Contracts and Sales

Legal Value Element

Adequacy of Consideration: in general, courts do NOT inquire into the adequacy or fairness of consideration. "A mere peppercorn"

Act or Forbearance by Promisee Must Be of Benefit to Promisor

An act or forbearance by the promisee (or a promise to act or forbear) is sufficient consideration to form a contract if it benefits the promisor. The benefit, however, need not be economic.

Bargained-For Exchange

this element of consideration requires that the promise induce the detriment AND the detriment induce the promise. There is no bargain involved (meaning no consideration) when one party gives a GIFT to another.

Mental Incapacity

One whose mental capacity is so deficient that they are incapable of understanding the nature and significance of a contract may disaffirm when lucid or by a later appointed legal representative. They may likewise affirm during a lucid interval or upon complete recovery, even without formal restoration by judicial action. In other words, the contract is voidable.

elements of undue influence

(1) undue susceptibility to pressure by one party, and (2) excessive pressure by the other party.

Exceptions to the Parol Evidence Rule

1) Partially Integrated Writing 2) Defense against formation 3) explain a vague term 4) correct a clerical error

Elements of Consideration

1) a bargained-for exchange between parties 2) legal value, meaning that which is bargained for must be considered of legal value, or as it is traditionally stated, it must constitute a benefit to the promisor OR a detriment to the promisee.

Promises to Pay Debt of Another (Suretyship Promises)

A promise to answer for the debt or default of another must be evidenced by a writing. However, if the main purpose or leading object of the promisor is to serve a pecuniary interest of his own, the contract is NOT within the Statute of Frauds even though the effect is still to pay the debt of another.

Goods Priced at $500 or More

A contract for the sale of goods for a price of $500 or more is within the Statute of Frauds and generally must be evidenced by a signed writing to be enforceable. Note that a writing is sufficient even though it omits or incorrectly states a term, but the contract is not enforceable beyond the quanity of goods shown in the writing.

Void Contract

A contract having no legal force or binding effect.

Voidable Contract

A contract that may be legally avoided at the option of one or both of the parties. Ex. infancy or mental illness

Discharge of Debts

A debt can be discharged through an accord and satisfaction. In general, an accord must be supported by consideration even if the consideration is of a lesser value than the originally bargained-for consideration.

Timing - Disclaimers and Limitations in the Box

A disclaimer must be agreed to during the bargaining process. A warranty disclaimer or limitation on remedy included inside the packaging of goods is not effective against the buyer.

Revocation

A revocation is the retraction of an offer by the offeror. An offer may also be revoked indirectly if the offeree receives: (1) correct information, (2) from a reliable source, (3) of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer. Effective when received NO MAILBOX RULE FOR REVOCATION

Merchant's Confirmatory Memo

A merchant's memo confirming an oral agreement that contains different or additional terms is also subject to the battle of the forms provision

Effect of Merger Clause

A merger clause recites that the agreement is the complete agreement between the parties. The presence of a merger clause is usually determinative in large commercial contracts. For most contracts, however, the modern trend is to consider it as one factor in determining integration.

Additional Terms under Article 2

A party can't contradict a written contract but may add consistent additional terms unless: (1) there is a merger clause, or (2) the courts find from all of the circumstances that the writing was intended as a complete and exclusive statement of the terms of the agreement

Validity Issues

A party to a written contract can attack the agreement's validity. The party acknowledges (concedes) that the writing reflects the agreement but asserts, most frequently, that the agreement never came into being because of any of the following: - Formation Defects: Formation defects (for example, fraud, duress, mistake, and illegality) may be shown by extrinsic evidence. - Conditions Precedent to Effectiveness: If a party asserts that there was an oral agreement that the written contract would not become effective until a condition occurred, all evidence of the understanding may be offered and received.

"Past" or "Moral" Consideration

A promise given in exchange for something already done does not satisfy the bargain requirement. Exceptions: Where a past obligation is unenforceable because of a technical defense (ex. SoL), that obligation will be enforceable if a new promise is made in writing or is partially performed. Also, under the modern trend, if a past act benefited the promisor and was performed by the promisee at the promisor's request or in response to an emergency, a subsequent promise to pay for that act will be enforceable.

Performance Not Within One Year from Date of Contract

A promise that by its terms cannot be performed within one yar is subject to the Statute of Frauds. Part performance does NOT satisfy the Statute of Frauds in this case. The date runs from the date of the agreement and not from the date of performance.

