advertisements: (most cases it will be B or C) o A. offers or o B. merely notices that goods will be offered o C. or notices that solicits offers.

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

Contracts of Adhesion

: Standard form contracts presented on a take-it-or-leave it basis are generally referred to as "contracts of adhesion." o Note that most contracts of adhesion will be judicially enforced. o Drafted by one party given to the other on a take it or leave it basis

Interpleader action:

: a procedure by which persons having claims against another person may be joined as parties to a lawsuit and required to set up their claims are such that the person initiating such procedure is, or may be, exposed to double or multiple liabilities. · You bring one action to prevent from exposing to multiple liabilities.

Procedural Unconscionability

: arises when one party to the contract lacks or is deprived of any meaningful choice regarding the terms of the contract due to: · Inconspicuous or fine print · Unintelligible language · Lack of opportunity to read the contract before signing

Equittable Estoppel

: is based upon a representation of existing or past facts · requires justifiable injurious reliance on a factual representation or conduct from another · promissory estoppel requires the existence of a promise (looks in the future)

Bilateral K Acceptance

: promise for a promise Ex: I promise to pay you $500, if you promise to climb the flag pole

mutual assent ("meeting of the minds")

A deliberate agreement between parties; offer and acceptance; a requirement of a legally enforceable contract. · An agreement on the "same bargain at the same time". · Courts use an objective measure, by which each party is bound to the apparent intention that he manifested to the others. · OBJECTIVE TEST - we do not care what each party subjectively intended but rather it is measure by what a reasonable person in the position of the second party would have thought what the first party intended o Parties that intend but do not manifest do not have a K o Parties that manifest but do not intend have a K Embry v. Hargadine (p. 188) - re employment contract · The actual words used, as interpreted by a reasonable man, rather than the subjective intent of the parties, determine whether a contract has been formed. · P contract for employment was up and met with boss and stated he would quit if he didn't have another year. Boss stated "go ahead, you're all right, get your men out and don't let that worry you. P thought contract was renews and made no other effort to find employment. · It was only necessary that P, as a reasonable man, had a right to and did so understand. · The meeting of the minds, is not determined by the secret intention of the parties, but by their expressed intention Lucy v. Zehmer (p. 190) - joking offer · When a parties conduct and words warrant a reasonable person in believing that he intended a real agreement, the party cannot avoid the K by claiming he was acting in jest. · P and D were at a bar getting a little tipsy. After discussion, P said he would pay $50k for D's farm. D then wrote a K on a napkin and signed it with his wife which was then signed by P signaling acceptance. D then said he was joking. The court held this a valid sale because a reasonable person in the shoes of the P would have thought this was a valid K of sale for D's farm. · Mental assent of the parties in not requisite for the formation of a contract o If words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to the other party · Objective meaning - reasonable person - under those circumstances o Parties background knowledge o Their past dealings o Purpose of conversation

consideration

A benefit to the promisor or a detriment to the promisee that is bargained for. (the quid pro quo) - a favor or advantage granted or expected in return for something. 1. There must be a bargained for exchange between the parties a. Requires that the promise induce the detriment and the detriment induce the promise. 2. Must constitute a benefit to the promisor or a detriment to the promisee. · Consideration may take the form of: o 1. An Act, including giving value (ex. Money) o 2. Forbearing from acting § The act of tolerating or abstaining o 3. Creating, modifying, or destroying a legal relationship, right or duty (waiver of any legal right at the request of another party is sufficient consideration for a promise) o 4. A return promise, as long as the promised performance would be consideration. · If either party intended to make a gift, he as not bargaining for consideration. · If promisors motive as to induce detriment, it will be treated as consideration. · If the motive was no more than to state a condition of a promise = no consideration · Benefit doesn't need monetary value o Peace of mind or gratification of influencing the mind of another may be sufficient to establish bargained-for consideration. · The test is whether the act or forbearance by the promisee would be of any benefit to the promisor. o If the promisor's motive is to induce the detriment, it will be treated as consideration; if the motive was no more than to state a condition of a promise to make a gift, there is no consideration. o Ex: come to my house and I will give you my old television. The promisee suffers a detriment by going to the promisors house, as she did not have to go there at all. However, the promise of the television was probably not made to induce the promisee to the promisor's house. Hence, there is no consideration. (this is a gratuitous promise)

