BMGT 380 Test 3

UCC

- Deals with sale of goods (Goods must be tangible, movable personal property) Does NOT apply to services, real estate, stocks, bonds

Quasi Contract Examples:

1. Jones paints Smith's house by mistake, thinking it belongs to Reed. Smith knows that Jones is painting his house but does not inform him of his error. There are no facts from which a court can infer that Jones and Smith have a contract because no prior dealings or discussions Smith knowingly getting a free paint job would unjustly enrich them at the expense of Jones, so court implies as a matter of law a promise by the benefited party to pay for the REASONABLE value of the benefits received 2. Thomas Products fraudulently induced Perkins to buy a household products franchise by grossly misstating the average revenues of its franchisees. Perkins discovers the misrepresentation after he had resold some products that he has received but before he has paid Thomas for them. Perkins elects to rescind (cancel) the franchise contract on the basis of the fraud Enabling Perkins to avoid paying for the goods he resold would unjustly enrich them as the expense of Thomas, so courts imply as a matter of law a promise by the benefited party to pay the reasonable value of the benefits he received

4 Exceptions to Revocation

1. Options: Offeror agrees not to revoke offer for a stated time in exchange for some valuable consideration, and has received consideration (ex. Jones in exchange for $5,000 gives Dewey a six-month option to purchase her farm for $550,000. Jones cannot revoke offer during the six-month period, and Dewey has no obligation to accept Jones' offer) 2. Offer for a Unilateral Contract: Offeree has started to perform requested act before the offeror revokes, cannot be revoked for a period of time that it would take a reasonable person to do the job. (ex. Franklin makes unilateral offer to Waters: "If you mow my lawn, I'll pay you $25. since Unilateral is contract at 100%, Franklin tries to wait until Waters is almost done to say "I revoke" - right to revoke suspended for the necessary reasonable amount of time to complete performance, other approach is Promissory Estoppel if the offeree relies on the offer being kept open) 3. Promissory Estoppel: Offeror says they will keep an offer open, Offeree relied on representation that the offer will remain open, Cannot revoke. (ex. Gigantic Contractor seeks to get the contract to build a new high school gym, it receives bids from subcontracts, Liny Electric submits lowest bid to do electrical work on job, Gigantic uses Liny's bid in preparing its bid for the general contract. Gigantic cannot accept Liny's bid until it knows it has gotten the contract. School awards Gigantic the contract, before Gigantic can accept Liny's offer, Liny attempts to revoke it. Court can use doctrine of promissory estoppel to hold that Liny's offer could not be revoked) 4. Firm offer for the sale of goods under UCC. It is sort of like an option but there's no separate side deal. Is irrevocable for a period of time even without consideration (reasonable time if no time stated) To be a firm offer: 1. Be made by an offeror who is a merchant 2. be contained in a signed writing, 3. give assurances that the offer will be kept open (ex. Worldwide Widget makes an offer in signed writing in which it proposes to sell a quantity of Turbo Widgets to Howell, and gives assurances that the offer will be kept open for a year. This would be a firm offer, but it can be revoked after three months if Howell has not yet accepted) Code requires that assurance terms on forms provided by the offerees be separately signed by the offeror to effect a firm offer (case of taking advantage of merchant customers by placing an assurance term in order forms) ------------------------------------ *Time of Effectiveness of Revocations - Revocations are effective only when they are actually received by the offeree (ex. Davis offers to landscape Winter's property for $1500, Two days after the offer Davis changes his mind and mails a revoke letter. The next day Winter who has NOT YET received Davis' letter calls to accept the offer - This forms a contract because he has not YET received the revocation)

Elements of an Offer (Different from UCC and common law)

1. Some objective indication of a present intent to contract on the part of the offeror 2. specificity or definiteness in the terms of the alleged offer 3. whether the alleged offer has been communicated to the offeree

Termination of Offers (7 ways)

