CONTRACTS FINAL

(contract formation, consideration) adequacy of consideration, not consideration (6), option contracts and consideration, consideration under the Rest.

-DONT LOOK AT VALUE of what the parties are exchanging -must be clear what you are getting/loosing (ex: promise for being a good boy is too vague, not clear what you're giving up or other party is getting) - promise to give some amount later in exchange for some small amount now may pass consideration test if there was inducement of the promise by the amount received now (ex: agreed to loan $25 worth of greek currency in exchange for $2k later bc crisis in Greece and needed money immediately -- here, there was bargained-for-exchange > consideration NOT CONSIDERATION: (1) PAST ACTIONS -ex: K agreed to lend F his car bc they are good friends; F is so grateful he says in consideration for lending the car he will give K a vase then F changes his mind > F has no contractual obligation to give vase to K - exception: may serve as consideration for moral obligation (ex: if a hero saves a life but is injured as a result, if the person he saved promises to pay money in exchange for gratitude courts might enforce) (2) CONDITIONAL GIFT -look at how much the condition benefits the promisor - mutuality of obligation test: some courts use this, usually articulate as "both parties must be bound or neither is" (3) ILLUSORY PROMISE - a promise is illusory if it makes performance entirely optional w the promisor so no true commitment from promisor and thus not consideration (ex: "I will give you my dog tomorrow and you can pay me $400 if you feel like it? "I agree"; ex: A promise to buy 100 flowers from B and B promises to sell them to A unless B changes his mind) - even though illusory > may be unilateral contract if the promisor who made the illusory promise fulfills the action (ex: promise to stay at company illusory bc at-will employee but actually does stay and company benefits as a result > still a contract - NOT a requirement contract (ex: "we will buy at $1 each as many as we choose = illusory; ex: "we will buy at $1 each as many as we require" = requiring contact, not agreeing to a number > this is a non-illusory promise, just dont specify an amount) - NOT a discretionary promise: a discretionary promise is one that has a condition that needs to be met in addition to acceptance for the contract to be formed; need a good faith effort to meet the condition to avoid breach; ex: A promises to sell land to B in exchange for b's promise to buy the land if B is able to acquire satisfactory leases; if sale goes thru depend son if he can meet condition) (4) NOMINAL/SHAM CONSIDERATION: doesnt look at value unless consideration by one party is a sham (like $1) to establish a pretense of consideration (ex: aunt promises money to boy once he turns 18 "for value received" but aunt doesn't actually get anything as a benefit just recites "for value received" > no consideration (5) GROSS INADEQUACY: signaling issues of fraud, mistake, duress, ect. (6) PRE-EXISTING DUTY RULE - a promise to perform something you already had to do cannot serve as consideration - party who agrees to do what the party was legally ovulated to do has given no consideration (ex: agent for an actor in a there year contract can re-negotiate the deal for more money so long as there is more consideration such as extending to four years) - common problem in attempts to receive agreement - modifications require new consideration; exception: no consideration for modification for a contract for a sale of goods (UCC)) OPTION CONTRACTS AND CONSIDERATION: -nominal consideration is chill for consideration and offers are not freely revocable -Rest. says option contracts may exist where there is no consideration but if it is reasonable and bargained for -exception to mailbox rule: acceptance effective on receipt - exception that there must be a new agreement or expiration to terminate power of acceptance CONSIDERATION UNDER REST. - does not require benefit or detriment as long as promise is bargained for (induced), strongly asserts absence of any mutuality of obligation test for contract enforcement

(formation of a contract; offer) limitation to being able to retract an offer #3 DETRIMENTAL RELIANCE

(3) DETRIMENTAL RELIANCE: where the offeror could reasonably expect that the offeree would rely to her detriment on the offer and the offeree does so rely, offer will be held irrevocable as an option contract for a reasonable length of time ex: general contractor solicited bids from various subcontractors before making its own irrevocable offer on a construction project; for the subcontractor to be held to its offer the subcontractor must reasonably have foreseen the possible use of its subcontractor bid in the making of the general contractor's irrevocable offer

(formation of a contract; offer) limitation to being able to retract an offer #2 MERCHANTS FIRM OFFFER (UCC)

(2) MERCHANTS FIRM OFFER (UCC): requirements = (i.) offer to buy or sells goods, (ii.) by a merchant in the business of selling goods involved in the transaction, (iii.) in a signed writing (loose requirement, doesn't have to be a signature, a letterhead is sufficient) > [ (a) gives assurance to offeree that it will be held open and (b) if assurance is contained on a form supplies by the offeree, offer must sign the assurance separately but no requirement if the assurance is in a doc from the offeror) EFFECT: offeror can't revoke (even without consideration) for the time stated (w/cutoff of 3 months) or if no time is stated for a reasonable time up to 3 months NOTE: the passage of 3 months does not by itself revoke the offer, rather it makes the offer revocable; the officer, like any other offer, would live on until it expired for some other reason such as rejection, passage of time, or death or incapacity of the offeror or offeree

(statute of frauds defense) EXCEPTIONS to the statute of frauds

(1) FULL PERFORMANCE EXCEPTION: when one party to a contract has complete his performance, the one-year provision of the statute does not prevent enforcement of the promises of other parties - ex: on 2/1, A agrees to lend $1k to B to be repaid over the next 5 years; A gives $1k to B on 2/15; falls within SoF bc cannot be completed within a year, but once A gives the $1k to B, no longer has to meet the SoF requirements bc full performance by A - ex: A promises to pay B $5k in 2 years for B's promise to render a stated performance for 5 years; A pays the $5k and B then refused to perform; once A pays the $5k the SoF no longer applies bc thats full performance by A - ex: A sells and delivers goods to B in return for B's promise to pay $1k in six months, $1k in a year, and $1k in 18 months; before delivery, w/in the SoF, but after A has delivered there is full performance by A so exception (2) PART PERFORMANCE/RELIANCE EXCEPTION: when transaction involves interest in land, a contract may be specially enforced even when it does not comply w the SoF if the party seeking enforcement has reasonably relied on the contract and on the continuing assent of the party against whom enforcement is sought such that he has changed his position and injustice can be avoided only by specific enforcement - even if there are other reasonable reasons to explain at the buyer's actions, if a reasonable person looking at the buyer's actions would believe a contract existed, that is enough to meet this exception -- do NOT need buyer's acts to be "unequivocally referable" - 2 IMPORTANT FACTORS (1) taking possession of the property And (2) making valuable, permanent, and substantial improvements to the property - remedy here will be grant of specific performance -ex: if the buyer build a home and made improvement w the seller's knowledge after an oral promise by the seller that he would sell the buyer the land (3) PROMISSORY ESTOPPEL EXCEPTION: a promise which the promisor should reasonably expect to induce action or forbearance on the party of the promisee and which does induce the action is enforceable notwithstanding the SoF if injustice can be avoided only by enforcement of the promise - the remedy granted for breach is limited as justice requires (but court has discretion over what remedy to grant) - FACTORS TO CONSIDER: the availability and adequacy of other remedies, the definite and substantial character of the action or forbearance in relation to the remedy sought, the extent to which the terms and making of the promise are established by clear and convincing evidence, the reasonableness of the actions or forbearance, and the extent to which action was foreseeable by the promisor - ex: Alaska Democrat Party v. Rice >she accepted a job and quit her old one, sold her home, and moved to Alaska in reliance on a 2 year employment contract by a party leader (so falls within SoF bc cant be completed within a year); SoF wouldn't apply bc of promissory estoppel

(assessing performance and breach; breach of a contract) types of breaches

(1) PARTIAL BREACH: breach that is not significant > effect of not discharging dues, non-breaching party has to perform - Ex: using Cohoe wrought iron pipe instead of Reading) -Minor deviations (partial breach) don't amount to a failure of a condition to the other party's duty to perform (they just give rise to damages) (2) MATERIAL BREACH: failure to perform a significant performance obligation > effect of suspending duties; no duty of non-breaching party to perform unless the breach is "cured" - A party who material breaches but substantially performs its obligation may recover expectation damages minus an offset for defects in their performance - Doctrine of substantial performance: duty of performance simplicity conditioned on their being no occurred material failure of the other party's performance - Ex: Sackett's failure to tender the balance of the purchase price; Non-breaching party may suspend performance ;doesn't discharge obligation unless it become a total breach - How to tell if the breach is material? > Jacobs & Young factors: "We must weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence. Then only can we tell whether literal fulfillment is to be implied by law as a condition." -Ex: B promises to build a house for A according to specifications; A promises to pay B (exchange of promises) > Constructive condition: A's duty to perform is conditioned on B's performance; The condition is met if B substantially performs: Then either: No breach, Partial breach, Material breach: A does not have a duty to perform (suspended duty) (A could waive B's breach; B may be able to "cure" breach (within limited time); If not "cured" then total breach discharges A's duty) If the condition is excused, then A has a duty to perform (3) TOTAL BREACH: a material breach that has not been cured after a reasonable period of time > eventual effect of discharging duties; non-breaching party no longer bound by contract - Cure: missed payment on close of business on Wednesday but delivered it Thursday morning - Total breach can be immediate if time is of the essence

(intro) three elements of a contract (think agreements, not formation)

(1) agreement in fact b/t the parties (2) agreement as written -- may not correspond accurately to the agreement in fact and (3) the set of rights and duties created by (1) and (2)

(intro) "flavors" of promises

(1) enforceable as contracts (mutual assent & consideration) (2) enforceable based on other doctrines (i.e. promissory estoppel) (3) unenforceable

(assessing performance and breach; breach of a contract) breach of a contract analysis

(1) identify the type of condition (2) determine whether party's breach triggers non-breaching party's duties -If express condition > then only literal performance triggers other party's duty; if breach > then no duty - If constructive condition > then substantial performance triggers other party's duty if the breach if partial, not material (3) determine whether the breach is material (4) if material, determine whether the breach was "cured" or whether it has ripened to a "total breach"

(intro) Roadmap for general analysis

(1) is contract governed by CL or the UCC (goods vs. services) (2) is there a valid offer? -did the communication create a reasonable expectation in the offeree that the offeror is willing to enter into a contract? - are the terms reasonably certain? - was there a present intent to contract demonstrated by a promise, undertaking, or commitment? - was the promise communicated to an identified offeree? - is this an offer for a unilateral or bilateral contract? (3) is there acceptance? - if CL > does it comport w the mirror image rule? - is the acceptance seasonable? (4) is there mutual assent? - was there a meeting of the minds? (5) is there consideration? (6) is there a statute of frauds defense? (7) are there any parol evidence issues? (8) can P claim other theory such as promissory estoppel or unjust enrichment? (9) was the promise conditional? (10) was there a breach? (11) is nonperformance permissible? - are there are defenses? (fraud, incapacity, duress?) - are there any justifications? (12) what are the appropriate remedies?

(the meaning of the agreement, parol evidence rule) PER analysis roadmap

(1) is the evidence subject to PER? [ is there a final writing (integration), is a party trying to introduce oral/written evidence of a term agreed to prior to execution of writing but not include din writing; or oral evidence of a term agreed to contemporaneously w execution of writing but not included in writing? no > evidence admissible yes > is the writing totally integrated? (2) is the writing totally integrated? yes > judge refused to admit parol evidence (but check PER exceptions) no > is evidence consistent and not contradictory w writing? (3) is evidence consistent and not contradictory w right? no > judge refuses to admit parol evidence (but check PER exceptions) ye s> judge admits parol evidence

(formation of a contract; acceptance) events that terminate power of acceptance

(1) non-occurrence of any condition of acceptance under the terms of the offer (2) death or incapacity of the offeror/offeree (3) rejection by offeree (effective when received) (4) lapse of time (either specified or if none within reasonable time) (5) counteroffer by offeree - qualified/conditional acceptance: looks like acceptance but is not, is actually a reply to offer w additional/different terms and hence a counteroffer (ex: I accept if we change x) - acceptance w modification request: after contract has been formed is considered a special request that original offeror is not bound to, still an acceptance (ex: offeror offers to buy 100 eggs for 10 cents each, you accept and also ask if buyer can ship them to you) -inquiry regarding the possibility of different terms: before a contract is formed does not count as counteroffer (as long as you don't reject the original offer) (ex: would you e interested in selling for x instead of y? is that acceptable?)

