Contracts Midterm

§ 152. When Mistake of Both Parties Makes a Contract Voidable

(1) Bilateral mistake [at time of K basic assumption + material effect], the K is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 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.

elements of promissory estoppel

(1) a (clear & unambiguous) promise, (2) reasonable/foreseeable reliance, (3) actual detrimental, (4) enforcement of promise is the only way to avoid injustice

UCC open terms

'open price term' will not necessarily prevent enforcement of a contract for the sale of goods ct may enforce if they find the parties intended to be bound by their agreement if they fail to agree on a price ct may enforce a 'reasonable price' if one party is given the power to fix price they must do so 'in good faith'

a unilateral mistake consists of all of the following elements:

(1) a mistake [belief not in accord w/ facts] (2) of one party (3) at the time the K was made, (4) the mistake goes to a basic assumption on which the mistaken party made the contract, (5) the mistake has a material effect on the agreed exchange of performances that is adverse to the mistaken party, (6) the mistaken party does not bear the risk of the mistake under § 154, and (7)(a) the effect of the mistake is such that enforcement of the contract would be unconscionable, OR (7)(b) the other party had reason to know of the mistake or the other party caused the mistake.

counteroffer UCC

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act. happens when there is a counteroffer (expressly conditional) and no acceptance, but the parties begin performing

· Plowman v. Indian Refining Co.:

workers were promised pensions at the time of their firing, disagreement about the duration of pensions promised, no benefit/detriment exchange occurred o Promise was made after performance and moral obligation is not legally enforceable (consideration) Holding: an agreement to pay someone for life in exchange for nothing lacks consideration and is not an enforceable contract something which has been delivered before the promise is executed, cannot properly be legal consideration

U.C.C. § 1-303 Course of Performance, Course of Dealing, and Usage of Trade

1. express terms (a) [course of performance] communication on this K b/t parties (b) [course of dealing] history of K's b/t parties, 1 instance not enough 2 is (c) [usage of trade] any practice or method of dealing having such regularity of observance in a place, vocation/trade as to justify an expectation that it will be observed w/r/t the transaction in question (d) may supplement or qualify the terms of the agreement (e) the express terms of an agreement and any applicable course of performance, course of dealing, or trade usage must be construed whenever reasonable as consistent w/ each other. If such a construction is unreasonable: (1) express terms prevail > course of performance, course of dealing, and trade usage; (2) course of performance > course of dealing and usage of trade; and (3) course of dealing prevails > usage of trade.

§ 154. When a Party Bears the Risk of a Mistake, A party bears the risk of a mistake when;

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

Prochazka v. Bee-Three

- A contract is patently ambiguous if it is open to at least two reasonable interpretations. Holding: When a contract has 2 possible interpretations [3 termination clauses] it should not be dismissed as a MOL we must give words their plain and ordinary meaning, within the four corners of the document (no extrinsic evidence yet) parties intentions must be gathered, not from particular words or phrases, but from the entire agreement when unambiguous -> apply plain meaning if a contract is ambiguous, then courts may look to extrinsic evidence to determine the meaning

mailbox rule

- C/L traditionally held that an offer and a revocation must be received to be effective - an acceptance will in some cases be treated as effective as soon as it was dispatched - places risk of a lost communication on offeror - does not apply if the offeror has expressly stated or implied that he must receive the acceptance for it to be effective R2§§30,63

Parol Evidence Rules

-doesn't apply to exclude evidence offered to interpret or explain the meaning of the agreement if partial- the writing may not be contradicted by extrinsic evidence but may be supplemented by additional consistent terms; if completely integrated- can't be contradicted, nor supplemented (R and UCC); either way, the rule doesn't address extrinsic evidence that merely explains the meaning of a written agreement because it concerns interpretation rather than contradiction or supplementation, still might not be admissible under other rules, like in textualist ct when contract is unambiguous -doesn't apply to agreements, written or oral, made AFTER the execution of the writing -doesn't apply to evidence offered to show that effectiveness of the agreement was subject to an oral condition precedent -doesn't apply to evidence offered to show that the agreement is invalid for any reason, such as fraud, duress, undue influence, incapacity, mistake, or illegality -some cts limit the fraud exception to cases of "fraud in the execution/factum" [strict], most cts extend it also to "fraud in the inducement" - [permissive]; -doesn't apply to evidence offered to establish a right to an "equitable" remedy, such as "reformation" of the contract [mistake]; Thompson ct didn't allow oral warranty under the collateral agreement exception because the exception only applied to agreement about a "subject distinct from that to which the writing relates" [strict jdx] other cts were more flexible and allowed collateral agreement to justify admission of pe even when it did not relate to a separate or distinct transaction [permissive]

SOF asserted as a defense

1) is the contract one the SOF applies to ? [interest in land, >500$, can't complete under year] if no proceed as regular case if yes, 2) is it SOF "satisfied" ? - actually have a written form (w terms) + signed by def (party whom it would be enforced against, initials are enough, letterhead w party name and address may be) if yes proceed as SOF cause if no, are there other factors such as performance or reliance by pl that might evoke an exception to statutory bar?

once an ambiguos term has been found;R2 §201 has multiple steps

1, if both parties attach the same meaning to K language that meaning governs, if not step 2 2, where parties have different meanings, it is interpreted in accordance w the meaning attached by one of them IF at the time of the K was made: a) that party didn't know of any different meaning attached by the other, or b) that party had no reason to know of any different meaning has the interpreter ask 2 questions, did each party have ACTUAL KNOWLEDGE about what the other party thought the K meant? AND what CONSTRUCTIVE KNOWLEDGE should each party have known about what the other party thought the K meant? if 1 party has actual knowledge, but the other only had constructive or no knowledge, then the 2nd party's interpretation governs if 1 party had constructive and the other had no knowledge, then 2 party governs - whichever is less at fault governs basically if they the SAME LEVEL of knowledge, neither party is bound by the meaning of the other, "no meeting of the minds" cts generally treat the contract as if the disputed provision is an indefinite term, or a gap in the contract, 3 possible results; - if the gap is not material, cts will add a term that is reasonable under the circumstances - if the gap is a material term, and the parties have either (a) not performed, or (b) performed so little that it can be undone, then contract is nullified - if it is material, and the parties have performed to a point they can't undo, then cts will fill the term that is reasonable under the circumstances

different terms under UCC

3 options; -interpret 2-207(2) to only apply to 'additional terms', different terms do not become part of the contract -treat it the same as additional terms and analyze whether the different term is a material alteration -Knockout rule - if the offer has says '90 day warranty', and the acceptance says 'unlimited warranty', then both terms would drop out and the duration of the term would be determined by applying Article 2

Acceptance UCC

A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. [only counteroffer if it says "this is only an acceptance if you expressly assent to the additional or different terms"] The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. merchant = seller of goods non-merchant = additional terms are only proposals and must be accepted to become part of the contract

