Legal Studies Contract Laq

Front 1

Sources of Contract Law

Back 1

UNIFORM COMMERCIAL CODE
(a) RESTATEMENT (SECOND) OF CONTRACTS (Modern)
(b) COMMON LAW OF THE VARIOUS STATES (Older)

Front 2

UCC
When applied? What it governs?

Back 2

sale of personal property. (TV, car, textbook.) all of these transactions governed by article 2. does not apply to real property (land and anything attached to it).

If sale of goods AND specific provision of UCC is applicable, THEN UCC governes. If either of these no, THEN general law governs

adopted in every state

Front 3

If mixed sale of goods AND services

Back 3

sale of goods predominates - UCC applies.. but ONLY IF there is a specific section in UCC that applies...

sale of services predominates - Common Law applies (1-103)

Front 4

Quality Roofing vs. Hoffman

Back 4

Roofing sued Hoffman and won. they used UCC. Hoffman appealed and won. They should have used common law. Why?

language of contract.. QR was "contractor" not "buyer or seller"... this was a service agreement..

Is it rendition of service with goods intentionally involed? or transacton of sales, with labor intentionally involved?

Front 5

what is a contract?

Back 5

Restatement - promise that course will enforce
all contracts are promises, but not all promises are contracts.

UCC - defines agreement, and contract. contract comes from agreement.

Front 6

Requirements for Contract

Back 6

1. Mutual Assent - Offer/acceptance.. by words or conduct
2. Consideration - each party must exchange legal benefit and legal detriment
3. Legality
4. Capacity - incompetent - no legal capacity... minors, dunks, exc - limited capacity

Front 7

Bilateral contract

Back 7

2 promises..

Promise 1: I promise to pay you $10 if you bring me lunch from ABP
Offeror (me) -------$10----------- Offeree (you)

Promise 2: You promise to get me lunch from ABP if I pay you $10
Offeror (you) ------- LUNCH------- Offeree (me)

Front 8

Unilateral contract

Back 8

one promise/offer in exchange for performance

$100 for the return of Sandy

Front 9

Classification of Contracts

Back 9

1. The Nature of the Promises
(a) Bilateral/Unilateral Contracts
(b) Express/ Implied Contracts
2. Enforceability
(a) Valid
(b) Void “ab initio”
(c) Voidable
(d) Unenforceable
3. State of Performance
(a) Executory
(b) Executed

Front 10

Implied in Fact contracts

Back 10

“A contract, implied in fact, is an actual contract which arises where the parties agree upon the obligations to be incurred, but their intention, instead of being expressed in words, is inferred from their acts in the light of surrounding circumstances.”
Martin v Little Brown Publishing Co.

Front 11

Expressed

Back 11

parties manifested agreement through oral or written language

Front 12

Martin v Little Brown Publishing

Back 12

plaintiff wanted compensation for helping to find a plagiarism.

he did not ask for, but was it implied that he would get?

no. it was not reasonably inferable that he would get money. he acted like a volounteer and gave a "gift" to store. he enriched them but not "unjustly"

Front 13

executed/executory

Back 13

executed - contract fully performed.

executory - not yet fully performed.

david brings goods to carla in 10 days and carla pays david in 30. when david brings goods, it is executed as to david, but executory to carla, pending carlas payment. when she pays, it is executed.

Front 14

valid, void, voidable, unenforceable

Back 14

valid - valid

void - contract never came into existence bc one of big four was missing

voidable - it has come into existence, but at some point you find it is fraud.. stop and do not go on

unenforceable - law can not provide remedy.. maybe didnt go along with statute of frauds or statute of limitatons

Front 15

Quasi-Contract or Implied in Law

Back 15

not a contract. obligations imposed by the law without reference to the intention of the parties to prevent an injustice

ex: Anna by mistake gives envelope with $100 to Robert. Robert doesnt have to give it back, but Anna can take it
to recover need elements: 1) a benefit to def (R), by plai (A).. 2) a knowledge by def of benefit.. 3) retention of benefit by def, without compensating plaintiff for value

Front 16

Promissory Estoppel

Back 16

A doctrine which arises when injustice can be avoided only by enforcement of a non enforceable promise.

because one party has relied on the promise of the other, it would be unfair not to enforce the agreement.

requires: detrimental reliance

If Ann cant pay for textbooks, and i agree to pay when she comes back.. i can not back off because she relied on my promise

Front 17

Quantum Meruit

Back 17

(“For as much as he deserves:)
Requirement: plaintiff conferred a benefit of goods or services with reasonable expectation of payment.
[looks to what the plaintiff gave]

in Martin, plaintiff could not recover QM bc he was volounteer

Front 18

Unjust Enrichment

Back 18

- Plaintiff conferred a benefit upon defendant
- Defendant knew of and appreciated the benefit
- Defendant retained or accepted the benefit under circumstances in which it would be unjust or inequitable for defendant to retain the benefit without paying for it.

Unjust Enrichment looks to what the defendant received

SEE EX IN QUASI

Front 19

Statute of Frauds

Back 19

states that there needs to be something in writng in order for contract to be valid. only some contracts fall within this category

Front 20

Requirements for Writing that satisfies Statute of Frauds

Back 20

1. writing signed by party against whom enforcement is sought
2. reasonably identifies subject matter of contract
3. sufficient to indicate contract existed
4. states with reasonable certainty the essential terms

Restatement 131

Front 21

Dear Jud,
Wasn’t it a lovely wedding?
I just received Heather’s loan documents which you sent to me. Now, I know I promised to pay off Heather’s medical school loans if you married her. Upon sober reflection, however, I have decided that all you need is love. Therefore, I’m returning her loan papers to you, and am repudiating my oral promise, which you can’t enforce anyway.
Have a great honeymoon!
Love,
Mom

Back 21

she has to pay, because follows all the terms.

