Table of Contents
Love For Dogs Treat Every Rover Terrifically
Module 1— Contract Law and Article 2
Common Law
Common Law  judge-made law developed over years in individual cases
Restatements
Restatement of Contracts (1932)  "classical" hard-and-fast rules for resolving contracts
Restatement (second) of Contracts  modern more flexible view
neither is the "law" secondary authority only
Uniform Commercial Code (Article 2)-- Sale of Goods
a movement to reform, modernize, codify, and make uniform much of commercial law
11 articles  general provisions, leases, commercial paper, bank collections, electronic wire
transfers letters of credit, bulk sales, document of title, investment securities, secured transactions
Sale of Goods  UCC applies to every contract for the sale of goods, even if one or
both of the parties are not merchants
unless otherwise provided, article 2 applies to the transaction in goods
Goods  (must be movable/tangible at the time of transactions) all things (including
specially manufactured goods) which are movable at the rime of identification to the
contract for sale other than the money in which the price is to be paid, investment
securities and things in action.
service is intangible and not a good
Hybrid or Mixed Transactions
Lohman v. Wagner
UCC  applies to transactions in goods, and goods are anything movable at the time of identification to the contract. in mixed
contracts involving both goods and services, the test is the predominate factor
UCC Quantity Requirement  UCC requires that a written contract include a quantity term
goods include young animals and their unborn young, they are movable
UCC Writing Requirement  a contract for the sale of goods for the price of $500 or more is not enforceable unless there is some
writing sufficient to indicate that a contract for sale has been made. Contract is not enforceable beyond the quantity in the writing.
Service  this agreement also calls for Lohman to provide housing and labor
this is a hybrid scenario
Predominant Factor Test  looks at the transaction as a whole and determines whether the purpose is of service (with good
incidentally involved) or sale of goods (with service incidentally involved)
look at the language of the parties and the agreement
Hypos
contract with artist for a painting= service
Contract for installation of water heater= sale of goods
Contract for sale of sod and installation= sale of goods (quantity of sod, trees, and shrubs made the sales component bigger)
Sale  passing of title from the seller to the buyer for a price
IRAC Example for Lohman v Wagner
Issue
the issue is whether a mixed contract involving the sale of weaner pigs, together with the provision of housing facilities and labor is a contract within
article 2 of the UCC
Rule
article 2 of the UCC applies to transactions in goods, and goods are anything moveable at the time of identification to the contract. In mixed contracts
involving both goods and services, the test for whether article 2 applies is whether the predominant factor, thrust, or purpose of the transaction was
the sale of goods or the rendition of services.
Application
the terminology suggests that it is a contract for sale, because the title of the contract document was Weaner Pig Purchas Agreement. The language of
the agreement thus focuses on the buying and selling of the pigs. Also, the larger component of the transaction was the transfer of the pigs to the buyer
with the seller's provision of housing and labor merely supporting that sale.
Conclusion
therefore, the mixed contract for the sale of weaner pigs and the provision of housing facilities and labor should be characterized as a sale of goods
falling within the scope of Article 2 of the UCC.
