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71 Cards in this Set

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What are the two policies in conflict with each other for mutual assent?
(1) we want to protect people from having contract imposed on them when they didn't mean to be obligated, but (2) we want to protect reliance
What is the modern approach toward the objective theory of contracts?
In the very old days, there was a heavy subjective requirement, the "meeting of the minds". Then there was an obective push. Modern law isn't strictly objectivist.
What is the restatement definition of promise?
The manifestation of intent by the promisor that justifiesthe promisee in understanding that a commitment has been made
What is the objective test for mutual assent?
In the absence of compelling contrary indications, assent will be legally sufficient when each party, by the deliberate use of words or conduct, manifsted agreement to be contractually bound.
What two things does the objective test for mutual assent in contemporary law do for us?
It has a legal standard / substantive aspect and has evidentiary aspects.
What is the substantive standard for determining objective assent?
The manifestations will be interpreted from the standpoint of what a reasonable person in the position of the party to whom the manifestation was made.
What is the evidentiary aspect of objective assent?
The kinds of evidence allowed for determining an objective manifestation of assent include: signature on a writing, or behavior surrounding the transaction. However, the court may admit some subjective testimony to interpet a manifestation but needs to be reconciled objective manifestations.
On the test, what should you think high level when considering whether mutual assent is present? (3)
(1) apply the objective substantive standard
(2) apply the evidentiary rules for objective assent
(3) be careful to show a couple of different constructions by different courts, some very objective, some more lenient
High level, what do you do if parties disagree about the meanings of their words and actions?
The intent of the parties must be interpeted by the court. This is where the objetive standards come into play in your analysis.
What is a criticism of the offer and acceptance model?
It may be too rudimentary and artificial to cope with the many contemporary methods of contract formation.
What two issues can the rules of offer and acceptance settle?
(1) to determineif a contract came into existence at all
(2) if a contract is formed, which communication was the offer and which was the acceptance
What separates the end of the bargaining and the contract?
A legal offer and then a legal acceptance
What is the Rest. definition of an offer? (Rest. 24)
A manifestation of willingness to enter into a bargain, so made as to justify another person in undersand that his assent to that bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
What six elements should be present in an offer?
P-A-I-D-C
(1) COMMUNICATED
(2) must indicate a DESIRE to enter into a contract
(3) directed at some PERSON or group of persons
(4) must INVITE acceptance
(5) contract will ARISE without further APPROVAL
What is the standard for "indicate a desire to enter into a contract" element?
It is part of offer. It needs to specify the performance to be exchanged and the terms governing the contract.
What is the standard for "contract will arise without any further approval" element?
It is a part of offer. Offer must create a *reasonable understanding* that the contract will arise upon acceptance
What is a good high level way to think about whether an offer is being made or whether it is just a proposal?
If the communication conveys the reasonable understanding (see objective again) that the offeror intends to be committed upon acceptance: power of acceptance.
What are five factors that courts have looked at in discerning between a preliminary proposal and a legal offer?
W O R T P
(1) WORDS used in the communication
(2) does it OMIT significant terms
(3) not specifically directed at a particular PERSON
(4) RELATIONSHIP of the parties (prior dealings or communication)
(5) common practices and TRADE usage (if members of same community or trade)
What if a contract doesn't specify a time for expiration?
Then a reasonable time will be imposed by default.
What is a good way to think of an expiration date?
As the longest period of time the offer could remain open. It could be revked prior to that.
What is the rule for revocation?
Revocation is only effective when received by the offeree unless the offerree knew of it otherwise.
What happens if the revocation somehow fails to reach the offerree
The offer will still be revoked indirectly if the offeror takes an action clearly inconsistent with a continued intent to enter a contract and the offerree has reliable information about this action.
What is the basic rule for statute of frauds?
A contract within its scope may not be enforced unless a memorandum of it is written and signed by the party to be charged.
Does the entire contract have to be written to be enforceable by the statute of frauds?
NO
Who has to sign a contract under statute of frauds?
The person against whom enforcement is sought
What is the policy underlying the statute of frauds?
To prevent a person from falsely alleging a contract through perjured testimony
What is the flipside of the positive part of the policy underlying the statute of frauds?
The person seeking to evade the contract can just as easily escape without a writing
What is the contemporary legal thinking on the statute of frauds
That it may be better to let the factfinder evaluate strength of credibility than mechanically apply statutel England has repealed it.
What are the three flow chart questions to ask in evaluating statute of frauds?
(1) does the contract fall within the statute?
(2) is the contract reflected in a writing that satisfies the statute?
(3) does the case fall within one of the exceptions permitting enforcement despite non-compliance?
What are the six types of contracts falling within the statute of frauds?
