I Brought Change

Front 1

contract

Back 1

a contract is a promise or a set of promises for the breach of which the law gives a remedy. or the performance of which the law in some way recognizes as a duty

Front 2

promise

Back 2

is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promise in understanding that a commitment has been made

Front 3

bargain

Back 3

an agreement to exchange promises or to exchanbbe performances

Front 4

voidable contract

Back 4

is one where one or more parties have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract, or by ratification of the contract to extinguish the power of avoidance

Front 5

reformation

Back 5

if the paties orally agree on a deal. but mistakenly prepare and execute a document which incorrectly reflects the oral agreement, either party may obtain a court order for reformation ( a re-writing of the document)

Front 6

mutual recission

Back 6

as long as a contract is executory on both sides (i.e neither party has fully performed), the parties may agree to cancel the whole contract. this is a mutual recission.

Front 7

unilateral recission

Back 7

where one of the parties to a contract has been the victim of fraud, duress, or breach by the other party, he will generally be allowed to cancel the contract, terminating his obligation under it. some couorts call this a unilateral rescission. But it is better to say that the innocent party may cancel or terminate.

Front 8

mutual assent

Back 8

each party must manifest assent with a reference to the other. parties must agree to the same terms. (meeting of the minds)

Front 9

objective test

Back 9

a partys intent is deemed to be waht a reasoanble person in the position of the one party would think that the first partys objective manifestation of intent meant.

Front 10

legal enforceability

Back 10

the parties intention regarding whether a contract is to be legally enforceable will normally be effective. Thus if both parties intend and desire that their “agreement” not to be legally enforceable, it will not be. conversely , if both desire that it be legally enforceable, it will be even if the parties mistaken believe that it is not.

Front 11

iii. Objective indicators: may show intent NOT to contract.

Back 11

1. If party knows or has reason to know that other party has no intent, then NO contract.
2. The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents

Front 12

Misunderstanding

Back 12

if the parties have a misunderstanding about what they are agreeing to, this may prevent them from having the required “meeting of the minds,” and thus prevent a contrat from existing. No contract will be formed If 1) the parties each have a different subjective belief about a term of the contract (2) that term is a material one and (3) niehter party knows or has reason to know of the misunderstanding.

Front 13

Fault

Back 13

conversely if one party knows of should know that he has a different understanding as to the meaning of an ambiguous term than the other, a contract will be formed on the term as understood by the other(innocent) party

Front 14

Offeree is negligent

Back 14

if the offerees failure to read or understand the offer due to his own negligence, he is bound by the terms of the contracts as stated in the offer

Front 15

Presumptions against contract

Back 15

where the evidence is ambiguous about whether parties intended to be bound the court will follow these rules: in a social or domestic setting , the presumption will be that legal relations were not intended. In business relationships courts presume intention.

Front 16

Intention to be legally bound

Back 16

neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.

Front 17

Intent to put in writing later:

Back 17

if two parties agree (either orally or a brief writing) on all points, but decide that they will subsequently put their entire agreement into a more formal written document later, the preliminary agreement may or may not be binding. In general, the parties intention controls

Front 18

Where no intent manifested

Back 18

where the evidence of intent is ambiguous the court will generally treat a contract as existing as soon as the mutual assent is reached, even if no formal document is ever drawn up later.

Front 19

Certainty

Back 19

terms must be reasonably certain to provide basis for an agreement, breach, and an appropriate remedy

Front 20

Preliminary negotiations

Back 20

a manifestation of willingness to enter into a bargain is not an offer of 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 21

Advertisements

Back 21

Most advertisements appearing in newspapers, store windows, store windows, etc. are not offers to sell. This is because they do not contain sufficient word of commitment to sell

Front 22

Specific terms

Back 22

but if the advertisement contrains specific words of commitment, especially a promise to seal a particular number of units, then it may be an offer

Front 23

Words of commitment

Back 23

Look for words of commitment- these suggest, an offer. (ex. Send three box tops plus 1.95 for your free cotton t-shirt,” is an offer even though it is also an advertisement; this is because the advertiser is commiting himself to take certain action in response to the consumer’s actions)

Front 24

Who may accept

Back 24

offer may be accepted only by persons in whom the offer intends to create power of acceptance

Front 25

Rewards

Back 25

must know of offer to accept- cannot claim reward for particular act done without knowing offer

Front 26

ii. How to accept

Back 26

(a) affirmative by words, (b) perform or refrain from act, or (c) if form not specified, may accept by promise or performance, unless indicated by the language or the circumstances an offer invites acceptance in any manner and by any medium reasonable in the circumstances . Its 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.

