Contracts Final Exam (Van Detta)

Ambiguity

Capable of more than one meaning. Ambiguity can lie in a word itself or in the structure of a sentence.

What does it mean to limit the remedy "as justice requires?"

Cmt d. i. Reliance on the promise or a. Reliance damages b. What you spent getting ready to perform the K; or c. What you spent in reliance. ii. Based on what the K would have given them. a. "Full blown K" b. Expectation damages profits c. Specific performance. iii. Restitutionary reliance a. If a benefit to the promisor, promisor MUST pay it back.

Equity and Fairness

Counterweight to freedom of contract by recognizing situations in which the deal is so unfair that social justice demands that courts look at the substantive terms of the deal

Article II of the UCC

Covers the Sale of Goods

Curing Vagueness and Ambiguity

Evidence of what the parties said or did in negotiations, correspondence, or dealings prior to the agreement or during the period following it may help clarify what they meant by the language used a. Clarity may be supplied by custom or usage in the commercial environment in which the parties made the agreement, or by standardized terms recognized by law

Lucy v. Zehmer

Focus on objective meaning of words and not the subjective meaning that a party might ascribe to the terms

UCC §2-204

Formation in General i. A contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract ii. An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined iii. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy

OCGA §13-3-44

GA's promissory estoppel statute -Mirrors §90

Promises Between Family Members

Generally gratuitous and unenforceable, unless clear and convincing evidence that the parties intended for there to be a contract rebuts the presumption

Predominant Purpose Test

Hybrid Contract a. When a transaction involves both the sale of a good and the provision of services or labor, whether the transaction is governed by Article 2 depends upon the "predominant purpose" of the transaction.

Trade Usage

If both parties are active participants in the market or trade, usages in that market or trade are readily attributable to their contract, except to the extent that the contract clearly excludes a usage

Death or Mental Incapacitation

If either the offeror or offeree dies or becomes legally incapacitated, then the offer terminates, and the offeree no longer has the power of acceptance

Lonergan v. Scolnick

If the promisee knows or has reason to know that the promisor does not intend it as an expression of his fixed purpose until he has given a further expression of assent, the promisor has not made an offer

Bargained-For-Exchange

Key requirement of consideration i. Refers to the motives of the parties in making an exchange ii. "The promise must induce the detriment and the detriment must induce the promise"

Definition of Offer

Manifestation of willingness to enter into a bargain so made as to justify another reasonable person in understanding that his assent to that bargain is invited and will conclude it (Restatement 2nd of Contracts §24)

UCC §2-205

Merchant's Firm Offer i. Under Art. 2, a merchant can make a firm offer (an irrevocable offer) to either buy or sell goods without consideration as long as: i. The offer is made by a merchant; ii. The offer is made in a writing signed by the merchant; and iii. The offer expressly states by its terms that it will be held open. ii. A firm offer that meets all the requirements becomes irrevocable either for the period of time stated in the firm offer or for a reasonable time if no time is specified. iii. Under § 2-205, a firm offer cannot be longer than 90 days. i. The offer would then become revocable, but still enforceable.

UCC §2-104

Merchant: A person who deals in goods of the kind or otherwise by his occupation holds himself out has having knowledge or skill peculiar to the practices or goods involved in the transaction

Battle of the Forms: Common Law

Mirror Image Rule and Last Shot Rule i. Mirror Image Rule: A purported acceptance with differing and/or additional terms = rejection and counteroffer i. If parties perform, a contract is formed ii. In this case, apply the Last Shot Rule: the terms of the final document before performance became binding

Types of Irrevocable Offers

Option Contract Conditional Contracts Promissory Estoppel Part Performance of a Unilateral Contract Merchant's Firm Offer

Wright v. Newman

P was obligated to pay child support under the doctrine of promissory estoppel where he had assumed paternity, even after knowing that he was not the child's father. (Dissent: D did not rely upon the promise to her detriment; therefore, no promissory estoppel).

What is the prerequisite for applying promissory estoppel?

PE is not enforcing a contract, but enforcing a promise.

Common Law

Primary Authority a. General principles that are widely adopted and that developed through judicial opinions over time

How do you terminate an acceptance?

Rejection Counteroffer Death or Mental Incapacitation Revocation Lapse of Time

Preliminary Agreements: Interpretation and Construction

Restatement 2nd §200: describes interpretation as the ascertainment of the meaning of a promise or agreement. It is an evaluation of facts for the purpose of deciding their mutual intent.

