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Contracts Outline (done)
Contracts I (University of Memphis)
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CONTRACTS OUTLINE –2016
Restatement §(2) 1 Contract Defined: a contract is a promise or set of promises for the breach of which the law
gives a remedy, or the performance of which the law in some recognizes as a duty
 TYPES of contracts:
i. Express Contract- Express contracts are formed by language, oral or written.
ii. Implied in Fact Contract- are formed by manifestations of assent other than oral or written
language, i.e., by conduct (e.g., if a person sits in a barber’s chair and the barber cuts his hair, a
contract has been formed by the parties’ conduct).
iii. Quasi-Contract or Implied in Law Contract- not contracts at all; constructed by courts to avoid
unjust enrichment by permitting plaintiff to bring an action in restitution to recover the amount of
the benefit conferred on the defendant.
1.
What body of law applies? Step 1: UCC or Restatement.
UCC Article 2 applies to contracts for the sale of movable goods.
o UCC 2-105 says “things other than money that are movable at the time of sale,
including unborn animals and growing crops, which are not actually movable” (Many
are obvious, but courts are split on some things like electricity).
 Common law governs all other contracts. (Restatement)
 Common law can/will fill in gaps in the UCC
Step 2: Check if unilateral or bilateral.
A unilateral contract is enforceable when someone chooses to begin fulfilling the act demanded
by the promisor. A bilateral contract is enforceable from the get-go; both parties are bound.

2.
Under that law, has an enforceable deal or promise been made?
For a contract, you need 2 things: “Formation of a contract requires a mutual assent and a
consideration.” (R2d § 17) (or P.E. as substitute, or [maybe] moral obligation + mat. ben.)
 Mutual Assent: ((usually) Offer + Acceptance)
 § 17: formation of a K requires a bargain in which there is manifestation of
mutual assent to the exchange of consideration
 A legal performance that manifests itself into a bargain
 1. OFFER:
a. Restatement § 24: Offer defined: The manifestation of willingness to enter into a
bargain so made as to justify another person in understanding so that this assent to
that bargain is invited and will conduct it
b. UCC §2-206: a manifestation of a willingness to enter into a bargain; gives the
offeree the power to create a contract through acceptance by any reasonable means
c. Newman: communication by the offeror, creating a reasonable expectation in
offeree, that offeror is willing to enter into a K, on specified terms, such that offeree
need ONLY accept to form a K- gives offeree power to close deal by saying “yes”
 INTENT TO CONTRACT
A. Objective theory
o Looked at through objective, reasonable person standard.
o Court look to intention of parties through words, writings and actions
o Objective Standard Test Used:
o A true interpretation of an offer or acceptance is not what the party making it
thought it mean or intended it to mean, but that a reasonable person in the
position of the parties would have thought it meant
B. Sufficient Manifestation of assent:
1. any way that expresses to the other party the intent to be bound
2. when party engages in conduct (words or acts) that he knows or should reasonably
know the other party may interpret as an offer or acceptance Rest §19
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
3. Restatement § 21: neither real nor apparent intention that a promise be legally
binding is essential to the formation of a K, but manifestation of intention that
promise shall not affect legal relation may prevent formation of a K
4. Ex: Lucy v Zehmer - Man who has had a few drinks makes a K; it’s a K b/c there
was physical manifestation of intent- a reasonable person would see an offer
a. Offer includes not only what was said, but what is inferred by what was said
b. A party becomes bound by reasonable interp. of party’s words & actions
5. UCC §2-204 says you can show assent in any manner sufficient to show agreement.
And contract doesn’t just necessarily fail because of indefiniteness if both parties
intend to make a contract.
-ProCD v. Zeidenberg- you can show assent by not returning a product
in a given period of time.
*Penalty default rule: prevents strategic behavior. Forces people to say what they mean
or be held responsible to what others think they mean.
 Requirement of a Bargain: Restatement § 17:
o The formation of a K requires a bargain in which there is a manifestation of mutual
assent to exchange and a consideration
 Restatement § 20: Effect of Misunderstanding
o There is no manifestation of mutual assent to an exchange if the parties attach materially
different meanings to their manifestation and
o Neither party knows or has reason to know the meaning attached by the other or
o Each party knows or each party has reason to know the meaning attached by the other
 Restatement § 22: Mode of Assent:
o The manifestation of MA to an exchange ordinarily takes the form of an offer or proposal
by on party followed by an acceptance by the other party or parties
o A manifestation of MA may be made even though neither offer nor acceptance can be
identified and even though the moment of formation cant be determined
Leonard v. Pepsico:
o The commercial featured a youth arriving at school in a Harrier Jet and said the Harrier Jet was
7,000,000 Pepsi points. P tried to obtain the Harrier Jet by sending fifteen Pepsi points and a check
for the amount of money needed to obtain the Harrier jet. D refused to deliver the harrier jet
 Unreasonable to believe this was an offer; given context of communication a reasonable
person would see it was only satire by showing jet—not really an offer (objective
standard test was used)
 LANGUAGE REQUIRED FOR A VALID OFFER
{If essence of form suggests offer—it is an offer}
Terms:
- Material terms- MUST be included. Court cannot make them up. Quantity
- Nonmaterial- Not important. Court can fill them in. Price, time of perf., etc.
Industry Custom:
- The courts will also look to generally accepted custom in the industry in
determining whether the proposal qualifies as an offer.
Certainty: § 33.
- An offer, to have a legal effect, must be certain as to its terms
HYPO:
o “I am selling by K book for $50.” (is this an offer?—maybe)
 It meets definition of an offer—one must accept
 Needs more unambiguous language
 ADD: “I am selling K book…to whoever does accept, does anyone
accept?”
o Determine if an offer:
 1) Can offeree respond anyway other than yes or no?
 2) Is this unambiguous enough that one could say yes?
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 MASTER OF THE OFFER
- sets the terms for the agreement and can change at any time prior to acceptance (with
notification). Offeree can only accept said terms as is.
- “I am going to sell this for $500” is a demonstration of an intent to offer, not an offer
 Note: In Auctions, Auctioneer is the offeree and bidders are the offerors.
o § 26: Preliminary Negotiations: A manifestation of willingness to enter into a
bargain is not an offer if the person to whom it is addressed knows or has reason to
know that the offeror does not intend to conclude a bargain until he has made a
further manifestation of assent.
 NOT OFFERS:
o Advertisements, solicitations
- not reasonable to believe this is an offer. No certainty.
Exception: - Lefkowitz v. Great Minneapolis Surplus Store (ad that said first
three people in the store got a fur coat. Holding: was an offer because it had all
the makings of an offer; Reasonable person would think so)
o Bids, estimates, proposals, quotes
- Proposed price sent to multiple parties is not an offer- Quantity term is
missing; No clear offeree, so there is no power of acceptance to create K
- Exception: it is complete and has limitation
i. Jokes
- It is the manifest intent that determines offer/acceptance
- The agreeing party must know that the “offer” is a “joke.
ii. invitations to bid/offer
 OFFER HYPO
o
“I am selling by K book for $50.” (is this an offer? …maybe)
 It meets definition of an offer—one must accept
 Needs more unambiguous language
 ADD: “I am selling K book…to whoever does accept, does
anyone accept?”
o
How to determine if an offer:
 1) Can offeree respond anyway other than yes or no?
 2) Is this unambiguous enough that one could say yes?
 2. ACCEPTANCE:
a. UCC: any manner and medium reasonable
b. Common law: mirror image rule
c.
Acceptance of Offer: § 50(1)
i. Acceptance of an offer is a manifestation of assent to the terms made by the
offeree in a manner invited or required by the offeror
d. Acceptance by Performance: § 50(2)
i. Acceptance by performance require that at least part of what the offer
requests be performed or tendered and includes acceptance by a performance
which operates as a return promise
e.
Acceptance by Promise: §50(3)
i. Acceptance by a promise requires that the offeree complete every act
essential to the making of the promise
f.
Power of acceptance: An offer may be accepted only by a person whom the
offeror intended to create a power of acceptance (POA).
 Certainty: R2d § 33:
o
The terms must be ‘reasonably certain’ for acceptance to occur
o
2 ways that contracts are not certain/ indefinite:
2. relevant terms may simply be absent, leaving gaps in the contract
(vague) – shows no manifestation of intent
3. insensitive to relevant future contingencies- A complete contract
should specify what will occur if there is a contingency
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Burden of proof- falls on party that opposes the terms.
Open price = reasonable price at time of delivery. If u don’t trust judicial
capacity to come up with a reasonable price, you can designate a third party to
set the price for you if you disagree."escalator clause" - fixed according to a
formula tied in some way to the market.
EX: Glover v Jews, HYPO: Newman emails you, “I hereby offer to sell my bright orange
(with black racing stripes) 1995 VW Jetta, nicknamed Tony the Tiger®, delivered to your
house in exchange for cash payment Sunday. We can agree on the price later.” u reply,
“Great, I accept!” Sadly, both you and Prof. Newman catch the flu and fail to agree on
the price. Sunday comes and goes, and Prof. Newman does not deliver the car. You sue
Prof. Newman for breach of contract. Did the emails satisfy the “definiteness”
requirement for contract formation? NO; no price. Vague.
Certainty cases: Toys, Inc. v. F.M. Burlington Company- option L. Oglebay .v Armco – K.
 TERMINATION OF OFFER: § 36
Power of acceptance may be terminated by:
 Lapse of time
 Revocation by the offeror
 Death or incapacity of the offeror or offeree
 Rejection or counter offer by the offeree
 Offerees POA is terminated by non-occurrence of any condition of acceptance
1. Lapse of offer
 An offeree's power of acceptance is terminated at the time specified at the offer,
or, if not time is specified, at the end of a reasonable time (R2d §41)
 EverTite Roofing Case
2. Revocation of offer
An offer is freely revocable until it is accepted. UNLESS FIRM OFFER OR
OPTION K.
2 ways to revoke offer:
1. Direct: "offeree receives from offeror a manifestation of an intention not to enter
into proposed contract" (R2d §42)
2. Indirect: "offeror takes definite action inconsistent with intention to enter into the
proposed K and the offeree acquires reliable information to that effect (R2d §43)
a. EX: offeror selling property to third party rather than offeree and
offeree hears this
- Indirect Communication of Revocation: §43
o An offeree’s power of acceptance is terminated when the offeror takes definite
action inconsistent with an intention to enter into the proposed K and the
offeree acquires reliable information to that effect:
o EX: offeror selling property to third party rather than offeree and offeree hears
this
o Definite action in consistent with intention to enter into proposed K
o Policy—reward expectation/intent of the parties
Revocation Hypo: Prof. Newman emails student after class "I’ll sell u my car for
$5000. this will be open until Friday 9 am. Warm regards, Prof. Newman" later that
night follow-up email says "I revoke!!" I reply immediately "I accept" -under UCC,
was lawyer's acceptance valid? NO- Can’t accept after offer is revoked.
 Option Contracts and Firm Offers
3. Offeror’s death or incapacity
- Exception: doesn’t terminate offeree's power of acceptance under option contract. but
may, depending on how pivotal their role in the enterprise, affect obligations under
contract.
4. Offeree’s rejection or counter-offer § 38:
1. Outright rejection
- An offeree’s power of acceptance is terminated by his rejection of the
offer, unless the offer has manifested a contrary intention
o
o
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- A manifestation of the offerees intention not to accept the offer is a
rejection
2. Rejection via counter- offer
a. Counter Offer: § 39: Offer made by offeree proposing anything
different from original offer.
b. RULE: any condition no matter of trivial, if attached to
acceptance creates a counter offer—this is subject to
acceptance by original offeror
c. When counter offer is made—original offer is revoked—this is a
new offer on the table—old offer is dead forever
d. Rest. §59 says a reply that says it’s an acceptance but is in fact
conditional is a counter-offer, not an acceptance
e. MN RR case. Offer for 2500 rails @ $54. Accepted 1200.
Rejection**
f. -Look for partial performance: if there is partial performance
with the acceptance then it can’t be a counter-offer.
3. Rejection via nonconforming acceptance
a. Mirror Image Rule: (common law) Acceptance of an offer must
*mirror* every single aspect of that offer
b. Assent or meeting of the mind requires an offer and acceptance in
the exact terms and that the acceptance must be communicated to
the offeror
c. Offeree must respond to the offer as it was originally given by the
Master of the Offer. Otherwise, it is counter offer/rejection
d. UCC rejects this rule and recognizes as binding in 2
circumstances:
i. shipment of nonconforming goods
1. UCC §2-207 -acceptance is valid even if it
alters or adds terms.
ii. battle of forms
**Note: You can't decide to accept after they have rejected unless: option or firm offer**
 Offer & Acceptance under Unilateral Contracts
- Offer can require acceptance by either promise or a performance
 NOTICE REQUIREMENT
a. Mailbox/Dispatch rule- §40
 An offer MUST be communicated to be born (must reach intended recipient to be
effective)
 Offer can be revoked at any time before acceptance--- But for revocation to be
valid it must be communicated to prevent reliance.
 Acceptance is valid the SECOND it is dispatched.
i. Offeree is bound as soon as acceptance discharged—even if not received.
ii. EX: deal by e-mail after counter offer comes acceptance second
offeree hits sent we have an acceptance even if never received
EXCEPTIONS:
o When offeree sends rejection first, then sends acceptance  whichever
received by offeror first wins race
o When offeree sends acceptance first, then sends a rejection  whichever
received by offeror first wins race
 ADDITONAL TERMS:
KNOCK-OUT RULE (terms that materially change K)
a. Terms that materially change contract are knocked out unless expressly agreed to by
the other party
b. If we knock out essential terms, we use the default rules to fill them (default rules are
generally pro-buyer)
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- For these cases, it’s REALLY IMPORTANT who is the offeror because it governs
which terms get knocked out
-Posner v. Oscar Meyer- use common sense to determine material terms: if consent
cannot be assumed then, the term is material
-Examples of materially altering clauses: negating standard warranties, clause
requiring guaranty of high percentage of delivery where lower is standard for the
industry, a clause giving power to seller the power to cancel up on buyer’s failure to
meet any invoice when due.
Additional terms that do not materially change the contract:
- incorporated into the contract unless objection was already given or is given in a
reasonable amount of time.
-Rest. §61 says a reply that requests a modification is not invalidated unless the
acceptance is made to depend on assent to the change – so something that’s obviously
an acceptance but adds unimportant terms is an acceptance.
- Examples of non-materially altering clauses: a clause enlarging seller’s’ exception
due to superceding causes; a clause fixing reasonable times for complaints within
limits; a clause providing for interest on overdue invoices within the standard practices
(comment 5)