Front 27

when to accept

Back 27

Power of acceptance must still be in effect and be made timely from point offer was made.

Front 28

iii. Mirror image rule:

Back 28

under common law, offeree’s response is acceptance only if “mirrors” the terms of the offer. If acceptance conflicts or fails to comply with terms, or adds new terms, acts as a flat rejection to offer.

Front 29

acceptance terms which varies from offer.

Back 29

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

Front 30

i. Mailbox rule:

Back 30

acceptance is effective upon proper dispatch- once out of the offeree’s possession (unless it is an option contract).1. Sent by manner invited: not if offer says- “your letter of acceptance must be personally received by me.”
2. Lost in transmission: depends on whether properly addressed.
a. Proper address: acceptance effective on dispatch even if never received by offeror, but court may discharge offeror if he sold to someone else.
b. Improper: if offer is misdirected, despite offeror’s fault, can only be accepted if open for acceptance (RST 49).
-where an acceptance is seasonably dispatched but the offeree uses means of transmission not invited by the offer or fails to exercise reasonable diligence to insure safe transmission, it is treated as operative upon dispatch if received within the time in which a properly dispatched acceptance would normally have arrived. (67)

Front 31

ii. Notice of acceptance

Back 31

offeror must receive notice or have reasonable way of receiving notice that offer has been accepted

Front 32

notification of acceptance(performance)

Back 32

notification needed ONLY if specified by offer or there is no reasonable means for the offeror to learn of the acceptance. Contract only binding if:
a. Offeree exercises reasonable diligence to notify; or(54)
b. Offeror learns of performance in reasonable time; or(54)
c. Offer does not require notification of acceptance.(54)

Hint 32

*Note- offeree may reject even after begins to perform, but may be bound if offeror may infer from conduct that he assents.
Note: unless the offeror manifests a contrary intention, an offeree who learns of an offer after he has rendered part of the performance requested by the offer may accept by completing the requested performance. RST51. However, a person who complies with the conditions of a reward offered by a private party but who has no knowledge of the reward is not entitled to collect the reward.
- The rendering of a performance does not constitute an acceptance if within a reasonable time the offeree exercises reasonable diligence to notify the offeror on non-acceptance(rst 53)
- The rendering of the invited performance does not constitute an acceptance if before the offeror performs his promise the offeree manifests an intention not to accept. (RST53)
- A written revocation, rejection,or acceptance is received when the writing comes into the possession of the person addressed, or of some person authorized by him to receive it for him, or when it is deposited in some place which he has authorized as the place for this or similar communications to be deposited for him (rst68)

Front 33

notification of acceptance(by promise)

Back 33

must use reasonable means to notify the offeror of acceptance. ***
-Where notification is essential to acceptance by promise, the offeror is not bound by an acceptance in equivocal terms unless he reasonably understands it as an acceptance.

Front 34

acceptance by silence

Back 34

usually not valid

Hint 34

exceptions-
a. Offeror has stated or given 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.
b. Offeree receives benefit of service (not goods) is held to acceptance if:
-Had reasonable chance to reject benefits; and
-Knew (or should have) that provider of service expected compensation.
c. Prior conduct: past dealings make silence reasonable
d. Acceptance by dominion: goods received and kept(rst 69)

Front 35

Acceptance and Rejection by Offeree

Back 35

depends on which is dispatched first

i. Rejection sent first: acceptance effective only if received before the rejection.
ii. Acceptance first: acceptance effective upon dispatch, and subsequently-dispatched “rejection” (really a “revocation of acceptance”) does NOT undo the acceptance, regardless of whether rejection is received before of after acceptance.
iii. Option contracts: effective on receipt, NOT dispatch.
iv. Risk of mistake in transmission: the risk of mistake in transmission of the terms of the offer is upon the offeror. That is, a contract is formed on the terms of the offer as received by the offeree.

Front 36

Certainty

Back 36

no contract will be found if the terms of the parties agreement are unduly indefinite. But if the court believes that the parties intended to contract, and the court believes that it can supply a “reasonable” value for the missing term, it will generally do so.
The terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance.

