Legal Issue
Restatement
UCC
Contract Formation: Generally, the UCC allows for more indefiniteness than the RS if there is good faith
Offer:
§24: The manifestation of willingness to
§2-206(a): an offer to make a contract
enter into a bargain (bargain not a gift).
shall be construed as inviting acceptance
Revocation: offer can be revoked by
in any manner and by any medium
offeror at anytime before acceptance
reasonable in the circumstances.
Mailbox Rule: revocation of an offer
becomes valid upon receipt (opposite of
acceptance which becomes valid upon
dispatch).
Generally advertisements are not offers,
but merely invitations for offers.
Acceptance:
§50: 1) acceptance 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. 2)
acceptance by performance requires
some of the performance occur.
Mailbox: treated as acceptance as soon
as dispatched even if lost in mail
CISG
§14: must be sufficiently
definite and indicate the
intention of the offeror to be
bound in case of acceptance.
(Sufficiently definite:
indicates the goods and
expressly/implicitly fixes or
makes provision for
determining the quantity and
price).
Revocation: §18: offer may
be revoked if the revocation
reaches the offeree before
he has dispatched
acceptance.
2-206(a): order or other offer to buy goods 18: statement made by or
for prompt or current shipment shall be
other conduct of the offeree
construed as an acceptance either by
indicating assent to an offer
prompt promise to ship or by the prompt
is an acceptance (silence
or current shipment of conforming goods. alone is not). Becomes
effective the moment the
indication of assent reaches
the offeror.
Mailbox: if acceptance lost in
mail no K
Legal Issue
Restatement
UCC
CISG
Consideration:
Return promise must be bargained for
(not a gift)
§71: an exchange of promise or
performance in the form of, an act other
than a promise, a forbearance by giving
up a legal right that you entitled to, or
the creation, modification, or destruction
of a legal relationship (benefit/detriment
test)
Postponed
Bargaining:
Agreement to Agree
***********
§33:To have a K terms have to be
reasonably certain (courts need
something to go on to fill in the gaps)
example Walker v. Keith rent is a
material term, so if it is not fixed parties
needed to provide a concrete method by
which it can be fixed, courts can’t do this
themselves.
2-305: If price is not fixed, but parties
intended to make a binding K then UCC
will fix a reasonable price.
If the price is not set by fault of one party,
the other can cancel or set a reasonable
price.
Silence on price: looks at time of delivery:
what was a reasonable price then
§87: Need purported consideration, no
requirement for merchants, applies to
services, other contracts,
justness/reasonableness standard built
in, must be in writing and signed by the
offeror
Option Contract: §2-205: way for
merchants to create option contract—
“firm offer” –offer by a merchant, in
signed writing, that by its terms cannot be
revoked for a certain amount of time. Has
an outer time limit of 3 months (can
revoke after this). Need signed writing.
(no consideration needed, applies only to
merchants, applies only to the sale of
goods)
14: Indicates goods, band
expressly or implicitly fixes or
makes a provision for
determining quantity and
price.
Silence on price: looks at
price at time of the
conclusion of the K (when
the promises were
exchanged).
No time limitation. If offer
says it is good for a year—it is
good for a year. Does not
need to be in writing.
Option Contracts
*********
§45 Can also be created by part
performance on unilateral contract
Legal Issue
Restatement
UCC
CISG
Battle of the Forms
***********
CL: Mirror image rule: a “varying”
acceptance is a counter-offer, preventing
K from being formed. §59: reply to an
offer which purports to accept but is
conditional on offeror’s assent to
extra/different terms from those offered
is a counteroffer. (Last shot rule: a party
impliedly accepts a counter-offer by
conduct indicating a lack of objection to
it, so gives advantage to the person who
sends the last form).
2-207: Additional terms are to be
construed as proposals for addition to the
contract. Between merchants those terms
become part of the contract unless: a) the
offer expressly limits acceptance to the
terms of the offer b) they materially alter
it; or c) notification of objection to them
has already been made or is given w/in a
reasonable amount of time. If two terms
directly contradict each other then they
are knocked out (bc seen as giving notice
of objection). If non-merchants, then new
terms are proposals and must be assented
to as modifications.
