Acevedo Contracts Final

UCC 2-204 Formation in General

(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.

UCC 2-306 Output, Requirements and Exclusive Dealings

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

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

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

UCC 2-206 (offer and acceptance)

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

Mutual Mistake Elements

- Even a mutual mistake will not be grounds for rescission if the mistake is one the risk of which is properly allocated to the party now seeking rescission. A mistake about the general state of market conditions will almost certainly fall into this category, since a contrary rule would give parties an incentive to remain ignorant of something they could easily check. Therefore, Daisy can enforce the contract as it is written. - Basic assumption - Material effect - Risk

Impossiblity: Reasonable Control ("Force Majeure")

- Reasonable control contains two prongs: the party must not affirmatively cause the excusing event and the party must take reasonable steps to ensure performance. - A party will not be excused from performance due to impossibility unless the party can show that the excusing event was beyond the party's reasonable control.

Impracticability Elements

- a modern doctrine of impossibility, allows for excuse of performance. - performance is possible, but exceedingly difficult

UCC 2-207

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.

impossibility of performance

A doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes impossible or totally impracticable (through no fault of either party).

Misrepresentation

A false statement or lie that can render the contract void.

Offer

A promise or commitment to perform or refrain from performing some specified act in the future.

Unilateral Mistake basic assumption

Again, the issue here is whether Shah's unilateral mistake is grounds for avoiding the contract. Remember that to avoid a contract based upon unilateral mistake, the rules for avoiding a contract based on mutual mistake must first be satisfied. That is not the case here: Shah knew that he needed a machine for cutting marble, yet he failed to adequately inspect and investigate to see if Mimzeh's machine was suitable for this purpose before entering into the contract. Shah's "conscious ignorance" of this fact will therefore bind him to the agreement as made.

UCC 2-205 Firm Offers

An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

Termination by Rejection

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

Death or Incapacity

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

Ivor E. Keyes is a gifted pianist. On hearing him play, his beloved Aunt Charity determined to do something to help him advance his career. Ivor told her that he needed to get some training from a really fine pianist to improve his interpretation and style. He had contacted the celebrated Maestro Molto Bravissimo but had not engaged him as a teacher because he could not afford his fee of $150 an hour. Aunt Charity declared: "You shall have him as your teacher. I will send you a check for $15,000 tomorrow. That should cover 100 lessons." Ivor thanked her and said, "Auntie, if I ever make it to Carnegie Hall, I will get you the best seat in the house." She replied, "Yes, that will be nice, dear. I'll hold you to it." Do Ivor and Aunt Charity have a contract?

Aunt Charity clearly has suffered a detriment in promising to pay $15,000 to Ivor. However, this is nothing more than a gratuitous promise, like her promise to Chevy in Example 4, unless Ivor has given consideration in exchange for it. The only undertaking that could conceivably qualify as consideration is his assertion that he will get her the best seat in the house if he ever makes it to Carnegie Hall. (His implicit undertaking to use the money for piano instruction is best treated as nothing more than a condition of the gift and should not qualify as consideration.)

Consideration Bargain Ben Hur offers to sell his chariot to his cousin, Hardy Har Hur, for $400. Hardy Har accepts. What's the consideration in the contract?

Consideration requires bargained-for legal value. "Bargained-for" means the detriment must induce the promise, and the promise must induce the detriment. Ben's detriment = selling the chariot, prompted by Hardy Har's willingness to pay for it; Hardy Har's detriment = paying the $400, based on Ben's willingness to sell. Note that each party's promise is the consideration for the other party's promise.

Additional Consideration

Even in courts following the majority/common-law rule that a promise to do what one is already obligated to do cannot be consideration, the promisor's promise to undertake different or additional duties (no matter how slight the difference) is consideration for the return promise. So Columbus' agreement to leave 2 days earlier was consideration for the capital-naming promise, making that promise enforceable.

Misrepresentation in Sale

If during the negotiation process a party makes a statement that is part of the bargain and they don't intend to honor such statement ("maintenance free"), then that is a misrepresentation. Here Honest John can be shown to have lied about his intention to do repair work and his opinion of the vehicle he sold Portia. These are hard things to prove, but here Portia has the evidence through the

What do you call a promise that's not supported by consideration?

It depends on whether it's cloaked in terms that make it appear the promisor has committed himself. If it's just a naked promise ("I promise to give you my car"), then it's a gratuitous promise. If it's cloaked in terms of commitment that make it seem like there's consideration ("I promise to give you my car unless I decide not to move to Australia in August"), but the promisor has a completely unrestricted right to renege on his promise, then it's an illusory promise.