1. Terms of the Offer - Offeror is "master of the offer" and has power to determine terms and conditions (ex. This offer is good for 5 days, must send acceptance by mail) 2. Lapse of Time - Offers that fail to provide a specific time for acceptance are valid for a reasonable time ( can have brief duration such as stocks or bonds, or produce) (normal time for communicating and response for mailed offers) 3. *Revocation - Offers are revocable in general any time before acceptance, even if they stated promise is open for specific time period ***4 Exceptions: see next*** (Revocation only effective when received by the offeree) 4. Rejection - Offeree may expressly reject an offer by indicating that he is unwilling to accept it. Implied rejection by making a counteroffer, Rejection terminates power to accept the offer (Rejections only effective when received by the offeror) *Offeree who mailed rejection can still change her mind and accept if she communicates the acceptance before the offeror receives rejection 5. Death or Insanity of Either Party - Death or insanity of either party automatically terminates the offer without notice (Meeting of Minds is impossible) 6. Destruction of Subject Matter - Offer is terminated if prior to acceptance subject matter of the proposed contract is destroyed without knowledge or fault of either party (ex. Mark offers to sell Wiggins his lakeside cottage, then the cottage was destroyed by fire before Wiggins accepts - the offer was terminated on the destruction of the cottage) 7. Intervening Illegality - Offer is terminated if the performance of the contract it proposes becomes illegal before the offer is accepted (ex. Computer manufacturer offered to sell computer to another country, but two days before the offer was accepted, Congress placed an embargo (ban) on all the sales to this country - offer was terminated by the embargo)

Cabot Oil & Gas Corp v. Daugherty Petroleum

6 elements: (1) whether the contract of that class is typically in writing (2) whether it is of such nature as to need a formal writing for its full expression (3) whether it has few or many details (4) amount involved is large or small (5) whether it is common or unusual contract (6) whether the negotiations themselves indicate that a written draft is contemplated as a final conclusion of the negotiation

Bilateral Contract

A promise made in exchange for another promise (contract formed as soon as the promises are exchanged, even before the parties begin performing any of the acts promised)

Executed and Executory Contracts

An executed contract has been fully performed by both sides. An executory contract has been made, but one or both sides have not yet fulfilled all of their obligations

acceptance by non-instantaneous forms of communication

Circumstances under which the offer was made reasonably led the offeree to believe that acceptance by some non-instantaneous form of communication is acceptable Offeree responds by using mail or telegraph, or other means that creates a time lag between dispatching of acceptance and its actual receipt by the offeror Because of lag offeror may be attempting to revoke offer while the offer is attempting to accept Mailbox Rule

Common Law of Contracts

Court-made law Covers Anything not covered by UCC

Consideration: Promissory Estoppel

Exception to the consideration requirement: Elements: (1) promise (2) that the promisee relies on (3) that causes significant damage when not carried through (4) and the damages could be avoided by enforcing the promise In absence of consideration, court can decide whether promissory estoppel applies to a promise made by an offeree to keep an offer open

Preexisting Duties

Fail to meet consideration requirements. Agreeing to perform a promise that one is legally required to do is a pre-existing duty not a consideration. (ex. Every member of society has duty to obey the law and refrain from crime, a promisee's promise to not commit an crime in exchange for something is not consideration) Lacks legal value

Illusory Promises

Fail to meet consideration requirements. they lack mutuality of obligation. When a promise does not really promise anything (promise to "buy all the sugar that I want") ex. Defendant retained ability to modify any term of the contract at any time -> promises were illusory

(3) Communication of Acceptance

For Bilateral contract -> offeree must make the promise requested by the offer, communicate intent to be bound by the offer For unilateral contract -> offeree must perform the requested act