Promises in Consideration of Marriage

A promise the consideration for which is marriage must be evidenced by writing. This applies to promises that induce marriage by offering something of value.

Conspicuous Defined

A term is conspicuous when it is "so written, displayed, or presented that a reasonable person against whom it is to operate ought to have noticed it." Language in the body of a writing is conspicuous if: (1) it is in larger type than surrounding text; (2) it is in a contrasting type, font, or color; or (3) it is set off from the text by marks that call attention to it. The court, not the jury, decides any fact question as to conspicuousness.

Implied Warranty of Fitness for a Particular Purpose

A warranty will also be implied in a contract for the sale of goods whenever (1) any seller, merchant or not, has reason to know the particular purpose for which the goods are to be used and that they buyer is relying on the seller's skill and judgment to select suitable goods; and (2) the buyer in fact relies on the seller's skill or judgment.

The Mailbox Rule

Acceptance by mail or similar means is effective at the MOMENT OF DISPATCH, provided that the mail is properly addressed and stamped unless one of these exceptions applies: 1) The offer stipulates that acceptance is not effective until received 2) An option contract is involved (an acceptance under an option contract is effective ONLY upon receipt) 3) The offeree sends a rejection and then sends an acceptance, in which case WHICHEVER ARRIVES FIRST is effective 4) The offeree sends an acceptance and then a rejection, in which case the acceptance is effective (that is, the mailbox rule applies) UNLESS the rejection arrives first and the offeror detrimentally relies on it.

The Offer

An offer creates a power of acceptance in the offeree and a corresponding liability on the part of the offeror. For a reasonable communication to be an offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms. In deciding whether a communication creates this reasonable expectation, ask: 1) was there an expression of a promise, undertaking, or commitment to enter into a contract? 2) were there certainty and definiteness in the essential terms? 3) was there communication of the above to the offeree?

Beginning Performance in Response to True Unilateral Contract Offer

An offer for a true unilateral contract becomes irrevocable once performance has begun. The offeror must give the offeree a reasonable time to complete performance. Distinguish - Preparations to Perform: Substantial preparations to perform do not make the offer irrevocable but may constitute detrimental reliance sufficient to make the offeror's promise binding to the extent of the detrimental reliance

Requirements for Real Estate Transactions - Land and Price Terms

An offer involving realty must identify the land and the price terms. The land must be identified with some particularity but a deed description isn't required. Most courts will NOT supply a missing price term for realty.

Lapse of Time

An offer may be terminated by the offeree's failure to accept within the time specified by the offer or, if no deadline was specified, within a reasonable time

Express Warranties

Any affirmation of fact or promise made by the seller to the buyer, any description of the goods, and any sample or model creates an express warranty if the statement, description, sample, or model is part of the basis of the bargain.

Merchants vs. Nonmerchants

Article 2 generally defines "merchant" as one who regularly deals in goods of the kind sold or who otherwise by their profession holds themselves out as having special knowledge or skills as to the practices or goods involved.

Unilateral Mistake

If only one of the parties is mistaken about facts relating to the agreement, the mistake will not prevent formation of a contract. But, if the non-mistaken party knew or had reason to know of the mistake made by the other party, the contract is voidable by the mistaken party. As with mutual mistake, the mistake must have a material effect on the agreed-upon exchange, and the mistaken party must not have borne the risk of the mistake.

Acceptance of Offer for Unilateral Contract

Completion of Performance: a unilateral contract is not accepted until performance is completed. However, the offeree is not obligated to complete performance merely because they have begun performance, as only complete performance constitutes and acceptance of the offer. Notice: Generally, the offeree is NOT required to give the offeror notice that he has begun the requested performance but is required to notify the offeror within a reasonable time after performance has been completed. However, no notice is required if: (1) the offeror waived notice; or (2) the offeree's performance would normally come to the offeror's attention within a reasonable time.