(1) contract for the transfer of land (or interest thereof)
(2) contracts that can't be performed within a year
(3) contracts for the sale of goods over $500
(4)
(5)
(6)
Discuss the requirement that the contract be performed within one year
Courts are leary of the one year requirement so they work hard to make it not apply. If it is clear that the contract would be breached if performed less than a year from the date, then they will hold it doesn't apply. Ex-lifetime membership in a gym (p305)
Discuss the rules for contracts for the sale of goods and statute of frauds
Only applies if over $500. That is the total value of all goods in transaction including cash and trade in
What are the three requirements to satisfy the writing requirement under the statute of frauds?
(1) A written memorandum
(2) It must contain enough information to show contract was made
(3) Must be signed by the adverse party
Discuss the rules of what satisifies the first element of the writing requirement, the "written memorandum" itself
Rule: there is no particular formal requirement. Toilet paper OK. Linked correspondence Ok, written after contract formed OK, even if lost by the time of litigation, oral testimony can prove.
What is the policy behind the lost writing rule in the statute of frauds?
It is one further safety valve that prevents abuse of the statute of frauds by a party who seeks to escape a genuine contract.
Discuss the rules of what satisifies the first element of the writing requirement, whether the writing "contains enough information to show contract was made" itself
Common law: (1) parties, (2) nature of the exchange, (3) material terms.
UCC: only requirement is for quantity and expressly says the writing will be sufficient even if some terms are missing
If the writing requirement of the statute of frauds is satisfied, do you have a valid contract?
NOOOO. Compliance with the statute is a different issue from adequate proof of contract for purpose of relief. If it is highly uncertain, staute frauds may be only one of the problems to deal with.
Discuss the rules of what satisifies the second element of the writing requirement, the "signing" (UCC is on another flashcard)
The party disputing the existence of the contract must have signed it. But, full and formal signature not needed. Any mark or symbol places by the party on the paper with the intention of authenticating it. Standard: initials, logo, "X", letterhead
What legal effect does the E-Sign and UETA prove
To the extent that la requires a signature, it may not deny effect to a signature in electronic form. The signature is defined as "electronic sound, symbol, or process"
Discuss UCC specifc rule of what satisifies the second element of the writing requirement, the "signing"
2-201(2): A writing can be enforced without signature if: (1) both parties are mercants, (2) if contract is oral, a written confirmation is sent within reasonable time with is signed OR satisfies the statute against the sender and (3) recipient has reason to know its contents (4) recipient does not give written notice of objection within 10 days.
In other words, the non signing recipient is also bound by failing to protest.
What are some of the policies for allowing exceptions to the statute of frauds
(1) Circumstances can provide evidence of contract formation so it is unduly technical to require writings
(2) protecting the interests of a party who suffered a detriment in justifiable reliance
Discuss the common law exception to part performance for the statute of frauds
You should not assume that the principle will be available all the time. Courts are a little hostile to it. High evidentiary standard that the conduct does establish contract. Some require prejudice or reliance. Some recognize it only if party seeking performance has fully performed.
Discuss the UCC exception to part performance for the statute of frauds
Both exceptions are narrow and defined in 2-201. First is for gods specially made for the buyer and the second allows enforcement only to the extent payment for goods has been made and accepted, or goods have been delivered and accepted.
What is the common law exception to the protection of reliance to the statute of frauds?
A promise reasonably expected to induce reliance, the inducement of justifiable reliance, and the need to enforce the promise to prevent injustice.
What happens if you violate the statute of frauds?
Contract will be void or unenforceable. You have to raise statute of frauds as an affirmative defense and cannot deny allegations generally.
How does a contract fail for indefiniteness?
If a material term of the agrement is left indefinite and uncertainty cannot be resolved by construction or intepretation. "Material" = so central to the value exchangd under the contract tat it is a fundamental basis of the contract. The court should not create a contract for the parties.
What level of indefiniteness does UCC and restatements afford?
Contract should be reasonably certain if the language of the agreement, interpreted in context and with legal rules, provides enough content to restablish an intent to contract, a basis for finding breach, and a means of providing a remedy.
In the topic of interpretation, discuss the relationship of contract definiteness to remedy.
Degree of certainty required may be different depending on the nature of the controversy and relief claimed. See examples on p255 of EE.
What are the three rules when deciding whether to send something to a judge or factfinder?
(1) When no factual dispute requires asssessment of credibility but just ordinary grammatical meanings, the the judge
(2) If meaning to be decided by evaluation of oral testimony, better for factfinder
(3) No pertinent evidence of meaning and construction is calle for, then judge
What are the four areas of factual inquiry that the court can indulge in when interpreting contrats? And in what priority order?
(1) express terms of the parties
(2) course of performance
(3) course of dealing
(4) trade usage or usage
* conflicts in the facts are resolved in this priority irder
* notice these are all objective sources
Discuss the express words and conduct of the parties in signifying intent
These are most important. Court must look at the document as a whole. In the old days courts were loathe to look beyond the four corners. Now courts worry aout getting the wrong result that way. A history of communication leading up the express terms of the contract will help too.