Preexisting Contractual Duties and Modifications under Common Law

General Common law on contract modifications holds that agreement to modify an existing contract requires some new consideration to be binding ex. Turner enters into contract with Acme for construction of new office for $3,500,000. When construction partially complete, Acne tells turner due to rises materials cost it will stop unless Turner agrees to pay extra $500,000. Turner promises to pay the extra amount, but when job is finished he refused to pay the extra $500,000. -> Turner promise to pay extra is NOT enforceable, as all Acne has done in exchange for Turner's promise is pay more to build the building, something they had a preexisting contractual duty to do -> If Acne had promised to finish earlier or install a better carpet, it would have done something it had no legal duty to do, then Turner's promise to pay more would be enforceable since it is supported by NEW consideration

Silence as Acceptance

Generally not acceptance, but under certain circumstances Offeror cannot impose on the offer a duty to respond to the offer (ex. Arnold says "If I don't hear from you in 3 days, I'll assume you're buying the corn" Porter silence is still NOT acceptance) Accepted when: Customary trade practice or prior dealings between parties that indicate silence signals acceptance (ex. Porter and Arnold dealt with each numerous amount of times, Porter gives have book immediately he does not want. Porter's silent retention of goods for a week would probably constitute an acceptance)

(3) Communication the Offeree

If offer has not been communicated, may be evidence that the offeror has not yet decided to enter into a binding contract ex. Stevens and Myers are negotiating for sale of restaurant, Myers tells his friend Reilly he plans to offer 150,000 to Myers. Reilly tells Myers that Steven has decided to offer him 150,000 and Myers calls Steven to say he accepts offer. (No offer because Stevens did not communicate it to Myers) Advertisements for the sale of goods at specified price are NOT considered to be offers - Rather they are treated as being invitations to offer or negotiate. Rewards - advertisements offering rewards for lost property, information, or for the capture of criminals are generally treated as offers for unilateral contracts (to accept must be completed 100%) Must find it reasonable to conclude that Offeror wanted to enter into contract ( Mason v. Kolodziej case)

Acceptance of Ambiguous Offers

If offer is unclear about which form of acceptance is necessary to create contract: offer may be accepted in any manner that is reasonable in light of the circumstances surrounding the offer either promise to perform (bilateral) or performance (unilateral), if reasonable can create contract

Stipulated Means of Communication

If offer stipulates the means of communication that the offer must use, acceptance is effective on dispatch only through that stipulated means of communication Acceptance by other than the stipulated means does not create a contract because terms variance

Quasi-Contract (implied-in-law contract)

Imposed in certain cases to avoid unjust enrichment, even if all elements of contract formation not satisfied - Confers a benefit - Knowingly accepts it - retains it under circumstances that make it unjust to do so without pay One person may have provided goods or services to another who BENEFITED from them, but has no contractual obligation to pay them because no fact exists that would justify a court in implying a promise to pay

Acceptance in Bilateral Contract

Involves the exchange of a promise for a promise To accept an offer to enter contract, offer must make the promise requested by the offer (expressed or implied) ex. Wallace sends Stevens a detailed offer for purchase of his business. Steven sends Wallace a letter saying "I accept your offer" - Steven expressly accepted Wallace's offer ex. Arnold a farmer leaves 10 bushel of corn with Porter, says "Look this corn over, if you want it it's $5 a bushel". Porter sells the corn which impliedly accepted Arnold's offer

Acceptance in Unilateral Contracts

Involves the exchange of a promise for an act To accept an offer to enter such a contract, the offeree must perform the requested act can't revoke once performance begins, power to revoke suspended for reasonable time to complete

Elements of Consideration

Legal Value - (1) in exchange promisee agrees to do something he had no prior legal duty to do, that provides legal value (2) in exchange for promise, promisee refrains from doing or agrees not do something she has a legal right to do, that also provides legal value Adequacy - as long as the promisee's act or promise satisfies the legal value test, courts do not ask whether the act or promise was worth what the promisor gave or promised to give in return Bargained for Exchange - promisee's act or promise must have been bargained for and given in exchange for the promisor's promise

Consideration

Legal Value, bargained for and given in exchange for an act or promise If promisor did not ask for anything in exchange for making her promise or if what the promisor asked for did not have legal value (something already entitled to), the promise is NOT enforceable against her because it is not supported by consideration

Who can Accept an Offer?