Promissory Estoppel or Detrimental Reliance

Consideration is not necessary if the facts indicate that the promisor should be estopped from not performing. A promise is enforceable if necessary to prevent injustice if: (1) The promisor should reasonably expect to induce action or forbearance and (2) Such action or forbearance is in fact induced. THIS IS ONLY THE RIGHT ANSWER IF THERE IS NO CONSIDERATION

When Contract is Removed from Statute of Frauds

Contract Modifications: A written contract can be modified orally, but the modification must be in writing if the contract as modified falls within the statute of frauds. Performance: - Land Sale Contracts: If a seller conveys to the buyer, the seller can enforce the buyer's oral promise to pay. Likewise, the buyer may seek to specifically enforce an oral land sale contract under the doctrine of part performance. Most jurisdictions require at least two of the following 1) payment (in whole or in part), 2) possession, or 3) valuable improvements - Service Contracts: Full Performance Required. An oral contract that cannot be completed within one year but has been fully performed by one party is enforceable. - Sale of Goods Contracts: Part performance takes a sale of goods contract out of the Statute of Frauds when (1) the goods have been specially manufactured, or (2) the goods have been either paid for or accepted.

Duress and Undue Influence

Contracts induced by duress or undue influence are voidable and may be rescinded as long as they are not affirmed. Withholding something someone wants or needs will constitute economic duress if: (1) the party threatens to commit a wrongful act that would seriously threaten the other contracting party's property or finances; and (2) there are no adequate means available to prevent the threatened loss.

Rejection

Express Rejection: an express rejection is a statement by the offeree that they do not intend to accept the offer. Such a rejection will terminate the offer. Counteroffer as Rejection: A counteroffer is an offer made by the offeree to the offeror that contains the same subject matter as the original offer, but differs in its terms. Conditional Acceptance as Rejection: When an acceptance is made expressly conditional on the acceptance of new terms, it is a rejection of the offer. The conditional acceptance is essentially a new offer, and the original offeror may form a contract by expressly assenting to the new terms

Requirements for Sale of Goods - Quantity Terms

In a contract for the sale of goods, the quantity being offered must be certain or capable of being made certain.

General Rules of Contract Construction

Contracts will be construed as a whole: specific clauses will be subordinated to the contract's general intent. The courts will construe words according to their "ordinary" meaning unless it is clearly shown that they were meant to be used in a technical sense. If provisions appear to be inconsistent, written or typed provisions will prevail over printed provisions. The courts generally will try to reach a determination that a contract is valid and enforceable. Ambiguities in a contract are construed against he party preparing the contract, absent evidence of the intention of the parties. The parties' course of dealing (that is, the sequence of conduct concerning previous transactions between the parties to a particular transaction that may be regarded as establishing a common basis of their understanding. A usage of trade (that is, a practice or method of dealing, regularly observed in a particular business setting so as to justify an expectation that it will be followed in the transaction in question) The parties' course of performance (that is, if a contract involves repeated occasions for performance by either party and the other party has the opportunity to object to such performance, any course of performance accepted or acquiesced to is relevant in determining the meaning of the contract) When rules conflict: (1) express terms are given greater weight than course of performance, course of dealing, and usage of trade; (2) course of performance is given greater weight than course of dealing or usage of trade; and (3) course of dealing is given greater weight than usage of trade

Specific Disclaimers

Disclaimer of Warranty of Merchantability: can be specifically disclaimed or modified only be mentioning merchantability. If the sales contract is in writing, the disclaimer must be conspicuous. Disclaimer of Warranty of Fitness for a Particular Purpose: can be specifically disclaimed only by a conspicuous writing. A written disclaimer is sufficient if it says, for example, "there are no warranties which extend beyond the description on the face hereof."

Delivery Terms and Risk of Loss

Effect of Breach of Rick of Loss Defective Goods: If the Buyer has a right to reject the goods, the risk of loss doesn't pass to the buyer until the defects are cured or the buyer accepts the goods in spite of their defects. Note that the buyer generally has the right to reject for any defect. Revocation Acceptance: If the buyer rightfully revokes acceptance, the risk of loss is treated as having rested on the seller from the beginning to the extent of any deficiency in the buyer's insurance coverage. Noncarrier Case In such a case, if the seller is a merchant, risk of loss passes to the buyer only when they take physical possession of the goods. If the seller is not a merchant, risk of loss passes to the buyer upon tender of delivery. Carrier Case A carrier case is a sale in which it appears that the parties intended the goods to be moved by a carrier (for example, when you order a book from a website). Shipment Contract: If the contract authorizes or requires the seller to ship the goods by carrier but does not require them to deliver the goods at a particular destination, it is a shipment contract and rick of lass passes to the buyer when the goods are delivered to the carrier - Seller's Duties Under Shipment Contract 1. make a reasonable contract with the carrier on behalf of the buyer 2. deliver the goods to the carrier 3. promptly notify the buyer of the shipment 4. provide the buyer with any documents needed to take possession of the goods Destination Contracts: If the contract requires the seller to deliver the goods at a particular destination, the risk of loss passes to the buyer when the goods are tendered to the buyer at the destination. Common Delivery Terms FOB: "Free on Board" the risk of loss passes to the buyer at the named location. The seller bears the risk and expense of getting the goods to the named location. FAS: "free alongside" Risk of loss passes to the buyer once the goods are delivered to the dock