19: Adopts essentially the
mirror image rule of the CL.
1) A reply to an offer which
purports to be an acceptance
but contains additions,
limitations, or other
modifications is a rejection of
the offer and is a counteroffer.
2) if the additional or diff
terms are immaterial and
offeror does not object to
them then the purported
acceptance is an acceptance
of the additional terms
(but CISG sees most things as
material)
Legal Issue
Restatement
UCC
CISG
Statute of Frauds
************
110: Following classes of contracts
cannot be enforced without a written
memorandum: a) executor or
administrator to answer for a duty of
decedent b) answer for the duty of
another (assume liability for someone’s
debt) c) marriage d) sale of land e)
contract that is not to be performed
within one year from the making thereof
(Not applied if possible to be performed
within one year)
132: memorandum can consist of several
writings if one of the writings is signed
and the writing clearly indicate they
related to the same transaction
134: signature may be any symbol made
or adopted with an intention (actual or
apparent) to authenticate the writing
Exceptions:
Part performance of a sale of land (move
on land and make improvements may be
enforced w/o memorandum)
Promissory Estoppel Exception: in
contracts that don’t involve the sale of
land, part performance may be important
in determining whether a court should
apply the promissory estoppel exception.
(promise that promisor should
reasonably expect to induce action, does
induce action is enforceable even if
within SoF if injustice can be avoided only
by enforcement of the promise.
2-201: 1)Goods $500 or more not
enforceable unless there is some writing
sufficient to indicate that a k for sale has
been made between the parties and
signed by the party against whom
enforcement is sought. Writing is not
insufficient bc it omits or incorrectly state
s term agreed upon, but contract not
enforceable beyond the quantity in
writing.
2) Merchants: if within reasonable time a
writing in confirmation of the K is received
and the party receiving it has reason to
know its contents then satisfies section 1
3) A K is valid if it doesn’t meet the
requirements of section 1 if a) goods are
specifically manufactured for the buyer
and are not suitable for sale to others b)if
party against whom enforcement is sough
admits in pleading, testimony, or
otherwise in court that a contract for sale
was made, but the K is not enforceable
under this provision beyond the quantity
of goods admitted c) with respect to
goods for which payment had been made
and accepted or which have been received
and accepted
No S of F provision expressly
negates any requirement of
writing.
Legal Issue
Restatement
Promissory
Estoppel
90: A promise which the promisor should
reasonably expect to induce action or
forbearance on the part of the promise
or a 3rd Person & which does induce such
action or forbearance is binding if
injustice can be avoided only by
enforcement of the promise. Remedy
granted for breach may be limited as
justice requires
A person who has supplied things or
services to another, although acting
without the other’s knowledge or
consent is entitled to restitution from the
other if a) he acted inofficiously b) the
things/services were necessary to
prevent the other from suffering serious
bodily harm or pain and c) the person
supplying them had no reason to know
that the other would not consent to
receiving them, if mentally competent
and d) it was impossible for the other to
give consent or because of extreme
youth or mental impairment the other’s
consent would have been immaterial
Recipient of services makes an express promise after
receiving benefits: a promise made in recognition of a
benefit previously received by the promisor from the
promise is binding to the extent necessary to prevent
injustice. A promise is not binding if: the promise
conferred the benefit as a gift or where the promisor
has been unjustly enriched or to the extent that its
value is disproportionate to the value of the benefit
received.
Restitution
Promissory
Restitution
UCC
CISG
Legal Issue
Restatement
Contract Interpretation:
Contract
If parties have same weird meaning
Interpretation
that meaning controls.
If parties have different meanings:
interpreted according to the meaning
attached by one of them if at the time
the agreement was made that party did
not know or have reason to know the
other’s meaning and the other party did
know or had reason to know their
meaning.