Masters of their offers, offeror have the right to determine who can bind them to a contract Only person with the LEGAL power to accept an offer and create contract is the original offeree Attempt to accept by anyone other than offeree is treated as an offer - can be accepted or rejected

Past Consideration

Not consideration at all act or benefit given in the past that was not given in exchange for the promise in question ex. Uncle says to nephew on his 21st birthday, I've hear you've been good this past year and have refrained from drinking and smoking. Tomorrow I'll give you a check for 5,000. Not enforceable, promise was not bargained for and given in exchange (no previous agreement)

Basic Elements of a Contract

Offer (Promise) Acceptance (of the offer) Consideration (to support each party's promise) Capacity (both parties have capacity to contract) Legal (performance of the contract must be legal)

(2) Definiteness of Terms

Offer that fails to state specifically what the offeror is willing to do and what he asks in return for his performance is unlikely to be considered an offer ex. Smith says to Ford "I'd like to buy your house", and Ford responds "You've got a deal" - lacks specificity to no contract formed, indicates parties are in negotiation without an actual agreement If Smith sends Ford a detailed and specific written document stating all terms and conditions on which he is willing to buy the house and Ford writes back agreeing to the terms - Contract is created Definiteness is important because courts need to know the terms on which parties agreed in order to determine if a breach of contract has occurred and calculate a remedy if it has

(3) Manner of Communication

Offeror is the Master of the offer Has power to specify the precise time, place, and manner which acceptance must be communicated (stipulation) ex. Prompt Printing stipulates that Jackson must respond by certified mail to accept the offer, if Jackson uses a different method that no contract unless Prompt Printing indicates a willingness to be bound by the deviating acceptance If the offeree suggests a method or place of communication, or is silent on such terms, the offeree may accepts within a REASONABLE time by any REASONABLE means of communication

(1) Intent to Contract

Offeror must indicate present intent to contract, present intent means the intent to enter the contract upon acceptance signifies that offeror is not joking, haggling, or equivocating The Subjective Standard to Intent - (used in early courts) "meeting of the minds" between the parties, left contracts vulnerable to disputes about actual intent (What did the offeror intend?) The Objective Standard of Intent - Looks at parties outward manifestations to contract, What his words or acts and the circumstances signify about his intent (What was the impression the offeror gave to the offeree?) If a reasonable person familiar with all the circumstances would be justified in believing the offeror intended to contract, court would find it satisfied even if they offeror himself says that he did not intend to contract

Promises to Pay Debts barred by bankruptcy discharge

Once a bankrupt debtor is granted discharge, creditors no longer have legal right to collect discharged debts

Promissory Estoppel

One person relying on a promise made by another even though the relevant circumstances are not sufficient to justify the conclusion that a contract exists (1) the existence of a clear and definite promise which the promisor should reasonably expect to induce action by the promisee (2) proof that the promise acted to its detriment in reasonable reliance on the promise (3) a finding that injustice can be avoided only if the court enforces the promise now used in courts to prevent offerors from revoking their offers, to enforce indefinite promises, and to enforce oral promises that would ordinarily be in writing Other definition from Thomas v. Archer case: (1) the action induced amounts to a substantial change of position (2) it was either foreseen or reasonably foreseeable by the promisor (3) an actual promise was made and itself induced the action or forbearance in reliance thereon (4) enforcement is necessary in the interest of justice

Merchants (held on higher standard)

Person who regularly deals in the kind of goods being sold, or pretends to have some special knowledge about the goods or employed an agent in the sale who fits one of the descriptions (ex. buying used car from used-car dealer, the dealer is a merchant) but if he sells you a fridge, he is not a merchant

