Contracts

§164 - Misrepresentation voidable when assent is induced by either a fraudulent or a material misrepresentation and the other party is justified in relying on.

Fraudulent: Intended to make you act Material: would not have entered the contract or acted knowing the info withheld If a party's manifestation of assent is induced by either a fraudulent or material misrepresentation by one who is not a party to the transaction upon which the percipient is justified in relying, the contract is voidable.

Towing example:

How much of the value of the contract did you receive. Towing example: If you get a car towed and it ends up halfway to where it needed to be you still received 0% of the value you were looking for (your car is no good to you there)

Rest. 2d §159

Misrepresentation: A misrepresentation is an assertion that is not in accord with the facts. An assertion can be a statement, concealment, opinion (sometimes) Another way to look at it is anything a person would reasonably assume be revealed to them when entering a contract. Goes to economic efficiency: We expect that to be the norm. Something that a party withholds that is extremely hard for you to get a hold of (either fiscally or logistically) will make something unfair misrepresentation. Also brings in the least coast-avoider: who can preclude the information for the cheapest and easiest.

Rule for Consideration

So your final rule for consideration should be to ask "Why did one party ask the other to perform? So that..." · This will distinguish between a promise, performance, or just a gratuitous behavior and takes out the ability to consider past actions (cant try to induce someone to do something they have already done).

Policy implications of substantial performance

We are worried that there is a possibility of parties going provision chasing: adding a bunch of specific provisions everywhere throughout the contract in the hopes that the other party will mess up (essentially setting traps in contract) The other side of this is also not being able to get specifics that you care about and contracted for because a party will just get as close as they feel like to what you wanted.

§209 Integrated agreements:

Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agreement, it is taken to be an integrated agreement unless it is established by other evidence that the writings did not constitute a final expression.

Everett v. Sumstad (Washington - 1981)

· When a party sells a safe not knowing what is inside, and the buyer knows that there are locked compartments to the safe that they cannot readily access, has the buyer purchased the unknown contents in addition to the safe? · Yes, title to a safe with a locked compartment can pass from seller to buyer when neither party has knowledge of the safe's contents. · Here the risk was not just known but it was part of what you were buying: "Look at what is in this safe, who knows what could be inside this compartment that no one has ever opened" o Not a mistake but a mutual unknown

Two ways to think of State of frauds

Step (1) does this fall within the statute of frauds. (Is this within the 1-year provision, etc.); Step (2) Does this satisfy the statute of frauds (Does this satisfy the written memorandum) When we have an oral contract we always ask two questions: Is it within the statute of frauds and does it satisfy the statute of frauds

Three steps to Parol evidence

Step 1. Is the oral terms consistent with the contract Step 2: Is the contract fully or partially integrated Step 3: Is the oral agreement within the scope of the contract (if within scope then it should have been included when contract was written and we don't allow the evidence in - if outside of scope and in need of probably additional consideration, we allow that evidence in)

§168 - Reliance on assertions of opinion

(1) An assertion is one of opinion if it expresses only a belief, without certainty, as to the existence of a fact or expresses only a judgement as to quality, value, authenticity, r similar matters. (2) Facts not submitted to recipient can be interpreted as an assertion if the person action indicate them to interpret the nondisclosure as their opinion

Steps to Statute of frauds

(1) Having a contract - is it oral? (2) Having a writing (Written memorandum establishing (1) the existence and (2) the essential terms of the contract and is signed by the party seeking to avoid the contract. (3) If merchants, having a confirmation to confirm writing. A lesser standard than the normal 'writing' requirement.

Two main questions:

(1) Is the written agreement so complete that is precludes proof of other terms o If the parties intended the final writing to be an authoritative statement of the parties rights and responsibilities concerning only certain issues, parol evidence is admissible if offered to prove the existence of an additional term. (2) Are any additional terms consistent with the integrated writing? Will depend on narrowly or broadly interpreting the writing.

§162 - When a misrepresentation is fraudulent or material.

(a) Maker intends his assertion to induce a party to manifest his assent and the maker (1) knows or believes assertion is not in accord with the facts (b) Does not have confidence that he states or implies in the truth (c) Knows there is no basis for the assertion Misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so.

Rule on Promises

A contract term that allows one side unfettered control over cancelation w/o consequences is not a contract · However, flexibility is encouraged and seen in requirement contracts where the ability to change the required quantities or prices is inducing between parties and encourages contracting. · There cannot be too much exclusivity like seen here though where they are just guessing and changing the numbers on a whim without rational basis (market prices, past yearly sales, how much was needed last time, etc.)

Promise:

A promise is a manifestation of intention to act or refrain from acting The person manifesting the intention is the promisor The person to whom the manifestation is addressed is the promisee. If a third party benefits that person is a beneficiary. If a promise is made of an event beyond the promisors control, it is called a warranty and if an assumption is made about future events this is an opinion or prediction (if the opinion is that of an expert there may be an implied promise that the person is using care when making their prediction).

Objective Theory of Contract

Or what a reasonable person would believe turns a predication, opinion, or plan into a commitment. Individual, private, subjective value of objects drives social contracts Something is worth as much as you deem it to be so. To do this we need specificity --> something specific the other person can rely on. The promisor knows that the other is going to dictate their actions around the statement.

Two Approaches

Textualist: Plain meaning - terms have a plain meaning when they are reasonably susceptible to only one interpretation. · The textualist approach assumes that contract terms can be clear enough to prove their own meaning Contextualist: Considers extrinsic evidence in addition to the language and structure of the contract itself and is reasonably susceptible to multiple meanings. · The broader context has the potential to establish that the contract might be most reasonably interpreted in a way that is contrary to what the contractual language standing alone would initially suggest.

§210 Completely and Partially Integrated Agreements

Whether an agreement is completely or partially integrated is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.

Key Principles

o The first trio of rule often compete for dominance § Autonomy: The law should enable people to exercise free choice. § Efficiency: The law should support the allocation of resources to the people who value those resources most in order to increase total social welfare. This is the most important principle to understanding contracts. Trust is needed for deals and bargains to be made The agreement must be voluntary as well - a voluntary exchange is mutually beneficial and wealth enhancing because both sides get to express what is desired from the other. § Integrity: The law should encourage people to keep their commitments. o The second trio often justifies important exceptions to general sets of rules: § Paternalism: The law should protect those who cannot protect themselves. § Administrability: The law should not require judges to make decisions they are ill-equipped to make well or can make only at high cost. § Social justice: The law should favor those who have less wealth or opportunity.

Mattei v. Hopper (California - 1958)

§ The contract was neither illusory nor lacking in mutuality of obligation because the parties inserted a provision making plaintiffs performance dependent on his satisfaction with the leases he had to obtain himself. § One party only had to do something (sell their house) if the other party was satisfied with conditions to do their part of the contract (obtain additional leases). § The court believes the contract implies that he has to put in a good faith effort to find satisfactory leasees The concern being if a good faith effort wasn't required the party with the provision is within his control to dictate "satisfaction", meaning he could just not put in the effort and cancel the contract whenever he felt like it. · A "satisfaction" clause like this one has been given effect in the past: Commercial Value: o There are two primary categories - (1) contract where condition calls for satisfaction as to commercial value or quality, operative fitness, or mechanical utility, dissatisfaction cannot be claimed arbitrarily, unreasonably, or capriciously and the standard of a reasonable person is used in determining whether satisfaction has been received. Taste/Fancy Judgement: o (2) those involving fancy, taste, or judgement. Where the question is one of judgement, the promisor's determination that he is not satisfied, when made in good faith, has been held to be a defense to an action on the contract. § California has stated that since these types of promises require a performance which shall be satisfactory to him in the exercise of an honest judgement, such contracts are almost always upheld. § The party must show that they are not only dissatisfied with the contract but he must be dissatisfied with the performance and as a performance of the contract, his dissatisfaction must be genuine

Conditions

· A condition is an event not certain to occur which must occur unless its non-occurrence is excused, before performance under a contract becomes due. · Conditions usually limit obligations to perform duties but under certain circumstances conditions themselves may not be strictly enforced

Termination of Offers

· A contract is either accepted by the offeree, in which case it ripens into a contract or it is terminated in which case it legally ceases to exist. · Termination destroys the offeree's power of acceptance so if the parties want to contract than a new offer must be made (even if on the same terms) · There are four termination events: (1) The revocation of an offer by the offeror (2) The rejection of an offer by the offeree Can be implied like we saw in Dickerson (3) The lapse (or expiration) of the offer in accordance with its terms or as a default in a reasonable time The length for this is determined by the circumstances and what the parties would have considered to be a long-time in the moment the contract was formed. (4) The death or incapacity of the offeror or offeree. Inaction cannot be accepted or required as acceptance of a contract but can be a rejection Also, the offeror is the master of the offer: They decide on what terms acceptance happens

Illusory Promises

· A promise of future performance can be consideration even if the obligation to provide that future performance is expressly conditioned on the occurrence of an event that is not certain to occur. (Ex: Insurance companies promise to rebuild home if fire occurs) o All that is required is the mere possibility that the company will be obliged to act for there to be the requisite consideration. · If the requirement of performance remains entirely within the discretion of the promisor, the element of commitment can be entirely absent and therefore (illusory. This cannot be considered consideration as the terms to make performance are entirely optional. o (Ex: Insurance company promising to rebuild home if fire and if they elect to do so; or the example of one party promising to sell as many of Item A at X price as the other party chooses to over the next month - the other party has no obligation to buy any of item A despite the promisor promising a specific price, therefore there was no consideration and no contract)

Duress

· Allows courts to protect parties from the consequences of agreements that satisfy the technical requirements of contract but were not entered into voluntarily. · Although the underlying goal of protecting party autonomy is clear, courts have struggled to distinguish between negotiating behavior that constitutes impermissible coercion and ordinary hard bargaining by a party with superior bargaining power. · The restatement notes the balance between acceptable leverage and unacceptable coercion is struck by permitting parties to avoid enforcement of contract only if they are coerced by an "improper threat" by the offeror and have no reasonable alternative by to accept., · Autonomy is a part of human dignity and forcing people into contracts goes against that · If voluntary exchanges are mutually beneficial, then getting rid of voluntary aspect of contracts takes away the mutual enhancing aspect as well.

Acceptance

· An acceptance is a manifestation of assent to the terms of an offer made by the offeree in a manner invited or required by the offer. · Three requirements: (1) An acceptance must manifest a willingness to be bound in a contractual relationship - would a reasonable person in the position of the offeror believe that the offeree had assented to the contract. (2) The acceptance must come from the offeree. (3) Acceptance must reflect the terms of the offer and be provided in the way in which the offer instruct - anything else would be a counteroffer o The requirement that the acceptance must do nothing more than reflect the offer is known as the mirror image rule. · List of default rules: (1) The offer may either seek acceptance in the form of a promise (bilateral) or performance (unilateral) (2) AN offer may prescribe the time, place, or manner of acceptance - if this is not specified than any medium reasonable under the circumstances will do (3) AN offer may require that acceptance be indicated with particular words or a particular act - if this is not specified than any medium reasonable under the circumstances will do (4) The offeror may bot compel the offeree to respond to an offer by stating that the offeree's silence or inaction will be treated as an acceptance. (5) If the offer fails to specify that the offeree must notify the offeror of acceptance, an offeree who accepts by promise must provide notice. An offeree who accepts by performance need not provide notice.

Ordinary vs. Promissory

· An ordinary condition is an event beyond the control of either party - the example being an insurance contract that obligates the insurer to pay to rebuild the customers home if it is destroyed by fire. o The fire is a condition precedent. · A promissory condition is a duty of one party as well as being a condition of the other party's duty - an example is a contract that calls for a landlord to furnish property to a tenant when the tenant posts a security deposits. Here A has a duty and it is a condition of B's duty. A has breached and then B can sue. Signing the contract you are bound to give deposit and the other party is bound to give you keys to the apartment but that action is conditional on you giving the deposit first. · The difference between ordinary and promissory conditions is critical because the consequences of a failure of the condition are dependent on the condition's type. When an ordinary condition is not satisfied, the conditional duty never becomes due, but neither party has a legal cause for action against the other. · The failure of a promissory condition constitutes a breach of contract and therefore the non-breaching party's conditional duty is not triggered but the non-breaching party has a cause of action for breach - an example would be if a tenant does not provide the required security deposit, the landlord not only has no duty to hand over the premises, but may also sue for damages under property law.