If neither party knows/had reason to
know the other’s different meaning no
K
Where language has generally prevailing
meaning, it is interpreted in accordance
with that meaning (technical terms given
technical meaning when used in technical
field)
-Preference: interpretation that creates
lawful and effective meaning to all terms,
hierarchy: express terms, course of
performance, course of dealing, trade
usage, specific and exact> vague or
general language, separately negotiated
or added terms are given greater weight
than standardized terms (boiler plate) or
other terms not separately negotiated
-Interpretation against draftsman favored
UCC
CISG
Statements made by and
other conduct of a party are
to be interpreted according
to his intent where the other
party knew or could not have
been unaware what that
intent was parties are
bound by an usages to which
they have agreed and by any
practices which they have
established between
themselves
Legal Issue
Restatement
UCC
CISG
Parol Evidence
************
213: A partially integrated agreement
discharges prior agreements to the
extent that it is inconsistent with them
(can be supplemented by them).
A completely integrated agreement
discharges prior agreements to the
extent that they are within its scope.
214: Exceptions to P.E.: evidence allowed
to determine if it is or is not integrated
and if it fully or partially integrated,
meaning of the writing (whether or not
integrated) (if it is ambiguous), illegality,
fraud, duress, mistake, lack of
consideration, or other invalidating
clause, ground for granting or denying
rescission, specific performance, or other
remedy.
Exception: oral express conditions
where the parties agree to an oral
condition, agreement is not integrated
with respect to the condition
2-202: writing intended to be final may
not be contradicted by evidence of any
prior agreement or contemporaneous oral
agreement but may be explained or
supplemented.
No parol evidence rule
permits use of all relevant
extrinsic evidence in arriving
at the interpretation on what
parties knew/had reason to
know  intended to reject
P.E. Rule
Implied Terms
2-306: implies a requirement to use
reasonable diligence and good faith
performance (can contract around, but
hard to do)
(adds in terms that can be applied: price,
warranty, delivery time): for the most
part, these are gap fillers.
Reasonable termination (time for the
person to make substitute arrangement)
Legal Issue
Restatement
UCC
CISG
Good Faith
205: Every contract imposes upon each
party a duty of good faith and fair dealing
in its performance and its enforcement.
Observe good faith
Warranties
Implied Warranty of Habitability in
Residential Leases: recognized by
majority of states, landlord comply with
building codes, make repairs: fit and
habitable condition
Implied Warranty of skillful and sound
construction: most states recognize an
implied warranty that houses to be
constructed are done skillfully free from
material defects
Can include express warranties in
contract (interpreted by parol evidence)
1-201: Good faith mean honesty in fact
(subjective standard) AND observance of
reasonable commercial standards of fair
dealing (objective standards).
2-306: When term is measured by the
output of the seller or the requirements of
the buyer means such actual output or
requirements as may occur in good faith,
except that no quantity be unreasonably
disproportionate to any stated estimate or
if no stated estimate to any normal or
otherwise comparable prior output
§2-313-§2-316: Express: created by: any
affirmation or promise made by the seller
to the buyer which related to the goods
and becomes part of the basis of the
bargain, any description of goods or
model/sample that becomes part of the
basis for bargain
Implied Warranty of Merchantability:
(MERCHANTS): all goods are of good
quality and fit for the ordinary purposes
for which they are used.