(statute of frauds defense) types of contracts within the statute

(Excellent Dope Surely Makes Oneself Owe $500) (1) Excellent: Executors or administrators of estates to perform obligation of the deceased (2) Dope: answer for the Debts of another (3) Surely: Sale of an interest in land - ex within statute: A promises B to transfer Blackacre to B in consideration of B's promise to pay 5k -ex not within statute: A tenders a deed of Blackacre and B accepts the deed (4) Makes: Marriage consideration - ex of in consideration of marriage and within statute: "if you promise to marry me, I'll transfer to you the title of my beach home beforehand" or "will you marry me" followed by "yes, but only if we have a pre-nup" - ex of not in consideration of marriage and not within statute: "will you marry me?" > "Yes!" > 2 weeks later agree a pre-nup is a good idea (5) Oneself Owe: Outside One year from the time contract is made completion impossibility - ex not within statute: contract to build the tallest building in the USA -- not likely to finish within a year but its still technically possible - ex within statute: promise in July 2015 to appear in a show on September 2016 - ex not within statute: A promises B that A will pay 25k when B's husband dies - courts are split on supply agreement for over a year in which either party can terminate at will: majority says termination does not count as performance so within statute; minority says that performance could be done within a year bc they can terminate within one year so not within statute (5) $500: over $500 sale of goods

(formation of a contract) OFFER: factors to determine if its really an offer

(Losers Suck Penises More Idiotically) (1) LANGUAGE: words used in communication are always primary indicators, communication that omits significant terms is less likely to be an offer (comprehensiveness, completeness, and specificity of terms), more than just "fluffy details" (2) SURROUNDING CIRCUMSTANCES: does the promisee know or have reason to know that the promisor does not intend the purported offer as an expression of his fixed purpose?; statement made in anger and reasonably understood in this context > no legal effect but a statement subjectively intended to be in jest but reasonably understood to have made seriously > offer (3) PRIOR PRACTICE AND RELATIONSHIP OF THE PARTIES: may cast light on how the recipient reasonably should have understood the communication, terms of previous inquiry (4) METHOD OF COMMUNICATION: broad communications media likely to be a solicitation of an offer, number of persons to whom it is address (true offers usually go only to one person) (5) INDUSTRY CUSTOM: where parties are members of the same community or trade, look to generally accepted common practices and trade usages

(assessing performance and breach) repudiation: right to adequate assurance of performance / reasonable grounds for insecurity

(Rest. 251; UCC 2-609(1), (4)): R. 251: when a failure to give assurance may be treated as a repudiation > Where reasonable grounds arise to believe that the obligor will commit a breach by non—performance....the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance Reasonable grounds: judged by a commercial standard, fact-specific (i.e.: bankruptcy): (1) party has failed to perform obligations under the contract (2) party hears rumors from a trustworthy source (3) statements by the possibly breaching party - The obligee may treat as a reputation the obligor's failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case - What is a "reasonable time" will depend on the circumstances > UCC: not exceeding 30 days; Rest.: no maximum - UCC: requires the demand be in writing, but not strictly enforced Duty of good faith applies - Case ex: Hornell Brewing Co. v. Spry Court found P has reasonable grounds for insecurity and made a reasonable demand for assurances where DE had numerous unpaid invoiced, broke numerous promises to pay, disrespected negotiations, ect. D's failure to respond constituted a repudiation which entitled P to suspend performance and terminate the agreement. - IN SUM: assuming there are reasonable grounds for insecurity, the non-breaching party can suspend performance and demand an adequate assurance of performance; if assurances are not given or inadequate, the non-breaching party may treat the failure to respond as a repudiation - Illustration: on May 1st, A contracts to sell and B to buy a parcel of land for 50k, delivery of the deed and payment of the price to be on July 30. Unknown to both A and B, C has a dower interest in the land. On May 15, B discovered this and demands that A give him adequate assurance of due performance. A fails to do so, and B commence an action against A on July 1st. B had reasonable grounds to believe that A would commit a breach by nonperformance that would of itself have given B a claim for damages for total breach. If the court concludes that a reasonable time for A to give assurances had passed on July 1st, B properly treated A's failure to give assurances as a repudiation. B then has a claim for damages against A for total breach.

(supplement the terms of the agreement; warranties) express warranty disclaimers

- Difficult to disclaim - Written warranty: written warranty language ("promises") followed by disclaimer ("no warranties") in same document - Oral warranty: oral warranty followed by document disclaiming express warranties > Parol evidence problem bc buyer wants to introduce evidence to contradict the written disclaimer; buyer can argue the document is not an integration, there was fraud, or there was misrepresentation; some courts find that the disclaimer is unconscionable and declare it void

(assessing performance and breach; breach of a contract) Rest. 225: Effects of the Non-Occurrence of a Condition

- Performance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused - Non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur

(assessing performance and breach of contract) retraction of repudiation + case example

- The repudiating party may retract by giving notification to the non-repudiating party before he materially changes position in reliance on the repudiation or indicates that he considers the repudiation to be final - Party can retract their reputation if.... (a) Non-repudiating party has not relied on the repudiation (materially changing their position in reliance on repudiation) (b) Non-repudiating party has not yet indicated that they consider the repudiation final - An effective retraction triggers the non-repudiating party's obligation to perform Case ex.: Truman L. Flatt & Sons v. Schupf P to purchase land from D contingent on obtaining a permit; couldn't obtain so sent letter to D offering lower price; D refused P sent another letter saying will buy at the original price The court held P's first letter may or may not have been a repudiation; but even if it was, P retracted before D materially changed position in reliance or communicated that he considered the repudiation to be final

(intro) contract (def, what does the formation of it require )

- contract: a promise or a set of promise, for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty (Rest. 1) - the formation of a contract requires a bargain in which there is (1) a manifestation of mutual assent to the exchange and (2) consideration [CONTACT = OFFER + ACCEPTANCE + CONSIDERATION] - bargain: an agreement to exchange promises or to exchange a promise for a performance or to exchange performances (note that a contract can be formed even without bargaining process like in non-commercial transactions b/t family members, checking "I agree," restitution, promissory estoppel)

UCC vs. CL -- when does Article 2 of the UCC apply? THEN: define merchant, sale, and goods

- if a contract is FOR THE SALE OF GOODS > Article 2 of the UCC applies - remember that article 2 applies even if merchants are not involved (identity of the parties doesn't matter as long as it's for sale of goods w exception of special rules applying to merchants) - merchant: deals in good of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices of goods involved in the transaction - sale: the passing of title from the seller to the buyer for a price (money or otherwise) - goods: anything MOVABLE at the time of the contract, including specially manufactures goods, livestock, and growing crops (applies to sales of most TANGIBLE things like cars, horses, and hamburgers, but does NOT apply to the sale of real estate, services, intangibles like patents, or construction contacts) (ex sale of goods = clothing purchase, sale of a car, sale of a cow, airline purchaser of a jet from manufacture) (ex NOT sale of goods = purchase at dry cleaners to clean your clothes, sale of land or home, rental of a car, life insurance policy, employment contract)

(supplementing the agreement, warranties) implied warranty of merchantability

- only applies if seller is a merchant of this kind of good - UCC 2-314 - Trade usage, course of dealing, ect. can exclude warranty ELEMENTS: (1) seller of the good was a merchant w respect to the goods sold (2) goods sold by the seller were not merchantable (not of average quality) (3) breach caused the buyer's damages (proximate cause of the loss) - Merchantable: they "pass without objection in the trade;" are "of fair average quality" are "fit for the ordinary purposes for which such goods are used" - Course of dealing could have an effect on what is merchantable (other implied warranties may come from course of dealing or trade usage) - Merchantable = product will work - Ex: if you've been selling to a person a product for a number of years, you cannot start providing them w products below the regular expected quality - Bayliner: court agreed w Bayliner that although the boat did not meet the needs of this particular sport fisherman, there was no evidence that the boat was not merchantable as an offshore fishing boat

(supplementing the terms of the agreement, warranties) implied warranty disclaimers

-General rule: disclaimers must be conspicuously written! ( "AS IS", "WITH ALL THE FAULTS") -Must mention "merchantability > something like "Seller....disclaimers all warranties, including the warranty of merchantability" -Fitness for a particular purpose: Only need a general disclaimer of warranties - Cannot disclaim the implied warranty of habitability for dwelling; vast majority of states recognize an implied warranty of habitability in residential leases > safety, cleanliness, essential utilities functions—health and safety standard met in general - TREND: many courts view disclaimers w suspicion and will refuse a disclaimer unless it is clear, unambiguous, and reelects both parties' expectations

(meaning of the agreement, parol evidence rule) UCC approach to PER

-UCC is more liberal w the PER/more willing to admit parol evidence - decision make must always examine the words in light of the commercial context w/in which they were used (i.e. evidence of usage of trade, course of dealing, and course of performance) - assume trade usage, course of dealing, and course of performance are part of the agreement to begin w - parol evidence will supplement the contract

(formation of a contract) MUTUAL ASSENT: def, it requires...., standard, exception

-mutual assent: AKA "meeting of the minds""; the manifestation of mutual assent to an exchange ordinarily takes the form of an OFFER or proposal by one party followed by an ACCEPTANCE by the other party or parties - intention to be bound: mutual assent requires that the parties INTENDED TO BE BOUND by the terms of the agreement -OBJECTIVE standards: in evaluating evidence (UCC also adheres to CL law objective theory bc does not speak to the object test itself); this is a a question of fact and a reasonable interpretation of words or actions; will not consider the intent of the parties but WHAT A REASONABLE PERSON IN THE POSITION OF THE PARTIES WOULD AHVE THOUGHT the offer/acceptance meant (whether intent to be bound existed); evidence of intent can be shown in writing, orally, or through conduct ex: builder agrees to tough standards set by buyer but thinks she will actually build to a more lax standard then builds to more lax standards and the buyer sues, buyer would win bc the builder agreed to and signed to the tougher standards ex of subjective: B signs a contract w A to buy condo but thinks she is only reserving it > court would decide for B bc its not her actual intention (THIS IS WRONG. do NOT do this. instead......) ex of objective: court would decide for Abc B manifested assent by signing the contracts (THIS IS RIGHT) EXCEPTION: if buyers KNOWS SELLER DOES NOT REALLY MEAN THE OFFER > NO MUTUAL ASSENT bc a reasonable person would know seller isn't serious baed on past interactions ex: A says "I will sell you my car" but has no intention of actually doing so; B says "I will buy your car" > here, there is mutual assent bc reasonable for B to believe A ex: same as above but B has reason to know that A doesn't actually mean it and is just joking > no mutual assent bc reasonable person would not think A is serious reason to know: info from which a person of ordinarily intelligence would infer the the fact in question does or will exist

statute of frauds (define/summary/main idea, roadmap)

-statute of frauds is a DEFENSE against enforcement - there are some situations where we require there to be writing to make a promise enforceable in order to prevent fraudulent claims - writing must show that fraud is unlikely - if a contract falls within the statute and fails to comply w it and no exception applies the contract will be unenforceable ROADMAP: (1) is contract within the statute? yes > is there a writing satisfying the statute? (2) is there a writing satisfying the statute? no > does an exception apply? (3) does an exception apply? yes > no SoF issue no > oral contract unenforceable

(supplementing the terms of the agreement, warranties) implied warranty of habitability

-this is common law! not the UCC! -deals w implied warranties in real estate and construction -Implied warranty that a builder-seller would construct habitable housing -An implied warranty of workmanlike construction, implied warranty of habitability/skillful construction/merchantability - requires quality of work/material to meet average reasonable standards of the trade; this is the only warranty that the law implies on providers of service—and it may only apply in a construction context; it merely requires that the provider of the service perform its work to a standard equal to that which prevails among average/ordinary professionals in its field