Front 22

if contract is within statute, but there is no writing (common or UCC), contract is....

Back 22

UNENFORCEABLE

Front 23

Contracts within Statute of Frauds

Back 23

1. Suretyship Promise
(Promise to Pay the Debt of Another).
2. Promise by Executor of Estate to Pay Decedent’s Debts Personally.
3. Promises in Consideration of Marriage.
4. Promises Conveying Interests in Land.
5. Agreements Not to be Performed in One Year.
6. Contracts for the Sale of Goods for a Price of $500 or More. (U.C.C. § 2-201).

Front 24

Suretyship Promise

Back 24

three parties and two contracts

mother tells merchant to give 1,000 to son. "If he doesnt pay, I will" mother does not pay in any event. ONLY if so defaults.
son - principal debtor
mother - promisor/surety
merchant - promisee/creditor

primary contract - btwn principal debtor (son) and creditor (merchant)
collateral contract - mom and creditor

in addition, son can promise mom to call every day for a year, if she agress to pay debt if son defaults

Front 25

suretyship promise - letter of Credit

Back 25

borrower promises to repay bank 100,00 0 with interest if they lend him. (BIlateral promise)
borrower promises to pay guarantor/issuer of LC 1,000 if they agree to pay bank back if borrower can not.

Original promise:
Borrower - original promissor/ee
Issuer - collateral promisor
bank - original promissor/ee

Surety promise:
borrower - principal
issuer - obligor (obliged to pay)
bank - obligee (obliged to receive)

Front 26

Types of Surety Promises

Back 26

Letters of Credit
Guarantors (loans, etc)
Bonds on appeal
Performance/Payment Bonds

Front 27

Price v Mercury Supply

Back 27

guy said he was hired "for the rest of his life".. but he was eventually fired and he brought this suit.

statute of frauds says that "no action shall be brought on a contract which is not to be performed within one year, less in writing and signed"

if contract capable of full performance within the year, it is not within statute.

this contract is capable bc he could die or one party terminates

but anyway, there is no proof that there was contract so he cant get anything

Front 28

Infra Annum

Back 28

“No action shall be brought on a contract ‘which is not to be performed within the space of one (1) year from the making thereof’ unless [the contract is evidenced by a writing].”

PRICE

Front 29

Statute of Frauds Anaylisis

Back 29

UCC 2-201

1. Is there a contract for the sale of goods worth $500 or more?
Yes: Contract is within the statute and a writing is required.
[Go to Step 2.]
No: Contract is not within the statute, and no writing is required.
2. Is there a writing?
Yes: Go to Step 3.
No: Go to Step 4.
3. Is the writing sufficient to satisfy U.C.C. § 2-201?
Signed by the party against whom enforcement is sought?
Indicates that a contract for sale has been made?
Specifies quantity term?
Yes to all three: Stop here; contract is enforceable.
No to any of the three: Go to Step 4.
4. Does the transaction fall within one of the exceptions to the need for a writing?
§ 201(3)(a): Specially manufactured goods.
§ 201(3)(b): Admission that contract exists.
§ 201(3)( c ): Goods which have been paid (in whole or part).
Goods which have been delivered and accepted.

Front 30

A, B, C, D.
A - custom model, calls to cancel before manufacture
B - 100 deposit
C - sends letter to cancel
D - nothi

Back 30

all over 500, so ALL need writing

A is not enforceable, bc 201 3A. sony had not made substantial begininng.
B is enforceable, bc 201 3C. made deposit
C is enforceable, bc by sending letter, admitted to existence of contract
D not enforceable. needs writing and no writing granted

Front 31

Parol Evidence Rule (Common Law)

Back 31

Where the parties to a contract express their agreement in a writing, and
Where the parties intend that writing to be the complete and final statement of their agreement,
Parol [oral] evidence of the parties’ prior or contemporaneous oral or written negotiations is inadmissible to vary or change the written words of the contract.

Front 32

Merger or Integration Clause

Back 32

a) Entire Agreement: The terms and conditions of this Agreement constitute the entire agreement of the parties hereto, and the terms herein supercede and incorporate any previous negotiations, communications or agreements whether oral or in writing.

good way to make sure contract is fully integrated

Front 33

Exceptions to Parol Evidence

Back 33

1. Evidence that the parties did not intend writing to be complete and final expression. (CL,R,UCC)
2. Evidence that the contract is void or voidable.(CL, R, UCC)
3. Evidence of subsequent oral modifications. (same)
4. Evidence of ambiguity. (same)

Front 34

Restatement Exception to Parol

Back 34

Evidence of the “meaning of the writing, whether or not integrated.” (Restatement Section 214)

Front 35

UCC exception to Parol

Back 35

a. Course of dealing
b. Trade usage
c. course of performance

all this refers to 2-202, and to documents that are not integrated.

Front 36

Clause Barring Subsequent Modification

Back 36

No Oral Modification: No variation, waiver, amendment or modification of any of the terms of this Agreement shall be valid unless supported by a written memorandum signed by both parties to this Agreement.

Front 37

Lease agreement. $1,000 on first day of each month. Integration clause. Lessor accepts rent on 15th for first 6 months. 7th month - cancels because didnt pay on first

Back 37

the fact that he has been paying on the 15th is the parol evidence, but it can not be applied.

there is an integration clause, and this is final. also, evidence can not contradict integrated terms. Restatement

Front 38

Widgets sale. 100 widgets, $1,000 per month on "first day of month." interation clause. seller accepts money on 15th for 6 months. 7th month - cancels because didnt pay on first

Back 38

UCC 2-208. Course of performance. since sale involves REPEATED performance, and accepted without objection by both parties - this ecidence can be relevant to decide meaning.