Sateriale v. R.J. Reynolds Tobacco Co.

a promise in exchange for performance is a unilateral contract the offer is accepted by rendering a performance rather than making a promise - (typical examples are rewards or prizes) - offering reward for finding person who committed a crime - calls for the performance of a specific act - makes the offer irrevocable ads have been held to be offers (unilateral contract) where they invite the performance of a specific act without further communication and leave nothing for negotiation the terms of a contract are reasonable certain/definite if they provide a basis for determining the existence of a breach and for giving an appropriate remedy (sufficiently definite for court to determine breach and remedy)

· Meyer v. Uber Technologies:

Meyer joined the app but did not view the T&C posted below the registration button on the apps interface o T&C must be obviously binding when accepted through continued use (clickwrap) A smartphone app user has inquiry notice of the app's terms of service if a reasonably prudent user would have known about the terms and the conduct that would be required to assent to them (screen was uncluttered, don't need to scroll to see the link, the blue link is underlined and stands out from black text, was directly adjacent to the button saying register (proximity), terms are provided simultaneously to enrollment, connecting terms to the service they apply to, rpp would understand the terms were connected to the creation of an account, terms are clear and conspicuous once you click the link, arbitration clause is clear, even though terms are lengthy)

Katz v. Danny Dare, Inc [Promissory Estoppel]

Holding: When an employ voluntarily retires and incurs detriment in response to a promise to receive pension payments for life, and he cannot make money other ways, then the promise will be binding under promissory estoppel even though the company could have fired him change of position = detrimental reliance

· Marshall Durbin Food Corp. v. Baker:

B was induced to stay at a failing company through the promise of a retirement package, company then says the promise was illusory due to their right to fire him Holding: B's act of service was an acceptance to this unilateral contract of at-will employment when a form expressly states consideration will create rebuttable presumption that consideration exists illusory promise = words in promissory form that promise nothing, a promise of future willingness is not an expression of present willingness and is not a promise the presence of an illusory promise does not destroy the possibility of a contract instead, it may create a unilateral contract, and the promisor who made the illusory promise can accept it by performance legal detriment = when the promisee gives up something he was privileged to retain prior to the contract consideration consists of either benefit to promisor OR detriment to promisee, don't need both [*note R§77 holds that an illusory promise can not serve as consideration at-will is illusory because either can escape the contract some ct's find illusory promise does not render return promise unenforceable unless no other consideration is present]

· Barfield v. Commerce Bank:

Bank refuses to give change for a hundred dollar bill to black individuals, Barfield claims this violated the discrimination laws in contract formation o Value does not have to change for an exchange to occur (benefit to bank that customers may then make larger transactions there) Holding: a business engaging in 'gratuitous service' such as changing bills constitutes consideration because they are doing so for a larger purpose, to induce customers to make more lucrative transactions, thus if they refuse to do so for one race it will be violation of §1981 [T]he legal sufficiency of a consideration for a promise [does not] depend upon the comparative economic value of the consideration and of what is promised in return, for the parties are deemed to be the best judges of the bargains entered into. . . . Where a party contracts for the performance of an act which will afford him pleasure, gratify his ambition, please his fancy, or express his appreciation of a service another has rendered him, his estimate of value must be left undisturbed.

Brown Machine, Inc. v. Hercules, Inc.

Brown sent price quote, which included a cover page stating that Brown wished to further discuss the quote and that the quote was being submitted for "approval." Also attached to the quote were several paragraphs, including one providing that the quotation was not an offer that could be accepted. In response to the proposal, Hercules submitted a purchase order. The purchase order provided that acceptance of the order expressly limited the terms of the contract to the terms of the purchase order. The purchase order did not contain an indemnity provision. In response to the purchase order, Brown sent Hercules an order acknowledgment, which contained an indemnity provision Holding: (b/t merchants) when an offer expressly limits acceptance to the terms of offer, additional terms added to the acceptance (such as an indemnification clause) do not become a part of the contract

Part performance exception for SOF

C/L unequivocally referrable Strict · Performance must unequivocally refer to the contract · Other possible reasons do not nullify, but conduct must be unequivocally provable Permissive · Not about one possibility, but what a reasonable person would assume the conduct is based on · For land: taking possession, making valuable, permanent, and substantial improvements Restatement · Reasonable reliance and continuing assent of the party against whom enforcement is sought OR · Changed position so substantially that enforcement is the only way to avoid injustice §2-201(3)(c) UCC exceptions to SOF - partial performance - seller must deliver the goods and have them accepted by the buyer acceptance must be voluntary and unconditional, may be inferred from the buyer's conduct in taking physical possession of the goods or some part of them - buyer must deliver something that is accepted by the seller as such performance part payment may be made money or check, accepted by the seller

Dougherty v. Salt:

Child receives a promissory note, court decided it was gratuitous and unenforceable PAST consideration is NOT consideration holding: a promise to give money to a nephew in exchange for nothing lacks consideration and is not a contract, even if the form says "value received"

Nanakuli Paving & Rock Co. v. Shell Oil Co. [UCC, implied terms]

Cts may imply trade usage/course of dealings/performance into K's if there is (1) evidence that it is consistent w/ terms of the K, and (2) is so prevalent that the parties would have intended to incorporate them, even if it qualifies or cuts down the K but doesn't totally negate any express terms. When a supplier doesn't comply w commercial standard of advanced notice for price increase there is a claim for breach of good faith. UCC trade usage = "any practice or method of dealing having such regularity of observance in a place [given locality], vocation or trade as to justify an expectation that it will be observed w/ respect to the transaction." - need not be universal, ancient or immemorial "Course of dealing -sequence of conduct b/t the parties PRIOR to the agreement.course of performance = how parties actually perform the K at issue [most relevant] 1 instance is not enough to show course of performance, 2 times is For a merchant, good faith means "the observance of reasonable commercial standards of fair dealing in the trade."