Does Article 2 Apply
Sale  requires the passing title from the seller to the buyer for a price
Advent Systems Limited v. Unisys Corporation
Advent agreed to provide Unisys with software, hardware, training, and marketing materials
UCC
No contract for the sale of goods over $500 when no quantity in writing
§1-102(2)(a)  UCC favor including software as a part of "goods"
Common Law
common law does not have a requirement for quantity, so this contract was enforceable under
common law
Software  is a good as long as it is in a movable medium when the contract identifies it for sale
Intellectual Property  not a good
Predominate Purpose Test
(1) language of the parties' contract, (2) the nature of the suppliers business (3) the role of
the services component (4) the relative amounts charged for the goods component and for
the services component (5) how the relative costs are allocated
Minority View
Gravamen Test
applies the common law rules to the services component and article 2 to the goods
component (this is difficult in cases where it is not possible to tell between service and
goods)
Module 2— The Objective Theory of Contracts
Contract Formation
Contract Formation-- requires a bargain in which there is manifestation of assent to the exchange
and a consideration
(Mutual Assent-- Offer + Acceptance) + (Consideration)
Counteroffer  a reply to an offer which purports to accept it but is conditional on the offeror's
assent to terms additional to or different from those offered is not an acceptance but is a
counteroffer
same effect as a reject and is now a new offer, the roles are now switched
Lucy v. Zehmer
Mental Capacity Defense  if compulsive alcoholism rises to the level of mental illness that
such a party is unable to understand the nature and consequences fo the transaction or is
unable to act in a reasonable manner in the transaction and the other party is aware of the
party's condition, the intoxicated party may have a defense.
Objective Theory of Contracts (outward manifestations)
Objective Theory  contract formation depends on what is communicated, not merely what is thought
whether there is mutual assent is to determine how a reasonable person would understand the parties' words and conduct, not by the parties' secret
intentions
1) what a reasonable person would have believed the parties' words and conduct to mean and,
2) what the offeree actually believed
Remember: contextual evidence is relevent, its not just WHAT was said but also where it was said, tone of voice, & surrounding circumstances
Fairness Rationale: to avoid the reasonable meaning of his words and conduct is unfair to those whom he deals.
Learned Hand's Formula  a contract has nothing to do with the personal, or individual, intent of the parties. you take the usual
meaning of the words not what was internally intended.
external conduct-- it matters what is communicated not what is merely thought or intended
Subjective Theory
asks whether both parties actually intended to form a contract. there must be a "meeting of the minds" meaning that both parties actually intend to
be contractually bound to the same terms at the same time
Efficiency Rationales (Objective Theory Justifications)
Transactional Efficiency commercial interaction is more efficient if businesspeople can rely on objective manifestations instead
of what someone really meant
Judicial Efficiency proving subjective intentions is too difficult. Subjective requires the impossible.
Remedy for Breach
Substitutional Reliefsuch remedies are designed to give a substitute for the promised performance. usual remedy is money
damages
Specific Relief designed to give the aggrieved party the very performance promised. injuction by the court ordering the
breaching party to perform promise
Specific Performancemoney damages are inadequate for land sale bc of the theory that each parcel of land is unique. only
available where money damages are deemed inadequate. (e.g. loss of some unique piece of property)
Shrinkwrap/Clickwrap
Shrinkwrap Agreementnotice on the outside and terms on the inside
by keeping a product and not returning it the customer has made an outward expression of assent whether or not the terms were actually read
notice on the outside and terms on the inside.
Customer has the opportunity to read terms and conditions, by keeping the product and not returning there is assent.
Terms and Conditions
a user does no tneed to actually read them or click on them as long as she is given notice of their existence
Clickwrap v. Browsewrap
Clickwrap
terms and conditions are on the same page as the 'I agree'
required to scroll through terms and conditions before hitting 'i agree'
Browsewrap
terms and conditions are not on the same page and must be accessed by a hyperlink
consumers are not required to access them before proceeding
Nicosia v. Amazon
amazon uses a hybrid between clickwrap and browsewrap. issue is whether Nicosia was given sufficient notice of the terms
Deprived of the Opportunity
where a party has signed a contract without reading it she can argue mutual assent was lacking because she was deprived of the opportunity to read
the contract or if the contract was not "plain and unambiguous"
Module 3—The Offer- Definiteness and Reasonable Certainty
Offer  a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent
to the bargain is invited and will conclude it.
Elements: (a) manifest offeror's willingness and (b) manifestation is made so that the recipient would reasonably understand assent is invited and (c)
the expression of assent also must be made so that the recipient would reasonably understand that his assent is all that is needed to close the bargain.