UCC: Firm offer rule:
Elements:
•
“order or other offer to buy goods for prompt or current shipment”
Action:
• “[Such offers] shall be construed as inviting acceptance either by a prompt promise
to ship or by the prompt or current shipment of conforming or non-conforming
goods”
Exceptions:
“Unless otherwise unambiguously indicated by the language or circumstances”
“but such a shipment of non-conforming goods does not constitute an acceptance if
the seller seasonably notifies the buyer that the shipment is offered only as an
accommodation to the buyer
 Unilateral vs. Bilateral Contracts:
Unilateral K:
 Promise for performance
o Offer empowers offeree to only accept by complete performance of the
promise
 There is an offer, acceptance to give something for performance and performance
is the acceptance
 Offeror can revoke anytime before performance is completely done
o EX: give $50 to swim across MS River—only swim 99% of way, offeror
can revoke that offer because not complete
 If terms require offeree to deliver item to receive item = unilateral K
 Must do something and want full performance—the unilateral K
 Unilateral K arises when performance is based on will or pleasure of one of the
parties:
o Promisor receives performance from promise as consideration
o Thus, offer to make unilateral K is accepted when the requested
performance is rendered
 § 54: No notification is necessary to make such an acceptance effective unless the
offeror requests such a notification
 Petterson v. Pattberg: (traditional rule for revocation of unilateral K)
 D owned bond on P’s property, behind on mortgage payments, made
agreement that he would pay 250 for 3 months, paid first 250, then went to
settle up, D had sold the mortgage
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
Court said this was unilateral contract and the offer could be
revoked before performance, since D revoked the offer before he
accepted the other payment, its okay
 RULE: Common Law Approach—unilateral K may be revoked at any time
prior to fill performance of act required as acceptance
 Example: Susan promises to pay Charles $5 if he will deliver a textbook to
Rick. Charles is not obligated to deliver the book, but if he does in fact
deliver it, Susan is obligated to pay him the $5.
Bilateral K: (MOST K ARE BILATERAL)
 Promise for a promise
 Requires actual acceptance of of the K—creation of a promise
 Formed upon the giving of the promise to perform an obligation in the future, and
failure to fulfill promise I s breach

§ 56: For acceptance to become effective, the offeree must at least attempt to
communicate it to the offeror, in a reasonably prompt manner
 Example: Sidney promises to sell Blackacre to Bertram for $6,000, and Bertram
promises to purchase Blackacre at that price.
 Indirect Communication of Revocation: §43
i.
An offerees power of acceptance is terminated when the offeror takes
definite action inconsistent with an intention to enter into the proposed K
and the offeree acquires reliable information to that effect:
1. EX: offeror selling property to third party rather than offeree and
offeree hears this
2. Definite action in consistent with intention to enter into proposed
K
3. Policy—reward expectation/intent of the parties
 § 45 Option K Created by Part Performance or Tender:
o when an offer invites an offeree to accept by rendering a performance and does not invite a
promissory acceptance, an option K is created when the offeree tenders or begins the invited
performance or tenders a beginning of it
o The offeror duty of performance under any option K so created is conditional on completion
or tender of the invited performance in accordance with the terms of the offer
o Cook v. Coldwell Banker: (part performance as acceptance)—Modern Unilateral K
Performance

P was real estate agent, given incentive plan for commissions, which
she met, but wasn’t paid the full amount because she left the company

Holding:

She accepted her by staying and her performance entitle her to
recovery

Unilateral K—she fulfilled the promise and an offer cant be
revoked after SUBSTANTIAL PERFORMANCE has been rendered

RULE: Modern Approach: an offer to enter into a unilateral K may not
be revoked once the offeree had made substantial performance (restatement)
o Harlow v. Advance Steel (parties conduct creating a K)
 Used UCC—Contract law that governs only the sale of goods
 Seller promised to deliver good at certain time and buyer promised to pay. There was
a negotiation over phone (oral K). Forms sent between parties but conflicted with
each other.
 Thus no MA through the forms (mirror image rule—any difference in an offer creates
counter offer)
 Court doesn’t mind conflict bc parties had oral K formed before forms were sent
 Both parties acted to understand the implied oral K
 RULE—terms of a K are terms actually performed on
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
 TAKEAWAY—even if the exact moment of acceptance cant be pin pointed—there
still may be mutual assent (how would reasonable person interpret oral K made over
the phone)
 UCC § 2-207(3):
b. Conduct by both parties, which recognizes the existence of a K is sufficient to
establish a K for a sale although the writings of the parties do not otherwise establish
a K.
c. In such case, the terms of the particular K consist of those terms on which the
writings of the parties agree, together with any supplementary terms incorporated
under any other provision
 UCC § 2-204: Formation in General:
d. A K for the sale of goods may be made in any manner sufficient to show
agreement, including conduct by both parties which recognizes the existence of
such a K
e. An agreement sufficient to constitute a K for sale may be found even though the
moment of its making its undermined
f. Even though one or more terms are left open a K for sale does not fail for
indefiniteness if the parties have intended to make a K and there is reasonably
certain basis for given an appropriate remedy

Oral K and the SOF:
o K for goods of $500 or more must meet writing requirement of (UCC § 22-01)
o UCC does not always require formal signed K in order to satisfy SOF, even
if there was no such document in this case, requirements of SOF may still
be met
3. CONSIDERATION:
“The formation of a contract requires a bargain in which there is a manifestation of mutual
assent to the exchange and consideration.” (Rest. §17)
consideration must be bargained for and there must be inducement on both sides of the
contract (Rest. §71)
The law is concerned with the outwardly expressed intent. (§71, comment b)
Sufficient consideration present only when each party to the K has intended to secure
something from the other party that he was otherwise not legally entitled to.
 Legal Benefit-Detriment Test waiving a legal right or the benefit of the other. You need benefit or detriment on one
side.
 Courts will not ask whether the thing which forms the consideration does in fact
benefit the promisee or a third party
 Sufficient consideration present only when each party in K has intended to secure
something from the other party that he was otherwise not legally entitled to.
 any change in legal position (Hamer- (not drinking = consideration)
 § 71: Requirements of Exchange; Types of Exchange:
 To constitute consideration, a performance or return promise must be bargained for
 Bargained-for exchange theory: The bargained-for element means detriment has to
induce the promise.
 A performance or return promise is bargained for if it is sought by the
promisor in exchange for his promise and is given by the promisee in
exchange for that promise
 The performance may consist of:
 An act other than a promise
 A forbearance
 The creation, modification or destruction of a legal relation
 The performance or return promise may be given to the promisor or to other person
 Sufficient consideration is present only when each party to the K has intended to
secure something from the other party that he was otherwise not legally entitled to.
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 CONSIDERATION HYPOS:
 Buy a coffee from Starbucks?
- Yes; consideration; promise to pay $ with promise to receive
coffee
 Ask for cup of water?
- No- no consideration on part of person asking
 Ask for a cup of hot water but they charge a few cents?
- Yes—value of consideration is irrelevant as long as it’s there
 Ask for water and cashier says can’t give hot water b/c the boss is there but
give me a nickel and he puts it in tip jar?
- Not giving the $ for the water but unrelated reason si is it
consideration? Under benefit/detriment test yes BUT if reason for
exchange is to make pre text for consideration the NO
CONSIDERATION. This would be a sham consideration
 Hammer v. Sidway: (abstention form legal conduct)
 P nephew, received promise from uncle to receive $ upon refraining from drinking,
etc, until the age of 21. P sues D estate for breach of contract upon estate stating the
promise never had consideration.
 COURT—ruled in favor of P bc the nephew waivered a legal right at the request of
another party = consideration
 RULE: look to objective position of the party; one party giving up a legal right for
promise of another
 Must have value that can be objectively considered
 § 79:
o Court will not consider the value of the consideration between the parties; don’t need
equivalences of values
o What they will consider is the purpose
o Whether it was nominal or how it was structured but not the value
 HYPOS:
 “I will buy you ice cream”—Consideration?
 No—this is a gift; promisee is not changing their legal status
 Doing something (walking to receive) is not consideration
 The gist of changing behavior was to receive the gift
 Homeless man walks to Bardog to pick up gift bought for them
 You are free to accept/reject when someone offers gift
 If you accept you must do something receive the gift
 That something is not required by law (no legal duty is being given up)
 Homeless man walks to Bardog to pick up gift but tell him “if you walk on left
side of the street”
 Yes. Consideration—change in legal status in manner greater than
minimum effort (don’t have to walk on left side—could walk on right)
 If you graduate law school, I will give you $--consideration?
 Yes—no pre-existing legal obligation to graduate
 Free to K with aunt for completion of law even though you already do it
 “Parallel legal obligation duty”
 Family Contracts:

- traditionally not enforceable
 Gratuitious Promises:
 If promisor merely intended to make gift to promisee upon the
performance of a condition, the promise is a gratuitous and the
satisfying of condition is not consideration for a K.
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 Donative Promises:
 Promise to make a gift—no bargain is involved
 These promise are generally not enforceable
 Exception—if promisee had detrimentally relied on it

Restatement § 73: Performance of a Legal Duty
 If you have a legal duty to do something, you cannot use the fulfillment of
the obligation is the terms of the K
 A promise to do what you already have to do is no consideration
 EX: walking to receive the gift given to you

Feinberg (past work, post work, retiring ≠ cons.)
Exception (minority view): moral obligation + material benefit = cons.
Webb (Employer promised to pay + life saved = cons.)
Illusory promises- if a promise can be breached, it is not illusory
Shadwell - binding. No benefit to offeror. That court was PROBABLY
wrong. Uncle just being nice.
Dyer v. National By Products Inc
.
- TN- follows objective/ subjective rule.
 LOPSIDED CONSIDERATION
a. Nominal or Nonexistant Consideration
i.
If there’s no consideration, there’s NO consideration
ii.
If it’s been bargained for, then value has been assigned, even if no actual value
exists.
iii.
Nominal is really only $1. Much more, is seen as bargained for
b. Adequacy of Consideration
i.
Reasonable Belief
ii.
Boehm- (paternity, not father case)- you only have to believe you MAY have a
claim.
1. She has claim against one of them. Has subjective belief that
each one of them might be the father.
iii.
Evidence of Bargaining
1. If there IS evidence of bargaining, then there IS consideration
2. Bolin Farms-price was bargained for (regardless of Mkt Value)
Satisfaction clauses
 If it is a commercial sale, OBJECTIVE reasonable person test is used to decide.
 If it is anything else, ex: painting, then good faith SUBJECTIVE test is used.
 In both cases, it is not illusory but must be proved to act as consideration.
NOT consideration: gifts, stipulations, past services, unenforceable/illusory promises.
-Conditional gifts: They sometimes look like consideration because of the conditions but
if the giver wasn’t induced to give by some promise, then it is just a conditional gift.
Gifts can’t be taken back after they’ve been given, but they can be revoked if they
haven’t been given yet. §71
(promise to give $100 to the school to pay down the debt was not a contract because the
school didn’t do anything to induce the promise. … If they had promised to give him
something, such as a brick or something, then it would be different).
-Past services/consideration: Events that already happened can’t be considered
consideration because they weren’t induced by the promise – they happened anyway,
without the promise (§86a)
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-Moore v. Elmer (promise to pay her mortgage if he died is not a contract because he
didn’t get anything in return – she had already read his fortune)
-Moral consideration: A moral obligation to pay someone is not enough consideration to
create a contract in most cases. It is sort of like past consideration. (§86, a)
-Mills v. Wyman (Wyman’s agreement to pay Mills for taking care of his sick son is not
consideration): moral obligation doesn’t translate to contract.
Exception: A promise in recognition of a benefit received is enforceable to the extent
that it is needed to prevent injustice. It is not binding if the promisee meant the benefit to
be a gift (or other reasons that mean the promisor is not unjustly enriched) OR if the
promise is disproportionate to the benefit received. (Rest. §86)
3.
If so, what are the terms of those obligations?
 Restatement § 87(2): Option Contract: (Substitute for Consideration)
o A promise made by an offeror that effectively limits the offeror’s power to
revoke the offer.
o Exception to default rule- buys time you have to make decision to purchase
or not
o Promise + consideration = Option contract
o An offer which the offeror should reasonably expect to induce action or
forbearance of a substantial character on part of offeree before acceptance
and which does induce such action is binding as an option K to the extent of
avoiding justice
o Dickinson: no consideration = no option
o Shows pre-contractual reliance
o Protects those who began consideration based on a promise, or arose
because of gifts and a promise wasn’t followed through
o Lapse of exercise period (reasonable time given by court) terminates option
K.
o Focus on REASONABLENESS
o Binding when:
- It is in writing
- Has consideration
- Made irrevocable
OPTION CONTRACT 2: UCC § 2-205 FIRM OFFER





Even without consideration, a signed offer by merchant will be bound under contract laws.
Offer will be held open as long as it’s in writing by a merchant for three months, even for
lack of consideration
If don’t want to be bound to UCC, merchant is master of offer, can say UCC doesn’t apply,
master of offer
No consideration has to be given at all to make offer irrevocable
Imposes no requirements that offeree demonstrate reliance on the offer in order to claim the
right to accept despite an attempted revocation
Hypo: Prof. Newman emails Student after class: “I’ll sell you my car for $5000. This offer
will be open until Fri., 9 AM. Warm regards, Prof. Newman.” Later that night, Prof.
Newman sends follow-up email: “I revoke!!” You immediately reply: “I accept.”
Under UCC 2-205, was your acceptance valid?
Hypo 2: Car-lot salesperson emails Lawyer: “We’ll sell you that 2016 Camaro for $24,000.
This offer will be open for six months. Sincerely, Salesperson.” Four months later,
salesperson emails: “Never mind, we revoke.” Lawyer replies: “I accept!”
Under 2-205, was Lawyer’s acceptance valid?
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TAKEAWAY: a written offer for sale of goods that says it will be open for a period of time,
not to exceed three months—the offeror loses right to revoke that offer
Option K #3: offer to unilateral K + part performance Restatement § 45:
 Where an offer invites an offeree to accept by rendering a performance and does
not invite a promissory acceptance, an option K is created when the offeree
tenders or begins the invited performance or tenders a beginning of it
 The offeror duty fo performance under any option K so created is conditional on
completion or tender of the invited performance in accordance with the terms of
the offer
 “Substantial Performance”—limits freedom of offeror to revoke
 Promissory Estopple as substitute for Consideration
Hypo: A promises to pay B $100 if B walks across the Brooklyn Bridge. B starts
walking, but when B is almost to the other side, A drives by and yells, “I revoke my
offer!” Is A contractually bound to pay the $100? Yes.
HYPO: $100 to break 3 eggs on your head. You break two, then I revoke the offer. Can’t
do it. You’ve already partially performed. Offer MUST be left open long enough to fully
accept
Option K #4: reliance by offeree
 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 K to the extent necessary to avid
injustice
o Dickinson v Dodds- no consideration, no option
HYPO: A promises to pay B $100 if B runs 10 miles the next day. A knows B doesn’t
own running shoes. That night, B pays $50 for a pair of running shoes. A few minutes
later, A calls and says, “Sorry, deal’s off.”
Was an option contract formed under R2d s. 45?
Was an option contract formed under R2d s. 87(2)?
HYPO: A says to B, “I’ll give you $100 if you promise to run ten miles tomorrow. Get
back to me.” A also makes a strange sideways-palm gesture. A knows B doesn’t own
running shoes. That night, B pays $50 for a pair of running shoes. A few minutes later,
A calls B and says, “Sorry, deal’s off.”
Was an option contract formed under R2d s. 45?
Was an option contract formed under R2d s. 87(2)?
UCC § 2-207(3):
 Conduct by both parties, which recognizes the existence of a K is sufficient to establish a
K for a sale although the writings of the parties do not otherwise establish a K.
 In such case, the terms of the particular K consist of those terms on which the
writings of the parties agree, together with any supplementary terms incorporated under
any other provision
UCC § 2-204: Formation in General:
 A K for the sale of goods may be made in any manner sufficient to show agreement,
including conduct by both parties which recognizes the existence of such a K
 An agreement sufficient to constitute a K for sale may be found even though the
moment of its making its undermined
 Even though one or more terms are left open a K for sale does not fail for indefiniteness
if the parties have intended to make a K and there is reasonably certain basis for given
an appropriate remedy
Oral K and the SOF:
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K for goods of $500 or more must meet writing requirement of (UCC § 2-2-01)
UCC does not always require formal signed K in order to satisfy SOF, even if there was
no such document in this case, requirements of SOF may still be met


 Nominal consideration:
Courts don’t look at the adequacy of consideration, but if it is way out of proportion and
looks just like a formality and not something that was actually bargained for, then it does
not satisfy the consideration requirement Rest. §79
 Exception: For option contract, nominal consideration is OK to
make contract irrevocable. §87
 Illusory promises:
promise based on the promisors own future will § 77
A promise or apparent promise is not consideration if by its terms the promise or
purported promisor reserves a choice of alternative performances unless:
 Where a promise is subject to a condition which is within the control of
promisor; especially where condition is related to K performance, or when
promisor knows such condition can’t occur
 Cannot serve as a basis for consideration

Agents Binding Their Principals:
 Agency law allows all employees to bind employer
 All employees assumed to be able to action on behalf the employer
 RULE: employees of a corporation has authority to bind that corporation but no
fiduciary duty

RECAP:




Acceptance can be in any form as long as consistent with the offer
Every K must have consideration
K not consideration is void
exception for consideration: option contracts and promissory estoppel
 RESTITUTION:
o
o
o
AKA: quasi contract; quantum meriut; implied contract; common count; unjust enrichment
Definition: principle of equity that implied an obligation to pay where there was no express
agreement and impossible under the facts to imply an agreement
o Even where there is not expression of assent by a party, a K may be imposed by law
under doctrine of K implied in law
o Implied agreement suggests that there can bean actual contract by conduct
Restitution is measured by reasonable value of benefit
 Implied in Law vs. Implied in Fact K
o Implied in Law:
 2 elements:
 1. Conferral of benefit’s
 2. Allowing to keep them without compensation would eb unjust
 EX: plant trees on road and ask payment for what they did
o
Implied in Fact: O + A+ C
 Conduct used in manifest mutual assent
 K where MA is manifested by conduct or in facts
 EX: Starbucks don’t ask just hand them $
 There must be acceptance (oral or conduct)
 K created by CONDUCT NOT WORDS
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
Credit Bureau v. Pelo:
o Pelo injured, doctors took steps to fix him, he refused the services rendered, said that he was
involuntarily admitted to the hospital but signed release under duress, hospital then treated him
and sold the debt to Credit Bureau
 D argued no express or implied K because he tried to prevent the hospital from treating
him
o COURT: said that it would be unjust to let him take services that he needed, while in a state
where he couldn’t make his own choices and then not pay for then
 D received a benefit and was required to pay for that benefit
 There was a K implied in law under these circumstances
o
o
RULE: a person who had been unjustly enriched at the expense of another is required to
make restitution to the other
RULE: under UE—can have liability even if recipient of benefits does not consent to benefits
—as long as not officious
 Elements of Unjust Enrichment (restitution)
o 1. Conferral of benefits
o 2. Allowing benefits t o go uncompensated would be unjust
 Restatement of Restitution § 1:
o A person who has supplied things or services ot another, although acting without the other
knowledge or consent is entitled to restitution therefor for the other if:
 He acted unoffciously and with intent to charge thereof
 The things or services were necessary to prevent the other form suffering serious bodily
injury or pain
 The person supplying had no reason to know that the other would not consent to
receiving the, if mentally competent
 It was impossible for the other to give consent or because of extreme or mental
impairment, the others consent would have been immaterial
 EXAM—always acknowledge officiousness when no consent ot conferral of benefits:
o Officious Test:
 Is person who conferring befit acting reasonably under circumstances
 Are the acting reasonable –of so they should be compensated
 HYPO:
o Neighbor has fire extinguisher, his neighbor has a fire and a guy uses his fire extinguisher to put
the fire out. He then asks neighbor for $ for use of his fire extinguisher—guys says no because he
didn’t ask
 No implied in fact K (express) but can sue on implied in law
 2 elements:
o Conferral of benefits
o Unjust to let go uncompensated
 HYPO:
o We live in evergreen neighborhood and take prude in homes. One neighbor doesn’t want to do
maintenance in home. so other neighbors cut bushed, paint his house while out of town. Can
people doing work recover under implied in law theory?
 Is it reasonable under circumstances?
 NO—officious behavior
 Not preservation of life or property
 HYPO:
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o
Go to surgery to remove cyst on back, under general anthesia, consent to removal of cyst. Dr.
removes cyst and mole that he thinks is troubling. Patient gets check and both are there but didn’t
argue to remove more. Do you have to pay?
 Was dr acting reasonable under circumstance?
 Talk a about both side—patient and Dr.
 PROMISSORY RESTITUTION:
o
Modern Trend: enforced a promise based on a moral obligation if the promise is based on an economic
benefit previously given to the promisor and enforcement is necessary to prevent injustice
o No bargain for exchange occurred
 Restitution vs. Promissory Restitution:
o Restitution: obligation to ay to avoid unjust enrichment
 Four types: saving lives. Things or property, commercial context, family context
o Promissory Restitution: (1) presence of a promise and (2) material benefit plus injustice