· DeFontes v. Dell, Inc.:

Dell posts their terms online, in the order acknowledgement, and enclosed in their packaging, but only some of these included the clause letting consumers know they can reject the terms through returning the product o T&C must expressly indicate that they can be rejected through return or nonperformance when shrinkwrap terms are not reasonably apparent/clear to the pl's that they can either accept terms by accepting the product past x days or to reject the terms by returning the goods, the terms will not be upheld as binding layered contract theory; contract formation occurs when the consumer accepts the full terms after receiving a reasonable opportunity to refuse them BOP falls on seller to show that the buyer has accepted the seller's terms after delivery -Under the UCC, additional terms in a shrinkwrap agreement will only become part of the contract for the sale of goods if the agreement explicitly provides that the consumer can reject the terms by returning the goods. U.C.C. § 2-206 (a) Unless otherwise unambiguously indicated by the language or circumstances, (1) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances; (2) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods layered contract theory; contract formation occurs when the consumer accepts the full terms after receiving a reasonable opportunity to refuse them

· Dohrmann v. Swaney:

Dohrmann got his elderly neighbor to give him millions of dollars in a bargained-for exchange where he would change the middle names of his sons o The court will consider adequacy of consideration only when it shocks the conscience and is accompanied by circumstances of unfairness (alzheimers, grossly unequal bargaining power, not having attorney present) Holding: when the consideration of the contract is legally impossible to enforce it is not valid. when the benefit of a contract is so minimal in light of the detriment suffered, such as an agreement to change a sons middle name in exchange for 5M, the consideration will be deemed invalid thus no contract

Lonergan v. Scolnick

Facts: Scolick placed an ad in the newspaper and Lonergan responded. Holding: no contract was made, a letter saying to "decide fast", calling itself just a form letter, and using conditional language "if you want" is not an offer with any expressed manifestation, but an invitation to make an offer

Gottlieb v. Alps Material alteration

G sells A fabric but changes the type of fabric partway through production leading to a recall, test for material alteration; either surprise and hardship OR unreasonable surprise Surprise; it cannot be presumed that a reasonable merchant would have consented to the additional terms hardship; whether the term would impose substantial economic hardship on the non-assenting party if industry standard ≠ no unreasonable surprise Holding: trial ct erred finding that limitation of liability clause materially altered the contract, award of consequential damages must be stricken but A can still recover some direct and incidental damages

Taylor v. State Farm Insurance [Parol evidence C/L, contextualist]

Holding: In a fully integrated K, party may not introduce PE to contradict the express terms of the contract, but may be introduce to interpret the K, including the parties' intent. When a possibility for a bad faith claim exists at the time of agreement, and the release in the agreement does not expressly disclaim bad faith, it can be interpreted that the parties did not intend to include a disclaimer of bad faith claims. antecedent understandings and negotiations may be admissible however for purposes of interpretation step 1- ct considers evidence to demonstrate parties intent A judge may consider parol or other extrinsic evidence to determine whether the contract language is ambiguous. step 2- PE rule applies to preclude admitting extrinsic evidence that would vary or contradict the meaning of the written words (judge can also decide this in step 1) fundamental that a ct attempt to ascertain and give effect to the intention of the parties at the time the K was made, even if the language ordinarily means something else

Sherrodd, Inc. v. Morrison-Knudsen Co. [Parole evidnece exception fraud]

Holding: PE is not allowed when the pl alleges fraud and misrepresentation that directly contradicts the express terms of a written K [strict jdx, no fraud in the inducement] Rule: a party may not introduce parol evidence that conflicts with the express terms of a K, UNLESS - evidence of mistake/imperfection OR -the parties dispute the validity of the K, OR - fraud that does not relate to the subject of the K. Where an alleged oral promise directly contradicts the terms of an express written K, the PE rule applies [fraud in the inducement not recognized, only in the execution] Commercial stability requires that parties to a K may rely upon its express terms w/o worrying that the law will allow the other party to change the terms of the agreement at a later date (Baker v. Bailey) [GOOD FOR POLICY Q'S]

Seidenberg v. Summit Bank [C/L good faith]

Holding: PE rule has no impact on the ability of pl's to substantiate either their claim of reasonable expectation of continued relationship or claim of failure to perform contractual obligations in good faith under ICGFFD ICGFFD - "neither party should do anything which will have the effect of destroying or injuring the right of the other party to receive fruits of K"; FACTORS for breach of ICCGFFD; [R2§205] - unequal bargaining power - financial vulnerability - advice of competent counsel at formation - expectations of the parties - purposes for which the K was made - bad faith or ill motive A party exercising right to use discretion in setting price under K breaches the duty of ICGF if (1) that party exercises its discretionary authority arbitrarily, unreasonably, or capriciously, AND (2) objective of preventing the other party from receiving its reasonably expected fruits

Harvey v. Dow

Holding: Teresa's reliance on the Dows' general promise to give her land at some time, when coupled with their affirmative actions in allowing her to build a substantial house on a particular piece of their land, would seem to be eminently foreseeable and reasonable. From those actions, a promise by the Dows to convey that specific site could be fairly implied. Neither the absence of an explicitly articulated promise, nor the absence of consideration is a bar to enforcing that promise. [promissory estoppel] In a promissory estoppel analysis, "[t]he promise relied on by the promisee need not be express but may be implied from a party's conduct." Tozier when applying the doctrine of promissory estoppel "[i]n the context of the transfer of land, when the donee has made substantial improvements to the land in reliance upon the promise to convey the land, courts will enforce the promise to convey

Pops Cones v. Resorts International Hotel, Inc. [promissory estoppel]

Holding: When a company tells another not to renew their lease and assures them they will enter a contract for a new location this is enough to send the question of promissory estoppel to the jury, regardless of whether an agreement was ever made statements in negotiation may be binding under promissory estoppel when assuring action will result in continuing negotiation and contract formation

Locke v. Warner Bros, Inc. [C/L good faith]

Holding: a K which gives one party discretion as to which projects of the other party to develop, the ICGF will apply to them using that discretion in good faith and not categorically rejecting proposals [when no express right to refuse], so neither party would frustrate the other party's rights to receive the benefits of the contract Rule: where a K confers one party a discretionary power affecting the rights of the other, a duty is imposed to exercise discretion in good faith and in accordance w fair dealing in every K there is an IC that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract when it is a condition of an obligor's duty that they be subjectively satisfied w respect to the obligee's performance, the subjective standard of honest satisfaction is applicable Fraudulent intent may be inferred from such circumstances as def's failure to attempt performance [circumstantial] ICGF cannot contradict an express term of a contract

Buffaloe v. Hart [part performance SOF UCC]

Holding: a part performance exception under UCC to the SOF exists when the seller has delivered the goods and the buyer delivers something that is accepted by the seller as performance such as money or check (retaining check for 4 days before ripping up was enough to show buyer accepted) Rule: §2-201(1) a check may constitute a writing sufficient to satisfy the requirements of this section provided it: (1) contains a writing sufficient to indicate a contract of sale b/t the parties; (2) is signed by the party or his authorized agent against whom enforcement is sought; and (3) states a quantity §2-201(3)(c) UCC exceptions to SOF - partial performance seller must deliver the goods and have them accepted by the buyer acceptance must be voluntary and unconditional, may be inferred from the buyers conduct in taking physical possession of the goods or some part of them buyer must deliver something that is accepted by the seller as such performance part payment may be made money or check, accepted by the seller

Wood v. Lucy, Lady Duff-Gordon [C/L implied terms]

Holding: a promise exchanged from consideration may be implied from circumstances of reasonable efforts such as acceptance of a privilege which induces duties, for example an exclusive right to endorse someone implies they will make reasonable efforts to do so Rule: a promise may be lacking yet the whole writing may be "instinct w an obligation" imperfectly expressed [implied obligation] (1) A contract may be enforced when there is no evidence of a promise, exchanged as consideration, in the explicit terms of the contract. (2) A promise to use reasonable efforts may be implied from the entire circumstances of a contract.