(statute of frauds defense) requirements of the statute of frauds

A CONTRACT WITHIN THE SOF IS ENFORCEABLE IF: (1) THERE IS A WRITING SIGNED BY OR ON BEHALF OF THE PARTY TO BE CHARGED WHICH - writing requirement: the writing does not have to be a formal document/contract, does not have to be drafted at the time of the agreement, and does not have to be reviewed by both parties; more than one document can be used to satisfy > you can merge documents as long as they refer to the same subject matter even if they don't reference each other > (i) taken together, all the documents as a whole have all essential terms, (ii) one of the documents must have the signature of the party charged and (iii) unsigned documents on their face must show that they relate to the unsigned doc.; Rest. is more lenient: gives judge more flexibility to decide whether the parties agreed/the documents can be concatenated - signature requirement: only needs to be signed by the party against whom enforcement is being sought, if documents are merged only need one of them to be signed, requirements for signature are lax and do not require a traditional signature, initials and letters are okay (2) REASONABLY IDENTIFIES THE SUBJECT MATTER OF THE CONTRACT (3) IS SUFFICIENT TO INDICATE THAT A CONTRACT HAS BEEN MADE BETWEEN THE PARTIES OR OFFERED BY THE SIGNER AND (4) STATES W REASONABLE CERTAINTY THE ESSENTIAL TERMS OF THE UNPERFORMED PROMISES IN THE CONTRACT example: K agrees to sell his car to F and send him a letter W the price of 10k (goods here are over $500) and delivery situation signed by him; F changes his mind; K cannot enforce the promise bc F has not signed and he is the party to be charged

(formation of a contract; offer) limitation to being able to retract an offer #4 BEGINNING PERFORMANCE IN RESPONSE TO TRUE UNILATERAL CONTRACT OFFER (just an example)

A offers to pay B to paint his house, insisting that acceptance can only occur by the act of painting his house rather than as a promise; B begins to paint the house; A attempts to revoke the offer; A's attempt at revocation will be ineffective bc B must have a reasonable time to complete the act of painting

(formation of a contract; acceptance) UNILATERAL CONTRACTS (def, when accepted, limitation on revoking, requirement, compare w article 2 )

ACCEPT BY DOING THE THING ASKED FOR (not accepted until performance is complete) -only one promisor and one promisee - promises to pay upon completion of the requested act (ex: Jon promises to bend the knee if Dany helps him fight the whitewalkers; Danny is not obligated to help Jon, but if she does, Jon is obligated to bend the knee) once act is completed > contract formed until completed > no offer in classical courts you could revoke anytime before performance BUT MODERN COURTS COMPARED UNILATERAL CONTRACTS TO OPTION CONTRACT > PARTIAL PERFORMANCE: once the offeree has begun, the offer is irrevocable until performance completed within a reasonable time; this creates an option in favor of the offeree bc offerree is still not obligated to complete even if begun; courts may require SUBSTANTIAL PERFORMANCE to make offer irrevocable (ex: I'll give you $100 if you walk across the bridge > if you only take one step, offer could still be revocable); preparations generally not considered enough to make irrevocable (ex: I'll give you $100 to walk across the bridge and then you buy walking shoes > offer not irrevocable); if it does become irrevocable it can't be altered or withdrawn NOTICE: offeree not required to give offeror notice that he has begun requested performance, but is required to notify within a reasonable time after performance has been completed unless: (a) offeror waived notice OR (b) offeree's performance would normally come to the offeror's attention within a reasonable time (if required notice is not given > contract still formed but offeror's duties are discharged) (ex: A tells B that he will pay B to wait the house A is living in > B need not formally notify A bc performance would be obvious; ex: A tells B that if he lends C money A will pay back the loan if C does not; A becomes contractually bound on his promise the instant B loans C the money but A will be discharged from duties if B fails to notify A of acceptance within a reasonable time) COMPARE w/ ARTICLE 2:accepted by beginning performance > gotta notify when you start performing and if don't in reasonable time offeror can say offer has lapsed > no contract at all)

(formation of a contract) ACCEPTANCE (def, timeline, what happens if accepts/wants changes and makes counteroffers/rejects or time to accept expires, who can accept,

ACCEPTANCE: manifesting of assent to terms made by the offer in a manner invited or required by the offer TIMELINE: preliminary negotiations > offer > offeree is given power of acceptance > if manifests acceptance in legally effective way in that moment a contract comes into being if accepts > contract; if wants changes and makes a counteroffer > initial offer considered rejected and now original offeror has power of acceptance; if rejects or time to accept expires > no contract) WHO can accept: party to whom the offeror is addressed (offeree) offeree must know of the offer in order to accept

(the meaning of the agreement, principles of interpretation) interpretation of standardized contracts (define adhesion contracts, 3 factors, courts may 'strike out' certain terms when....)

ADHESION CONTRACTS: contracts where one party has no say in the terms but has no choice but to accept 3 FACTORS: (1) use of a standard form (2) inequality of bargaining power (party writing the form is a "repeat player" and knows more about the applicable law and circumstances than the other party) (3) absence of choice other than to accept or reject the contract (i.e. take it or leave it) courts may strike out certain terms when the drafting party had reason to believe the non-drafting party would not have agreed to that term bc it violates the non-drafting party's reasonable expectations - courts will imply there was a reason to believe the other party wouldn't have accepted the terms if is against the reasonable meaning of the term or if there is a bizarre or oppressive result > - Doctrine of Reasonable Expectation: if the terms go against the reasonable meaning of the terms or the main purpose of the agreement, or if they are bizarre or oppressive, there was reason to believe that B would not accept the terms - customers are not bound to unknown terms which are beyond the range of reasonable expectation ex: CJ Fertilizer v. Allied Mutual > the insurance policy for burglary defined burglary by requiring visible marks on the exterior; the term was not ambiguous bc it was specifically defined in the contract; however, the court did not apply the definition bc CJ did not negotiate the terms and didn't read the whole contract and the general understanding was that the policy would cover any burglary that is not an "inside job." the def. in the agreement was too narrow and went against CJ's expectations unfairly

(formation of a contract) OFFER (indefiniteness and postponed bargaining) Agreement to agree (general def, 3 approaches)

AGREEMENT TO AGREE: parties have reached an agreement but will decide one or more essential terms later; can be binding if parties intend them to be, if not then they are just preliminary negotiations; can form a contract if there is a definite objective standard/formula to calculate the essential terms ex: saying "reasonable rent" is not certain enough bc what is considered reasonable varies THREE APPROACHES: (1) CL: parties have to manifest sufficiently to definite agreement about essential terms > if not no contract (2) REST.: more relaxed, courts may supply term which is reasonable in circumstances when parties to a bargain sufficiently defined to be a contract have not agreed w respect to an essential terms (but still requires price to be certain) (3) UCC: open price terms okay, article 2 gap fillers apply where the parties to an otherwise enforceable contract have not agreed about a term; price will be reasonable price at time of delivery if: (a) nothing is said as to price or (b) price is left open to be agreed to by the parties and they fail to agree or (c) price is to be fixed by some external factor/third party and is not set; court will determine: mode/place/time of delivery, time and place for payment, quantity, price of goods

(formation of a contract; acceptance) ACCEPTANCE BILATERAL CONTRACTS (def, if both parties still have to perform promises.... , acceptance must be..... , ways (3) to accept)

BILATERAL CONTRACTS: accept by PROMISING TO PERFORM, consists of the exchange of mutual promises (a promise for a promise) ex: Jon promises to bend the knee and Danny promises to help him kill the whitewalkers if both parties still have to perform the promises > called an executory contract acceptance MUST BE COMMUNICATION; but EXCEPTION when offeror waives it in offer ex: A applies for life insurance on a form that provides that the policy will become effective immediately upon approval by the insurance company's home office; contract formed when home office approves application silence: can be acceptance if previous dealings making it reasonable and offeree takes benefits method: any reasonable manner and by any medium reasonable under the circumstances acts: the offeror is the master so could require an act to signify acceptance ex: Cersi offers to purchaser Jamie's sword specifying that Jamie must dress like a clown next Tuesday to accept

(assessing performance and breach; breach of a contact) breach of a contract (define breach, two questions)

BREACH: any non-performance of a contractual duty at a time "when performance of that duty is due" - Each party's duty to perform is impliedly conditioned on their being "no uncured material failure by the other party to render any such performance due at an earlier time." (Rest. 237) - Performance is not due if for any reason nonperformance is "justified" TWO QUESTIONS: (1) when is one party's performance due so that failure to perform will be a breach? (2) when is nonperformance by a party justified under the terms of the agreement?

(formation of a contract; acceptance) bilateral contracts; DEPOSITED ACCEPTANCE RULE (where it applies, state rule,

CISG (convention of contracts for international sale of goods) provides that otherwise revocable offer cannot be revoked once acceptance has been dispatched places the risk of non-arrival on the offeree instead of offeror > means that acceptance must actually reach the offeror in timely fashion; "lost acceptance" would not have this effect though

(electronic and layered contracting) clickwrap and browsewrap terms

CLICKWRAP TERMS: clicking the "I accept" button shows assent BROWSEWRAP TERMS: customer assent e merely using the website - a reasonable user must have noticed that the terms were there or there is no assent (constructive notice only, no actual notice by the user is required) - ex: Hines v. Overstock.com, the arbitration clause on the website was not enforceable bc there was no need to look at or near the link when making a purchase, so the reasonable user wouldn't have noticed they were entering a contract - must be conspicuous based on placement, size, color, how easy it is to find, ect. (textual notice that continues use will constitute assent may be required in addition to having a noticeable link, purpose to provide reasonable notice to the website user) - can make browsewrap terms applicable by writing "by placing order, you agree to terms" next to the "please order" button

(formation of a contract) OFFER (indefiniteness and postponed bargaining) COMMON LAW: general def., essential terms, what courts do when a non-essential terms is missing, examples

COMMON LAW: for a contract to be formed parties must AGREE ON ALL ESSENTIAL TERMS of the transaction in a definite/certain way; contracts are inherently incomplete (can't agree to literally every single thing) but essential terms can't be missing bc if they are there is no intent to be bound but instead just negotiations ESSENTIAL TERMS are typically (depends on facts) (Please Stop Quacking Tomorrow Pretty Please): -price -subject of the contract -quantity -time of performance -place of performance -payment terms if a non-essential term is missing > courts IMPLY A TERM THAT IS TYPICAL OR REASONABLE; terms are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy ex: "I will sell you my bar for $10k" and "I will buy your car for 10k" -- there are still things they haven't agreed to (when they will transfer, where, if it will have gas, ect.) but they have agreed to the material and essential terms, not required to prepare for every eventuality or potential scenario, so this is a contract -- anything else will be determined by what is reasonable ex: "I will sell you my car" and "I will buy you car" -- this is not a contract bc they did not agree on a price, which is an essential term of the deal ex: "I will sell you my car at a price that makes everybody happy" and "I will buy your car at a price that makes everybody happy" -- they have a formula to determine price but this particular formula is not definite enough to form a contract ex: "I will sell you my car. let's hammer out all details, including price, next week" and "I will buy your car. talk to you soon." -- there is no contract bc they didn't mutual assent as to all essential terms of the agreement, such as price, in this scenario

(assessing performance and breach; breach of a contract) condition precedent

Condition Precedent: an act or event, other than lapse of time, which must occur before a duty to perform a promise in the contract arises May be express or implied If condition is satisfied, the promisor will have to render performance If the condition is not satisfied the promisor may not have to render performance

(supplementing the agreement, warranties) express warranties: define, elements

EXPRESS WARRANTY: created by statements regarding a good's quality, description, ect.; UCC 2-313; does NOT require that the seller have the intent to create an express warrant ELEMENTS: (1) must show that the seller made a sufficiently factual promise about the qualities or attributes of the goods which turned out not to be true -affirmation of fact relating to goods -description or model shown -sample or model shown -a sample model which is made part of the basis of the bargain creates an express warranty that the whole of the goods will conform to the sample or model - seller does have to use the word "warranty" - no puffery (puffery and opinion do not crate a warranty; puffery is brand and warranty goes to the quality of product performance definite enough to find an enforceable promise) (2) must show that the factual promise was part of the basis of the bargain - subject to PER: some courts will find grounds to permit evidence of express warranties despite PER but evidence regarding prior statement inadmissible if fully integrated - if the seller at some point before the transaction made a factual promise then we presume that the factual promise was part of the basis of the bargain unless the seller can rebut that presumption by showing that the buyer did not rely on that factual promise (3) must show that whatever damage suffered is due to the failure of the good to live up to the promise (casual relationship)