Mills v. Wyman:
o Plaintiff Mills, cared for the son of Defendant Wyman when he was ill. After Son died, Defendant
promised to compensate Plaintiff for the care Plaintiff provided his son. Plaintiff is bringing this
action to recover the compensation promised by Defendant
o COURT: Dad was under no legal obligation to pay for the services on taking care of his son—no
consideration—the son was independent and no material benefit flowed to father
o Case stands for proposition that classical contract law will not allow moral consideration to
substitute for actual consideration
o RULE: it is only when the party making the promise gains something or he to whom it is made
loses something that the law gives the promise validity
 Moral Obligation can give rise to a legal obligation in certain specific situation:
o If a person was subject to a legal obligation that has become unenforceable, a subsequent promise
will be enforceable
 § 82. Promise to Pay Indebtness; Effect of SOL:
o Promises to pay debts barred by the statue of limitations are enforceable because the debt is a
preexisting legal obligation
 In special circumstances even debt barred by SOL if promise to paythis is sufficient to
serve as consideration
 WHY?
 You actually receive a benefit
 The fact its barred does not remove its legal character
 § 83. Promise to Pay Indebtness Discharged in Bankruptcy:
o Promises to pay debts previously discharged in bankruptcy are also legally enforceable
 § 85. Promise to Perform a Voidable Duty:
o a promise to perform all or part of an antecedent K of the promisor, previously voidable by him,
but not avoided prior to the making of the promise is biding
 EX: minors promise when he reaches age of majority to perform K made during minority
is legally binding

Webb v. Mcgowin:
o Webb saved McGowin’s life, resulted in crippling Webb, McGowin said he would pay him for life
for saving him, McGowin then died and the payments stopped
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o
Court said that since he saved his life, it became a valid contract. Webb conferred a material
benefit to McGowin, which was consideration and promise shows that McGowin recognized and
requested the services and consideration because Webb was crippled while McGowin benefited
o
RULE: moral consideration is sufficient to support a promise given in recognition of past
economic benefit received by the promisor
RULE: where the promisor received a material benefit and the promisee suffers a material
detriment, moral obligation is sufficient consideration to support a promise
o
 § 86. Promise for Benefit Received (Promissory Restitution)
o A promise made in recognition of a benefit previously received by the promisor form the promisee
is binding to the extent necessary to prevent injustice
o 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
 to the extent that it its value is disproportatinte to the benefit
 Material Benefit Rule:
o If a person receives a material benefit from another other than gratuitously, a subsequent
promise to compensate the person for rendering such benefit is enforceable

Watts v. Watts:
o Cohabiting partnership, man had the career and woman supported him, Boyfriend ran off with
other girl and girlfriend sue on unjust enrichment. Court upheld the claim.
o COURT: there was an express or implied contract between the two and doctrine of restitution
applies
 Since P had a change in her circumstances by quitting her job and moving, performed
housework for no pay, and had joint bank accounts, it shows there are necessary factors
for an express or implied contract to be breached
 Also there was benefit conferred on D by P, knowledge of that benefit by D and
acceptance by D, so it would be unjust to let D keep everything
o 1. Conferral of material benefits and
o 2. Allowing those to material benefit to uncompensated would be unjust

REVIEW:
o 3 DIFFERENT COA:
 K
 PE (equitable claim)
 Restitution (UE

 Restitution and Unjust Enrichment § 1
A person who is unjustly enriched at the expense of another is subject to liability in restitution
Quasi-contract- Implied in-fact contract- (Cotnam v Wisdom case about person being
thrown from car, Collano v Oakwood- shrubbery case)
- Created practically for infants, crazies, drunks
 Court says appropriate remedy is reasonable compensation for services
rendered
 Fair compensation for time, service, skill
 Means of patient is one factor
 **Usually a volunteer won't get paid, unless for some reason they reasonably
expect to get paid"
 NOT QUASI CONTRACT:
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 Implied-in fact contract version 2.
EX: Context of marriage?
(Pyeatta v Pyeatta)- expectation damages not awarded in restitution cases. Restituion
damages.
Also: Washington university case, 5% of revenue is fair.
 Concealment, fraud, and misrepresentation: R2d §§ 159, 160



intentional misrepresentation is fraud; innocent misrepresentation is not
half-truths= misrepresentation
Is the person being misleading? We want people to have to know information, but we don’t
want people to take advantage of this knowledge!
 Competing policy concerns- suggests rule wont be one-sided but will be in middle.
 Sue or wait to be sued?
 Sue for rescission (and possibly tort-claim) - bring rescission claim
 Wait to be sued, raise defense- bring rescission counter-claim and possible tort
counter-claim
Rule for innocent misrepresentation/fraud:
K elements:
1. Misrepresentation- assertion not in accord with the facts (R2d 159)
 Conduct can be an "assertion" (R2d 160)
2. Material- reasonable party would not have made deal if they had known truth
3. Justifiable reliance -these are enough for innocent misrepresentation: k shield
 Victim's capability?
 Nature of transaction?
 Plausible?
Extra Tort element: Scienter (intent)
- enough for fraud: K shield or tort sword.
 Fraudulent misrep;: intent to deceive or knowledge of likelihood od deceiving
 Negligent misrep.: negligence as to falsity + intent to induce other party to rely
Promissory Fraud
 A promise a party never intended to perform
 May recover punitive, as well as compensatory damages
 Examples: dance case- yes. Sports contract-case- no.
HYPO: Bethenny at garage sale looking for couch. Sees brand new CHRISTIAN LOUBOUTIN
shoes in box. No price tag. Grandma offers them to her for $10. she accepts and says ill take
them. Someone swoops in and says those are real.. Grandmother wont give her shoes.
Bethenny sues her in small-claims court.
Does Sara have any defenses?
No. Bethenny did not make any misrepresentation. Bare nondisclosure.
HYPO: Felicia refused to pay. Does she have any defenses?
Bethenny never said they were real.. If she had said "designer", then it would be a
misrepresentation. Intent.
Swinton v Whitinsville Sav. Bank -BARE NONDISCLOSURE (OF TERMITES) NOT FRAUD.
FOR EXAM: Check off the 3 elements.
1. Misrepresented?
2. Material ?
3. Justifiable ?
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 PROMISSORY ESTOPPLE § 90
 A doctrine of K law that operates to create a quasi-contractual obligation independent of
the requirement of K formation
 3 ways it is used:
 as a substitute for consideration
 Answer to some technical legal defense
 New/separate cause of action
TYPES
 Family promises
 Promises to convey land
 Promises coupled with gratitious bailments
 Charitable subscriptions
Limits on Offeror Power to Revoke:
 If the offeree gives the offeror some consideration to hold the offer open for a
stated period of time, under the classical system the offer will be irrevocable
during that period as an “option K”:
 Two promises:
 1. Offer
 2. Promise to hold offer open
 ONLY RELEVANT when there is no consideration.
 Reliance by injured part
 It’s a check to make sure important promises that aren’t accidentally thrown out
for lack of consideration – most people don’t know about the consideration rule
and might take steps to rely on promises that have no consideration (want to
protect their reliance)
 -NOTE: hard to win a promissory estoppel case.
 R1 § 90: Elements of Promissory Estoppel:
 A promise is made
 Promisee relied on the promise to his detriment
 Promisor knows or has reasons to know of the reliance
 Injustice can only be avoided be enforcement of the promise
4 types of promissory estoppel:
1. Gratuitous promises
2. Promises to convey land
3. Promises coupled with gratuitous bailments
4. Charitable subscriptions
 R2 § 90: But… Remedy may be limited
Gratuitous promises: family promises, charitable donations, & promises of
pensions
Rickets v. Scothorn (grandpa’s gift to granddaughter- can’t work if she wants.
Qualifies for PE b/c she quit job-even though she was rehired later, it was loss of
salary, lower earning power, etc)
-Feinberg v. Pfeiffer (company told hard-working employee they had a pension for
her whenever she wanted to retire. She retired a few years later, and they paid for a
while but then stopped. She relied by retiring – hard to get a job when you’re old.
Construction bids
-James Baird Co. v. Gimbel Bros (construction case where the court took a very
narrow approach to PE as only for gratuitous promises, saying the subcontractor’s
offer was an offer that was never accepted)

Reasonable Test for Promissory Estopple:
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



Must be a promise—doesn’t have to be offer, legal offer, or illusory offer
Promisor must have reason to suspect reliance on the promise (will the promisee rely on this
promise?)
 Bound to the person that is relying if the promisor had reason to expect reliance—even if
promisor didn’t expect reliance—if a reasonable person would know that promisee was
actin on the promise (objective test with reasonableness)
Promisee must have relied on that promise to their detriment (objective test)
Injustice if promise not enforced bc promises induced P to act to their detriment.