Implied Warranty of Fitness for a
particular purpose: (not just merchants):
Where seller at the time of contracting has
reason to know any particular purpose for
which the goods are required and that the
buyer is relying on the seller’s skill or
judgment to select or furnish suitable
goods, there is (unless excluded or
modified) an implied warranty that goods
shall be fit for such purpose
§35: Seller must deliver
goods which are of the
quantity, quality and
description required by K and
packaged in manner required
by K except where parties
have agreed otherwise, the
goods do not conform with
the K unless they: are fit for
the purpose for which goods
of the same description
would ordinarily be used, are
firt for any particular purpose
expressly or impliedly made
known to the seller at the
time of the conclusion of the
contract, except where buyer
did not rely or it was
unreasonable for him to rely,
possess the qualities of
goods which the seller has
Legal Issue
Restatement
Defenses to Enforcement
Duress
Physical Duress
Duress by Threat: Assent is induced by an
improper threat and victim has no
reasonable alternative (then K is
voidable)
Economic Duress: One party involved in
wrongful act or threats which caused the
other party to involuntarily enter the
agreement. Victim had no choice but to
agree or face serious financial hardship
(no reasonable alternative) and the
financial hardship has to have been
caused by the party
threatening/committing wrongful act
UCC
CISG
Can contract around express and implied,
but to contract around an implied
warranty must be in writing and
conspicuous and for merchantability must
mention merchantability
held out to the buyer as
sample/model, are contained
in packaging usual manner
adequate to preserve and
protect the goods
Seller not liable if buyer knew
at the time of K that goods
would not conform ith any of
those things.
Legal Issue
Restatement
Undue Influence
Other party doesn’t have to be
responsible for creating the situation.
Unfair persuasion where one party is
under the domination of the person
persuading OR the relation between
parties justifies P in assuming D won’t act
inconsistent with P’s welfare.
Elements usually present (undue
influence): 1) discussion of transaction at
an unusual place or 2) unusual time 3)
insistent demand that the business be
finished at once 4) extreme emphasis on
consequences of the delay 5) multiple
persuaders 6)absence of third party
advisers 7) statements that there is no
time to consult financial advisers or
attorneys
1) Tort action for damages 2) Right to avoid the enforceability of the K through “rescission” (return parties to where
they were before K): requires injured party to return any money or property she received.
Misrepresentation
UCC
CISG
162: factual misrepresentation fraudulent when: intends assertion to induce a party to manifest assent and the maker:
knows or believes assertion to be untrue, does not have confidence that he states or implies the truth (reckless
negligence), or knows that he does not have the basis that he states or implies for the assertion.
Misrepresentation is material if: it would be likely to induce reasonable person to manifest his assent, or the maker
knows that it would be likely to induce the recipient to do so
163: VOID if misrepresentation related to character or essential terms of a proposed contract induces what appears to
be manifestation of assent by someone who neither knows nor has reasonable opportunity to know the character or
essential terms of proposed contract (bc then no real manifestation of assent)
164: VOIDABLE: if party’s manifestation of assent is induced by fraudulent or material misrepresentation by the other
party upon which the recipient is justified in relying
168: Relying on opinions NOT justified (unless relation of trust/confidence, person w/opinion has special skill,
particularly susceptible)
Legal Issue
Restatement
UCC
Unconscionability
If a contract or term is uncon at the time
the contract is made a court may refuse
to enforce the K, enforce part, or limit
(SAME as UCC):
Need PROCEDURAL and SUBSTANTIVE
Unconscionability (both must be present
at the time the K is made)
2-302: If court finds the contract or any
clause to have been unconscionable at the
time it was made the court may refuse to
enforce the contract, or may enforce the
remainder of the contract without the
uncon clause, or may limit the application
of any uncon clause to avoid uncon result.
When uncon is claimed parties shall be
given reasonable opportunity to prevent
evidence as to its commercial setting,
purpose, and effect
Public Policy
188: promise to refrain from competition
is not valid if 1) the restraint is greater
than is needed to protect the promisee’s
legitimate interest or 2) the promise’s
need is outweighed by the hardship to
the promisor and the likely injury to the
public.