Drennan v. Star Paving [promissory estoppel]

Holding: b/t a subcontractor who made the bid and a general contractor who reasonably relied on it, the loss resulting from the mistake should fall on the party who caused it, when a subcontractor makes a bid without an express mention that it is revocable prior to acceptance that they can reasonably foresee the general contractor relying on in making their bid will be be held to that promise when the general contractor does rely on it, regardless if the subcontractor makes a mistake in underestimating the bid amount -bid by subcontractor can be an offer when the custom is to do all bids in one day Limitations on the Drennan Rule ct indicated situations where general contractor would not be allowed to invoke promissory estoppel if def's bid "expressly stated or clearly implied that it was revocable at any time before acceptance" inequitable conduct by the general contractor; bid shopping; trying to find another subcontract for cheaper while claiming the og bidder is bound bid chopping; attempt to renegotiate w the bidder to reduce the price

Hemlock v. Solarworld [UCC, frustration, impracticability]

Holding: shift in market price that renders a contract unprofitable does not make it impracticable nor frustrate its purpose affirmative defense of impracticability; 4 elements (1) Event: acts of god or third parties. Impracticability: extreme difficulty (2) Basic assumption: not predictions about market conditions (more about allocation of risk) (3) W/o fault (4) Assumption of risk performance need not be impossible, but there must be a showing of impracticability b/c of (1) extreme and unreasonable difficulty, expense, injury, or loss involved applies only if an unanticipated circumstance has made performance of the promise vitally different from what should reasonably have been w/in the contemplation of both parties when they entered into the K; defense is only viable if an (2)unforeseen event occurs; and (3) the non-occurrence of that event was a basic assumption on which both parties made the K - shifts in the market price do not constitute impracticability - neither does the simple fact a K has become unprofitable for one of the parties - neither does 3p illegal actions that influence market price affirmative defense of frustration; also [like impracticability] requires a showing that 1, unforeseen event 2, altered a basic assumption, and 3, that the unforeseen event thwarted the parties purpose in making the K to such a degree that 1 party's performance becomes virtually worthless to the other no argument that continuation of existing market conditions was a basic assumption of the contract mutual profitability not be accepted as the primary purpose of a K

Frigaliment Importing v. BNS International Sales Corp (UCC, contextualist)

Holding: when 2 parties have different subjective understandings of a contract term, the party who's understanding is closest to the objective meaning will govern the contract when one of the parties is not a member of the trade or other circle, his acceptance of the standard must be made to appear by proving either that he had actual knowledge of the usage, or the usage is so generally known in the community that his knowledge may be inferred [actual or constructive] for inferred knowledge it must be shown that the usage is of so long continuance, so well established, so notorious, so universal and so reasonable in itself that the presumption is violent that the parties contracts w reference to it and made it part of their agreement no credit should be given to witness usage who could not adduce instances in verification (does the opposite of what they testify) If the parties to a K subjectively, but in good faith, construe an ambiguous term differently, cts may look to external factors to determine the proper interpretation of the term.

Thompson v. Libby [C/L parol evidence, textualist]

Holding: when a K facially appears to be complete expression of the entire agreement parol evidence is inadmissible, to be admissible as "collateral" it cannot relate to the same subject matter as the K [regardless if full interpretation] Rule: parol evidence is inadmissible to contradict or vary the terms of a valid written instrument does not apply where the writing is incomplete on its face and does not purport to contain the whole agreement, as in the case of mere bills of parcels, etc. The only criterion of the completeness of the written K is the writing itself. If it imports on its face to be a complete expression of the whole agreement,—that is, contains such language as imports a complete legal obligation,—it is to be presumed that the parties have introduced into it every material item and term; and parol evidence CANNOT be admitted to add another term to the agreement, although the writing contains nothing on the particular one to which the parol evidence is directed.

Aceves v. U.S. Bank, N.A.

Holding: when a bank promises to negotiate to modify and reinstate a loan in exchange for a debtor not proceeding with their bankruptcy claim, and they don't negotiate there will be a claim for promissory estoppel When a person refrains from changing their ch 7 claim to ch 13 in reliance on a promise to negotiate a loan that person has had reliance

Kirksey v. Kirksey (PE)

Holding: when a family member makes a gratuitous promise such as giving family a home and land to cultivate, no action will lie for breach because a gratuitous promise is not enforceable Rule: gratuitous promises/conditional gifts are not enforceable [like tramp hypo]

Alaska Dem. Party v. Rice

Holding: when a pl establishes a promise by clear and convincing evidence and it reasonably induces action or forbearance and does so then it will be an exception to the SOF pl's burden in overriding Statute is to establish the promise's existence by clear and convincing evidence [ONLY BY PREPONDERANCE OF EVIDENCE IN REG PROM ESTOP CLAIM] factors as to whether injustice can only be avoided by enforcement; a) the availability and adequacy of other remedies, particularly cancellation and restitution; b) the definite and substantial character of the action or forbearance in relation to the remedy sought; c) the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence; d) the reasonableness of the action or forbearance; e) the extent to which the action or forbearance was foreseeable by the promisor.

James Baird Co. v. Gimbel Bros [promissory estoppel]

Holding: when an offer is revoked before consideration or acceptance has occurred the doctrine of promissory estoppel will not apply where the custom for offer and acceptance of bids is not done quickly but is drawn out Notes; most courts agree that a contractors bid is not a binding acceptance an offeree can be protected against a surprise revocation of an offer by an option contract

Totem Marine Tug & Barge, Inc. v. Aleyska Pipeline Service Co. [Duress]

Holding: where one party faces bankruptcy or accepting a release agreement the release will not stand because it was formed under economic duress (T said A deliberately w/held pay of acknowledged debt knowing T had no choice but to accept inadequate settlement) R§ economic duress: (1) wrongful or improper threat essential element [BOP on P] the def by wrongful acts/threats, intentionally caused him to involuntarily enter into a particular transaction, [threat to breach has been held as a wrongful act] [threat to breach or w/hold payment is bad faith - intentional non-payment of an acknowledged debt] (2) circumstances permitting no adequate alternative [caused by the wrongdoer] available legal remedy such as suing 4 breach may be a reasonable alternative, finding another similar good or service on the market... may not be adequate where the delay involved in pursuing that remedy would cause immediate and irreparable loss to one's economic or business interest - wait of even a few weeks may be fatal (3) inducement of the K by threat [involuntariness] - goes beyond financial embarrassment, P must show def produced these factors through their acts duress must be proven by evidence that the duress resulted from D's wrongful and oppressive conduct, and NOT by P's necessities

R definition of "wrongful";