(2) UCC: "Battle of the Forms" 2-207 Flowchart

Previously: If dispute arose before parties started to perform, court would hold that no contract resulted because offer and acceptance did not match If dispute arose after performance had started, court would probably hold that the offeror has impliedly accepted the offeree's counteroffer and was bound by terms Because these are not satisfactory, the courts changed the mirror image rule for contracts involving sale of goods ------ Section 2-207(1) allows the formation of a contract even when there is some variance between the terms of offer and acceptance. Makes it possible in some circumstances for a term contained in the acceptance form to become part of the contract The code provides that a DEFINITE and TIMELY expression of acceptance creates a contract, even if it includes terms that are different from those in the offer or adds additional terms that original offer did not have -> Attempted acceptance that was expressly conditioned on the offeror's agreements to the offeree's terms would not be a valid acceptance (Offeree expresses that acceptance is only valid if the offeror agrees to those additional or different terms) -> No Contract Section 2-701(2) IF parties are both merchants, the additional terms become part of the contract unless: 1. The offer expressly limited acceptance to its own terms 2. The new terms would materially alter the offer 3. The offeror gives notice of objection to the new terms within a reasonable time after receiving acceptance IF between non-merchants, additional terms are treated as proposals by offeree to modify contract (to which offeror may assent to not without effect on contract status) Section 2-701(3) Contract resulting when parties engage in conduct that "recognizes the existence of a contract" such as exchange of performance The offeror who accepts performance in the face of an express rejection or expressly conditional acceptance is not therby bound to all terms contained in the offeree's response Code provides that terms of a contract created by such performance are those on which the parties writings BOTH AGREE, supplemented by appropriate GAP-FILLING provisions (knock-out rule) Knock Out rule: used by majority of courts when there is an acceptance that contains terms that are different (NOT additional) to the terms of the offer

Charitable Subscriptions

Promises to make gifts for charitable or educational purposes are often enforced despite the absence of consideration -> when the institution or organization to which the promise was made has acted in reliance on the promised gift justified on promissory estoppel

Mailbox Rule

Properly dressed and dispatched acceptances can become effective when they are dispatched, even if they are lost and never received by the offeror

WHEN the UCC applies:

Sale of Good? -> No -> Common law applies, unless code provision applied by analogy (good faith, unconscionability) Sale of Goods? -> Yes -> Code applies Code rule on point -> No -> Use the relevant common law rule Code rule on point -> Yes -> Special rule for merchants?

Auctions (Without reserve)

Sellers at auctions are generally treated as making an invitation to offer Bids are treated as offers that be accepted or rejected, offeror may withdraw goods at anytime before acceptance When an auction is advertised as being WITHOUT RESERVE: The seller is treated as having made an offer to sell the goods to the highest bidder and the goods cannot be withdrawn after a call for bids has been made UNLESS no bids are made within a REASONABLE time

Promise to Pay Debts barred by statues of limitations

Statues of limitations set express statutory time limit on a person's ability to persue a legal claim

Operation of the Mailbox Rule: Common Law of Contracts

Traditional Common Law: Effective upon dispatch when the offer used a manner of communication that was expressly or impliedly authorized by the offeror (ex. You may respond by mail = expressly authorized) OR Manner of communication used by the offeror in making the offer would be implied authorized (offer sent by mail impliedly authorizes acceptance by mail) OR Mode common in the parties trade business (business offers come through mail and acceptance comes through telegram, so telegram acceptance is implied) IF improperly dispatched acceptance by means of communication that is not authorized, acceptance is effective when RECEIVED

(2) Common Law: "Mirror Image Rule"

Traditional contract law rule is that an acceptance must be the MIRROR IMAGE of the offer Attempts by the offerees to change the terms of add new terms are considered as counteroffers Recent Years: Judicial tendency to apply the mirror image rule in a more liberal fashion by holding that only MATERIAL variances between an offer and purported acceptance result in an implied rejection of the offer No Rejection is implied if an offeree asked about the terms without indicating rejection (inquiry) or if the offeree accepts the offer's terms while complaining about them (grumbling acceptance) Penna vs. Fox Case

Sources of Law Governing Contracts

Two bodies of Law: Article 2 Uniform Commercial Code (UCC) - statutory in every state Common Law of contracts

