Contracts Fall 2005

Front 1

what ways can you create a contract?

Back 1

1. promise plus a bargain
2. promise plus a moral obligation
3. promise plus an un-bargained for reliance (promissory estoppel)

Front 2

what ways can you find consideration?

Back 2

1. benefit/detriment theory
2. restatement 71: bargain that is sought by promisor and given my promisee

Front 3

is a gratuitious promise consideration?

Back 3

no

Front 4

under what rule can you find a bargain for consideration?

Back 4

restatement (second) 71: bargain that is sought my promisor and given my promisee

Front 5

what is the willison aid

Back 5

look for beneift to promisor when tryign to see if there is a bargain

Front 6

can a past benefit/detriment be consideration?

Back 6

no

Front 7

is nominal consideration adequate consideration?

Back 7

no

Front 8

can you have mixed motives in consideration?

Back 8

yes

Front 9

under what rule does it say mixed motives in consideration is ok?

Back 9

restatement (second) 81: unless both parties know that the purported consideration is mere pretense, it is immaterial that the promisor’s desire for the consideration is incidental to other objectives and even that the other party knows this to be so

Front 10

under what rule does it say adequacy of consideration doesn't matter? (adequacy of consideration; mutuality of obligation)

Back 10

restatement (second) 79:
If the requirement of consideration is met, there is no additional requirement of:
-A gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or
-Equivalence in the values exchanged; or
-“mutuality of obligation.”

Front 11

is novelty required for consideration?

Back 11

no

Front 12

what is the peppercorn theory?

Back 12

something may look like it has little value, but actually has a lot; value is in the eye of the beholder

Front 13

courts don't worry about adequacy, but what do they worry about sometimes?

Back 13

unconscionability if grossly unequal bargain

Front 14

under what rule do you have unconscionability?

Back 14

ucc 2-302: If the court as a matter of law finds the contract or any term of the contract to have been unconscionable at the time it was made the court may
-refuse to enforce the contract, or
-it may enforce the remainder of the contract w/o unconscionable term, or
-it may so limit the application of any unconscionable term as to avoid any unconscionable result

Front 15

to see if a contract is unconscionable what other things do they look at?

Back 15

-mathematical disparity
-limited resources of the plaintiff known to the seller
-gross inequality of bargaining power (seller has more power than the buyer b/c the buyer can’t pay the entire price up front and the buyer isn’t in position to negotiate)

Front 16

can a promise to do something illegal suffice as consideration?

Back 16

no

Front 17

do you released claims suffice as consideration?

Back 17

yes

Front 18

under what rule do released claims suffice as consideration?

Back 18

under restatement (second) 74 Settlement of Claims
(1) Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless:
-The claim or defense is in fact doubtful b/c of uncertainty as to the facts or the law (honest), OR
-The forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid (reasonable belief)

Front 19

what is the willison test for reasonableness when looking at claim?

Back 19

must not be
-absurd in fact
-unfounded in law

Front 20

is there consideration when have a pre-existing duty?

Back 20

no

Front 21

what rule says a pre-existing duty cannot be consideration?

Back 21

restatement (second) 73 Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.

Front 22

when is there an exception to the pre-existing duty rule? (under what rules)?

Back 22

under restatement 89
under ucc 2-209

Front 23

what does restatement 89 say?

Back 23

Modification of Executory Contract: a promise modifying a duty under a contract not fully performed on either side is binding:
-(a) If the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made, or
-(b) To the extent provided by the statute, or
-(c) To the extent that justice requires enforcement in view of material change of position in reliance on the promise

Front 24

what does ucc 2-209 stay?

Back 24

Modification; Rescission and Waiver
-An agreement modifying a contract w/in this Article needs no consideration to be binding.
-Does need to be in good faith though, not through coercion or duress

Front 25

what are teh 4 steps under K modification?

Back 25

1.Is it voluntary?
2.Was it made before full performance on either side?
3.Were there unanticipated circumstances? (Rst only)
4.Is it fair and equitable?

Front 26

does mutuality of obligation enough for consideration?

Back 26

yes

Front 27

if have a free way out (illusory promise), is there consideration?

Back 27

no

Front 28

do output and requirement Ks create consideration?

Back 28

yes

Front 29

under what rule does it say that output or requirement Ks are good?