(the meaning of the agreement; principles of interpretation) maxims of interpretation (first consider....., other general interpretation rules)

FIRST CONSIDER the context of the agreement then look at the interpretation principles; absent strong contextual evidence, courts prefer to interpret contracts to: - make agreement lawful - make agreement reasonable -reconcile any seeming inconsistencies among the terms -give meaning and effect to all terms (not make any of them redundant) OTHER GENERAL INTERPRETATION PRINCIPLES: (1) If two clauses conflict, the more specific clause acts as an exception to the more general (ex: "no animals may be kept on premises" and "tenant's service dog shall be kept on leashes when in public areas of the building" will be interpreted as serving dogs being an exception to the no-animals rule, otherwise the clause wouldn't make any sense bc theres no service dogs following the first rule literally) (2) separately negotiated terms are given greater weight then standardized terms (3) handwritten terms generally control over typed or printed ones, and typewritten ones generally control over printed ones (4) when a series of words are used together, the meaning of each word affects the meaning of others (ex: lease prohibits "cats, dogs, and primates" so this wouldn't restrict your brother from staying overnight) (5) when specific and general words are connected, general word is limited by the specific one (ex: S contracts to sell B his farm together w the cattle, hogs, and other animals" this would not include S's dog

(supplementing the agreement, implied terms) implied terms: UCC approach (gap filled, default rules)

GAP FILLERS More specific than Rest. is on what terms to be supplied (i.e. gap fillers) UCC 2-204(3): gap fillers apply where parties to an otherwise enforceable contract have not agreed about a term DEFAULT RULES: (a) PRICE OF GOODS (2-305) -Open price term will not prevent enforcement of a contract if parties intended to be bound - If parties later fail to agree on price, the courts may enforce a reasonable price - If one party has the power to fix the price, she must do so in "good faith" -If parties did not intend to be bound > courts will not fix the price (b) MODE, PLACE, AND TIME OF DELIVERY (2-307; 08, 09) -Mode > single delivery -Place > seller's place of business -Time > reasonable time after sales (c) PLACE AND TIME OF PAYMENT -Place > where buyer receives goods -Time > reasonable time after delivery (d) WARRANTIES (2-312, 15, 15) (e) EXCLUSIVE DEALINGS (2-306(2)) -Best efforts: a lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposed unless otherwise agreed; an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale -"Best effort" clauses: most courts define "best efforts" whether as applied by the UCC or included expressly in a contract, in terms of general reasonableness or diligence; some courts go further to state that a best effort cause suggests a fiduciary relationship, while others find such clauses unenforceable due to vagueness (f) TERMINATION OF A CONTRACT (2-309(3)) -Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing w notification is invalid if its operation would be unconscionable - How to contract around this? > Have an "agreed event, include a provision in the contract dispensing w notification, and agreements dispensing w notice are invalid if their operation would be unconscionable No gap fillers for.... (These are required terms! Have to already have them!) = (a) subject matter of contract and (b) quantity (if missing > no contract) -However, requirement (everything I need) and output (everything I have to sell) contracts are acceptable EXAMPLES: -Wood v. LucyLady Duff-Gordon: P gives the "exclusive right" to market D's name on designs (endorsements). D breached "exclusive right." Argued no consideration, so no contract bc P didn't promise anything; Court found that although that's correct under a literal interpretation of the agreement, implied promise of P to use "reasonable efforts" to generate business; so sufficient consideration for contract -Leibel v. Raynor Manufacturing Co.: Exclusive distributorship agreement for D to sell garage doors to P to re-sell, install, and service; D terminal; P claims entitled to reasonable notice Court held "reasonable notice" required

(is non-performance permissible?, defenses to enforcement; incapacity) Minors/Infants (general rule, affirmation/ratification by minors, effects of disaffirmance by minors, effect of misrepresentation, necessities exception)

GENERAL RULE: contracts entered into by minors are voidable at the minor's election before or within a reasonable period after reaching the age of majority (Rest. 14: unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person's 18th birthday > Contract VOIDABLE) AFFIRMATION/RATIFICATION BY MINORS: - Rest. 85: no consideration necessary for the minor to be bound by the contract - Express ratification: minor expressly ratifies the contract -Illustration: A, an infant, promises B to pay him $100 in consideration of a bike which B transfers to him. The bike is worth $60. On coming-of-age A promises to pay B the sum he originally agreed to pay. He is bound to do so. If instead of such a promise he promises to pay a smaller sum, like $40, he is also bound, but only to that extent - Implied in fact ratification: mot explicit, minor acts in away that makes it clear they want to abide by the contract - Ex: minor keeps making car payments on car bought while a minor - Implied by law (silence) ratification: Minor turns 18 and does not do anything for a reasonable amount of time EFECTS OF DISAFFIRMANCE BY MINORS: - Traditional/Restatement approach: minor does not need to restore the dealer to the position they were in before - Modern approach: seller is entitled to set off for loss in value; "where the minor has not been overreached....and the contract is a fair and reasonable one, and the minor has actually paid money on the purchase price, and taken and used the article purchases, the minor ought not to be permitted to recover the amount actually paid, without allowing the vendor...reasonable compensation for the use of, depreciation, and willful or negligent damage to the article purchased, while in the minor's hands" (Dodson) EFFECT OF MISREPRESENTATION: - Minor can void the contract but must pay full restitution to the non-minor NECESSITIES EXCEPTION: - Even under the traditional rule, the right of a minor to avoid a contract has been subject to al imitation for the reasonable value of necessities - Recovery for non-minor is based on restitution rather than enforcement of the contract - Necessities include items one needs to live: water, clothing, shelter, ect. - Ex: Sally, age 10, walks into a store and asks for a loaf of bread and says she'll pay next week. Next week, sally refuses to pay and the owner sues. The store owner would win bc the contract was for a necessity

(the meaning of the agreement, parol evidence rule) impact of PER; particle vs. totally integrated and how to tell, integration clauses/merger clauses, contradictory vs. consistent)

IMPACT: of the PER depends on the degree to which the writing constitutes a comprehensive and final written memorandum of the agreement PARTIALLY INTEGRATED: a writing that parties intended to be the the final expression of at least one of the terms it contains, but NOT a final expression of ALL the terms of their agreement; may be supplemented by parol evidence of consistent additional terms; may not be contradicted TOTALLY INTEGRATED: a writing that parties intended as the final, complete, and exclusive statement of ALL the terms that were agreed to; may neither be contradicted nor supplemented) HOW TO DETERMINE IF TOTALLY OR PARTIALLY INTEGRATED: - classic approach: judge decided parties' intent to integrate their writing purely on the basis of the "four corners" of the written document w/out recourse to any extrinsic evidence; test is if the writing appears totally integrated (complete) on its face and thus is totally integrated - modern approach: judge will consider extrinsic and contextual evidence to determine parties' intent on the issue of integration; the judge determines whether a jury could find that the written contract did not state the entire deal and thus is only partially integrated INTEGRATION CLAUSES/MERGER CLAUSES state that the writing is intended to be final and complete; all prior undertesadnings are deemed t the been "merged" into or superseded by the final writing; courts give these clauses a lot of weight but they are not determinative ex: parties had a writing signed by both; the buyer claimed they agreed to a warranty but the written document had nothing about warranties; the evidence was subject to PER bc there is a writing and this is oral evidence prior to the writing; the writing is totally integrated bc there was no evidence it was incomplete; therefore, the buyer's evidence was inadmissible. CONTRADICOTRY V. CONSISTENT: a parol term does not contradict a term in the writing so long as it a consistent additional term; a term is a consistent additional term if under the circumstances it is one that "might naturally be omitted from the writing"; depends on the nature and importance of the term to the transaction and how complete the writing looks

(supplementing the agreement; implied terms) implied terms (two kinds, define incomplete terms)

IMPLIED TERMS: (1) terms implied-in-fact: agreed to in some meaningful sense by the parties themselves; (2) terms implied-in-law: may be implied due to a statute CL or bc court feels it is appropriate INCOMPLETE TERMS: default rules that parties can contract around; policies = fairness, placing loss on party best able to prevent, placing loss on party best able to bear/re-distribute the loss (lease cost avoider/provider)

(alternative means of contract formation; restitution) material benefit rule (state rules, examples, when a promise is not binding)

MATERIAL BENEFIT RULE: if a person receives a material benefit from another, a subsequent promise to compensate the person for rendering such benefits is enforceable -bc the promise shows that the promisor really wanted the service, and if bargained for they would have reached an agreement, so the conduct was not gratuitous - a promise made in recognition of a benefit previously received by the promisor from the promisee is binding TO THE EXTENT NECESSARY TO PREVENT INJUSTICE EXAMPLES: - an employee saves the life of the boss of the company by stopping a piece of machinery from hitting him, causing permanent injury to the employee; the boss' promise to pay him weekly for the rest of his life is enforceable bc the employee conferred a material benefit - A gives emergency care to B's adult son while the son is sick and w/out funds; B subsequently promises to reimburse A for his expenses; B didn't receive anything directly from A so A will probably not recover bc this is a material benefit to the son, not to B himself - A lends money to B (a material benefit to B) who later dies; B's window promises to pay the debt but the widow didn't have any obligation to do so bc no material benefit to her, so not enforcement bc it was B's debt *A PROMISE IS NOT BINDING:*: (A) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched - the promisor bears the burden to prove that it was intended as a gift - doesn't matter that you didn't intend to be compensated, you usually don't in an emergency situation, the subsequent promise gives you this cause of action (B) to the extent that its value is disproportionate to the benefit (C) a promise to pay an additional sum for an existing obligation is not enforceable -ex: A hired B for $400; after work is complete, A is so impressed he says he'll pay $50 more; that $50 more promise is not enforceable

(statute of frauds defense) sale of goods under statute of frauds and UCC merchants exception

MERCHANT'S EXCEPTION: typically a "confirmation" sent from the seller to the buyer (which it not signed by the buyer) would not satisfy the SoF if not signed by the party being charged, but there is an exception when: (1) contract is b/t merchants (2) within a reasonable time from making an oral contract, one party receives a written confirmation from the other (3) signed by the sender and otherwise satisfies the SoF as against the sender (4) recipient has reason to know of its contents (5) recipient doesn't give written notice of objection within 10 days (has to be written, wording of objection must disclaim knowledge of the contract to preserve the SoF defense, if they just object to a term they lose the SoF defense) note: you could still argue no initial contract existed from the oral conversation Examples: - LC phones an order for $8k machine from ACME when they accept verbally; ACME sends confirmation signed by ACMe to confirm the promise (at this point enforceable against ACME only); LC than recipes the confirmation and does not object within 10 days -- now enforceable against ACMe and LC - FF has never spoken w JM; FF gets a doc from JM "confirming" an order for $10k worth of jam; FF thinks it's a joke and throws it away; JM delivers the ham and sues FF to accept and pay for it; here, merchants' exception will not apply bc there no initial oral contract

(assessing performance and breach of contract) effect of anticipatory reputation, non-repudiating part can either....