Hill v. Gateway 2000 (Court of appeals 7th circuit - 1997)

· Are a list of terms enforceable that come with buying a computer that includes a do not return past 30 days clause, constitute a lack of notice when the terms were not read over the phone at check out and did not elicit clear consent by the customer but the buyer also had a reasonable opportunity to read the contract closely before 30 days were up and the information was readily available through alternative means like the business website. · A reasonable person would read the box, have noticed of the terms, and an opportunity to read and return box if they did not agree to it. · Not only does gateway advertise the 30 day return period but the Hill's could of asked the vendor to send a copy before deciding whether to buy. o Or they could consult public sources that may contain the info they need like the website of the vendor or magazines. The terms and conditions were out there for the buyer to find it they wanted to and therefore it is fair game. o Finally they could inspect the documents after the products were delivery · The only time you will really have lack of notice is if you requested the information and they directly refused to give it to you · RULE: If you have notice, terms are out there, and available - then you are bound by them

Alaska Packers v Domenico (9th circuit - US)

· Are goal is to have contracts that can renegotiate things but also do not have hold up due to continual issues (people being vulnerable but not too vulnerable) · Do workers who are already contracted to do a job at a certain price, who wait until it was too late to find other men to perform the task, and then refuse to work without cause until a new contract at a higher price is established remove the other parties ability to have consideration due to the lack of bargaining power. Asymmetrical bargaining power is not something the court is all that concerned about · Can the contract being modified is there a changed circumstance, meaning is the change fair, equitable, and unanticipated at the time of the original contract. · The reason the packing company is so vulnerable once they get to Alaska is that they have already invested a lot of money into this endeavor so when there are no other options, the workers can negotiate all the way up to the sunk cost. · Therefore we have an original negotiation in cali, then changed circumstance as the fishers are unhappy with nets and the company has no way of hiring new people. We then have renegotiation in Alaska when the fishermen have all the leverage. · No astute reasoning can change the plain fact that the party who refuses to perform and thereby coerces a promise from the other party to the contact to pay him an increased compensation for doing that which he is legally bound to do , taken an unjustifiable advantage of the necessities of the other party.

Disambiguation:

· Both textualist and contextualist courts consider these sources of meaning that are intrinsic to the contract - such as language in other provisions of contract, structure, definition of words, and other logical implications that can be made. · Extrinsic evidence can include trade usage evidence (how participants in the business or industry of the disputing parties customarily understand the contract term), course of performance evidence (how the parties have performed their obligations under the particular contract at issue in the past), and course of dealing evidence (how the parties have behaved toward each other when acting according to prior legal arrangements). o Evidence concerning the negotiations that led to the contract, statements at the time contract was executed, and the commercial circumstances that provide context surrounding the contract can also be considered.

Ever-tite roofing Corporation v. Green (Louisanna - 1955)

· Can a party to a contract who hires one company to roof their house, then hire another company to roof the house instead and revoke their original offer, if no written acceptance by an expressly permitted party of the original contract was received but they had began working on the project within a reasonable time and without notification of the contract being revoked. · This case highlights that commencement by action is vague the court try's to be lenient with its interpretation Not a specific moment in time but a time in which the parties would reasonably aspect given the circumstances of the contract made. o Does performance begin at the moment tile starts hitting the roof or the minute the car is packed up and they start preparing to go to work. The court doesn't give us a hard and fast rule but tries to look at the circumstance and determine what the parties would reasonably consider performance to be. · There was also no unreasonable delay on plaintiffs part in receiving, processing or accepting the contract or in commencing the work contracted to be done, no time limit was specified in the contract, and the parties knew that due to the compliance with financing the job through the lending agency, there would be an unavoidable delay before starting the work. o The general rule is that since the contract did not specify the time within which it was to be accepted or within which the work was to have been commenced, a reasonable time must be allowed therefor in accordance with the facts and circumstances and the evident intention of the parties.

Hamer v. Sidway (NY - 1891):

· Case about Uncle promising $5,000 to his nephew if he refrains from various nefarious habits until he his 21. Is this proper consideration given that the plaintiff benefited from refraining from these acts regardless of if he was paid $5,000 or not when he turned 21. · The Court deemed that the plaintiff upheld their end of the promise under the guise that the defendant would uphold his end (the promise changed his behavior - he relied on it). It does not matter who benefits or why, the promise was inducing and therefore consideration. · This focuses back on the difference between a unilateral contract and a bilateral contract: Uni: Where one person promises to perform (promise Performance). In this case mutual assent happens with the party that needs to perform actually performs - the party making the promise does not want a promise in return but an action to occur so that action has to occur for mutual assent; Bi: Both parties promise something (promise Promise). In this case agreement or mutual assent happens when both parties exchange their duty. o In this case we have a unilateral contract where the uncle is offering a promise for a performance. At the time of the contract the uncle is not looking for his Nephew to promise action in return but to actually act, and then if he continues to act, his performance will uphold his end of the deal at the age of 21. o So has the Nephew been induced to give something up? Yes, each side had something of value (Money - Action or more accurately the refraining of action), the benefit or not of each side is irrelevant. It has legal value because each had consideration and bargaining power and mutually assented through action to accept the offer. · "A valuable consideration in the sense of the law may consist either in some right, interests, profit, or benefit accruing to the one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. Courts will not ask whether the thing which forms the consideration does in fact benefit the promisee or a third party, or is of any substantial value to anyone, it is enough that something is promised." o This meaning not so much that consideration is one or both sides profiting but that one or both sides is giving up a legal right in the present or limiting their legal freedom of action in the future

Hawkins v. McGee (Supreme Court of NH - 1929)

· Case about defendant who promised to 100 percent fix the hand of a boy and the operation then didn't go as planned. The court asked if the promise made was enough to induce the other party into a contract with the other party. · This case dealt with two issues; (1) Whether an utterance that looks like a promise necessarily means it was one Turned into when a doctor guarantees a 100% good hand to convince the patient of an experimental surgery, is this a promise. · (2) Whether pain and suffering and worsening of the hand should be included in the damages for a break of K The general rule is you get what you are promised but the theory of contracts goes deeper than that: what is the social wealth of each little transaction that is done. · The context around the statement is important to this case: When the defendant stated "I will guarantee to make the hand a hundred percent perfect" he was doing so not as a prediction or assurance, but in order to convince the other party to let him do the surgery o This is different from the vasectomy case where the statement that "you will never have kids again" was not to convince the defendant to get an experimental surgery but a warning of the effects of a routine operation. Shows that context of what is said, when, matters. o So we have to figure out what a promise is: A promise is an utterance that someone else relies on but not necessarily one of which the promisor intended them to rely on. · This gets back to the Objective Theory of Contract: A promise is something that a reasonable person would deem to have convinced or induced the other party to act.

In Re Greene (New York - 1930)

· Case about if a man promising a house, taxes, and other financial gifts in exchange for other party dropping his past claim of marriage to the individual count as consideration · For consideration to be valid, it cannot be for something already contracted for in the past: no way to bargain and therefore promise is not inducing and cannot be considered consideration. · In this case there were three possible considerations; the nominal $1, paying the taxes on the house he bought for her, and the boat loads of money. o The court says that $1 nominally compared to how much he was giving up is nowhere near a reasonable trade and therefore not consideration and paying the taxes on something he didn't owe in the first place makes little sense. So in this case the court does use a balancing test to determine if both sides are giving up something truly valuable even if goes against the objective theory of contract. o The money in exchange for a release of the marriage claim is close to consideration but because that promise was made in the past and the relationship had already ceased to exist, contracting to drop a previous contract that was essentially already dropped is not giving up something that could be considered consideration.

Strong v. Sheffield (NY - 1895):

· Case about man who gives his nephew-in-law a loan and then his niece asks for him to forebear collection until they can get their act together and pay it off. · The court held that the Uncle and Niece did not have a valid contract as there was no specified time that he had to forebear for, only "until such time as I want my money, I will make a demand on you for it." this required no forbearance and he could of asked for it immediately if he wanted but in fact waited two years unnecessarily. o The debtor and the defendant may have hoped that forbearance would follow (and it did) but there was no fixed agreement to do so and the agreement was to forbear for such time as the plaintiff elected. · The consideration is to be tested by the agreement and not by what was done under it since there was no specified time or reasonable time of forbearance there was no consideration for the defendant to agree to and no valid contract for the defendant to ensure assets if note was not paid. · There is essentially two contracts going on. One between the creditor and the borrower (Nephew-in-law). That one is simply a loan in exchange for repayment upon request. · The second is between the creditor and his niece. For the insurance that the loan will be repaid in return for the forbearance on that loan for a reasonable time. The second contract is uni-lateral (like the uncle paying kid to abstain from fun) where the niece doesn't want a promise but the actual performance of forbearance - meaning there is no breach of the contract but rather acceptance or denial based on his actions. Therefore, when he stopped forbearing the loan, it was not a breach but just his denial of the terms of the contract with the niece and enforcement of the other contract with the nephew-in-law.

Kirksey v. Kirksey (Alabama - 1845)

· Case about widow whose wife died and her brother-in-law told her to come down to Florida and live with him on land he owned. The question is if the exchange of the convenience of not having to go and take care of his sister-in-law, for her selling her land, moving 70 miles, and living with him count as proper consideration. · The court felt this was more like gratuity and that the action is not a breach of contract · In this case the argument for a contract would be that the owner was offering a place to stay near him in return for the convenience of not have to go to Alabama and have more extensive duties as the widow's brother-in-law. The court disagrees, although this example shows that the argument could be made to differentiate from a gratuitous offer and a promise for consideration between parties. Always ask who is being inconvenienced by this exchange. If one party is inconvenienced and the argument is made that they get nothing in return, it would be called a gift. · The court here believes the brother-in-law is getting nothing in return or at the very least a pass on societal duties (not something tangible) and therefore he is just giving a gift.

Mutual Assent

· Contract law ensures voluntariness by requiring that both parties "assent" to the contract. · But we ask what words or conduct are sufficient to show that a party has assented to being bound to a contract? Subject intentions of the parties (what they were both thinking) or the objectively reasonable understanding of their words and overt actions (did they appear to be expressing the same thing?)

Frost v. ADT, LLC (Court of appeals 10th circuit - 2020)

· Contract of adhesion has two elements: (1) Notice and (2) Choice - In general a contract for adhesion is enforceable so therefore you have to use an affirmative defense like misrepresentation, unconscionability, or duress to attack the contract. · When a website advertisement guarantees local emergency services will be notified by ADT when they are alerted of a fire, Is a contract voidable for unconscionability, by stating that it will only take reasonable efforts to alter emergency services and that they are not liable for any injury while services are in use, when the terms were stated in clear, bold language on the first page of the contract and ADT has an incentive to enact limited-liability provisions given their low rates. · They are not offering insurance and they say that in the contract: The court feels that this is a fair price for what the buyer is getting and therefore not substantially unfair. · Further the buyer has choice in the market because you can pick any company you'd like. If you want something with better services you can get it elsewhere for more money.

Damages

· Damages is intended compensation for a breach, measured in the terms of the contract - the purpose is to put the plaintiff in as good a position as he would have been in had the defendant kept his contract - the measure of recovery is based upon what the defendant should have given the plaintiff, not what the plaintiff has given the defendant or otherwise expended. The rule is you get what you lost, or were promised. Goes back to the idea of trust and efficiency. If I just got what I gave up back, there would be no point in ever giving. But if you get what you were promised than you can be sure that a contract will be enforced for what you intended it to be for.