Impermissible threats include bad faith threatened use of civil process; threats which are a breach of the duty of good faith and fair dealing under a contract with the recipient; threats which would harm the recipient without significantly benefitting the party making the threat; or threats where "what is threatened is otherwise a use of power for illegitimate ends." must be more than hard bargaining, or tough business tactics do not include arrangements that "serve a practical business function"

RECAP PAROL EVIDENCE

Is the written agreement integrated? classical approach (Thompson) and modern approach: integrated when the writing is made w consideration and deliberation and is intended to embody the entire agreement of the parties How do we determine whether it is integrated? classical approach (Thompson): look at the writing itself [4 corners] to determine whether it is an expression of a whole agreement modern approach: consider all evidence, including extrinsic evidence, to determine the intent of the parties What is the value of a merger? classical approach: it conclusively establishes that a writing is integrated modern approach: not solely determinative When is PE admitted to interpret the meaning of the agreement? Classical approach/ "plain meaning" approach,: extrinsic evidence is only allowed for interpretation if the court first finds that the contract is facially ambiguous Modern approach: Ct should consider extrinsic evidence to determine its relevance to the parties' intent THEN exclude from the factfinder irrelevant evidence OR evidence contradicting or varying the meaning of the agreement.

· Long v. Provide Commerce, Inc.:

Long purchased flowers, PC wanted to enforce their arbitration clause, Long claims he did not notice the hard to see T&C and should therefore not be bound by them o T&C must be clearly viewable to the reasonably prudent user when hyperlinks to terms are so inconspicuous (green on green, cluttered, submerged, no textual notice given, and hard to find on the page even when looking for them) that a RPU would not be on notice then they cannot form a binding browsewrap agreement Rule: whether a binding browsewrap agreement has been formed depends on whether the user had actual or constructive knowledge of the terms; whether a reasonably prudent user would be on notice an offeree regardless of apparent manifestation of his consent, is not bound by an inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious

Normile v. Miller

P shown D's property, makes an offer, offer rejected by counter offer, P thinks about counteroffer. Meanwhile P's agent tells other client counteroffer terms and that client purchases. When P finds out (from agent) he nevertheless tries to accept counteroffer***can't accept after receiving notification of revocation from reliable source.

· Pennsy v. American Ash Recycling Co.:

Pennsy receives defective substrate for free from AA, Pennsy must redo the work at great cost, AA claims the substrate was a gift and not a contract, P says AA benefited from gift o The promise must induce the detriment and be the reason for it (consideration) Holding: There may be sufficient consideration to form an enforceable contract even though the parties have not bargained for the specific terms of the agreement, when the promise (free aggrite) induced the detriment (cost of disposal) where a party offers a product for free but does not have to provide for its disposal it will constitute consideration

Linking multiple writings as contract - layered contract theory

Strict approach requires express, explicit reference to the unsigned letter in the signed letter Permissive approach allows for relation in subject matter and consideration of conduct and context

UCC §2-202 Final Written Expression: Parol or Extrinsic evidence

Terms to which the confirmatory memoranda of the parties agree or which are otherwise outlined in a writing intended by the parties as a final expression of their agreement may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented (a) by course of performance, course of dealing, or usage of trade (Section 1-303); and (b) by evidence of consistent additional terms unless the ct finds the writing was intended to be a complete and exclusive statement of the terms of the agreement.

Edward v Tobin

[minority] found 'reasonable rent' was enough and enforced the agreement based on their intent to be bound

E.C. Styberg Engineering Co. v. Eaton Corp.

UCC 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 contract must be specific as to essential terms, such as identity of the parties to be bound, the subject matter of the contract, consideration, a quantity term (almost always fatal if missing), a price term (missing price term alone is not fatal) - a price quotation is considered an invitation for an offer, rather than an offer to form a binding contract - the buyers' purchase order in response to such a quotation most often constitutes the offer Holding: when parties cannot agree on a quantity term, and their conduct does not show a manifest intent to enter the bargain, no contract is formed

Hamer v. Sidway:

Uncle promises his nephew money if he abstains from vices until his 21st birthday o Abstaining from your legal rights is a legal detriment (consideration)

Walker v. Keith

a renewal agreement that lacks certainty (missing an essential element [price] and does not provide a method for determining rent) is not a valid contract because it is indefinite, but an agreement to agree Rule: an agreement must be sufficiently definite AND include all of its material terms (sufficient for a court to determine what the parties agreed on) in order to be binding an agreement to agree is not a contract the provision for a renewal must be certain in order to render it binding and enforceable indefiniteness, vagueness, and uncertainty in the terms will render it void unless the parties by their conduct or acts supplement the covenant and thus remove uncertainty if parties perform anyway (conduct shows agreement) this is one exception to not having essential term certainty required is such as will enable a court to determine what has been agreed upon [C/L]

Williams v. Walker-Thomas Furniture Co [unconscionability]

a contract may be unenforceable for unconscionability where there is grossly unequal bargaining power [procedural] and no meaningful choice [substantive] to be made procedural; meaningfulness can be negated by gross inequality of bargaining power, manner in which the contract was entered is relevant; did each party considering education or, lack of have a reasonable opportunity to understand the terms of the contract, or were important terms hidden in a maze of fine print and minimized by deceptive business practices substantive; in determining reasonableness or fairness, primary concern must be the terms of the K considered in light of the circumstances existing when made whether a meaningful choice is present can only be determined in light of all the circumstances surrounding the transaction; The terms are to be considered "in the light of the general commercial background and the commercial needs of the particular trade or case."‍‍ Corbin suggests the test as being whether the terms are "so extreme as to appear unconscionable according to the mores and business practices of the time and place." must be extremely excessive compared to what someone would expect under the circumstances

promissory estoppel and UCC

[majority] promissory estoppel is an exception to UCC SOF [substantial minority] estoppel is not an exception to UCC SOF requirements

R§151 a contractual mistake is

a belief not in accord w/ the facts the erroneous belief of one or both parties must relate to a fact in existence at the time the contract is made [not erroneous belief as to something to happen in the future]

Quake Construction v. American Airlines

a letter of intent may be binding when it is clear that the ultimate contract will be substantially based on the same terms as the previous document, "this notice of award authorizes work", cancellation clause also shows intent to be bound by the LOI parties could've specifically provided that negotiations are not binding until a formal agreement is executed, in which case it is not binding until that formal agreement is executed

Ray v. William G. Eurice & Bros., Inc.

absent fraud or coercion, one who has the capacity to understand a written document who reads and signs it, or without reading it, signs it, is bound by his signature in law and has manifested their assent

acceptance

acceptance must be clear, unequivocal, and unqualified in order for a contract to be formed (Beastie) silence is not acceptance §39 Qualified or conditional acceptance is a counteroffer, same effect as rejection = offer terminated is a default rule, only used unless either party expressed intention otherwise UCC 2-207(1): acceptance must be timely, definite, and can add additional terms as long as it is not expressly conditional on acceptance of terms "acceptance is expressly conditioned on these terms" Analysis of acceptance - Was it sent w/in a reasonable time? Was it definite? Was assent made expressly conditional on different/add'l terms?