Non-repudiating party is discharged from performing, and may sue immediately for damages; need not wait until performance is due Non-repudiating party can either: (1) accept the repudiation by giving notice (i.e., terminate the contract; file suit), (2) accept the repudiation by reliance/changing position (i.e. finding a new buyer) (no notification required), (3) wait and see if the repudiating party retracts

(formation of a contract) OFFER def, requirements (CL and UCC),

OFFER: manifestation of willingness to enter into a bargain, a communication by the offeror which creates a reasonable expectation in the offeree that the offeror is willing to enter into a contract on specified terms such that the offeree need only accept in order to form a contract; creates a power of acceptance in the offeree and corresponding liability on the part of the offeror; offeror's intention does not matter; rather, we take the offer's intention and determine if a reasonable person in the offeree's position would have understood that the offeror was making an offer REQUIREMENTS: - CL: need either a price or a method to ascertain the price; also needs all essential terms; it's an offer if: (a) it is clear that if the offerree accepts, the deal is done, (b) it must leave no doubt that no further assent is required by the offeror; (c) the offeror is the master of the offer (decides terms of offer and method of acceptance) -UCC: price not required, but quantity is

(supplementing the agreement, the implied obligation of good faith) applying the implied convent of good faith (open price terms, outputr/requirement contacts, satisfaction clauses)

OPEN PRICE TERMS - UCC 2-305(2): "a price to be fixed by the seller or by the buyer means a price for him to fix in good faith" -Good faith includes observance of reasonable commercial standards of fair dealing in the trade In the normal case, a posted price, price in effect, or market price satisfies this requirement -Exception: Breach of duty could be shown through improper motive even if prices might appear to be objectively reasonable OUTPUT/REQUIREMENT CONTRACTS: - Must be governed by good faith - Historically held invalid for lacking consideration, the UCC now supplies implied terms for requirement/output contracts; note that agreements that do not to some degree bind a buyer only from a particular seller may be likely found invalid due to lack of consideration -Requirement contract: buyer agrees to purchase all of a particular good or service it requires from one seller - Output contract: seller agrees to sell all of its output of a particular good or service to a buyer Risk involved in these contracts: buyer can be flooded by a seller's output (sometimes mitigated by providing minimum or maximum quantity) - 2-306(1): "in the absence of a stated estimate.....no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise completed prior output or requirement may be tendered or demanded" -These contracts probably have no implied floor but do not have an implied ceiling -Good faith standard probably met if reeducation due to circumstances beyond requirement buyer's/output seller's control SATISFACTION CLAUSES: - Always governed by good faith - Objective approach: often employed where commercial quality, operative fitness, or mechanical utility are in question - Subjective approach: still requires "honest dissatisfaction" which may be subject to proof although burden would on the P if challenging; often employed where personal aesthetics or any are at issue - Usually applied in the arena of "personal aesthetics or fancy" - Rest. approach: preference for objective standard but parties intent is paramount - Basically, if it is "practicable" to determine whether a reasonable person in the position of the obligor would be satisfied, in interpreting the force of a satisfaction clause, that interpretation is preferred; i.e., the satisfaction clause implies that the condition is met if a reasonable person in the position of the obligor would be satisfied

(formation of a contract; offer) limitation to being able to retract an offer #1 OPTION CONTRACTS

OPTION CONTRACTS: grants to a prospective buyer the exclusive right to accept an offer within a specified time but it must be agreed to b/t the parties and supported by valuable consideration; must be a new agreement or expiration of option to terminate the power of acceptance (rejection, counter, death, or incapacity usually); has to have timely acceptance: offer must be accepted within the time specified or if none is within a reasonable time ex: offeror offers to sell farm to offeree for 1mil and promises to keep offer open for 90 days if offeree pays offeror 1k to keep offer open > if offer pays the offeror an option contract is formed and offeror must keep offer open for 90 days ex: offeror offers to sell farm for 1mil and promises to keep offer open for 90 days but there is no consideration to make enforceable the promise > offeror may terminate at any time ex: does not buy farm in 90-day period and on the 92nd day the farmer sells the farm to someone else > even if farmed has no revoked it most courts find option holder can no longer accept (option period and offer period one in the same)

(alternative means of contract formation; promissory estoppel) PROMISSORY ESETOPPEL (define, elements

PROMISSORY ESTOPPEL: a means of enforcing a promise when there is no consideration but there has been DETRIMENTAL RELIANCE RESULTING IN INJUSTICE ex: when a man died, his brother promised the widow that she could live on his land, which he allowed for some years and then reneged on; there was non consideration so the promise wasn't enforceable even though the widow gave up her land to move onto the brother's based on his promise; here, you could resort to promissory estoppel ELEMENTS: (1) PROMISE (express or implied by conduct) - a vague statement of intent + conduct = implied promise ex: daughter relied on her parent's vague promise to grant her land, but the father helped her obtain permits and helped her build a house on the land, court rules that this a promise implied through conduct (2) REASONABLE AND FORESEEABLE RELIANCE ON THE PROMISE -- PROMISOR MUST HAVE REASON TO KNOW THE PROMISE WILL BE RELIED UPON W AN ACTION - promisor should reasonably expect to induce the action or forbearance (3) PROMISE INDUCES SUCH ACTION OR FORBEARANCE BY THE PROMISEE (CAUSE/EFFECT) (4) DETRIMENTAL RELIANCE ON THE PROMISE -ex: economic loss, lost opportunity, change of position, ect -ex: daughter built house which cost her money -ex: company decides to lay off an employee, they tell him this and then pay him a pension, there is a promise but it did not induce an action or retirement so there was no reliance and thus no promissory estoppel -ex: employee announced his retirement and afterwards the company offered to provide him a pension, no reliance on the promise, promise did not induce his retirement bc he was doing that before he knew they were giving him a pension - ex: D promises P $10k knowing P wants the money to buy a particular car; P convinces the seller of the car not to sell the car to anyone for 2 weeks; D then tells P she won't give her the money; here, there is no detrimental reliance by P on the promise bc there has been nothing lost (5) INJUSTICE CAN ONLY BE AVOIDED BY ENFORCEMENT OF THE PROMISE - doesnt have to be a legal detriment to the injured party to meet the injustice requirement -ex: daughter can't sell the house, can't move the house, and can't otherwise recover the money she spent -ex: the ex-employee is now older w a gap in employment so it's harder for him to get a job

(formation of a contract; acceptance) BATTLE OF THE FORMS UCC 2-207 APPROACH (purpose, approach, summary)

PURPOSE: typical situation is when buyer sends offer and seller sends acknowledgment that does not completely match - resolve the question of whether a contract was formed despite disparity in offer and response and if so which terms are part of the contract (is there a contract? what are the terms?) - when no issue of offer but one or both parties subsequently sent a written or electronic confirmation of contract that adds or differentiates terms, determine whether terms are part of contract (there is a contract, but what are the terms) CONTRACTS INVOLVING A NON-MERCHANT > TERMS OF ORIGINAL OFFER GOVERN - merchant = deals in goods/holds self out w special knowledge - expression of acceptance w different OR additional terms valid unless expressly made conditional on assent to the additional or different terms (in which case response = counteroffer/rejection) - if any party to the contract is not a merchant, the additional or different terms are considered to be mere proposals to modify the contract that do not become a part of the contract unless the offeror expressly agrees - if based on conduct instead of writing > KNOCKOUT RULE: any terms that are not common in both forms are "knocked out" and replaced by UCC gap fillers CONTRACTS BETWEEN MERCHANTS > ADDITIONAL TERMS USUALLY INCLUDED: additional terms in the acceptance will be included in the contract if both are merchants UNLESS: (i) they materially alter the offer - a term materially alters a deal if it would result in surprise of hardship if incorporated without express awareness by the other party - surprise: would a reasonable merchant (given the circumstances) have consented to the additional terms?; reasonable expectations in light of common practice and usage; if a term is widely used, its inclusion should be no surprise - hardship: would the term impose substantial economic hardship on the assenting party? (ii.) the offer expressly limits acceptance to the terms of the offer, or (iii.) the offeror has already objected to the particular terms within a reasonable time after notice is received SUMMARY: K based on the parties' writings? YES > are both parties merchants? are both parties merchants? NO > offer terms govern YES > additional/different terms in acceptance incorporated? K baed on the parties' writings? NO > K based on the parties' conduct? K based on the parties' conduct? NO > no K YES > Knock Out rule (common terms and UCC gap fillers)

(alternative means of contract formation; promissory estoppel) Pre-acceptance reliance

Pre-acceptance reliance refers to the situation where there has not yet been an acceptance but there has bene reliance, and the offer is revoked ex: you sell eggs from your backyard chickens a farmer's market and a customer says you could sell them at a store, giving you until the end of the month to decide (offer); relying on this offer, you add more coops and buy more chickens, but when you go to accept the customer revokes his offer

(formation of a contract) OFFER (indefiniteness and postponed bargaining) ' revocation by offeror (def, either by: ,5 limitations listed but not described)

RETRACTION of the offer, terminates the offeree's power of acceptance either by: (a) direct communication: directly tells offeree offer is terminated (b) indirect communication: if offeree indirectly receives correct information from a reliable source of acts of the offeror that would indicate to a reasonable person that offeror no longer wishes to make an offer ex: if sellers made an offer to buyer to sell house but then sold it to someone else without telling the buyer it's not effective revocation and buyer still has power of acceptance LIMITATIONS: (1) Option contracts (2) Merchant's firm offer (UCC) (3) Detrimental Reliance (4) Beginning performance in response to a true unilateral contract offer (5) Beginning performance for offer indifferent as to manner of acceptance

(formation of a contract; acceptance) bilateral contracts : MAILBOX RULE (state rule, CL or UCC?, if you change your mind, exception)

REVOCATIONS AND REJECTIONS ARE EFFECTIVE UPON RECEIPT AND ACCEPTANCES EFFECTIVE ON DISPATCH -receipt: when it reaches a destination that ordinarily receives communication (gotta be 100% sure); if it's in the mailbox, likely courts will count it as reception (burden on seller to be 100% sure about reception) COMMON LAW AND DEFAULT RULE so offeror can choose an alternative - default vs. mandatory: default rules can be modified by agreement of the parties but mandatory rules will be enforced even if the parties attempt to override or modify them IF YOU CHANGE YOUR MIND: - acceptance mailed > then rejection mailed: whichever gets there first is effective - rejection mailed > then acceptance mailed: acceptance effective unless rejection gets there first and offeror relies on rejection -ex: if offeror receives your rejection and then sold their car to someone else they were relying on your rejection - note: bc revocation effective only upon receipt if the offeree dispatched an acceptance before receiving revocation the acceptance is effective for forming a contract; true even though acceptance is dispatched after and received after revocation is EXCEPTION FOR OFFER CONTRACTS ACCEPTANCE IS EFFECTIVE UPON RECEIPT

(assessing performance and breach, breach of a contract) anticipatory repudiation : define reputation; how clear and unequivocal?

Reputation (R. 250; UCC 2-610): clear and unequivocal statement by the obligor to the obligee indicating that the obligor will commit a breach that would qualify as a material and total breach of the contract How clear and unequivocal? > R. 250 comment b: mere expression of doubt as to his willingness or ability to perform is not enough to constitute a repudiation, although such an expression may give an obligee reasonable grounds to believe that the obligor will commit a serious breach and may ultimately result in a repudiation....however, language that under a fair reading "amounts to a statement of intention not to perform except on conditions which go beyond the contract" constitutes a repudiation Illustration: On April 1st, A contracts to sell and B to buy land, delivery of the deed and payment of the price to be on July 30th. On May 1st, A tells B that he will not perform. A's statement is a repudiation. Illustration: The facts being otherwise as stated in Illustration 1, A does not tell B that will not perform but says, "I am not sure that I can perform, and I do not intent to do so unless I am legal bound to." A's statement is not a repudiation.

(supplementing the agreement, implied terms) implied terms (Rest. approach)

Rest 204; Omitted essential terms > When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court

(is non-performance permissible?, defenses to enforcement; incapacity) incapacity (rest. capacity to contract classes of people lacking capacity to contract:

Rest. 12(2): Capacity to Contract; Classes of people lacking capacity to contract: - minority (infants) - mental incapacity - intoxication

(assessing performance and breach; breach of a contract) determine whether non-breaching pay must perform

STEP ONE: WAS THE BREACH MATERIAL? - NOTE: if breaching party's performance is an express condition precedent, non-breaching party can withhold performance - When is breach material? (i.e. when is performance substantial?) > Rest. 241 — factors to consider (focus on non-breaching party): (1) Extent to which injured party will be deprived of the benefit which he reasonably expected (2) Extent to which injured property can adequately be compensated for part of benefit of which deprives (Look to dates: if clear that A must get something by December 1st....then B's delivery on December 31st will be a material breach); (Focus on beaching party: (1) Extent to which party failing to perform will suffer forfeiture (2) Likelihood that the party failing to perform will cute his failure (3) Extent to which behavior of the party failing to perform comports w standards of good faith and fair dealing) - Ex: Jacobs & Young: honest mistake STEP TWO: IF BRACH IS MATERIAL > THEN DETERMINE WHETHER THE BREACH IS TOTAL - R. 242: when is breach total? - Extent to which it reasonably appears to the injured party that delay may prevent or hinder him in making reasonable substitute arrangements - Extent to which the agreement provides for performance without delay and whether the circumstances indicate that performance or an offer to perform by that day is important - Ex: degree of importance that the terms of the agreement attach to performance without delay

(supplementing the agreement, the implied obligation of good faith) good faith (requirement, UCC def., Rest. def, purpose)

The requirement of good faith: -UCC 1-304: "every contract....imposes an obligation of good faith in its performance and enforcement" -Rest. 205: "every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement" Definition of good faith: -UCC 1-201: "honesty in fact and the observance of reasonable commercial standards of fair dealing" - Rest. 205: "faithfulness to an agreed upon common purpose and consistency w the justified expectations of the other party" Purpose: protect (not spoil) the fruits of the contract Example: A, the owner of a shopping center, leases part of it to B, giving B to the exclusive right to conduct a supermarket. During the term of the lease, A acquires adjoining land and leases part of the adjoining land to C for a competing supermarket. Assuming the lease was silent as to this type of activity, B may argue that A acted in bad faith

(assessing performance and breach; breach of a contract) excusing the non-occurrence of an express condition; to avoid forfeiture....