Back 29

ucc 2-306(1) A term which measure the quantity by the output of the seller or the requirements of the buyer is valid so long as the quantities occur in good faith and are not unreasonably disproportionate to any stated estimate or to any normal or otherwise comparable prior output or requirements.
& there has to be good faith!

Front 30

does exclusive dealign enough for consideration?

Back 30

yes

Front 31

under what rule does it say that exclusive dealing is enough for consideration?

Back 31

ucc 2-306(2) A lawful agreement by either the seller or the buyer for exclusive dealing in goods imposes (unless otherwise agreed) an obligation by the seller to use best efforts to supply the goods and the buyer to use best efforts to promote their sale. (Lady McDuff case codified in the UCC)

Front 32

do satisfaction clauses make consideration?

Back 32

yes, but not same as total discretion; so you can say “I ain’t got no satisfaction” but have to do it with good faith

Front 33

under what rule does it say that satisfaction clauses are enough for consideration?

Back 33

restatement 228: (satisfaction of the obligor as a condition) When it is a condition of an obligor’s duty that he be satisfied w/ respect to the obligee’s performance or w/ respect to something else, and it is practicable to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied. and done in good faith (more clearly stated: we will presume that there is a reasonable effort implied into a contract) (Omni case codified in the Restatement)

Front 34

what is tinalea?

Back 34

something the british courts recognize; talking about notion of freedom from K; this is not a legally enforceable agreement

Front 35

what are the 3 different types of Ks?

Back 35

express
implied-in-fact
quasi

Front 36

what are the elements of a quasi k?

Back 36

-benefit conferred
-appreciate of such benefit
-would be inequitable to retain benefit without payment of the value thereof (unjust enrichment)

Front 37

what is wade's test for unjust enrichment?

Back 37

-acting gratuitously?
-measurable benefit?
-opportunity to decline benefit?

Front 38

under what sitautions do you have promise plus antecedent benefit?

Back 38

-promise to pay for benefit received
-promise to pay for a dormanlt legal duty
-pormise to pay the debt of an infant
-promise to pay debt discharged in bankruptcy

Front 39

what rule deals with promises to pay for a benefit received?

Back 39

Restatement (Second) § 86 (Promises for Benefit Received) provides: “(1) 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. (2) a promise is not binding under Subsection (1), (a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or (b) to the extent that its value is disproportionate to the benefit.”
Easier to remember:
1) was there a promise made in recogniztion of a benefit previously received?
2) does there look like there might be injustice if were to fail to make this binding?
3) did A confer this benefit as a gift?
4) is payment disproportionate?

Front 40

what rule deals with promises to pay a dormant legal duty? (SOL has run)

Back 40

Restatement (Second) § 82: a promise to pay all or part of an antecedent contractual or quasi-contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for the effect of a statute of limitations; Restatement is less b/c doesn’t require writing; P would have had better argument: show promise to pay this debt would be binding if the only thing keeping it from being binding was the statute of limitations

Front 41

what are the three purposes of consideration?

Back 41

1. Evidentiary: that consideration shows that the parties reached an agreement
2. Cautionary: consideration serves the purpose that the parties truly meant to follow through with their agreement
3. Channeling: consideration gives the courts something specific to enforce

Front 42

what rule deals with promissory estoppel?

Back 42

restatement 90 “a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.”

Front 43

what rule deals with promissory estoppel and charitable organizations?

Back 43

restatement 90 Subsection 2: charitable subscription: or a marriage settlement is binding without roof that the promise induced action or forberance

Front 44

what are the main points of promissory estoppel?

Back 44

-reasonable reliance
-unjust if not enforced

Front 45

what are the 3 types of damages?

Back 45

1. expectancy
2. reliance
3. restitution

Front 46

what 2 things result from a breach of K?

Back 46

1. damages OR
2. specific performance

Front 47

when do you get specific performance?

Back 47

-unique
-damages inadequate (land!!)

Front 48

what are expectancy damages?

Back 48

wher P would have been had K been performed (from bad nose to jennifer aniston nose); this is the traditional measure that the courts want to do (start with this one and if too hard fall back on reliance)
-Market price – K price = damages
-WE CAN SELDOM ACHIEVE IP’S EXACT EXPECTATION BY AWARDING MONEY

Front 49

where are reliance damages?