Part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed

Action in reliance on an agreement may make a contractural remedy appropriate even though uncertainty is not remove

Front 37

Ways to Terminate Power of Acceptance(rejection)

Back 37

by offeror

Hint 37

Exception: will not terminate if (1) offeror indicates that the offer still stands despite the rejections; or (2) offeree states that although she is not now accepting, she wishes to consider the offer further later. RST (38)

Front 38

ways to terminate power of acceptance(counter offer)

Back 38

defined- an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer.
*Power to accept terminated as if flatly rejected, unless otherwise indicated by the offer unless it is a mere inquiry regarding the possibility of different terms, a request for a better offer, or a comment upon the terms of the offer, is ordinarially not a counter offer. (intent of offeree)

Front 39

ways to terminate power of acceptance (lapse of time)

Back 39

 End of reasonable time: if time limit is not set, power of acceptance terminates at the end of reasonable time.
 Face-to-face: if parties bargain in person or over the phone, power of acceptance continues only during that conversation, unless otherwise indicated by the offer.
 Unless otherwise indicated by the language or the circumstances, and subject to the rule stated in 49 an offer sent by mail is seasonably accepted if an acceptance is mailed at any time before midnight on the day on which the offer is received.

Hint 39

 If the oferee knows or has reason to know offeror has a specific time (statute of limitations) that must be taken into account.

Front 40

way to terminate power of acceptance (revocation)

Back 40

by the offeror, or
*Can withdraw offer at any time before acceptance (unless there is an option contract).
• Effective upon receipt: must communicate revocation or take direct action inconsistent with offer- offeree finds out (from reliable 3rd party) that offer was revoked (Dickinson v. Dodds- land sold to 3rd party)
• Lost revocation: if the letter or telegram revoking the offer is lost through misdelivery, revocation never becomes effective.
• An offeror may reserve the power to revoke the offer without notice, and such a reservation will be given effect whether contatined in the offer or in a later communication received by the offeree before a contract is created.

Front 41

Revocation of general offers:

Back 41

where an offer is made by advertisement in a newspaper or other general notification to the public or to a number of persons whose identity is unknown to the offeror, the offeree’s power of acceptance is terminated when a notice of termination is given publicly by advertisement or other general notification equal to that given to the offer and no better means of notification is reasonably available.

Front 42

ways to terminate power of acceptance (death or incapacity)

Back 42

of either party, or
 If either offeror or offeree dies or loses the legal capacity to enter into contract, power to accept is terminated.
 This is so even if offeree does not learn of offeror’s death or incapacity until after he dispatched the acceptance. RST 48

Front 43

ways to terminate power of acceptance(#6)

Back 43

6. An offerees power of acceptance is terminated by the non-occurrence of any condition of accepted under the terms of the offer.

Front 44

f. Irrevocable Offers

Back 44

the ordinary offer is revocable at the will of the offeror. Even if the offer states- “offer will remain open for two weeks

Hint 44

i. Option contract, Part-performance, Detrimental reliance

Front 45

option contract

Back 45

signed option contract (promise to keep offer open) reciting payment of consideration is irrevocable, even if consideration was never paid. Unless, there is manifested intent NOT to accept.
1. Where an offer invites an offeree to accept by rendering a performance and does not invite a promisory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.2) the offerors 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. Rst 45

Front 46

ii. Part-performance

Back 46

promise for performance (unilateral contract), where actual performance begins to make offer temporarily irrevocable. As long as offeree continues to diligently perform, offer remains open and is irrevocable until finished.

Front 47

iii. Detrimental reliance

Back 47

: promise for promise (bilateral contract), where preparations make the offer to be temporarily irrevocable as long as justice requires (i.e. begins work on job).
1. RST87 (2): an offer which the offeror should reasonably expect to induce action or forbearance of substantial character on the part of offeree before acceptance and which does induce action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
2. Sub-contractor offer: offers to a general will often become temporarily irrevocable under this rule.

Front 48

Consideration defined

Back 48

performance or return promise must be a bargained-for exchange that is sought by offeror in exchange for his promise and is given by the offeree in exchange for that promise.

Front 49

performance can be?

Back 49

1. Performance or return promise can go to the offeror or some other person.
2. Detriment to induce promise v. Promise to induce detriment
a. Either way there must be something given up or something to circumscribe liberty.

Front 50

adequacy(consideration)

Back 50

Adequacy NOT usually evaluated: however, extreme disparity in exchanged value may suggest there was no bargain. (rst 79)

Front 51

is a bargained for promise consideration?