Equitable and Promissory Estoppel

Estoppel may be applied if it would be inequitable to allow the Statute to defeat a meritorious claim. Examples include situations where the defendant falsely and intentionally tells the plaintiff that the contract is not within the Statute or induces the plaintiff to change position in reliance on an oral agreement.

Good Faith and Fair Dealing

Every contract within the UCC imposes an obligation of good faith in its performance and enforcement. "Good faith" is honesty in fact and the observance of reasonable commercial standards. The common law also imposes a duty of good faith and fair dealing. A breach of this duty usually involves exercising discretion in a way that deprives the other party of the fruits of the contract.

Types of Contracts

Express Contracts: formed by language, oral , or written. Implied Contracts: formed by conduct. Quasi-Contracts: not contracts at all; it is a name given when an unenforceable contract results in unjust enrichment

Who May Accept and Offer

Generally, only the person to whom an offer is addressed has the power of acceptance. A member of a class to which an offer has been directed also has the power to accept. Generally, an offeree's power of acceptance cannot be assigned. But, if the offeree paid consideration to keep the offer open, the right to accept IS transferable

Common Law vs. Article 2 Sale of Goods

Generally, the common law governs contracts. However, for contracts involving the sale of goods, Article 2 of the Uniform Commercial Code ("UCC") applies. Article 2 has adopted much of the common law of contracts, but when the common law and Article 2 differ, Article 2 governs in a contract for the sale of goods. Anything not for "goods" is governed by common law.

"Goods" Defined

Goods are all things movable at the time they are identified as the items to be sold under the contract. Any contract for goods is governed by UCC Article 2 despite whether there are merchants involved or the price.

Fraud in the Inducement

If a party induces another to enter into a contract by using fraudulent misrepresentation, the contract is voidable by the innocent party if they justifiably relied on the fraudulent misrepresentation.

Reformation

If a party to a written agreement alleges facts (for example, mistake) entitling him to a reformation of the agreement, the parol evidence rule is inapplicable.

Contracts Involving Goods and Nongoods

If a sale involves both goods and services, you will determine which aspect is dominant and apply the law governing that aspect to the whole contract. However, if the contract divides payment between goods and services, then Article 2 will apply to the sale portion and the common law will apply to the services portion.

Mutual Mistake as to Existing Facts

If both parties entering into a contract are mistaken about existing facts relating to the agreement, the contract may be voidable by the adversely affected party if: (i) The mistake concerns a basic assumption on which the contract is made (ii) the mistake has a material effect on the agreed-upon exchange; AND (iii) the party seeking a voidance did not assume the risk of the mistake Not a defense if the party asserting mistake as a defense bore the risk that the assumption was mistaken. Mistake in value generally not a defense

Misunderstanding - Ambiguous Contract Language

If the contract includes a term with at least two possible meanings, the result depends on the parties' awareness of the ambiguity: a. Neither party aware—no contract unless both parties intended the same meaning; b. Both parties aware—no contract unless both parties intended the same meaning; or c. One party aware—binding contract based on what the ignorant party reasonably believed to be the meaning of ambiguous words. Ambiguity is one area where subjective intent is taken into account. Ambiguity is one area where subjective intent is taken into account.

Place of Delivery

If the place of delivery isn't specified, the place usually is the seller's place of business, if they have one; otherwise, it's the seller's home.

Time for Shipment or Delivery

If the shipment or delivery isn't specified, shipment/delivery is due within a reasonable time

Time for Payment

If the time for payment isn't specified, payment is due at the time and place at which the buyer is to receive the goods.