Unilateral Contract

A contract that results when an offer can be accepted only by the offeree's performance. a contract whereby only performance (rather than a return promise) constitutes acceptance of the offer. · An offer for an act · PERFORMANCE = ACCEPTANCE o Complete performance · Seeks performance and not a promise · Ex: if you mow my lawn tomorrow, I will give you $10 · Ex: Bring down flag and bring it to me and I'll give you $500 is a unilateral contract o you bring down flag and give it to me is the acceptance

moral obligation

A moral obligation: a duty that is based only on one's conscience and that is not legally binding; an obligation with a purely moral basis, as opposed to a legal one. · Some time in the past A has conferred a measured benefit on B · Past consideration is not consideration in law, which means that promise will not be enforceable · You may be morally compelled to do something, but you are not legally bound to do it. Mills v. Wyman (p. 107) · Grown son comes back from voyage, he was sick and good samritan takes him in. Father (D) wrote a letter promising to pay. D did not pay P. The court found the promise unenforceable because D made out of moral obligation. The promise to pay wasn't given in exchange, was not given to induce the man to take care of his son and therefore the consideration could not be enforceable. · Promise did not induce him to take care of son, nor did caring of son induce promise: because the action occured first and the promise came later · Ex: if D would have offered to pay P before treatment commenced then the promise would have been legally enforceable because there would be adequate consideration. · Ex: same facts as case but son is a minor; D would have a legal duty (moral obligation plus antecedent benefit)

§161 (when Non-Disclosure is equivalent to an Assertion)

A person's non-disclosure of the fact known to him is equivalent to an assertion that the fact does not exist in the following cases only: a. Where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material. b. Where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. c. Where he knows the disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part. d. Where the other person is entitled to know the fact because of a relation of trust and confidence between them.

Material Benefit Rule again

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. Webb v. McGowin (p. 112) · P was going to drop 75lb block on D, to prevent serious injury to D, P dropped with block to not hit D. P was crippled for life. McGowin (D) agreed to give him $15/week/life in consideration for saving life. After D's death estate tried to stop. Court held that in saving D from death or serious bodily injury, this was a material benefit. · Material benefit = save you from serious bodily injury or death. This was the promisors benefit · a moral obligation is sufficient consideration for a subsequent promise if the promisor received a material benefit, even if the promisor had no original duty or liability. First Hawaiian Bank v. Zuckerkorn (p.103) · if you make a new promise (by debtor) to pay, although the statute of limitations has past, it resets the clock and restores the obligation. · R2 § 82: a promise to pay all or part of the antecedent contractual or quasi-contractual indebtness owed by the promisor is binding if the indebtness is still enforceable or would be except for the effect of the statute of limititations. · Pg 106 SOL

mixed motives

A promise may be enforceable if it is supported by some consideration, even if that consideration was not the primary motive for making the promise. Thomas v. Thomas (p.118) · R2 § 81: the fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise." · Deceased husband, had several property, wanted to leave one house for wife. D had express agreement with wife - P would pay money for upkeep of the grounds allowing P to live there. Several years later D reengaged stating mixed motives were the basis for consideration. o Court held that the agreement had a valid consideration and the motives of the parties did not matter. (stipulation for payment not a mere proviso, but an express agreement). o It was just desire of husband, the contract was established when they put it in writing that they would give her the house as long as she maintained the house, $1/yearly, and remain unmarried. (the motive was the brother trying to honor the wishes of his late brother, but would not be able to incorporate that into the will) o Motive not the same thing as consideration, what's important is the promise supported by consideration § Consideration moving from plaintiff

Invitation to treat

An invitation to treat is only inviting a person to make an offer that does not have to be accepted. · Invitation to treat is an invitation to make an offer o Ex: mail with offer for a credit card from a bank is an invitation to treat § When you fill out the application for a credit card that is an offer from you § Them accepting you to have a card is an acceptance o Most advertisements as well as requests for proposals and invitations to bid, are not offers that the recipient can accept and thereby form a contract, o rather they are invitations to recipients to make an offer that the party issuing the invitation may choose to accept and thereby form a contract