Healy v. NY Central and Hudson River RR Co (NY - 1912)

· Does a bag drop-off service, common at train stations, that puts a provision on the back of the token required to reclaim possession that states the company is only liable for $10 of the value of any lost or stolen item, constitute lack of notice of contract when it is unreasonable to expect a person exchanging their bag for a token to assume the back contains restrictions or provisions. · There was also nothing connected with the transaction would suggest to a reasonably prudent man the existence of such a special contract or ask about the possibility · No doubt the plaintiff was hastily given the card board ticket and he equally as hastily shoved it in his pocket without any reasonable opportunity to read it. If there is not adequate notice than a contract is unenforceable -What are the parties expectations? · Here the party would not be expecting a provision on the back of the token and therefore the court deems unenforceable. · Today we see these types of things all the time, why? Terms and conditions are everywhere and the standard for what we are expecting has changed.

W.W.W. Associates, Inc. v. Giancontieri (New York - 1990)

· Does a clause stating that proceedings not concluding before a given date allows "either party to cancel contract" give both parties the ability to cancel said contract when one party contends that the provision was only included for their benefit and to ease their concern about pending litigation involving the other party and the parcel of land they were contracting for. · Third party would mean If the plaintiff installed something wrong and it injures another party who sues, they can indemnify the installer Here the defendant wants this to also apply to their property being damaged and not a third party per the language of the contract. · Because the writing is clear and complete, it should be enforced according to the terms and the plaintiffs reading of it should be rejected. · The next question though is whether extrinsic evidence should be considered in order to create an ambiguity in the agreement. o The answer is no - extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face.

Corinthian Pharmaceutical Systems v. Lederle Labs (Indian - 1989)

· Does a company that increases the price of a vaccine they distribute and made its customers aware that they would be priced at the cost of the drug at the time of shipment, not the cost on the last price sheet sent, accept the offer of the buyer by sending the first 20th of an order or by explaining the price increase and providing the option to cancel of the remaining part of the order constitute a counter-offer. · Because the defendant knew the price was about to change, they knew the other party was not willing to be bound by the terms (they knew they no longer had mutual assent and tried to get in under the wire) · The only possible conclusion in this case is that Corinthians order of May 19 for 1,000 vials was the first offer and nothing the seller had done prior to this point can be interpreted as an offer. · According to the UCC though, once they confirmed prompt promise to ship or actually shipped the vials it constituted acceptance if they conformed to the terms Corinthian asked for. o If they did not conform (like in this case) and seasonably notified the buyer that the shipment was a mere accommodation, the seller has not accepted the buyers offer and made clear in their accommodation letter that the 50 vials were being sent as an exception to their policy and the rest would be edited to the higher price. o Therefore the non-conforming shipment is viewed as a counter offer that the buyer could accept or reject.

In Re Soper's Estate (Minnesota - 1935):

· Does a contract awarding the wife of either party insurance money in exchange for their shares in a company upon their death, apply to the actual wife of the one party, when it turns out that they had two wives because they had fraudulently faked their own death, moved 4 states away, and started a new life with a new wife and this wife was unknown to the other party in the contract. · Parties: Two business partners Looks at §201(2)(b) party had no reason that wife meant something else to the other party and therefore we would go with their interpretation. · No one in Minnesota knew of his real wife and he referred to Gertrude as such. · Public records and general repute suggest that all recognized Gertrude as Youngs wife and all friends and acquaintances knew and recognized her as his wife · Awarding the insurance money to Soper would be going directly against the wishes of the contract as it clearly points to Gertrude as Young's wife and the word wife is not a fixed or objective symbol but subjective and personal.

Frigaliment Importing v. BNS International (New York - 1960)

· Does a contract between two parties for "1 ½ - 2 pound and 2 ½ -3 pound US Fresh Frozen Chicken, Grade A" mean chicken suitable for broiling or chicken more suitable for stew when the word chicken is unclear, both interpretations have been used in the trade, only one interpretation included both order sizes, and the quality of chicken at the price offered would be unreasonable from an economic standpoint if a business were to sell at that price. · This case is a testament of using everything you can to interpret a contract. o Course of dealings: Previous conduct that establishes a common basis of understanding; Course of performance: How the parties reacted to performance of the contract (in this case their reaction to the first shipment and acceptance of the second); §214: States that preliminary negotiations are allowed to establish the writings meanings; Price: Low quality would cost 30 cents, high quality would cost 35 cents, and contract was for 33 cents; Department regulation; Dictionary; Customary trade; Expert witnesses. · The defendants subjective intent aligned with an objective meaning of chicken and plaintiff failed to show that a narrow view of Chicken needed to be taken.

Nanakulia Paving And Rock Co. v. Shell (Ninth Circuit - 1981)

· Does a contract for asphalt material that states the price of material will be determined by "the posted price at the time of delivery" but has protected the price for the other party in the past when there was an increase and it is industry custom to do so mean that the party must continue to price protect now. · Government Rule is that you can't move your price once you have set it and therefore a company like Nana who contract with the government would expect a company like Shell not to shift their price either because as the middle man, Nana would get squeezed. · Locking in both sides is efficient and the industry cares about these contracts being efficient. · The court also determines that the terms of the agreement were not ambiguous and price protecting twice before and it being industry custom indicated an understanding of the terms of the agreement.

Hanford v. Connecticut Fair Association (Connecticut - 1918)

· Does a contract imply that revocation of performance is permissible if performance would go directly against public policy, if the party refusing to perform cannot show that the public has already suffered but is likely to in the future when the purpose of the event is to create the circumstances necessary to create the negative result, like bringing roughly 120 babies together into one room during a pandemic. · Kind of an obvious case - as a matter of public policy we typically do not want to let babies get sick and die. · The question of the validity of the contract does not depend upon the circumstances whether it can be shown that the public has in fact suffered but whether the contract is in its nature, such as might have been injurious to the public. What is the general tendency of contract · Holding a show likely to get children sick is clearly against the public interest. · While the plaintiff points to cases where schoolteachers were. Repaid for time missed when whole school was shut down the court points out that a teacher cannot control how many people are in their classroom. o This pageant however would strive to get as many people in the building as possible: different goals for contract enforcement.

Comprehensive Technologies International v. Software Artisans (4th circuit - 1993)

· Does a contract requiring a former employee not to accept employment that would likely substantially interfere with CTI's business for one year after termination go against the traditional public policy against unreasonable non-compete clauses when the type of employment is confined to software R&D, the employee was privy to a lot of information valuable to the employer, and the employee retained the ability to earn a living. · The covenant not to compete is no greater than necessary to protect CTI's business and is not unduly harsh or oppressive. Hawkes does not suggest, and we do not find that the covenant is unreasonable from the standpoint of public policy. · Here a three part test is established by case law to determine when a contract goes against public policy · The compete clause is more reasonable when you think of all the information the party was privy to. o In this case the person has a significant amount of information making him a "formidable competitor" and barring that employee from working for competitors in any capacity was not greater than necessary to protect business interests. o Although broad as in nationwide the category of business he is unable to compete in is relatively small. o The plaintiff can still do a many number of things not defined in the covenant in the software development field and therefore not unduly.

Pacific Gas v. GW Thomas (California - 1968)

· Does a contract where one party agrees to remove and replace a metal cover and agrees to perform work while taking on all risk of damage, expense, and liability resulting from injury to the property, include the other parties property when contextual evidence of admissions from agents, similar contracts between the parties in the past, and the language used suggests that the provision was only to insure third-party damage. · The court determines that extrinsic evidence should have been admissible when determining the meaning of the provision of the contract and the parties intent. · The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face but whether the offered evidence is relevant to prove a meaning which the language of the instrument is reasonably susceptible. · Words do not have fixed meanings and are not absolute. · This requires circumstance to reveal intent and the exclusion of parol evidence regarding such circumstances can easily lead to words being misconstrued in a contract.

Klocek v. Gateway (Kansas - 2000)

· Does a customer that is not a merchant, who buys a computer from Gateway which includes standard terms in the box constitute additional provisions to the original contract when Gateway did not make acceptance of offer conditional on the acceptance of these terms and received payment and shipped the product. · Going through 2-207 this is either a contract over the phone, and the terms in the box sent back are acceptance and then the 5 days no return was determined to not be enough to show DEA or offer was on the phone, the box with the terms was the contract sent back for acceptance and in this case the same analysis is applied (not retuning computer is not enough to show DEA)

Williams v. Walker-Thomas Furniture Co. (DC/U.S. court of appeals - 1964)

· Does a furniture selling low-income market retailer, that's business model relies on replevin, create a contract voidable for unconscionability when they are well aware of the buyers financial problems and none-the-less create a contract that is confusing, hard to read, hides the price, and makes repayment near impossible even if we typically require mutual misunderstanding and not unilateral mistakes to make a voidable contract. · Appellant had limited education and separated from her husband and uses public assistance to take care of her and her 7 children. · The contracts were written in extremely fine print in small paragraphs and had a provision that meant the title to all items bought remained in the Appellee's possession until all items were paid off. Meaning a default on one was a default on all. · She thought that the contracts just meant that once an item was paid off it was hers, she admitted that she did not ask anyone to read or explain the contracts to her but that must of the purchases were made at her home; the contracts were signed in blank; and that she did not read the contracts or be provided with a copy of them. · The court holds that where the element of unconscionability is present at the time a contract is made, the contract should not be enforced. · This has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. · Meaningfulness of choice, circumstances surrounding the transaction, and inequality in bargaining power can all be considered. o Did each party to the contract consider the others obvious education or lack of it, have a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print and minimized by deceptive sales practice. · The main thing to take from this case is that it is really hard to invoke unconscionability. Think of just how one sides the unfairness in this case had to be and it was still a toss up.

Carmichael v. Adirondack Bottled Gas (Vermont - 1993)

· Does a gas company, who has a contract with a local supplier, that also contains a "key man" clause, terminating the agreement without notice due to the death of one of the parties, still owe a duty to cordially wind down relations and not attempt to take advantage of the remaining partner by offering a low, previously rejected price and imposing a short deadline under the idea of good faith and fair dealing. · Court here affirms the lower courts finding of a breach of implied covenant. · Disagrees with Adirondacks claim that it could not have violated the good faith and fair dealings of the contract because the contract was terminated when Carmichael died. · Court feels that the parties owed each other duties with respect to winding down their affairs as long as the post-termination conduct was related to the contractual relationship - manner of termination cannot be contrary to equity and good conscience. · Court says that that T1 there was an implied agreement not to be disrespectful as the contract died down. You knew that the key man clause implied the end of contracting with a party after death and you should of known that you should do that at the actual funeral

Edwards v. Arthur Andersen LLP (California - 2008)

· Does a noncompete clause, that goes against the public policy of the California labor code section 16600 restricting these types of contracts, unduly restrain the employee from following his dreams when the contract had to be signed before employment, and did not allow the person to work within 18 months, in the same profession · Section 16600 prohibits employee noncompetition agreements unless the agreement falls within a statutory exception, and that a contract provided when an employee releases "any and all claims" does encompass nonwaivable statutory protections. · The noncompete clause was invalid · Here we have an actual statute determining what the public policy is. · California settled public policy in favor of open competition, and rejected the common law "rule of reasonableness" for non-compete clauses · Therefore besides a few exceptions (only anti-trust things like sale of company and dissolution of partnership) they have been deemed unenforceable. · The noncompetition agreement was required to be signed before employment and did not allow the person to work within 18 months, in the same profession, in the same area, severally restraining his ability to practice his profession.

Levine v. Blumenthal (New Jersey - 1936)

· Does a promise not to breach a lease due to economic downturn constitute consideration for an agreement to pay less rent then before agreed upon. · In this case the plaintiff leased a store front to a business owner who could not afford to pay an increase in rent; therefore the defendant expressed that they would go bankrupt if forced to pay the agreed upon amount and both parties restructured the contract. · The plaintiff then went back and sued for the money they would have been owed if the original monthly rent had been required. Is the edited contract a valid replacement for the previous one? · The court holds that the secondary agreement at issue is not supported by a valid consideration and it therefore created no legal obligation It is well established that a promise to do what the promisor is already legally bound to do is an unreal consideration, however, any consideration for a new undertaking, however, insignificant, would satisfy the necessary requirement for consideration. o Therefore if a reduction in payment from one party, in exchange for a guarantee by the other not to voluntarily enter bankruptcy would have been proper consideration. This case however, where there was just a fear by the leaser that the leasee would go bankrupt if they continued to pay the full amount, is not sufficient for consideration.