Restatements

Secondary Authority i. Compilations of the modern common law and includes commentary and illustrations (Complied by the ALA (American Law Institute)

Freedom of Contract

Stands for the belief that parties should be free to enter agreements without government intervention

The General Obligation of Good Faith and Fair Dealing

The determination of whether a party acted in good faith must be made with reference to the reasonable expectations of the parties in the context of the transaction

Mutual Assent

The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and consideration (Restatement 2nd of Contracts §17(1))

Acceptance

A manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer (Restatement 2nd of Contracts §50(1))

Past Consideration

A promise based on consideration received in the past is generally unenforceable since it was not bargained for

Definition of Promise

A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in (reasonably) understanding that a commitment has been made (Restatement 2nd of Contracts §2(1)

Definition of Contract

A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty (Restatement 2nd of Contracts §1)

Leonard v. PepsiCo

An advertisement does not constitute an offer unless its terms are sufficiently clear and leaves nothing open for negotiation and an advertisement intended to be a joke cannot be sufficiently clear.

Meeting of the Minds

An agreement between parties where each party is aware of the commitments being made by each individual

Cantu v. Central Education Agency

An offer that does not specify any particular manner of acceptance may be accepted by a properly addressed letter, effective at the time such letter is deposited in the mail, unless facts and circumstances suggest that acceptance by mail is unreasonable.

Petterson v. Pattberg

Any offer to enter into a unilateral contract may be withdrawn before the act requested to be done has been performed -Holding was made before the Restatement changed this

To what kinds of promises does PE potentially apply?

What is the promise at issue? i. Family ii. Charitable a. Promise that is donative in nature b. Primary action is the bestowal of a gift with conditions. i. Is there consideration for awarding the gift based on PE? 1. It depends if you have a reliance scenario. iii. Commercial iv. How clear and definite is the promise? a. Promises that are implied. i. Would be implied from the conduct, the parties words don't amount to being an expressed promise.

What is required for the promise to be reasonably foreseeable to the promisor?

Whether the promisor knew or should have known that his/her promise would induce reliance by the promisee

UCC §2-306(1)

a. "A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded" i. OCGA §11-1-201(20) 1. "Good faith" means --> honesty in fact; and the observance of reasonable commercial standards of fair dealing

Mutuality of Obligation

a. "Both parties must be bound or neither is bound" b. Only applies to bilateral contracts

Exceptions to the Legal Duty Rule

a. A Fair and Equitable Modification in View of Changed Circumstances i. Sometimes parties make a one-sided modification because circumstances changed after contract formation in a way that was unanticipated 1. Labor Strike: makes it difficult for one party to meet its obligations a. The party might agree to modify that party's duty to give them a longer period of time to perform

Academy Chicago Publishers v. Cheever

a. Agreement created to publish husband's short stories, though vague for valid reasons (wife had to go find short stories, didn't know how many there were, etc.) b. Holding: Agreement not a contract b/c terms too indefinite c. Although parties may have had and manifested intent to make a contract, if content of agreement is unduly uncertain and indefinite no contract is formed d. A contract may have open terms, but there must be enough to show court the intent of the parties and give it a basis for deciding whether the agreement has been kept or broken e. Criticism: It's impossible to identify every term in a contract

Normile v. Miller

a. An offeree cannot enforce a contract to sell property when he did not accept the offer to sell until after the offer had been validly revoked. i. Miller had made a counteroffer to Normile for the property

Plowman v. Indian Refining Co.

a. Eighteen employees, including Plowman (the employees) (plaintiffs), of Indian Refining Co. (Indian Refining) (defendant) were let go from the company and began receiving pension checks. Most of the employees testified that they were told they would receive the pension checks throughout the rest of their lives. A year after promising the pension checks, Indian Refining discontinued the payments. b. One cannot enforce a promise that has not been supported by consideration. Past consideration is insufficient.

Wood v. Lucy

a. Lucy hired Wood to place goods Lucy designed and endorsed on sale, in return for half the profits made b. Lucy wanted out of the contract, saying Wood did not bind himself to do anything, did not actually promise to try to sell Lucy's goods c. Wood made an implied promise to use reasonable efforts to sell Wood's products, and this implied promise (good faith effort) constitutes consideration i. Lucy was giving up her exclusivity, in return for these reasonable efforts ii. A promise to use reasonable efforts may be implied from the entire circumstances of a contract.