§ 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

implied in fact contract

Formed by Manifestations of assent other than oral or written language 1. Plaintiff expected the defendant to compensate him or her for services; and 2. The defendant knew or should have known that the plaintiff expected compensation. · Intention of parties is not expressed, but agreement in fact, creating an obligation, is implied or presumed from their acts. · Must include all elements of express contract o Mutual agreement/consent o Intention of the parties o Meeting of the minds · Mutual agreement & Intent to promise, but agreement and the promise have not been made in words and are implied by the facts. (inferred by conduct) · Same legal effect as an expressed contract · Ex: a person sits in a barbers chair and the barber cuts his hair, a contract has been formed by the parties' conduct. · Ex: order food delivery and food is delivered, there's an implication

Hadley v Braxdale

Hadley v. Baxdale (p.41) · Mill - broken shaft · An injured party may recover only those damages that fairly and reasonably arise naturally from a breach or that may reasonably be supposed to have been contemplated by both parties, at the time the parties made the contract, as the probable result of a breach. R2 §351: 1. Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made. 2. Loss may be foreseeable as a probable result of a breach because it follows from the breach a. In the ordinary course of events; OR b. As a result of special circumstances, beyond the ordinary course of events, that th3e party in breach had reason to know.

doctrine of consideration

Have to test a Promise with the Doctrine of Consideration to see if it is legally enforceable. · Bargain: a negotiation resulting in the voluntary assumption of an obligation by one party upon condition of an act or forbearance by the other. · Benefits conferred without a promise and benefits conferred before a promise are normally not recoverable on a contract theory o Doctrine of consideration would not apply R2 §71 : 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 given by the promisee in exchange for that promise. (Quid Pro Quo) 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 some other persons.

implied in law contracts ( quasi )

Not contracts at all Construed by courts to avoid unjust enrichment by permitting the plaintiff to bring an action in restitution to recover the amount of the benefit conferred on the defendant. 1. Benefit conferred upon defendant by plaintiff 2. Appreciation by defendant of such benefit 3. Acceptance & Retention by defendant of such a benefit under such circumstances that it would be inequitable to retain the benefit without payment of the value thereof. · No reference to intentions or expressions of parties · Obligation arises, not from consent of parties, but from the law of natural immutable justice and equity. (obligation imposed despite of intention) · Act from which law implies must be voluntary. · Ex: doctor renders serviced on unconscious man

Option Contract (firm offer)

R2 § 25: an option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke. · Option contract: limits power to withdraw in light of consideration R2 §45: (option contract created by part performance) ACCEPTANCE BY PERFORMANCE 1. Where an offer invites an offeree to accept by rendering a performance AND does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. 2. The offerors duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer. · A contract where a promise is legally binding on the offeror, to keep an offer open for a period of time. · A valid option therefore eliminates the offeror's usual power to disregard her commitment to keep the offer open and to revoke it at any time before it is accepted. · A valid option K eliminates the offerors power to withdrawal the offer, usually an option K is gained through consideration. o Ex: offeree pays offeror a certain amount of money to leave offer opened for a specified period of time. · Option contract = can't withdraw offer o Some consideration is given to leave it open for a certain period of time and therefore you cannot withdraw within that certain period of time. · Option contracts are resilient, cannot be revoked by offeror nor destroyed by counter offer o Offeree can destroy contract by stating he isn't going to exercise option or let time lapse

Preliminary Negotiations

R2 § 26 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. · Was there an expression of a promise, undertaking, or commitment to enter into a contract rather than a mere invitation to begin preliminary negotiations not an offer

Offer: Creation of Power of Acceptance

R2 § 29 (to whom an offer is addressed) 1. The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance. 2. An offer may create a power of acceptance in a specified person or in one or more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance. · An offer has an immediate and significant legal effect. · It enables or empowers the offeree to accept and thereby place the parties in contractual relationship. · Thus an offer is said to confer upon the offeree a "power of acceptance." · An acceptance is the exercise of the power conferred by the performance of some act or acts · Both offer and acceptance must be "acts" expressing assent. General Rule: The offeror's manifestation intent determines who may accept the offer R2 §.29(1). The offeror may give the power to accept to: § A specified person § One or more members of a specified group or class of persons § Anyone or everyone who makes a specified promise or renders a specified performance R2 §.29 (2)

contract

R2 §1: 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.