Carlill v. Carbolic Smoke Ball (Queen's Bench - 1892)

· Does an advertisement by a drug company that offers money to anyone who experiences their products failure, such as a medicinal ball not preventing the contraction of influenza or any other disease, constitute an offer to contract when they explicitly set money aside for those who take up the offer despite the advertisement not limiting the time of offer or establishing a review process. · You can also add in an additional question about acceptance here: Can a person accept purely by performance and not notify the other party. · The drug company is saying that they think people wont get sick from their products and show their seriousness through setting funds aside and offering reward. Their goal is to build public trust and get people to buy their product. (Their side of the consideration) · The problem with their side of the deal is that they have no verification system to ensure people are following the directions of the advertisement: This goes back to the issue of what a reasonable person would think - is it reasonable for a person to think a company will give out money for something they are not even checking to make sure happened? · The court believes that this was not an offer made in jest based on the statement that they put a deposit in the bank to show they were serious. · It also does not matter that it was not made to anybody in particular because that is the nature of an advertisement: they are offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer. o Unless the offeror requests notification, only performance is required to accept an offer.

Beanstalk Group v. AM General (7th Circuit - 2002)

· Does an agreement between Beanstalk and AM for the trademark licensing rights of Hummer where it received 35 percent receipts for any agreements whether in the form of a license or otherwise granting merchandising or other rights made while representing hummer, require AM to give Beanstalk the 35 percent when they sell the entire Hummer brand to GM when doing so would appear to render absurd results. · The lawsuit has little merit as taking Beanstalks interpretation would render absurd results Think of Absurd result as a version of looking for parties intent (absurdity is sign of not being the parties intent) · Does the deal make sense Look to industry custom, past dealing, general context, Etc. · Beanstalk did not broker this deal at all and didn't even know about it, would be absurd for them to get paid 35 percent · Beanstalk and AM would have obviously known that if the Hummer business was ever sold, the trademark would go with it. It is hard to believe that Beanstalk would obtain commission for this just due to the fact that the deal would include the trademark. Dissent: · Claims that because Beanstalk is increasing the overall value of Hummer through the licensing of the brand they deserve a cut of the brand when it is sold.

Waddle v. Elrod (Tennessee - 2012)

· Does an email between attorneys specifying the agreed upon terms of a settlement agreement where the sending party states that this confirms their prior oral agreement and the other party responds confirming the agreement by saying "that is our agreement" and acting as the defendants agent electronically sings the response email count as a written memorandum avoiding statute of frauds. · It is within the Statute of Frauds because it is a transfer of property. It is satisfied because of the written memorandum being exchanged. · Applying these principles the Statute of Frauds does not bar enforcement of the settlement - the emails considered along with the legal description of the property in the cross-claim, described the terms of the agreement with sufficient specific, this was confirmed by Ms. Elrods attorney stating "that is our agreement", and he was acting as her agent, and his signature at the end of the email satisfies the requirement that the document be signed. · The court notes that this is a settlement agreement and the statute of frauds only applies in the case that real property is exchanging hands (not something like the settling of a boundary line dispute). o Because the agreement here requires Elroy to transfer half interest in the property it applies. · It also must be signed by the party to be charged or by some other person authorized to act on that party's behalf. o The Court of Appeals held in Gessler that the printed name was sufficient as well as cross mark, initials, numerals when used with the intention of constituting a signature, or imprint made by a rubber stamp o While this predates email the holding is broad enough to encompass typed names.

C.R. Klewin v. Flagship Properties (Connecticut - 1991)

· Does an oral agreement for a multi-million dollar project between a real estate development business and contractor that is to begin immediately but has multiple phases spanning an unspecified amount of time but presumably more than a year, fall under the statue of frauds requirement that any contract not to be performed within one year of its making have at least a written memorandum accompanying it. · An oral contract that does not say, in express terms, that performance is to have a specific duration beyond a year is the functional equivalent of a contract of indefinite duration for the purpose of the statue of frauds. · Such a contract is enforceable because it is outside the proscriptive force of the statue regardless of how long completion of performance will actually take. · Statute of frauds is only applied to contracts that specifically requires performance to being past a year from the formation of a contract and no other contract that may take over a year to perform but does not expressly require it.

Brunswick Hills Racquet Club v. Route 18 Shopping Center (New Jersey - 2005)

· Does it go against the practice of good faith and fair dealing when a party to a contract knows the other party has not properly executed the steps required to extend an agreement but it wants to and it is in the first parties best interest to let the deal die and therefore they are purposely evasive for 19 months until deadline passes. · Appellate court decision reversed and there was a clear breach of the implied covenant of good faith and fair dealing. · The breach was demonstrable course of conduct, a series of evasions and delays, that lulled plaintiff into believing it had exercised the lease option properly.

Bazak International vs. Mast Industries: (New York - 1989)

· Does purchase orders, telecopied to the seller specifying the specifics of an oral agreement made a week prior, qualify as confirmatory writings under the merchant exemption of the statute of frauds when it is dated the day of the oral agreement, specifies the exact agreement discussed prior, signed by the buyer, but was not acknowledged or returned by the seller. · Because there is a trade of goods and we are over $500, we are in the merchant exemption. · In this case we look for a writing memorandum and we ask if it is ok that the memorandum wasn't signed by the one party · The annotated purchase order forms signed by the buyer, sent to the seller and retained without objection, fall within the merchant's exception, satisfying the statutory requirement of a writing even without the sellers signature · In the statute of frauds, a contract for the sale of goods for the price of $500 or more is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought. o In this case the sale was for more than $500, the only writings were not signed by Mast, but Bazak claims the orders fall under the merchants exception to the signature requirement - "if within a reasonable time a writing in confirmation of the contact and sufficient against the sender (means signed by sender) is received and the party receiving knows of its contents, it satisfies the requirements unless an objection is made within 10 days of receiving". If you have writing, sent in reasonable time, and is not objected again by other party than you can enforce contract. Reasonable to believe that the written confirmation gave reasonable enough information for the other party to have the opportunity to understand what they are accepting or rejecting. · It is not necessary that the written document explicitly alert the other party that its objective is to confirm the previous agreement. o All that is required is some objective guaranty, other than word of mouth, that there really has been a deal and recognizes that it is common practice for a merchant to enter a sales agreement and later confirm it with writing. o Typically, both parties have to sign written confirmation

Craft v. Elder and Johnston Co. (Ohio - 1941)

· Elder and Johnston ran an advertisement in the Dayton Shopping news that offered for sale a certain all electric sewing machine for the sum of $26 as a Thursday only special · Is an advertisement that states the price of a product and the day it will be sold at the price elevate a willingness to negotiate into an offer to contract. · The court rules that besides special circumstances, an ordinary newspaper advertisement is not an offer but an offer to negotiate, an offer to receive offers, or an offer to "chaffer" · A published price list is not an offer to sell the goods listed at the published price but often merely expressions of a willingness to negotiate. · Even though the advertisement specified the day and rate, it does not specify how many sewing machines are available. o This is important because it is unreasonable for an owner to put themselves on the hook for an unlimited number of machines, and therefore, unreasonable for a customer to assume an offer was made as it is not a statement that anyone can say "yes" to and be entered into a contract. · unless it's a special circumstance, advertisements are an invitation to negotiate not a solid offer to contract. - general rule for advertisements · This ends up being a policy consideration: We don't care as much about customers and want to encourage advertising without putting them on the hook for more than they can handle. · As a rule an offer is something that would bind the person to performance manifestation of intent to contract something that the other party only has to say "yes" to, to enter into a contract. o Therefore an offer is an expression of apparent intent to be bound specific enough to justify the other party thinking if they accept they are in a contract.

Interpreting Ambiguity

· Even when parties agree on what set of words make up their contractual obligations, they often disagree about the meaning of those words. · Two questions have to be asked: (1) Is the disputed language ambiguous (susceptible to more than one meaning) ; (2) What meaning is best supported by the evidence. · Restatement has three-step method: (1) If the parties agreed on the meaning of a term at the time of contracting, that meaning governs. (2) If the parties disagreed on the meaning at the time of contracting, but one party understood (or should have understood) the others meaning (and the opposite is not true), the meaning that was intended by one and understood by the other governs. (3) If parties had different intentions and neither knew or should have known the meaning intended by the other, courts will search for the most objectively reasonable meaning.

Good Faith and Fair Dealing:

· Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement - it is immutable meaning it cannot be disclaimed as part of the contract · However the duty cannot trump explicit contractual entitlements · Two main circumstances where it is invoked: (1) When one party acts in a way that appears to deprive the other of its legitimate expectations under the contract (2) When one party exercises discretion that is allocated to it by the contract in an arbitrary or exploitative way.

Las Vegas Dreaming Hypo:

· Hypo about psychic having a vision of winning in Vegas and the defendant asking the psychic to come with her to Vegas and pick the slot machines they would use. · What is being given up in this hypo: Psychic is giving up their time and brings luck on trip. Lyons is financing the trip and splitting the winnings. · Note how this is different than a gratuitous act and consideration: Asking someone to just go with you for fun does not require consideration from the party coming along with you and there is no bargaining. Giving away luck or picking the winning slot machine for someone is the consideration needed for both sides to actually be bargaining.

Lefkowitz v. Great Minneapolis Surplus Store (Minnesota - 1957)

· In this case the advertisement said "Saturday at 9 - 3 brand new fur coats, first come first served $1 each" and another said "Saturday at 9 - 2 brand new scarfs each $1, 1 black lapin stole $1, first come first served" o Each time the plaintiff was the first to present himself at the appropriate counter in the defendant's store o Defendant refused to sell stating the first occasion that by a "house rule" the offer was intended for women only and on the second visit that the plaintiff knew the house rule previously stated. · "The test of whether a binding obligation may originate in advertisements addressed to the general public is whether the facts show that some performance was promised in positive terms in return for something requested" · This court is of the view that where the offer is clear, definite, and explicit, and, leaves nothing open for negotiation, it constitutes an offer and this is the case here with the advertisements the store listed. · The defendant also contends that he modified the advertisement for "women only" by their house rule. The court believes he does not have the right, after acceptance, to impose new or arbitrary conditions not contained in the published offer. · Why does the price difference matter here and not in the previous case: The $1 seems almost nominal and an objective customer would be unreasonable to expect an offer that is this too good to be true. However, the owner limits the amount of coats to "first come, first serve" - they are therefore limited the amount of people who can accept the offer, while increasing foot traffic and notoriety of the store. We would consider this to be valid consideration on their part and therefore a reasonable person could assume that they meant to contract.

Nordyne Inc v. International Controls and Measurements (8th circuit of appeals - 2001)

· In this case, Nordyne had purchased control boards from ICM for approximately ten years and after Nordyne made specific requests, ICM sent model boards to Nordyne with a quote that estimated annual usage numbers, stated it was valid until December 31, said "orders must be fully released within one year", standard packaging would apply, shipping would be 30 days, and all orders were non-cancelable and non-returnable. · Nordyne argued that the quotation did not amount to an offer because it was not for immediate acceptance, subject to providing acceptable samples, and it did not specify quantity or include a delivery schedule. · A price quotation such as one appearing in a catalogue or on a flyer, is not an offer, but is rather a suggestion to induce offers by others - but a price quotation if detailed enough, can amount to an offer creating the power of acceptance; to do so it must reasonably appear from the price quote that assent to the quote is all that is needed to ripen the offer into a contract. · Here all the factors weigh in ICM's favor: the two had been communicating for several months, quotation was sent and only sent to Nordyne, it included quantity, price, and time in which to accept, as well as packaging, shipping, and payment terms. We also note that the product was specifically modified just for them. · Again, the important thing here is the facts and circumstances: What do these things mean to those making the contract, is it a formality, or something the whole deal hinges on. Will help you understand if the document is an offer to negotiation or an offer to sign a contract.