UCC  You can still have an offer if the parties omit price (Car)
Common Law  A communication missing price is not an offer (House)
Effect of an Offer
Offer Legal Effect
an offer gives the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer.
the making of an offer creates in the offeree the power of acceptance
must communicate to a reasonable offeree that the offerees unilateral action will create a contract
mere inquiry or "invitation" does not constitute an offer-- "would you be interested in buying the farm for $50k?"
Preliminary Negotiations.
Further Manifestation of Intent
a manifestation of willingness is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not
intended to conclude the bargain until he has made further manifestation of assent
Willingness to Enter into a Bargain
Anderson v. Douglas
fired from job for stealing a box of pencils. Employer did not make any definite commitment to be bound by the handbook procedure.
Employment at Will employer can terminate for good reason, bad reason, or no reason.
if the parties have not agreed on a fixed duration for the employment contract them it is "at will"
if an employer can fire for any reason then the employer is not bound by the progressive discipline statement in the handbook
Certainty
Causes of Indefiniteness
Haste  the parties fail to take the time and trouble to be more precise (especially in routine transactions)
Reluctance  either or both parties are reluctant to address an issue in fear the deal might fall through
Unforeseeability  the parties may not be able to foresee the problems
Failure to agree  the parties may negotiate over some terms but fail to come to an agreement
Restatement (Second) § 33
(1) even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of
the contract are reasonably certain
(2) the terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate
remedy
(3) the fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be
understood as an offer or as an acceptance.
Problem with Indefiniteness
Indefiniteness  (1) if the court cannot find the essential terms with reasonable certainty, it cannot determine whether those terms
have been breached and (2) if a court does not know what a term to a contract is, it cannot fashion an appropriate remedy for a
breach (3) freedom of and from contract (4) if parties have not reached an agreement on essential terms, they probably never
reached a final agreement.
Academy Chicago Publishers v. Cheever
A contract may be enforced even though some contract terms may be missing or left to be agreed upon, but if essential terms are so
uncertain that there is no basis for deciding whether the agreement has been kept or broke, there is no contract.
A contract is sufficiently definite and certain to be enforceable if the court is enable from the terms and provisions thereof to
ascertain what the parties have agreed to.
Essential Terms
1) Parties
2) Subject matter
3) Quantity
4) Price (UCC determines if absent) (cannot be too ambiguous) (reasonable price at the time of delivery)
5) Delivery (UCC can provide gap fillers for this)
Supplication of Terms
A court may supply a term if there is a basis from which to infer what that term might be
UCC Gap Fillers
the parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the
time for delivery if (a) nothing is said as to price.
Gap Fillers
operate as default rules that apply whenever the agreement is silent as to the subject of the gap-filler
(1) Open price term: a "reasonable price" (barrel example where the price is left out and on August 20th it is $30 a barrel..enforceable)
if price is too ambiguous the court will not fill this gap
(2) Mode of delivery: in a single lot
(3) Place of delivery: at the seller's place of business; but for specific goods located somewhere else, delivery where those goods are located
(4) Time of delivery: a reasonable time
(5) Payment Terms: payment due at the time and place where buyer is to receive goods
Module 4—Offer v. Negotiations
Leonard v. PepsiCo, Inc.
Claim that Pepsi offered to sell a Harriet Jet
Objective Theory  in evaluating commercials the court looks at the defendant's intent subjectively and what a reasonable person
would thing of the commercial objectively.
Jokes  an obvious joke would not give rise to a contract BUT if there’s no indication that the offer is in jest objectively then there
may be a valid offer.
Advertisement  the general rule is that advertisements do not constitute an offer (mere invitations to deal, not legally binding
offers)
exception— where advertisement is clear, definite, and explicit and leaves nothing open for negotiation
Exceptions to Ads
Rewards
Mink Stole Case  where the man read a specific ad and preformed and he was a man but this wasn’t in the ad.
Reasoning—more demand than supply. a reasonable person would not believe that an ad constituted an offer.
