Contracts

Acceptance by Silence: §69

(1)(a): silence or inaction can operate as acceptance if: § Offeree takes the benefit of offered services; § Offeree has a reasonable opportunity to reject them; AND § Offeree had reason to know that offeror expected compensation. (1)(b): silence or inaction can operate as acceptance if: § Offeror gave offeree reason to know that assent may be manifested by silence or inaction, and § The offeree, in remaining silent, intends to accept (1)(c): silence or inaction can operate as acceptance if: § The parties have had previous dealings, AND § Because of those dealings it is reasonable that the offeree should notify the offeror if he does not intend to accept. (2): silence or inaction can operate as acceptance if: § There are offered terms, AND § The Offeree "does any act inconsistent with the offeror's ownership." § But no contract if the terms are "manifestly unreasonable" § And if the offeree's act is "wrongful," there is no contract unless offeree still wants it & ratifies it.

Shipment of non-conforming goods & acceptance

(Corinthian v. Lederle) Shipment of non-conforming goods is acceptance, UNLESS Seller notifies the buyer that non-conforming shipment is an accommodation. § Note: under UCC it is possible to have acceptance that is also breach (non-conforming goods)

Court interpretation preference

(1) greater weight to parties' purpose (2) give words their prevailing meaning (reasonable, lawful, effective meaning) (3) construe contract as a whole (4) Course of performance accepted without objective given great weight (5) Specific or exact terms given greater weight (6) Negotiated terms given greater weight than standard terms (7) Courts interpret AGAINST the drafter (last resort) RST §202

Risk of Mistake §154

- (applies to mutual & unilateral mistakes) o A contract is not voidable if the mistaken party "bears the risk of mistake" o Risk of mistake can be allocated by the agreement. § NOTE: Look for "as is" to show buyer assuming risk.

Congregation v. Robert A Deleo

- Decedent promised to make contribution to the Rabbi for $25K. He died intestate and did not make payments. Rabbi arguing this was enforceable contract. Court said there was no bargaining, no consideration, no actual reliance, and no injustice. Applied RST §90. Court reluctant to enforce promises to make gifts.

CONSIDERATION: Bargained for Exchange

- Evidence by a change in legal position between parties. - Mutual inducement - Legal detriment - Economic benefit not required - Past or Moral Obligations - generally not considered consideration - A gift is NOT a bargained for exchange

Capacity §12

- Parties to a contract must be competent (legal capacity to be held to their contractual duties). Incompetency can arise from infancy, mental illness or defect, guardianship, or intoxication. - Capacity to Contract (according to Restatement): o §12(1): A person cannot be bound by a contract unless they have the legal capacity to at least incur voidable contractual duties. o §12(2): A person has capacity unless: § Under guardianship (Britney Spears); § A minor; § Mentally ill, or § Intoxicated. - Incapacity creates a voidable contract o This is still a contract, but this means it can be enforced by the statutorily protected (minor, etc.) but cannot be enforced by the non-protected party.

Jones v. Star Credit

- Plaintiff bought a $300 refrigerator from a door to door salesmen at the price of $900. Issue was whether the contract was unconscionable. Specifically, the court is looking at the inequality of bargaining power, and the gross price disparity. Court released the plaintiff from the obligations to pay the unconscionable price. o Note: sometimes courts will justify the larger charges when the salesman is going to rural area, is increasing price to mitigate risk of not being repaid.

Williams v. Walker-Thomas Furniture Co.

- Single mother with limited education and 7 children purchased furniture over the course of 5 years, bought the stereo last and was almost done paying off the balance. Missed a stereo payment and the company sued for repossession of the items in the contract. She is arguing that the contract should not be enforced because against public policy and no meeting of the minds. o Trial Court § Meeting of the minds - people who enter into contracts have a duty to read them. Therefore, this was unilateral mistake - there was meeting of the minds. § Public policy - Court said conduct raises serious questions about irresponsible dealings, but still did not declare against public policy.

Mistake (def) §151

- a belief that is not in accord with the facts as to a basic assumption on which the contract is based that materially affects the performance of the contract. o A wrong prediction about future event(s) is not a legal mistake. o The mistake must relate to the facts as they exist at the time of making the contract. o In order to assert mistake, the contracting party must not only show existence of a mistake, but also show other elements.

Misrepresentation (def) §159

- an assertion that is not in accord with the facts. o Must be an assertion or affirmation of existing fact, distinguished from expression of opinion, prediction of future events or promise to do something in the future. o Many cases of misrepresentation are also mistake, because misrepresentation is less stringent standard. o There are both contract, and tort remedies for misrepresentation.

Why do we have the consideration requirement?

- interest in promoting welfare enhancing contracts. A promise alone without consideration is not welfare enhancing. Enforcing promises (gratuitous) does not enhance welfare the same. - Costs of enforcing gratuitous promises. (ex; moral value of gift giving, would have to create administrative bodies to make donations enforceable. - Intent to contract is neither necessary nor sufficient to establish contractual liability.

Termination of the power of acceptance §36

- offeree's power of acceptance may be terminated by: o Rejection or Counter-offer o Lapse of time o Revocation by the offeror (direct or indirect); o Death or incapacity of the offeror or offeree, OR o Non-occurrence of any condition of acceptance under the terms of the offer. (RST §60) § Ex: manner, time, or place of acceptance - must be complied with to accept.

Who has power to accept an offer? §52

1. Only person to whom the offer is addressed has power of acceptance. Offeree must know of the offer at the time of acceptance

Three Kinds of Enforceable Promises

1. Promise + Consideration [CONTRACT} 2. Promise + Recognition of Antecedent Benefit [MORAL OBLIGATION] Rarely enforceable 3. Promise + Unbargained for reliance [PROMISSORY ESTOPPEL] Liability without a promise --> QUASI CONTRACT/RESTITUTION

LOST VOLUME SELLER

A seller who can recover lost profits from a defaulting buyer even though the seller sold the item to another buyer, where the seller has other similar items and would have made two sales had the original buyer not defaulted. Entitled to expectation damages

Parol Evidence Rule

A substantive rule of contracts under which a court will not receive into evidence the parties' prior negotiations, prior agreements, or contemporaneous oral agreements if that evidence contradicts or varies the terms of the parties' written contract. Applies only if there is an integrated writing (final expression of the terms of the deal/agreement) If Total Integration --> no outside evidence admitted. If Partial --> cannot be admited for contradictory terms, BUT can by admitted for additional consistent terms

Lefkowitz v. Great Minneapolis Surplus Store

Ads in the newspaper that included the quantity of items, price, place, and because it said first come first served, it was a specific person. Ads were a binding offer. Valid offer because clear, definite, and left nothing to further negotiations.

Are advertisements offers?

Advertisements are usually considered to be preliminary negotiations, rather than offers to sell. Usually construed as solicitation for offers. Too indefinite - addressed to too broad of a group (might invite over acceptance) EXCEPTION - advertisement offer IF: (1) it promises a particular performance (2) It is clear, definite, and explicit, and (3) circumstances indicate that the alleged offeror intended to enter into a binding relationship without further negotiations. Ex: Reward offers.

