Contracts 1L Dillon

Front 1

Defenses to Contract Formation

I Saw U F the M-A-I-D

Back 1

I Saw u F the MAID

I-Illegality

S-Statue of Frauds

U-Unconcionability

F-Fraud

the

M-Mistake

A-Ambiguous

I-Incapacity

D-Duress

Hint 1

I Saw U F the M-A-I-D

Front 2

UCC 1-103(b)

Affirmative Defenses

Back 2

UCC 1-103(b)- defense

Estoppel

Fraud

Misrepresentation

Duress

Coercion

Mistake

Bankruptcy

Validating/Invalidating Cause

supplement w FRCP 8© Affirmative defenses

Front 3

FRCP 8© Affirmative Defenses

Back 3

Bancruptcy

Duress

estoppel

Failure of COnsideration

Illegality

Fraud

Payment

Res Judicata

Front 4

Lucy v Zehmer

2 prong & 3 prong

together if pass = ____

Back 4

2 prong

1. objective - external manifestations reasonable person know

2. subjective - internal what actually know

3 prong

1.General Rule - external manifestation ONLY

2. correlative - objective test reasonable person understand

3. Exception- expressed subjective disclosed

if both yes = mutual assent

ex. harvard boys cow is a horse still k cuz both understood meaning

2nd exception = mutual mistake - invalidating clauses , coercion, duress, illegal, ect .

Hint 4

2n r k 12 capacity - drunkard

48 death or incapacity

38 termination power of acceptance

Ucc 2-106 (3) termination death

Front 5

balfour v balfour

Back 5

social agreements not binding k

policy reasons- if allowed fewer k and inhibit commerce

Front 6

2ND RESTATEMENT K 2

Back 6

(2 )promise defined - intent to commit to act or refrain from act in future

Front 7

2nd r k 1 - contract

Back 7

2nd r k 1 contract - promise breach of which law give remedy or performance recognized as duty

Front 8

2nd r k 21

Back 8

2nd r k 21- intent to be legally bound

Front 9

Dunhill guideline intent

Back 9

Dunhill letters agreement intent to agree in future

Guideline Intent;

1. ambuguious

2.unless until clause

3. not illegal

4. plain meaning

5. written memorial maybe after contract arise

6. lack of written memorial not render non binding unless not legally binding unless or until clause

Hint 9

see 2nd r k 27 & 21

Front 10

Moulton wholesale salt

price quote

Back 10

critical mass of terms

sale of goods - quality

conveyance of land - land description

price quote ; quantity most important term

Front 11

Oliver v south worth

Back 11

2nd r k 24- offer

willingness enter into bargain legal effect puts offeror on the bus of liability (intent)

Front 12

2nd r k 21-

intent to be legally bound -

General rule?

exception ?

case?

Back 12

21 - intent to be legally bound need not be express or manifested .. policy reasons would be chilling to commerce less k

rebutable presumption -

Exception - expressed intent not to be binding then no k -

policy- freedom to and from k

Dunhill- leter of intent

Front 13

lewkowitz - black stole

first come first serve advertisement

general rule ?

Back 13

general rule advertisements not k but this advertisement was an offer

reward offer= unilateral

promise$ for performance info

narrow down who can qualify to accept

Front 14

boulton v jones

store new management previous customer sent perchase order - new owner deliver and refuse to pay or accept

bc never intent k w new party

Back 14

purchase order= offer

52 - who may accept offer

only person invited to further consideration

29 - whom the offer addressed

50 - acceptance by offer - assent manner terms specified

acceptance by performance

at least part performance or tendered

acceptance by promise - require complete every act essential to make of the promise

Front 15

fairmont glass- quantity term

Back 15

seller initial correspondence response request for price quote on quantity jars so it was an offer

general rul request for proposal- no offer

price quote - no offer-

purchase order - offer

Front 16

Boiler plate

vs

dickered terms

Back 16

boiler plate - fine point unread

standardized text

dickered terms- filled in terms goods, price, quantity, delivery

Front 17

211 - standardized agreements

general rule

corelative pure objective test

exception

pro & cons

Back 17

211-

general rule - reason to believe commonly used written form so uses

correlatative - writings reasonably treated as standard interpretation w/o regard to parties knowledge of terms