Lefkowitz v. Great Minneapolis Surplus Store
"3 brand new fur coats worth to $100 first come first served $1 each"
"worth to $100" is too uncertain
"1 Black Lapin Stole first come, first served" is an offer. 1 stole avoids language of unlimited liability
Avoiding Pepsi Commercial Issue
"All orders are subject to seller's approval"— a clear, simple statement, prominently placed.
Policy Reflection
Social Welfare  freedom of contract will encourage individual entrepreneurial activity, and that process will maximize the
welfare of the parties and thereby improve overall social welfare.
Personal Autonomy  freedom of contract accords individuals a sphere of activity within which they may act freely to shape their
lives as they think best.
contract law is consensual, people are not to be held contractually bound unless they have agreed to be bound.
Reward Cases
Advertisement of Lost Dog  an offer (there is only one person who can return the dog so no risk of unlimited liability.
this is more bargaining for the act not soliciting offers from people promising to find and return him
Method of Acceptance
offerors can prescribe the method of acceptance
Acceptance Methods  (1) making a return promise as an acceptance or (2) actually performing the required act as an acceptance
R2K § 30(1)  an offer may invite or require acceptance to be made by an affirmative answer in words or by performing or
refraining from performing a specific act or may empower the offeree to make a selection of the terms of his acceptance.
Bilateral v. Unilateral
Bilateral Contract  promise for promise
Unilateral Contract  promise for performance
reward cases are unilateral — no one would promise to return a dog that is missing because if they could
not find it then they are in breach of the contract.
Sateriale v. R.J. Reynolds
Camel Cash Loyalty Program— similar to reward deal (unilateral) because it offers prize to consumers if they buy camel cigs
Advertisements  "advertisements of goods by display, sign, handbill, newspaper, radio or TV
are ordinarily not intended or understood as offers to sell"
Unilateral Contract Offer  promises to provide rewards to customers if the customer buys
camel and saves the certificates
Displays with Price Listed  the usual rule is that display of an item with a price is merely an
invitation to make an offer
there was no potential for over-acceptance in this case because it decided how may c-notes it released so it
controlled the amount of consumers who could accept.
Module 5—Agreements to Agree
Letters of Intent
If the parties intended that the document be contractually binding, that intention would not
be defeated by the mere recitation in the writing that a more formal agreement was yet to be drawn.
however, parties may specifically provide that negotiations are not binding until a formal agreement is
in fact executed. if the parties construe the execution of a formal agreement as a condition precedent,
then no contract arises unless and until that formal agreement is executed.
Restatement
manifestations of assent that are sufficient will not be prevented from operating by the fact that the partie also
manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that
the agreements are preliminary negotiations.
Quake Construction, Inc. v. American Airlines, Inc.
letter of intent stated: "a contract agreement outlining the detailed terms and conditions is being prepared and will be available for your signature
shortly"
Letter of Intent Binding or Not?
(a) whether the type of agreement is one usually put in writing (b) whether the agreement contains many or a few details (c) whether it involves a
large or small amount of money (d) whether the agreement requires a formal writing for the full expression of the covenants (e) whether the
negotiations indicated that a formal written was contemplated at eth completion of the negotiations
Ambiguity  refers to situations where a word, sentence, or expression may have two or more entirely different meanings.
Vagueness  refers to situations where the expression does not refer to a neatly defined referent but to an area disturbed around a
central norm
The Purpose  attempt to discern from the language and actions of the parties whether they intended to be contractually obligated
immediately or whether they intended to defer being contractually bound until some later event, like the execution of another
document
construction contracts usually include payment, termination, and damages for delayed terms, and these were not included in the LOI
Module 6—Acceptance
Acceptance
Once an offer is made, the next step in contract formation is an acceptance by the offeree. Once accepted, the offer becomes a contract.