Front 39

What can be admitted into a "complete and exclusive" document?

Back 39

NOTHING ELSE.

Front 40

Battle of the Forms

Back 40

B sends order form to S. S sends order form back with different terms.

S's order form is acceptance of B's terms, unless specifically stated that S will only agree if B agree to the new terms.

between merchants, the new terms become part of the contract UNLESS B refuses them

Front 41

Development of Common Law doctrine of Consideration

Back 41

Common Law - doctrine strictly enforced
Restatement - severely modified
UCC - barely mentioned

Front 42

Elements of Consideration (Common Law)

Back 42

- Legal value

- Bargained for exchange

Front 43

Legal Value

Back 43

legal detriment to promisee OR legal benefit to promisor will suffice

Front 44

Legal detriment

Back 44

to Promisee.
doing/promissing to do that which promisee was under no prior obligation to do.
Refraining from doing/promising to refrain from doing that which promisee was under no prior obligation to refrain from doing.

Front 45

Legal benefit

Back 45

to promisor

obtaining that which promisor had no prior right to obtain

Front 46

Consideration Sweater Sale Example. Bilateral Contract. Amy promises to sell Bill sweater for 100. Bill promises to pay Amy 100 for sweater

Back 46

Promise 1: Amy = promisor. Bill = promisee
- Bill pays $100 (detriment)
- Amy gets $100 (benefit)

Promise 2: Bill = promisor. Amy = promisee
- Amy gives up sweater (detriment)
- Bill gets sweater (benefit)

Front 47

Bargain for Exchange

Back 47

1 - sought by promisor in exchange for his promise AND
2 - is given by promisee in exchange for that promise

1. Promisee’s detriment had to be suffered in exchange for the promise
2. Parties must have bargained for the exchange of promise

Front 48

Computer Transfer to Niece example. I promise to give computer. She promises to pick it up.

Back 48

"Legal Value?" Yes.
Bargain for exchange??

did i promise computer IN EXCHANGE FOR trip?
did she promise trip IN EXCHANGE FOR computer?

Front 49

Mutuality of Obligation

Back 49

“Unless both parties are bound, neither is bound”
At common law – Each promise in a bilateral contract must be supported by consideration.

Front 50

Hamer v Sidway

Back 50

Uncle promised 5,000 to nephew if he refrained from drinking, smoking, etc. until 21. Nephew did so and wanted his money at age 21. Is unlcle obliged to pay?

yes. there IS consideration. Nephew forbore to do all these legal things, which he had no legal right to forbore to.

Front 51

Adequate Consideration

Back 51

adequate consideration

:a consideration that is reasonably equivalent in value to the thing for which it is given
fair consideration

:a consideration that is reasonable and given in good faith

Front 52

Batsakis v Demotsis

Back 52

Pl gave to the df 500,000 drachmaes in exchange for the future payment of $2000 U.S. dollars, plus 8% per annum. The df could not, because of the situation around WWII, get to her money. At the time 500000 drachmaes was only worth $25 U.S. dollars.

was consideration legally adequate?
Yes. Plaintiff got 2,000 plus 8% annum.

courts will inquire into the sufficiency of the consideration, but not the adequacy of the consideration.

Df got exactly what she contracted for according to her own testimony. Mere inadequacy of consideration will not void a contract.

Front 53

Illusory Promise

Back 53

Promise that will not be enforced.

Front 54

JGM and HDM example. JGM promises to provide funds to allow HDM to live comfortably. HDM promises to apply to college and attend if get in.

Are these promises supported by consideration?

Back 54

Promise 1: JDM to support HDM..
HDM give up choice (detriment)

Promise 2: HDM to give up choice..
??? no benefit to promisor. WHAT MEANS COMOFORTABLE LIVING? subjective

illusory promise

Front 55

Harris v Watson

Back 55

ship was in trouble and master offered to pay seamen 5 extra dollars if he navigated ship.

plaintiff was nonsuited because of principal of policy. If people were to be payed extra for handling a ship in danger, then they would intentionally put it in danger.

Front 56

Stilk v Myrick

Back 56

Pl, a seaman on a ship headed from London to the Baltic and back, was to be paid 5 pounds per month. Two sailors deserted the ship and the captain agreed to split their wages among the remaining 9 sailors, equally, if substitutes could not be found and the ship made it back to London.

Whether the pl was entitled to additional pay, for incurring additional labor, when an emergency on the ship occurred?
No. Agreements stemming out of a pre-existing duty are void for lack of consideration.

Those who remain are bound by the terms of their original contract to exert themselves to the utmost to bring the ship in safely to her port.

Front 57

Special Consideration Cases

Back 57

- Illusory Promises
- common law rule, - UCC Output and Requirements contract

- Pre-Existing Duty
- Common law, - modern

- contracts enforceable w/o consideration

Front 58

Common Law Pre-Existing Duty Rule

Back 58

A modification to an executory contract is VOID because it lacks consideration (“nudem pactum”)

Policy: prevent “hold-ups”

Lingenfelder v. Wainwright

Front 59

Lingenfelder v Wainwright Brewing

Back 59

PRE-EXISTING-DUTY (CL)
while Lingenfelder was designing new buildings for brewery, he noticed a competitor also. and he asked for 5% of refrigeration plant or he would quit.

Whether Jungenfeld and Wainwright entered into a new contract with additional consideration to perform the original plus a commission?
No. A promise to pay a man for doing that which he is already under contract to do is without consideration. A change, or modification to an original contract, upon new or different considerations is binding.