PUrely objective- what reasonable average person understand

Exception- if one party has reason to believe if the party knew the writing contained the term would not assent then disputed term not part of writing

pro - grease wheels commerce more k

con - favor drafter of k bc people don't read the k

Front 18

bc tire - yellow pages ad never published sue for lost profits

Back 18

no k bc o'rs Unilateral K -

no performance no acceptance

not like give type relief impossible quantify

see - r k 211

Front 19

Vaskie - offer expiration ?

Back 19

41 lapse time - reasonable time

Policy reason: offeree can not reasonably expect the offer to be open for an unlimited period of time., bc it would place the offeror under unlimited liability - under the bus of liability
Reasonable expectation of ther offeror – ability to set a stated period of expration.
“Lapse”=offeree not accept within the period of time
if allowed to lapse then the offeror can reallocate his interests

Hint 19

Vaskie allege insurance co. breach of contract when fail to honor personal injury accident settlement offer unspecified time for expiration of offer

Front 20

ucc 1-203

ucc 1-304

Back 20

need to write

Front 21

chaplin v con ed

class action "take it or leave it" settlement

say no then change mind

Issue: after reject can still accept?

Hold?

Back 21

Hold; NO

POA terminated by rejection

no more offer

see 2ndR K36 :

methods terminate POA

Front 22

bilateral k

Back 22

promise for promise

creates 2 rights 2 duties

P1 duty supplyX, right get $$

P2 duty Pay$$, right get X

formation befor performance

Front 23

unilateral k

Back 23

promise for performance

1duty 1right

think: Public Rewards

Promise($) - Performance(Info)

P1 duty to pay p2 for doing task P2 right to be paid for doing task

Front 24

2 Ways Revocation?

When can Or revoke?

Farley-

Dodds

Back 24

Offeror revocation

before Offoree's exercise POA

Farley -direct

Dodds-indirect

Front 25

Farley - want buy stock ..lengthy negotiation Offoror revoke

ee claims accept before revoke

Holding?

guidelines

Back 25

direct revoke

Hold revoke b4 EE accepted

proposal can be revoked anytime before POA used

when acceptance effective?

soon as letter in mailbox - mailbox/dispatch rule -

only applies to

biK thru correspondence

Front 26

Mail Box (dispatch) Rule

What is ?

When Apply?

Broad or Narrow application?

Back 26

Restmt (2d) § 63

manner medium specified by offer soon as in Mailbox

unless

option contract then must be received by offoror for acceptance to be operative.

Receipt rule is GR: for offers, revocations, rejections and option k ? and MOST acceptances

Only applies

bilateral Ks by correspondence

Narrow

(a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but
(b) an acceptance under an option contract is not operative until received by the offeror.

Front 27

Receipt Rule -

Indirect Revocation

Rest k#?

case ex. ?

Back 27

rest k 43

Ee's POA terminated when Offoror take def action intent not to K and EE receives reliable info

Guidline indiret Revoke =

Offor intentional no K and

take action & Offoree knows offeror FART -

Factual,

Accurate

Reliable

Third party convey info 2Offoree

"offor intent no k , take action ANd Offoree know FART" = Indirect revocation

Dodds -

Receipt rule is GR: for offers, revocations, rejections and option k ? and MOST acceptances

Dodds

Front 28

Dodds- indirect revoke sale of land

How ? guidelines

Back 28

rk 43 - indirect revocation

Offor intentional no K and

take action & Offoree knows offeror Must FART -

Factual,

Accurate

Reliable

Third party convey info 2Offoree

hold revoke valid .