EXAM—ANALYSIS OF PROMISSORY ESTOPPLE:
1. Is there a promise—and if so—is it sufficiently clear?
2. Is there actual good-faith reliance upon the promise?
3. Reliance must be reasonable under reasonable test (Berryman)

Points of view for each:

Promisor

Promisee

Mutual objective 3d party observer
4. Justice element
 QUALIFIED ACCEPTANCE—BATTLE OF THE FORMS:
o
General Rule: a purported acceptance that adds to or changes the terms of the offer (a
qualified or conditional acceptance) terminates the offerees power of acceptance—it
become as counter offer

Princess Cruises v. GE:
 Princess sent in boat for repairs to GE, GE’s contract limited their liability to repair
problems from poor service. Princess had problems with the turbines after they got
the boat back, had to cancel cruises
 Court: this K was for a rendering of services, not goods, so UCC wouldn’t apply and
must use common law doctrines
 RULE: the UCC applies to cases on which the predominate purpose of the
transaction is the furnishing of goods
 A K for both the serves and goods is governed by UCC or CL—dependent
on thrust of K
 Legal standard used: look to thrust of K; measure the value of goods vs. value of
services to determine which predominates

TAKEAWAYS:
 Predominate thrust for mixed K
 What is incidental—services or goods?
 “Mirror Image Rule”
 K forms between both parties must be identical to one another or no K—
performance on feuding forms can act as validation of previous form
 Last Shot RULE:
 Last form sent by either party controls terms of the transaction

Princess Cruise Walk Through:
 PC sends GE a purchase order
 GE sends FPQ form to PC—this is now counter-offer
 Is there a K now?
 There is O but not A
 PC has the FPQ
 GE reviews the PO sent after they sent FPQ and sends FPQ to PC
 BUT—work begins before PC receives
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Is there K now?
 O = yes
 A = yes—work stared (Harlow)
 C = yes
 PC = $$
 GE = services
TAKEAWAY: in a mixed K, choice of governing law (UCC, CL) depends on
whether predominate thrust of K was for sale of goods or provision of services




HYPO:
Go to buy a carà get warren (services if something goes wrong)
 Pay $ for both goods and services (mixed K)
 Gist of K – goods ($ going to vehicle itself—warranty just comes with it)
 How much $ is actual for goods and ho much K price for services?
 Say it is 50/50-> what is incidental to what
 EX: installing security systemà installation is incidental)
 UCC 2-207—Generally
o Takes respective forms—sees what forms are material to K and uses UCC rules to
supplement K and results in K neither party intended
 UCC 2-203(3)
o Conduct by other parties which recognizes the existence of a K is sufficient to
establish a K for sale although the writings of the parties do not otherwise establish a
K. then, the terms of the particular K consist of those terms on which the writings of
the parties agree—together with any supplementary terms incorporated under any
other provision of the act
 Court takes forms and forms K on what parties ACTED on
 If acceptance by performance UCC will create K that what the parties
acted on
 Last Shot RULE:
o If performance occurs after exchange of last shot, the terms in the last shot
become the K from the performance, even if the writings of the parties don’t
establish a K
 Last form sent by either party controls terms of transaction
o If acceptance/performance and last shot occur at same time?
 Look at: is there an acceptance?—if so, what are the terms of the contract?
 Court will look at both sides, look at last shot as request for modification,
but depending on parties conduct, can declare no contract and the last
shot is a counter offer
 Turns on facts of the situation
o If performance first, then last shot?
 There is a contract because initial contract was signed
 Last shot is a proposal for modification, no effect on original contract
 If want to make the new terms binding, they would have to negotiate them
as a new contract
 Restatement § 50. Acceptance of Offer Defined; Acceptance by Performance; Acceptance by
Promise—applies different approach (COMMON LAW)
o A of an offer is a manifestation of assent to the terms thereof made by the offeree in
a manner invited or required by the offer
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o
o

A by performance requires that at least party of what the offer requests be performed
or tendered and includes acceptance by a performance with operates as a retune
primes
A by a promise requires that the offeree complete every act essential to the making
of the promise
THE “AGREEMENT TO AGREE”
o
Classical Law: agreements to agree are not enforced because of lack of mutual
assent to material terms
o This doesn’t change the fundamental rules for MA because they both
require an agreement for a K to take place
o Possible replacement for MA

Walker v. Keith: (uncertain material term)
o Keith leased a lot to Walker for 10 yr term at $100 a month, option to extend lease for 10 more
years. Rent would be fixed on comparative basis of rental values at the time reflected by
comparative business conditions of the two periods.
o Court said the rental provision was defective because it didn’t specify rent or process it would be
set by, so no agreement was made, the option wasn’t in existence and the rent could then not be set
 K not enforceable if provision for determining rent is so indefinite that parties cant be
held to have agreed to essential term of renewal
 Language of lease terms was ambiguous, they hadn’t agreed to any rent terms, all they
had agreed on was to agree at a later date
o RULE: agreement to agree does not fix enforceable obligation
o RULE: in order for K to be formed, law requires substantial certainty as to material terms upon
which parties have agreed
 Walker—rent is material term of lease—parties didn’t agree to certain rent or method of
determining rent—no enforceable K

Performance Exception under Walker:
o If actually occupied land and pay rent—there is K (under oral agreement)

Factors distinguishing and agreement to agree:
o Agreement to agree:
 Time
 Look to elements of traditional K:
 1. Actions, performance taken of parties to prove their agreement
 2. Language of clause or agreement (certainty)
 3. Circumstances surrounding formation of that agreement
o Agreement to agree: To determine if parties intend to bind themselves or have an out
 Subjective impression that they have deal now but iron out details later (more work to be
done)
o If parties actual establish the terms at that moment—it is a K
 HYPO:
o “I promise to give you deed to land in Alaska if you come puck up this deed”
 Client want to know—is this promise enforceable?
 2 theory’s to base this one:
o 1. Is there a K
o 2. Promissory Estopple
 Is there a K?
 O = land (certainty)
 A = yes (went to house to get deed)
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C = no ( didn’t have to change legal status bc would have had to come pick It
up anyway)
 NO K
K = O + A+ PE
 O = land
 A = yes (went to house to get deed)
 PE
o 1. Promise
o 2. Promisor could expect promisee to rely n promise (no reliance here)
o 3. Was the reliance reasonable
 Promisor
 Promisee
 Third party
o 4. Justice element


o
Promissory Estopple Argument
RULE: consideration does not have to be exchanged and performance not have to be
rendered at that moment for K to be formed
- EX: Job Offer—on February 3 but don’t get first check until August 1st
- K is formed when you accept job offer on Feb 3 (promise to work and promise to pay)
RULE: no rule in K formation preventing one from entering K with significant time before
performance

RECAP:
o Even if parties claim there is no K relationship subjective interpretation does not matter
o Restatement Rules govern K formation doesn’t matter if is says there is no K
o Agreements to Agree: (Walker v. Keith)
 Why separate coverage?
 If partied don’t agree (create K) there is no K BUT an agreement to agree
simply does not fix an enforceable obligations
 Agreement to agree at some point in the future is binding if the terms are certain—
specify that you actually bind yourself X amount of time from now (perform that
promise)
 Agreement to agree are common in every day relations (Ex: firms negotiating)
o Memorandum of Understanding (notice of intent)
 People who sign often under impression that there is no K but s step on the way to full K
 Subjective impression that until there is a real K with signatures there is no K but not
always the case
2.
ELECTRONIC CONTRACTING
o
o
o
Clickwrap Agreement:
o Click “I Agree” to terms and conditions that restrict our rights
Browserwrap Agreement:
o Agreements to use a website to terms and condition (limitations on use of website)
o Embedded in website itself
o DON’T do anything don’t manifest assent any other way than by using the website
Shrinkwrap Term:
o Purchases (software, goods, etc)
o By opening, you agree to K
o When unwrap package—agree to terms and conditions and if does not review and
return in X amount of days they are bound
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 HYPO—Boris Computer Screen Transaction:
o K between BM & VTEK?
 Yes
 Consideration—sent $$, sent screen
o What to make of forms?
 VTEK forms contradict themselves
 1. Express warranties no dead pixels; terms and condition  said if 2 or less
dead pixels screen cant be return d
 2. Form said would have to pay for return but they sent Fed Ex return slip
 3. Said they would charge 15% stock fee but didn’t charge
 What controls—actions or terms and condition?
 Actions:
o 1. Label retuned (princess cruises)
o 2. Restocking fee
 Objective theory of K
 Modification doctrine
 Breach arguments
o If VTEK wants to use their terms and conditions, the last one to send
terms and conditions so they apply (princess cruises)
 There is a K—but hat terms are enforceable:
 UCC for goods K 2207
 2-207(3) if parties performing on K the terms are whatever parties do by their
actions
o where there is battle of forms—court rips up
o K terms are those confirmed by actions
3.
CHARITABLE SUBSCRIPTIONS:
o Generally: a charitable subscription is an oral or written promise to give real or personal property
to a charity or for a charitable purpose
o Restatement § 90(2)—a charitable subscription is binding without proof that the promise induced
action or forbearance
o 1. Must be an actual promise
o 2. And it is just to enforce that promise

King v. Trustees of BU:
o King sent his papers to BU to be housed in new special collections, said the papers submitted
would be legal property of BU and indicated that a portion would be sent to BU until all were sent
and that at his death they would be legal property of BU. Wife sued for conversion of the papers,
said it wasn’t a charitable pledge
o Issue: if there is evidence of donative intent, may a charitable subscription become enforceable if
the recipient of the property spend money to care for it.
o COURT: there was a promise by MLK in the letter to transfer title of his paper to BU
 The statement that they will remain his and then BU at his death sows donative intent
 BU relied on kings letter—indexing, research, trained staff to care for them
o
PE RULE SPECIAL TO CHARITABLE SUBSCRIPTIONS:
 You don’t need reliance on charitable SUBSCRIPTIONS
 BU only needed to show:
o 1. Donative intent promise
o 2. Justice element
 Even though reliance not required—reliance is component of justice element
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o
FACTORS TO DETERMINE CHARITABLE GIFT: Evaluate reasonableness from both
parties
 Language
 Circumstances
 Relationships
 CHARITABLE SUBSCRIPTION ANALYSIS:
o Charitable Subscription:
 To enforcement charitable subscription you need evidence of promise, some reliance that
will result in a just outcome
o Intent Rule:
 To determine intent—look to language used by parties, circumstances of exchange, and
relationship between the parties form both sides

Promissory estoppel Claims:
o Pops Cones—clear promise
o Kings—promise (intent by factors) and justice (reliance)
4.
Commercial Contracts

Katz v. Danny Dare:
o P suffered a head injury while employed by the D Danny Dare, Inc. P was subsequently convinced
to retire after being offered a pension. After retiring, P worked for D on a part time basis, but after
two and a half years D cut and then eliminated P pension.
 If employee accepts offer for retirement pension, his reliance will support claim of PE
even if employer could have fired him instead
o TEST—not whether P gave up something to which he was legally entitled but whether D
made promise to him on which he acted to his detriment
 PE—not require change in legal status only detrimental reliance
 Important takeaways:
o Where an employer not required to provide pension but does so anyway and it leads to detrimental
reliance—the promise can be enforced under PE
o Detrimental reliance can include anything involving a voluntary change
o Intent and relationship of parties as objective test to connect promise and reliance
o Connection between intent, promise and intent to induce reliance

Shoemaker v. Commonwealth Bank:
o P owned house, D had mortgage on it, P was supposed to carry insurance on it, failed to do so, D
said they would get it and add it on to the mortgage payments, P assumed it was done, then their
house burned down and found there was no insurance
o COURT: there was a promise made that they would get the insurance, P relied on that promise
by not getting their own insurance, unable to determine reasonableness based on facts, so
remanded back to see if their reliance was reasonable
 P claim required proof that:
 D made promise it reasonably expected would induce forbearance
 P actually refrained from taking action in relying on that promise
 Injustice can be avoided only by enforcing that promise
 PROMISSORY ESTOPPLE AS A CAUSE OF ACTION:
 ELEMENTS OF PE: § 90
o Promise
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o
o
o
Reliance on that promise to detriment
Reasonable reliance as a result of promise
Injustice of not enforced

Kirksey v.Kirksey (family promises)
o P brother in law D invited P to bring her family and kids to his farm, promised to provide home
and for P and kids on farm until they grew up. P moved 70 miles to the farm and after 2 years, D
made P and kids leave.
o Court: this was a gratuitous gift—no consideration thus cant enforce promise—brother in law as
only being gracious in giving her the land
o RULE: gratuitous promise not enforceable even after P sufferance loss in reliance on it