Restatement §74

Agreement not to assert an invalid legal claim is not consideration UNLESS: Validity of claim is uncertain under law at the time of the agreement (objective); OR Forbearing party believes the claim may be valid (subjective- looking at if parties actually intended to bargain Hard to come up with evidence to contradict)

Liquidated Damages

An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of a breach. Liquidating damages clauses are enforceable, but penalties are NOT. - Penalties: grossly disproportionate to probable loss. - Liquidated damages: reasonably proportionate to loss.

Quasi Contract

An obligation or contract imposed by law (a court), in the absence of an agreement, to prevent the unjust enrichment of one party. exists when: (1) Parties do not intend to contract (2) One of them provides a benefit (3) The other party knowingly accepts the benefit (4) It would be unjust to deny compensation to the party providing the benefit (ex: expectation of pay); AND (5) The benefit the provider was not a volunteer and had a legitimate reason for his actions

Acceptance by Silence & Conduct

An offer may be accepted by CONDUCT. § Conduct must indicate assent. § If the conduct specified as acceptance is something that the offeree would have usually done, it is not enough to indicate assent. (ex: telemarketing call in Schreiber v. Olan Mills) Schreiber v. Olan Mills - mills used telemarketing to attract business, Schreiber sent letter saying if called again, Mills would be entering into a contract for his listening services. Received another call. However, court said there was no mutual assent to contract. Even Schreiber didn't wanted - wanted to stop calling

Acceptance: Lapse of Time §41

An offeree's power of acceptance is terminated at the time specified in the offer. § If no time is specified, the offer terminates at the end of a reasonable period. § Reasonableness is a question of facts & circumstances § (Ever-Tite Roofing v. Green)

Jacobs & Young v. Kent

ECONOMIC WASTE homeowner constructing home, hired contractor for plumbing and requested a specific brand of pipe. Plumber put in a different type of pipe. Homeowner sued for damages - wanted to replace plumbing. P could not recover cost of replacing the pipe, b/c it would be economically wasteful.

Jacqueline Ervin v. Hosanna Ministry

CAPACITY Ervin admitted to care for addiction treatment. She raises as a defense against enforcement that she does not remember signing the waiver/agreement and that she did not have capacity to sign. Court denied the motion for summary judgment because issues of material fact existed as to whether she was lacked the capacity to execute the general release.

In re Greene (1930)

CONSIDERATION Bankrupt man made contractual agreement to pay for woman's expenses in exchange for $1. They had a previous relationship. ISSUE: Is the contract enforceable? Was there consideration? NO CONSIDERATION - Past illicit intercourse not enough - Words alone cannot establish consideration "other good and valuable things" - $1 was nominal - did not induce him into contract. - Release from imaginary legal claim is not a legal detriment. Gratuitous promise.

Langer v. Superior Steel

CONSIDERATION Letter said that he would recover $100 pension per month - stopped. ISSUE: Whether the letter created an enforceable contract. Was the promise supported by sufficient consideration? CONSIDERATION: legal detriment and incurred at the issuance of the promisor - Difference between consideration and conditional gift. - Since the company benefited by the exclusivity provision (not allowed to work for competitor) then the bargain occurred Also, courts say could've enforced under promissory estoppel. RULE: Promisor should reasonably expect promise to induce action or forbearance Of definite and substantial character, On part of the promisee Promise does induce action/forbearance Failure to enforce promise = injustice

Quasi Contract (Contract Implied in Law)

CONSIDERATION SUBSTITUTE Quasi Contract: a fictional contract created for equitable, NOT contractual purposes. o Defendant's liability is equal to the value of the benefit taken by the plaintiff. o Obligation to recognize actions as a contract is external à correcting injustice. ELEMENTS of IMPLIED IN LAW o (1) Plaintiff action benefited the defendant with reasonable expectation with being compensated. o (2) Defendant knowingly and voluntarily accepted the benefits o (3) The law finds that the defendants benefits were unjust, unfairly burdening the Plaintiff o (4) Resulting in a cause for damages, usually restitution (AVOID UNJUST ENRICHMENT)

Consideration: legal detriment

Can be a promise to do something they are not obligated to do; OR promise to refrain from doing something they have a legal right to do. Forbearance (to sue) §74 - can constitute b/c giving up a legal right. BUT promise NOT to breach = pre-existing legal duty.

Acceptance by Performance

Can only accept by performance if offer invites this type (or is silent on method of acceptance - and performance would be reasonable). Offer not accepted until performance is COMPLETED, but §45 beginning performance can create promise to hold offer open until work is completed. Beginning of performance is treated as promise to complete (§62)

Larry Bowling v. Max Sperry

Car sale to a minor, when car soon needed significant repairs, Bowling disaffirmed the contract. Issue in the case was whether contract was voidable because Bowling was a minor, and whether a car is considered a necessary item. Court found a car in this case, a car is not a necessary item.

Promissory Estoppel (§90)

Consideration Substitute Promise + Unbargained for Reliance RST 90 o A promise which promisor should reasonably expect to induce action or forbearance o On part of the promisee or third person, o An which does induce such action or forbearance, o Is binding if injustice can be avoided only by its enforcement of the promise. o Remedy may be limited "as justice requires"

First Hawaiian Bank v. Jack Zukerkorn (1981)

Consideration: Moral Obligation Exception to general rule (that moral obligation/past consideration is not sufficient) when previous binding legal obligation § tries to open new credit card at bank with old debts, which obligation to pay passed due to statute of limitations. § A new promise to pay a lapsed debt binds the debtor to a new limitations period. § A promise may be express or implied: · Implied if: o (1) expressly acknowledged the debt; OR o (2) make a payment on the debt.

Relational Contract Theory

Contract has to be viewed in context of relationship between the parties Prior dealings of parties and societal norms will influence the parties performance Ex: news stand problem

Bolin Farms v. American Cotton Shippers (1979)

Forward sales contract between farmers (sellers) and the cotton buyers. market spikes and farmers want higher prices. ISSUE: Whether forward sales contract is enforceable? RULE: Changing circumstances/profitability do not make a contract unenforceable. Court say that the farmers reaped the benefit for a forward sales contract by limiting their risks. Purpose of contract is create predictability -- must balance against unfair advantages but none existed here because farmers benefited.

Capacity: Mental Illness §15

General Rule: Someone who is mentally impaired at the time of the contract, can avoid the contract so long as the counter party can be put into his pre-contractual position. §15(1): A person incurs only voidable contractual duties by entering into a transaction of mental illness or defect. Therefore, a contract is voidable if: - (Confusion) The person is unable to reasonably understand the nature and consequences of the transaction, OR - (Compulsion) The person is unable to act reasonably with regard to the transaction and the other party has reason to know of this condition. §15(2) If the contract is made on fair terms, and the other person does not know of the mental illness, the power of avoidance does not apply in the following circumstances: - To the extent the contract has been performed in whole, or in part; OR- Where the circumstances have changed so that avoidance would be unjust.

SOF AND LAND SALE CONTRACTS

General Rule: a contract for sale of land is not enforceable unless it is in writing. The contract may be enforced however, if the party seeking performance can prove: § (1) an oral contract was formed; and § (2) an exception to SOF applies (ex: partial performance) o Partial Performance: person seeks enforcement of the contract must prove: § (1) She partially performed on the contract; AND · Ex: payment of purchase price, possession by the purchaser, substantial improvements to prop. § (2) Her performance was induced by the other party's misrepresentation. · This misrepresentation can include silence or acquiescence.