Reasonable, commercially reasonable, and seasonably

UCC Code rules try to deal fairly with the fact of what people actually do in today's market place Reasonable -> What people really do in the marketplace rather than what a reasonable person would do Seasonable -> within a reasonable time Merchants are required to observe "reasonable commercial standards of fair dealings", Good faith = honesty in fact

Relationship of the UCC and the Common Law of Contracts

UCC does not change ALL of the traditional contract rules Courts have demonstrated tendency to apply UCC contract concepts by analogy to some contracts not covered by Article 2 (ex. concepts of good faith dealing and unconscionability have enjoyed UCC application) UCC is more flexible than common law, more likely to find that parties have a contract UCC sometimes gives less weight to technical requirements such as consideration UCC has practical rules to deal with what people actually do in today's marketplace (reasonable, commercially reasonable, and seasonably) UCC aimed to promote fair dealing and higher standards in the marketplace, so posed a duty of good faith in every contract ("honesty in fact") UCC recognizes unconscionable contract (grossly unfair or one-sided) UCC recognizes that merchants are more knowledgeable and better able to protect themselves, so holds Merchants to a higher standard

Preexisting Duty and Contract Modification under the UCC

UCC does not require consideration for firm offers Agreement to modify a contract for the sale of goods needs no consideration to be binding Ex. Electronics World orders 200 televisions at $150 per unit from XYZ. Electronics World later seeks to cancel its order but XYZ refuses to agree to cancellation. Instead XYZ reduces the price to $100 per unit, which Electronic World Agrees. But when TV's arrive, they send bill for $150 per unit. Under UCC -> no new consideration is necessary, XYZ's promise to reduce the price of goods is enforceable

Valid, Unenforceable, Voidable, and Void Contracts

Valid - meets all legal requirements for a binding contract (enforceable by law) Unenforceable - meets all legal requirements for contract but not enforceable because of another legal rule (ex. fraud writing) Voidable - harmed parties have the legal right to cancel their obligations under the contract (right belongs to ONLY harmed party) Void - agreements that create no legal obligations for which no remedy will be given (ex. illegal "hit" contracts)

Acceptance when a writing is anticipated

Writing is a good idea because it provides written evidence of the terms of agreement if dispute arises before writing has been prepared or signed Clear expression of intent that both parties need to sign for agreement prevents formulation of contract IN absence of a clear expression of intent, court asked whether a reasonable person familiar with all the circumstances of the negotiations would conclude that the parties intended to be bound only when a formal agreement was signed IF it appears that parties concluded negotiations and reached an agreement on all essential aspects of contract, most courts would find that contract WAS reached, even without formal signed agreement

Implied Contract

a contract that comes about from the actions of the parties (surrounding facts and circumstances indicate that an agreement has been reached) ex. Symons v. Heaton case

Liquidated Debts

a debt that is both due and certain: parties have no good faith dispute about either the existence or the amount of the original debt creditor's promise to discharge a liquidated debt for part payment of the debt at or after its due date is UNENFORCEABLE for lack of consideration ->because debtor has done less than he had a preexisting legal duty to do (pay the full amount of the debt) ex. Connor borrows 10k from Friendly Finance Company, payable in one year. One the day payment is due, Connor sends check for 9k marked: "Payment is full for all claims Finance company has against me". Friendly cashes the check, impliedly promising to accept it as a full payment by cashing it, and later sues Connor for 1,000. Friendly is entitled to the 1,000 because Connor has given no consideration to support Friendly's implied promise to accept 9,000 as full payment. IF Connor has done something he had no preexisting duty to do in exchange for Friendly's promise to settle for part payment, he could enforce Friendly's promise and avoid paying the 1,000. ex. if he paid 4,000 in cash and a car worth 5,000 could have been consideration