Unconciousability restatement and ex.

R2 §208/UCC §2-302: Pursuant to the Uniform Commercial Code, a court may find a contract clause or an entire contract to be unconscionable at the time it was made and may: 1. Refuse to enforce the contract; 2. Enforce the remainder of the contract without the unconscionable clause (sever); OR 3. It may so limit the application of any unconscionable clause to avoid nay unconscionable result. 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. Jones v. Star Credit (p.572) P (Welfare recipient) bought a freezer worth $300 for $1000 after markup and warranty was unconscionable as a matter of law after P paid over $600. D knew P was uneducated, poor, and nobody else would extend him credit.

Promissory Estoppel

R2 §90: A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by the enforcement of the promise. 1. The promisor should reasonably expect to induce action or forbearance 2. Such action or forbearance is in fact induced. · If a detriment of a definite and substantial character has been incurred by the promisee, then the court may enforce the promise. · A promise: o Must be reasonably expected to induce reliance or forbearance by promise or third party o It does induce the reliance or forbearance Injustice may only be avoided by enforcement of the promises (remedy to avoid injustice - amount varies depending upon amount of reliance) · A party reasonably and foreseeably relied on promise, and as a result of that reliance a detriment was incurred.

nominal consideration

Some jurisdictions enforce a contract where there is only a peppercorn (tiny bit) of consideration. · Adequacy of values exchanged: as long as there is a legal detriment in exchange for the promise, the court will not look into the value of the detriment. · Ex: giving someone a house for $1 is nominal consideration. · Courts don't like to look at the adequacy of the consideration. · Where assent is negated by a defect in bargaining power (FRAUD DURESS UNCONSCIONABILITY - "shocks the conscience"), the courts will take cognizance of the disparity in the exchange and overturn or adjust its terms · Restatement rejects because doesn't look into adequacy of consideration but that there is consideration- changes consideration from a new rule/immutable rule to a default rule so that oarties can contract around it · Might be a mere formality should be suspicious of the value difference- restatement 2nd · Common law rule- it was the seal · Contemporary view- is insufficient for a contract- not bargained for just a pretense of the bargain Browning v. Johnson (p. 121) · Osteopaths - P originally had a contract with D for D to have option to buy practice. P made a contract with D which said P would pay D $40k to no longer have option to buy practice. P wanted to get out of second contract stating that there was not adequate consideration. Court held that there was, D giving up his option buy practice for $40k constituted valid consideration. · Partied who are competent to contract will not be relieved from a bad bargain that they make unless consideration is so inadequate, which is not the case here. o Courts are promoting the policy of enforcing voluntary exchange on the terms agreed by the parties (don't care about adequacy)

Pre-existing duty rule

The promise or performance of an act that the promisor is already legally obligated to perform does not constitute consideration. · The Rule: the essence of the so-called pre-existing duty rule is that performance or the promise to perform a preexisting duty does not constitute consideration for a promise to pay more or so something not required by the original contract. o Policy rationale: (1) to prevent extortion and (2) to prevent the hold up game o Exceptions: § New or different consideration promised § Voidable obligation · Ratification: a person's binding adoption of an act already completed but either not done in a way that originally produced a legal obligation or done by a third party having at the time no authority to act as the person's agent. § Pre existing duty owed to third party § Honest dispute as to duty § Unforeseen circumstances § Modification of contract for sale of goods § Existing debts · Ex: agree to do A, must do A cannot use A as consideration for a new contract. That new contract must have new consideration. · If there is a substantive policy consideration supportive of the pre-existing duty rule it is the prevention of coerces contractual modifications.

illegality

When a term is unenforceable on grounds of public policy · even if there is a contract, but based on illegal contract so court will look to set it aside if any of the following are illegal or against public policy. 1. Bargain itself 2. It's performance Objectives to be achieved

unilateral mistake

a) : generally, a mistake made by only ONE of the parties will not excuse her performance of the contract unless: §153 o The other party to the contract knew or should have known of the mistake; o Enforcing the contract despite the mistake would be unconscionable; or o The mistake is one of the mathematics only; and, o Even then, her performance will only be excuse if she does not bear the risk of mistake. §153 (when mistake of ONE party makes a contract voidable) - unilateral mistake 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 §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. · voidable contract: Where one party may elect to avoid the legal relations created by the contract or by ratification of the contract to extinguish the power of avoidance.

mutual mistake

a) a mistake on the part of BOTH contracting parties as to some material fact and will allow either party to avoid the contract, unless the party bears the risk of mistake. §152 (When mistake of BOTH parties makes a contract voidable) 1. When a mistake of both parties at the time of a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performance, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under §154. 2. In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.