When a party merely does what he has already obligated himself to do, he cannot demand an additional compensation therefor

Front 60

MODERN Pre Existing Duty Rule
Angel v Murray analyzation

Back 60

A modification of a contract, without consideration, is valid if:
(1) Parties voluntarily agree
(2) Promise modifying the contract was made before the contract was fully performed
(3) Underlying circumstances which prompted the modification were unanticipated and
(4) The modification is fair and equitable

Angel v. Murray citing Restatement 89

Front 61

angel v murray

Back 61

guy collects trash for $10,000 a year for 5 years. pop goes up. wants more money. granted. taxpayer sues.

Under the preexisting duty rule, is an unexpected circumstance a valid ground to modify a contract?

Yes. unanticipated circumstances may allow this. no additional consideration needed. the other party, not influenced by duress or coercion, agrees to pay additional compensation for work already required to be performed.

Front 62

Pre-Existing Duty Rule for UCC

Back 62

An agreement modifying a contract within this Article needs NO consideration to be binding.

So, in coffee example - it doesnt matter what happened in brazil, if they agree to new terms, it is binding.

Front 63

Magic Words - Elimination of Requirement of consideration

Back 63

if writing intends for signer to be legally bound, there is no need for consideration.

ex: “For valuable consideration as set forth

herein, the receipt and adequacy of which are

hereby acknowledged, and intending to be legally

bound hereby, the parties to this agreement

hereby agree as follows:”

Front 64

Ridge Runner v Veneman

Back 64

Ridge Runner told govt, they would help them in any emergency if they were "willing and able" if govt promised to "consider" calling them first. govt never called in 6 years.

there is no contract here, because both promises are illusory. Ridge runner promises nothing, because it depends on "willing and able"... and govt promises nothing, only to "consider"

Front 65

Elements of Offer

Back 65

INTENT to make an offer

CERTAINTY AND DEFINITIVENESS in the essential terms (at Common Law)

COMMUNICATION to offeree

Front 66

Test of Intent to make an offer

Back 66

Objective test:

Did the offeror’s words and conduct create a reasonable expectation in the offeree that the offeror is willing to enter a contract on the basis of the offered terms?

Front 67

what is NOT an offer

Back 67

- Invitation to offer (“Make me an offer for xyz”)
- Statement of opinion
- Statement of future intent

Front 68

CONSIDERATION FOR UNILATERAL CONTRACTS

Back 68

in Unilateral contract, performance = consideration AND acceptance

Front 69

Inivitation to Offer

Back 69

- advertisements
- offer of reward

Front 70

Lucy v Zehmer

Back 70

Lucy offered Zehmer at a bar 50,000 to buy farm. Zehmer made a contract with proper language and signed it. wife also signed. Zehmer then said that it was a joke.

Whether the writing signed by the defendants(Zehmer) and now sought to be enforced by the PL was the result of a serious offer by Lucy (PL) and a serious acceptance by Defendants and there for a binding contract?

yes. contract binding. doesnt matter what is in his head as long as actions seem serious (obj). actions DID seem serious. he was not too drunk, he drove home, language, wife took out money, etc

Front 71

Leftkowitz v Greater Minneapolis Surplus Store

Back 71

store put advertisement in newspaper for coats, etc. "first come first serve" Leftkowitz got there first, but they did not want to give him bc "house rules" were only woman.

Does a newspaper advertisement constitute an offer where it is clear, definite, and explicit and leaves nothing open for negotiation?

yes. Advertisements involving transactions in goods are offers when they invite particular action.

Front 72

Advertisements

Back 72

“Whether the facts show that some performance was promised in positive terms in return for something requested” Williston
Is the advertisement “clear, definite, and explicit [leaving] nothing open for negotiation?”
Lefkowitz v. Greater Minneapolis Surplus Store, Inc.

Front 73

Barnes v Treece

Back 73

Treece said "i will give 100,000 to anyone who can bring me a crooked punchboard". audience laughed. barnes brought one. treece told him money was in escrow, told him to come to seattle, ect.

is contract enforceable?

yes. treeces actions were not in jest. unexpressed intentions dont count. reasonable person would believe it. this was a valid unilateral contract and barnes perfomed

Front 74

Statement of Opinion - not an offer

Back 74

A therapeutically reassuring prognostication of probable result

Dentist example.. this is NOT statement of opinion. it goes beyond thereputicallly reasurring and becomes an OFFER for unilateral contract

Front 75

Certainty and Definitiveness (element 2 of offer)

Back 75

1. identity of the offeree
2. subject matter
3. quantity
4. price (Common Law)
5. Time of delivery (COmmon Law)
6. Duration (Common Law)

Front 76

Leonard v Pepsico

Back 76

kid collects 700,000 points after watching commercial. and demands a jet.

did he have reason to believe that this advertisement was an offer?

no. the attitude of the commercial would not cause a reasonable person to believe that a soft drink company would be giving away fighter jets.

Front 77

Field v Golden Triangle Broadcasting

Back 77

Field and GT wrote up an agreement of terms. they both signed. triangle then claimed that the agreement was pending on a final agreement, based on some of the language.

is that letter agreement an enforceable contract?

yes. parties may bind themselves contractually although they may intend, at some later date, to draft a more formal document. the fact that they met and discussed and intalled every change, indicates that both parties intended to bind themselves.

*OPPOSITE TO EMPRO* *STATE LAW*

Front 78

Empro v Ball-Co

Back 78

Empro wanted to buy Ball-Co’s assets. Empro sent Ball-Co a letter of intent to purchase their assets, but the letter required a later final agreement and other conditions. Ball-Co bailed and started negotiating with another buyer. empro sued.

are parties binded by letter of intent?

no. ball-co proposed to change some of the terms. these terms were not final. and if empro could walk away, so can ball-co.