Back 49

where P was before K (from bad nose to original nose); easier to apply than expectancy and tend to equate for the usual recovery for med mal practice
-refund IP the resources wasted in reliance on the K/gets IP back to status quo
-THINK: the amount spent by the IP
-amount spent in reliance on K b/t the time the K was made and the time D breached

Front 50

what are restitution damages?

Back 50

where D was before K (puts D back to 0)
-Like reliance b/c also restores status quo, but its focus is on the D
-MONEY PAID TO THE DEFENDANT
-THINK: amount received by the defendant
-THINK: you breached—I want my money back
-THINK: unjust enrichment

Front 51

what are liquidated damages?

Back 51

agree in K what amt of damages will be if a breach

Front 52

what are two kinds of expectancy damages?

Back 52

general (arise naturally) and special (can usually only recover general damages unless special damages meet hadley test)

Front 53

what is the hadley rule/test?

Back 53

test to see if can get special damages:
(1) reasonably foreseeable to breacher (how to show? Tell them)
(2) not too speculative (have to show an amount; easier with mill than with entertainer)
-Won’t get his lost income, even if he could show it, for the rest of his life, he would have a duty to mitigate, duty to make reasonable efforts to get another job so he could continue getting his income and so court would determine the reasonable amount of time to get another job

Front 54

do you normally get emotional distress damages or punitive damages for Ks?

Back 54

EMOTIONAL:
-courts reluctant...only in special circumstances
PUNITIVE:
-only if wrapped up in torts

Front 55

when do you see punitive damages or damages for emotional distress with Ks?

Back 55

EMOTIONAL:
-personal Ks (deep personal human relations like a funeral home, personal dignity)
-insurance companies acting in bad faith
PUNITIVE:
-when K bound up with torts

Front 56

if just have language of a bargain is that enough to make consideration?

Back 56

no...need mutual assent

Front 57

how can you collect damages if D won't pay?

Back 57

Basic objectives are to impose by attachment, levy, garnishment or docketing of the judgment, i.e. by operation of law, a lien upon the D’s non-exempt property and, through the sheriff or other public official, to conduct a public sale the proceeds of which are used to satisfy the judgment. If the proceeds are insufficient, the judgment is discharged and any excess paid to the D. However, there is many a slip b/t the docketing and the satisfaction of a judgment (i.e. D may not have any property in the jurisdiction).

Front 58

what is the test for mutual assent?

Back 58

objective test: inner intentions drool, words rule!!

Front 59

when will courts not expect people to be bound by their words (outward manifestations)?

Back 59

social engagements, family agreements

Front 60

how do you know when something is an offer?

Back 60

creats power of acceptance in offeree

Front 61

what is a test that can be used to see if an offer has been made or want to negotiate more?

Back 61

fixed purpose test

Front 62

under what rule does it say that an offer is not an offer if offeror (not fixed purpose)? just preliminary negotiations

Back 62

restatement (second) 26. preliminary negotiations. a manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

Front 63

are ads generally offers?

Back 63

no

Front 64

under what circumstances might an ad be an offer?

Back 64

if it is clear, definite, and explicit and leaves nothing open for negotiation (Williston)

Front 65

what is the offer test?

Back 65

>what a reasonable man in the same position would have thought
-Language: do we have the word offer in there?
-Definiteness: how definite is the proposal? Is it vague?
RULE: a price quotation is not necessarily enough to make an offer
-names specified? Reasonable b/c not likely to be an offer if a lot of people can accept

Front 66

what is a sale with reserve?

Back 66

If an auction is with reserve then it can be withdrawn at any time by person putting up for sale (seller); if doesn’t say anything, assume sale with reserve
-Offer is when highest bid is given and no acceptance until hammer comes down
-So offeror is the bidder (buyer) and offeree is the person putting item up for sale (seller)
-This law protects the seller

Front 67

what is a sale without reserve?

Back 67

-Offer is when the bidding starts and acceptance when you become the highest bid
-Offeror is the bidder (buyer) and the offeree is person putting item up for sale (seller)
-Offeror (bidder) can retract bid at any time before hammer falls: this clears all bids and does not revive any of the previous lower bids

Front 68

what is a sharp bid?