CISG
Legal Issue
Restatement
Justification for Non-Performance
Impracticability/
261-264: duty to perform discharged if,
Impossibility
after K is made, a party’s performance is
made impracticable without his fault bc
something happened and basic
assumption of K was that such a thing
wouldn’t happen, UNLESS the language
or the circumstances indicated the
contrary (e.g. death or incapacity,
existence of a thing necessary for the
performance fails to exist, complying
with gov regulation or order)
Frustration of
265: Duty to perform discharged when,
purpose:
after a K is made, a party’s principle
purpose is substantially frustrated
without his fault bc something happened
and the basic assumption of the K was
that such a thing wouldn’t happen
UNLESS language of the circs indicate the
contrary (Courts require that substantial
frustration make the performance
virtually wrathless/utterly defeated)
UCC
CISG
2-613: Casualty to Identified Goods:
When K requires for its performance
goods identified when the K was made,
and the goods suffer casualty w/out fault
of either party before the risk of loss
passes to the buyer, then the K is avoided
if the loss is total AND if loss is partial or
goods have deteriorated, such that they
no longer conform to the K, buyer can
demand inspection (his choice) can either
treat K as avoided or accept goods with
deduction of contract price
2-615: (encompasses impossibility,
impracticability, and frustration of
purpose): a)delay in delivery or nondelivery in whole or in party by a seller
who complies with (b&c) is not in breach if
performance has been made
impracticable by something happening
and basic assumption fo K was that this
thing wouldn’t happen OR by good faith
compliance with gov regulations b) when
things in a only affect a part of the seller’s
capacity to perform, he must allocate
production of deliveries among his
customers in reasonable/fair way c) seller
must notify the buyer seasonably that
there will be a delay or non-delivery
79: 1) Party excused if he
proves that failure to
perform was due to an
impediment beyond his
control and that he could not
reasonably be expected to
have taken it into account at
the time K was made or to
have avoided or overcome it
or its consequences
Legal Issue
Restatement
UCC
CISG
Contractual
Modifications
***********
73: Performing a legal duty already owed
to a promisor, where there is no honest
dispute about what the original bargain
intended is NOT consideration.
89: K modification is binding if (brings RS
closer to UCC): a) the modification is fair
under circumstances not anticipated by
the parties when the K was made; or b)
as allowed by statute (ie minimum wage)
c) to the extent that justice requires
enforcement bc parties materially and
justifiably changed position in reliance on
the promise (catch-all particular of §90)
UCC 2-209: Contract modification does not
require consideration to be binding: one
sided modifications should be routinely
enforced except where special
circumstances apply and MUST be in good
faith
Modification or rescission includes
abandonment or other change by mutual
consent does not include unilateral
termination or cancellation
Modification must satisfy SoF if SoF
applies to change, signed agreement that
does not follow (many states say
modifications have to be in writing for K’s
that are in statute of frauds even if
modification by itself isn’t)
If parties agree, a K may be
modified or terminated
A K in writing which has a
provision requiring a
modification or termination
to be in writing may not be
modified or terminated by
writing but a party can’t
try and use the provision if
conduct indicates otherwise
Breach
Express Conditions
225: 1) Performance of a duty subject to
a condition cannot become due unless
the condition occurs or its nonoccurrence is excused 2)unless it has
been excused, the non-occurrence of a
condition discharges the duty when the
condition can no longer occur 3) nonoccurrence of a condition is not a breach
by a party unless he has a duty that the
condition occur
Legal Issue
Restatement
UCC
CISG
Material Breach:
234: performances that can be done at
the same time are due simultaneously,
but performances requiring longer period
of time are due before the other (ie
construction build before getting paid)
237: Minor or immaterial deviations from
the contractual provisions do no excuse
the other party from her duty to perform.