Argue that Kirksey was K:
o O = gives her place to live
o A= se moves there
o C = could use change in legal status (she could have stayed where she was; he could have given
land to someone else)

Argue that PE applies:
o Promise was definite/ specific
o She relied on promise—gave up her home and moved
o Reliance was reasonable and direct result of his promise
o If didn’t enforce it would be unjust to no allow

Greiner v. Greiner: (modern application of PE)
o P asked D, Plaintiff’s son Frank Greiner, to move from another county to live on land she was
planning to give him. D left his homestead and moved into the house P moved to another tract of
land for him. P indicated to several people that she was giving this tract of land to D, but never
included a provision in her will or executed a deed to D.
o Issue: if a promise induces reliance b the promise may the promise be an enforceable K?
o COURT: looked to why there was no deed and if that promise was then enforceable
 Determined that the initial offer was not enforceable from the letter because it was
indefinite—but the second letter offer was a promise because of the specific details it
included
 The cured offer specified the 80 tract
 Frank relied on that promise to his detriment because he moved down there and lived
there—and spent money on improving property
o DISTINGUISH:
 Kirksey no evidence that woman improved land but in Greiner—P did make
improvements so there was reliance

Wright v. Newman:
o Newman sued for child support of her kids, Wright was only father of one of them, but she relied
on that promise to care for the child. He signed birth certificate and promise to provide for them
but then stopped payments.
o COURT: had to decide whether or not P relied on this promise
 He promise to take care of kids—implied promise
 She didn’t look for natural father because of his promise (reliance)
 If not for promise—child might have other finical support (detrimental reliance)
 It was reasonable for her to rely on this promise because he did it for 10 years
 It would injustice to not enforce the
o RULE: court recognized that PE can be based on conduct as well as express promise
 NOTE: Material Breach vs. Partial Breach:
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o
o
Material Breach:
 If you as tenant received 800 square feet apt—area material terms to that K so 799.9 feet
is material breach
Partial Breach:
 Gist of K is being honored but details not being honored
 EX: in lease, LL shall slo provide week cleaning service in common areaonly
clean every two weeks—this only partial breach
 STATUTE OF FRAUDS [Restatement (2) §131]

In most instances, an oral contract is valid. However, certain agreements, by statute, must be
evidenced by a writing signed by the party sought to be bound.
o SOF: doctrine of K law that requires certain kinds of K to be in writing in order to be enforceable
o Policy: to prevent fraud—don’t want fraudulent allegation of the existence of a K
 Evidentiary - most obvious; the signed K is evidence they made a K
 Cautionary- extra time it takes to prepare causes parties to think further about K
o K needs to be EVIDENCED by signed writing to be enforceable
 K itself NOT have to be in writing
o Operates as a defense
o SOF K: “MY LEGS”- Marriage, Year, Land, Executor, Goods over $500, suretyship
o SOF is in almost every state- treat it like it is common law in this class, focusing on main ones
o First, is the K at issue one of the types in which SOF applies—does it fall within the statute?
 K of an executor or administer to answer for a duty of his decedent
 K to answer for the duty of another (surteyship)
 K made upon consideration of marriage (marriage provision)
 K or the sale of an interest in land (land contract provision)
 K that is not to be performed within 1 year from the making thereof—“one year
provision”
o SOF: UCC § 2-201
o K for the sale of goods at a price of $500 or more (includes a $500 sale)
o Hypo: car lease of $300 a month for 6 months, total $1800.
 K formed? Yes.
 Fall within SOF? No, lease is not a sale.
 SOF ANALYSIS:
o 1. Does SOF apply to this K? (does it fall within SOF (trigger rule))
 If yes—then is t SOF satisfied
 If no—no need for SOF analysis
o 2. Does the K satisfy SOF?
 Is there writing to evidence the K
 Is it signed by the party to be charged (person against whom enforcement is sought)
 § 134. Signature: any symbol to indicate (intention, actual or apparent) to
authenticate writing as that of the signer
 Requirements of the Writing--§ 131, 132, 134:
o In order to satisfy the SOF, memorandum must contain:
 Identity of the contracting parties’ description of the subject matter of the K
 Terms and condition of the agreement
 Recital of the consideration
 Signature of the party to be charge (the party’s initials or seal by suffice)
 {Note: Electronic Record Satisfies Writing Requirement}
 Example: Becky Baker calls Sam Supplier and orders 2,000 pounds of flour for use in her bakery at
Sam’s price of 70¢ a pound. As will be discussed infra, this contract is within the Statute of Frauds and
is unenforceable by either party without some writing evidencing the material terms.
o Later the same day, Becky receives a flyer from another supplier indicating that their price for
flour is 65¢ per pound. Becky immediately faxes Sam Supplier the following note: “Please
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cancel my order for 2,000 pounds of flour. /s/ Becky Baker.” Becky’s attempted cancelation
of the contract is a sufficient writing under the Statute of Frauds to make the contract
enforceable, at least against her.
 Crabtree v. Elizabeth Arden: IMPORTANT RULE: just matters that the documents were signed
with intent to authenticate the information contained therein and such info evidences the terms of K
 § 132 Several Writings:
o The memorandum may consist of several writings if one of the writings is singed and the writings
in the circumstances clearly indicate that they relate to the same transaction
 § 130. One Year Provision: K Not be Performed Within One Year
If a K can’t be performed in a year, regardless if an at will or fixed term K, it will be under SOF
 Where any promise in a K cannot be fully performed within a year form the time the
K is made, all promises in the K are writing the SOF until one party to the K
completes his performance
o Standard view is that K is not subject to SOF if it is possible to be performed within a year, even
though the prospect of such performance is remote
o Hypo: Today, Pete offered to wash Daria’s car on Nov. 30, 2017 in exchange for Daria’s promise
to pay Pete $20 upon completion of the job. Daria accepted.
 Was a K formed? YES.
 If so, does it fall within SOF? Yes; must be evidenced by writing.
o Hypo: Today, Pete offered to wash Daria’s car once per month during next 11 months in
exchange for Daria’s promise to pay Pete $20 upon completion of the 11th job. Daria accepted. =
NO; does not fall within
o Note: If Pete has a choice of either- does NOT fall within SOF.
o Note: courts assume unlimited resources (building COULD be done w/in year with a million
workers- falls w/in SOF- need signed writing)
 If the contract is possible to complete within one year, it is not within the one-year prong
of the Statute of Frauds, even though actual performance may extend beyond the oneyear period. (TN uses reasonableness test (NO K, but TN rules not on our 1L K exam!)
 BUT: courts can’t change laws of physics (5 rotation of crops will not grow within year)
 People could die within 1 year, so SOF does not apply.
 The Land- Contract Provision: Restatement § 125(1)
o Contracts for sale of land, Contracts creating a joint venture, Mortgages, Leases
o Exceptions:
 Contract creating a partnership for purpose of buying and selling land
 Contract to apportion profits from sale of land
o Hypo: HYPO: "I'll pay you 5% of the sale price as a commission if you sell my house and land.
Parker accepted. K formed? Yes. Fall within SOF? No. about price.
o HYPO: I'll grant u a permanent easement over the west 20 ft of my property at 123 looney
ave, if u build a giant slip n slide on the land. K formed? Yes Fall within SOF? Yes, about
conveying land
o HYPO: emailing back and forth. Daria: "ill get back to u about purchase of land in 30
days".option K formed. No consideration for option so NO contract. - SOF does not apply. No
signed writing.
o If there is consideration for the option K, then SOF can apply.
Note: original land transfer- K. is a rescission agreement a K? No. not a K to transfer interest in
land but a K- surrendering legal rights to sue. Fall within SOF? No.
 SOF ADP WALKTHRU:
o 1. Was there a K? –Yes
 Does the K fall within the SOF?
 Yes; “term K” –impossible to fulfill 2 year term in one year
o 2. Is the SOF satisfied?
 Evidence of K in writing
 Signed by the party to be charged
o
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3. If doesn’t meet SOF—does it fall under the exceptions
 Reliance:
 Reasonableness
 Adequacy of remedies
 Justice
 Exceptions to SOF:
o 1. Admission under oath—if party to be charged admits there was K, this is an exception of SOF
o 2. Performance exception:
 Performance on K has effect of ratifying K
 if there is performance then there is acknowledge of the existence of a K (evidence of a
K)
o 3. Reliance
 Promise will be enforced due ot the reasonable reliance on that promise by promisee to
avoid SOF injustice
 Treats SOF as technicality
o
 Reliance Exception: Factors to evaluate to determine if injustice can be avoided only by enforcement:
o 1. Reasonableness of reliance
o 2. Adequacy of other remedies
o 3. Justice
 RULE: where there is evidence of reasonable reliance, SOF should not serve as a barrier or technicality to
enforcement
o Must be clear and convincing evidence—50.1%
 SOF—UCC 2-201
o RULE: SOF covers certain type of class of k where you need to produce some sort of written
document showing that a K existed
o Applicable to sale of goods for $500 or more
o
HYPO:
 Arrange for payment of credit, signed with 3rd party credit agency apart form Best Buy,
TV arrives, get bill form 3rd party, Best Buy is out 2,000 dollars. 3rd party files suit to get
2,000 dollars back
 There is a K BUT barred by SOF because no writing  greater that $500 under
UCC must be in writing UCC TN
 Say that you don’t receive the TV?
 K was formed
 Is it enforceable under SOF (oral)?
o No but buyer can argue PE and UE
o
Exceptions that apply: UCC 2-201
 Acceptance exception
 Here, the TV was accepted and received
1. Is there a K?—SOF enforceable or not
2. If not—can you assert PE or UE?
1. In previous hypo—Best Buy can assert PE (reliance) but not UE (no
material benefit conferred)
 PRINCIPLES OF INTERPRETATION:
 Plain Meaning:
o If a writing or a term appear to be unambiguous on tis face, it must be interpreted solely on the
basis of such writing
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 Restatement §201(1): Meaning of Terms
o (1) Where parties have attached the same meaning to a term the term is interpreted in accordance
with that meaning (mutual assent)
o (2) Where the parties have attached other meanings to a term it is interpreted in accordance to a
meaning attached by one of them if
 That party did no know of any different meaning attached by the other, and the other
knew the meaning attached by the first party
 The party did not know or have reason to know any different meaning attached by
the other and the other party knew the meaning attached by the first (restatement
of objective theory of contract)
o (3) Unless otherwise stated, neither party is bound to meaning attached by the other, even though
may be a failure of mutual assent


RULE: if both parties do in fact attach the same meaning to a provision that meaning will govern
o The mutual understanding of the parties controls, even if it is different from the interpretation that
would be given to the K by a reasonable person
RULE § 201—whether B should have known what A meant by term, or whether A knew the meaning
attached by B
 Cannons of Interpretation: Corbin and Williston
o Williston: (Writing)
 If the writing is an integration, the meaning given to it as a whole or any individual term
is the reasonable man standard
 If there is no integration and unambiguous, use objective reasonableness test
 If no integration and terms are ambiguous, subjective intent is irrelevant
o Corbin: (Context)
 Allows all relevant and extrinsic evidence to assist in interpretation on, including
subjective intent of parties
 Corbin argues that a court should admit all relevant evidence in order to determine the
intention of the parties, including evidence of subjective intent