When does a modification of a contract require new consideration?

Generally, cannot modify an existing contract without new consideration. EXCEPTION: does not apply if both parties agree to the change the contract. EXCEPTION: RST §89 - promise modifying a duty under contract is binding if: (1) the contract is not fully performed (2) The modification is fair and equitable (3) In view of the circumstances not anticipated by the parties when K was made. EXCEPTION: UCC 2-209 - does not require new consideration for modifications, just good faith. Must first mutually agree not to enforce the contract, THEN change the terms of the contract (essentially new contract) If recission + modification are simultaneous --> not enforceable (dissatisfied entertainer)

Statute of Frauds

Generally, oral agreements/contracts are enforceable. However, contracts/agreements that fall within the Statute of Frauds are unenforceable unless they are in writing. PURPOSE: used to determine if an agreement existed, not as concerned with ascertaining the terms of the agreement. Statute of Frauds is a gate you must pass through in order to go to court -- still must prove that there was a contract and the other party breached it. Distinguishable from parol evidence rule § SOF: requires written evidence of a contract § PAROL: tells us when to admit written evidence that contradicts or adds to the prior agreement (more focused on the terms of the contract)

Acceptance by Silence

Generally, silence does not operate as an acceptance unless: (1) the offeree has reason to believe that the offer could be accepted by silence, was silent and intended to accept by silence; AND (2) Due to previous dealings or pattern of behavior it is reasonable to believe that the offeree must notify offeror if the offeree does not intend to accept. If offeree does not want to accept, it must explicitly reject.

Frigaliment Importing Co. V. BNS Int. Sale Corp.

INTERPRETATION (chicken) contract silent on definition of chicken (fowl- stewing chickens v. frying chickens). Suing BNS for delivering goods not in conformity with contract in the second shipment. Defendant's interpretation of chicken was objectively reasonable. However, no mutual assent/meeting of the minds.

CONTRACT: PREAMBLE

Identifies the contract Can use to identify the bargaining portion (evidence) Name of agreement, parties, date signed Identity of buyer & seller

Can an offer made in jest express an intent to be bound to constitute a valid offer?

Interpret the offer objectively. if statement made in jest, and is reasonably understood to be a joke --> NO OFFER. If statement is subjectively intended to be a joke, but reasonably understood to be made in seriousness --> considered an offer. Ex: W.O. Lucy v. Zehmer

CONTRACT: Definitions

Interpretative mechanism - not telling parties to do anything Can narrow or expand common usage Fosters consistency HOFFER LIKES THIS SECTION

Offer: Reasonable Expectation

Language must create a reasonable expectation that the offeror is willing to enter into a contract on the basis of the offered terms. Would a reasonable person receiving the communication believe she could enter into an enforceable deal by accepting the offer? (OBJECTIVE TEST) (1) was there a promise, undertaking or commitment to enter into a contract? (2) Was there certainty and definiteness in essential terms? (3) Was there communication of the above to the offeree?

Realism

Law is in flux Law is a means to a social end Impossible for law to be apolitical To understand it, we must look behind the formal rules to the heuristics of the people using them Law should be evaluated in terms of its effect on society.

Austin Instrument Inc. v. Loral Corp

Loral awarded government contract for radar sets and recruited Austin as subcontractor. When awarded a second gov't contract, Austin threatened not to fulfill the contract unless they won the bid. Court found that this was a classic case of economic duress b/c possession of needed goods was threatened, they could not find another source to deliver in the timeframe they needed to fulfil their contract and a remedy breach would not have allowed them to procure the parts they needed in the time.

Contract Implied in Fact

a contract that arises from the conduct of the parties rather than from their express statements Mutual agreement and intent to promise, but the agreement and the promise have not been made in words, and are implied from the facts.

Unconscionability

a contract that shocks the conscience or results in unfair surprise or oppression. (Jones v. Star Credit) o Unconscionability = absence of meaningful choice (+) contract terms that unreasonably favor the other party. (Williams v. Walker-Thomas) § No meaningful choice - gross inequality of bargaining power. · Consider educational level of the parties, whether important terms hidden in fine print, whether deceptive sales practices were used.

Duress §175

a party would have preferred not to agree, but was faced with either: § Physical force (contract void), OR § Threat of adverse action, sufficient to overcome free will (contract voidable). RESTATEMENT §175 § If assent is induced by an improper threat, and § Threat leaves the victim no reasonable alternative to assent, then · In other words, must have induced the consent. § Contract is voidable by the threatened party. § Threat must be "wrongful," "oppressive" or "unconscionable" Can be unreasonable use of superior economic power in commercial context.

Parol Evidence

any oral or written words outside the four corners of a written contract

Compensatory Damages: Real Estate Contracts

calculation for expectation damages (from breach) = difference b/w contract price and FMV of property on the date of the breach. § These values might be similar, could be nominal damages § BUT, P can recover damages in excess of above amount if reasonably foreseeable to defendant at time of contracting.

Purpose of Parol Evidence Rule

carry out party intentions, facilitate judicial interpretation, clarity of terms, prevent fraud. o If term was important to deal, parties should make sure to get into final deal b/c writing is more reliable evidence of what the parties actually agreed to.

Reliance Damages

contract damages placing the injured party in as good a position as she would have been in had the contract not been made Expenditures made in preparation for performance; PLUS (+) § Expenditures made in performance, MINUS (-) § Any loss that D can prove P would have suffered if contract had been performed. Puts P in position she would have bene in had the contract never happened.

Scope of Parol Evidence Rule

does not apply to - meaning parol evidence can be admitted in: (1) VALIDITY ISSUES - evidence can always be admitted to argue the agreement never came into being. § Formation defenses - (fraud, duress, mistake, illegality) § Consideration (2) COLLATERAL AGREEMENTS (separate agreements) § Collateral: related to subject matter but not part of the primary promise & does not conflict. (3) SUBSEQUENT AGREEMENTS/MODIFICATIONS § Parol evidence can be offered to show evidence of subsequent modifications - the parol evidence rule only applies to prior or contemporaneous evidence. § Can show that parties altered after the writing was integrated/in its final form. (4) INTERPRETATION § RULE: if there is uncertainty or ambiguity or dispute as to the meaning of the rems, extrinsic evidence can be admitted to reach a meaning to which the document is reasonably susceptible. · Because not contradicting terms à trying to explain terms (ex: chicken stewing v. frying)

Formalism

excessive adherence to prescribed forms Law can be deduced from basic principles Moves slowly Predictable, objective, apolitical The rules are what they are

Hawkins v. McGee (HAIRY HAND CASE)

expectation damages § person burnt hand to get treated. Dr. promises to treat, but ends up causing a "hairy hand." Court tries to boy in position he would have been in if dr. kept promise to restore his hand. · Damages = diff. in value b/w restored hand & hairy hand o = value of restored hand MINUS (-) value of hairy hand. o Remember: subtraction of a negative number is equivalent to addition.