Interstate Industries v. Barclay (7th circuit -1976)

· In this case, a company who has been doing business with a manufacturer for 5 years received a price quotation for fiberglass panels in accordance with certain specified standards, the prices Barclay would charge and expressly stated the price quotations based on quantity. · When the plaintiff responded with their order, however, Barclay said they could not fulfill it. · The court asks if a purchase order that fails to state key details like quantity, delivery terms, and payment details constitute a solid offer only requiring acceptance to be considered mutual assent into a contract. · To form a contract according to §2-204 of the UCC, it is necessary to show agreement or a meeting of the minds. o The restatement §20 provides "a manifestation of mutual assent by the parties to an informal contract is essential to its formation and the acts by which such assent is manifested must be done with the intent to do those acts..." o §22 states that this assent takes the form of an offer or proposal by one party and offer is defined as "a promise which is in its terms conditional upon an act, forbearance or return promise being given in exchange for the promise or its performance" · Barclays august letter informing interstate of the cost was defined by the district court as an offer because the UCC provides no guidelines as to when a communication will constitute an offer - so we must look to see if a price quotation constitutes an offer or an invitation to make an offer. Have to look at parties intent. · When looking at Barclays letter it advised interstate of the availability, specifically referred to its contents as a "price quotation, contained no language which indicated that an offer was being made and failed to mention the quantity, time of delivery, or payment terms. No quantity is key: We are always asking why some would put themselves on the hook for this deal if we believe an offer was extended. So why would someone put themselves on the hook for an unlimited amount of something - this implies more was necessary for a contract to form.

What is good faith and fair dealing:

· Intentionality or honesty · Not evading duties · Trying to delay the other side the fruits of the bargain · Adhering to commercial norms.

Leonard v. Pepsico (New York - 1999:

· Is a commercial, with comedic value, such as offering advanced military weaponry to the teen consumer of a soft drink for significantly less value than it is worth, clear and definitive enough to elevate past an advertisement and constitute an offer to contract. · Like advertisements, jokes are not an offer unless the buyer has a reasonable reason to believe the offer was serious. · The general rule is that an advertisement does not constitute an offer. The restatement says "It is of course possible to make an offer by an advertisement directed to the general public, but there must ordinarily be some language of commitment or some invitation to take action without further communication." o It must be clear, definite, and explicit, and leave nothing open for negotiation to be considered a contract though. · The commercial cannot be regarded as definite because it specifically reserved the details of the offer to a separate catalog. · The court must distinguish between "reward" cases merely offering an invitation to negotiate and promises of reward in which the offer is to induce the performance of an action. (Like Carlill v. Carbolic Smoke Ball) · In this case there are all sorts of objective things that a person would notice and be able to determine that the ad was not a legitimate offer. (it's a military grade harrier jet for starters)

Austin Instrument v. Loral Corp (New York - 1971):

· Is a company that contracts out the manufacturing of parts for a military radar system and includes a liquidation clause and late delivery or cancellation clause do to the importance of the product they are making, subject to economic duress when the contracted manufacturer refuses to finish production of contracted parts until they are renewed for a second year and it is not feasible to find any replacement manufacturer given time constraints and specificity of the product. · Austin claimed that they would not accept an offer for less than all parts and they would cease to deliver items under current contract unless they were awarded the next contract. · Austin ended up ceasing delivering of the items and the defendant admits that after looking through the field and not being able to find someone else for the job, they gave in to the demands. · The relationship between Loral and the Navy is what made no other alternative reasonable and therefore duress the importance of that relationship is how Austin was able to put the pressure on Loral. · Because the relationship with the navy would be irreparable if they feel through the parts were needed immediately.

Swinton v. Whitinsville Savings Bank (Mass - 1942)

· Is a contract formed for a house infested with termites, that the selling party knew to be true, and the defendant having no way of knowing or observing these conditions upon inspection, voidable due to the sellers reluctance to disclose pertinent information being misrepresentation. · The court determines here that not revealing a termite infestation does not constitute misrepresentation as there was no false statement or representation, or of the uttering of a half trust which may be tantamount to a falsehood. No intimidation that the defendant by any means prevented the plaintiff from acquiring information. · Court here says that concealment is not misrepresentation and there is no duty to affirmatively reveal We don't want an unintended effect where sellers feel every random thing has to be disclosed at the time of sale in order for a contract to not be voidable. · Misrepresentation happens when there is a manifestation of intent to induce another to contract where there is (1) fraud; (misappropriation; and a justified reliance from one side that the other is telling the truth · We typically ask, what would the parties have thought when purchasing - termites are expectable and not very costly to check for. The ghosts and Roaches in the other two cases seems to be more out of pocket and things that would be expensive to find out and unreasonable to assume the seller would ask about it before buying. · There also appears to be a difference between not disclosing something and the actively creating the circumstances for the other party not to find out - like the turning on the lights so the roaches would hide before tours of house.

Rehm-Zeiher Co. v. F.G. Walker Co. (Kentucky - 1913)

· Is a contract, that requires a certain amount of whiskey to be bought at a specific price, but contains a clause allowing the buying party to change that amount for any "unforeseen" reason, cause the contract to lack the mutuality required to have a valid contract, since they can contractually decline to buy any bottles at any time they deem it necessary. o Any unforeseen reason is interesting in the contract because what do the parties get out of this provision: The buyer wanted a distinct out and this gave them that, but at what point does that out lose the consideration of the contract. o An easy way to fix this is to just add a "exclusivity clause". This would make "unforeseen" still advantageous to the buyer who can leave the deal if something happens, like an economic downturn, or their business doesn't take off right away. It also would give the seller the security that any "unforeseen" reason will not include something like finding a new seller. o Exclusivity is the difference between Lady-Duff and this contract · The courts main concern is that they see any "unforeseen" reason as the same as finding "any cheaper supplier" o If this were to be enforceable there would be no point in contracting as there's no point in a contract that is only good when the one party doesn't find a better offer. o Courts have ruled that the quantity under contract may not always be measured by any certain standard, as long as it is capable of an approximately accurate forecast. The capacity is within certain limits ascertainable by the vendor and the contract valid. o Therefore, a hotel can order to be supplied with ice for the entire season or a construction company can order all the iron needed for a specific build. · This case is different though because the company did not establish any ascertainable volume of trade of that would fix with any reasonable degree of certainty the quantity of whisky necessary to supply the demand for this brand (can't just guess). · Because the provision giving the company the right to take as much whisky as it desires and stop for any given unforeseen reason for not needing the original amount made the amount contracted for totally arbitrary and gave the company no obligation. Because in this case, they were not exclusive partners, RZ was not giving up anything in the contract and could go elsewhere for the whiskey at any point in time. Making no contract, as there was nothing binding them to their deal.

Eastern Air Lines v. Gulf Oil Corp (Florida - 1975)

· Is a jetliner that is in contract with a fuel company to exclusively purchase their gas at certain airports, interpreting the contract in a way contrary to good faith and fair dealing expectations when they partake in fuel freighting, a practice where they stock up on more fuel than necessary in cities that the price is cheaper and hold off in cities where it is more expensive, especially given the context of the oil crisis of the 1970s and government price control. · Eastern has not violated the contract. The potential for fuel freighting was expected and known and is therefore in the minds of Parties at T1 vs. they were looking for a number that represented the market and could not foresee everything going sideways. · Freighting opportunities are very low due to practical concerns with flights and when interpreting the contract to discern the true intent of the parties, the court deems in unreasonable not to enforce it. Seller could only refuse performance if the buyer suddenly demands entire inventory or demands delivery of an unreasonable amount. (requirements contracts need to be reasonable amounts according to UCC) · The parties are trading risk for stability here. They both know they have the potential to get screwed if the market goes the opposite way they think it will/ Both are therefore contracting for stability. Just because one side inherently gets a bad deal out of it does not mean we then think bad faith.

Dickinson v. Dodds (Queens Bench - 1876)

· Is a promise to hold an offer to contract open until 9am on Friday a contractual obligation that allows the other party to accept the contract no matter what until that time even if there was no consideration for that promise and the other party no longer wished to enter contract and mutual assent was lost. · This is an example of an option contract (or lack of one): You can have an offer held open but there must be some sort of consideration on both sides for it to be enforceable. Essentially like there are two separate contracts being considered. · It is clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind and that he had in fact agreed to sell the property to Allan. It is therefore impossible for there to be an existence of the same mind between the parties and therefore no acceptance of contract. · Once you know the other party lacks to willingness to contract you lose mutual assent and know that their offer has been revoked or terminated. · He revoked the offer, even though it wasn't communicated to the other part because by acting inconsistent with the original offer and the other party hearing about this, they know that the offeror now lacks mutual intent.

Consolidated Freightways Corp. of Delaware v. Williams (Georgia - 1976)

· Is a unilateral contract from and employee to an employer by sign posting that offers $5,000 dollars to any employee for providing information to their supervisor on individuals stealing valid when the employee itself was a supervisor, was not considering the reward when he acted, had a duty to report this information based on job description, and did so during workhours. · The main question is to whom was the offer made? To everyone, to lower-level employees, to supervisors? · The motion by the defendant claims that the reward was not offered to the plaintiff because they were a supervisor, as shown in the fact that the sign indicated that the acceptor should contact his supervisor. o Court disagrees and states that the instruction to contract your supervisor did not necessarily exclude supervisors as offerees; the evidence showed that many of the defendants' supervisors also hard supervisors over them. o The court says that it does not matter why an offeree accepts an offer to act. It does not need to be the sole motive or even the principal or prevailing motive. · The defendant also argues that there was no consideration considering that the employee in the supervisor role already had an obligation to report theft he witnessed given his position. The defendant is arguing you cant have something you are already paid to do be consideration, which would be true but the court disagrees that this was in his job description. o The court points out that his actions of having another take his routine duties while he hid in a trailer to catch the theft was above and beyond his required duty and he was acting of his own ideas

Stambovsky v. Ackley (New York - 1991)

· Is the nondisclosure of the paranormal nature of a house cause a contract to buy the house voidable because the seller has created the condition that was not disclosed through advertising and the buyer has no reasonable reason to do due diligence on this topic upon purchase. · The plaintiff who lives in New York City had no way of knowing the folklore behind the house. · Also the house is known to be haunted because of the defendants publicization of her close encounters. · Law should be modified to state that anytime a seller opens itself up to facts or knowledge not known to others, it was also share that information with a buyer · The court also notes that the long rule that the non-disclosure of information does not constitutes actionable misrepresentation finds proper application where the fact undisclosed is patent, the plaintiff has equal opportunities for obtaining the information or the defendant has no reason to think that he is acting under any misapprehension. o This case is none of those though and therefore, there is no sound policy reason to deny plaintiff relief for failing to discover a set of affairs which the most prudent purchaser would not be expected to even contemplate (like ghosts). · The court goes with a rule that where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care, non-disclosure constitutes a basis for rescission. Dissent: · Applies the rule of caveat emptor which requires that a buyer act prudently to assess the fitness and value of his purchase and operates to bar the purchaser who fails to exercise due care from seeking the equitable remedy of rescission.

Offer

· Mutual assent is sometimes indicated simultaneously, such as when two parties indicate their assent to the terms of a transaction by signing a detailed written agreement at the same moment. · Other times it is sequential though when an offer is put forward and then accepted by another - an offeror/offeree relationship. · So what is the legal definition of an offer - the restatement states it is "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" o So we ask whether a reasonable person in the position of the offeree would believe that the offeree's assent is all that is necessary to create a contact. o Could also be said to be a promise to provide a specific performance, conditional on the offeree assenting to the terms proposed. o Determining whether an offer has been made does not defend on the use of the word "offer" but depends on a global analysis, not only of the words stated or actions taken but also of the surrounding context, including the nature of the communication and any preexisting relationship between the parties.

Affirmative Defases

· One party can sometimes avoid enforcement of a contract by asserting an affirmative defense, · An affirmative defense contends that even if a party can establish the elements of a contract, the contract should not be enforce. · Two principles we are looking at: (1) Enforcement supports the voluntary choices of the parties to be bound to an agreement (2) Voluntary contract makes parties better off than they would otherwise and thus increasing social welfare · If a contract may not have been entered voluntarily or the transaction wont further social welfare, we may allow the contract to be unenforceable. · This includes; Infancy, incapacity, duress, misrepresentation, unconscionability, and public policy doctrine.