*OPPOSITE TO FIELD* *FEDERAL LAW*

Front 79

Restatement 27 - Existence of a contract where written memorial contemplated

Back 79

Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations.
See, Field v. Golden Triangle; Empro vBallco

Front 80

Certainty and Definitiveness (in UCC 2-204)

Back 80

1) conduct by both parties which recognizes existence of contract
2) its certain and definite even though the moment of making is not determined
3) even if one or more terms are left open

(no need for price or time of delivery)

Front 81

If no price mentioned under UCC contract??

Back 81

UCC 2-305... price is reasonable price

Front 82

if no specific time mentioned under UCC contract??

Back 82

UCC 2-309.. reasonable time

Front 83

Email from B to S, subject: Lobsters. "60 for tomorrow"
Email from S to B, subject: re: Lobsters. "you got it!"

Back 83

this is a valid contract under UCC. price will be reasonable market price of lobsters, and time will be tomorrow.

Front 84

Acceptance

Back 84

Valid offer creates “power of acceptance”

Valid acceptance creates the mutual assent element of an enforceable contract

Front 85

Acceptance Issues - Common Law

Back 85

1. MANNER or FORM of ACCEPTANCE
A.. Offeror specifies manner of acceptance
-- Bilateral Contracts (Conroe)
-- Unilateral Contracts
B. Offeror does not specify a manner of acceptance (Fujimoto)
2. TIME OF ACCEPTANCE

Front 86

Manner of Acceptance (R 50)

Back 86

Acceptance of an offer is:

- Manifestation of assent to the terms of the offer
- Made by the offeree;
- In a manner invited or required by the offeror.

- by performance or part performance
- by conduct which communicates acceptance
- by silence

Front 87

Form of Acceptance Invited (R 30)

Back 87

any way the offeror wants.

he is the "master of the offer"

if not indicated, any "reasonable way"

Front 88

International Filter Co v Conroe Gin

Back 88

IF came with offer to Conroe. manner of acceptance specified (accepted by conroe AND approved by exec in Chicago). Conroe came back with counteroffer, IF said ok.

Conroe lost because there was a valid contract. IF accepted promptly and the exec in chicago approved, but was not supposed to notify Conroe.

Offer specified manner of acceptance

If offer specified a method of acceptance, and communication is NOT required, then communication of acceptance to the offeror will NOT be required by a Court

Front 89

Fujimoto v Rio Grande

Back 89

Fujimoto was hired by rio. signed wrtten contract and kept it. then quit. rio did not pay. Fujimoto sued. and won.

could offer be accepted by any other way than return of signed contract?

yes. company knew, or had reason to know, that they had accepted contract.

Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.

If offer DOES NOT specify a manner of acceptance, then a “reasonable manner of acceptance” will be implied. Communication of acceptance to offeror is part of a “reasonable manner of acceptance.

Front 90

Acceptance by Silence - Bilateral Contract (R 56)

Back 90

Old Common law rule - silence when duty to speak, can constitute acceptance

modern - silence CANNOT be acceptance of bilateral contract unless offer states OTHERWISE.

Front 91

Day v Caton

Back 91

Day built a wall in between two estates. Caton and Day's estates. Caton asked Day to pay half, Day refused.

whether the silence of a party seeing services rendered upon his land can be construed as assent, and thereby a contract issue forth?

yes. Caton had knowledge that Day expected payment and he sat there and did nothing.

R 69 1A

Front 92

Acceptance by Silence - Unilateral Contract

Back 92

Rule of Day v Caton

Silence is acceptance if --
- Offeree gets benefit;
- Offere knows, or should know that offeror expects payment;
- Offeree has reasonable opportunity to object

OR

- offeror states that assent may be manifested by silence (Hill)

OR

- where because of previous dealings, it is reasonable that offeree should notify if he does not intend to accept

Front 93

Hill v Gateway

Back 93

A customer picks up the phone, orders a computer, and gives a credit card number. Presently a box arrives, containing the computer and a list of terms, said to govern unless the customer returns the computer within 30 days.

Are these terms effective as the parties' contract, or is the contract term- free because the order-taker did not read any terms over the phone and elicit the customer's assent?

contract is binding. by keeping the computer for more than 30 days, hill accepted contract, including arbritation clause.

R 69 1B

Front 94

Davis v Jacoby

Back 94

Whitehead promised Caro Davis to make her the only heir if she promised to come take care of him and his wife.

Was Whitehead’s offer validly accepted such that a contract was formed? Was the offer for a unilateral contract (promise for performance) or for a bilateral contract (promise for promise)?

it was a bilateral contract. validly accepted by promise to come.

Caro was made heir

Front 95

Presumption of Bilateral Contract -Davis v Jacoby

Back 95

Because of problems with acceptance of unilateral contracts by performance, courts now enforce a PRESUMPTION that where there is a doubt, the offeror will be held to have wanted a return promise rather than a performance.

Front 96

Acceptance Under UCC 2-206 (1)(a)

Back 96

1) Unless otherwise unambiguously indicated by the language or circumstances

(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances.

Front 97

Form of Acceptance under UCC 2-204

Back 97

1. contract can be made in any matter sufficient
2. even though moment of making is undetermined

Front 98

Dickinson v Dodds

Back 98

Dickinson delivered offer to sell property to dodds. contained specific date and time for acceptance. plaintiff brought letter of acceptance to mother in law at 730 pm prior to deadline. def received the next morning, but had already sold.

Whether the time limit acts solely as an express offer to purchase, or whether Df is free to sell to another in lieu of a formal acceptance?

Df was free to sell property to another in absence of acceptance

To constitute a K, the two minds were at one, at the same moment in time, there was an offer continuing up to the time of acceptance. If there was no such continuing offer, then the acceptance comes to nothing.