To avoid forfeiture [has to be more of a partial breach] Rest. 229: to the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange Forfeiture: denial of compensation that results when the obligee loses its right to the agreed exchange after it has relied substantially, as by preparation or performance, on the expectation of that exchange Summary: Condition cannot be material; Disproportionate forfeiture; How much time and resources have been invested?; Could they be deployed elsewhere? illustration: A contracts to build a house for B, using pipe of Readings manufacture; in return, B agrees to pay 75k in progress payments, each payment to be made "on condition that no pipe other than that of Reading manufacture has been used." Without A's knowledge, a subcontractor mistakenly uses pipe of Cohoes manufacture which is identical in quality and is distinguishable only by the name of the manufacturer which is stamped on it. The mistake is not discovered until the house if completed, when replacement of the pipe will require destruction of substantial parts of the houses. B refuses to pay the unpaid balance of 10k. A court may conclude that the use of Reading rather than Cohoes pipe is so relatively unimportant to B that the forfeiture that would result from denying A the entire balance would be disproportionate, and may allow recovery by A subject to any claim for damages for A's breach of his duty to use Reading pipe.

(assessing performance and breach, breach of a contract) determining whether non-breaching party must perform UCC approach Perfect Tender

UCC 2-601: Buyer's Rights on Improper Delivery ....if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may: (a) reject the whole; or (b) accept the whole; or (c) accept any commercial unit or units and reject the reset There is a breach of contract when the seller sends the buyer non-conforming goods EXCEPTION: (a) buyer makes an offer (b) seller ships goods, all or some of which are nonconforming (c) normally, this would be a breach because of the perfect tender rule (d) however, if the seller tells the buyer they are sending the goods as an accommodation, it is not a breach

(intro) (UCC) opinions and predications

UCC says that a statement purporting to be the seller's opinion/mere prediction of future events does not create a warrant but the buyer's reliance on the seller's skill/judgement may create an implied warrant (expert opinion paid for > likely a promise) ex: A, seeing the house of thoroughly fireproof construction, says to B, the owner, "this house will never burn down" > this is not a promise but merely an opinion or prediction; if A had been paid for his opinion as an expert, might have been implied promise

(assessing performance and breach; breach of a contract) waiver or estoppel; wrongful. prevention

WAIVER: "an intentional relinquishment of a known right" [Rest. 84(1)] - To waive a condition, the condition must not be material (must not be a material part of the deal) -If the condition is not minor, may still use estoppel ESTOPPEL: obligor expresses intent not to insist on it, followed by obligee's prejudicial reliance on that manifestation of intention -Ex.: A says, "you don't have to deliver written notice" and B relies on this statement WRONGFUL PREVENTION: Rest. 245: condition excused if the promisor wrongfully hinders or prevents condition from occurring

(supplementing the agreement, warranties) define warrant, caveat emptor, history

WARRANTY: a guarantee of a product or service for a specified period of time caveat emptor: let the buyer beware historically, at CL the seller bore no responsibility for the quality of the product he was selling unless he expressly guaranteed it or gave a warranty to the buyer

(supplementing the agreement, the implied obligation of good faith) good faith determination, purpose,

[expectations + purposes] -To determine what is considered good faith performance, courts must consider expectations of the parties and purposes for which the contract was made -There is an implied covenant of good faith in all contracts > Implied covenants (like good faith) can't contradict or override express terms, but can qualify parties' rights (even if the contract gives them discretion to do so under a literal reading of its terms) -Purpose = balance power discrepancies; look for: (1) subterfuge not quite arising to fraud; (2) other party deprives of fruits/benefits of agreement; (3) nefariousness in extracting an agreement (look at behavior!) - Gender / racial discrimination could violate obligation of good faith - Employment in USA is at will (no good faith obligation) > almost always loose - Discretionary decisions that result in economic disadvantage to the other party do not have legal significance if made without bad motive or intent - You must always back up a bad faith argument w/hard facts; it is not an independent cause of action - However, violating commercially reasonable standards to deprive the other party of reasonable profits may be a violation of the implied covenant of good faith - Good faith in performance: evasion of the spirit of the bargain, lack of diligence and slacking off, willful rending of imperfect performance, abuse of a power to specify terms, and interference w or failure to cooperate in the other party's performance - Good faith in enforcement: conjuring up a pretended dispute, asserting an interpretation contrary to one's own understanding, falsification of facts, taking advantage of the necessitous circumstances of the other party to extort a modification of contract for the sale of goods without legitimate commercial reason, harassing demands for assurances of performance, rejection of performance for upstate reasons, willful failure to mitigate damages, abuse of a power to determine compliance or to terminate the contract

(statute of frauds defense) sale of goods under statute of frauds and UCC exceptions other than merchants exception

a contract which does not satisfy the writing requirement is enforceable if it falls into one of the exceptions: (1) SPECIALLY MANUFACTURED GOODS: where the seller has begun to make specially manufactured goods for the buyer (specially manufactured, not suitable for sale to others, substantial beginnings/commitments) (2) PARTIAL PERFORMANCE: payment has been made and accepted, or goods have been delivered and accepted; will validate the contract only for those goods which have been accepted or for which payment has been made and accepted (SoF will still bar enforcement for non-delivered, non-accepted goods) - ex: Bufalloe v. Hart > sale of barns fell in w SoF bc more than $500, part performance exception applies bc payment was made and accepted (they kept the check signed by the P) and the P accepted the goods bc he told people he owed them, he paid for insurance, ect.; contract was enforceable for all 5 barns if P has "accepted the goods" but only for 2 bars in relying on D accepting payment bc he had only paid for those barns so far; check could satisfy the SoF is D signed it when cashing the check bc then it stared the quantity of the 5 barns and would be signed by D (3) ADMISSION: where the party charged admits in his pleading, testimony, or otherwise in court that a contract was made

(alternative means of contract formation; restitution) RESTITUTION (when someone is subject to restitution, what it's aimed at, cause of action, what you get, define quasi-contract, Posner, elements of quasi contract, and when restitution is denied)

a person who is UNJUSTLY ENRICHED AT THE EXPENSE OF ANOTHER IS SUBJECT TO THE REMEDY OF RESTITUTION EVEN WHERE THERE WAS NO PROMISE MADE - aimed at restoring money, property, or the value of property or services when it would be unjust to permit the recipient to retain what was received without paying for it - cause of action is unjust enrichment - restitution is the remedy - you get the amount you spent in providing the services QUASI-CONTRACT: A CONTRACT IMPLIED IN LAW (aka quasi-contract) IS AN OBLIGATION BY THE LAW W/O REGARD TO EITHER PARTIES' EXPRESSION OF ASSENT: - where a person performs services for another which are KNOWN TO AND ACCEPTED, THE LAW IMPLIES A PROMISE TO PAY for those services (ex: K is on vacation and F shows up at his house w his lawnmower business truck but no one answers the door; F mows the lawn and leaves a note charging $100; K refuses to pay; F would not win bc there is no express or implied contract, no conduct to show that K wanted his lawn mown, so it doesn't make sense to force a contract on K) - MOST SITUATIONS INVOLVE EMERGENCIES WHERE LIFE OR PROPERTY ARE AT IMMINENT RISK so there is no opportunity to bargain bc a loss iS imminent -PROTECTION OF ANOTHER'S LIFE OR HEALTH: a person who performs professional services required fOR the protection of another's life or health is entitled to restitution from the other as necessary to prevent unjust enrichment if the circumstances justify the decision to intervene w/out request; unjust enrichment will be MEASURED BY A REASONABLE CHARGE FOR THE SERVICES IN QUESTION; (ex: a Dr. is summoned by a bystander to attend to an unconscious victim; the Dr. performs emergency surgery and charges a reasonable and customary amount for services which the victim refuses to pay; courts say the Dr. should get paid bc there is a contract implied in law; can't wait to get an implied or express promise from the victim and most people would want the dr. to help in this situation) - PROTECTION OF ANOTHER'S PROPERTY: a person who takes effective action to protect another's property from threatened harm is entitled to restitution from the other as necessary to prevent unjust enrichment if the circumstances justify the decision to intervene without request; unrequested intervention is justified only when it is REASONABLE TO ASSUME THE OWNER WOULD WISH THE ACTION PERFORMED; measured by THE LOSS AVOIDED OR BY A REASONABLE CHARGE FOR THE SERVICES PROVIDED, WHICHEVER IS LESS; (ex: O's boat breaks from its dock and drifts to where C finds it damaged and in danger or sinking; C repairs it to keep it afloat and stores it until O discovers it and refuses to pay for repairs or storages; there is a contract implied in law bc C is protecting property and we assume assent) POSNER: to allow restitution there must have been a situation where TRANSACTION COSTS ARE HIGH and where parties WOULD HAVE AGREED WERE THEY ABLE TO BARGAIN ****ELEMENTS****: (1) P HAS CONFERRED A BENEFIT ON THE D (2) D HAS KNOWLEDGE OF THE BENEFIT AND HAS ACCEPTED OR RETAINED THE BENEFIT CONFERRED (will assume assent of D in emergency situations) (3) CIRCUMSTANCES ARE SUCH THAT IT WOULD BE INEQUITABLE FOR THE D TO RETAIN THE BENEFIT W/OUT PAYING FAIR VALUE FOR IT ****RESTITUTION DENIED IF****: (1) D refused (2) P didn't intent to be compensated (3) P is an officious intermeddler (i.e. trying to push their services on someone else even though they aren't being requested)

(assessing performance and breach; breach of a contract) express condition

agreed to by the parties themselves Must be explicitly stated and are always strictly enforced Express conditions must be literally performed and are not subject to the doctrine of substantial performance, as constructive conditions are Courts are skeptical of procedural conditions, especially if other things serve that function Language: must have certain words > "if; on condition of; subject to; provided that" Note: satisfaction clauses can be express conditions, discussed in good faith (supra) Can be waived only by the person that the condition favors (waivers can be retracted, and condition reinstated, as long as other party hasn't reasonably detrimentally relied unless condition is a material part of the principal contract purpose, in which case it's always retractable) Estoppel may also apply to express conditions (if other party reasonably detrimentally relies on condition/waiver) If a condition relies on one party's action and the party obstructs then non-performance of that condition is excused Failure to meet express conditions discharges other party's duty unless the other party excused the non-occurrence of the condition; nonoccurrence of a condition not a breach unless party is under duty to make condition occur Excuses for non-occurrence of condition: Impracticability, mistake, fraud, bad faith; Waiver/estoppel; Anti-forfeiture doctrine (Courts favor the interpretation w the lowest risk of forfeiture, can be reason to waive conditions; High standard, not used much) Prevention: obligor makes it impossible for oblige to satisfy condition Mailbox rule doesn't apply to express conditions Ex: "I will purchases your house if I can get financing"

(alternative means of contract formation; promissory estoppel) limiting offeror's power to revoke (main idea)

an offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice ex: A leases a farm to B and later gives B an 'option' to buy the farm for 15k within 5 years; with A's approval, B makes permanent improvements; A then tries to revoke the option, demanding a higher price; here, the offer is irrevocable bc B has detrimentally relied on A's offer/promise and it was reasonable and foreseeable that B would invest by improving the land ex: in reliance on A's offer to sell the land, B starts looking for investors, but then A revokes the offer; here, there is no promissory estoppel bc it was not foreseeable to A that B would look for investors