Unilateral K Acceptance

acceptance in form of performance Ex: If you climb that pole, I will give you $500 ver-Title Roofing v. Green P. 259 (performance as acceptance) - unilateral contract · D contracted P to redo roof. P ran credit check, once finished, loaded truck and headed to D. D had hired someone else to do roof. Court held that P had begun performance when he loaded the trucks, this constituted a valid acceptance by converting D's offer into a firm offer which could not be revoked at beginning of performance. o This demonstrates the modern trend with a unilateral K, once performance begins in converts into an option contract (a firm offer) and the offer cannot be revoked. In a sense it converts the unilateral K into a bilateral K, because the performer is promising to finish the work when he begins o When time period for offeree to accept offer is not specified courts will defer to a reasonable time period which is different depending on the facts of the case. o Loading of truck was a return promise and therefore a bilateral contract · Offer can be withdrawn before acceptance and no obligation · Expectation damages: includes profit of the job · Reliance damages: loading truck

Substantive Unconscionability

arises when the TERMS of the contract substantially deprive one party of the benefit of its bargain · Elements include: o Lack of meaningful choice o Gross inequality of bargaining power o Commercially unreasonable contract · Courts generally require both procedural and substantive but some courts will find substantive sufficient by itself · Cross collater clause effect of keeping balace due on all items purchased until that time when all the balance was completely paid

Substantive Unconscionability

arises when the terms of the contract substantially deprive one party of the benefit of its bargain. · Elements include: o 1. Lack of meaningful choice § In terms of contract o 2. Gross inequality of bargaining power § Negotiating from point of weakness, limited knowledge, limited power v. big company o 3. Commercially unreasonable contracts

Federal Trade Commission (FTC)

has regulated the door to door sales o "Requires a cooling off period" for the consumer. o Also section 4(c) of uniform consumer sales practice act provides favorable conditions to the consumer for the courts in determining whether an act or practice is unconscionable. Read notes on p.576-7; Jones v. Star Credit

reformation

is usually where there is mutual mistake in expression

· OFFEROR = MASTER OF THE OFFER

o Offeror - Determines how acceptance will be made § What is the person requiring you to do § Offeror gives offeree power of acceptance - but can limit this power in any way · Ex: accepting within a certain time period of in a certain manner o Offeror - Can destroy the offer § can withdraw the offer at any time before acceptance (unless its an option K) o Offeror power to withdraw is limited with an OPTION CONTRACT § Ex: offeror requiring offeree accept within a certain period of time o Option Contract = firm offer, power of offeror to withdraw that offer is limited under a certain period of time. § Ex: offer to sell car by Friday next week, Thursday she changes her mind and sells it to someone else. Can change her mind. § BUT if gives deposit - offeror can not revoke the offer before the time given because consideration has been paid to keep it open. § Without deposit or consideration, it would not be a breach of K if she sells it to anyone else before Friday - just a regular contract and you have the right to sell it to whoever you want unless that deposit/consideration was put down to keep it open for that specific period of time. § In order to have an Option contract/firm offer: where offeree has given that consideration to leave it open for a specific period of time. · Therefore the offeror cannot revoke the offer before that time. · In the bargaining relationship, an offer, however defined, must be communicated to be effective. · Once communicated the offer creates in the offeree a power of acceptance, the duration of which may be limited by the terms of the offer or some concept of reasonable time.

· B. Incompetence/Insanity

o Rule: a person lacks the mental capacity to contract only if his mental processes are so deficient that he lacks understanding of the nature, purpose, and effect of the transaction. o A contract entered into by such a person is voidable by him or by a guardian acting on his behalf (not by other party).

