Contracts

Front 1

Offer

Back 1

A promise which creates in the offeree a power of acceptance.

Front 2

Acceptance

Back 2

Manifestation of assent to the terms made by the offeree in a manner invited or required by the offeror.

Front 3

Lucy v. Zehmer

Back 3

Objective Theory of Contract Formation

Front 4

Restatement 62

Back 4

When offer invites acceptance by either performance or promise, the beginning of the invited promise or tender of performance = acceptance by performance and operates as promise to perform

Front 5

Petterson v. Pattberg

Back 5

Unilateral Contract - can revoke before acceptance.

Front 6

Leftkowitz v. Greater Minneapolis Surplus Store

Back 6

Advertisements binding agreement if offer is clear, definite, explicit, leaves nothing open for negotiation, is offered in return for something requested.

Front 7

Davis v. Jacoby

Back 7

Bilateral contract cannot be withdrawn/modified upon performance.

Front 8

Fujimoto v. Rio Grande Pickle Co

Back 8

Acceptance by Action

Front 9

Day v. Caton

Back 9

Acceptance by Silence

Front 10

Morrison v. Thoelke

Back 10

Mailbox Rule

Front 11

Livingstone v. Evans

Back 11

Counteroffer doesn't reject if the counter-offeror indicates that he is still standing by his original offer & offeror is still willing to accept it.

Front 12

Loring v. City of Boston

Back 12

Termination of offer by Lapse - end of reasonable time

Front 13

Phillips v. Moor

Back 13

Revocation must be made in a reasonable time if you have the right to do so.

Front 14

Continental Laboratories v. Scott Paper Co.

Back 14

Intent to memorialize oral agreement in writing:

Front 15

Walker v. Keith

Back 15

Indefiniteness: When parties leave price open, court can't insert price unless there's a specific method of computation

Front 16

Dickenson v. Dodds

Back 16

Revocation: not effective until received by the offeree. Receipt can be from a reliable 3rd party

Front 17

Hoffman v. Red Owl Stores

Back 17

Promissory Estoppel: damages shouldn't put the promisee in a better position than performance would've imposed, shouldn't put a greater burden on the promisor than performance would've been.

Front 18

Allegheny College v. National Chautauqua County Bank

Back 18

Courts enforce charitable subscription without consideration, actual reliance

Front 19

James Baird Co. V. Gimbel Bros.

Back 19

Sub-contractor's bid temporarily irrevocable for period necessary to allow contractor to get the job & accept the sub-contractor's bid.
If subcontractor is bargaining for acceptance, Promissory estoppel is not appropriate.

Front 20

Beard Implement Co. v. Krusa

Back 20

UCC 2-206: When manner of acceptance is unambiguously indicated by language or circumstances, no other manner is appropriate.

Front 21

Commerce & Industry Ins. Co. v. Bayer Corp.

Back 21

2-207: Battle of the Forms
Proviso - when acceptance is conditional upon acceptance of new additional/terms & seller performs without acceptance: No contract.

Front 22

Klocek v. Gateway, Inc.

Back 22

2-207: Battle of the Forms
When there's no proviso, both parties are not merchants, you need express agreement to additional terms to enforce.

Front 23

Schurtz v. BMW of North America

Back 23

2-719: Limiting Remedy of Warranties
2 approaches - if (1) & (2) are read dependently & warranty fails its essential purpose, can go for consequential/incidental damages w/out having to prove unconscionability. If (1) & (2) are read independently, have to prove unconscionability.

Front 24

Wood v. Lucy

Back 24

Consideration: Implied promise of Good faith effort to perform is sufficient consideration in exchange for compensation.

Front 25

Schnell v. Nell

Back 25

Sham Consideration: when the consideration shows there is no bargain at all - often sham consideration to make a gift

Front 26

Schnell v. Nell

Back 26

Consideration/Past Consideration/Moral Obligation not sufficient.

Front 27

Hamer v. Sidway

Back 27

Consideration just has to be a legal detriment, does not have to hurt the promisee

Front 28

Batsakis v. Demotsis

Back 28

Court rarely looks at adequacy of consideration unless the consideration is not fungible - i.e. difference in currency. Court will then look to see if consideration was bargained for.

Front 29

Fiege v. Boehm

Back 29

Forbearance on invalid claim:
Majority: need good faith AND belief must be reasonable.
2nd Restatement: Good faith OR plaintiff's subjective belief that claim had merit

Front 30

Sylvan Crest & Gravel Co. v. United States

Back 30

Alternative Promises: When promisor reserves alternative performances - consideration if each of the alternatives would've been consideration if it'd been bargained for alone.

Front 31

McMichael v. Price

Back 31

UCC 2-306 Output/Requirements - exclusivity is sufficient consideration to bind parties.

Front 32

Mills v. Wyman

Back 32

Benefits previously received but not requested: promises to pay for them are not enforceable if they're a gift.

Front 33

Webb v. McGowin

Back 33

Courts may enforce benefit to recipient of services if benefit was substantial, recipient would've bargained for it had he been able to, justice would require enforcement.