bilateral contract

an exchange of promises in which each party promises to do something for the other

Revocation of an offer

an offer can be revoked (and countermanded by the offeror) at any time before it is accepted even if there is a specified time for acceptance notice of revocation must be given to the offerree (indirectly or directly) needs only be sufficient to put offerree on notice the offeror has taken action inconsistent with offering

Cook v. Coldwell Banker/Frank Realty Co.

an offer to a unilateral contract is accepted when the requested performance is rendered an offer to pay a bonus for continued employment is an offer and enforceable when accepted by the employee's performance cannot revoke that offer once the offeree has made substantial performance

Mirror Image Rule (C/L)

an offer to purchase only remains an offer until the seller accepts it on the exact terms contained in the original offer by the prospective purchaser if he purports to accept but changes the terms it is a conditional acceptance - is actually a counteroffer and rejection of the buyers offer - a contract requires meeting of the minds or an offer and acceptance in the exact terms that the acceptance must be communicated to the offeror - `if there is a change or addition of terms added by the acceptance there is no meetings of the minds nor contract = rejection = termination

additional terms UCC

are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer (counteroffer); (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. merchant = seller of goods non-merchant = additional terms are only proposals and must be accepted to become part of the contract

intent to be bound under both UCC and R is whether the parties intended to be bound

at the point where they agreed in principle or only if further negotiations proved successful

Last Shot Rule (C/L)

can indicate acceptance of a counter offer by conduct indication lack of objection to it The traditional judicial reaction was that the forms could not be ignored and since the terms thereon did not match, the last form had to be a counter-offer permitting the seller to have his "last shot" and to prevail. Princess applies this holding P accepted counteroffer by conduct

how definite an offer needs to be C/L

cannot require further expression of assent must be sufficiently definite for a ct to ascertain the parties' obligations and to determine whether those obligations have been performed or breached

meaning of integration

complete integration= a writing that is intended to be a final and exclusive expression of the agreement of the parties partial integration - a writing that is intended to be final but not complete b/c it deals w some but not all aspects of a transaction b/t parties correct application of parole evidence rule requires ct to first determine if the writing at issue is a complete or partial statement of the contract terms determining integration Thompson ct follow Williston who argued q of integration must be determined on the 4 corners of contract - found complete integration Williston asserted that inclusion of a "merger clause" conclusively establishes the writing was integrated, sometimes called an integration clause, parallels textualist approach other cts follow a contextualist approach to integration, R2§210 "a writing cannot of itself prove its own completeness, and wide latitude must be allowed for inquiry into the circumstances bearing on the intention of the parties" professor Corbin integration should always depend on the actual intent of the parties, considering all facts and surrounding circumstances in addition to the writing under this approach merger clause alone will not be determinative of integration R supports this, so does UCC

Jannusch v. Naffziger

oral contract for use of festival food truck -predominant purpose test (to determine whether a contract for both the sale of goods and the rendition of services falls w/in the scope of article 2 of UCC) - a contract that is primarily for services with the sale of goods being incidental will not fall w/in the scope of article 2 -a contract may be enforced even though some terms may be missing or left to be agreed upon, but if the essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken, there is no contract -rejection of goods must be w/in a reasonable time after their delivery or tender. it is ineffective unless the buyer seasonably notifies the seller -the fact that a formal written document is anticipated does not preclude enforcement of a specific preliminary promise -an agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined Holding: when the parties have agreed on a sale of goods and their conduct shows that agreement then it is binding

relevance of trade usage and related types of extrinsic evidence UCC

contextualist cts and some textualist cts allow trade usage to overcome the unambiguous modern view trade usage can be used both to interpret an ambiguous term and "also to determine whether a contract provision is ambiguous in the first place" R2 UCC §1-303 defines "usage of trade" - evidence of trade usage should be relevant to the interpretation of the parties' agreement, also defines 2 other relevant to issue of interpretation, course of performance actions of the parties in carrying out the contract at issue course of dealing actions taken by the parties in performing previous contracts b/t them commercial context operates as interpretive evidence evidence not enough to amount trade usage, course of dealing, or course of performance, but still relevant to agreement the type of business or industry the parties are in the geographical location of the parties the time of day or year when the contract was negotiated and formed the nature and length of the parties business relationship the age, experience, and education of the parties, and supply demand pricing and other conditions in the market in which the parties are doing business

Statute of Frauds

contracts must be in writing for: -sale of land/ sale of interest in land [lease] -not possible to be completed w/in one year -sale of goods >$500

Martinez-Gonzalez v. Elkhorn Packing Co {economic duress}

economic duress occurs when one party commits a (1) wrongful act, need not be unlawful or tortious, limited to actions that make a mockery of freedom of contract and undermine proper functioning of our economic system; assertion of false claim, bad faith threat to breach a contract, threat to w/hold payment of an acknowledged debt (2) that act is "sufficiently coercive to cause a RPP faced w no reasonable alternative to agree to an unfavorable contract", need for a job and the money offered under the agreement, does not equate to economic duress NOT reasonable alternative; to be forced into bankruptcy financial ruin, or selling's one's home (3) [causation] a K cannot be rescinded when it appears that consent would have been given not w/standing duress ED does not prohibit simple hard bargaining but precludes wrongful exploitation of business exigencies to obtain disproportionate exchanges of value doctrine is one of "last resort" to be used only absent "conventional alternatives and remedies" the party seeking recision bears the BOP economic duress undue influence - involves "the use of excessive pressure to persuade one vulnerable to such pressure. factors: (1) "undue susceptibility in the servient person" susceptibility = a lessened capacity of a party to make a free contract, result is inability to act w/ unencumbered volition (2) "excessive pressure by the dominating person." (7 factors/elements in Odorizzi) the two elements act in balance. If either exists to a large degree, the 2nd need not be so

consideration

either a bargained for exchange (reciprocal inducement) or benefit to the promisor/detriment to the promisee past performance/promises = not consideration What is the impact of a statement/recital? ("for value received") = rebuttable presumption of consideration can courts second guess consideration? = only if its so grossly inadequate as to shock the conscience plus unfair circumstances Consideration is the bargained for exchange of promises in which one party promises orperforms in order for the other party's promise. This is based on reciprocal inducement, inwhich the parties have a quid pro quo relationship. Under the Holmesian test, the promisemust induce the detriment and the detriment must induce the promise. Generally,consideration is easily proved in contract law.