(contract formation, consideration) CONSIDERATION (define, modern modern approach)

consists of a BENEFIT TO THE PROMISOR OR A DETRIMENT TO THE PROMISEE WHICH IS INDUCED BY THE PROMISE (i.e. consideration is bargained for as the exchange for the promise) - each promise must be supported by a benefit or a detriment - detriment to the promisee must be giving up a legal right -ex: nephew gives up drinking and smoking after he turned 21 in consideration for money from uncle, bc he gave up a legal right this was consideration ex: if he gave up heroin instead > not consideration MODERN MODERN APPROACH: PROMISOR MUST HAVE MADE THE PROMISE IN ORDER TO GET THE BENEFIT OR THE DETRIMENT OF THE PROMISEE -ex: professor offers go give you lunch if you come to campus on Tuesday when you normally wouldn't but then cancels > there is a detriment to you bc you came to campus but the promise of lunch was not induced by getting you to come to campus > no consideration ex: aunt wants to give nephew $10k when he turns 19 so in consideration she received $1 as benefit to her but $1 did not induce promise > no consideration - reciprocal inducement of promise and consideration (one party's performance is the "price" of others) ex: reaming at one's job is response to a promise for a bonus

(assessing performance and breach; breach of a contract) conditions and promises defined

contract terms may be interpreted as..... CONDITIONS: failure excuses performance by promise, but does not entitle promisee to damages (ex: "if", "on condition of", "subject to", "provided that" -Types: (i) express conditions: non-occurrence excuses performance (oii) implied/constructive conditions: non-occurrence may excuse performance if there has not been substantial performance PROMISES: Failure to perform entitles promisee to damages; it does not excuse promisee's performance unless that failure is a material or a total breach (Default if ambiguous) PROMISSORY CONDITIONS: failure to perform entitles promisee to damages and excuses promisee's performance

(alternative means of contract formation; promissory estoppel) REMEDIES FOR PROMISSORY ESTOPPEL

courts can choose which type of damages to reward, or may reward both: - expectation damages: put the promisee in the position he expected to be per fulfillment of promise -reliance damages: what the promisee lost of spent by relying on the promise ex: K promises R he will pay him $25k after colleges, and based on this R quits his part-time job, plans to borrow $ and repay the loans w this promised money when he graduates; the day before he graduates, K tries to revoke the promise--here, it is reasonable and foreseeable R would rely on the promise and he did to his detriment bc now he has loans and he gave up his job, there is injustice bc this seems unfair -- so here we have promissory estoppel > giving R $25k would be expectation damages bc thats what he would get if K fulfilled his promise; gibing R his loan money is reliance damages (how much he took out by relying on the promise) ex: had right after R's freshman year concluded K tried to revoke the promise and R continued in college for 3 more years -- his reliance will only be applicable for the first year of college, that's the only time he could the been relying on the promise so only period he will be able to recover for under promissory estoppel ex: had right after K made the promise, R bought a new car for $25 guy and K tried to revoke the promise, it's not reasonably foreseeable that R would use the money to buy a car, so not recovery here Rest. ex: A applies to B, who is a distributor for radios manufactured by C, to sell C's products; B informs A that C accepted the application and will reward the franchise, telling A to proceed to employ salesmen and solicit orders, and that A will receive delivery; A spends $1k in preparing to do business, but the franchise doesnt go thru; if it did, A wouldn't made a profit of $20k; expectation damages her would be $20k, what they would've gotten if they wouldn't gotten the franchise and reliance damages would be $1k, what they spent relying on the promise

(meaning of the agreement, parol evidence rule) limitations/exceptions to PER

even though PER bars evidence, it may not be barred regardless under these situations: (1) EXTRINSIC EVIDENCE TO EXPLAIN MEANING OF (INTERPRET) WRITTEN TERMS - parol evidence to explain the meaning of the term is allowed but not to contradict or vary the writing -ex: evidence to show what the parties meant w boom scale (2) COLLATERAL AGREEMENT RULE: if the parol evidence is sufficiently distinct from the scope of the integrated writing, it can be seen as intended as as a separate ancillary contract -ex: A and B in an integrated writing promise to sell and buy a specific automobile; as part of the transaction they orally agree that B may keep the automobile in A's garage for 1 year paying $15/month (3) CONDITION PRECEDENT: evidence that the agreement was subject to a condition that must happen before any contractual obligation arises -ex: if A and B draft an elaborate written contract whereby B will contract a shopping mall according to A's plans and before signing A says to B "of course we agree that this whole deal depends entirely on my being able to get financing" and B replies "of course" if no financing is obtained, B may not recover form A (4) EXTRINSIC EVIDENCE TO SHOW DURESS, MISTAKE, MATERIAL MISREPRESENTATION, AND OTHER BASES FOR INVALIDATING (VOIDING) THE CONTRACT -ex: seller and buyer enter into a lengthy written agreement to sell seller's house (w a merger clause) and agreement is silent on the premise of terminates; before the closing, seller says "we checked and there are no terminated in the house" but the house did have termites; court would allow the evidence bc this is a fraudulent statement made by the seller - limitation: when the alleged oral promise directly contradicts the terms of an express written contract, the PER bars introduction (ex: same seller and buyer but here agreement states "seller does not know if terminates are present and disclaims any liability for them" but seller says "we checked and there were no terminates" but the house does have them, court would not allow the evidence) - exception: some courts have rejected this limitation as the PER is intended to protect the terms of the contract, shouldn't bar evidence challenging the validity of it - non-reliance clauses where the purchaser acknowledges they won't rely on any statements except those included in the agreement may be considered, but CA courts are skeptical

(supplementing the agreement, warranties) implied warranty of fitness of a particular purpose

for goods only! -UCC 2-315 - Not limited to merchant sellers ELEMENTS: (1) buyer had an unusual or particular purpose in mind for the goods (2) seller had reason to know of this purpose (ex: buyer has told the seller of this purpose) (3) seller has reason to know that buyer is relying on seller's skill or judgement to select or furnish goods that will meet buyer's needs (4) buyer in fact relied on seller's skill or judgement in selecting suitable goods (5) goods were not fit for the buyer's particular purpose

(formation of a contract) OFFER (indefiniteness and postponed bargaining) ' formal contract contemplated (general def., approaches, factors, can be considered what?)

formal contract contemplated: parties have agreed to all details and reached agreement in principle but contemplate the later execution of a formal written contract both the UCC and Rest. recognize that parties may be bound contractually even when they have only reached an agreement in principle > REST: manifestations of assent are enough to form a contract even if the parties plan to make a formal writing unless the agreements are only preliminary negotiations > then no contract UCC: even if terms are left open a contract for sale does not fail for indefiniteness if the parties intended to make a contract and there is a reasonably certain basis for giving a remedy there must be intent to be bound even before the formal writing, consider these FACTORS: (a) type of agreement usually put in writing? (b) few or many details? (c) large or small sum of money? (d) does agreement require formal writing for full expression of covenants? (e) did completion of negotiations indicate that a formal document was contemplated? CAN BE CONSIDERED either (a) no contract, (b) contract, or (c) agreement to negotiate in good faith

(the meaning of the agreement; principles of interpretation) which interpretation prevails when choosing between two reasonable meanings?

if A has reason to know of the meaning B attaches to the term and B does not have reason to know of the meaning attached by A then B's meaning prevails where one party is responsible for writing the contract or is in a stronger bargaining position, if a term is ambiguous it will be interpreted against the draftsman ex: Joyner v. Adams; the meaning of "developed" was ambiguous and both parties had reasonable interpretations; P did not convey there meaning and D specifically rejected the P's interpretation; D's understanding matched commercial real estate trade; thus, D's meaning won

(statute of frauds defense) sale of goods under statute of frauds and UCC (when it is subject to SoF, requirements)

if a contract for the sale of goods if FOR A PRICE OF $500+ it is subject to the SoF and the UCC - promissory estoppel can be used to enforce a contract for the sale of goods that fails to comply w the UCC -if for sale goods the one year rule does not apply!!! dont have to satisfy CL requirements.... Instead, the *REQUIREMENTS* are: (1) A writing sufficient to indicate that a contract for sale has been made between the parties (note that a writing will not be insufficient bc it omits or incorrectly states a term even if essential) (2) is signed by the party against whom enforcement is sought (3) must specify a quantity

(formation of a contract; acceptance) UNILATERAL CONTRACTS AMBIGUOUS SITUATIONS

if it is not clear whether the offeror is asking for a promise or an action it is ambiguous here, the offeree HAS THE CHOISE OT ACCEPTANCE W A PROMISE OR ACCEPTANCE BY COMPLETING THE TASK - when you choose performance, the beginning will create a contract (as opposed to just making it irrevocable in typical unilateral situation) ex: "I will pay you $100 to mow my lawn on Sunday" -- not clear if asking for promise to mow or asking for you to mow = ambiguous ex: A, a merchant, mails B, a carpenter, an offer to employ B to fit up A's office in accordance w A's specifications and B's estimate previously submitted, the work to be completed in two weeks; the offer says "you may begin at once" and B immediately begins to work in his own shop; the next day, before B has sent a notice of acceptance or begun to work at A's office, A revokes the offer; the revocation is timely, since B has not begun to perform

(assessing performance and breach; breach of a contract) implied or constructive condition

imposed by the court as justice requires Substantial performance will suffice to satisfy the condition Preference: if language is ambiguous, the court will interpret it as a promise or constructive condition Ex: if one party materially breaches a contract, the other party's contract obligations are suspended

(formation of a contract) OFFER: preliminary negotiations: offer vs. solicitation of offers

its not an offer if knows or has reason to know that the person making it doesn't intend to conclude a bargain until he has a further manifestation of assent ads: more invitation to offers, usually indefinite to quantity/other terms, and addressed to the public > exception: if specific to quantity it's an offer, since limiting the substance of an ad means that not everybody can accept the ad quoting of price: inviting an offer rather than making one invocations of bids and other offers: "make me an offer" normally indicates that no offer is being made

(electronic and layered contracting) define layered contracting, non-good example

layered contracting typically involves payment for and delivery of goods before the buyer has a chance to view or assent to the standardized terms non-goods example: insurance policies where you pay and later receive a copy of the policy w all of the terms and exclusions

(formation of a contract; acceptance) OFFER AND ACCEPTANCE UNDER THE UCC 2-207

liberal and less formal: OFFER CONSTRUED AS INVITING ACCEPTANCE IN ANY MANNER REASONABLE IN THE CIRCUMSTANCES AND SUFFICIENT TO SHOW AGREEMENT (conduct sufficient) UCC DOES NOT APPLY THE MIRROR IMAGE RULE - there does not need to be a clear moment where contract was formed but does need to be agreement on essential terms, however, some can be left open > price is not essential (quantity is tho), does not fail for indefiniteness if the parties have intended to make contract and missing terms will be supplied by the court DEFINITE AND SEASONABLE EXPRESSION OF ASSENT CONSTITUTES ACCEPTANCE EVEN W ADDITIONAL OR DIFFERENT TERMS UNLESS MADE EXPRESSLY CONDITIONAL ON ASSENT TO ADDITIONAL OR DIFFERENT TERMS - seasonable = made in good time - definite expression of acceptance = manifest an intent to accept the offer (mere fact that deviates from terms of offer not enough, must be something fundamentally at odds) an order or offer to buy goods shall be construed as inviting acceptance either by: - a prompt promise to ship OR - a prompt or current shipment of the goods (when the beginning of a requested performance is a reasonable mode of acceptance an offeror is not notified within a reasonable time may treat the offer as having lapse before acceptance)

(intro) promises beyond human control.....

may include a promise to answer for harm of event not occurring (ex: A, the builder of a house or inventor of the material used, says to B, the owner, "I warrant this house will never burn down" > includes a promise to pay for harm if the house does burn down)

(formation of a contract; acceptance) bilateral contracts; ACCEPTANCE BY UNAUTHORIZED MEANS

may still be effective if it is actually received by the offeror while offer is still in existence ex: A makes offer to B specifying that acceptance should be by e-mail; B mails A her acceptance; acceptance is not effective upon dispatch of letter but only upon receipt by A receiving if it offer is still open