Promissory Estoppel

It takes the place of consideration. The most significant ramification of this is that it makes gratuitous promises enforceable. (It also does other things, like making the bids of subcontractors enforceable, but it's the enforceability of gratuitous promises that's the most important role of promissory estoppel.) Under Restatement of Contracts §90, promissory estoppel exists when: Someone makes a promise; Which he should reasonably expect; Will lead to the promisee's action or forbearance; The promisee does in fact justifiably rely on the promise to his detriment; and Injustice can be avoided only by enforcing of the promise. NOTE: The court needn't enforce the promise completely; it can enforce it to the extent necessary to avoid injustice. NOTE: Promissory estoppel replaces consideration where the promisee's detriment was not bargained for (as long as the above elements are present).

What are the basic elements of valid consideration for a bilateral contract?

Legal value (detriment to promisee or benefit to promisor); and Bargained-for exchange. NOTE: Bargained-for exchange means the detriment must induce the promise and the promise must induce the detriment—thus, each party's promise is the consideration for the other party's promise. If one party's detriment occurs in reliance on the other's promise, but there is no bargained-for exchange, the promise is enforceable due to "promissory estoppel" (in spite of the lack of consideration). NOTE: Although there need only be, in theory, detriment or benefit, in practice most courts require both.

Licensee Revenue Purpose

Licensing statutes intending to produce revenue do not void contracts. Generally, statutes indicate a penalty (e.g. $100 fine) for operating without a license. The practical challenge, is determining whether the statute is intended to regulate behavior or is intended to raise revenue.

Promissory Estoppel Answer

Most American courts would enforce the agreement under the doctrine of promissory estoppel. Maximillian made a promise on which he should reasonably have expected Monroe to rely, Monroe justifiably relied on the promise to his detriment, and injustice can only be avoided by enforcing it.

George Washington's friend Benny Arnold tells him, "If you walk across the street with me now and go into the hardware store, I'll buy you an axe." Washington crosses the street and enters the store. Arnold reneges. Has Arnold breached a contract?

No, because there was no consideration, and promises without consideration are generally unenforceable. These facts highlight the difference between: (a) consideration, and (b) a condition on a gift. In these kinds of cases, you have to look at whether the detriment in question is something the promisor bargained for (a requirement for consideration). In other words, did the promisee's detriment motivate the promisor to make the promise? Here, Arnold wasn't really motivated by a desire to have Washington cross the street and enter the store; instead, these acts were merely a condition to facilitate Arnold's making of the purchase. Since Arnold didn't bargain for Washington's crossing the street, there was no consideration for Arnold's promise. Therefore, that promise was an unenforceable promise to make a gift.

Illegality

No. The issue here is whether an illegal purpose of only one of the parties—Princip—means the other, innocent party may not recover under the contract. The rule is that the innocent party may recover, even if he knew about the other party's illegal purpose, as long as the purpose doesn't involve serious moral turpitude or the innocent party takes action to further the illegal purpose. Here, Princip's illegal conduct involves murder, so Al can't recover.

What are the two basic types of legal detriment?

Promisee does something he's not obligated to do (e.g., paint the promisor's fence); Promisee refrains from doing something he is entitled to do (e.g., give up smoking).

How do you distinguish a bargained-for legal detriment from a condition on a gift?

The distinction here focuses on whether a requested act is consideration or just a condition on receiving a gift. If it's consideration, the promise is enforceable; if it's just a necessary condition on receiving a gift, it's not. The way to tell the difference is to ask whether the defendant was bargaining for the act in question—would it benefit the promisor in any way? For instance, if Dagwood tells his neighbor,Herb Woodley, "Come over to my garage and I'll give you my hedge clippers," he's made a conditional gift; it's not an enforceable promise. That's because Herb coming over to the garage wouldn't benefit Dagwood; he wasn't bargaining for it. It's a necessary condition on Herb's receiving the hedge clippers. If instead Dagwood said, "Come over and trim my hedges and I'll give you my hedge clippers," then there is consideration, because Dagwood receives something he bargained for—getting his hedges trimmed.

Unilateral Mistake Defenses

The issue here is the effect of a unilateral mistake. In addition to the requirements necessary in a mutual mistake situation (mainly that the mistake must relate to a "basic assumption" and the risk must not be one properly allocated to the party seeking to avoid it), a party who wants to avoid a contract based on unilateral mistake must also prove that either: (1) enforcement of the contract would be unconscionable, or (2) the other party knew or should have known of the mistake or somehow was at fault for creating the mistake. Here, Leo was aware from the get-go that Mike was mistaken about the value of the card, but failed to correct Mike. Mike is therefore able to satisfy requirement (2), and can avoid the contract.