Front 34

Harris v. Watson

Stilk v. Myrick

Lingenfelder v. Wainwright Brewery

Back 34

Pre-existing duty: If party does or promises to do what he's already legally obligated to do, then no consideration.

Front 35

Clark v. Elza

Back 35

Executory accord - enforceable as bilateral contract - effect: suspends previous duty.

Front 36

Hawkins v. McGee

Back 36

Expectation damages put the aggrieved party in the position they would've been in had the other party performed.

Front 37

Peevyhouse v. Garland Coal & Mining Co.

Back 37

Expectation damages calculated by diminution in value when damages would've been disproportiantly higher than value of full performance.

Front 38

Sea Colony East v. Carl M. Freeman Associates

Back 38

Useful life calculation of expectation damages - not sued when the party did not have full use of components during "useful life"

Front 39

Sullivan v. O'Connor

Back 39

Reliance damages used when you can't calculate expectation damages w/ certainty or when court is hesitant to give expectation damages.

Front 40

Maglica v. Maglica

Back 40

Restitution damages calculated by value of services, not value of benefit conferred.

Front 41

Feingold v. Pucello

Back 41

Value of services not given when they are given to someone unethically.

Front 42

Britton v. Turner

Back 42

Breaching Plaintiff: If he didn't substantially perform, he can't recover on the contract--cost avoidance, cannot go beyond contract price.

Front 43

Lumley v. Wagner

Back 43

No specific performance for contract for services, but equitable remedy could be injunction to compete

Front 44

Laclede Gas v. Amoco Oil

Back 44

Specific Performance: available under other proper circumstances - e.g. special price, availability, long term contract w/ fluctuating market

Front 45

Centex Homes Corp. v. Boag

Back 45

Specific performance not appropriate when damages are readily measurable and $ damages would be adequate

Front 46

Freund v. Washington Square Press

Back 46

Limit damages for uncertainty: If too uncertain for causation, amount, speculative profits, then no recovery for expectation dmaages

Front 47

Humetrix Inc. v. Gemplus

Back 47

Lost profits are not too speculative when you can put a value on the expectation - if you can reasonably determine by calculation

Front 48

Hadley v. Baxendale

Back 48

Consequential damages from special circumstances - the circumstances must be reasonably foreseeable to both parties at the time of contracting, but don't need express/tacit agreement to be liable for them.

Front 49

Rockingham County v. Luten Bridge Co.

Back 49

P must mitigate unnecessary damages. If he doesn't, then he can't collect for avoidable damages.

Front 50

Parker v. Twentieth Century Fox

Back 50

For employment contracts, P doesn't have to take different/inferior job than the one contracted to mitigate damages.

Front 51

Hibschman Pontiac, Inc. v. Batchelor

Back 51

Punitive Damages: very hard to get.
Recoverable only if breaching conduct is also a tort where you can get punitive damages OR if there's sufficient evidence of fraud

Front 52

Yarbro v. Neil McGinnis Equipment

Back 52

Statute of Frauds - Exception to Suretyship. Leading Object Rule: If there's a pecuniary/business main reason for surety taking on someone else's debt - don't need writing.

Front 53

Satterfield v. Missouri Dental

Back 53

Statute of Frauds - One-Year Provision: If a contract, by its terms, can't be performed w/in 1 year from the time of its making, you need a writing.

Front 54

Wagers v. Associated Mortgage Investers

Back 54

State of Frauds: Land Transaction - exception - possession, improvement, partial payment = part performance. need 2/3.

Front 55

Thomson Printing Machinery Co. v. B.F. Goodrich Co.

Back 55

2-201: 10 Day rule exception: If merchant sends other merchant memo confirming oral agreement and merchant doesn't respond w/in 10 days, he can't claim statute of frauds defense. Acceptance by agent (mailroom) is ok. must use due diligence in getting the memo to the right person.

Front 56

Crabtree v. Elizabeth Arden Sales Corp.

Back 56

Statute of Frauds - Memo Satisfying: Older view: if we don't have same subject matter, if signed writing refers to unsigned writings, we can piece it together.
Modern View: Ned at least 1 signed writing, and all the writings put together gives you the essential terms & have same subject matter.

Front 57

Eastern Dental v. Isaac Masel

Back 57

2-201: Satisfying Statue of Frauds writing - need quantity in writing or if it's requirements/output contract - need it to say requirements/output

Front 58

McIntosh v. Murphy

Back 58

Promissory Estoppel exception Statute of Frauds. Consider if there's reasonable reliance, availability/adequacy of other remedies, definite/substantial character of action in relation to remedy sought, extent to which action corroborates existence of contract

Front 59

Restatement 87(2)
Option Contracts

Back 59

Applies to bilateral & unilateral contracts.
An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
Applies to preparation to performance

Front 60

Restatement 45
Option Contract Created by Part Performance or Tender

Back 60

Applies to Unilateral Contracts only
Where an offer invites an offeree to accept by rendering a performance & does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance
Preparation to perform is not sufficient.

Front 61

Restatement 90
Promise Inducing Action/Forbearance

Back 61

1. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a 3rd person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
2. A charitable subscription or a marriage settlement is binding under (1) without proof that the promise induced action or forbearance.