Front 29

Horan- sale of property
Π made bid, Δ accepted,

Π $20k &letter insisting include

furniture items remain in the house as a

condition of Π’s acceptance
Issue : Did Π accept the offer even tho he put in a condition?

r k 39 &59,61

Back 29

(H) There is no K.
Π’s “acceptance” was actually a conditional acceptance, aka a “counteroffer”
CO Created POA in the Δ, which he did not exercise

How are COs & Rejections diff?
Rejection = “no”
Counteroffer = “no” + a new offer

Front 30

2nd r k 27 existence of k where memorial contemplated

Back 30

rk 27 - Even if the parties to an agreement plan to make the agreement in writing, if they have finalized the terms but not yet put it in writing, a K has been formed UNLESS, either party has reason to believe that the other party has not accepted all of the terms or wishes to add additional terms. In this event, such planning only results in preliminary negotiation.

Front 31

Rest 50 -Acceptance

Back 31

Rest 2d. 50- Acceptance
Offer creates a legal power of acceptance in o’ee
O’or is the master/mistress of the offer
O’or is the creator of the power to make the decision to make the offer, the terms dictate the elements and the medium of the acceptance
Until acceptance, o’or has power
Revocation, change terms
When acceptance happens, o’or’s power terminates and you have a K

Front 32

2nd k 36 -

Terminating the

Power of Acceptance

Methods

Back 32

Restmt (2d) § 36: Methods of Termination of the POA
(1) offeree's POA terminated
(a) Rejection or counter-offer
(b) Lapse of time, or
(c) Revocation by the offeror, or
(d) Death or Incapacity of the offeror or offeree.
Recall: possible injustice created by Rest(2d) § 48 death/incapacity

12 incapacity
(2) In addition, an offeree's power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer

Hint 32

2nd k 36 -

Terminating the

Power of Acceptance

& Methods

Front 33

2nd rest k 48

& 12

Back 33

restatment 48 - death or incapacity

12 - Legal Capacity

ONLY apply to OFFERS

before acceptance

2. Termination power of acceptance -

Incapacity of Offeror-

UnionTrust/SaveBankVStateBanksee usb or printed case westlaw
Offeree guaranteed offer later offeree incapacitated -

cry hold: appointment of conservator w pltf knowledge served to revoke the unaccepted offer (due 2incapacity of offeree prior to acceptance = revoke )

Front 34

2nd Rest. K - 38

Back 34

Rejection

1.rejection terminate ee's POA

2. Unless- ee's expressed intent to think about offer further

Hint 34

2nd Rest. k 38 - Rejection

Front 35

Rest k 39 -

require what of terms for acceptance ?

Back 35

Restmt (2d) § 39 Counter Offer

(1) A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing bargain with

add terms or diff terms from original offer.

(2) offerEE's POA terminated by his making of a counter-offer, unless

offeror manifested diff intention or unless the CO manifests a contrary intention of the offeree

2 legal effects:
Terminating POA in o’ee
New offer is on the table

Mirror Image terms for acceptance of Counteroffer

Hint 35

Rest k 39 Counter Offer

Front 36

7 case types that Lurk the Borderline of Counter Offer

Back 36

7 case types that Lurk the Borderline of Counter Offer

1. Proposal to Modify

(sidecar 1-5

proposal for separate agreement

Mere inquiry

request for better offer

comment on offer

Offoree - contrary statement Invitation to deal not terminate POA - still considering

offoror - offer stand for x -time not CO not terminate EE's POA

Front 37

R k 59 - Acceptance Add Terms

rk 61 Acceptance request change terms

Are Both ?

Back 37

59-Conditional Acceptance or CO

purports to accept but

require or's accept add/dif terms

61-acceptance w request2modify- (sidecar)

Are Both

Conditional Acceptances

and

conditional acceptances

are not acceptances.

Front 38

Guideline for Counter Offers

Back 38

Mirror image rule and not add conditions or limits

Where there’s an offer to form a bilateral K, the offeree must communicate acceptance to the offeror before any K is formed
OTA; acceptance must be transmitted in an overt manner

Valid acceptance determined from transmissions of the parties
Acceptance must be

definite and unequivocal
Can't add conditions or limits
X: acceptance is clearly independent of the conditions cmt. b Rest. 39
Must be interpreted by a reasonable person

Front 39

irrevocable offer

Right of first refusal become

Option Contract

case?