Back 51

4. A PROMISE WHICH IS BARGAINED FOR IS CONSIDERATION IF, BUT ONLY IF, THE PROMISED PERFORMANCE WOULD BE CONSIDERATION

Front 52

existence of condition (consideration)

Back 52

even if the person promising to make a gift requires the promise to meet cetain conditions in order to receive the gift, there will still be no consideration(and the promise wil thus be unenforceable) if the meeting of the conditions is not really “bargained for” by the promisor. (rst 75)

Front 53

is there consideration if law rules contract voidable?

Back 53

6. The fact that a rule of law renders a promise voidable or unenforceable does not prevent it from being consideration. (RST 78)

Front 54

what if what is bargained for dosent induce the promise?

Back 54

8. (1) the fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise. (2) the fact that a promise does not of itself induce a performance or return promise does not prevent the performance or return promise form being consideration for the promise. (81) (unless both parties know that the purported consideration is mere pretense, it is immaterial that the promisors desire for the consideration is incidental to other objectives and even that the other party knows this to be so.

Front 55

9. A promise to perform all or part of an antecedent contract of the promisor, previously voidable by him, but not avoidable prior to the making of the promise, is binding

Back 55

(rst 85)

Front 56

10. A promise made in recognition of a benefit previously received by the promisor from the promise is binding to the extent necessary to prevent injustice.

Back 56

. A promise is not binding under subsection (1) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or to the extent that its value is disproportionate to the benfit. (86) “moral obligations

Front 57

11. Guaranty

Back 57

a promise to be surety for the performance of a contractual obligation, made to the oblige, is binding if (a) the promise is in writing and signed by the promisor and recites a purported consideration; or (b) the promise is made binding by statute; or (c) promissory estoppel

Front 58

Modification

Back 58

is binding if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made.

Front 59

1. Mere gratuity “altruistic” pleasure

Back 59

gifts made with love and affection without requiring something in return
a. Cannot rescind gift for lack of consideration

Front 60

2. Conditional gifts

Back 60

not enforceable where condition is not the motive for the promise

Hint 60

a. Unless offeror imposes a condition from which he will benefit (bargained-for)

Front 61

3. Rewards

Back 61

require actual knowledge (Glover v. Jewish War Veterans)

Front 62

4. Nominal consideration

Back 62

if so small, court may conclude it is a “sham,” and as a factual matter hold no bargain is present- promise does not have to be enforced.

Front 63

5. Forebearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless

Back 63

(a) the claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or (b) the forebearing or surrendering party believes that the claim or defense may be fairly determined to be valid. (RST 74)

Front 64

6. The execution of a written instrument surrendering a claim or defense by one who is under no duty to execute is consideration?

Back 64

6. The execution of a written instrument surrendering a claim or defense by one who is under no duty to execute it is consideration if the execution of the written instrument is bargained for even though he is not asserting the claim or defense and believes that no valid claim or defense exists. (RST 74)

Front 65

b. Pre-Existing Duty Rule

Back 65

in an exchange for a promise or performance, a party that does or refrains from doing something that he is already under a legal obligation to do, does NOT equate consideration.

Hint 65

i. Acceptable changes in pre-existing contracts: different performance needed than initially agreed to (consideration=modification)
1. RST 87: unanticipated circumstances which make re-adjustment fair and equitable (Angel v. Murray- garbage collection)
ii. Promises to pay past debts
1. Existence of debt (consideration=agreeing not to withhold)
2. Amount of debt (consideration-amount above old bargain)

Front 66

c. Illusory and Implied Promises

Back 66

promise is not supported by consideration, and is therefore not enforceable. An illusory promise is a statement which appears to be promising something, but which in fact dies not commit the promisor to do anything at all

Hint 66

A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performance unless (a) each of the alternative performances would have been consideration if it alone had been bargained for; or (b) one of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promise exercises his choice events may eliminate the alternatives which would not have been consideration. (rst 77)

Front 67

d. Mutuality of Obligation

Back 67

both parties must furnish consideration.

Front 68

e. Past Consideration

Back 68

: promise to pay for benefits previously received is generally unenforceable without further consideration; especially if services requested or provided without request in emergency situation.

