FORMATION
Offer + Acceptance
1. Mutual assent:
a. Manifestation of present commitment to terms
2. Consideration
a. Anything of value, but requires a trade
b. Cannot be exact “like-kind” such as money for money
Unilateral v Bilateral
Uni: promise for performance
-performance may consist of:
1. an act other than a promise; or
2. forbearance; or
3. creation, modification, or destruction of a legal relation
Bi: promise for promise
Policies:
1.
2.
3.
4.
Predictability: objective lens
Freedom of contract
Fairness
Efficiency
Certainty of Terms
Q: quantity
T: time for performance
P: parties to contract
P: price
P: place for performance
S: subject matter
Special Offer Rules (39)
1. Advertisements
2. Quotes
3. Request for bids
4. Letters of intent
Irrevocable Offers
1. Firm offer under UCC 2-205
-an offer by a merchant that gives assurance that it will be held open (period of
irrevocability may not exceed 3mo)
2. Option Contract
3. unilateral where there is partial performance
4. reliance
How can an offer be withdrawn or nullified?
1. Rejection
2. Counteroffer
3. Lapse of time
a. If not time is attached, and conversation is face-to-face, offer generally only
extends to close of conversation
4. Revocation
a. Direct (Petterson)
b. Indirect (Dickinson)
5. Death or incapacitation
Mirror Image Rule
a. Common law only
b. Acceptance must be on the exact terms of the offer
c. Derivation constitutes a counteroffer
d. A mere inquiry of different terms is not a counteroffer (R2d Contracts §29b)
UCC 2-207
(1) A definite expression of acceptance operates as ac acceptances even though it states
additional/different terms
(2) Additional terms are considered as proposals for addition to the contract
a. Adopted into contracts unless:
i. Offer expressly limits acceptance to terms of offer
ii. Terms materially alter offer
iii. Objection has already been given or is given within a reasonable time
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to
establish a contract for a sale, even though the writings of the parties do not otherwise
establish such contract
Schnell v. Nell (122)
-if the promise cares for, improves, or preserves the property of a promisor, it is
sufficient consideration for the promisor’s subsequent agreement to pay for the service, even if
done so without the promisor’s request
Webb v. McGowin
-for a moral obligation to support a subsequent promise to pay, there must have existed
a prior legal obligation
Promissory Estoppel
-protects a party if that party legitimately relies on another’s promise, even if the technical
prerequisites for a contract have not been met
Consideration: bargain of exchange for anything of value
1. In general
2. Common issues
a. Adequacy
b. Past/moral
c. Settlement of invalid claims
i. Enforced if:
1. P had a genuine belief that the claim was valid at the time of
settlement
2. Claims was, at worst, doubtful from the perspective of a
reasonable person
d. Pre-existing duty (UCC 2-209)
e. Illusory (UCC 2-306)
i. A promise that does not restrict the promisor’s future right of action
ii. Gives the promisor unfettered discretion to perform or not perform
or
iii. If it does not restrict the promisor’s autonomy
DEFENSES
Statute of Frauds (272)
1. Land sale
2. Suretyship
3. Cannot be performed within one year
4. Sale of goods for $500 or more
5. Made in consideration of marriage
6. By executors to answer for a duty owed by their decedents
Duress
Elements:
1. One party must commit a wrongful act; and
2. The wrongful act must preclude the other party from exercising his free will
Economic Duress
1. Wrongful act
a. threat of breach of contract made in bad faith
2. Preclude the exercise of free will
a. Could not obtain foods from another source
b. Ordinary remedy of action for breach would not be sufficient
Incapacity (260)
1. Minority – up to 18th birthday (except for necessities)
2. Mental incapacity
3. Intoxification
DAMAGES
Goal: to award a non-breaching party the economic equivalent of the benefit of her bargain
Post-Performance: court seek to give the party what was bargained for
-encourages reliance
-provides no escape for breach
-the harm is the breach, not the contract
General damages- damages that any party who suffered a similar wrong would incur
Special damages- damages necessary under the particular circumstances to ensure the plaintiff
ends up in the same economic position that he or she would have reached
1. Reliance
2. Consequential
*courts deduct any costs or losses a plaintiff is able to avoid*
General Damages (286)
Seller- FMV – Contract Price
Buyer- Contract Price – FMV