Unliquidated Debts

a good faith dispute about either the existence or the amount of a debt Settlement of an unliquidated debt is called an ACCORD and SATISFACTION. When an accord and satisfaction has occurred, the creditor cannot maintain an action to recover the remainder of the debt that he alleges is due ex. Computer Corner a retailer orders 50 personal computers and associated software packages from Computech for $75k. After receiving the goods, Computer Corner refuses to pay the full 75k arguing that some computers were defective. Comp Corner sends Computech a check for $60k marked "Payment in full for all goods received from Computech". If computech cashes the check they have impliedly promised to accept $60k as full payment. Would be enforceable as Comp Corner gave consideration to support it: Gave up the right to let court determine the amount owed. Computech could refuse the check and sue for 75k, but could risk losing and Computech getting less than 60k, with time consuming and expensive legal process. So Computech may feel it has no practical alternative other than to Cash the Check.

Expressed Contract

a written or oral agreement in which all terms are explicitly stated

Bids

advertisements for bids are generally treated as invitations to offer (unless the ad for bids unconditionally states that the contract will be awarded to the lowest responsible bidder) offerors: those who submit bids bidders can withdraw their bids at any time prior to acceptance by the offeree inviting the bids, and the offeree is free to accept or reject any bid (general contract principles)

Composition Agreements

agreements between a debtor and two or more creditors who agree to accept as full payment a stated percentage of their liquidated debts or after the date on which claims are payable Enforced by courts despite contrary to general rule on part payment of liquidated debts Agreement to settle for less than the amount provides necessary condition Creditors do so out of fear of debtor going into bankruptcy, in which they'll recover less

Forbearance to Sue

an agreement by a promisee to refrain, or forbear, from pursuing a legal claim against a promisor (considered to be valid consideration) to support a return promise, usually to pay a sum of money by the promisor. Has legal right to sue, but gives it up

Modern version of Mailbox Rule -- Restatement (second)

an offer that does not indicate otherwise is considered to invite acceptance by any reasonable means of communication within a reasonable time which is effective on dispatch

"Noncontract" Obligations

circumstances in which the law enforces an obligation to pay for certain losses or benefits even in the absence of mutual agreement and exchange of value give a person who cannot establish the existence of a contract a chance to obtain compensation

"Hybrid" Contracts

contracts that involve terms for both goods and services Find primary purpose (whatever has more $ value)

Definiteness Standards under the Common Law

courts are contract enforcers, not contract makers (modern contract law tolerates a lower degree of specificity than classical contract law, but still unlikely to enforce an agreement leaving open important aspects of a transaction) Modern contract law allows for some particularly important terms like price to be implied only when the circumstances warrant (Domingo v. Mitchel)

Nonconforming Goods

goods different from what the buyer ordered if ship goods not as specified in order technically breaching contract by sending the wrong merchandise unless- seller notifies buyer in reasonable time they're accommodations - shipment is counteroffer, customer can return the goods and buy from elsewhere

(1) Intention to Accept

in determining whether an offeree accepted an offer, the court is looking for the same PRESENT INTENT TO CONTRACT on the part of the offeree that it found on the part of the offeror -> intent to accept is judged by an objective standard (offeree must objectively indicate a present intent to contract on the terms of the offer for a contract to result; offeror = master of the offer) Master of the offer can specify in detail what behavior is required of the offeree to bind him to a contract, so offeree must comply with all the terms to accept the offer

Which Terms are Included in the Offer?

offerees are bound only by terms of which they had actual or reasonable notice (if the offeree actually read the term in question, or if a reasonable person should have been aware of it, it will probably become part of the parties' contract) (ex: fine-print provision on the back of a theatre ticket: generally not binding; since a reasonable person would not expect contract terms on a ticket) (ex. terms printed on a multipage airline ticket might well be considered binding on the purchaser if such documents would be expected to contain terms of the contract) (Uber vs. Cordas case)

Unjust Enrichment

one benefiting unfairly at another's expense (1) valuable services were rendered (2) to the party to be charged (3) which services were accepted, used, and enjoyed (4) under circumstances that reasonably notified the party being charged that the other party would expect payment for the services