Capacity of Parties: Voidable Contracts - MINORS

o Rule: the contracts of a minor are voidable (buy the minor only) at the option of the minor, but a minor may nevertheless enforce the contract against the adult. o Exception/ratification upon age of majority: if a minor enters into a contracts and soon after he/she turns 18, he/she has a reasonable time after he becomes a major to get out of the contract. o However, once the contract is ratified by the minor it becomes valid and binding and no longer voidable. o Ways to ratify contract: § 1. Failure to timely disaffirm § Expressly o In sum, infants may enter contracts, but they retain the right to void the contract. o Some states mitigate the harshness of this rule by giving the other party the ability to obtain restitution, including the return of the goods sold if they exist; so if o If contract involve "necessaries" - goods or services that the infant needs to live—then the infant must pay restitution if he disaffirms the contract.

reliance

reimburse the plaintiff for any cost-monetary or otherwise she/he incurred in preparation for and/or in furtherance of performance (aka out of pocket damages) · Put you where you were before you started the contract; anything you expended as a result of what your relied upon. · Damages should be limited to reliance Ex: G and Rich had agreement where Rich promised to open a liquor shop with G (Rich would be the financial backer, G went out and bought a shop and material to start it up and Rich reneged. · Expectation damages: · Reliance Damages: G could recover for his out of pocket expenses that were incurred based off of the reliance of the promise, in this case the shop and materials that were bought for to start it up (gets you back to where you were, before you acted on the reliance of the promise)

§54(1). Acceptance by Performance

where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification. THE COMMENCEMENT OF A UNILATERAL CONTRACT TURNS IT INTO AN OPTION CONTRACTS, BUT THE ACCEPTANCE IS NOT COMPLETE UNTIL THE PERFROMANCE IS COMPLETE Carlill v. Carbolic Smoke Ball p.241 (acceptance by performance and not by promise) D was owner of medical product, placed ad - if you use 3x daily for 2 weeks you won't get the flu and would give them 100 pounds. Ad also stated 100 pounds was placed in vault. Court held that the ad was an offer and not a pudd because the ad was clear, definite, and unambiguous. The vault showed D was serious. Court reasoned that P did not have to notify the D that they were doing what the ad required (acceptance) · Purpose: offers for a unilateral contract may not require notification of acceptance. · If there is an option contract, ability to revoke is not there · Advertisement is generally a solicitation for the offer · One who performs the conditions for receiving a reward offer in an advertisement has accepted the offer, creating a contract for payment of reward.

modern trend (modification of contract)

which is also an exception to the pre-existing duty rule R2 §89 - A promise modifying a duty under a contract not fully performed on either side is binding: (all of the following elements need to be present) 1. Parties voluntarily agree a. The promise modifying the original contract was made before the contract was fully performed on either side; AND b. The underlying circumstances which prompted the modification were unanticipated by the parties; AND c. The modification is fair and equitable Angel v. Murray (p. 140) D entered into 5 year contract to pick up trash with P. The amount of units for service unexpectedly rose. D asked for more money than original K stated. P did not want to pay additional money using pre existing duty rule. Court ruled in favor of D using the modern trend. · There was a substantial increase and only fair that he gets paid for the extra number of homes that he has been collecting garbage from Modifications without consideration when the modification flows from an unexpected change in circumstances.

misrepresentation

§ 159 A Misrepresentation is an assertion that is not in accord with the facts. · "assertion" would include not only words but conduct. · Remember that, in general, the misrepresentation must be an assertion of existing fact (not future facts). · Generally a contract can only be rescinded for fraud following a misrepresentation of fact and not opinion. o Existing facts not future · Erroneous statements of opinion do not render it voidable o Misrepresentations of fact renders a contract voidable; erroneous statements of opinion do not.

Undue Influence

§ 177 - (When Undue Influence make a K 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 t now of the undue influence either gives value or relies materially on the transaction. · Misuse of position of confidence or taking advantage of a person's weakness, infirmity, or distress to change improperly that person't action or decisions—thus undermines revealed preference, ie, meeting of the minds · Undue influence deals with situations which duress was not present, but one of the parties had a particular strong influence over the other, and abused this position of dominance to persuade the weaker party to enter into a disadvantageous K o Usually limited to situations where there is a relationship of trust. Ex: Father owned business hired accountant, when passed away, son took over and continued with same accountant. But then accountant got son to sell the company for half the price. This is Undue Influence. Ex: Husband and Wife, if you don't do this, I am going to report to to the IRS. This is Undue Influence, you use a position of power.