Front 69

VI. PROMISSORY ESTOPPEL(use when a plaintiff has relied on a contract that is unenforceable due to non-complian with the SOF

Back 69

a promise which the offeror should reasonably expect to induce action or forbearance on the part of the offeree or 3rd person, and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.


i. Actual reliance: The promises must actually rely on the promise. (Example: On the facts of the above example, B must show that without A’s promise, B would not have quit his job and attended college.
ii. Foreseeable reliance: The promiess’s reliance must also have been reasonably foreseeable to the promisor

Front 70

Amount of recovery in PE

Back 70

where P.E. is used, the damages awarded are generally limited to those necessary to “prevent injustice”. Usually, this will mean that the plaintiff receives reliance damages, rather than the greater expectation measure. In other words, P is placed in the position he would have been in had the promise never been made

Front 71

VII. STATUTE OF FRAUDS

Back 71

Nature of statute of frauds- most contracts are valid despite the fact that they are only oral. A few types of contracts, however, are unenforceable unless they are in writing. Contracts that are unenforceable unless in writing are said to fall “within the Statute of Frauds”. The statute of frauds is pretty much identical from state to state

Front 72

Suretyship (SOF)

Back 72

A promise to pay the debt or duty of another is within the Statute of Frauds, and is therefore unenforceable unless in writing.(RS 112)

Hint 72

(exception) Main Purpose rule: If the promisors chief purpose in making his promise of suretyship is to further his own interest, his promise does not fall within the statute of frauds. This is called the “main purpose” rule.

Front 73

Novation

Back 73

occurs where the oblige under an original contract(the person to whom the duty is owed) agrees to relieve the obligor of all liability after the duty is delegated to some third party. A novation thus substitutes for the original obligator a stranger to the original contract, the delegate. Not within the statute of frauds

Front 74

is A contract to discharge a duty owed by the promisee to a third person within the statute of frauds as a contract to answer for the duty of another?

Back 74

A contract to discharge a duty owed by the promisee to a third person is not within the statute of frauds as a contract to answer for the duty of another. (RS 123)

Front 75

Marriage Provision

Back 75

A. Contract made upon consideration is marriage or a promise of marriage is within the statute

Hint 75

1. Exception for mutual promises to marry: but if an oral contract consists solely of mutual promises to marry (with no ancillary promises regarding property transfers), the contract is not within the statute of Frauds, and is enforceable even though oral. This is, an ordinary oral engagement is an enforceable contract.

Front 76

The Land Contract Provision

Back 76

a. Leases: for instance, a lease is generally an “interest in land,” so that a promise to make a lease will generally be unenforceable if not in writing.
i. One year or less: but most states have statutes making oral leases enforeceable if their duration is one year or less.
b. Mortgages: a promise to give a mortgage on real property as security for a loan also usually comes within the statute
c. Contracts incidentally related to land: but contract that relate only incidentally to land are not within the statute. Thus a contract to build a building is not within the statute, nor is a promise to lend money with which the borrower will buy land.
d. A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the statute of frauds if it is established that th party seeking enforcement. In reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided on by specific enforcement.
e. When a transfer of an interest in land has been made, a promise to pay the price, if originally within the SOF, ceases to be within it unless the promised price is itself in whole or in part an interest in land. (125)

Front 77

Part performance

Back 77

Even if an oral contract contract for the transfer of an interest in land is not enforceable at the time it is made, subsequent acts by either party may make it enforceable.
1.Conveyance by vendor: First, if the vendir under an oral land contract makes the contracted for conveyance, he may recover the contract place.
2. Vendee’s part performance: second, the vendee under an oral land contract mayt in reliance on the contract take actions which 1) show that the oral contract was really made; and (2) also create a reliance interest on the part of the vendee in enforcement. Such a vendee may then obtain specific performance ( a court order that the vendor must convey the land) even though the contract was originally unenforceable because oral.
a. Taking possession and making improvements. For instance, if the vendee pays some of all of the purchase price, moves onto the property, and then makes costly improvements on it, this combination of facts will probably induce the court to grant a decree of specific performance.
b. Payment not sufficient: Usually, the fat that the vendee has paid the vendor the purchase price under the oral agreement is not by itself sufficient to make the contract enforceable. (instead, the vendee can simply recover the purchase price in a non-contract action for restitution.)

Front 78

UCC Contracts involving goods and nongoods

Back 78

if a sale involves both goods and services (e.g.) a contract to paint a portrait), a court 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 service, then UCC will apply to the sale portion and the common law will apply to the services portion.

Front 79

UCC General 2-201

Back 79

SOF:
a contract for the sale of goods for the price of $500 or more is not enforceable…unless there is some writing sufficient to indicate that a contract for sale has been made….” So an oral contract for goods at a price of $500 or more is unenforceable under the UCC.