Back 68

Bids that say $100 over highest bid and they are not allowed; an unacceptable and sometimes called a fraudulent practice. Illegal per se.

Front 69

what about public contracting and govt. Ks?

Back 69

-Govt. Ks at all levels and have a bid process that is supposed to encourage competitive practices
-There is a sealed bid and a lot of other steps
-There is a whole series of regulations called the Farr that deal with govt. Ks

Front 70

what about price quotations?

Back 70

a price quotation is not necessarily enough to make an offer

Front 71

can an offeror revoke before an offeree accepts?

Back 71

yes as long as before acceptance has been communicated to offeror and only when acceptance is a promise to do something; when an offer calls for a promise as distinguished from an act, notice of acceptance is always essential

Front 72

can an offer lapse over time?

Back 72

yes

Front 73

how can you find where an offer has been made?

Back 73

by looking for POA

Front 74

can an automated, ministerial act constitute an acceptance?

Back 74

no b/c no intent behind it, b/c the party was merely a computer without a person thinking about whether that it was acceptance, b/c person does not intend to create the POA, b/c the code says so

Front 75

what does the CL require for acceptance?

Back 75

mirror-image?

Front 76

what does the code require for acceptance?

Back 76

ucc 2-206: (Offer and Acceptance in Formation of a K): distinct from CL: offer can by accepted through any reasonable manner/medium; prompt promise to ship or prompt or current shipment of conforming or nonconforming goods (except if buyer is seasonably notified that it’s an accommodation); if no notice of accommodation then it would be an acceptance; you can have an acceptance that is also a breach if you send nonconforming goods
-so can send conforming goods or non-conforming goods, but non-conforming is a breach along with the acceptance
-unless put accommodation with non-conforming goods and then it is a CO)

Front 77

Under what rule is notification dealt with for acceptance by performance?

Back 77

Restatement (second) 54. notification requirement with acceptance by performance offeror needs to request the notification if they want to be notified, but when the offeree accepts by rendering performance and know offeror has no way of learning about it within a reasonable time, the duty of the offeror is discharged unless the offeree exercises reasonable diligence to notify, or if offeror leanrs of the performance within a reasonable time, or the offer indicates that notification of acceptance is not required.

Front 78

Can you collect from a reward that you didn’t know about but coincidentally gave information?

Back 78

No; when there is a private reward, they have to know that there is a reward out there, have to be responding to the offer and know about it when give information (not always the case with govt. Ks)

Front 79

Can you collect on a reward you knew about but gave information reluctantly?

Back 79

Yes, but perhaps not if obstructive in some way

Front 80

what if the cop gives information in the course of employment; collect? what if off-duty? what if outside jurisdiction?

Back 80

No b/c he already has a pre-existing duty; No b/c often required to do a lot while off duty; Could claim that not already his job

Front 81

How do you revoke an offer/reward?

Back 81

Same way make offer/reward (if in paper, then revoke in paper)

Front 82

Under what rule does it say that if you do the performance of an offer (while knowing about the offer) but don’t want that performance to be acceptance that you have to make it known?

Back 82

Restatement (second) 53

Front 83

Under what rule is form of acceptance invited discussed?

Back 83

Restatement (second) 30: Form of Acceptance Invited: an offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his acceptance

Front 84

Under what rule is acceptance by promise discussed?

Back 84

Restatement (second) 50(3): acceptance by promise required. if you are supposed to accept by a promise, you have to complete every act essential to the making of the promise; he didn’t make a promise at all here, so then he has not accepted; we know the offeror is master in commander and if the offeror invites a promise as acceptance, then that is what you have to do

Front 85

Under what rule is notification with acceptance by promise discussed?

Back 85

Restatement (Second) § 56: Acceptance by Promise; Necessity of Notification to Offeror: it is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably

Front 86

Under what rule is acceptance discussed when offer gives offerree choice b/t acceptance by performance or promise?

Back 86

Restatement (second) 62: Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance.

Front 87

Under what rule is acceptance by performance and commencing performance discussed?