Statute of Frauds

· Oral contracts are generally enforceable unless they fall under the statute of frauds: five categories of contracts (remember this is already a contract, the question is, is it void or can we force enforcement) commonly subject to state statutes of frauds: (1) Contracts that call for an executor or administrator of an estate to answer for the debts of the decedent (2) Contracts that call for one person to answer for the duties of another (3) Contracts for which marriage provides consideration (4) Contracts for the sale of interests in land (5) Contracts not to be performed within one year of their making. (6) Sale of goods over $500 Merchant exemption we ask is the writing requirement satisfied as well. o For the writing to be satisfied it must be signed, specific and indicate the essential terms of the contract (see restatement §131 · These contracts technically need not be a written contract to be enforced but must at least have a written memorandum establishing the existence and essential terms of the contract and is signed by the party seeking to avoid the contract. · Remember these are contracts but the categories specify when we can allow a party to avoid performance.

Conditional Promises

· Promises exchanged for consideration can be described as conditional promises; the provision of the performance that serves as consideration is also the condition that must be satisfied. o That is like in Hamner v. Sidway: The nephew refraining from vices is the consideration of the party and the condition that must be met for the contract to be satisfied · The mere presence of a condition, however, does not prove the existence of consideration: That is, even where the promisor states a condition on her promise, the promisor might not be bargaining for the fulfilment of the condition · You have to consider whether the desire to have the promisee satisfy the condition in question induces the promisor to make the promise, and what additional information might cause you to change your mind.

Vokes v. Arthur Murray (Florida - 1968)

· Should a gullible, talentless hack, who spent 30k on dance lessons be able to recover damages when the other party partakes in "trade puffing" or the exaggeration of opinions with the intent to convince the buyer into purchasing more lessons because they are in a position of superior expertise, their opinions can be considered facts, and if the truth was told it is unlikely that more purchases would have been made. · Decision dismissing the plaintiff's claim should be reversed and the plaintiff deserves her day in court. · Court feels that the truth of the plaintiffs ability being fully known to the defendants, but withheld from the plaintiff for the sole and specific intent to deceive and defraud the plaintiff and to induce her in the purchasing of additional hours of dance lessons. · Defendants claim that the contract can only be rescinded for fraud when the alleged misrepresentation is a material fact rather than an opinion, predication or expectation, and that the statements and representations set forth at length in the complaint were in the category of legal "trade puffing" · While misrepresentation has to be of fact and not opinion there are several exceptions, one of them being where there has been some artifice or trick employed by the representor · Additionally, a statement of a party having superior knowledge may be regarded as a statement of fact although it would be an opinion if the parties were dealing on equal terms.

Precedent vs. Subsequent

· The distinction is one of timing in relation. A condition precedent must occur before the duty arises. A condition subsequent must occur after the duty arises or the duty will be extinguished. · Notification is a condition subsequent because the failure of the condition will extinguish a duty that has already arisen. Thus if the homeowner fails to notify, the insures duty to pay is terminated.

Consideration

· The existence of a promise is not sufficient for a contractual obligation and there must be the mutual assent to the exchange and a consideration. If either is lacking, there is no contract · As this suggests, not all promises are enforceable because consideration makes the distinction between promises that American contract law has deemed worthy of court protection and those that it has not. There are two forms a contact can take in the exchange of promises: (1) a bilateral contract where both parties promise to perform some action in the future or (2) a unilateral contract where only one party promises a future action. · Oliver Holmes makes the distinction of the exchange of consideration as the exchange of promises or performances between two parties (must induce the other party to act): o To constitute consideration the performance or promise must be bargained for, meaning a promise or performance is bargained for if it is sought by the promisor in exchange for his promise and is given by the promise in exchange for that promise. o This is different than a "gratuitous promise" or gift that lacks consideration and the distinction is the main battle ground for these questions.

External reservation:

· The original trial in Hawkins said that both the plaintiff and the defendant had to believe they were making a promise but that is not the case. So long as one party states the promise and the other party acts relying on that promise then it has been made, internal reservations to statement made externally does not matter.

Parol Evidence

· The parol evidence rule renders unenforceable agreements that were entered into prior to or simultaneously with the adoption of a written contract · Applies to oral evidence but also written evidence such as communication by letter between parties prior to the drafting and signing of a written contract. · Its primary purpose is to protect parties reasonable expectation that a final written agreement supersedes earlier agreements and preliminary discussion · It also is evidence of the parties intent, is less self-serving, and encourages the parties to enter written agreements as courts prefer this and parties now know this proof will be favored to oral proof.

Langer v. Superior Steel Corp (Supreme Court of Penn - 1932)

· This case asks if a pension letter that promises continuous payment for staying out of the workforce creates a gratuitous promise or an enforceable contract due to the opportunities given up by one side and the benefits to lack of competition on the other. · Was there the opportunity to bargain? The offer was made but he accepts the money through his actions, do you need promises on both side or some sort of affirmative statement? The answer is no, just 1 promise will do if the other remains silent but shows by their actions they agree, then we have a contract. Goes to the point made in Hamer that performance is all that is needed for mutual assent. · The court notes that there was sufficient consideration for a contract because the plaintiff was hindered from obtaining a new job and the defendant benefited from him not working elsewhere. Both gave something up and that promise induced the other party to act, therefore there was consideration o The defense tries to argue he would not have reentered the work force anyways. Back to the objective theory of contract. It doesn't matter if the action on one side would have been done regardless, and we have no idea if that was the reason he stayed out of the workforce but by his actions he did his part and both sides had consideration so there is a valid contract.

Empro Manufacturing v. Ball-CO Manufacturing (7th circuit - 1989)

· This case has to do with a letter of intent that was sent from Empro to Ball-Co with preliminary negotations for the title of the land that the Ball-Co plant was on. Both parties signed the letter and negotiated for several months. · It is important to note that the document was a "letter of intent" and that this was subject to the formation of a "definitive agreement" and "upon approval of the board of directors" at Empro. · Our new hard and fast rule for an Offer is: An outward manifestation of a private, subjective intent to be bound to hold up their end of the bargain. "On the Hook" for something if signed. o The offer is the Manifestation of the Parties intent. · Here we ask what is the evidence towards the parties intent: There was clear open and unresolved issues Why would someone put themselves at risk to sign an ambiguous contract. In the case of Walker Whiskey it made sense, it was a business opportunity with a startup company. Here the facts show the opposite. o The facts involving "subject to board approval" is important because it can be intended or interpreted in multiple ways: Is subject to board approval a boilerplate statement that Empro puts in all its letters or is it something that the entire contract would hinge on (an important question that a client would need to answer when determining the force of the letter they signed) · if the full agreement showed that the formal contract was to be nothing but a memorial of an agreement already reached, the letter of intent would be enforceable. · But in this case, Empro made clear that it was free to walk at anytime and the shareholders. Could decide not to approve the deal for any reason they wanted. · On the other side, Ball-Co assumed it could negotiate terms different from or in addition to the ones already stated as they returned revisions to Empro upon acceptance and asked for "clarification" on some points o Both sides clearly were not planning on just formalizing the original letter of intent into an official contract and plenty negotiations were still being made.

Embry v. Hargadine, McKittrick Dry Goods (Missouri - 1907):

· This case has to do with an employee who has been trying to negotiate a contract for months goes into the President of the companies officer and tell him he will not work unless he is offered a new contract. The President of the company responds "don't worry about it and get back to work". · The President took that as he was just telling the employee to go back to work because he was late for a meeting. But the Plaintiff believed that this entailed a new contract. · So the question is asked: Does a conversation that a reasonable man can infer implies a contract count as a contract when one of the parties subjectively did not intend their words to be interpreted that way despite saying "don't worry about it, get back to work". · The context here matters, the plaintiff repeatedly tried to contract with the employer and was continuously brushed off, the previous contract had expired, and this was his last effort before he walked - to which the defendant just shooed him away and tried to keep him working without committing to another contract. · The court rules that Regardless of the parties subjective or actual intent, if a reasonable man could infer form their conduct intent to enter into a binding and enforceable contract, that contract is presumed to exist. o The standard is how a reasonable person would interpret your words and acts to mean and not what is unexpressed o The court rules that if the plaintiff understood that he was employed based on the conversation, it constitutes a valid contract and the formation of a contract does not depend on a finding that both parties intended to make one, it is only necessary that the plaintiff, as a reasonable man, had a right to and did so understand.

Wood v. Lucy, Lady Duff-Gordon (New York - 1917)

· This case involves a contract between a fashion designed and a man wanting exclusive rights to sell her work. The deal included him being employed by her to have the exclusive right, subjected to her approval, to put her indorsements on the designs of others. He also had the exclusive right to place her own designs on sale, to license others to market them. o In return she was to have one-half of "all profits and revenues" derived from any contracts he might make. · He claims that the fashion designer broke her part of the contract when he placed her indorsement on dresses without his knowledge and withheld the profits. · The fashion designed claims that the agreement lacks the elements of a contract as the plaintiff had not promised in words to use a reasonable effort to uphold his obligation. o The court feels that this is fairly implied though and a promise may be lacking, and yet the whole writing may be instinct with an obligation, even if it is imperfectly expressed. · This case centers around the exclusivity of their deal. It leads to context that makes requirements not expressly stated in the contract essentially there. · Because the deal between the two parties is exclusive rights to sell and both parties do not appreciate a benefit on their own (splitting profit 50/50) logic and industry standards suggest that the defendant had an obligation and she had a reasonable expectation that effort would be put in to sell her clothing or else it would not make sense for them to have entered an agreement in the first place.

Harrington v. Taylor:

· This case is about the couple who had domestic violence disputes and eventually the wife tried to kill the husband with an ax - the plaintiff stepped in and caught the ax, severely injuring herself. The husband whose life she saved offered to pay her for the act but never did. · So the question is whether performing an act that the other party later promises compensation for is enough consideration to make a binding contract between the parties. · Even though the defendant should be compelled by common gratitude to alleviate the plaintiffs misfortune, a voluntary act performed does not entitle someone to recover later for the result they created. The issue here is if an act is already completed there is no opportunity for bargaining and therefore it can not be the object of proper consideration.

Lucy v. Zehmer (Virginia - 1954)

· This case shows two men who were in a bar and negotiate the selling of a farm. Both were drinking and the one party claims that they were purely joking. Does this contract remain enforceable later when the defendant claims they never intended to seriously enter a contract. · Details matter: The contract was written on a napkin, told his wife it was a joke, rewrote it when a correction was needed, had wife sign, he signed, previous decisions and negotiations were had - these types of things go to the reasonable belief standard. · Evidence like the discussion of what was to be included in the sale, the provision to examine the title, the completeness of the contract, and Lucy taking possession of it without either of the other party requesting it back suggest that this was a serious contract. · Even if the Zehmer's were jesting about the contract, evidence shows that Lucy did not so understand it but considered it to be a serious business transaction and the contract to be binding on the Zehmers as well as on himself. Not only did he believe but the evidence shows that he was warranted in believing that the contract represented a serious business transaction and a good faith sale and purchase of the farm. · In the field of contracts we must look to the outward expression of a person as manifesting his intention rather than to his secret and unexpressed intention. o At no time prior to the execution of the contract had Zehmer indicated to Lucy by word or act that he was not in earnest about selling the farm.

Unconscionability:

· Typically, contracts are consistent with the principle of both autonomy and efficiency. The presence of infancy, incapacity, duress, or misrepresentation raises questions as to whether enforcement would serve either of these core principles. · The unconscionability doctrine reflects a somewhat uneasy suspicion that some contracts might fail to reflect true party autonomy or fail to make both parties better off. Looking for mutual wealth enhancement. · We look at the disparity in bargaining power and taking advantage of the weaker party in the contract (are you treating customers differently) · Most courts require evidence of one or more procedural defects in the bargaining process and substantive unfairness in the resulting agreement o Procedural defects in the bargaining process The fine print, hidden price, limited education. High pressure, income, kinds, racist credit system. o Substantive unfairness in the agreement (what is the result of the agreement that is unfair) Paying off almost everything and getting every item taken back anyways

Misrepresentation:

· Unlike duress where coercion is at play, the complaining party lacks the information at the time of contracting that if known, would have caused that party to withhold consent. · It is a violation of accepted social norms of fair dealing and likely violates Pareto efficiency (meaning at least one party is made better off and neither party is made worse off). · Restatement: Allows a party to avoid enforcement if his assent was induced by (a) an assertion not in accordance with the facts, that was (b) material or fraudulent, and upon which (c) he was justified in relying.