Counteroffer

§ 39 - 1. A counter-offer 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 counter-offer, unless the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree. · Usually a counter offer rejects the original offer, and makes the original offeree the new offeror. · Any response by an offeree which varied or added to the terms of an offer was treated a as counteroffer · Common law mirror image rule: "a proposal to accept, or an acceptance, upon terms varying from those offered, is a rejection of the offer and puts an end to the negotiation, unless the party who made the original offer renews it, or assents to the modification suggested."

***MISTAKE***

§151 - a mistake is a belief that is not in accord with the facts. · Mistakes are made when the parties have incomplete information at the time of contracting. The information is knowable but not known. · A mistake is determined at the time of formation of the contract. What information of the parties have at the time of the formation of contract.

acceptance

§50 (Acceptance; Acceptance by Performance; Acceptance by Promise) 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 incudes acceptance by performance which operates as a return promise. 3. Acceptance by Promise requires that the offeree complete every act essential to the making of the promise.

Mirror Image Rule

§59 - a reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer. · Any response by an offeree which varied or added to the terms of an offer was treated a as counteroffer Minneapolis & St Louis Railway v. Columbus Rolling-Mill p. 322 · Mirror image rule: counter offer which destroys sellers offer · There is a considerable body of law which differentiates between a so-called "conditional" acceptance, which is no acceptance at all, from a genuine acceptance accompanied by mere "inquiries", "requests", "suggestions" of the offeree.

fraud

· A fraud is o A misrepresentation or omission o Of material fact, o Made knowingly and with intent to deceive an innocent party o On which the innocent party justifiably relied o Resulting in injury to the innocent party

objective test

· An agreement on the "same bargain at the same time". · Courts use an objective measure, by which each party is bound to the apparent intention that he manifested to the others. · OBJECTIVE TEST - we do not care what each party subjectively intended but rather it is measure by what a reasonable person in the position of the second party would have thought what the first party intended o Parties that intend but do not manifest do not have a K o Parties that manifest but do not intend have a K Embry v. Hargadine (p. 188) - re employment contract · The actual words used, as interpreted by a reasonable man, rather than the subjective intent of the parties, determine whether a contract has been formed. · P contract for employment was up and met with boss and stated he would quit if he didn't have another year. Boss stated "go ahead, you're all right, get your men out and don't let that worry you. P thought contract was renews and made no other effort to find employment. · It was only necessary that P, as a reasonable man, had a right to and did so understand. · The meeting of the minds, is not determined by the secret intention of the parties, but by their expressed intention Lucy v. Zehmer (p. 190) - joking offer · When a parties conduct and words warrant a reasonable person in believing that he intended a real agreement, the party cannot avoid the K by claiming he was acting in jest. · P and D were at a bar getting a little tipsy. After discussion, P said he would pay $50k for D's farm. D then wrote a K on a napkin and signed it with his wife which was then signed by P signaling acceptance. D then said he was joking. The court held this a valid sale because a reasonable person in the shoes of the P would have thought this was a valid K of sale for D's farm. · Mental assent of the parties in not requisite for the formation of a contract o If words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to the other party · Objective meaning - reasonable person - under those circumstances o Parties background knowledge o Their past dealings o Purpose of conversation

conditional promise

· Conditional Promises are enforceable, no matter how remote the contingency, unless the "condition" is entirely within the promisor's control. o Ex: I will buy your company IF you hire my son § Legally enforceable under a conditional promise because condition outside of promisor's control o Ex: I promise to buy your house IF I eat pizza tomorrow § Not legally enforceable under conditional promise because promisor has control of the condition

sot

· Contracts that cannot be fully performed within one year; (p. 436) o If a contract is not capable of being performed within one year then it must be in writing. o Capability of performance: of a contract is capable of performance within a year then it need not be in writing. o It's a question on whether the performance can be performed within one year o Its not a question on whether it can extend beyond a year, but rather a question on which it can be performed within a year. § Ex landscaper hired to cut down all the trees in florida in one year, not asking whether contract can extend or whether it can be completed but rather that the contract is for one year. § As long as contract says it has to be performed within a year o *** Agree to complete a job within a year, but it takes 18 months, it does not matter because the original oral contract was for within a year.*** · When do you start accruing the time for a contract? o Start counting time from the time the contract is entered into and NOT at the time performance begins.