Joyner v. Adams: (modified objective approach)
o Adams contracted to subdivide Joyner’s land by a date; he did most of it, except 2 lots, D said
that the lots were subdivided according to customs.
o COURT: where one party doesn’t know the meaning of a term that the other party has
assigned them, there is no mutual assent and the provisions can be stricken
o RULE: when there is not meeting of the mind, but one party knows or has reason to know
what t ether party means and the other party doesn’t know or have reason to know, the court
enforces the K in accordance with the innocent party’s meaning
o CONTRA PREFERENDUM: language in K should be construed against drafter of the K

RULE: A party is bound by the other party’s meaning if the first party either knew or had
reason to know of the second party’s meaning while the second party did no know or have
reason to know of the first party’s interpretation
 Question of Law: Objective Approach
o Four corers approach
o Answer what meaning of a particular term
 Question of Fact: Modified Objective Approach:
o Allows extrinsic evidence
o Third party involved and asked about his interpretation of the particular term
o Extrinsic Evidence:
 Third party interpretation
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o
 Custom
 Trade usage
 Course of dealings (A and B prior negotiations)
 Course of performance (what has been done in context of K)
When have ambiguity—allow parties on stand to determine if parties know meaning form the
other side
 yes—that meaning controls
 no—then no K or term cant be interpreted
 Restatement § 202. Rule in Aid of Interpretation:
o 1) Words and conduct interpreted in light of the whole circumstances and if principle purpose is
ascertainable, given great weight.
o (2) Writings interpreted as a whole.
o (3) Unless a different intention is manifested
 (a) Plain meaning of terms used,
 (b) Technical terms and words of art are given their technical meanings in their field
o (4) Course of performance is given great weight
o (5) If reasonable, manifestations of intention are interpreted as consistent with each other and with
any relevant course of performance, course of dealing or usage of trade
 Restatement § 203. Standards of Preference in Interpretation
o Express terms greater than implied
o Specific terms greater than general language
o Separately negotiated or added terms greater than standard terms or non-separate negotiated terms
o Express terms > course of performance > course of dealing > usage of trade
 Restatement § 204. Supplying an Omitted Essential Term
o Where parties to a bargain defined as a contract have not agreed to a term which is essential to a
determination of their rights and duties, a term which is reasonable will be provided by the courts

REVIEW:
o Restatement §201(3)
 Objective test: if parties attach different meaning to term and court attempt to interpret
those meanings and fails there may have been no mutual assent
 Subjective test: where other party knew or had reason to know what the other party
meant by language and other party had no reason to know, court will interpret other
parties meaning (innocent party)
o Joyner takeaways:
 Contra Prefendum: general fallback; not used to convert K into question of law;
interpreted against the drafter
 Joyner stands for proposition that the modern objective approach to K interpretation
actual knowledge or reason to know (constructive knowledge)
 Other extrinsic evidence can shed light on meaning of a particular term
o EXAM
 1. Is there a K between A and B?
 2. What does the term Y mean?
 Separate interpretation analysis for every disputed term
 Separate K analysis for every K in hypo

Frigaliment:
o P bought chicken from D, wanted chicken under certain weights, received that, but wanted fryer
chicken, didn’t get that, issues with German interpretations of word chicken
o COURT: D felt that they could fulfill the order by complying with how it was stated. Also, P was
given the opportunity to make sure what type of chicken they wanted
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RULE: to interpret a disputed term in a K, the court will consider (in order of importance)
 (1) The language of the K (2) the preliminary negotiations (3) trade usage (4) legal
standard (5) course of performance (6) maxims
o RULE: court does not look to subjective intent of bother parties but rather adopts a modified
objective approach that determines a reasonable standard for chicken:
 One maxim of interpretation is that a reasonable construction is preferred over an
unreasonable construction
o USE Modified objective contract theory (§ 201 (2)): a party is bound by the other party’s
meaning if the first party either knew or had reason to know of the second party’s meaning while
the second party did not know or have reason to know of the first party’s interpretation
Frigaliment Approach—if K is not integrated—then use all extrinsic evidence
o

 UCC 2-208. Course of Performance
o If K involves repeated occasions for performance by either party and other party knows the nature
of the performance and has chance to object to that performance, any course of performance
accepted or not objected to is relevant to meaning of the agreement
 Restatement 223 & UCC 1-205. Course Dealings and Usage of Trade
o Course of Dealing: Represents a sequence of pervious conduct between the parties to a
transaction which establishes common basis of understanding for interpreting their expressions
and conduct
o Usage of trade: Represents a practice that is employed with regularity in a place, vocation or trade
justifying an expectation that the practice will be observed with respect to the agreement in
question

RECAP:
o Williston:
 If writing is an integration, the meaning given to it as a whole or any individual terms is
the reasonable man standard.
 If no integration and is not ambiguous, use objective reasonableness test
 If no integration and ambiguous, subjective intent is irrelevant
o Corbin:
 Allows all relevant and extrinsic evidence to assist in interpretation, including subjective
intent of parties
 PAROL EVIDENCE RULE
o
o
General Rule: prohibits introduction of extrinsic evidence to contradict/ supplement terms of an
agreement where that agreement has been reduced to a final, integrated writing
o Evidence that is oral or written that shows prior agreements or negotiations between the
parties
o Rationale: law favors written agreements that reduce possibility of fraud
o Only operates to exclude evidence
Examples of Extrinsic Evidence:
o Third party interpretations
o Earlier negotiations or drafts
 Oral evidence
 Parties testifying or introducing documentary)
o Trade custom
o Course of performance
 Restatement § 209. Integrated Agreements
o an integrated agreement is a writing which is understood as the final expression of the agreement
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o
o
whether there is an integrated agreement is to be determined by the court or with application
of the parol evidence
where the agreement looks to be a final expression it is considered to be integrated unless
established by other evidence
 RULE:
o when writing is intended to be final only with respect to a part of the agreement, writing may not
be contradicted, but may be supplemented
 must look for merger clause first before parol evidence
 Williston vs. Corbin:
o Williston:
 Court cant consider extrinsic evidence to determine whether the agreement is integrated
 Determine whether it is integrated from 4-corners
 “merger clause” is conclusive to show completely integrated
o
Corbin:
 Court can consider extrinsic evidence to determine whether the agreement is integrated
 Restatement § 210. Completely and Partially Integrated Agreements:
o A completely integrated agreement is an integrated agreement adopted by the parties as a complete
and exclusive statement of the terms of the agreement.
o A partially integrated agreement is an integrated agreement other than a completely integrated
agreement
o Whether an agreement is completely or partially integrated is to be determined by the court as a
question preliminary to determination of a question of interpretation or to application of the
parol evidence
 Restatement 213 Parol Evidence Rule:
o a binding integrated agreement discharges prior agreements to the extent that is inconsistent
with them
o a binding completely integrated agreement discharges prior agreements to the extent they are
within its scope
o an integrated agreement that is non-binding or is voidable and avoided does not discharge a prior
agreement, and even though non-binding it may be effective in rendering a term inoperative that
would have been a part of the agreement regardless of integration

Thompson v. Libby:
o D contracted with P to buy logs, contract didn’t say what the log quality would be. P sued for
payment, D said logs weren’t of the quality purported to sell.
o COURT: looked to four corners of contract to determine that the parties final intent was to place
everything from negotiations into writing, no extrinsic evidence allowed. (Williston 4 corners)
o RULE: the PER prevents extrinsic evidence from being used to contradict or vary the terms of a
written K that is intended as the full expression of the parties agreement
 AN INTEGRATION CLAUSE IS NOT NEEDED TO CREATE A FULLY
INTEGRATED AGREEMENT

Thompson Walkthrough:
o If this were Frigailmetn analysis—look to all extrinsic evidence for ambiguous terms
o Question here: what is the meaning of the term at dispute?
 Term “HCS”….is this a warranty
o Buyer wanted to introduce evidence of existence of a warranty
 D argued that it was never in k
 Must convey to jury that there is a rule that confines us ot the 4 corners of the K
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o

Policy: the fact that the parties put agreement in writing means they include everything the
intended to agree to
Thompson Takeaways:
o Once the complete agreement has been reduced to writing, extrinsic evidence is inadmissible
o When agreement has been reduce to writing but is incomplete—can use extrinsic evidence
o To determine whether a K is integrated or not—look on fact of agreement (as it appears on it face)
—4 corners approach
o Court gives itself the power to determine if the agreement is integrated by looking at writing
o YOU DON’T NEED INTEGRATION CLAUSE TO CREATE FULLY INTEGRATED
AGREEMENT
 EXAM APPROACH:
o When encounter ambiguous term susceptible to two or more meanings—first run through parole
evidence analysis (i.e. is the K integrated)
o If the conclusion is no Frigailment rules of interpretation ( Restatement 201)
o The K is integrated—follow the parol evidence rule

Taylor v. State Farm:
o P involved in car accident, judgment greater than his policy, D says he signed release waiving
claim of further actions, which had merger clause.
o COURT: merger clause is not dispositive to invoke parol evidence rule. Use process to determine
the extent of the integration and then use parol evidence to illuminate the meaning of the contract.
Example of Corbin approach
o Summary: interpretation may be a proper ground for using parol evidence
 1. Restrictive = “plain meaning” view/four corners; evidence of prior negotiations
may be used of interpretation only upon a finding that some language in the K is unclear,
ambiguous or vague
 2. Corbin Approach (majority/modern)
 No need for finding of ambiguity before judge considers extrinsic evidence
 Court considers all evidence t determine its relevance to parties intent and then
applies PER to exclude form fact finders consideration only evidence that
contradicts or varies meaning of agreement
 Court cannon apply the PER without first understanding the meaning the parties
intended t give the agreement
 To understand agreement, judge cannot be restricted to four corners of document
 Court can admit evidence for interpretation but must stop short of contradiction
o Summary of the Rule: judge first considers offered evidence, and if they find that the K language
is reasonably susceptible to the interpretation asserted by tis proponent, the evidence is admissible
to determine the meaning intended by the parties
 Taylor Takeaways:
o Legal claims whether ripe, known or unknown are totally good consideration (EX: I could buy any
claims you have against me)
o Bad faith claims was tort based and narrow holding was = unless you exclude tort based claim
explicitly it is not covered in general, all contractual claims released
o Where parties K terms at issue is reasonably susceptible to two or more meanings—extrinsic
evidence is admissible to determine the meanings (frigaliment)
o Corbin v. Williston View
 PER Exceptions:
o Explanatory Evidence Exception: Not apply to evidence offered to explain the meaning of
the agreement
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
Can be permitted to show meaning of term or purpose of agreement so long as it does not
contradict the agreement
Doesn’t Apply to oral agreements or written agreement made after the execution of the
writing:
 “Subsequent agreement” exception
 Parties are free to have as many K as they want and having PER rule exclude subsequent
K because they have to still follow all traditional rules
 Can use subsequent K to show intent of original K (probative)
Oral Conditions precedent:
 Condition that must be satisfied before K springs into being
No apply to evidence offered to show K formed/invalid for fraud duress, undue influence,
incapacity, mistake etc
PER not apply to evidence offered to established right to an equitable remedy
PER not apply to evidence introduced to established a “collateral” agreement between
parties
o
o
o
o
o
 § 214. Evidence of Prior or Contemporaneous Agreements and Negotiations:
o Agreements and negotiations prior to or contemporaneous with the adoption of a writing are
admissible in the evidence to establish:
 That the writing is or is not an integrated agreement
 That the integrated agreement if any, is completely or partially integrated
 The meaning of the writing, whether or not integrated
 Illegality, fraud, duress, mistake, lack of considerations, or other invalidating cause
 Ground for granting or denying recession, reformation, specific performance, or other
remedy