Exceptions:

Hint 79

a. Specially manufactured goods: No writing is required if the goods are to be specially manufactured for the buyer, are nut suitable for sale to others, and the seller has made either a substantial beginning of their manufacture or commitments for their procurement.” 2-201 (3)(b)
b. Estoppel: a writing is also not required ‘if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted.” 2-201(3)(b).
c. Goods accepted or paid for: finally, no writing is required “with respect to goods for which payment has been made and accepted or which goods have been received and accepted.” 2-210(3)©. (ex. Buyer orally orders there pairs of shoes from seller for a total of $600. Buyer then sends a check for this amount in advance payment. Once seller takes the check and depostis it in the bank, seller loses his staute of frauds defense).

Front 80

ucc satisfaction by a memo

Back 80

sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought.

1 omissions: even if the writing contains a mistake (not price and length) as to the term, there will be often enough to satisfy the SOF under UCC.

2. Confirmation:between merchants, one who receives a signed confirmation for the other party will generally be bound, unless the recipient objects within 10 days after receiving confirmation.

Front 81

ucc formation 2-204

Back 81

1. contract may be made in manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such contract.

2. an agreement sufficient to constitute a contract 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 contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Front 82

offer and acceptance under UCC 2-206

Back 82

1. indicated by the language or circumstances
-an offer inviting acceptance in any manner and by any medium reasonable in circumstances.
-an order or other offer to buy goods for prompt shipment is inviting acceptance either by promise to ship or shipping of conforming or non-conforming goods. But such a shipment of non conforming goods is not acceptance if the seller notifies the buyer it is an accommodation

2.Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance

accommodation shipment:

Hint 82

If the seller is “accommodating” the buyer by shipping what the seller knows and says are non-conforming goods, this does not act as an acceptance. In this “accommodation shipment” situation, the seller is making a counter-offer, which the buyer can then either accept or reject. If the buyer accepts, there is a contract for th quantity and type of goods actually sent by the seller, not for those originally ordered by the buyer. If the buyer rejects, he can send back the goods. In anyevent, seller will not for those originally ordered by the buyer rejects, he can send back the goods. In any event, seller will not be found to be in breach.

Front 83

2-207 additional terms

Back 83

1. A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this

Front 84

2-209 modification rescission and waiver

Back 84

(1) An agreement modifying a contract within this Article needs no consideration to be binding.

(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.

(3) The requirements of the statute of frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its provisions.
(4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver.

(5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

Front 85

§ 2-302. Unconscionable contract or Clause.

Back 85

(1) If the court as a matter of law finds the contract or any clause 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 without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

Front 86

§ 2-306. Output, Requirements and Exclusive Dealings.

Back 86

(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
(2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

Front 87

§ 1-103. Supplementary General Principles of Law Applicable.

Back 87

Unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, Bankruptcy, or other validating or invalidating cause shall supplement its provisions.

Front 88

The one-year provision

Back 88

A. General rule: if a promise contained in a contract is incapable of being fully performed within one year after the making of the contract, the contract must be in writing. Contracts of uncertain duration are simply excluded.
1. Time runs from making: The one-year period is measured from the time of execution of contract, not the time it will take the parties to perform(ex. On July 1, 1990, Star promises Network that star will appear on a one-hour show that will take place in September, 1991). This contract will be unenforceable if oral, because it cannot be performed within one year of the day it was made. The fact that actual performance will take only one hour is irrelevant.

Front 89

impossibility to perform within a year, falls within the SOF?

Back 89

The one year provision applies only if complete performance is impossible within one year after the making of the contract. The fact that performance within one year is highly unlikely is not enough.

Judge from time of contract’s execution: The possibility of performing contract within one year must be judged as of the time the contract is made, not by benefit of hindsight

Front 90

ability to terminate within one year count as completion

Back 90

courts are split about whether the existence of a termination clause that permits termination in less than a year will remove a more-than-one-year contract from the one-year provision.

Front 91

Full performance on one side

Back 91

Most courts hold that full performance by one party removes the contract from the one-year provision. This is true even if it actually take that party more than one year to perform.(RS130)

Front 92

memorandum

Back 92

Unless additional requirements are prescribed by the particular statute of frauds is enforeceable if it is evidenced by any writning signed by or on behalf of the party to be charged, which (a) reasonably identifies the subject matter of the contract (b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and (c) states with reasonable certainty the essential tersm of the unperformed promises in the contract.(131)

Front 93

does the memo have to be one writing

Back 93

I. The memo may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction (132). Signed and unsigned papers may be read together if in the circumstances they clearly relate to the same transaction and the party to be charged has acquiesced in the contents of the unsigned writing. The earlier signature may be adopted with reference to a document prepared later, whether signed or not.