UCC Contract Modification

a. No Consideration Needed i. UCC §2-209(1): An agreement modifying a contract within this Article needs no consideration to be binding ii. Still must be made in good faith b. Good Faith Requirement i. This helps guard against situations where the modification is made under duress ii. UCC §1-304

Requirements Contract

a. Obligates the buyer and seller for the purchase and sale of all that the buyer requires for a particular type of good b. "Everything I need, I'll buy from you"

Outputs Contract

a. Obligates the buyer and seller for the purchase and sale of all the output that the seller produces of a certain good b. "Everything I make, I'll sell to you"

Consideration

a. Restatement 2nd of Contracts §71 i. Every contract requires consideration on both sides of the transaction ii. Consideration consists of: i. A bargained for exchange between the parties, and ii. That which is bargained for must be of legal value b. Consideration is primarily used as a sorting mechanism to allow courts to identify promises that are legally enforceable

Promissory Estoppel

a. §90. Promise Reasonably Inducing Action or Forbearance. i. (1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. (2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.

Batsakis v. Demotsis

a. π lent ∆ $25 in drachmae during WWII; ∆ promised to repay $2,000 b. Holding: ∆ won $2,000 (there's no question there was a bargain) c. Mere inadequacy of consideration does not void a contract d. "Just a symptom, not a disease" - inadequacy of consideration is not a defense of breach of contract

Paramount v. DPS

i. "When the predominant element of a contract is the sale of goods, the contract is viewed as a sales contract and [Article 2] applies, even though a substantial amount of service is to be rendered in installing the goods."

Unordered Merchandise

i. A consumer has no legal obligation to return or pay for goods sent in this manner. ii. The company has sent the consumer a gift iii. Private Companies (UPS, FedEx) --> look at state statute

Congregation v. DeLeo

i. A decedent made an oral promise to Congregation Kadimah Toras-Moshe (Congregation) (plaintiff) to give it $25,000. The Congregation planned to use the money to build a library in its synagogue. The decedent died without having actually given the money to the Congregation. ii. Is an oral contract for a charitable gift supported by sufficient consideration to be enforceable? iii. No detriment to the Congregation as the hope or expectation of the donation was not enough.

Bilateral Contract

i. Acceptance takes the form of a return promise ii. Once the promises are exchanged, each party is legally obligated to perform is duty iii. Example: Selling a house iv. **Most contracts under common law are bilateral**

Unilateral Contract

i. Acceptance takes the form of the actual performance of the offeree ii. Contract only forms after the offeree has started performing

Rejection

i. An offeree rejects an offer when he communicates to the offeror that he does not intend to accept the offer ii. Rejection terminates the offeree's power of acceptance iii. Offeree cannot reject an offer and then later try to accept it

UCC §2-206

i. An order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods a. Such a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer

Dougherty v. Salt

i. Aunt Tillie gave Charlie a $3,000 promissory note ii. Aunt Tillie died and her estate refused to pay, so Charlie sued iii. Court held that the note was purely voluntary and thus an unenforceable promise of an executory gift. The boy was not a creditor, nor was the aunt paying a debt. Rather, she was conferring a bounty. In other words, there was no consideration on the part of the boy iv. Gift promises are generally unenforceable if they lack consideration v. This was an executory (hasn't been given yet) gift.

Alaska Packers' Association v. Domenico

i. Boat workers agreed to a season-long contract then tried to renegotiate for a higher price once they arrived in Alaska. ii. Where parties enter a new agreement under which one party agrees to do no more than he was already obligated to do under an existing contract, the new agreement is unenforceable for lack of consideration. iii. A modification is invalid because of no consideration. Under common law (pre-existing duty rule), there is no modification without consideration. There is no change in the duties that the packers are agreeing to perform, but they are demanding more money from Domenico in exchange for the same services.

Types of Promises

i. Contractual a. Creates both a duty and a right b. Duty: for one of the parties to perform the promise c. This establishes a right for the other party to enforce the promise by seeking a remedy if there is a breach of the duty ii. Gratuitous a. Lacks consideration b. When someone promises to make a gift, they typically do not expect anything in return

Special Rules of Mailbox Rule

i. If an offeree sends a rejection and then changes their mind and sends an acceptance, then the mailbox rule does not apply a. Whichever communication arrives first is effective ii. If an offeree sends an acceptance and then changes their mind and sends a rejection, then the rejection is ineffective a. Mailbox Rule applies

Determination by an Objective Standard

i. If the parties do not actually defer agreement, but instead agree, expressly or by implication, on some means of settling the term without the need for later agreement between the parties, the have entered into an enforceable contract. i. The open term can be resolved under the prescribed standard (a court must glean their intent)