R2 § 26 a communication is not an offer

if the person making it does not intend to enter a bargain until the other person has made a "further manifestation of assent"

factors for considering whether the parties intended to reduce their agreement to writing; [Quake]

whether the type of agreement involved is one usually put into writing whether the agreement contains many or few details whether the agreement involves a large or small amount of money whether the negotiations indicated that a formal written document was contemplated at the completion of the negotiations where in the negotiating process was the process abandoned reasons for abandonment extent of assurances previously given by the party which now disclaims the contract the other party's reliance upon the anticipated completed transaction

Interpretive Principles

interpret the contract as a whole - should not construe any provision as isolated from the rest of the contract avoid interpretations that result in terms conflicting avoid interpretations that make terms superfluous [where some have no effect] reasonable meanings preferred over unreasonable meanings avoid interpretations that don't make business sense or are illogical avoid interpretation that make parties look irrational purpose of the contract - given considerable weight in determining agreements meaning recitals and whereas clauses usually show purpose noscitur a sociis - the meaning of a word is affected by its immediate context ejusdem generis - when a general term is combined w a specific one, the general one will be deemed to include only things of the same type of specific term contract to sell farm w cattle hogs and other animals would not include house dog but would include sheep expressio unius exclusio alterius - if one or more specific items are listed, w out anymore general or inclusive terms, other items though similar are excluded to sell cattle and hogs and farm excludes sheep and the dog specific provisions are exceptions to and control the contradictory general provisions - given greater weight than general language, generally applies when contract has 2 inconsistent provisions contra proferentum - construe against the drafter if ambiguous, construe against drafter most jdx's limit this to cases where one party had sole responsibility for drafting last resort and applies when other rules of interpretation have failed plays larger role in adhesion contracts, contracts that meet 3 elements; standard form contracts, offered by a business to consumers, on a take it or leave it basis w no option to negotiate terms

agreement to agree

is not binding if an essential element is reserved for future agreement, there is nothing for ct's to enforce if the agreement provides a prescribed method to ascertain the missing essential term, the agreement might be sufficiently definite

Contract formation under UCC

leaves definition of consideration and offer up to the C/L rules of the state article 2 deals with transactions in goods = tangible, movable property does not apply to; real estate, contracts to provide services, contracts to lease goods, nor contracts related to IP; patents, trademarks applies to both consumer and commercial contracts for sales of goods (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. (3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

R2d §17 formation of a contract requires

offer acceptance and consideration

mutual assent

offer and acceptance, two views; objective and subjective

(minority) step-saver

offer to buy/giving payment info, acceptance is shipping the product found that UCC 2-207 applies and it is a proposal for additional terms not binding unless expressly agreed to by purchaser-not a merchant contract is fully formed when a buyer orders a product and seller accepts payment and promises to ship/ships

Beaver v. Brumlow [part performance land SOF exception, unequivocally referable]

oral promise to sell land, built house Holding: clear, cogent, and convincing evidence of entering a verbal contract to sell specific land + specific part performance by both sellers and buyers in reliance on contract = out of SOF and enforceable by specific performance performance must be 'unequivocally referable' to the agreement, a part performance relied on to take the case out of the statute [of frauds] should be of a character, not only consistent with the reasonable presumption that what was done was done on the faith of such a contract, but also that it would be unreasonable to presume that it was done on any other theory doesn't mean no other plausible explanation unequivocally referable means an outsider knowing all of the circumstances of the case except for the claimed oral agreement, would naturally and reasonably conclude that a contract existed regarding the land, (and of the same general nature as alleged by the claimant) (need not relate exclusively to the oral contract just lead to belief a contract exists) two main factors [when coincide usually result in specific performance] taking possession of the property making valuable, permanent, and substantial improvements to the property lack of price term is not fatal here

ProCD v. Zeidenberg (majority)

placing order in person, by phone or on internet is NOT an offer the vendor makes the offer by shipping the product to the purchaser w the vendor's terms of sale included held that buyer of software was bound by shrinkwrap term included in packaging and that later appeared when buyer first used software held UCC 2-207 was inapplicable bcuz in cases involving only one form battle of forms provision was irrelevant evaluated the agreement under UCC 2-204 and reasoned that "[a] vendor, as master of the offer, may invite acceptance by conduct, and may propose limitations on the kind of conduct that constitutes acceptance. A buyer may accept by performing the acts the vendor proposes to treat as acceptance" Hill v. Gateway expanded ProCD holding to apply beyond cases where the terms appeared on the software first time using when a merchant delivers a product that includes additional terms and conditions, but expressly provides the consumer the right to either accept those terms or return the product for a refund within a reasonable time, a consumer who retains the goods beyond that period may be bound by the contract; however buyer NOT bound if terms only say 'if you are dissatisfied w product you may return w/in _ days'

Knockout Rule (UCC)

situations where the standard form offer has a term, such as a seller's limitation of warranty protection to 90 days, and the standard form acceptance by the buyer provides for a warranty of unlimited duration. Under this approach, both terms would drop out and the duration of the warranty would be determined by application of Article 2.

2 general approaches to contract interpretation

textualist/m approach/ classical approach/ formalist plain meaning rule, and four corners rule 1, is the language ambiguous? (reasonably susceptible to more than one meaning- q of law for judge) might consider what is within the four corners of the contract itself if unambiguous -> apply the "plain meaning" of the text no extrinsic evidence viewed at this stage if ambiguous -> move to second stage 2, resolve ambiguity using extrinsic evidence law scholar says this is the majority approach contextualist approach, contextualism, substantive/modern approach [R2 approach] also a 2 stage process 1, both extrinsic and intrinsic evidence can prove if a contract is ambiguous if reasonably susceptible (ambiguous), stage 2, fact issue for the jury if unambiguous and evidence weighs on one side, SJ for that part

R2 § 24 offer

the 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, - must be an expression of a fixed purpose - conditional language "if" can show there is no offer nor fixed purpose (Lonergan) Typically, price quotes are not offers, but are invitations for an offer (E.C. Styberg). Purchase orders are typically considered to be offers. C/L requires all material terms UCC more flexible as long as there's a quantity term and enough to calculate remedy

R§45 in unilateral contract;

the offerree is protected by providing when the offeror invites acceptance by performance, the beginning of performance creates an "option contract" cannot revoke once offeree begins requested performance if offeree fails to complete performance can be revoked R doesn't require "substantial" performance

lack of reasonable alternatives

threat may be improper but there is a reasonable alternative = no economic duress alternatives; legal action, alternative sources of goods, services, or funds, toleration if threat involves only minor vexation inducement of involuntary assent causation = threat must "substantially contribute" to the manifestation of assent prior standard was "threat such to overcome will of person of ordinary firmness and courage" - Totem now a subjective standard asking whether the particular victim was induced by the threat all attendant circumstances must be considered, including such matters as; the age, background, and relationship of parties must threatening party cause hardship? one judge held can't void for economic duress unless the threatening party caused the financial hardship cts have held that for economic duress there must be a causal link b/t coercive acts and circumstances of economic duress on other hand, few cts have held that it is enough that one party takes advantage of the other side's dire circumstances, w/o having caused the financial hardship

wrongful or improper threat

threat need not be illegal to give rise to claim of duress wrongful per se; - threats to commit crime or tort - threats of criminal prosecution not wrongful per se but could be if made in bad faith; - threats to engage in litigation - to refuse to honor the contractual obligation