(formation of a contract; acceptance) BATTLE OF THE FORMS COMMON LAW APPROACH

mirror image rule: no contract unless directly mirror the offer LAST SHOT RULE: if the terms are in conflict but the parties performed, the last paperwork wins ex: A sent a form, B sent an acknowledgment w contrasting limitations of damages, then A proceeded w repairs to the ship, so B wins bc they have the limitation of damages on their form which came last

(formation of a contract; acceptance) modern view on bilateral vs. unilateral contracts

modern view = MOST CONTRACTS ARE BILATERAL unless clearly indicated otherwise by the language or the circumstances, all offers are "indifferent" offers, meaning they can be accepted by promising to perform or beginning performance ex: A orders manufactures goods from B; recognizing the speed w which the order much be filled, B begins to manufacture the ordered items shortly after the order is received; this constitutes an acceptance of the offer IF B gives A notice of its beginnings of performing within a reasonable time and creates an implied promise on the part of B to complete manufacture UNILATERAL LIMITED TO TWO CIRCUMSTANCES UNDER ARTICLE 2 AND THE REST.: (1) where the offeror clearly indicates that completion of performance is the only manner of acceptance (2) where there is an offer to the public (like a reward offer) which obviously contemplates acceptance by performance

(alternative means of contract formation; restitution) promissory restitution aka moral obligation (define, exception to what normal rule?)

moral obligation issues arise WHEN THE RECIPIENT OF SERVICES MAKES AN EXPRESS PROMISE TO PAY FOR THEM, BUT ONLY AFTER THE BENEFITS ARE RECEIVED; promissory restitution is an exception to the typical rule that past actions cannot serve as consideration -ex: K is out on vacation and F mows the lawn; K upon returning sees the lawn and promises to pay; he is not obligated to pay bc the past action of the lawn being mown is not consideration for the promise bc it was before the promise -ex: from case Mills v. Wyman > L became sick and M took care of him; afterwards, L's father promised to pay for the expenses, but he did not not; his promise wasn't enforceable bc it took place after the services had already been given to L; note: this would be consideration is the promise was made before the care was renders and would be unjust enrichment if the son was underages bc the father has a legal obligation to pay for his son's expenses, so there has been a legal benefit to the father

(alternative means of contact formation promissory estoppel) pre-contractual liability

normally not reasonable for a party to rely on assurances during negotiations, but there are some situations where PRE-CONTRACTUAL PROMISES MIGHT LEAD THE OTHER SIDE TO RELY ON THOSE STATEMENTS AND THEY MAY BE ALLOWED TO RECOVER UNDER PROMISSORY ESTOPPEL - ex: Pop's Cones v. Resorts > Resorts assured Pop's that negotiations were almost done and told them not to renew their lease; detrimental reliance bc they didnt renew the lease and had to find somewhere else to go and were closed for extra time in reliance on Resort's promise; this has a HIGH INJUSTICE ELEMENT bc Resort's was keeping Pop's as a fallback while actually negotiating w someone else; if Pop's was a franchise instead of a mom-and-pop type like it was, the injustice factor wouldn't have been as strong companies can protect themselves from failed negotiations by reminding the other party that it is tentative and nothing will be binding before the final agreement; don't make promises or assurances w/ strong statements of intent w/out qualifying it

(formation of a contract; offer) limitation to being able to retract an offer #5: BEGINNING PERFORMANCE FOR OFFER INDIFFERENT AS TO MANNER OF ACCEPTANCE (just an example)

once offeree begins performance the contract is complete and revocation is impossible after offeror is notified that performance has begun

(alternative means of contact formation; restitution) pre-existing legal obligation

pre--existing legal obligation exception: PAST ACTIONS MAY SERVE AS CONSIDERATION WHERE THERE WAS A PROMISE SUPPORTED BY CONSIDERAETION WHICH BECOMES UNENFORCEABLE AND THEN ANOTHER PROMISE FOLLOWS TO FUFILL THAT OBLIGATION - promise to pay a debt barred by SoL - express promise to pay debts previously discharged in bankruptcy - promise to perform on antecedent contract previously voidable by the promisor ex: obligations of minors affirmed after majority, contracts entered into while lacking capacity, contracts induced by a fraud after fraud discovered

(the meaning of the agreement; principles of interpretations) principles of interpretations (when are they needed, first step)

principles of interpretation are needed when either terms are left out of a contract and thus the contract is incomplete so courts will fill in terms for the parties OR when the parties agree to an ambiguous term and courts must determine the meaning of the term first step: establish ambiguity -ambiguous when there are 2 different interpretations of the term which are both objectively reasonable (can consider 3rd party testimony but do not consider subjective evidence of the parties' belief) second step: determine which term should prevail

(electronic and layered contracting) shrinkwrap contracts (define, majority, minority)

shrinkwrap contracts are contracts where a vendor delivers a product that includes w it additional terms and conditions MAJORITY: the seller makes the offer by sending the product w the terms, the purchaser can then either accept by opening and keeping the product or just not returning it or reject by returning it; court says seller must make it clear that you can reject the contract by returning the product ex: DeFontes v. Dell: the court held that the purchasers accepted the offer in the shrinkwrap contract by keeping the computers, but they weren't aware that they could reject the contract so Dell still lost MINORITY: the purchaser makes the offer by purchasing, the seller accepts the offer by charging the buyer and shipping the product -note: additional terms in shrinkwrap will be seen as proposals to add to the contract as governed by UCC 207-2; they will not be part of the contract (assuming you are not a merchant) unless you expressly assent to the terms

(intro) boilerplate clause

standard, generic, reusable legal clauses found at the end of a contract (sometimes fine print)

(the meaning of the agreement; principles of interpretation) extrinsic evidence to use in interpretation

start w express words of agreement, trying to interpret them in light of the contract as a whole then look at evidence outside of the agreement: COURSE OF PERFORMANCE: how parties have acted so far during the current agreement (ex: if your landlord saw you w a fish and didn't object) HISTORY OF COMMUNICATIONS DURING NEGOTIATIONS (ex: if your landlord told you expressly that you could have a fish) COURSE OF DEALING: how the 2 parties have behaved in past agreements b/t the 2 parties TRADE USAGE: what people in the industry typically use the term to mean; when one party is not a member of the trade, the other party has to show the newcomers actually knew about the trade usage OR that usage is so widespread that we can presume the newcomer accepted it TRANSACTIONAL CONTEXT AND MARKET FACTORS: reasonable construction should be preferred over one that is unreasonable ex: Frigaliment v. BNS: the contract did not specify what "chicken" means; BNS said it means chickens, Frigaliment said it means only young and tender chickens; the court determined that the term was ambiguous bc of the testimony of third parties; BNS was inexperienced in the trade and Frigaliment did not show the term was widespread or well-established; the price BNS set was below market value if we interpreted the contract as Frigaliment argued we should; thus, the court went w the more general definition of chickens

(intro) sources of contract law

statutory law (statute of fraud, some states have also codified principles of common law > enacted into statutory form) UCC (a treaty) Restatements of Contracts (secondary authority)

(the meaning of the agreement, parol evidence rule) Parol evidence rule (define, it applies when...., evidence subject to PER)

the parol evidence rule determines whether the fact-finds may consider that parol evidence to decide whether the terms should be included in the final agreement APPLIES WHEN: (1) there is a writing (integration) that the parties regard as a final embodiment of their agreement (2) a party tries to introduce extrinsic evidence of a term that it claims is the final contract but that does not appear in the writing EVIDENCE SUBJECT TO PER: all evidence of oral or written statements regarding terms allegedly agreed to prior to the final writing which are not in the final writing - includes evidence of an oral agreement made contemporaneously w the final writing - does not include evidence of a written agreement made contemporaneously w the final writing (court may piece together parties' agreement from several contemporaneous writings) - does not include statements or agreements made after the written agreement - if evidence is not subject to the PER, assume the evidence is admissible

(formation of a contract; acceptance) bilateral contracts: MIRROR-IMAGE RULE (CL or UCC?, state rule and what to distinguish if from)

this is A COMMON LAW RULE EACH AND EVERY TERM MUST HAVE ABSOLUTE UNEQUIVOCAL ACCEPTANCE -ex: A offers to lease warehouse to B by handing B a signed copy of his standard lease agreement; B reads over the lease and a clause providing that disputes will be settled by arbitration, signs the lease, and hands it back to A; A hands the keys over to B; here, by adding the arbitration clause to the lease, B rejected A's offer and made a counteroffer; by handing B the keys to the warehouse, A accepted B's counteroffer ANY DIFFERENT OR ADDITIONAL TERMS MAKE THE RESPONSE A REJECTION/COUNTEROFFER - distinguish from: (A) statements that make terms explicit: statements made by offerree that make implicit terms explicit do not prevent acceptance; ex: statement by offeree that "I accepted provided that convey marketable title" is a valid acceptance bc the obligation to convey marketable title is implicit in the offer to sell (B) grumbling acceptance: acceptance accompanied by expression of dissatisfaction is effective acceptance as long as it stops short of actual dissent; ex: "I think it's highway robbery at that price but I guess I'll have to accept it" is valid (C) request for clarification: does not necessarily amount to rejection and counteroffer; ex: "the 1k price--that includes shipping, doesn't it?" is not a counteroffer

(alternative means of contracts formation; promissory estoppel) limiting offeror's power to revoke: DRENNAN RULE (when it usually applies, default rule, examples, minority, limitations)

typical in the construction situation where a subcontractor put in a bid and the general contractor puts in a bid w the project manager using that bid -- the subcontractor's quote is considered an offer which the general contractor relies on when giving a quote to the project manager but has to wait to be given the job to accept the subcontractor's offer DEFAULT RULE: subcontractor quotes are NOT REVOCABLE until a reasonable time has passed from GC being awarded the contract - bc the GC is reasonably relying on the SC quote in preparing their own bid, which the SC knows and wants to happen -when SC submits the bid, there is an implied promise that the offer will remain open for a reasonable time -- does NOT require an express promise to keep the offer open - reasonable time after GC is awarded the contract bc need to give GC time to accept SC's offer, but don't want GC to keep SC on the hook for years after so if unreasonable time has passed the SC is freed from the offer EXAMPLES - after the GC submitted the bid, the SC tries to revoke the offer; court would say that the offer is irrevocable if the GC can show that they have lost an opportunity by having to revoke their own big on the project - from Drennan case: after the GC is awarded the project, the SC tries to revoke the offer; court says the offer is irrevocable bc the GC has detrimentally relied on SC's bid - if the GC has not yet submitted the bid, there is no detrimental reliance so no promissory estoppel MINORITY: offer cannot be binding thru promissory estoppel unless there is consideration (aka bid ! = offer) LIMITATIONS: - will be revocable if the SC's bid expressly states that it is revocable bc then the GC is not justified in relying on the bid - will be revocable when the GC has reason to believe the SC's bid was a mistake bc then the GC is not justified in relying on the bid (clear and palpable mistake ex would be a widely different bid) - will be revocable if there is inequitable conduct by the GC (ex: bid shopping or bid chipping, which is when you try to strong arm the SC into accepting a lower fee) - mere estimates/ballpark figures

(UCC vs. CL) when contracts involve both goods and non-goods and you need to figure out if its the CL or the common law, what do you do?

use the PREDOMINANT PURPOSE TEST: if the transaction is a hybrid of goods and services, look at the predominant purpose of the transaction to determine if it is a sale of services of goods; UCC applies if the predominate purpose is the sale of goods FACTORS (Looser - Not - I) (1) Language of the contract (2) Nature of the business of the supplier (3) the Intrinsic worth of the materials: consider the value of goods compared to the non-goods to determine which is the essence of the contract ex: a contract to repair a car involves both supply of parts and the provision of labor but the main purpose is the labor > sales of services bc goods are incidental to service > no UCC ex: sold food truck w/ equipment w name of the business which is intangible, bc the equipment and truck are worth much more the court found it was a sale of goods ex: a contract to repair a car involves both supply of parts and the provision of labor but the main purpose is the labor > so sale of services bc goods are incidental to services > no UCC MINORITY RULE: "splits" the transaction (Gravaman Test)

(intro) remedies for breach of contract (general)

usually monetary relief to protect P's expectation interests or maybe "specific performance" (which is ordering D to cooperate w performance originally agreed to)