Revised Definition of Promissory Estoppel

i. If—(1) a promisor makes a promise and (2) the promisor knows or reasonably should have known that the promisee will rely on the promisor's promise to the promisee's detriment and (3) the promisee {actually relies on that promise to the promisee's detriment & promisee reasonably relies on that promise}and (4) if injustice can only be avoided by enforcing the promise, then a court will enforce the promise. EXCEPT: the court can limit the remedy as justice requires

Gifts/Gratuitous Promises

i. Lack consideration and is unenforceable ii. Things that do not qualify as valid consideration

Joseph Martin Delicatessen v. Schumacher (Lease Renewal)

i. Landlord and tenant signed lease with renewal clause that said tenant could renew "at annual rentals to be agreed upon" ii. Holding: Renewal clause not enforceable b/c left no room for legal construction or resolution of ambiguity (method of remedy) iii. A mere agreement to agree, in which a material term is left for future negotiations is unenforceable

Elements of Promise

i. Manifestation of Intention a. Make one's intent known to others ii. To act or refrain from acting a. Just as one can promise to do something, one can also promise NOT to do something b. Abstaining from action forbearance iii. So made as to justify a promise in understanding that a commitment has been made a. Indicates that the party making the statement cannot reserve the right to not honor the promise iii. **A promise between family members are presumed not to be enforceable**

Categorization of Preliminary Agreements

i. Memorandum of Understanding (MOU) or Letter of Intent (LOI) ii. Three types: i. A binding contract a. Although preliminary in form, it does reflect agreement on all the major issues that need negotiation and the parties' intent to be bound by it. b. Even though they contemplate executing a final memorandum of agreement, they regard that step as a formality ii. Settles some terms, but leaves others up for future negotiations a. Cannot be a final and comprehensive contract that binds parties to their ultimate objective b. However, it does commit them to continue to work with each other and negotiate in good faith in an effort to reach a final agreement iii. No intent to be bound a. Merely an expression of intent to work together in the hopes of being able to conclude in a contract, but they do not intend it to create any binding obligation

Advertisements/Price Quotes

i. Merely invitations to bargain ii. Presumed not to be offers, unless certain and definite terms rebut the presumption

Substantive Rule of Acceptance

i. Mirror Image Rule i. The offeree must assent to every term of the offer ii. Exception: UCC §2-207

Elements of Offer

i. Necessarily be communicated to the person to whom it is addressed ii. Indicate a desire to enter into a contract iii. Must be directed at some person or group of persons iv. Must invite acceptance v. Must engender the reasonable understanding that acceptance will create the contract

The Problem of Indefiniteness in An Agreement

i. No contract comes into being if a material aspect of the agreement is left indefinite by the parties and the uncertainty cannot be resolved by the process of interpretation or construction a. For an apparent contract to fail for indefiniteness, there must be an incurable uncertainty about what the parties agreed to, so that their intent to enter a contract is in doubt, or the court is at a loss in establishing a basis for enforcing what was agreed b. The uncertainty must relate to a material aspect of the relationship c. A term is material if it is an important component of the contract. It is so central to the values exchanged under the contract that it is a fundamental basis of the bargain.

Three Elements of Contract Formation

i. Offer ii. Acceptance iii. Consideration

Gross Valentino Printing Co. v. Clarke

i. P sued D for breach of contract after the parties had entered into an agreement for printing magazines at a certain price, which was later increased. ii. Proof of consideration is unnecessary because under UCC §2-209, a modification to an existing contract within the UCC needs no consideration to be binding iii. The transactions are subject to the UCC b/c the definition of goods under the UCC is sufficiently broad to include books, or in this case, printed magazines

Pennsy Supply, Inc. v. American Ash Recycling Corp

i. Pennsy was involved in a state project and was hired to do paving of driveways and a parking lot. It contracted with American Ash, who provided the material for free, which was supplied. After the work was completed, the pavement cracked and Pennsy had to ultimately replace the materials (which turned out to be toxic waste) that were provided. ii. American Ash received a benefit when Pennsy agreed to haul away 11,000 tons of hazardous waste for free. iii. There may be sufficient consideration to form an enforceable contract even though the parties have not bargained for the specific terms of the agreement. Adds requirement that both parties recognize that there's an exchange going on—mutual understanding of bargain.