Back 39

single offer irrevocable
2 exceptions
Dodds Rule & 2nd rest 25 promiser secure right to consider by manifesting requirement formation & limit promisors revoke offer freeze ability to revoke
Right 1st refusal not an offer -- on exam find 3 elements and apply
Right to 1st refusal may become option contract
3 condition to morf “ Right 1st Refusal to Option Contract
1. Terms– selling right 1st refusal
2. Bonified 3rd party purchaser enter the picture
3. Notice – holder right 1st refusal activate now u need to activate ur right
Upon activation become a Option contract
[Later in spring discuss methods of Notice
- statue of frauds may deem inappropriate ]

D MAKING OFFERS IRREVOCABLE
1. Option Contracts
Orlowski v. Moore (1962)
Procedure: Complaint filed for specific performance

convey of land.
Issue: was Orlowski given a reasonable time to execute his right of first purchase?

Held : Under circumstances notice given to Orlowski to purchase the land for a reasonable time prior to execution of the option to Apollo and therefore any right under the lease was terminated .

Hint 39

dodds rule - receipt rule

indirect revocation

Front 40

option contract

2nd restatement k 25

Back 40

option contract

2nd restatement k 25

2 POA

Hint 40

option contract 25

45 optionK part performance

87 Irrevocable OptionK

37 Termination of POA OptionK

Front 41

need finish pg 17-32

Back 41

pg 17-25 mine

Front 42

last shot principle

Back 42

Last Shot Principle

Seller gets last shot
Problem: buyer might not know about some terms…but performance constitutes assent to all such terms
Probably believes that there is an agreement (OTA)

objective theory assent
Buyer probably

only read dickered terms,

not boilerplate terms
It is important to see if the forms differ on material terms
Material term: if the party was aware of the term, would it still have agreed?
2-207 was supposed to fix this problem but it made it worse! (Because people mis-read these complicated ill-drafted rules)

Front 43

2-207 should only be used with????

Back 43

2-207 only used with

STANDARDIZED FORMS

Fixes problem when mirror-image rule collides w/ standardized forms
Uses classical labels- offer, acceptance, conditional acceptance, offer to modify
Partially displacing – can flip out to get proper definitions but can’t undercut UCC provisions w/ extra code law

Front 44

2-207

Back 44

(1) is divided into 3 “chunks”
Chunk 1: 2 case types-
Case type 1: “a definite…acceptance”- Definite, seasonable acceptance
Acceptance case type- an offer has already happened (usually in a form)
Case type 2: “written…time”- written confirmation
Confirmation case type – confirming agreement that has already happened
If you don’t have one of these case types…NO 2-207
Counter-offers don’t fit under here.

Front 45

2-207

CHUNK 2

Back 45

Chunk 2: “even…upon”- Different or additional terms
If you don’t have additional or different terms in either of the forms…NO 2-207
This is the negation of the mirror image rule

Front 46

2-207

CHUNK 3

Back 46

Chunk 3: “unless…terms” - 2 possibilities
Only deals with “definite acceptance” case type
To trigger this chunk, the o’ee makes additional/different terms a condition of acceptance; it is a true C-O

Clause is not triggered- O’ee doesn’t make terms expressly conditional (unilateral offers to modify) - There is a K formed
Go to 2-207(2)…
Clause is triggered- o’ee makes terms conditional- NO K HAS BEEN FORMED – This is a counter offer (conditional acceptance)
Have to go to § 2-207(3) to try and find a K through the parties’ conduct (very rare)
Usually will go to 2-204

Front 47

General rules of 2-207 (2)

Back 47

Only use this section if YOU FOUND A K UNDER (1)…if not, go to (3)
GR: additional terms are mere proposals to the K (offer to modify)
What about “different” terms?
Murray: they just forgot it; read it in as if it says “additional or different” terms and then apply 2-207(2)
White: majority view; knockout rule - where the 2 forms have conflicting terms, just knock them out & use gap-fillers
Dillon: if you have a K under § 2-207(1) and have different terms, go straight to § 2-209(1)
This is the broad general rule; things are different between merchants