Battle of the forms:

· What happens when both contracting parties attempt to impose standard form contracts and the terms embodied in the two forms are inconsistent? · The common law would suggest that the second form is not an acceptance but rather a counteroffer on the new terms. · If a buyer does not read the form but merely notes that the sellers form agrees on key terms and does not note minor changes then technically the buyer might not respond to what is essentially a counter-offer. Therefore, no response means no contract has been formed and the seller is free to walk away whenever it is convenient. · UCC has a different approach: Two types of communications - a definite and seasonable expression of acceptance and written confirmation.

Leonard Pevar v. Evans Products (Delaware - 1981) (UCC)

· When a company has several phone calls inquiring about the purchase of lumber, which includes a price quotation and entering an oral agreement and written purchase order that specified price, quantity, and shipping instructions, does Evans acknowledgement with boilerplate terms and conditions on the backside of the document constitute a counter-offer for acceptance or terms that are only added to the previous oral contract if it does not materially alter the previous agreement · In this case there is a phone call, then a PO sent to defendant, an acknowledgement sent back with additional provisions, and then the plaintiff accepting goods Ways of formation under (1): (a) Agree orally and send confirmatory memo (b) Without oral agreement, exchange writings that don't match but constitute seasonable acceptance A response that does not substantially change offer. (c) Conduct (1) Formation Definite and seasonable expression of acceptance (DEA) or a written confirmation which is sent within reasonable time operates as acceptance unless expressly made conditional on asset to new terms. (2) Terms If not merchant, new terms are just proposals to be agreed upon expressly. If merchant it is in unless it expressly limits offer to acceptance of new terms, the new terms materially alter the agreement, or the other party has been notified of the objection to the original contract before or within a reasonable time after acknowledgement is sent. (3) Conduct by both parties despite writings The conduct by both parties which recognizes the existence of a contract can establish a contract - in this case the terms both parties agreed upon are the contract and we go to "gap-filler" UCC default standard for other provisions.

Weintraub v. Krobatsch (New Jersey - 1974)

· When a house is sold to a buyer, does the seller have a moral obligation to disclose all information important to a purchase, causing the nondisclosure of a roach infestation of such magnitude that no diligent owner could have been unaware, a voidable sale due to misrepresentation · Essentially overturns Swinton and states that a seller has a moral obligation to disclose any information good or bad that is important to the purchase. · The buyer claims that the house was so infested that there was no way not to know of the roaches being there. · The buyers assert that because of their entitlement to rescind they were under no liability to the seller. · In Keen v. James the court said that "silence may be fraudulent" and that relief may be granted to one contractual party where the other suppresses facts which he under the circumstances, is bound in conscience and duty to disclose to the other part and in respect to which he cannot innocently be silent · The disregard or nondisclosure must not be something minor that ordinary buyer and sellers would disregard. · Here the court determines that the incident here was of such magnitude and was so repulsive as to cause them to rescind immediately and through they had earlier indicated readiness that there be adjustment at closing for damage resulting from a fire which occurred after the contract was signed.

Masterson v. Sine (California - 1968)

· When a party grants land to relatives and stipulates the time table, sum to be paid, and how to handle any appreciation in value if the grantor wants to buy back the land, but does not stipulate a no-transferability clause to keep the land within the family, is the evidence admissible under the parol rule as an agreement that would naturally be made separate to the written contract. · Because this is a partially integrated document they are allowed to bring in other parts of the agreement if it is determined that is a natural provision of the contract that would have been handled separately. · The written contract does not say anything about assignability and this contract is partially integrated, allowing us to consider parol evidence o The court here deviates from Gianni which only used the four corners rule to determine integration - here they use outside evidence to do so. · The court here determines that evidence of oral collateral agreements should be excluded only when the fact finder is likely to be misled: Restatement says proof of a collateral agreement is permitted when "it is such an agreement as might naturally be made as a separate agreement by parties situated as were the parties to the written contract. · If something would of naturally been included in a contract and then we hear about it elsewhere we think it reinforces the full integration of the contract (if it was considered and purposely left out then we assume that was intentional) o In this case since the assignability is not likely to be naturally included and heard about elsewhere, then partially integrated determining that extrinsic evidence is admissible, the court then switches to see if they can apply parol evidence

Davis v. G.N. Mortgage Corp. (U.S. Court Appeals - 7th Circuit -2005)

· When a party signs two large stacks of forms; 1 for them and 1 for the insurance company where two prepayment penalty notes are included (1 for the duration of 2 years and 1 for 5 years) can the party the provision is imposed on use parol evidence to show the other party acted fraudulently and only enforce the 2 year provision instead of the 5 year provision even though the 5 year provision was clearly stated and they had ample time to read all the forms they were to sign. · Illinois adheres to a "four corners rule" of contract interpretation, which provides that an agreement when reduced to writing, must be presumed to speak the intention of the parties who signed it. It speaks for itself, and the intention with which it was executed must be determined from the language used and is not to be changed. · If the contract imports on its face to be a complete expression of the whole agreement, it is presumed that the parties introduced into it every material item, and parol evidence cannot be admitted to add another item to the agreement. · The court determines that parol evidence to assist us in determining the true intent of the parties when a common law fraud has been alleged can be used. o However, a party is not justified when he has ample opportunity to ascertain the truther of the representations before he acts

Gianni v. Russell (Supreme Court of Penn - 1924)

· When a store owner claims there was an oral agreement to not sell tobacco in exchange for being the only store in the unit that sold soft drinks, but the written contract only stipulates the tobacco part of the oral provision, is the information admissible under the parole rule. Not necessarily an admissibility issue but an enforceability issue - one party has a clause not in the written agreement they want to have enforced, parol evidence just happens to be their proof. · Plaintiff claims his agreement not to sell tobacco was part of the consideration for the exclusivity on soft drinks - since the promise to refrain from tobacco was in writing it would be natural to have included the promise of exclusive rights and it doesn't appear there could be a more import provision here. - using 4 corners rule to interpreting contracts. · When the controversy is over a subject handled orally that has a section in the written contact, it is presumed that the writing was intended to set forth all that was needed on the given subject.

Why we have Contracts

· When an agreement is made it is hard for both parties to act at the same time, therefore, the parties must to some extent trust each other - at least one party must trust the other to fulfill one or more promises. · Whether this is due to incentive or an on-going relationship, trust has to come from somewhere. · Contract law assures performance and thus promotes exchange through promoting the trust needed that both parties will hold up their end of the deal, plus the main reason that contract law succeeds is that the government stands ready to enforce contracts, using force if necessary.

Public Policy:

· When something contradicts state statues or is analogous to common law - a court will not enforce any contract that does this. · When the legislature has either clearly prohibited a type of conduct altogether or prohibited the exchange of consideration for that conduct. (Example is contracts for murder or for prostitution) · When cases don't squarely fit in this analysis we analogize the conduct to a category of prohibited conduct. o We look to see if there are paternalistic motives or negative externalities that arise from the conduct for why it would be banned by the legislature.

Nelson v. Elway (Colorado - 1995)

· When two parties agree verbally to a service agreement on their first contract to buy a dealership, but then do not include those terms in the subsequent buy-sell agreement to purchase a second dealership but that agreement has a merger clause stating "This agreement constitutes the entire Agreement between the parties... and supersedes all prior agreements, representations and understanding of the parties." Can the intent of the verbal agreement be considered when looking at whether the written document intended to allow this service agreement to be enforced. · The court agrees with the court of appeals that the merger clauses preclude consideration of extrinsic evidence to ascertain the intent of the parties. Integration clauses generally allow contracting parties to limit future contract. o Since this was meant to represent a final and complete integration of the agreement, evidence of the existence of prior agreements is inadmissible. o Even when admissible to ascertain the intent of the parties, evidence may not be used to demonstrate an intent that contradicts or adds to the intent expressed in writing. o Specifically in this case, the agreement went through multiple rounds of review and both parties were represented by counsel - making the complex transaction detailed in the written document better than the court rewriting it.

Standard form contract

One party drafts a set of terms then uses it as the basis for multiple agreements involving the same or similar subject matter (how much bargaining is there really when the contract is structured this way?) · Ranging from minor transactions, such as updating software, to significant ones, like renting an apartment · Usually a "contract of adhesion" meaning that the drafting party offers the terms as a single, nonnegotiable, take-it-or-leave-it proposition. · Another form is merchants who create standard form contracts to simplify deals, reduce transaction costs, and control their agents. · The major problem is very few non-drafting parties read their terms carefully - a non-drafting party may challenge then enforceability of particular terms on the grounds that the non-drafting party lacked notice of those terms, that she had no meaningful choice but to accept those terms, or that the terms were substantially unfair. · Courts typically have a "duty to read." - if enforceability depended on whether a non-drafting party actually read a particular term, there would be a powerful incentive for willful ignorance.

King v. Lewis:

Two principles: (1) Threats of physical violence make contract void; (2) Threatened civil suit will make a contract voidable if there is no bona fide claim to make (purely an exercise of power over the other) · Is a threat to bring action against another party criminally for slander, that also happens to be based in fact because the one party stated that the sheriff broke his oath and stole money, warrant enough stress to induce the other party into contracting under duress and fear of prosecution making the contract voidable. · Threats of bodily harm, sufficient to overcome the mind and will of a person of ordinary firmness and made for the purpose of coercing and which do actually coerce another into executing a promissory note, constitute duress and render such transaction voidable · In this case though the threat was not duress because the contract came from a substantial claim that was not baseless and the fear and anxiety came from "a creation of the mind" · It is the general rule that where parties enter into an agreement compromising and settling a claim about which there is a bona fide dispute, they are bound by such agreement even though it thereafter appears that the contentions of one of them were without foundation in law. · Threat of lawsuit will not be duress if made in good faith meaning the merit has the ability to succeed. The court says that the slander lawsuit had the ability to succeed and therefore is a viable thing to create a contract around.

What we are looking to accomplish through Misrepresentation doctrine

We look at the formation of the contract as T1: We are aiming to avoid post contractual hold up like in duress and we ask what the most efficient action is given the contract signed at that time. Misrepresentation is just one of many ways we try to avoid inefficient contracts.

The doctrine of substantial performance

substantial but incomplete performance (insubstantial breach) satisfies the constructive condition, although the injured party may be entitled to damages for harm caused by the breach

Jacob & Youngs v. Kent (New York - 1921)

· In a contract for the building of a new home that specifies a particular manufacturer of pipe be used, does the builder substantially perform when he completes the building of the home but uses a different manufacturer of the pipe when the difference in quality of pipes is minimal? · The order of the appellate court affirmed and the contractor should be able to recover the rest of the money without having to refix the pipes. · Looking at parties intent why does the one side not get what they bargained for They clearly wanted this and now the judge takes it away and suing for damages would be worth almost nothing. · Court says it was not material and therefore they still have to perform their duty and pay.

Divisibility/Servablity:

· The court looks at the consequences that can stem from the failure of a condition and when courts will consider the condition excused with the consequence that duties depended on the condition are due. · These cases look at when courts will consider a contract divisible such that satisfaction of certain conditions will trigger associated duties of the non-breaching party.

OW Grun Roofing and Construction v. Cope (Texas - 1975)

· In a contract for roof installation, where the homeowner includes a provision that the roof should be uniform in color, has the installer substantially performed by installing a roof that is not uniform in color such that his breach of the contract was immaterial when it would require the owner to completely redo the roof in order to get the performance they originally sought? · The most important factor to consider is the extent of the nonperformance The deficiency will not be tolerated if it is so pervasive as to frustrate the purpose of the contract in any real or substantial sense. The Doctrine of substantial performance does not give free reign to a contractor to install whatever is "just as good" in his judgement. · The court feels the plaintiff bargained for a roof of uniform color and the only way for the plaintiff to get that now is through installing a completely new roof.