Reasonable Covenant not to compete

The issue is whether the covenant is reasonable. Court use a three prong analysis in evaluating employment covenant: reasonable in scope, reasonable in time, and reasonable in geography. Most jurisdictions would find a three year covenant as is pushing the outer limit of reasonableness (two years is probably safer). If Lee worked 10 years then his defense will include the claim that the employer had more than a reasonable period of time to recover their investment in his training and education.

What is the consideration in a unilateral contract?

The promisee's continued performance constitutes consideration in a unilateral contract. Note that in a unilateral contract, there is no obligation on the offeree to perform; but if he does, the offeror is obligated to perform.

What are "requirements" and "output" contracts?

They're contracts where the quantity is measured by a party's requirements or output of a stated item. For instance, in a requirements contract, the buyer expressly agrees to buy all of his requirements of some item from a seller (e.g., "I promise to buy all the solar-powered flashlights I require next year from the Oxymoron Manufacturing Company"). In an output contract, the seller agrees to sell all of his output of a certain item to a buyer (e.g., "I promise to sell my entire output of recyclable bathroom tissue to the Earthsaver Store Chain"). The philosophical problem with requirements and output contracts is that they seem illusory; there doesn't seem to be any consideration. But in fact, the buyer (in a requirements contract) and the seller (in an output contract) do have their discretion limited and that's what supplies the consideration. In a requirements contract, the buyer suffers a detriment in the form of giving up the right to buy from others; in an output contract, the seller suffers a detriment by giving up the right to sell to others. Requirements and output contracts are enforceable as long as the parties act in good faith and the quantities involved are reasonably foreseeable at the time the contract is entered into. UCC §2-306.

2-308 Absence of Specified Place for Delivery

Unless otherwise agreed (a) the place for delivery of goods is the seller's place of business or if he has none his residence; but (b) in a contract for sale of identified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and (c) documents of title may be delivered through customary banking channels.

UCC 1 201

Unless the context otherwise requires, this Article applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this Article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.

Sec. 265 Restatement Supervening Frustration (Krell v. Henry)

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

Can offers made in jest ever be the basis of a contract?

Yes, as long as a reasonable person in the offeree's shoes would understand the offer to create a power of acceptance in him/her. If this objective standard is not met, there's no offer. NOTE: If the offeree knows or has reason to know that the offeror is joking, then there's no offer.

Are there any limitations placed on a requirements or output contract?

Yes. No quantity requested by a buyer in a requirements contract or provided by the seller in an output contract can be unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirement. UCC §2-306(1). If an estimate of output or requirement is included in the agreement, no quantity unreasonably disproportionate to it may be tendered by the seller or demanded by the buyer. Any miminum or maximum set by the agreement is a clear indication of the extent of elasticity intended by the parties. UCC §2-306(1), Official Comment

Adequacy of Consideration

Yes. The agreement is supported by consideration in the form of Antoinette's promise not to assert her claim. When a party promises to waive a valid claim, that is sufficient "detriment" to constitute consideration for the other party's promise to pay a settlement (here, the pearl necklace).

Requirements Contract- Hercules Manufacturing agrees to buy "all the thing-a-ma-bobs we need to produce our what-cha-ma-callits for the next year" from Zeus Metalworks. Zeus declines to deliver. Is Zeus bound? Assume instead that the agreement was for Hercules to buy "all the thing-a-ma-bobs we order for the next year." Is Zeus bound?

Yes. This is a typical "requirements" contract. Both requirements and output contracts are enforceable under the UCC, because they are deemed to be supported on both sides by consideration. This is so because the UCC imposes an implied obligation of good faith upon the parties, as well as one of exclusivity, in such output and requirements contracts. That is, Hercules has implicitly agreed to run his business in a good-faith way, so that he will continue to have a need for thing-a-ma-bobs. This (together with his agreement that he will not buy any thing-a-ma-bobs from anyone but Zeus), provides sufficient consideration to make the contract enforceable. Since Hercules has bound himself, Zeus' return promise is supported by consideration, making Zeus also bound. No. Under these facts, Hercules has not restricted his freedom in any way — he can choose to buy one unit, 100 or none. His promise is therefore illusory, and does not constitute consideration. Consequently, that promise cannot serve as consideration for Zeus' return promise, and Zeus is therefore not bound.

Objective Standard

You use an objective standard. It is: Would a reasonable person in the offeree's shoes assume that the power of acceptance had been created in him? Note that this means that if the offeree knows or has reason to know that the offeror hasn't made an offer (e.g., he's joking), then there's no offer.