Back 87

Restatement (second) 45: commencing performance creates option contract when have acceptance by performance only; and so offeror can no longer revoke the offer for at least a reasonable time, but offerree can stop performance whenever; if the offeree completes, then that’s considered full performance and acceptance and offeror must do his part of the bargain; if offeree decides he doesn’t want to do it anymore, he is not on the hook and he can walk away; so when ask for performance only and offeree gives part performance, the offeror just has to wait and see what the offeree does; offeror can’t pull out but offeree can finish performance or can stop

Front 88

What rule says what to do in case of doubt of what kind of acceptance wanted?

Back 88

Restatement 32 and says that if in doubt, can do whatever offeree choose; can work either way and if in doubt, do both!!

Front 89

What happens if start performance and offer was in doubt?

Back 89

Restatement 62. If start performance, no matter if chose promise or performance to be acceptance, the offeree cannot walk away (guess offeror cannot revoke anymore either) b/c there has been acceptance (remember under 45 when offer said performance only and had part performance that offeror couldn’t revoke but offeree could walk away)

Front 90

what three questions need to be asked when determining proper acceptance?

Back 90

(1) which form of acceptance is required?
(2) what is required of acceptance in this manner?
(3) is notification required?

Front 91

under what rule is acceptance by silence discussed?

Back 91

restatement 69: Acceptance by Silence or Exercise of Dominion. Where an offeree fails to reply to an offer, his silence and inaction operations as an acceptance in the following cases only:
(a) where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation
(b) where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer (one of few times that inner intentions gets the upper hand)
(c) where b/c of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept

Front 92

what is the basic gist of silence by acceptance?

Back 92

General RULE: silence ≠ acceptance
Exceptions where silence is in 69 (benefit, communication and intention, previous dealings)

Front 93

under what rule is the mailbox rule?

Back 93

restatement 63. unless the offer provides otherwise, (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual asset as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror

Front 94

under what rule is the situation of a time when rejection or CO terminates the POA (exception to the mailbox rule)?

Back 94

restatement 40: time when rejection or CO terminates the POA. Rejection or CO by mail or telegram does not terminate the POA until received by the offeror, but limits the power so that a letter or telegram of acceptance started after the sending of an otherwise effective rejection or CO is only a CO unless the acceptance is received by the offeror before he receives the rejection or CO

Front 95

explain the exception to the mailbox rule in your own words

Back 95

Restatement 40 in my own words: no matter what the situation, if acceptance received first then have K; however, there are variances if rejection received first:
-If rejection received first and it was sent first, then there is an overtaking rejection and mailbox rule doesn’t apply and acceptance becomes a CO (Scenario A)
-If rejection received first and it was sent at same time or a little afterwards, the courts are split:
Majority says: there is still a K (b/c acceptance sent off first) unless offeror relies on this rejection
Minority says: there is an overtaking rejection no K like when rejection sent first and received first (so kind of disregards fact that acceptance sent off first)
-If acceptance sent and received first then that is straight up mailbox rule regardless of rejection sent out

Front 96

what is the CL mirror-image rule?

Back 96

CL Mirror Image RULE (default): acceptance has to mirror the offer and if not mirror then it is a CO; once you fail to mirror the offer, you kill the offer
-there a little bit of leeway is asking for more info (consideration of another price); you may not kill the offer, but you have to be careful that questioning about the offer doesn’t turn into a counteroffer
-again, offeror is master in command and so can go against default rule and say that a CO won’t kill of the original offer

Front 97

what rule deals with Additional Terms in Acceptance or Confirmation?

Back 97

ucc 2-207

Front 98

what do you think when see additional terms?

Back 98

if good: think UCC
if not a good: think mirros

Front 99

what rule gives definition of a merchant?

Back 99

UCC 2-104: means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill; between merchants means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants

Front 100

explain ucc 2-207

Back 100

(1) oral agreement plus written confirmation that has something new or different: have K and just matter if terms are added (gateway to 2: between merchants, offer exressly limits, material alters, objection already given)
(2) written offer and written response that are not identical: if no unless then have a K and just see if terms are added (gateway to 2); if unless then no K under Pevar unless conduct creates a K and to then go to 3 to see if terms added (gateway to 2 closes but have gateway to 3)
(3) subsequent conduct

Front 101

under 2-207, what do the parties have to be in order for proposals to becomes added terms?

Back 101

between two merchants

Front 102

under ucc 2-207 and two merchants what are the three conditions that keep proposals from becoming new terms?