VALID OFFER CREATES THE POWER BUT NOT THE RIGHT TO ACCEPT

Front 99

Lapse in Time

Back 99

Offer- Day 1
Nothing is said as to how long it will remain open. (“Dangling Offer”) , but says:
“This offer will expire of its own terms unless accepted on or before Day 14.”
Offeree decides to accept but to wait until Day 14 to do so.
On Day 7 Offeror revokes.
Result?

its ok.

Front 100

Alpha Rolling Mill

A-B: 6/08-2000 to 5000; notify by 6/20
B-A: 6/16 - telegram order 1600 on 6/08 terms
A-B: 6/18 – rejection of 6/16 order
B-A: 6/19 - telegram order 2000 per 6/08 terms
A: no reply; B sues A. Result?

Back 100

A wins. 6/16 counteroffer kills 6/08 offer.

Front 101

Counteroffer/"Mere Inquiry"

Back 101

Counteroffer: "No. Unless the terms are..." - this kills contract and forms a new offer

Mere inquiry: "would you consider terms..." - offer is still on the table

Front 102

Counteroffer/mere inquiry hypo.

April 2, Harvey makes written offers to sell speedboat to Smith for $4200.
April 3: Smith replies that he is interested, but said the price appeared slightly excessive and wondered if perhaps, Harvey would be willing to sell the boat for $3900.
April 8, having received no reply, Smith accepts Harvey’s offer and sends check for $4200.
Result?

Back 102

If 4/3 is counteroffer; no contract; if 4/3 is inquiry into terms, contract on April 8.

4/3 is inquiry

Front 103

Revocation - Common Law Rule

Back 103

Offeror may revoke an offer at any time prior to acceptance.
Notice of revocation much reach offeree before offeree accepts. (Lyon v. Adographics)
Revocation is effective when it is received by the offeree.

Front 104

Lyon v Adographics

Back 104

guy receives counteroffer to sell business for 80,000 on specific terms. he signs it infront of notary, comes to office, but is told that the counteroffer is revoked (right before he gave signed offer)

did offeree accept before offeror revoked?

no. acceptance had to leave offerees hand. when oferee was informed that offer was withdrawn, plaintiff no longer had power to accept (R 42)

Front 105

Part Performance – Unilateral Contracts: Common Law vs Restatement vs UCC

Back 105

Wormser - no acceptance prior to full performance

R 50(2) and 62 - part performance = return promise to complete performance.

R 45 - part performance constitutes option contract. it becomes a unilateral where performance is required.

UCC 2-205 - "Firm Offer"

Front 106

Restatement 62 and 50(2)

Back 106

1) if it is acceptance by performance or promise, and performance is started, it is acceptance by performance.
2) this acceptance is also promise to perform 50(2)

50(2)
2) acceptance by performance requires that part of what offeror request be performed. and becomes return promise.

therefore, this makes it a bilateral contract. Promise for Promise

Front 107

Restatement 45

Back 107

Option Contract
1. if only performance is invited and NOT promise, then part perfomance makes it an option contract.
2. now must be full completed

Front 108

Marchiondo v Scheck

Back 108

Contract between seller of house and broker: “A commission for a sale of the house.” Seller’s offer to remain open for 6 days.
Broker works day 1-5 and procures a buyer for house.
Broker learns that seller has revoked on morning of 6th day, after Broker received the home buyer’s acceptance of Contract 1.

May seller revoke before 6th day?

partial performance was done by broker, and therefore entered bilateral contract. seller may not revoke. pay broker his commission.

Front 109

Firm Offer (2-205)

Back 109

Nov. 15, S offers in writing to sell 100 goblets at $100, “offer to remain open for 15 days [to Nov. 30].
Nov. 18, S notifies B of intention to revoke, which notification B ignores.
Nov. 30, B mails acceptance of Nov.15 offer, which S receives on Dec.4.
Result? No contract; option contract is effective upon receipt and option lapsed on 11/30. (UCC has no provisions re: time of effectiveness so common law governs)

Front 110

Termination of Offer

Back 110

- ACCEPTANCE (OFFEREE)
- LAPSE IN TIME (OFFEREE)
- REJECTION (OFFEREE)
- COUNTEROFFER/ “MERE INQUIRY”
- REVOCATION (OFFEROR)
- DESTRUCTION OF SUBJECT MATTER
- INCOMPETENCE OF OFFEROR

Front 111

Death of Offeror/Offeree

Harvey offers to sell speedboat to Braxton on April 2 for $4200.
Braxton was killed on April 9.
On April 10, executor of Braxton’s estate mailed an acceptance of Harvey’s offer to Harvey.
Result?

Back 111

Death of offeror kills offer; so does death of offeree.

Front 112

Time of Effectiveness

Back 112

Offer - when received by offeree
Revocation - when received by offeree
Rejection - when received by offeror
Acceptance - when SENT by offeree
("Mailbox Rule")

Front 113

Mailbox Rule

Back 113

Acceptance is valid as soon as it leaves possesion of Offeree

Front 114

Mailbox hypo.
May 1: S offers Greenacre to B for $1m.
Offer telegraphed;states it expires 5/15.
5/10: B sends letter to B accepting
5/22: S receives letter of acceptance
Is there a contract?

Back 114

yes, on may 10th.