Alternatives to Consideration

i. Promissory Estoppel i. Where a promise has reasonably relied on a promisor's promise by taking some sort of action or forbearance a. Focused on preventing injustice ii. Restitution i. Where one party has conferred a benefit on another party and it would be unjust to retain the benefit without compensating the other party a. Allows a court to restore what a plaintiff has lost even if there is no bargain

Types of Preexisting Legal Duties

i. Public Duties a. Public officials may not demand additional compensation or receive a reward for performing a task that is part of their public duties (firefighters, etc) b. However, if the performance of some act is outside the scope of their public duties, then they may collect additional compensation c. Preexisting public duties also extend to private citizens to obey the laws that govern our society ii. Contractual Duties a. A party may not enforce a new promise if the consideration for the new promise is based solely on an existing contractual obligation iii. Unenforceable Contract Modifications a. After a contract is formed, one of the parties demands more money for performing the same duty as required under the contract. b. A party owes money to another party, and the two parties settle the debt for a lesser amount. iv. Enforceable Contract Modifications a. If a party changes its preexisting legal duty so that it is different, then that difference may be consideration for a contract modification i. Change in timing ii. Change in type of consideration iii. Performing an additional duty b. If the two parties settle a dispute, then the settlement is consideration for the modification

Counteroffer

i. Restatement 2nd of Contracts §39 a. A counteroffer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer b. An offeree's power of acceptance is terminated by his making of a counteroffer, unless the offeror has manifested a contrary intention or unless the counteroffer manifests a contrary intention of the offeree ii. When a counteroffer is made, the original offer is terminated

Lapse of Time

i. Restatement 2nd of Contracts §42(1)(2) a. An offeree's power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time b. What is a reasonable time is a question of fact, depending on all the circumstances existing when the offer and attempted acceptance are made

If Acceptance is Not Specified

i. Restatement 2nd of Contracts §54 i. In case of doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses ii. If the offeree chooses performance, then the beginning of performance is deemed the acceptance and the offeree is contractually bound to complete performance

Silence as Acceptance

i. Restatement 2nd of Contracts §69 i. Silence is normally not acceptance a. EXCEPT: i. Offeree indicates, by words or conduct, that silence is acceptance ii. In past business dealings, the parties operated so that silence was acceptance iii. The offeree has exercised dominion over the consideration that was offered

Preexisting Legal Duty Rule

i. Restatement 2nd of Contracts §73 i. Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain

Illusory Promise

i. Restatement 2nd of Contracts §77 a. A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless: i. Each of the alternative performances would have been consideration if it alone had been bargained for ii. A promise to perform that leaves performance to the discretion of the promising party. iii. Won't constitute consideration.

Adequacy of Consideration

i. Restatement 2nd of Contracts §79(b) a. Mere inadequacy of consideration will not void a contract. There is not requirement that the things exchanged be of equal value. b. Gross inadequacy of consideration may be relevant to prove a defense to formation, such as incapacity, duress, undue influence, misrepresentation and fraud, nondisclosure, unconscionability, or mistake. c. If the purported consideration is nominal, then it is just a mere formality or pretense of a bargain and will not serve as consideration for a promise. i. Exception: Option Contracts (consideration can be nominal)

General Rules of Interpretation and Construction

i. The court should try to interpret an agreement in a way that gives effect to all its terms ii. Unless the context indicates otherwise, words used in a contract should be given their ordinary, general, or lay meaning rather than a specialized or technical meaning iii. If one interpretation would make the contract invalid and another would validate it, the court should favor the meaning that validates the contract

Mutual Rescission

i. The parties could mutually agree to terminate the contract ii. Such termination is a contract where the parties exchange promises to forgo their original contractual rights 1. Both parties' must be executory—where there are still significant performance obligations

Is there actual detrimental reliance upon the promise?

i. The promise in relying, must be acting reasonable. a. What a jury thinks you should have done.

Conditional Gifts

i. The promisor intends to give a gift; however, the promisee must perform an action (or forbearance) in order to receive the benefit of the gift ii. The action (termed a condition) results in a detriment to the promise iii. Companies do not give gifts to each other

Legal Value of Consideration

i. The thing exchanged must have worth ii. Legal value is established if there is either: i. A detriment to the promise or ii. A benefit to the promisor

Can injustice only be avoided by enforcement of the promise?

i. There is not another remedy available other than PE. a. PE comes into play when you cannot establish a contract between the parties. ii. There has to be an injustice that needs to be avoided. iii. How do we apply this? Cmt b. Must assess: a. The reasonableness of the promisee's reliance b. On the definite and substantial character in reliance to the remedy sought, c. On the formality with which the promise is made, d. On the extent to which the evidentiary, cautionary, deterrent, and channeling functions of form are met by the commercial setting or otherwise, and on the extent to which such other policies as the enforcement of bargains and the prevention of unjust enrichment are relevant. iv. Judges must exercise judiciary discretion.