Interpretation

If there is uncertainty or ambiguity in the written agreement's terms or a dispute as to the meaning of those terms, parol evidence can be received to aid the fact finder in reaching a correct interpretation of the agreement. However, if the meaning of the agreement is plain, parol evidence is inadmissible

Price

If: (1) nothing has been said as to price; (2) the price is left open to be agreed upon by the parties and they fail to agree; or (3) the price is to be fixed in terms of some standard that is set by a third person or agency and it is not set, then the price is a reasonable price at the time for delivery.

Implied Warranty of Merchantability

Implied in every contract for sale by a merchant who deals in goods of the kind sold, there is a warranty that the goods are merchantable. To be merchantable, goods must at least be "fit for the ordinary purpose for which such goods are used." Seller's Knowledge of Defect Not Relevant: As in all implied warranty cases, it makes no difference that the seller didn't know of the defect or that they couldn't have discovered it. Implied warranties aren't based on negligence, but rather on absolute liability that is imposed on certain sellers.

Buyer's Damages for Breach of Warranty

In General - Difference Between Goods Tendered and as Warranted: Generally, the measure of damages for breach of any warranty is the difference between the value of the goods accepted and the value of the goods warranted. Breach of Warranty of Title: Buyer may then rescind the contract, revoke acceptance of the goods, or sue for damages.

Employment and Other Service Contracts

In contracts for employment, if the duration of the employment is not specified, the offer, if accepted, is construed as creating a contract terminable at the will of either party. For other services, the nature of the work to be performed must be included in the offer.

Statute of Frauds

In most instances, an oral contract is valid. However, certain agreements, by statute, must be evidenced by a writing signed by the party sough to be bound.

Contracts of Infants (Minors)

Infants generally lack capacity to enter into a contract binding on themselves. But, contractual promises of an adult made to an infant are binding on the adult. Disaffirmance: A minor may choose to disaffirm a contract any time before (or shortly after) reaching the age of majority. The contract must be disaffirmed as a whole; it can't be affirmed in part and disaffirmed in part. Necessaries: items necessary for subsistence, health, or education. A minor may disaffirm a contract for necessaries but will be liable in restitution for the value of benefits received.

Four Methods of Revocation/Termination

Lapse of time, Revocation, Rejection, and Death

Interest in Land

Leases for more than one year Easements of more than one year Mortgages and most other security liens Fixtures Minerals or structures if they are to be severed by the buyer

Agreements Covered by the Statute of Frauds

MYLEGS Marriage Year: Performance Not Within One year from Date of Contract Land Executors Goods $500+ Sureties

Battle of the Forms Provision

Mirror Image Not Required: Article 2 has abandoned the mirror image rule, providing instead that the inclusion of additional or different terms by the offeree in a definite and timely acceptance does NOT constitute rejection and counteroffer, but rather is effective as an acceptance, unless the acceptance is expressly made conditional on assent to the additional or different terms. Whether the additional or different terms become part of the contract depends on whether or not both parties are merchants. Contracts Involving Nonmerchant - Terms of Offer Govern Contracts Between Merchants - Additional Terms usually Included: if both parties to the contract are merchants, additional terms in the acceptance will be included in teh contract unless: they materially alter the original terms of the offer the offer expressly limits acceptance to the terms of the offer OR The offeror has already objected to the particular terms, or objects within a reasonable time after notice of them is received

Modification of Contracts

Modern view permits modification without consideration if: (1) the modification is due to circumstances that were unanticipated by the parties when the contract was made and (2) it is fair and equitable.

Elements of a Contract

Mutual Assent: Offer and Acceptance Consideration: Bargained-for Exchange OR Substitute like promissory estoppel or detrimental reliance No Defenses: Mistake, lack of capacity, illegality, or statute of frauds

Acceptance under Article 2

Offers to Buy Goods for Current or Prompt Shipment: an offer to buy goods for current or prompt shipment may be accepted by either a promise to ship or by a shipment of conforming or nonconforming goods. Shipment of Nonconforming Goods: the shipment of nonconforming goods is an acceptance creating a bilateral contract as well as a breach of the contract unless the seller seasonably notifies the buyer that a shipment of nonconforming goods is offered only as an accommodation. If the buyer rejects, the shipper isn't in breach and may reclaim the accommodation goods, because the tender does not constitute an acceptance of the buyer's original offer.

Intoxicated Persons

One who is so intoxicated that they don't understand the nature and significance of their promise may be held to have made only a voidable promise if the other party had reason to know of the intoxication.