effect of open terms

· Effect of open term (s): o the existence of one or more open or uncertain terms may be evidence that the purported offer is only preliminary. R2 §33 (3).

ex of promissory estoppel

· Ex: family sister in GA and they lost their job and we are here in Florida and they are having a hard time and we pick up phone and suggest to come down here bc rich husband and set up business down here. Sister sells house take kids out of school. Then husband says he doesn't want to. That is a reasonable foreseeable reliance. Can recover under promissory estoppel. · Ex: P was unhappy as a cab driver, he told his rich friend (D). D who was a war buddy said I will give you a loan with no interest for the money you need to start your own cab company. P quit his job to his detriment. When he called D for the loan, D stated that it was merely gratuitous offer and no longer wanted to give him the money. Since P relied on the promise to his detriment, and D should have reasonably foreseen this reliance, the doctrine of promissory estoppel is applicable. · the key difference between a promise supported by consideration and a gratuitous promise supported by promissory estoppel is that on the former case the detriment is bargained for in exchange for the promise of the promisor. Ricketts v. Scothorn (p. 164) · D (grandfather) told P (granddaughter) that she no longer had to work; he would pay her sum of money. P quit her job (to her detriment) and relied on this promise. When D died the executor said there was no consideration and therefore promise was not legally enforceable. The court applied promissory estoppel and held that P altered her position for the worst based off of the reliance and it would be grossly unjust not to enforce it. o No quid pro quo: he did not say if you quit your job, I will give you o The promise was not to induce her to quit her job, although it could have been foreseen o No recovery under Doctrine of consideration Alleghany College v. Jamestown (p. 170) Cardozo had to imply consideration: when the college accepted $1k, it assumed a duty to do whatever was necessary to make a memorial fund and defendant received the benefit of knowing her name would be memorialized. · Because she never asked for it to be publicized it is implied · Dissenting Judge treated relationship as a gift or unilateral contract, and in either case the promise is not enforceable. o Unilateral: performance never took place, action required, she never gave $5k, never paid, so colleges obligation never arose. Blinne v. Beatrice Community Hospital (p. 383) · P's K with D almost up for his employment. P had job offers from other places, told D he would take them unless he had promise of employment from D. D stated "we have at least 5 years more of work ..." P was fired 7 months later, P sued that he relied on promise and passed up other employment. Court held promise was legally enforceable despite consideration because of the doctrine of promissory estoppel. o Reliance is that he forewent the other job · Unilateral contract determined by the outward manifestation Congregation Kadimah Toras (p.176) · Rabbi would visit ill man, during one of the visits D promised to give congregation $25k, never written, and congregation was going to use it for a library. · An oral promise to make gift cannot be enforced unless the promisee has acted in reliance on the promise. · A hope or expectation, even though well founded, is not equivalent to either legal detriment or reliance

DEFECT IN BARGAINING PROCESS

· Focus is on acts or omissions by one party which seriously disrupt the bargaining process. · There may be defenses that may be raised even with offer acceptance and consideration o Undue influence o Unconscionability o Capacity o Mistake · Therefore courts will seek to set aside agreement

Baily v west

· Horse: P took care of horse without knowing who had definite ownership. The fact that P volunteered his services under the condition of not knowing who owned the horse, P cannot recover for a contract implied in fact. Cannot recover for quasi because no one was unjustly enriched. · A. There was no mutual agreement and "intent to promise" to establish a contract "implied in fact" for defendant. · B. plaintiff was a mere volunteer who boarded and maintained horse at his own risk with full knowledge that he might not be reimbursed. · In absence of agreement between West and Bailey, or justified expectation of payment of Bailey's apt, the law would not force west to pay for Bascom Folly's food and board.

gratuitous promise

· a condition attached to a gift. o Aka nudum pactum o a promise not supported by consideration is a gratuitous promise. Kirksey v. Kirksey (p.71) · D told P she could live on his property, P moved set up her life there, D then rescinded the promise. · Court found that it was a gratuitous promise and not legally enforceable (conditional gift creates no detriment)