Front 115

Exceptions to Mailbox Rule

Back 115

- Offer stipulates that an acceptance will not be effective until receipt
- Option contract
- Mailing a rejection or counter-offer suspends operation of Mailbox Rule

Front 116

When is contract formed?
Day 1 - acceptance sent
day 2- rejection sent
day 3- rejection received
day 4- acceptance received

Back 116

Contract formed after day 1. Common Law and Restatement 40

Front 117

When is contract formed?
Day 1 - rejection sent
Day 2 - acceptance sent
Day 3 - rejection received
Day 4 - Acceptance received

Back 117

after day 1 - MB rule suspended (common law)
after day 3 - no contract common law; no contract R 40 (rejection received before acceptance)

Front 118

When is contract formed?
Day 1 - rejection sent
Day 2 - acceptance sent
Day 3 - acceptance received
Day 4 - rejection received

Back 118

after day 1 - MB rule suspended (common law)
after day 3 - contract formed under R 40
after day 4 - no contract under common law

Front 119

Contract Remedies

Back 119

to compensate non-breaching part but not to over compensate

Front 120

Types of Damages

Back 120

- money
- not money (equitable remedies)
specific performance
recission
injunction

Front 121

Compensatory Damages

Back 121

- actual
- incidental
- consequential

purpose - to place breaching party in as good as position as he would have been if breaching party fully performed

requirements:
- Foreseeability
(Hadley v. Baxendale; Martinez v Southern Pacific)
- Certain (Not Speculative)
(Hawkins, Ericson)
- Unavoidable
(Duty to Mitigate) (Luton Bridge;Parker)

Front 122

Coffee problem
Abel now wants to sue Coffee for breach of contract. What compensatory damages can he collect?

Back 122

Actual or Direct damages
– cost to repair or replace the Jolt machine.
Incidental damages
- publicity, cost of the milk etc. (most common: interest buyer must pay to finance purchase price of goods
Consequential damages
- lost profit from sale of coffee and doughnuts;
- damages to student who flunks exam?

Front 123

Hadley v Baxendale

Back 123

shaft breaks at mill. owners hire to deliver new one next day. pay certain amount. contract breached and not delivered for several days. sue for lost profits.

can plaintiffs recover lost profits?

no. The court found that an aggrieved buyer of services will be unable to recover consequential losses resulting from breach unless the losses are 1) a “natural” consequence of breach; or 2) the buyer brings the circumstances which would generate the losses expressly to the seller’s attention.

delivering company did not foresee the damages that would occur to plaintiff. needs to be foresseability.

Front 124

Limitation on Consequential Damages

Back 124

They must be foreseeable to the breaching party at the time the contract was entered into.

Front 125

Rule of Hadley v Baxendale

Back 125

1. . . . as may fairly and reasonably be considered either arising naturally [from the breach] OR
2. . . . as may reasonably be supposed to have been in the contemplation of BOTH parties, at the time they made the contract, as the probable result of the breach of it.

Front 126

Peevyhouse v Garland Co

Back 126

defendant breached contract and did not smooth land. doing so would have cost 29,000, but only increase land by 300.

to what damages is plaintiff entitled?

only $300. dissenting opinion says $29,000.

Front 127

how to measure compensatory damages (R 347) Peevyhouse

Back 127

the loss in the value to him of other parties performance cause by failure.. plus other damages

Front 128

Alternative Ways to measure lost value to plaintiff (Peevyhouse)

Back 128

1) cost of repair
2) dimunition of value

Front 129

Ericson v Playgirl

Back 129

plaintiff agreed to allow def to use photograph, only if aquired a quarter of cover page. editorial mix up. defendant breached. how much money can he get?

expert first said he would get a quarter of 50,000. plaintiff appealed, he wanted more. he ended up getting 300.

did breach actually cause the damage? could the publicity have been bad? yes
awarded nominal damages

Front 130

nominal damages

Back 130

breach. but no proof of damages. so court awards very little.

Front 131

Hawkins v Mcgee

Back 131

Mcgee (doctor) promised Hawkins a "100% good hand". breached. hawkins got hairy hand. court awarded 3,000 to hawkins. mcgee appealed, and hawkins cross-appealed.

The New Hampshire Supreme Court held that the lower court’s instructions regarding damages were incorrect, and found that the evidence presented would have justified a verdict for an amount sufficient to cover the cost of a new operation to correct the injury to the hand. Overturned and sent down for retrial.

not certain in amount. can not measure value of hand.

Front 132

"Certainty" Requirement

Back 132

Not “certain in amount” – just “not speculative”; “measurable”. (Hawkins)

Certainty in causation: the breach actually caused the damage. (Ericsson)

Front 133

Duty to Mitigate (R 350)

Back 133

damages are not recoverable if injured party could have avoided them without undue risk or burden

if he makes reasonable, but unsuccesful efforts to avoid loss, he can still recover.

Front 134

Parker v 20th Century Fox

Back 134

parker had contract to play lead role in musical. fox breached. offered to have her play lead role in another movie, somewhere else for same price. she refused and sued.

Was the job that Fox offered Parker in Big Country comparable employment and was Parker obligated to accept to mitigate damages?

No. Parker did not fail to mitigate damages by refusing to accept the part in Big Country, as the role was not comparable to that of Bloomer Girl

she received 750,000

Front 135

Money Damages

Back 135

-Compensatory (expected)
- Liquidates
- Nominal
- Punitive
- Reliance

Front 136

How to measure Compensatory Damages

Back 136

Loss to him of other parties failure to perform*
+ Incidental losses resulting from breach
+ Consequential losses
- COSTS SAVED BY NON-BREACHING PARTY

= Compensatory Damages

* actual losses can be measure by 1. cost of replacement/performance OR 2. lost value

Front 137

Reliance Damages (R 349)

Back 137

alternative to compensatory

Cost made to perform + cost made in preparation to perfrom - cost injured party would have incurred to perform

Front 138

Carter v Quick

Back 138

contractor breached contract in installing brick. lower court awarded damages by the amount it would take plaintiff to repair. higher court is now seeing if this is appropriate.

court reversed. evidence was insufficient. when considering a dwelling place, must use "cost rule" because owner is more interested in living comfortably than reselling the house. however there was still not enough to evidence and it was overturned.