Ricketts v. Scothorn

grandfather offered to pay $2,000 to stop working, b/c none of his grandchildren worked. She quit her job, but he was not able to pay. Court found estoppel could be used to enforce an unenforceable contract (no consideration) b/c grandfather induced her and she changed her position for the worst. This is necessary to prevent injustice.

Non-Fraudulent Misrepresentation

if even non-fraudulent, can still render a contract voidable if the misrepresentation is material and the party justifiably relied on the misrepresentation.

Restitution Damages

meant to compensate the plaintiff for the value of benefit provided the defendant o D put in pre-contract position when benefits that P conferred on D are returned to P. § Requires defendant to disgorge the benefit conferred on them. § Reasonable value to D of what he received has to be returned to P. § Determined by what it would have cost to obtain the benefit from someone like the P. § Put defendant in position she would have been in had there been no contract.

Beachcomber Coins v. Ron Bosket

mutual mistake as to the genuineness of the coin. The contract is voidable because there was a mutual mistake as to a basic assumption/essential fact of the contract. The coin dealer wins, contract is rescinded. The court unwinds the contract and puts parties back in pre-contractual relationship.

VOID

no contract established, therefore neither party has a duty to perform

Elements of an Offer

o (1) Communication by the offeror, o (2) Creating a reasonable expectation in the offeree, o (3) That an offeror is willing to enter into a contract, o (4) On the specified terms, o (4) Such that the offeree need only accept to enter a contract/conclude the bargain Must sufficiently identify the offeree --> broader the class of offerees more likely court interprets as invitation for offers.

Misrepresentation Rule

o A's assent is induced by either fraudulent or material misrepresentation of B; AND o A is justified in relying on the misrepresentation; THEN o The contract is voidable by B. § Restatement §§159-173 § A can enforce the contract against B; but B cannot enforce against A (innocent)

Textile Unlimited v. A.BMH

o BATTLE OF FORMS - sale of yarn w/ business relationship. Invoice & order acknowledgement contained terms (including arbitration clause) tucked into the back. Fine print said that P accepted if no response in 24 hours. Failed to respond in 24 hours. Determining whether additional terms, accepted by silence/conduct, were a part of the contract. Acceptance of the counter offer was condition (UCC 2-207(1) à UCC 22-07(3). Terms included expressed writings & gap-fillers. § Q 1: Was there an offer? Q 2: Was the offer accepted? Or was there a counter-offer? Q 3: Was the counter-offer accepted? Q 4: Was there a contract, what were its terms?

SOF Requirements

o Be signed by the party to be charged (i.e., the person against who enforcement is sought); and o Contain the essential elements of the deal. § Identify parties; § Subject matter of contract; § Essential terms of the contract; § Who made promises to whom; o Does NOT need to be formal à receipts, correspondence, can serve as a memo o The essential elements can be in more than one writing only if one of the writings references the other(s) § The writing does not have to contain the entirety of the contract. · This is not the deal; the writing is evidence or proof of the agreement

Specht v. Netscape Communications Corp.

o Clickbait accepting licensing terms which were hard to see. Court held there must be a manifestation of assent, even under UCC 2-207. There was no assent to "inconspicuous provisions" of which the offeree is "unaware" in a document whose contractual nature is not obvious. Assent may inferred if the offeree has inquiry notice. However, here terms were hidden à no inquiry notice. INQUIRY NOTICE - also referred to as constructive notice. · If a reasonably prudent person would have learned of the existence of the terms, AND · Offeree accepts product or service; THEN · Offeree is deemed to have accepted the terms.

Acceptance by Promise

o Exchange of promises is enough to render both enforceable. o May be accepted by promise to perform or by the beginning of performance. § RST §62: Commencement of performance operates as promise to render performance complete o NOTICE: an offeree of a bilateral contract must give notice of acceptance (return promise).

Mutual Mistake §152

o If both parties are mistaken as to a basic assumption of the contract; AND o The mistake has a material effect on the parties performance, THEN o The contract is voidable by the adversely affected party, UNLESS he bears the risk of the loss (see §154 à risk of mistake)

Non-disclosure & misrepresentation

o Non-disclosure is an assertion if: § (1) Disclosure is necessary to prevent a prior assertion from being a misrepresentation; § (2) Other party is mistaken, and non-disclosure = failure to act in good faith and in accordance with reasonable standards; § (3) Disclosure corrects other party's mistake about the contents or effect of a writing; or § (4) Other person is entitled to know because of a relationship of trust between the two parties.

Specific Performance

o Only available where money damages are inadequate (meaning RARE to enforce specific performance) o Almost always in real estate, much less common in other contracts. § Wine grapes form specific vineyard § Unique objects o A failure to comply with the court ordered performance = contempt of court. § This is different from damages.

Breach: Subject of Loss

o P must prove that breach caused the loss; o Loss must be determinable with reasonable certainty; o P has a duty after breach to make reasonable effort to limit the loss ("mitigation" or "cover") § P cannot recover loss that should could have reasonably avoided. § Getting replacement goods (under UCC) = 'cover"

Counter-offers (acceptance)

o RST § 59: Purported acceptance conditions on changed or added terms is a counter-offer. o RST §39: An offeree who makes a counter-offer loses her ability to accept the offer, BUT § Either offer or counter-offer can specify that the counter-offer will not terminate original offer. o RST § 61: Acceptances that request change in terms is valid UNLESS it depends on offeror's assent to the changed terms. (Conditional acceptance) § Ex (request): I accept your offer, and I hope you can arrange delivery in weekly installments. § Ex (counter-offer): I accept your offer, but only if you agree to make delivery in weekly installs.

Remedies for Mistake

o Typical remedy is § (a) declaration (declaratory judgement) that the contract is voidable by affected party; and § (b) restitution for either party o Law attempts to put parties in pre-contract position by "unwinding" contract o Where writing does not accurately reflect oral K, court can order reformation of writing.

Offeror as the master of the offer (§30)

o Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances o EXCEPTION: The offeror can raise the threshold for acceptance by communication that a form of otherwise reasonable acceptance will not suffice.

fraud in the inducement

o When one party lies about something in a document or about the effect the contract will have, the contract is not enforceable. o Such a contract is voidable by the adversely affected party if she justifiably relied on the misrepresentation in entering into the agreement. o Example: pre-nup agreement where fiancé promised to tear up agreement once they had children, then refused. He lied about how the contractual relationship would be carried out, fraudulently induced her into the agreement.

Unilateral Mistake §153

o When one party makes a mistake at the time the contract is made, o The mistake is a basic assumption underlying the contract o It has a materially adverse effect on the mistaken party; o Then the contract may be voidable. The contract is voidable in two instances: · (1) The non-mistake party either had reason to know of the mistake, or caused the mistake; OR · (2) The enforcement of the contract would be unconscionable o So unfair that it shocks the conscience

Cairo v. Crossmedia

o can one computer assent, on behalf of its owner, to the terms offered on another computer? YES. Cairo's repeated bot use of Crossmedia's website = imputed knowledge of the sites terms & conditions = acceptance. § RULE: Where offeree takes benefit w/ knowledge of terms, offeree deemed to accept terms.