Collateral Agreements and Naturally Omitted Terms

Parol Evidence is often said to be admissible if the alleged parol agreement is collateral to the written obligation and does not conflict with it. A term would naturally be omitted if: (1) it does not conflict with the written integration; and (2) it concerns a subject that similarly situated parties would not ordinarily be expected to include in the written instrument

Limitation on Damages

Parties may include in their contract a clause limiting the damages available in the case of breach of warranty.

Acceptance of Offer for Bilateral Contract

Recall that unless an offer specifically provides that it may be accepted only through performance, it will be construed as an offer to enter into a bilateral contract and may be accepted either by a promise to perform or by the beginning of performance.

Click-Wrap

Such limitations and disclaimers typically are upheld on the rationale that the purchaser can return the software if they disagree with the conditions.

Writing Requirement

The Statute of Frauds doesn't require a formal written contract. Among other things, the writing can be a receipt, a letter, a check with details in the memo line, or a written offer that was accepted orally. The Statute requires only one of more writings that: (1) reasonably identify the subject matter of the contract (2) indicate that a contract has been made between the parties, and (3) state with reasonable certainty the essential terms

Express Warranties

The UCC provides that words or conduct relevant to the creation of express warranties and words or conduct tending to negate such warranties shall wherever possible be construed as consistent with each other, but "negation or limitation is inoperative to the extent that such construction is unreasonable." In other words, once an express warranty is made, it is very difficult to disclaim.

Definite and Certain Terms

The basic inquiry is whether enough of the essential terms have been provided so that a contract including them is capable of being enforced

Unconscionability

The concept of unconscionability allows a court to modify or refuse to enforce an entire contract or a provision in it to avoid "unfair" terms, usually due to some unfairness in the bargaining process.

Missing Terms

The fact that one or more terms are left open does not prevent the formation of a contract if it appears that the parties intended to make a contract and there is a reasonably certain basis for giving a remedy. In such a case, the majority of jurisdictions and Article 2 hold that the court can supply reasonable terms for those that are missing. Price: Except in contracts for real property, the failure to state the price doesn't prevent the formation of a contract if the parties intended to form a contract without the price being settled. Article 2 provides that the price will be a reasonable price at the time of delivery. Time: If an agreement doesn't specify the time in which an act is to be performed, the law implies that it is to be performed within a reasonable time. Vague Terms: The presumption that the parties' intent was to include a reasonable term goes to supplying missing terms. The presumption cannot be made if the parties have included a term that makes the contract too vague to be enforced.

Supplemental "Gap-Filler" Terms

The key to forming a contract for the sale of goods is the quantity term. If other terms are missing from the agreement, Article 2 has gap-filler provisions to fill in the missing terms.

When Writing Not Required

There are three situations in which contracts are enforceable without the writing described above: Specially Manufactured Goods: If goods are to be specially manufactured for the buyer and are not suitable for sale to others by the seller in the ordinary course of their business, the contract is enforceable if the seller has, under the circumstances that reasonably indicate that the goods are for the buyer, made a substantial beginning in their manufacture or commitments for their purchase before notice of repudiation is received. Admissions in Pleadings or Courts: If the party agaisnt whom enforcement is sought admits in pleadings, testimony, or otherwise in court that hte contract for sale was made, the contract is enforceable without a writing. Merchants - Confirmatory Memo Rule: In contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if: (1) they have reason to know of the confirmation's contents; and (2) they do not object to it in writing within 10 days of receipt.

Is the writing an "Integration?"

There are two components: (1) whether the writing was intended as the final expression of the agreement; and (2) whether the integration was intended to be complete or partial. Evidence is admissible to show the parties' intent.

Method of Communication

Use of Broad Communications Media: the broader the communicating media, the more likely it is that the courts will view the communication as merely the solicitation of an offer Advertisements, Etc.: advertisements, catalogs, circular letters, and the like containing price quotations are usually construed as mere invitations for offers

Pre-Existing Legal Duty Rule

Traditionally, performing or promising to perform an existing legal duty is INSUFFICIENT consideration Exceptions: the preexisting legal duty rule is riddled with exceptions. There is consideration if - - new or different consideration is promised - the promise is to ratify a voidable obligation - the preexisting duty is owed to a third person rather than to the promisor - there is an honest dispute as to the duty; OR - there are unforeseen circumstances sufficient to discharge a party Also a good faith agreement modifying a contract subject to the UCC needs no consideration to be binding

Merchant's Firm Offer

Under Article 2: (1) if a merchant, (2) offers to buy or sell goods in a signed writing, and (3) the writing gives assurances that it will be held open, the offer is not revocable for lack of consideration during the time stated (3 months max if not stated)

Method of Acceptance

Unless otherwise provided, an offer is construed as inviting acceptance in any reasonable manner and by any medium reasonable under the circumstances.