Front 139

Correction Rule

Back 139

damages are paid according to how much it would cost to correct.
(but should not cost economic waste)

Front 140

Difference in Value Rule

Back 140

damages are paid according to the difference in value between the current structure, and the structure had it been constructed correctly

Front 141

Anglia Television v Reed

Back 141

Reed breached a contract with Anglia. Anglia sued for reliance damages based on the fact that they relied on Reed to act in the play and they paid directors fees, etc. Reed appealed saying they can not recover damages before contract was breached.

Can they recover damages that incurred before contract was breached?

yes. they get before and after. because of reliance damages. reed should have known that when he signed the contract, they relied on him to perfrom.

If a contract is broke and expenditures are wasted the breaching party must yield to the damages considered within the offer and acceptance.

Front 142

Sullivan v O'Conner

Back 142

patient was breached by doctors promise to have a "good nose." she sued and won 13,500. this was out-of pocket expenses, damges coming directly, naturally, and foreseable by defendants breach, and pain and suffering in third operation.

is this the right damages?

yes. plaintiff is to be put in same position. reliance damages. reliance interest.

Front 143

Centex Homes v Boag

Back 143

Boag deposited 525 check and signed additional 6,789 check. he then moved and stoped payment on check. check could not be cashed.

does there need to be specific performance here?

no. they can only keep the initial deposit as liquidated damages. because there was a clause that said the liquidated damages they receive are those paid at time of default. also, vendors of condominiums is taken into consideration

Front 144

Liquidated Damages R356

Back 144

1. the amount of the damages identified must roughly approximate the damages likely to fall upon the party seeking the benefit of the term.
2. the damages must be sufficiently uncertain at the time the contract is made that such a clause will likely save both parties the future difficulty of estimating damages

Front 145

Lumley v Wagner

Back 145

girl makes contract to sing at her majesty's theater every night for three months and nowhere else

can court issue an injuction?

yes. court can not force her to sing, but they can make her refrain from doing something she promised not to do.

Rule: An injunction compelling specific performance shall issue to a true and literal performance of their agreements.

Front 146

Equitable Remedies for Breach of Contract

Back 146

Only available where damages cannot fully compensate non-breaching party (“Inadequate remedy at law”).

- Injunction
- Restitution
- Recission
- Specific Performance

Front 147

Injunction

Back 147

Order of court requiring party to stop or refrain from taking some action
Temporary Restraining Order
Temporary Injunction
Permanent Injunction

Required:
“irreparable harm”
“likelihood of success on the merits”
“balance of harm in your favor”

Front 148

Restitution

Back 148

“Restore” or ”Give Back”
Used in conjunction with other equitable remedies (e.g. injunction, rescission)

Typical Case:
restitution for wrongs
restitution to reverse unjust enrichment

Front 149

Specific Performance

Back 149

- Traditionally available to buyers of real estate (Policy- unique quality of land)
- Traditionally not available to buyers of personal property (Policy – money damages will compensate)

NOT AVAILABLE for personal service contracts (Lumley)

Front 150

Recsission

Back 150

the unmaking of a contract between the parties.[1] Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract

Front 151

Reasons to Invalidate a Contract

Back 151

1. Invalidate Mutual Assent
ex: mistake, misrepresentation/fraud, duress
2. Public policy
ex: uncounciasiblity, good faith

Front 152

When mistake of both parties occur (R 152)

Back 152

if it has an material affect on the agreed exchange of performances, it becomes voidable, by the affected person.. UNLESS he bears that mistake beforehand. in R154

Renoir or Renois?.. if both thought wrong, then voidable.

Front 153

When party bears risk of mistake (R 154) ?

Back 153

when
1. risk is allocated to him by agreement
2. he is aware that he has only limited knowledge and can therefore be wrong
3. risk is allocated by court

Renoir or Renois.. but if seller said "im not sure if its real, do you still want to buy it for less"

Front 154

Duress

Back 154

1. "Improper Threat"
- per se (gun to head)
- only if resulting contract is unfair (WAWA)
2. leaving victim with no reasonable alternative

economic duress is not duress

Front 155

Restatement on Uncounciasibility (R 208)

Back 155

if uncounciasible, court may
1. refuse to enforce contract
2. force remainder of contract without uncounc term
3. limit application of term to avoid uncounciasible result

Front 156

UNCONSCIONABILITY

Back 156

A court may refuse to enforce a contract when “it finds, as a matter of law, that the contract was unconscionable at the time it was made.”

this is court looking down saying whether it is good or bad

factors:
- unequal bargaining power
(big fish v little fish)
- form contract
(contract of adhesion) not freely bargained
- contract drafted by big fish
(consumer v corporation)
- uneducated, weaker party gets short stick
(subprime mortages)

Front 157

Williams v Walker Thomas Furniture

Back 157

williams had contract with walker company saying that if they defaulted, company takes everything they bought. williams defaulted.

can court not enforce the contract if they find uncounciasibility?

yes. UCC 2-302 specifically says this

Front 158

Bak-a-lum v Alcoa

Back 158

# Bak-A-Lum claims Alcoa has violated exclusively distributorship arrangement on aluminum siding, seeking injunction and damages.
# Understanding that Bak-A-Lum would make best efforts to sell Alcoa's aluminum siding (standard rule under UCC).
# Alcoa kept termination of exclusive distributorship arrangement secret from Bak-A-Lum for as long as possible, so Bak-A-Lum would continue to sell as much as possible.

court ruled they did not give enough warning

they had right to terminate oral contract without notice = no problem
- they put off telling so that bak-a-lum could keep distributing.
- they induced them to buy more
- they told them to enter into new 5 year lease
**ALL THESE BREACH DUTY OF GOOD FAITH**