241: When failure is a material breach: a)
how much will injured party be deprived
of the benefit she expected? b) can
injured party be adequately
compensated for the benefit of which
she’ll be deprived c) extent to which
party failing to perform will suffer
forfeiture if forced to full perform d)
likelihood that party failing to perform
will cure his failure e) did party failing to
perform behave in good faith
242: When are duties discharged?(Total
Breach) Balance 241 factors, will delay
prevent or hinder injured party in making
reasonable substitute arrangements c)
does agreement provide for performance
without delay
2-601: Buyer’s Rights on Improper
Delivery: if the goods or the tender of
delivery fail to conform (exactly) to the
contract, the buyer may 1) reject the
whole or 2) accept the whole or 3) accept
part and reject the rest
2-608: Revocation of Acceptance: buyer
may revoke his acceptance of a unit whose
non-conformity substantially impairs its
value to him: if he accepted it can
return goods after accepting so long as
a)reasonably assuming that its nonconformity would be seasonably cured
and it hasn’t been and b) w/out
discovering the non-conformity if his
acceptance was reasonably induced by the
difficulty of discovery before acceptance
2-508: Cure by Seller of Improper Tender
or Delivery a) where seller’s tender or
delivery is rejected bc non-conforming and
the time for performance has not yet
expired, seller may seasonably notify the
buyer of his intention to cure and may
then make a conforming delivery within
the contract time b) where buyer rejects
non-conforming tender, which seller
reasonably believed would be acceptable,
seller may if he notifies the buyer, have
additional time to substitute a conforming
tender
25: Breach is fundamental if
it results in such detriment to
the other party as to
substantially deprive him of
what he is entitled to expect
under the K unless the
breaching part did not
reasonably foresee such a
result.
49(1): buyer may declare the
K avoided if the seller fails to
perform any of his
obligations that constitute a
fundamental breach under
the CISG.
51(2): Buyer may declare the
K avoided entirely only if the
failure to make delivery
completely or in conformity
with K amounts to a
fundamental breach of the K.
Immaterial Breach
must perform and can
sue for damages
(Jacobs pipe case
would have to sue for
nominal differences in
pipe value)
Material Breach
entitled to suspend
your performance
until they cure that
breach
Total Breach no
obligation to perform
under the K (entitled
to damages for harm
to date and future
harm flowing from
breach, partial breach
only entitled to harm
harm to date) (Arizona
Iced Tea case)
(Also applies to UCC)
Legal Issue
Restatement
UCC
CISG
Anticipatory
Repudiation:
250: Repudiation: a statement indicating
the the obligor will commit a total,
material breach OR a voluntary act which
renders obligor unable or apparently
unable to perform (must be practically
impossible)
251: Where reasonable to believe that
obligor will totally breach, oblige may
demand adequate assurances of
performance and may, if reasonable
suspend any performance for which he
has not already received the agreed
exchange until he receives assurance.
Obligee may treat obligor’s failure to
return assurance in reasonable time as
repudiation
253: Breach & Discharge of Duties: 1) if
you repudiate before breaching by nonperformance and before receiving all of
the agreed exchange, your repudiation
alone gives rise to claim for damages for
total breach. 2) Where K requires
performances, one party’s repudiation of
duty to perform discharges other party’s
remaining duties to perform
256: Retraction of anticipatory
repudiation: can retract a repudiation so
long as other party has not materially
changed his position in reliance on
repudiation OR other party indicates to
the repudiating party that he considers
the repudiation final
2-609: Right to adequate assurance of
performance: Reasonable grounds for
insecurity  may in writing demand
adequate assurance of due performance
and may suspend any performance (if
commercially reasonable) for which he has
not received the agreed return until he
receives assurance (Other party gets
reasonable time 30 days to provide
assurance)
Acceptance of improper delivery or
payment does not prejudice right to
demand adequate assurance of future
performance. Reasonable grounds for
insecurity growing debt & failure to
respond to request to discuss debt (not
just unreliable rumors)
2-610: If party 1 repudiates preperformance party 2 may await
performance OR resort to remedy  in
either case can suspend own performance
2-611: Can retract repudiation unless
aggrieved party has materially changed his
position or indicated he considers
repudiation final
72: If clear other party will
fundamentally breach K, can
declare K avoided. If time
allows, must seek assurances
from other party, unless
other aprty has declared that
he won’t perform.
71: Party may suspend
performance if apparent that
other part will not perform
his obligations as a result of
1) serious deficiency in his
ability to perform 2)
creditworthiness or 3)
conduct in performing or
preparing to perform