Back 102

1. offer expressly limits acceptance to the terms of the offer (mirror-image kinda)
2. if new terms are dicker terms and so would materially alter K
3. if objection of the offeree has already been given

Front 103

what happens if unless proviso under ucc 2-207?

Back 103

no k formed and so don't even need to see if proposals added (gateway to 2 is closed), but can if have contract under conduct go to 3 to see if terms added (gateway to 3 is open)

Front 104

how is Textile different from Pevar?

Back 104

Textile says unless proviso doesn't automatically say no K, but instead it is a CO and if have specific and unequivocal assent then a K can be made under 1, but if no assent of that kind, then can have a K under conduct and new terms are added based on 3 (like Pevar)

Front 105

what are the 3 choices to do with different terms (since ucc 2-207 only has additional terms in section 2)?

Back 105

1. knock out; use code gap fillers (majority view)
2. fall-out; K formed on term in offer and later conflicting terms drop out; some say this is bad b/c gives offeror too much power, but then respond by saying that offeree should give a clear CO
3. treat like additional terms—treat the deviant term as above: work through 2-207(2)

Front 106

what does the code say to do with written confirmations that conflict?

Back 106

knock-out

Front 107

what rule deals with indirect communication of revocation?

Back 107

restatement 43. An offeree’s POA is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed K and the offeree acquires reliable information to that effect.
-o offeror can revoke offer, but it need not be express revocation as long as offeree receives reliable information to that effect; indirect revocation where he was doing action inconsistent with the offer itself

Front 108

what ways can you kill an offer?

Back 108

lapse of time, rejection or CO by offeree, revocation by the offeror, or death or incapacity of the offeror or offeree or non-occurrence of any condition of acceptance under the terms of the offer

Front 109

what is the rule with lapse of time?

Back 109

-Lapse of time is what is reasonable under the circumstances (ie land and allowing time to go and praise it, coke stock which moves fast)
-With face to face, offer closes at end of conversation

Front 110

what is an option K?

Back 110

under CL you can revoke an offer any time before acceptance unless someone promises that their offer will remain open and there is consideration for this promise

Front 111

when an offer stipulates that it will be open for a stated period of time, when does the period begin?

Back 111

generally the period will begin when the offer is received, not when it is dispatched

Front 112

what rule deals with the termination of POA under option Ks

Back 112

-Restatement (Second) § 37: the POA under an option K is not terminated by rejection, CO, revocation, or death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty
-so the POA under an option K is really really strong and it cannot be defeated a of all these traditional methods of killing off an offer

Front 113

does the mailbox rule apply to option Ks?

Back 113

no, acceptance must be received and not effective when sent

Front 114

what about consideration and option K?

Back 114

need consideration for option K (mini K) but consideration amount is not relevant and can be nominal and don't even have to pay it as long as you say you will pay it

Front 115

how is an option K like kryptonite?

Back 115

An option K is like kryptonite b/c it is so strong that it cannot be killed by a CO

Front 116

does an option K have to be in writing?

Back 116

most courts require a signed writing to keep an option open with recital of consideration b/c of proof problems (so writing helps with evidentiary as well as cautionary and channeling functions of consideration)

Front 117

what are the ways that an option K is created?

Back 117

-traditional option Ks
-option Ks made with beginning performance with an offer that asks for performance only acceptance (restatement 45 repeat)
-option K made when have reliance by general contractors. restatement 87(2)
-firm offer made by merchants under code creates option k. ucc 2-205

Front 118

what is the difference b/t beginning to perform and preparing to perform?

Back 118

mere preparation is not sufficient to make an offer irrevocable
-if materials could be used on other projects
-however, may not work if preparation is so extensive that need to make it irrevocable to protect the offeree (custom cabinet)

Front 119

what rule deals with reliance of general contractors that create option Ks?

Back 119

87 (2) and looks a lot like restatement 90 promissory estoppel

Front 120

what rule deals with option Ks?

Back 120

-Restatement (Second) § 87. Option K.
-(1) an offer is binding as an option K if it
(a) it is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or
(b) is made irrevocable by statute
(2) an offer which the offeror should reasonable 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 K to the extend necessary to avoid injustice.

