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Restatement § 17
II. formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration
Requirement of a Bargain
Restatement § 24:
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it (seal the deal)
Offer
Restatement § 18
Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render performance

Comment: in the case of jokes – all parties must know it is not to be taken seriously – if deception or clearly couldn’t have know there may be an actual contract
Manifestation of Mutual Assent
Restatement § 22(2)
A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and ever though the moment of formation cannot be determined
Mode of Assent: Offer and Acceptance
Restatement § 32
a. In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses

b. Comment: An offeror expects to be bound when other party binds himself by express words, part performance or some other conduct – unless indicate an option – the usual offer invites an acceptance either by performance or constitutes a promise
Invitation of Promise or Performance
Restatement § 26
a. 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

b. Intent matters – no deal if the acceptee knows that further assent is req’d
Preliminary Negotiations
Restatement § 41*
An offeree’s power of acceptance is terminated at the time specified in the offer, or if not time is specified at the end of a reasonable time
Lapse of time
Restatement § 43
a. An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect
Indirect Communication of Revocation
Restatement § 87
• an offer binding as an option contract if it:
o is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes and exchange on fair terms within a reasonable time; or
o is made irrevocably by statute
• an offer which the offeror should be reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice
Option contract
Restatement § 45
IV. where an offer invites an offeree to accept by rendering performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it

V. the offeror’s duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer
Option contract created by part performance or tender.
Restatement § 65
Unless circumstances know to the offeree indicate otherwise, a medium of acceptance is reasonable if it is the one used by the offeror or one customary in similar transactions at the time and place the offer is received
Reasonable of Medium of Acceptance
Restatement § 30
IX. An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing specified act, or may empower the offeree to make a selection of terms in his acceptance

X. Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances
Form of Acceptance Invited
Restatement § 69
VI. where an offeree fails to reply to an offer, his silence and inaction operates 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

c. where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept

i. An offeree who does any act inconsistent with the offeror’s ownership of offered property is bound in accordance with the offered terms unless hey are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him

ii. Comments: previous actions may lend the offeror to believe that offer has been accepted if offeree remains silent and is so accepted, unless both parties know that silence is not intended
Acceptance by silence or exercise of dominion
Restatement § 68
A written revocation, rejection or acceptance is received when the writing comes into the possession of the person addressed, or of some person which he has authorized as the place for this or similar communications to be deposited for him
When is an offer/acceptance/revocation considered received?
Restatement § 59
A reply to an offer which purports to accept it but is conditional on the offeror’s assent to terms additional to or different from those offered is not an acceptance but is a counter-offer
Additional Terms
Restatement § 61
An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms
Change of Terms
Restatement § 71
1. To constitute consideration, a performance or a return promise must be bargained for

2. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promise in exchange for that promise

3. The performance may consist of ...

a. An act other than a promise, or

b. Forbearance, or

c. The creation, modification, or destruction of a legal relations

4. The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person
Requirement of Exchange (consideration)
Restatement § 87
1. An offer is binding as an option contract if it

a. As 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 reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
Option Contract
Restatement § 76
A conditional promise is not consideration if the promisor knows at the time of making the promise that the condition cannot occur
Conditional Promise as Consideration
Restatement § 355
Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable
punitive damages
Restatement § 356
1. Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.
Liquidated Damages and Penalties
Restatement § 344
Expectation Interest: interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed
Remedies: Expectation Interest
Restatement § 344
reliance interest: interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made
Remedies: Reliance Interest
Restatement § 344
restitution interest: interest in having restored to him any benefit that he has conferred on the other party
Remedies: Restitution Interest
Restatement § 347
Injured party has right to damages based on his expectation interest as measured by

a. The loss in the value to him of the other party’s performance caused by its failure or deficiency, plus

b. Any other loss, including incidental or consequential loss, caused by breach, less

c. Any cost or other loss that he has avoided by not having to perform.
How to calculate expectation interest.
Restatement § 349
The injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed
How to calculate reliance interest.
Restatement § 371
a. The reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in the claimants position.

b. The extent to which the other party’s property has been increased in value of his other interests advanced
How to calculate restituion interest.
Restatement §351
1. Damages are note recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made

2. Loss may be foreseeable as a probable result of a breach because it follows from the breach

a. In the ordinary course of events, or

b. As a result of special circumstances, beyond the ordinary course of events , that the party in breach had reason to know

3. A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance , or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation
Unforeseeability and related limitations on damages
Restatement § 350
1. Except as in sub 2, damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation.

2. The injured party is not precluded from recovery by the rule stated in sub 1 to the extent that he has made reasonable but unsuccessful efforts to avoid loss.
Avoidability as a Limitation on Damages