Hint 47

White’s view favors the buyer (version of the last shot rule); not applicable when 1 form has a term and other is silent; this is entirely the product of White’s opinion - no statutory support

Front 48

2-207 (2) both merchants

Back 48

Merchants defined in UCC § 2-104(1)
GR: additional (/different, depending on your reading) terms become part of the K UNLESS:
The offer expressly limits acceptance to the terms of the offer (aka a true C-O…go to (3))
They materially alter the K (cmt. 4 & 5)
Buyer (offeror) objects to the terms within a reasonable time
Basically: un-objected, immaterial terms will be put into the K
If you have this

Front 49

2-207(3)

Back 49

2-207(3)

When forms didn’t create the K, the conduct between the parties can indicate a K
Terms are those agreed upon in the original forms
Forms may not have critical mass of terms (didn’t create a K), but forms gave some terms
We can still find a K if the parties act if there is one
Gap-fillers can do the work

Front 50

2-207 (3) True CO?

Back 50

If we have a true C-O
If the offeror knows the terms and agrees to them, they will be in the K
If the offeror doesn’t notice the new terms, but both parties continue to perform, (3) explains that this conduct can create a K.
So what are the terms?
Terms agreed on by the parties in the forms
Conflicting terms don’t get used; gap-fillers do the rest of the work
Note: terms can only ‘conflict’ if both parties mention them

Front 51

ITOH

Back 51

ITOH - Deals when to take a K (counter-offer) from (1) to (3)- should’ve used 2-207(2)
Two forms between Itoh and Jordan
Itoh is o’or and Jordan is o’ee, bilateral K
Jordan’s form has 2 terms: conditional language (triggers unless clause from 2-207(1) and arbitration clause (different term- chunk 2 of 2-207(1)
Court takes a wrong turn
Found there was a C-O and that unless clause was triggered
Wrong! Should’ve gone to 2-207(2) and not to 2-207(3)
Only a formula c-o, didn’t look at OTA
Arbitration Clause would probably come in, if Ct. would’ve used (2)

Front 52

Interests -

Purpose of Remedys

Back 52

§ 344 Purpose of Remedies
But interests ≠remedies
Interests: the nature of the harm; how the party is aggrieved
Remedies: legally available options to repair harm caused by breach
Terms establish the intent to create the agreement; have to have enough terms to get from intent to remedy for interests

Front 53

Expectation

Back 53

Expectation: benefit had the K been performed
This is the preferred method (cmt. a)

Hint 53

Expectation = Starting Pitcher

Front 54

Reliance

next bullpen

Back 54

Reliance: aggrieved party reimbursed for losses suffered as if K was never made
Undertake acts of reliance that lead to loss
Returns aggrieved party to

status quo ante (before there was reliance)

Front 55

Restitution

final bullpen

Back 55

Restitution: benefit restored
This is when there’s injury to one, benefit to the other
Both parties are restored to status quo ante
Most severe
Comment d- two case types
Have enforceable K but expectation is not available
Don’t have enforceable K but restitution becomes non-contractual benefit

Hint 55

In restitution, the loss goes into breacher’s pocket

Front 56

Can have Reliance & Restitution?

Back 56

NO

Can’t have reliance & restitution together
Restitution: expenses by aggrieved party go straight to breaching party
Reliance: expenses by aggrieved party go to others not breaching party

Hint 56

Only way to have the two together is with part perfermance

Expectation: what the aggrieved party expected to get out of the K
- always larger than reliance recovery

Front 57

2 types of Reliance

Back 57

2 types of reliance
Active: part performance; organizing business affairs in some fashion that wouldn’t have happened w/o the K
Passive: passing on a different K; missed opportunity
This is much harder to prove
See cmt. B for 3 ideas that steer expectation interest toward objective evaluation

Hint 57

Active ex: buying lumber to build a house then they tell you they don’t need you after the lumber is already bought