West Coast Airlines v. Miners Aircraft (Washington - 1965)

· In a contract for sale of sealed cans, when the buyer inadvertently takes two engines that were unknown by both parties to be in the cans, have the engines actually been sold and are the titles to the engines to be passed from the seller to the buyer? · This case focuses less on mistake and more on if there was mutual assent and a meeting of the minds. · Money, terms, neither party knowing, holding onto FAA paperwork All interpretations for why they did not know they were selling the paperwork · There was no meeting of the minds as the parties did not know the Engines were in the cans and therefore no contract for the mistaken sale.

Impracticability:

· Impracticability is invoked when facts that were unanticipated at the time of contracting prove to be detrimental to one party's interest. · The primary difference between the mistake and impracticability doctrines is temporal: mistake doctrines concern facts that were in existence at the time of contracting but were unknow; impracticability arises from an unexpected change in circumstances and renders performance impossible or far more difficult. · When looking at impracticability it can be helpful to look at condition precedent (DUTY if something happens) and condition subsequent (Duty unless something happens) When thinking of impracticability it is a lot of subsequent.

Main Electric LTD v. Printz Services (Colorado - 1999)

· In a contract between a contractor and a subcontractor, does a payment clause that says the contractor will pay the subcontractor provided it has been paid by the owner make payment to the subcontractor conditional on the owner's payment to the contractor or is the contractor unconditionally required to pay? · Applying the rule interpreting a clause as a promise rather than a condition if there is any doubt of the parties' intention the court concluded a promise to pay remains unconditional although it may be delayed by the owners failure to pay the general contracts. · If a payment provision such as the one here creates a condition precedent then the subcontract will forfeit payment for work performed due to the occurrence of a condition completely outside their control (Owner insolvency) · Typically, a subcontractor looks to the general contractor for payment and not the owner and would not factor the risk of owner payment in to their dealing. · If the risk of the owners nonpayment is to be shifted to the subcontractor than that shift should be clearly stated in the agreement

Goodisson v. Nunn (Kings Bench - 1792)

· In a contract for the sale of an estate that stipulates that the buyer must pay the seller if they do not buy the estate and seller must pay buyer if they do not provide house, is the buyer required to pay the seller for not paying by a certain date if it is the sellers fault for the sale falling through due to the conditions being dependent on one another? · Where they are dependent covenants, no action will lie by one party unless he have performed or offered to perform his covenant. · It would be absurd to punish buyer for not performing when their performance was reliant on the other party also performing their side of the contract.

Maxton v. Lo Galbo (New York - 1986)

· In an agreement for the sale of a home that includes a cancellation provision that says that the buyer can cancel the sale if the tax is over 10 percent the agreed upon price if written notice is provided within three days, does the buyer breach the contract if they give oral notice and mail the written notice within the three-day period but the seller does not receive notice within the three days? · The defendants argue that the contract does not provide that time is of the essence and all that is required is reasonable notice and since they mailed the notice and gave oral notice within the three day period, they had done so despite the letter not arriving within the 3 day window. · Court says that when a contract requires that written notice be given within a specified time, the notice is ineffective unless the writing is actually received within the time prescribed

Sahadi v. Continental (Court of Appeals - 1983)

· In an agreement where a bank can demand payment from loaner in the event that their payment is not received prior to or on a set date but there is no language stating that time is of the essence, and loaner was allowed to arbitrarily set the date and are not harmed by the delay as the loaner has already tendered the funds, has the loaner materially breached the agreement by delaying payment? · The determination of materiality is a complicated question which looks at whether the breach worked to defeat the bargained-for objective of the parties or caused disproportionate prejudice to the no-breaching party, whether custom and usage considers such a breach to be material, and whether the allowance of reciprocal non-performance by the non-breaching party will result in his accrual of an unreasonable or unfair advantage. · The breaching party claims that time was not of the essence in the contract and this is evident as the bank allowed Sahadi to unilaterally pick the payment date, the date was not contended in negotiations, and the Bank suffered little prejudice by the delay. · Additionally, GLE had already tendered funds to repay interest, the Bank had previously accepted late payments, and calling in a loan a day after deadline was not industry norm.

Gill v. Johnstown Lumber Co. (Pennsylvania - 1892):

· Is a contract several when the parties agree to pay a different rate per 1000 ft of logs based on the type of log and the port the material was delivered to where that the party delivering the logs can require partial payment when some of the material was delivered to the correct location and other material was not due to unforeseen natural circumstances. · Incentives for parties: On one side it is unfair to not get what was needed; the otherside it is unfair to do most of the work and still get nothing. · Therefore, under severability we break apart the contract to what you did perform and what you did not before and require the duty to pay only for the performance. · When a contract by its nature is divisible, meaning the work undertaken to be done by the plaintiff consisted of several items (in this case different types of lumber) the entire sum does not need to be paid but an apportioned amount for the part of the contract completed. · The payment agreed to by Gill and JLC was a per-unit price depending on the type of log, and in the case of the cross-ties, the port to which they should be delivered. · Consequently, the nature of the contract is divisible and Gill is entitled to payment for the logs that were delivered.

Mistake

· Three criteria: (1) Both parties must be mistaken at the time of contracting as to a basic assumption of the contract (2) The mistake must have a material effect on the bargain (3) The party who is adversely affected by the mistake must not bear the risk of that mistake The party claiming mistake cannot be the party that also bears the risk of the mistake. · A mistake is a belief that is not in accord with the facts, whereas a misrepresentation is an assertion not in accord with the facts. At T1 both parties believe in the facts and that is why this is not misrepresentation.

Kingston v. Preston (Kings Bench - 1781)

· We have to determine if the uncle not providing business is a breach or if there is a condition that distinguishes duty. · There is a duty of owner to give business and duty of apprentice to give security · In an agreement for where one party agrees to transfer his deeds of business to another in return for one year of service and the provision of sufficient security of payment, is security of payment a condition precedent to the deeds being transferred or are the two mutual and independent? · When one party's performance under a contract is dependent on the prior performance of the other party, the other party's performance is a condition precedent - therefore, not being able to secure payment despite working the year and the half still means the defendant does not have to perform · Two types of contracts: (1) Conditional and dependent covenants, in contrast, condition the performance of one party on the prior performance of the other. Thus, a party's performance will be excused if the other party fails to perform the prior condition. (2) Mutual conditions have to be performed concurrently. If both parties are obligated to perform at the same time, a party who is ready, willing, and able to perform may be able to sue if the other party refuses. It is unclear whether the willing party must first perform · Here Kinston was to perform first by providing security and it would not make sense to require Preston to act independently and transfer business before receiving such security.

Irving v. Town of Clinton (Maine - 1998)

· When a contract for the removal of snow in return for payment in the amount of $107,000, but it is conditional on voter approval, are the parties discharged from their duties under this contract when the voters do not approve it as written but instead amend it for a lower payment amount? · An express condition precedent to the contract did not occur. · The town never breached because the contract condition to pay was reliant on town approval and did not have to be performed beforehand or if approval was not received. · Uncertainty of a condition does not make something not a contract.

Lowy v. United Pacific Insurance (California - 1967)

· When a contract has two distinct parts, excavation and then grading and cleaning, payment for each part is separate, and the terms specified the two "exhibits" of the contract, can a party recover for partial performance when they nearly complete all of exhibit A and then the other party terminates the contract over a dispute and hires another party to complete Exhibit B. · It is clear by this that the parties were treating the contract as divisible. · Therefore, the fact the defendant did not perform the second phase of the contract does not prevent his recovering from work done under the first phase. So there are two questions asked: Can the contract be split? If yes, did substantial performance of the first half occur?

Britton v. Turner (New Hampshire - 1834):

· When a contract is for a specific time and labor was performed for only part of that time, is the party that performed owed a prorated payment for the time worked since the other party is not harmed by the work done for him but the terms of the contract were technically never completed. · After nine and a half months, Britton stopped working for Turner, without Turner's consent. Upon Turner's refusal to pay for the work completed, Britton sued Turner alleging, among other things, a claim for quantum meruit. ("What one has earned" - A reasonable sum of money to be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract) · At trial, Turner proved that Britton had agreed to work for one year and voluntarily failed to do so, but Turner presented no evidence of damages he incurred as a result of Britton's breach. · The contract here was not substantially performed and not severable The contract was not month to moth but for a year. · The court here determined that even though it is not within the contract, something of value was given and since it cannot be recovered the party is due some sort of payment.

Wood v. Boyton (Wisconsin - 1885)

· When a jeweler buys an uncut gem valued at $700.00 for 1 dollar from a seller, and both parties were unaware of the value of the stone or even what type of stone it was, does the lack of fraud or mistake regarding the terms of the deal, prohibit the seller to rescind their sale. · The party may only rescind the contract if she can prove either fraud, unfairness, or mistake. The plaintiff is wholly unable to do that here. · Did she bear the risk: She proceeded with the sale unsure of what exactly she was selling (It was a known unknown) · If the seller decides to sell their item without further investigation as to its value to a person who is not guilty of fraud or unfairness which induced the sale, she cannot repudiate the sale because she learns of its value and her bad deal after the fact. · In the absence of fraud or warranty there is no ground for rescission of the sale.

Beachcomber Coins v. Boskett (New Jersey - 1979)

· When a seller had purchased a coin for $450 dollars under the pretense that the logo on the coin meant it was Denver minted and then resells it for $500 to a buyer who then resells it for $700 dollars on the condition that the coins authenticity is verified and the ANS determines it is a counterfeit, is the contract of the original buyer and seller voidable for both parties contracting under a mistake. · Where parties enter a contract and are under a mistake regarding a fact that forms the basis for the transaction, the contract voidable by either party if enforcement of the contract would be materially more difficult than it would have been had the fact been as the parties believed it to be.

Taylor v. Caldwell: (Queen's Bench - 1863)

· When parties agree to a contract to rent out a music hall for 4 days, but by the time performance is required, it is no longer possible due to the unforeseeable event of the hall burning down by the fault of neither party, is the contract voidable due to impracticability of a necessary condition to perform. · Impracticability is not about performing but about conditions. Thing could still happen but we excuse parties due to things they cannot foresee (Here the absence of the hall) · The Music Hall having ceased to exist, without fault of either party, excuses both parties, the plaintiffs from taking the gardens and paying the money and the defendants from performing their promise to give the use of the Hall and Gardens and other things. · We are looking at if the party should bear the risk of the condition being there for completion of performance. Was it foreseeable? Was there Fault? (We do not punish people for "acts of God" Fault implies control and we look at who has control of the conditions and who is the least cost avoider) · The entirety of the contract between Taylor and Caldwell suggests that it is based upon an implied condition that the hall continues to exist at the time of performance of the contracts. · Thus, the destruction of the hall through no fault of the parties renders performance of the contract impossible, and excuses performance for both Taylor and Caldwell.

Incorporation of conditions to allocate risk

· When parties allocate risk of an uncertain event, The non-occurrence of the event will typically impose no hardship on the parties. o Example is when you insure your house from fire. Either there is no fire, or the insurance company pays for new house if fire occurs. Either way the party buying insurance is as good off as they were when they entered the deal. · Sometime however, the failure of a relative minor condition, often promissory, may threaten to impose a significant hardship on the party expecting a subsequent performance. o Example would be paying for insurance by deadline or else insurance is revoked and you would have to go elsewhere. The failure of meeting the condition of paying the monthly premium on time has an impact on the party.

perfect tender rule

· from the UCC that grants the buyer the right to reject goods that do not conform to exact contractual requirements. · If a buyer does not reject imperfect goods within a reasonable time after delivery, the buyer must pay for the goods but can sue for damages due to any breach.

material breach doctrine

· one party's breach of a promissory condition constitutes a failure of that condition only if the breach is material. If the breach is not material the non-breaching party retains the right to sue for any damages but must nonetheless perform its subsequent duties.