Capacity: Intoxication §16

o §16: A person incurs only voidable duties if the other party has reason to know that due to intoxication: § The person is unable to understand the nature and consequences of the transaction; OR § The person is unable to act in a reasonable manner in relation to the transaction. TEST: (1) Whether the party possessed an understanding of the transaction; AND (2) if the incapacity was so severe as to prevent manifestation of assent, OR the other party had reason to know of the incapacity.

Consideration

something of value exchanged for something else of value (1) necessary (2) must be bargained for (3) legal detriment to promise (give something up) RULE: Consideration under the common law (1) A right, interest, profit or benefit accruing to one party, OR (2) a forbearance, detriment, loss or responsibility undertaken by the other (Hamer v. Sidway) Legal detriment + mutual inducement

Locks v. Wade

Lost Voume Seller one party contracted to rent/buy a juke box, then did not perform. Juke box owner rented to someone else, sued the would-be renter for breach. The person who breached argued that owner was not entitled to damages b/c rented to someone else and was not harmed by the breach. Could've rented to BOTH, 2nd lease couldn't happen w/o breach.

Sherwood v. Walker

Mutual mistake as to if the cow was barren or not. Court found that defense of mistake is only available is the mistake relates to a material fact of the contract. If the mistake makes it substantively different, then no contract. Old case here said that barren and breeding cow are substantively different, mistake is material and this defense applies.

Illusory Promise

Mutuality - both parties must be obligated to render performance. If the terms of the promise make performance entirely optional for the "promisor" then it does not constitute a real promise, therefore is not consideration. o To determine, look to see if BOTH parties limit their freedoms/give something up.

Can a communicated rejection of an offer terminate offeree's power to accept within option?

NO. But · IF the other party relies on rejection (a promise) - could be a promissory estoppel claim

Promise for Benefit Received (RST §86)

NOT POPULAR --> rarely adopted · RST §86 (1): "promise made based on a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. · RST §86 (2): The promise is NOT binding if: o (2)(a) The benefit was conferred as a gift o (2)(b) The person receiving the benefit not been unjustly enriched o (2)(c) Value of promise is disproportionate to value of the benefit.

Warren & Gloria Hill v. Ora & Barbara Jones

Non-disclosure & misrepresentation Home purchase agreement that sellers were to affirm that house was free from termite infestation. Later, the buyers discovered would require $5,000 to repair termite damage. Sellers failed to disclose; the court was determining if there was a duty to disclose and found that yes, the sellers had misrepresented a material fact of the contract.

CONTRACT: Signature

Not required to make the contract binding But sometimes contract must be signed by the party against who enforcement of the contract is sought because the statute of frauds Good practice --> can be electronically Don't have to have both signatures, as long as each party signs and identical document. Add the date.

mutual assent ("meeting of the minds")

Occurs upon the acceptance of a valid offer to contract - agreement on the same bargain at the the same time. OBJECTIVE MEASURE - bound to the apparent intention manifested to others --> outward manifestations relevant, secret intentions do not matter.

Revocation of Offers

Offer can be revoked by direct communication (§42) or indirect communication. Indirect: if offeror takes definite actions inconsistent with intent to enter into the contract AND the offeree acquires reliable inforamtion to that effect.

Four elements of a contract

Offer, acceptance, consideration, intent

VOIDABLE

One or more party has power to ratify or avoid - one party decides if contract is formed

Unenforceable Contract

Otherwise valid contract, but some legal consequences but are not enforceable in action for damages due to a defense Contract formed, but not enforced.

Hill v. Gateway

P ordered computer over phone, comp was delivered w/ terms which governed unless returned within 30 days. Court apply ProCD case and says that under UCC2-207, terms govern if provided a reasonable time to review and reject/return. 30 days was considered reasonable. Terms were binding. Gateway was the offeror, as offeror specified acceptance through performance.

Expectation Damages

P put in position in position in which she would have been but for the breach. FORMULA - Loss of what injured party would have received if D had performed, PLUS (+) -Incidental and consequential losses caused by the breach, MINUS (-) § Costs or other losses that P avoided by not having to perform. § Damages put P in financial position that would be in if contract fully performed on both sides.

Joe Webb v. N. Floyd and Joseph F. McGowin (1935)

PAST CONSIDERATION/MORAL OBLIGATION promise by B to pay back B who administered emergency medical services to his adult son. Court found the material benefit was sufficient moral consideration. (kind of historic anomaly)

Firm Offers UCC 2-205

REVOCATION OF OFFERS § An offer by a merchant; § In a writing signed by the offeror; § That gives assurance that it will be held open; § Is not revocable; · Either for the amount of time stated in the offer, OR · For a reasonable time no longer than three months if no time specified.

Acceptable evidence for court interpretation of terms

RST 212 - court must interpret a writing in light of the circumstances - Placing itself in position of parties when contract to determine intent (evidence allowed to prove intent) Evidence · Situation and relationship of the parties; · Preliminary negotiations; · Customs of trade; and · Prior dealings between the parties. UCC §2-202 - terms in an integrated writing may be explained or supplemented by "course of performance, course of dealing, or usage of trade."

Mailbox Rule

RST §63(a) · If the offer does not specify otherwise, AND · The offeree accepts using the invited manner and medium, THEN · Acceptance is effective as soon as it is put out of the offeree's possession, regardless of whether the offeror receives it. Acceptance effective when: · Offer: when received (Glover) · Acceptance: when sent (RST §63) · Rejection of offer: when received (RST §40) · Revocation of offer: when received (RST §42) · Option Contract/Firm Offer: when received (RST §63)

Consideration: RST §71

RST §71 (1): "To constitute consideration a performance, or a return promise must be bargained for." RST §71 (2): "A performance or return promise is bargained for if promisor seeks it in exchange for his promise and promise gives it in exchange for that promise." RST §71 (3): "The performance may consist of --> something of legal value o An act other than a promise, or o A forbearance (legal detriment), or o The creation, modification, or destruction of a legal relationship." RST §71 (4): "The performance or return promise may be given to the promisor or to some other person. It may be given by given by the promise or by some other party."

Option Contract §87

RST §87 · an offer which the offeror should reasonably expect to induce action or forbearance on the part of the offeree prior to acceptance, AND · which does induce such action or forbearance, · is binding as an OPTION CONTRACT to the extent necessary to avoid injustice. Attempts to negotiate new deals within the option do not terminate the option --> counteroffer rule does not apply ebcause the option is a separately negotiated agreement with independent consideration. REJECTION OF AN OPTION - will not terminate offeree's power to accept within the time of the option - however, if other party relies on rejection could be promissory estoppel

Consideration: Output-Requirements Contracts & Option Contracts

Requirements - legal determine if giving up the right to buy or sell the goods from other sources --> just must show that freedoms limited in some way (exclusivity) Option - requires consideration to keep open, but can be relatively modest

Joan Sullivan v. Merval Porter

SOF Exceptions - partially performed Sullivan suing to get specific performance of a sale of farm. Sullivan paid $3,000 (accepted by Porter) towards the agreed $350,000 sales price and began making immediate improvements. Court found that she partially performed on the contract by paying the down payment, and that she was induced to do so by the misrepresentation that the Porter's attorney was finalizing the documents and the Porter's silence when they noticed her making improvements.