Unilateral Contract

only one party makes a promise (contract made when customer has completed task) ex. Frequent buyer card, free cup after 10 purchases, contract formed after the 10 purchases

Acceptance by Shipment

order requesting prompt or current shipment of goods may be accepted by either a prompt promise to ship or current shipment of goods. ex. Ampex Corp orders 500 computers from Marks, Marks could accept by either promptly promising to ship the goods or by shipping them. If Marks accepts by shipping, any attempt to revoke the order by Ampex would be ineffective

Moral Obligation

promises made to satisfy a preexisting moral obligation are unenforceable for lack of consideration

Influence of Restatement (Second) of Contracts

reflects the SHIFT OF RULES TO STANDARDS in modern contract law-the shift from precise, technical rules to broader, discretionary principles that produce just results (ex. explicitly embraced code concepts of good faith and unconscionability) does NOT have the force of the law [but can be influential in shaping the evolution of contract law because courts have the option of adopting a Restatement (Second) approach to the contract issues presented in the case that come before them]

Definiteness Standards under the UCC

sales contracts under article 2 can be created IN ANY MANNER SUFFICIENT TO SHOW AGREEMENT, INCLUDING CONDUCT WHICH RECOGNIZES THE EXISTENCE OF A CONTRACT (if parties act as though they have a contract by delivering or accepting goods or payment, that may be enough to create a binding contract) *important difference between Code and classical common law standards for definiteness: under UCC the fact that the parties left open one or more terms of their agreement does not necessarily mean that their agreement is too indefinite to enforce a sales contract is created if the court finds that there is A REASONABLY CERTAIN BASIS FOR GIVING AN APPROPRIATE REMEDY (court finds that parties intended to make a contract and agreement is complete enough to allow court to reach fair settlement of their dispute) ->if a term is left open in a contract meeting these standards, the open term or GAP can be FILLED by inserting a presumption found in the Code's GAP-FILLING rules (allow courts to fill contract terms left open on matters of price, quantity, delivery, and time for payment) ->if a term was left out because parties were UNABLE to reach agreement, intent to contract is absent ->INTENTION IS STILL AT THE HEART OF THESE MODERN CONTRACT RULES; difference: courts applying UCC principles seek to further the parties' UNDERLYING intent to contract ex. J.D Fields & Company vs U.S Steel Co

Operation of the Mailbox Rule: UCC

similar to Restatement (second) provides that an offer that does not specify a particular means of acceptance is considered to invite acceptance by any reasonable means of communication and reasonable time -> effective on dispatch IF offeree attempts to accept the offer by some means that is unreasonable or if the acceptance is not properly addressed, (Misaddressed or insufficient postage) UCC says still effective on dispatch as long as it is received within reasonable time

Unconscionable Contract

so grossly unfair that the courts will refuse to enforce it

Preexisting Duty and Agreements to settle Debts

when a debtor offers to pay a creditor a sum less than the creditor is demanding in exchange for the creditor's promise to accept the part payment as full payment of the debt. enforcing the creditor's promise to take depends on nature of the debt and circumstances of the debtor's payment: (1) Liquidated Debts (2) Unliquidated Debts (3) Composition Agreements (4) Forbearance to Sue

Acceptance by Instantaneous Forms of Communication

when parties are dealing face-to-face, telephone, or any other means of communication that are virtually instantaneous, there are few problems determining when the acceptance was communicated. ->offeree says "I accept", contract is created

Acceptance

"manifestation of assent to the terms [of the contract] made by the offeree in the manner invited or required by the offer" (1) The offeree intended to enter the contract (2) the offeree accepted on the terms proposed by the offeror (3) the offeree communicated his acceptance to the offeror

implied-in-fact contract

"the conduct from which the interference is drawn must be sufficient to support the conclusion that the parties expressed a mutual manifestation of an intent to enter into an agreement" (1) the manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act (2) the conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and know or has reason to know that the other party may infer from his conduct that he assents