Front 94

memo

Back 94

II. Except in the case of a writing evidencing a contract upon consideration of marriage, the statute may be satisfied by a signed writing not made as a memorandum of a contract.

Front 95

signature of writing

Back 95

the signature to a memorandum may be any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of the signer. (134)

Front 96

who must sign

Back 96

Where a memorandum of a contract within the statute is signed by fewer than all parties to the contract and the statute is not otherwise satisfied, the contract is enforceable against the signers but not against the others.

Front 97

VI. Loss or Destruction of a memo

Back 97

the loss or destruction of a memorandum does not deprive it or effect under the statute. (137)

Front 98

ORAL MODIFICATION

Back 98

Generally, to determine whether an oral modification of an existing contract is effective, the contract as modified must be treated as if it were an original contract. This is true whether the original contract is oral or written.

Hint 98

a. Consequence. If the modifications are unenforceable under this test, the original contract is left standing. That is, the modification is treated as if it never occurred. (149)

Overlap of classes: ex; A and B orally agree to marry three years later. The contract is unenforceable because not to be performed within a year,

Front 99

VIII. Misunderstanding

Back 99

If the parties have a misunderstanding about what they are agreeing to, this may prevent them from

Front 100

mistake

Back 100

a belief that is not in accord with the fact. (erroneous belief)
A parties erroneous belief with respect to the law, as found in statute, regulation, judicial decision, or elsewhere, or with respect to the legal consequences of act, may, therefore come within these rule.

Front 101

Mutual mistake

Back 101

Three requirements must be satisfied before the adversely- affected party may avoid the contract on account of mutual mistake. (152)
1. Basic assumption: the mistake must concern a basic assumption on which the contract was made. (ex. The belief that a violin is stradavarius when it is in fact a worthless 20th century imitation is a basic mistake. But the sellers belief that a buyer whim he is selling on credit is credit worthy is probably a collateral rather tha a basic mistake
2. Material effect: the mistake must have a material effect on the agreed exchange of performance. (example:if both buyer and seller thinks that a violin is a stradavarius, but it is in fact a Guarnarius worth almost the same amount, the mistake would not have a materal effect on the agreed exchange
3. Risk: the adversely effect partymust not be the one on whim the contract has implicitly imposed the risk of the mistake. Of the, the contract does not make it clear which party is to bear the risk of a certain type of mistake, so the court allocate this risk in the manner that it finds to be reasonable under the circumstances.

Front 102

Unilateral mistake(153)

Back 102

It is more difficult for the mistaken party to avoid the contract than in the mutual make situation. The mistake party must show the same three showings as for mutual mistake ( basic assumption, material effect, and risk on the other party), plus must show either that:
1 Unconscionability- the mistake is such that enforcement of the contract would be unconscionable; or
2 Reason to know- the other party had reason to know of the mistake, or the other party’s fault caused the mistake.

Front 103

When a party bears the risk of a mistake (154)

Back 103

A)the risk is allocated to him by agreement of the parties, or (as is clause)
(b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
c) the risk is allocated to him by the on the ground that it is reasonable in the circumstances to do so

Front 104

Effect of fault of party seeking relief (157)

Back 104

A mistaken party’s fault in failing to know or discover the facts before making the contract does not bar him from avoidance or reformation under the rules stated in this chapter, unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing

Front 105

X. MISREPRESENTATION

Back 105

An assetion that is not in accord with the facts. An assertion must relate to something that is a fact at the time the assertion is made in order to be a misrepresentation. (159)

Action intended or known to be likely to prevent another from learning a fact is equivalent to an assertion that the fact does not exist(160)(could be non-disclosure)

Front 106

When non-disclosure is equivalent to an assertion

Back 106

a. Where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing
b. Where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part
c. Where the other person is entitled to know the fact because of a relation of trust and confidence between them
d. Half truth: if part of the truth is told, but another part is not, so as to create an overall misleading impression, this may constitute misrepresentation
e. Positive concealment: if a party takes positive action to conceal the truth, this will be actionable even though it is not verbal. (example: to conceal termite damage, seller plasters over wooden beams in the house he is selling)

The failure to disclose the fact may be unintentional, as when one forgets to disclose a known fact, and it is then equivalent to an innocent misrepresentation. Furthermore, he need not disclose facts that the ordinary person would regard as unimportant unless he knows of some peculiarity of the other person that is likely to lead him to attach importance to them.