SOF - UCC 2-201

SOF applies to sales of goods where sale amount is $500 or greater, or $5,000 or greater in jx where adopted amended UCC Writing must include QUANTITY TERM - does not need to include all terms.

Klocek v. Gateway

UCC 2-207, In transactions btwn a vendor & buyer (not a merchant) terms added after a sale & not expressly agreed wont be part of k distinguish from Hill. Ordered computer, but this time only 5 days. New terms treated as proposed additions under UCC 2-207(2). Because Klocek not a merchant, no express assent, the terms were not included.

Differences between UCC & Restatment

UCC: - Covers the sale of moveable goods - Binding on courts (law) - Article II - just sale of goods - UCC in general covers commercial transactions When UCC applies - preempts the common law (restatement) RESTATEMENT: - Summary of the law - Not binding on the courts --> unless adopted through common law. - Restatement covers all contracts

Hamer v. Sidway (1891)

Uncle said he would give his nephew 5000 when he was 21 if he refrained from "drinking alcohol, smoking, swearing, playing cards or billiards for money". The uncle died and the executor would not pay. The court found that forbearance was good consideration and ordered the money to be paid. Nephew refrained from doing something that he had a legal right to do. RULE: Consideration under the common law (1) A right, interest, profit or benefit accruing to one party, OR (2) a forbearance, detriment, loss or responsibility undertaken by the other

Capacity: Infancy §14

Unless a statute provides otherwise, minors (less than 18) only have the capacity to enter into voidable contract. - Minor can enforce the contract against the counter party, but counter party cannot enforce. EXCEPTION: required to honor contract for necessary items (food, clothing, shelter, education, etc.). § When necessaries are sold to a minor, minor must pay a reasonable price. § Necessary is something that is used for ordinary support and comfort. · Depends on the facts of a case (sometimes a car is necessary) It is possible for a minor to reaffirm the contract and abandon the defense. § Minor must disaffirm the contract before reaching majority (18). If not disaffirmed within a reasonable time of reaching 18, then the minor is deemed to have ratified the contract. Minors not required to return the counterparty to original position à merely must return whatever remains. (restoration v. restitution)

Acceptance under UCC §2-206

Unless otherwise unambiguously stated: the offer invites acceptance in any method that is reasonable in the circumstances. An order to buy goods is usually an offer. It may be accepted through: prompt promise to ship goods OR shipment of conforming or non-conforming goods. If accepting through performance --> must notify in reasonable time. (confirmation receipt) If does not notify --> treat as lapsed. NO MIRROR IMAGE RULE - but UCC 2-207 (battle of the forms)

Restatement §79

Value of consideration does not have to have equal value (adequacy is not a requirement) Court does not usually ask about relative values But inadequate consideration might indicate fraud or mere pretense of bargain

Procedural Unconscionability

unconscionability that derives from the process of making a contract Unfairness in negotiations or surprise in contracts (hidden terms) Contracts of adhesion In home Sales Contract

Economic Duress

§ A contract is voidable on the ground of economic duress if it is established that the party making the claim was forced to agree to the contract by means of a wrongful threat precluding the exercise of free will. § Proven by: · Possession of needed good or service is threatened; and · Threatened party cannot obtain the good from another source; and · Action/remedy for breach of contract would not be adequate.

Beneficial National v. Payton

§ Bank changed agreement unilaterally (added arbitration). The modification specifying acceptance by silence became effective when Payton did not object.

Compensatory Damages: Divisible Contracts

§ Divisible contract contains sets of reciprocal promises that are separable from one another. Therefore, a breach on one does not infer a breach on remaining promises. § If a contract is divisible, P is entitled to damages only on promises that are breached, not on contract as a whole. § To determine divisibility, look to the parties' intent: · Is it one deal with schedule to determine when performances will occur? OR · Is it a series of small deals all housed under an umbrella agreement? New Era Homes v. Forster - contract for a construction of a home. The contract was set out in stages and the buyer of the services was required to pay an amount each time a stage was complete. Breach occurred. Contractor argued that the contract was divisible, and therefore the early breach means not responsible for rest of damages.

Crabtree v. Elizabeth Arden Sales Corp.

§ Employment agreement solidified by a memo on a telephone slip. This set terms of employment with 2 pay increases. When Crabtree only received one pay increase, he sued. Arden argues that SOF applies, there was no written contract, therefore the contract was unenforceable. Court found that the "writing" component can be satisfied by separate writings pieced together so long as they are connected. Internal "parol evidence" can be used to connect.

CONSIDERATION: Bargain - Past or Moral Consideration

§ GENERAL RULE: Moral obligation alone is not sufficient consideration · If something was already given or performed before promise was made, it will not satisfy the bargained for requirement because it was not given in exchange.

Is Duress Subjective or Objective Test?

§ Old rule: objective - applied to a person of ordinary firmness § Modern: subjective - state of mind is more important to determine if the threat was sufficient to overcome the will of the threatened party. · Question of fact (for the jury) · Consider: age, sex, capacity, and all of the circumstances

Substantive Unconscionability

§ so one-sided that it shocks the conscience. · Facts and circumstances test - unreasonably unfavorable to other party or overly harsh. · Even if the contract is unfairly arrived at, but the contract is fair, then it is enforceable. · Need substantive, as well as procedural unconscionability. · Examples: o Disclaimers of consumer warranties (must be put in all caps) o Non-compete clauses (long duration) o Gross disparity of value/price

Acceptance: definition (§50)

§50 (1): Acceptance of the Offer Defined: "acceptance is manifestation of assent to the terms made by the offeree in a manner invited or required by the offer." §50 (2): Acceptance by Performance: "acceptance by performance requires that at least part of what the offer request be performed or tendered, includes acceptance by performance which operates as a return promise." §50 (3): Acceptance by a Promise: "acceptance by a promise requires the offeree to complete every act essential to the promise." i. The manifestation of assent to the terms of an offer. Through assent, the offeree exercises the power given to her by the offeror to create a contract.

Drennan v. Star Paving Co.

· Drennan solicited bids for school contract, Star gave bid and in reliance on the bid, Drennan submitted & received the contract. Star claimed made a mistake in their bid price, and revoked the offer. o Note: Drennan's use of Star's bid was not acceptance, nor did it create an option contract. Court implies a promise from Star to Drennan to hold bid open § "reasonable reliance" seen as consideration. RST §87

SOF - One Year Provision

A contract which, by its own terms cannot be performed within one year of its formation must be in writing. If the contract CAN be performed within one year, SOF does not apply. Whether the contract is actually performed within one year is irrelevant. For SOF to apply, the actual terms of contract must make it impossible for performance completed within one year. If the contract can be reasonably interpreted to provide alternative obligations AND at least one can be performed within one year, then SOF applies.

Offer: Terms

Terms of an offer must be certain and definite. Under common law, all essential terms must be covered. Essential terms: § (1) Subject matter, (2) Price, (3) Payment Type, (4) Quantity, (5) Quality, (6) Duration, (7) Work to be done § Identification (of the offeree) - to be able to determine whether offeror intended to give power of acceptance. § Subject Matter - required to be able to determine with reasonable accuracy what the promise is. If an essential term missing, it can be reasonably implied by the court. Ex: time - within a reasonable time BUT NOT QUANTITY - UCC no gap fillers

Peevyhouse v. Garland Coal & Mining Co.