Odorizzi v. Bloomfield School District [C/L undue influence]

undue influence; high pressure, which works on mental, moral/emotional weakness to such extent it approaches the boundaries of coercion, "taking an unfair advantage of another's weakness of mind, or of another's necessities or distress"; pressure by a dominant subject to a servient object (1) aspect is a lessened capacity of the object to make a free K [unduly susceptible] total weakness of mind which leaves a person entirely w/o understanding OR a lesser weakness which destroys the capacity of a person to make a K lack of full vigor due to age, physical condition, emotional anguish, or a combo; usually elderly, sick, senile persons (2) aspect involves an application of [excessive strength/persuasion] by a dominant subject to a servient object; elements of excessive pressure; (1) discussing transaction at unusual/inappropriate time, (2) transaction in an unusual place, (3) insistent demand business be finished at once, (4) extreme emphasis on consequences of delay, (5) the use of multiple persuaders by the dominant against single servient party, (6) absence of 3p advisers to the servient party, (7) statements that there is no time to consult financial advisers or attorneys. - whether a person of subnormal capacities has been subjected to ordinary force, or a person of normal capacities is subjected to extraordinary force, the match is equally out of balance and consent may be rescinded [either factor may be enough]

unilateral mistake and R§153

unilateral mistake voidable if he does not bear the risk of the mistake under the rule stated in § 154, and (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake."

Beastie Boys v. Monster Energy

valid contract (NY) requires offer, acceptance, consideration, mutual assent and intent to be bound manifestation of willingness to enter an agreement and be bound- offer C/L must be clear, un-ambivalent, and unequivocal - acceptance "dope" not sufficient must be timely

Lucy v. Zehmer

we must look to the outward expression of a person as manifesting his intention rather than to his secret and unexpressed intention the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts The mental assent of the parties is not requisite for the formation of a contract. If the 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 Holding: Whether the writing signed by the defendants and now sought to be enforced by the complainants was the result of a serious offer by Lucy and a serious acceptance by the defendants, or was a serious offer by Lucy and an acceptance in secret jest by the defendants, in either event it constituted a binding contract of sale between the partie

Lenawee County Board of Health v. Messerly [mutual mistake, C/L]

when both parties have a basic assumption [that the land can generate rental income] that is not true, it materially affects the agreed on performance, but the ct may decide to not to rescind and to let one party bear the mistake, especially if there is a clause that they take the land "as is" R§151 contractual mistake = belief not in accord w/ the facts - must relate to a fact in existence at the time the K is made [not something to happen in the future] § 152. When Mistake of Both Parties Makes a K Voidable (1) Where a mistake of both parties at the time a K was made as to a basic assumption on which the K was made has a material effect on the agreed exchange of performances, the K is voidable by the adversely affected party UNLESS he bears the risk of the mistake under the rule stated in § 154. (2) whether the mistake has a material effect on the agreed exchange, account is taken of any relief by reformation, restitution, or otherwise. § 154. When a Party Bears the Risk of a Mistake A party bears the risk of a mistake; (a) the risk is allocated to him by agreement of the parties, OR (b) he is aware, at time of K, that he has only limited knowledge w/ respect to the facts to which the mistake relates but treats it as sufficient [reckless contracting], OR (c) the risk is allocated to him by the ct on the ground that it is reasonable in the circumstances to do so.

BMW Financial Services v. Deloach [C/L, unilateral mistake]

when one party alone made the mistake of not flagging an account as in litigation so it doesn't go to collection, it's not unconscionable for the ct to place the burden of the mistake on that party and make them honor the settlement agreement made w the collector R§153 Unilateral Mistake, voidable by him IF he does not bear the risk under §154, AND (a) the effect of the mistake is such that enforcement would be unconscionable = unfair burden on another party; [not same as unconscionability defense] OR (b) the other party had reason to know of the mistake or his fault caused the mistake R§154 "A party bears the risk of a mistake when (a) risk allocated to him by agreement or (b) reckless King, or (c) risk allocated by ct on ground it's reasonable in the circumstances - risk of mistake must be allocated to a party when the mistake results from that party's 'neglect of a legal duty'; could be extreme negligence, not necessary to violate a statute R§157 "A mistaken party's fault in failing to know or discover the facts before making the K does not bar him from avoidance unless his fault amounts to a failure to act in good faith and in accordance w/ reasonable standards of fair dealing."

Princess Cruises, Inc. v. General Electric Co.

where an owner enters contract w engineering department for service of a ship and only incidentally mentions parts needed for repairs the contract is primarily for the sale of services rather than goods and the UCC does not apply. where a party purports to accept w their own form and own conditions, it is really a counteroffer, which is then accepted when the other party begins performing the UCC does not apply to contracts that are predominantly for the sale of services rather than goods Bonebrake factors for determining if UCC applies/if a contract is primarily for sale of goods -the language of the contract -the nature of the business of the supplier -the intrinsic worth of the materials when an acceptance changes the terms of a contract its a counteroffer (mirror image rule) At C/L, an offeror who proceeds under a contract after receiving the counteroffer can accept the terms of the counteroffer by performance (last shot rule)

UCC SOF requirements

writing must be signed or authenticated, perhaps by initials or even a printed letterhead ct must be persuaded the writing does indicate a contract for sale has been made (or offered oral evidence rests on a real transaction) must contain a quantity term Partial Performance §2-201(3)(c) payment of part of price will be sufficient to validate the entire contract if a party denies a contract but admits facts that establish a contract was made the SOF defense will be lost UCC 2-201(3)(b) admission exception party cannot admit making a contract in legal proceeding then avoid liability due to lack of writing UCC 2-201(3)(a) Special Manufacture exception exception to SOF for specifically manufactured goods, goods must be specially manufactured for the buyer and not suitable for sale to others in the ordinary course of sellers business UCC Confirmation b/t merchants exception merchant = someone who regularly deals in goods of a kind or holds themselves as having particular skills or knowledge involved in a transaction one of the merchants must send a written confirmation of the contract w/in a reasonable period after formed confirmation must be received by other party who must have reason to know its contents and fail to object w/in 10 days confirmation must be "sufficient" against sender, through satisfying 2-201 failure to answer bars SOF, but not argument that there was no contract formed UCC signed writing signed = any symbol executed or adopted w present intention to adopt or accept a writing ; letter head; initials; partys name and address writing = printing, type writing, or any other intentional reduction to tangible form ; electronic transactions counts