Discuss the usage of course of performance when interpreting terms
It is relevant because it assumes that actual performance terndered and accepted without objection is a strong indicator or what must have been intended. Four rules:
(1) It must be pertinent to a meaning of the term in controversy
(2) must show the party performed or accepted performance without protest or reservation of rights
(3) If conduct was by only one party it does not prove other party shared view
(4) The more extensive and repetitive, the stronger the influence
Dicsuss "usage of the trade" in the context of interpertation
It should be read broadly to not just include members of a trade but any commercial custom. UCC test for the word is whether "currently observed by the great majority of decent dealers." If you allege trade usage prove this:
(1) usage is pertinent to the term
(2) Usage does in fact exist (what is it, and what is the scope)
(3) both parties must be sufficiently connected to the trade or market
(4) must not be excluded byor incompatible with express terms of the agreement
What are the three considerations when deciding whether a party is sufficiently connected to the trade or market when interpreting terms under trade usage
(1) If both parties are members, they are bound
(2) if only party is a member, the usage does not apply unless other party know
(3) If market is non-specialized, applies only if both parties know of the usage
What are six key rules of interpretation
(1) try to interpret an agreement that effect to all its terms
(2) favor the meaning that validates the contract
(3) specific or preceise provisions should be given greater weight than general
(4) favor negotiated or handwritten terms over form terms
(5) Ejusdem generis
(6) When one party has drafted or selected the language, then the meaning is preferred that favors the other party. This is a tie breaker.
Can you enforce a contract to agree to agree?
No. Some courts a somewhat receptive to it, but others find that a term to "negotiate in good faith" is too indefinite to be enforced.
What is a good, high level, simple way of explaining when parol evidence rule applies?
It applies where an agreement is recorded in writing and one of the parties proffers evidence to prove a term that is not contained in the writing or to explain or expand a term in the writing.
State the parol evidence rule
To the extent that the parties execute a writing that is and is intended to be a final exprssion of their agremeent, no parol evidence may be admitted to supplement, explain, or contradict it. However, to the extent that the writing is not a final and complete expression of agreement, consistent, but not contradictory parol evidence may be admitted to supplement or explain those parts of it that have not been finally expressed.
Is parol evidence before or after signing?
BEFORE or contemporaneously with it
What is the policy conflict behind the parol evidence rule
On one hand, the rule is useful to exclude evidence that is probably unreliable or dishonest. However, it could product injustice by preventing a party from proving what was actually agreed to.
What is the standard for integration of any specific term (4 words)
FFCC. Full, final, certain, and clear
What is a total integration
AKA complete integration, (1) the entire writing clearly integrates every term that was agreed to and (2) was intended to be the exclusive statement of everything agreed to
Does a total integration remove all parol evidence?
Not necessarily. If a term was ambiguous or unclear, then the evidence would be allowed in to resolve ambiguity or explain the unclear language
What happens if you have a partial integration?
No parol evidence allowed on the integrated terms, but parol evidence will be allowed to supplement or explain the writing as long as it doesn't contradict or vary anything that has been written. Further, the meaning must be consistent with what's written.
What two steps does a judge go through in determining whether to allow parol evidence?
(1) Is it the writing totally integrated or is the term in dispute covered by a partial integration?
(2) If not then, is the evidence offered consistent with the writing on that term?
Aside from the four corners test, what will the court do when determining integration?
Go beyond face value to entertain extrinsic evidence that may be helpful in revealing that an apparentlyintegrated writing was in fact not intended as such, or contains ambiguity that isn't otherwise obvious
What is the problem with the judge determining integration beyond four corners?
It tries to answer the question of intent, which is obviously a factual question.
What questions does the judge ask under common law and UCC when determining whether a term should have been integrated in or not?
Common law: Ask whether the term "might naturally be omitted from the writing"
UCC: would the term certainly have been included (more favorable because it excludes evidence only if it clearly would have been part of the writing if the parties had agreed to it).
The result should probably be the same for both tests.
What is the standard courts use in taking a context approach rather than a four corners approach to reviewing integration
If the contract is clear, unambiguous, and complete then the court will presume this is integrated. The only way extrinsic evidence might mitigate that presumpion is if plausible demonstrates a reason to go outside the four corners and if it is consistent with the intent
If a court finds the agreement to not be integrated on point, then what does consistent and inconsistent extinsic evidence look like when the term is missing from the writing
Most consistent: writing has a gap on the issue and parol term fills gap without changing what is recorded in the writing

Least consistent: writing has a gap on the issue, but term would change the effect or meaning of other provisions recorded in the writing
If a court finds the agreement to not be integrated on point, then what does consistent and inconsistent extinsic evidence look like when the term is unclear or ambiguous the writing
Most consistent: writing is susceptible of the meaning supported by the parol evidence

Least consistent: meaning is implausible, given the purpose and effect of what is recorded in the writing