"strip mining and remedial work"; Expectancy Ds; Can't receive damages for more money than the property is actually worth RULE: - Where damages needed to remedy breach would be grossly disproportionate to value lost as a result of breach, award is limited to the lost value. MINORITY CASE- HARSH RESULT P would not have been in a financially better position with reclamation, land/house were worhtless either way the coal mining operation won and did not have repair.

Merger Clauses

"this contract is the entire agreement between the parties and supersedes all agreements oral or written." creates presumption that writing supersedes all prior related oral agreements. Collateral contract doctrine: if contracts are independent or unrelated to each other, the writing cannot supersede. BUT PE rule does not exclude evidence of separate, unrelated agreements. Court considers any relevant evidence to determine scope of merger clause

Exceptions to SOF under UCC

(1) Specialty Goods §2-201 · RULE: no writing is required if goods are a specialty or custom good. · If goods are manufactured for the buyer, AND · They are not suitable for other parties; AND · Seller has substantially started the performance. (2) Admission Exception · Statute of Frauds defense is not available, contract does not need to be in writing, if: o Party being sued admits to the contract o But only to the amount stated in admission is enforceable. (3) Partial Performance §2-201(3)(c) · Statute of Frauds does not apply to the extent that: o Payment has been made by the buyer and accepted by seller; OR o Goods have been received and accepted by the buyer. · Equivalent of common law partial performance doctrine · Only enforceable to the extent accepted and paid for. (4) Failure to respond (where both parties are MERCHANTS) §2-201(2) · If one merchant sent written confirmation to second merchant; · Within a reasonable time; AND · Second merchant does not object in writing within 10 days of receipt, THEN · Written confirmation serves as writing (contract is enforceable, even if the receiving party has not signed it) o Party trying to enforce the contract still has the burden to prove sufficiency (that an oral agreement existed, and statute of frauds is satisfied by a memo).

Restatement § 81

(1) The fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise. (2) The fact that a promise does not of itself induce a performance of return promise doesnto prevent the performance or return promise from being consideration for the promise.

Why not have contracts?

- Formalize contract law system stunts development of market sanctions - Expensive and can be inefficient - System entrenches a power disparity - Government involved in private dealings - Decreases flexibility in performance of the contract - Can limit what you can do in business relationship - Decrease trust when building business relationship Lack of knowledge about contract has legal ramifications.

What is a contract?

- GENERAL DEFINITION: a promise or set of promises, for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. § RESTATEMENT §1 = contract definition o Agreement between two parties that is legally actionable. § Parties decide the rules of their interaction and then the government enforces the rules the parties agreed upon. o Does NOT have to be in writing. o There is no federal contract law à studying trends in state common law.

Methods of Acceptance:

- Generally, must notify of acceptance (default rule) - To accept, must have knowledge of the offer. - Offer has complete control over offer and may specify how it will be accepted (§30). If silent, can be accepted in any way that is reasonable. - Must accept within time specified, but if not specified, accept in a reasonable time.

Masterson v. Sine

- Masters retained an option to purchase the property anytime within 10 years. Purchase price would be sales price + interest. Masterson went bankrupt and tried to exercise the option. Evidence related to price term was admissible to explain the meaning of the term. The deed could naturally exclude the option, therefore, the document is a partial integration - acceptable to bring in evidence outside of the contract for additional terms, but cannot bring in evidence of contradictory terms.

Ammons v. Wilson

Acceptance by Silence § Ammons v. Wilson - Ammons (grocer) bus relationship with Wilson - ordered shortening. Orders construed as offers to purchase, not binding until accepted. Normally shipped within in 1 week, but Wilson waited 12 days to decline. Previous dealings - silence understood to be acceptance.

Consideration: Legal Value

Adequacy of consideration - does not have to be of equal value (RST §79) BUT inadequacy might be evidence of pretense of bargaining. SUBJECTIVE VALUE -- as long as promisor wants it

Types of Contracts within SOF

Contracts where writings are required to enforce o (1) Promise to pay a lapsed/someone else's debt o (2) Transfer of interest in real estate (real estate sales) o (3) Agreements that will not be fully performed within one year o (4) Marriage pre-nups o (5) Sales of goods for greater than or equal to $500/$5,000.

Economic Waste

Cost of repairing or completing the performance, outweighs the benefit to the owner, therefore is economically wasteful. Costs for faulty construction = cost of repair. Where damage is trivial and repair would be economically wasteful: damages are the value of the proper construction MINUS the value of the actual construction "DIFFERENCE RULE" (only applies when trivial, if not trivial full cost of repairs are awarded) - Where damages needed to remedy breach would be grossly disproportionate to value lost as a result of breach, award is limited to the lost value.

No Hassle House

Course of performance - shows that parties were induced by the bargain even though she never responded to his offer that in exchange for payments on the house she would leave him alone. If not induced by promise (might never have spoken to him again) - then no promise, not an enforceable contract. Could seek promissory estoppel. RESTATEMENT §21 - intent to be legally bound not requirement in legally circumstances --> special.

Interpretation: Interpreting Ambiguous Term

Courts will consider: (1) The plain meaning of the term (2) The negotiations between the parties. § Greater weight given to terms negotiated (as opposed to standard) (3) The trade usage § A practice regularly observed in a business setting to justify an expectation that it will be followed § Widespread usage in trade that parties must have contracted with reference to that interpretation. § In frigaliment - it was significant that BNS was "newcomer" to trade (4) Other commercial conditions or market factors (ex: price) § Ex: price of fowl v. fryers were substantially different - infer meaning. (5) Course of dealings or performance between parties. § Course of performance accepted is relevant to determining meaning · Frigaliment accepted the first shipment of wrong chicken § Previous transactions can be used to establish a common understanding

Limitations of Damages §351

Damages are NOT recoverable for loss if: § At time contract was made, breaching party did not have reason to foresee the loss as a probable result of the breach. § Loss is foreseeable when it results from: · The ordinary course of events; OR · Special circumstances that breaching party had reason to know. A court may limit damages for foreseeable loss by: § Excluding recovery for loss of profits, by allowing recovery only for reliance interest, OR § If in the circumstances, justice requires in order to avoid unjust enrichment. § Damages are disproportionate to the transaction value. Damage are limited to: (Hadley v. Baxendale) § Fairly and reasonably considered to arise naturally from the breach, OR § Reasonably supposed to have been contemplated by both parties at time of contract § Damages arising from "special circumstances" only available if the defendant knew of those circumstances.

Bailey v. West (1969)

Defendant purchased racehorse, discovered the horse was lame and did not keep him. Horse taken to P's farmer, where he cared for him. ISSUE #1: whether a contract implied in fact existed between the parties? - RULE: a contract is implied in fact if the parties (1) intend to have a contract, AND (2) their arrangement has all the elements of a contract without verbal/written expression of agreement. Court said no contract implied in fact because the parties did not MUTUALLY intend to contract. ISSUE #2: whether a quasi contract existed between the parties? RULE: Quasi contract is a theory of liability that exists when: (1) Parties do not intend to contract (2) One of them provides a benefit (3) The other party knowingly accepts the benefit (4) It would be unjust to deny compensation to the party providing the benefit (ex: expectation of pay); AND (5) The benefit the provider was not a volunteer and had a legitimate reason for his actions This case failed because the plaintiff was a VOLUNTEER and cared for the horse --> shows how harsh the law can be here.