Front 107

A misrepresentation is fraudulent If the maker intends his assertion to induce a party to manifest his assent and the maker

Back 107

A misrepresentation is fraudulent If the maker intends his assertion to induce a party to manifest his assent and the maker

Front 108

a mirepresentation is material if

Back 108

it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so.

Front 109

Materiality is met in two ways

Back 109

1) A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent
2) If the maker knows that for some special reason it is likely to induce the particular recipient to manifest his assent

Front 110

when misrepresenation effects consent

Back 110

If a misrepresentation as to the character or essential terms of a proposed contract induces conduct that appears to be a manifestation of assent by one who neither knows nor has reasonable opportunity to know of the character or essential terms of the proposed contract, his conduct is not effective as a manifestation of assent. (163)
If a partys manifestation of assent is induced by either a fraudulent or amaterial misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient. If a partys manifestation of assent is induced by either a fraudulent or a material misrepresentation by one who is not a party to the transaction upon which the recipient is justified in relying, the contract is voidable by the recipient, unless the other party to the transaction in good faith and without reason to know of the misrepresentation either gives value or relies materially on the transaction. (164)

Front 111

A misrepresentation induces a party’s manifestation of assent if it

Back 111

substantially contributes to his decision to manifest his assent(167) (it is enough that the manifestiation substantially contributed to his decision to make a contract.)

Front 112

Reliance on assertions of opinion(168)

Back 112

(1) An assertion is one of opinion if it expresses only a belief, without certainty, as to the existence of a fact or expresses only a judgment as to quality, value, authenticity, or similar matter.
(2) If it is reasonable to do so, the recipient of an assertionof aperson opinion as to facts not disclosed and not otherwise known to the recipient may properly interpret it as an assertion
a. That the facts known to that person are not incompatible with his opinion, or
b. That he knows facts sufficient to justify him in forming it

Front 113

When reliance on an assertion of opinion is not justified

Back 113

To the extent that an assertion is one of opinion only, the recipient is not justivfied in relying on it unless the recipient
a. Stands in such a relation of trust and confidence to the person whose opinion is asserted that the recipient is reasonable in relying on it, or
b. Reasonably believes that, as compared with himself, ther person whose opinion is asserted has special skill, judgement or objectivity with respect to the subject matter, or
c. Is for some other special reason particularly susceptible to a misrepresentation of the type invoved. (lack of intelligence, illieteracy, and unusualy creduility or guillibility).

Front 114

When reliance on an assertion of intention is not justified.

Back 114

(1) To the extent that an assertion is one of intention only, the recipient is not justified in relying on it if in the circumstances a misrepresentation of inention is consistent with reasonable standards of dealing.
(2) If it is reasonable to do so, the promise may properly interpret a promise as an assertion that the promisor intends to perform the promise.

Front 115

When fault makes reliance unjustified.

Back 115

A recipients fault in not knowing or discovering the facts before making the contract does not make his reliance unjustified unless it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. (172) (but the mere fact that he could, by the exercise of reasonable care, have avoided the mistake caused by the misrepresentation does not bar him from relief)

Front 116

When duress by threat makes a contract voidable

Back 116

(1) If a party’s manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim
(2) If a party’s manifestation of assent is induced by one hwo is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in god faith and without reason to know of the duress either gives value or relies materially on the transaction. (175)

Front 117

(1) A threat is improper if

Back 117

(a) What is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property,
(b) What is threatened is a criminal prosecution
(c) What is threatened is the use of civil process and the threat is made in bad faith, or
(d) The threat is a breach of the duty of good faith and fair dealing under a contract with the recipient. (176)

Front 118

(2) A threat is improper if the resulting exchange is not of fair terms, and

Back 118

(a) The threatened act would harm the recipient and would not significatnyl benefit the party making the threat.
(b) The effectiveness of the threat is inducing the manifestation of assent is significantly increased prior unfair dealing by the party making the threat, or
(c) What is threatened is otherwise a use of power for illegitimate ends. (175)

Front 119

When undue influence make a contract voidable

Back 119

(1) Undue influence Is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare.
(2) If a partys manifestation of assent is induced by undue influence by the other party, the contract is voidable by the victim.
(3) If a party’s manifestation of assent is induced by onne who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the undue influence either gives value or relies materially on the transaction.