Front 62

Restatement 131
Requirements of a Memorandum

Back 62

Identifies subject matter of contract
Indicates that a contract regarding subject matter has been made between the parties or offered by the signer to the other party
States with reasonable certainty the essential terms of the unformed promises depending on:
agreement & its context
Subsequent conduct of the parties
Dispute which arises
Remedy Sought

Front 63

Restatement 139
Enforcement by Virtue of Action in Reliance

Back 63

A promise which the promisor should reasonably expect to induce reliance by the promisee and does induce reliance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement.
To determine whether injustice can be avoided only by enforcement:
-availability & adequacy of other remedies
-definite & substantial character of the reliance in relation to remedy sought
-extent to which reliance corroborates evidence of making/terms of the promise or evidence establishing those terms
-reasonableness of the action/forbearance
-extent to which the reliance was foreseeable by the promisor

Front 64

Restatement 355
Punitive Damages

Back 64

Recoverable only if the conduct constituting the breach is also a tort for which punitive damages are recoverable.

Front 65

Restatement 349
Damages Based on Reliance Interest

Back 65

As an alternative to the measure of damages stated in § 347, the injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed.

Front 66

Restatement 347
Measure of Damages in General

Back 66

The injured party has a right to damages based on his expectation interest as measured by:
(a) the loss in the value to him of the other party's performance caused by its failure or deficiency, plus
(b) any other loss, including incidental or consequential loss, caused by the breach, less
(c) any cost or other loss that he has avoided by not having to perform.

Front 67

Restatement §48. Death or Incapacity of Offeror or Offeree

Back 67

Death or Incapacity of Offeror or Offeree

An offeree's power of acceptance is terminated when the offeree or offeror dies or is deprived of legal capacity to enter into the proposed contract.

Front 68

Exceptions to Perfect Tender Rule

Back 68

1. Installment Contracts: Need substantial impairment
2. Cure: If seller offers to cure
3. Shipment Contracts: Need material delay or loss
4. Di Minimus

Front 69

Ways of Terminating Power of Acceptance

Back 69

1. Lapse
2. Counter-offer (without standing by original offer)
3. Rejection
4. Death or Incapacity
5. Revocation

Front 70

Things Considered in Determining Parties' Intent to Memorialize Agreement

Back 70

1. Parties' actions/words, surrounding circumstances
2. Amount is big, rather than small
3. Type of contract usually requires written expression
4. Lots of details vs. small
5. Routine transaction vs. unusual transaction
6. Details agreed upon vs. unresolved
7. Negotiations showed a writing was required

Front 71

Advertisements as binding obligation

Back 71

1. offer is clear, definite, explicit, leaves nothing open for negotiation
2. offers performance promised in return for something requested

Front 72

Mailbox Rule

Back 72

1. if properly addresed, effective upon dispatch
2. If not, effective upon dispatch if received w/in normal time of properly dispatched acceptance
3. If it comes later, then acceptance upon receipt.
4. Option Contracts: effective upon receipt.

Front 73

Option contract by operation of performance

Back 73

1. unilateral contract (R45): by part performance
2. either (R87-2): based on substantial/foreseeable reliance

Front 74

Forbearance on Invalid Claim

Back 74

Majority View: need good faith & reasonable belief
Restatement View: Either good faith or subjective belief

Front 75

Conditional promises

Back 75

1. Outside of promisor's control - consideration
2. Conditions that cannot occur - no consideration
3. Within promisor's partial control: implied promise to make the condition occur - sufficient consideration
4. Promisee's discretion: no consideration

Front 76

2-306
Output/Requirements

Back 76

Measuring output/requirements must be in good faith. No unreasonably disproportionate quantities may be tendered/demanded.

Front 77

Agreements to Accept Part Payment of Debt in Satisfaction of the Whole

Back 77

View 1: not binding for lack of consideration unless pay early or change the way that you pay, refrains from bankruptcy, debt consolidation
View 2: Only binding when debt is undisputed.
View 3: Enforce for policy reasons.

Front 78

Diminutive Value Measurement

Back 78

When there's economic waste from cost of performance - cost is disproportionate to the probable loss in value to plaintiff OR remedying the defect would require destruction of what's already been done.

Front 79

Useful Life

Back 79

When you adjust cost of performance by expired useful life of defective component.
Put the P in the position he would've been in w/out breach

Front 80

Reliance Damages

Back 80

Use when:
1. P can't calculate expectation damages w/ certainty
2. Court is hesitant to give expectation damages
3. When there's no enforceable contract

Front 81

Calculating Restitution Damages

Back 81

Net Enrichment: the extent that your services have enriched the other party
Cost Avoidance: What you would've had to pay someone else for the service

Front 82

Equitable Remedies

Back 82

CL uses for:
1. Unique benefit
2. Damages not measurable
3. Other equitable reasons - policy

Front 83

Liquidated Damages Reasonableness of Amount

Back 83

Traditional View: Reasonable as of time of contracting
Modern View: At time of contracting OR at time of breach/trial compared to actual damages