Front 121

what is the rule with general and subcontractors?

Back 121

-general contractors who rely on bids submitted by subKers may stop the subKers from revoking; subKer may make it clear that it retains the right to withdraw, but sub doesn’t have incentive to do that b/c it wants its bid to be picked; if palpable mistake that GKer should have known, then courts will say that the GKer may not bind the subKer and subKer can revoke
-the GKer is not bound; GKer may shop around for lower price SubKer; CA has passed statute that doesn’t allow that; normally though the GKer can shop around

Front 122

what rule deals with firm offers?

Back 122

ucc 2-205. Firm Offers. An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or it no time is stated for a reasonable time, but in no event may such period of irrevocability exceed 3 months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror

Front 123

explain firm offer?

Back 123

an offer by a merchant to buy or sell goods in assigned writing by its terms that will be held open, is not revocable for lack of consideration, and will be held open during the time stated and if no time stated, then a reasonable time, but in no event more than 3 months

Front 124

how is the ucc different from the CL as seen in dickinson?

Back 124

under CL an offeror can revoke offer if no consideration to keep open; not the case with ucc, but the firm offer can be superseded by a traditional option K so a merchant can do it for consideration if he so chooses and might do it so can get longer than 3 months

Front 125

what are the requirements of a firm offer?

Back 125

-In writing: printing, typing, intentional reduction to tangible form
-Signed any symbol adopted with intent to adopt a writing (can be X or letter head)
-Merchant offeror (only time need both to be merchants is in 2-207(2)
-Language must assure that offer will be left open

Front 126

when is an agremeent indefinite?

Back 126

if court can’t detect a breach AND can’t frame a remedy

Front 127

is there an agreement if an essential term is indefinite?

Back 127

no

Front 128

what rule deals with indefinite agreements?

Back 128

restatement 33. certainty. (1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a K unless the terms of the K are reasonably certain. (2) The terms or a K are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. (3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

Front 129

what rule deals with indefinite agreements with the sale of goods?

Back 129

UCC 2-204. Formation in General. (1) A K for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parites which recognizes the existence of such a K. (2) An agreement sufficient to constitute a K for sale may be found even though the moment of its making is undetermined. (3) Even though one or more terms are left open a K for sale does not fail for indefiniteness if the parties have intended to make a K and there is a reasonably certain basis for giving an appropriate remedy.

Front 130

what are the various terms in a K and how does the court feel about filling them in?

Back 130

-Price: (doesn’t have to be definite) Not as important as thought pre-law school, but that one that courts will find the easiest to fill in with: Finding external source; market value
-Subject Matter: (has to be definite) ct cannot tell if K was performed without knowing subject matter; that’s a really important element and courts probably unwilling to fill it in
-Quantity: (courts most reluctant to fill in) not a problem if just one good (i.e. a house)
but UCC reluctant to enforce a sale of goods if no quantity term. Except UCC 2-201: Comment 1: Except with output and requirement Ks (if in good faith)

Front 131

what does the UCC do if have usage of trade or course of dealing?

Back 131

go to what normally do, such as if you leave out place of delivery then will fill in place of delivery of where normally delivered

Front 132

what does the ucc fill in price with?

Back 132

reasonable price. ucc 2-305

Front 133

what is usually in agreements for delivery?

Back 133

-FOB seller’s location: seller delivers to carrier at seller’s location
-FOB buyer’s location: seller must safety transport goods to destination

Front 134

what does the ucc fill in with unspecified place for delivery?

Back 134

seller's location. ucc 2-308.

Front 135

what does the ucc fill in with unspecified time for delivery?

Back 135

reasonble time. ucc 2-309

Front 136

what does the ucc fill in with unspecified payment details (time and place)?

Back 136

where the buyer is to receive the goods and if that is left out, then that is filled in too

Front 137

what does the ucc fill in if quantity left out?

Back 137

usually required, but exception with ucc 2-206 and will fill in with output and requirement Ks in good faith

Front 138

what must be essential for the court to enforce an indefinite agreement?

Back 138

parites must have intent to be bound

Front 139

how can you tell if intent to be bound with an indefinite agreement?

Back 139

-if negotiations have concluded
-if have long course of dealings/relationship
-less detail provided less likely that an intent to be bound