Acceptance Must Communicated

Unless the offer says otherwise, acceptance of an offer to enter into a bilateral contract must be communicated to the offeror.

Warranty of Title and Against Infringement

Warranty of Title: Any seller of goods warrants that the title transferred is good, that the transfer is rightful, and that there are no liens or encumbrances against the title of which the buyer is unaware at the time of contracting. This warranty arises automatically and need not be mentioned in the contract. Warranty Against Infringement: A merchant seller regularly dealing in goods of the kind sold also automatically warrants that the goods are delivered free of any patent, trademark, copyright, or similar claims. But a buyer who furnishes specifications for the goods to the seller must hold the seller harmless against such claims.

Disclaimer of Warranties

Warranty of Title: The title warranty can be disclaimed or modified only by specific language or by circumstances that give the buyer notice that the seller does not claim title or that they are selling only such rights as they or a third party may have (for example, a sheriff's sale). Implied Warranties: The implied warranties of merchantability and fitness for a particular purpose can be disclaimed by either specific disclaimers or general methods of disclaimer.

Parol Evidence Rule - Supplementing, Explaining, or Contradicting Terms

When the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain, the writing is an "integration." Any other expressions - written or oral - made prior to the writing as well as any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing.

Bilateral Contracts

a bilateral contract is one consisting of the exchange of mutual promises; that is, a promise for a promise. Each party is both a promisor and a promisee. A bilateral contract offer can be accepted in any reasonable way. Unless expressly indicated otherwise, assume any contract is a bilateral contract.

Requirements Contracts

a buyer promises to buy from a certain seller all of the goods the buyer requires, and the seller agrees to sell that amount to the buyer. It is assumed that the parties will act in good faith; so, there can't be a tender of or a demand for a quantity unreasonably disproportionate to (1) any stated estimate, or (2) any normal or otherwise comparable prior output or requirements

Executor or Administrator Promises Personally to Pay Estate Debts

a promise by an executor or administrator to pay the estate's debts out of their own funds must be evidenced by a writing.

Output Contracts

a seller promises to sell to a certain buyer all of the goods that the seller produces, and the buyer agrees to buy that amount form the seller. It is assumed that the parties will act in good faith; so, there can't be a tender of or a demand for a quantity unreasonably disproportionate to (1) any stated estimate, or (2) any normal or otherwise comparable prior output or requirements

Unilateral Contracts

a unilateral contract is one in which the offeror requests performance rather than a promise. Here, the offeror-promisor promises to pay upon the completion of the requested act by the promisee. Once the act is completed, a contract is formed. Requires full performance and occurs in only two situations: 1. when the offeror clearly (unambiguously) indicates that completion of performance is the only manner of acceptance; and 2. where there is an offer to the public, such as a reward offer

Promise, Undertaking, or Commitment

for a communication to be an offer there must be an intent to enter into a contract.

Partial Integration

if an integration is complete, the writing cannot be contradicted or supplemented. If, however, the integration is partial, the writing may not be contradicted but may be supplemented by proving consistent additional terms.

Unenforceable Contract

is otherwise valid, but isn't enforceable due to a defense, such as the statute of limitations or Statute of Frauds

Defenses Based on Lack of Capacity

minors, mental incapacity, intoxicated persons

Termination by Operation of Law

the following events will terminate an offer by operation of law: 1. *death or incapacity of either party* - unless offer is of a kind the offeror could not terminate, e.g. option supported by consideration - death / insanity need not be communicated to other party 2. *destruction of the subject matter* - effective when occurs 3. *supervening illegality* - effective when occurs

Disclaimer By "As Is" or Similar Language

the implied warranties of merchantability and fitness can be disclaimed by expressions such as "as is," "with all faults," or other expressions that in common understanding call the buyer's attention to the fact that there are no implied warranties.