Procedure of Acceptance

i. Time i. Is it stated? ii. Mode i. Bilateral (promise for promise) OR ii. Unilateral (promise for performance) iii. Manner i. The method of acceptance iv. In the absence of specific instructions in the offer, an offeree can accept "in any manner and by any medium reasonable in the circumstances"

Accord and Satisfaction

i. Typically occurs when one of the parties have already performed but the other party alleges that the performance was faulty and refuses to pay the full contract price 1. Accord is a new contract that will terminate the old contract 2. Satisfaction is the actual performance of the accord

Hamer v. Sidway

i. Uncle promised π $5,000 if π would refrain from drinking, smoking, using tobacco, and playing cards until π turned 21 ii. When nephew turned 21, uncle wrote letter promising to pay π the $5,000 whenever π wanted it iii. Upon the uncle's death, estate refused to pay on the grounds that it was a gift promise iv. Holding: π gave up a legal right in return for the promised $5,000, so there was consideration v. Consideration means not that one party is profiting but that the other abandons some legal right (or limits some legal right) as an inducement for the promise of the other vi. For something to be consideration, it is enough that that thing have induced the promisor to make the promise (i.e., a bargain's a bargain)

UCC §2-207

i. Under §2-207(1), has a contract formed despite additional/different terms in the purported acceptance? ii. Is the expression of acceptance: seasonable, definite, not expressly made conditional upon additional/different terms? i. If yes --> Proceed to §2-207(2) a. If the contract is between merchants: i. Apply §2-207(2). Additional terms become a part of the contract, UNLESS: 1. Limits acceptance of the offer 2. Notification of objection 3. Materially alters acceptance a. Test for material alteration: i. Comment 4: those terms that would result in surprise or hardship if incorporated without the express awareness of the other party ii. Examples of clauses include— iii. negating standard warranties; iv. requiring that complaints be made in a time materially shorter than customary or reasonable; and v. any clause that would vary in a significant way an established usage of trade or a course of past dealing between the parties. ii. Two approaches for different terms 1. California Rule: treat different as additional and apply §2-207(2). 2. Knockout Rule: differing terms cancel out and agreed upon terms stay a part of the contract. Gap fillers are used to establish the rest of the terms. b. If the contract is between any non-merchant: i. The additional/different terms are proposals to modify the contract, but do not become part of the contract. ii. If no --> no contract. Purported acceptance is a rejection and counteroffer. a. Unless, conduct by both parties recognizes existence of a contract despite inconsistent forms. §2-207(3). i. Terms are the writings the parties agreed upon and gap fillers are used for the rest ii. If an essential term is not agreed upon, there must be a gap filler or no contract is formed iii. If price isn't agreed upon, apply §2-305.

Revocation

i. What constitutes an effective revocation? a. An offer is generally freely revocable at any time before it has been accepted if the offeree receives notice of the revocation b. Notice of the revocation may be received directly from the offeror or indirectly from another party or by other means c. The revocation may be communicated by words or by actions of the offeror ii. An offeror may revoke the offer if the revocation occurs before the offeree has accepted iii. If the offer has been accepted, then a contract has formed and the offeror may no longer revoke

Mailbox Rule

i. When sent through the mail, an acceptance is effective on dispatch ii. Everything else - (offer, rejection, counteroffer, or revocation) is effective on receipt

Novation

i. When the parties agree to replace either an existing obligation with a new obligation 1. Requires: a. A previous valid obligation b. An agreement by all parties to change the obligations c. A rescission of the prior contract d. The formation of a new contract

Moral Obligation

i. Will not serve as consideration for the enforcement of a promise; however, it may be relevant as an independent basis to prevent unfairness or unjust enrichment a. Love and affection ii. Two exceptions to the 'moral' consideration rule: a. A written promise to pay a debt barred by the SOL is binding; and b. A written promise to pay all or part of an indebtedness that has been discharged in bankruptcy is binding.

Vague Terms

stated so obscurely or in such general language that one cannot reasonably determine what it means

"Agreement to agree"

where parties deliberately postpone agreement on a material term, it cannot be said that they have formed a contract, even if they have reached consensus on all the other terms i. Agreements to agree are unenforceable