CONTRACT: TERM

Describes the length of the agreement

CONTRACT: Termination Provisions

Describes ways the parties agreement might end Good ending and bad endings Sometimes just a term - HOFFER says that isnt sufficient usually.

New Era Homes v. Forster

Divisible Contracts § contract for a construction of a home. The contract was set out in stages and the buyer of the services was required to pay an amount each time a stage was complete. Breach occurred. Contractor argued that the contract was divisible, and therefore the early breach means not responsible for rest of damages.

Dickinson v Dodds

Dodds said willing to sell to Dickinson. Dickinson informed that Dodds later changed his mind, but he dropped off acceptance to his house. Court held that Dodds did not have to expressly revoke his offer, b/c aware of conduct showing intent to revoke - b/c he knew that Dodds did not want to contract, there was no meeting of the minds.

Critical Theory

Ex: Race + socioeconomic status of farmers Viewing the law skeptically, asking whether the identities of the parties (if marginalized) plays a hidden role in legal analysis and outcomes. Law protects commercial interests

Kinds of Damages

Expectation - p put in position she would have been in BUT FOR the breach. Restitution - D put in pre-contract position when benefits P confrerred on D are returned Reliance - P put in pre-contract position

Incidental Damages

Expenses that are caused directly by a breach of contract, such as those incurred to obtain performance from another source. UCC§2-715 · Buyers costs of inspection, receipt, transportation, care and custody of rejected goods. · Transactional costs of "covering" - obtaining conforming goods from another source.

CONTRACT: Recitals

Explain background of the agreement and why parties are entering into it Contains representation of fact Not enforceable, can aid in interpretation

Kirksey v. Kirksey (1845)

FACTS: P was sister-in-law of D Kirksey. She was married/widowed by his brother. After brother died, she gave up her land and moved to him and two years later he made her leave his property ISSUE: is there consideration to enforce the contract? RULE: a mere gratuity/promise is not enough for a breach of contract. - GRATUITY = something that was not bargained for, no exchange, he got nothing in return. HOLDING: There is no consideration. Contract/promise cannot be enforced due to lack of consideration, defendant was just being gratuitous.

W.O Lucy v. Zehmer

MUTUAL ASSENT "Jokingly" and under influence of alcohol agree to sell his farm. Court said that parties were not too drunk to make a valid contract. He understood the nature and consequences of his actions and other party reasonably believed it was real.

Offer (definition) §24

Manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that: o (1) His assent is invited, AND o (2) His assent will conclude the bargain o NOTE: not an offer if communicator reserves the last word à offer should be the penultimate step

Pre-existing duty rule

Promise to do something you are already legally obligated to do is not valid consideration. SIMILAR perforamnce is consideration if it differs from what was required by the duty in a way that reflect MORE THAN A PRE-TENSE OF BARGAINING Need something NEW and DIFFERENT RST §73 Exception --> ratification of a voidable contract

CONTRACT: Conditions

Provide for the order of performance or may trigger conditions If condition isnt satisfied, other parties performance is excused

Consequential Damages

Special damages that compensate for a loss that is not direct or immediate (for example, lost profits). The special damages must have been reasonably foreseeable at the time the breach or injury occurred in order for the plaintiff to collect them. UCC §2-715 any loss arising from general or particular requirements of which seller had reason to know at time of contracting. o But not if loss could have been avoided by cover or other mitigation. · Loss resulting from buyer's needs that cannot be cured by cover. · Injury to person or property proximately resulting from breach of warranty.

CONTRACT: Words of Agreement

States that parties have reached an agreement Evidence parties intended to consent to a deal/contract Not necessary

List of Defenses

Statute of Frauds Capacity Mistake & Misrepresentation Duress Unconscionability Impracticability & Frustration of Purpose

The Case of the Lessee's Well

Stone owns land, oil company using the well. The well breaks and company has option to purchase at $20,000. Stone pays $2,000 to repair the well. Employee says verbally he will be reimbursed. Then company exercises the option, no reimbursement. Can the verbal contract be enforced ? NO. NO consideration because no inducement.

Professional Bull Riders Inc v. AutoZone

The language of the sponsorship agreement created a contract for one OR two seasons. Actual performance was not relevant. AutoZone walked away from contract after one season. This was not a breach, therefore it was possible for the contract to be completed within one year and the statute of frauds did NOT apply.

Why have contracts?

Threat of enforceability deters a breach Encourages trust, which encourages transactions Predictability "Insurance"- risk allocation mechanism Hard to do business without a law of contract.,

EXCEPTIONS to Moral obligation

When past consideration/moral obligation = consideration. (1) A resurrection of previously-binding legal obligation (promise to pay lapse debt - implied if debtor acknowledges the debt, makes a payment on the debt) (2) Affirmation of contract of which there is a defense (3) Promise for a benefit received (RST §86) - binding to the extent necessary to prevent injustice.

Complete Integration (Parol Evidence Rule)

Written agreement that the court finds is final and complete. · evidence from outside four corners CANNOT be admitted to prove either contradictory or additional consistent terms. § Effect of merger clause (statement in writing that agreement is the complete agreement) - presumption in favor of complete/total integration. But presumption can be rebutted.

Partial Integration (Parol Evidence Rule)

Written agreement that the court finds is final, but not complete. -Final expression of some, but not ALL terms. If partial - evidence from outside 4 corners CANNOT be admitted to prove contradictory terms, BUT CAN be admitted to prove additional consistent terms.

Humble Oil v. Westside

option contract where westside gave humble exclusive option to purchase land, for valuable consideration of $50. Humble requested contract to include utilities, westside argued this was a counteroffer which terminated the offer. Court said, no the option was to be held open.

American Mechanical Corp. v. Union Machine Co. of Lynn, Inc.

parcel of land for sale. Foreseeable that if buyer breached, it would cause a specific amount of damage to the seller. Seller trying to recover the damages. Union machine knew that bank would foreclose and that foreclosure would result in a below market price.

interpretation

process of courts determining the meaning of contract, considering the terms, parties' intent and the parties' purpose. Involves determining the meaning of indefinite, ambiguous or omitted terms. Indefinite: terms left open or uncertain · Essential term: parties never intended to make a contract · Minor: court may imply term based on what is customary or reasonable. Ambiguous: multiple meanings or misunderstanding. · If parties had the same meaning - court will interpret the term the same · If parties had different meanings--> void for lack of mutual assent. Parol Evidence admissible to determine meaning of ambiguous terms (not contradictory) Omitted: courts will supply reasonable terms and impose a duty of good faith.

Bilateral Contract

promise for a promise

Unilateral Contract

promise in exchange for an act

Battle of the Forms UCC 2-207

refers to the not uncommon situation in which one business makes an offer in the form of a pre-printed form contract and the offeree responds with its own form contract. At common law, any discrepancy between the forms would prevent the offeree's response from operating as an acceptance.