Sherrod v. Morrison:
o P doing excavating work, price quoted was for more work, before signing contract, but did work
after D coerced them into signing.
o COURT: applied Williston approach to determine that no extrinsic evidence could be used
because agreement was fully integrated.
Defenses.
5.
1.
CAPACITY: § 12 - cannot be bound if not legally
capable to contract.
 Without capacity, K is voidable
 Includes—under guardianship, an infant mentally incompetent, or intoxicated
Defenses based on status of party:
V.
Minority/infancy -Rest. §14
- CAN contract, but it is voidable by them at any time; — If you’re under 18, you can’t
make contracts (straightforward)
- Traditional rule:
 minor not have to make restoration
What does the minor get back? Restitution of all payments made. Goods must be
returned.
What must the minor give/pay back? Kid has to give back what can be given back.
** Adult has limited claim in restitution**
-Modern rule:
 minor does have to make restoration
1. Minor had to pay for portion of K used; get back the money he spent
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
2. Benefit Rule- Upon rescission of a K by a minor, recovery of the full purchase price is
subject to a deduction for the minor’s use of the goods, depreciation, and/or deterioration;
minor give/pays back? The difference in value if he has been depricated.
EX: Dodson – traditional rule.
Example: guy has spent 5000 on fixing car. Tore up contract.
Guy will get reasonable compensation (may be 5000)
 compensated either while a minor, or within a reasonable time after they
become an adult
* TN- split on which rule to use*
Ratification: a decisive act consistent w the contract
 HYPO: can babysitter sue parents for not full payment?
o Can girl sue parents?
o There was a K
 Breach—no money paid
o Can parents sue girl if she doesn’t show up?
 No—can’t sue minor
Exceptions:

Emancipated minor
 Armed forces
 Minor who is married
 Emancipated by law
VI.
Mental Incapacity Rest §15
Valid if the contract is fairly made and other party doesn’t know about the mental illness
– we can give some reliance damages to the extent necessary to avoid injustice
VOIDABLE if:
party is unable to understand the nature of the contract 15(1)(a)
-OR party is unable to act in a reasonable manner in relation to the contract AND the
other party has reason to know. 15(1)(b)
VII.
Intoxication Rest §16
- only voidable if the party was unable to understand or act reasonably AND the other
party had reason to know.
-Very hard to use as a defense – must be almost passed out.
Cognitive rule- whether mind was so affected as to render him wholly and absolutely
incompetent to comprehend and understand nature of transaction cognitive or lack of
control - restatement 2d, contracts- voidable only if the mental defect/illness makes him
unable to act in reasonable manner and other person has reason to know of this illness.
 EXCEPTIONS to Capacity:
o Minors can’t be sued for breach of K unless:
 K for the sale or provision of necessaries:
 Medical care
 Food
 Transportation (school or work)
 Misrepresentation/ fraud: Rest. §162




Fraud- intentional misrepresentation; NOT innocent misrepresentation
Can be both a tort-cause of action and a contract shield or one or other
Contract shield- innocent misrepresentation is a defense to Breach of K
Sue or wait to be sued?
o Sue for rescission- bring rescission claim
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Wait to be sued, raise defense- bring rescission counter-claim
 You can add "AND bring tort claim" to both of these - add restitution claim or in
second case, a counterclaim
Rule for innocent misrepresentation/fraud:
K elements:
1. Misrepresentation- assertion not in accord with the facts (R2d 159)
 Conduct can be an "assertion" (R2d 160)
2. Material- reasonable party would not have made deal if they had known truth
3. Justifiable reliance -these are enough for innocent misrepresentation: k shield
 Victim's capability?
 Nature of transaction?
 Plausible?
(don’t necessarily need every single one of these 3)
Extra Tort element: Scienter (intent)
- enough for fraud: K shield or tort sword.
 Fraudulent misrep;: intent to deceive or knowledge of likelihood od deceiving
 Negligent misrep.: negligence as to falsity + intent to induce other party to rely
*What separates a promise or representation or even an opinion from mere puffery?
-Sophistication of parties.
Arms-length transaction- You might never see them again.
Ex: Buying car, etc. A contract with daughter = not arms-length. Relationship predates
contract.
o
- doesn’t have to be fraudulent, like torts. Even if seller didn’t know, contract can be voided for
misrepresentation.
-Misrepresentation is fraudulent if the maker intends to induce assent and:
-knows or believes it’s false (§162(1)(a))
-does not have the confidence he implies or states (§162(1)(b))
-knows that he does not have the basis for the assertion (§162(1)(c))
-can get expectation if you can prove they knew.
-Misrepresentation is material if it would be likely to induce a reasonably person to assent or the
maker knows it will induce this person (§162(2))
-Get reliance damages if can’t prove fraud.
-Halpert v. Rosenthal (Plaintiff seller sold house with termites to buyer even though buyer asked
many times if the house had termites)
-Note: not a warranty because it’s not in the contract
-Rest. §161 says nondisclosure of a material issue that the buyer should know (or failure to correct
a basic assumption) is as bad as misrepresentation, even if the buyer didn’t ask.
-But the seller has to know (subjective test here, not what reasonable seller would know.)
 Threats/Duress/ Undue Influence:
DURESS
o Not assent if under duress
o Judged subjectively.
 Types of Duress:
o Economic duress (voidable)
o Physical duress or threat of physical force (void)
o Emotional duress
o Economic duress/ Duress to goods
 Remedies for Duress:
o Rescission
o Reformation
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o Ratification (breaths life into voidable K)
 3 Elements of Duress:
o 1. Presence of improper threat causing one to involuntary accept the terms
 Traditional is objective.
 Now subjective- look at age, race, gender
o 2. Lack of reasonable alternative
 No other option but to succumb to the aggressor
o 3. Overcome of will
 Subjective
 Would jury members have done the same thing
 TEST: whether the will of the person induced threat overcome rather than that of a
reasonable person
 EX: Plaintiff argued that he was forced to sign such agreement to avoid being bankrupt
and therefore seek to avoid the agreement on grounds of economic duress.
THREATS
Improper under Rest. §176, if:
-you threaten a crime or a tort or criminal prosecution
-if it is a breach of good faith
-If it results in an exchange not on fair terms AND the threatened act would harm the recipient
while not benefiting the threatening party.
{Note: hard bargaining between experienced adversaries of relatively equal power ought not to be
discouraged}
 Generally: §175
o Underlying assumption that the victim in the A—B K transaction does not have meaningful choice
o Burden of proof on party asserting the defense
o Objective standard/focus on objective circumstances
o What a reasonable person would so in same circumstances
o Focus on improper threat
 What constitutes improper threat: § 176
o Crime or tort
o Criminal prosecution
o Bad faith
UNDUE INFLUENCE(persuasion):
 Generally:
o Persuasion which tend to be coercive in nature—persuasion which overcomes the will without
convincing the judgment
o Focus on relationship
o If relationship is dominating domination party uses that force one into a deal
 Elements used to identify persuasion:
o
o
o
o
o
o
o
Discussion of the transaction at an unusual/inappropriate time
Consummation of the transaction in an unusual place
Insistent demand that the business be finished at once
Statements that there is no time to consult advisors
Absence of 3rd party advisors to the weaker party
Use of multiple persuaders by the dominant party against a single weaker party
Extreme emphasis on unpleasant/serious consequences of delay/non-compliance
What is the remedy?
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K: expectation-based recovery
Implied-in-fact K (v.2) or Restitution: D’s-benefit-based recovery (often “reasonable” value)
P.E.A.S.C.O.A.: reliance-based recovery
Misrepresentation: compensatory- / deterrence-based recovery
1.
sue for rescission and contract is torn up
2.
sue as a tort- get damages, if there are any
ex: Kannavos- sues for rescission, rather than for tort cause of action b/c he was buying it
to rent it out, not because he actually wanted the property.
Promissory Fraud: May recover punitive, as well as compensatory damages
Cases

Lefkowitz v. Great Minneapolis Surplus Store- (ad that said first three people in the
store got a fur coat was an offer because it had all the makings of an offer and said
what you had to do to accept) Reasonable person would think offer and these people
did think it was an offer.

Itoh v Jordan- Exchange of forms did not result in the formation of a contract under
2-207, Jordan’s form became a counter-offer.

U.S. Life Insurance v Wilson- "Mailbox rule"/ Dispatch rule" - applies equally to
unilateral and bilateral contracts. As soon as money is sent and cannot anymore be
reversed/taken back -- pinpoints time that offer is accepted and contract is formed.

Bayway Refining Co. v. Oxygenated Marketing & Trading A.G.- Tax clause was a
proposal for addition to contract- both merchants so would be proposal to addition of
contract unless exception (CB- top of 214) - is under "material alteration" exception.
U.C.C. § 2- 207 2(a)(b). Material alteration exception must result in OBJECTIVE
surprise or hardship (UCC 2-207 comment).

Northrop Corp. v. Litronic Industries- different terms. Knockout rule- two different
terms cancel each other out and UCC fills in. In this case, 2-309- nonconforming
goods may be rejected within a reasonable time.

Toys, Inc. v F.M. Burlington Company- Contracts do not have to list all the essential
terms at foundation to be enforceable as long as you have a reference for the court to
figure out.

Oglebay v Armco potential essay q: Although this involves goods, this case is much like
Ogelbay. It is a common-law contract bc it deals more with the exchange of services.
Looked at intent to be bound. Look at relationship/ contacts to find intent.

Feinberg v Pfeiffer Co. (woman salary increase for her time worked) Did the actual
PROMISE have consideration??? No. So NO contract.
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
Mills v Wyman- no consideration for the promise.- he did not take care of the kid
FOR the money. No contract. Must be pre-existing obligation.

Webb v. Mcgowin- exception/Minority rule- moral obligation is sufficient
consideration. New rule. Not universal!

Harrington v Taylor- moral obligation not sufficient. She had another legal remedy,
which could persuade court to seek damages from the inflictor.

Alaska packers Assn v Domenico attempted modification. No consideration- bound to
original agreement. Legal duty was interrupted by a mere demand, not rescission.

Schwartzreich v Bauman- suing for wages. He agreed to work for $90 a week. They
raised it to 100 when another store had offered him 90 a week. Tore signatures off first
contract- voided it, changed outcome. Had a second rescissial promise to work for a
year- new contract, unlike Alaska- makes them different.

Watkins v Carrig( excavating rock case) The defendant intentionallly and voluntarily
yielded to a demand for a special price. In doing this he yielded his contract right to the
price it provided.

Strong v Sheffield- (sues neice, note) Is not consideration b/c he could have sued at
any time, he didn’t agree to forbear for a fixed time. Did not have detriment!
RIHANNA RULE- if you're just as free after promise as before, no consideration

Mattei v Hopper- (mall, satisfcation clause provision )to bind either party, both must
have assumed some legal obligations. Consideration b/c he subjecteively, in good-faith,
liked it, STILL limited - has to buy. Binding. Counted as consideration

Strong v Sheffield- A creditor’s promise to forbear the collection of a debt “until such
time as I want my money” is illusory and the agreement is not enforceable against
either party
{ Materiality- one that would result in surprise or hardship if incorporated w/out express awareness by
the other party. UCC §2 207. Per se Materiality- Automatic fulfillment of standard }
o Surprise- must show that under circumstances it can be presumed that
a reasonable merchant would have consented to the terms.
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