Acceptance—Corbin a voluntary act of the offeree whereby he exercises the power conferred upon him by the offer and thereby creates the set of
legal relations called contract
Offeror as the Master of the Offer
Offeror if she makes an offer, she can set forth any terms she likes, the offeree must comply
Acceptance of an offer Acceptance must comply with the requirements of an offer as to the promise or performance
outward expression of a manifestation of assent to the terms thereof made by the offeree in a manner invited or required
by the offer
Elements of Acceptance—
a) “manifestation of assent”—the offeree must also express her consent to enter the bargain
b) “to the terms thereof”—the offeree’s acceptance must match the substantive terms of the offer
c) “made by the offeree in the manner invited or required by the offer”—the offeree must conform to any procedural requirements specified by the
offeror
Not Acceptance
Grumbling Acceptance— when “ill take it” is accompanied by an expression of dissatisfaction.
Such a response will be effective as an acceptance, so long as it stops short of actual dissent from the offer.
The offeree must know of the offer in order to accept it. The offeree cannot express assent to terms if she doesn’t know about them
Counteroffer— inclusion of any different or additional terms
An offer must be accepted by the manner in which the offeree requests in the offer.
Offeror’s Terms
Substantive Terms the terms of the proposed contract
Procedural Requirements the requirements for how an acceptance must be expressed
Inclusion of any different of additional terms makes the response a rejection and a counteroffer
Acceptance by Conduct tenant returns signed form with added arbitration clause is a counteroffer but when the landlord delivers
the keys, that is an acceptance.
Procedural Aspect if the offeror prescribes the only way in which his offer may be accepted, an acceptance in any other way is a
counteroffer
If this is merely a suggestion, then there is a contract.
R2K § 52  an offer can be accepted only by a person whom it invites to furnish the consideration. Only person’s whom the offer
is addressed has the power of acceptance.
Objective Theory of Contracts
Objective Theory whether a reasonable person would believe that the offeror has required the offeree to follow some particular
method of acceptance or that the offeror has merely suggested it
How to find the difference between prescription and suggestion by the offeror
Offer Can Prescribe
Time, Place, Manner of acceptance
Who can accept
Acceptance by performance (refraining from an act or doing an act) or promise
Houston Dairy Inc. v. John Hancock Mutual Life Assurance Co.
Houston Dairy’s late return of acceptance did not comply with the offerees terms and is a counteroffer
Counteroffer an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a
substituted bargain differing from that proposed by the original offer
Communication of Acceptance for acceptance to be effective it must be communicated to the offeror.
Deposit of a Check as Acceptance  maybe. Arguably, depositing the offeror’s check manifests the recipient’s agreement to the
proposed contract.
Acceptance by Silence
Courts generally do not infer a promise from mere inaction. So, an offeree’s silence in response to an offer is not ordinarily an acceptance.
Rule  Silence or inaction does not constitute an acceptance
Reasons to Reject Acceptance by Silence
Objective theory: ordinarily neither the offeror nor the offeree could reasonably expect that the offeree’s silence or inaction in response to an offer
amounts to an expression of assent
Freedom of/from contract: it’s difficult to say one’s obligation is voluntarily undertaken if you can avoid them only by going out of your way to
affirmatively decline offers.
Fairness: potential for abuse
Restatement (Second) § 69(1)
(1) Acceptance by Silence where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:
(a) where an offeree takes the benefit with reasonable opportunity to reject them and reason to know that they were offered with the expectation of
compensation.
(c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept (duck
example)
(2) an offeree who does any act inconsistent with the offeror’s ownership of offered property is bound in accordance with the offered terms unless
they are manifestly unreasonable (giving away ducks example)
Exceptions
It is silence + something else that constitutes acceptance
Silence + prior course of dealings
Someone situated in the hunter’s position would reasonably understand the neighbors silence as acceptance because that is the way they
have operated for 10+ years
Consumer Protection Legislation
The seller could mail unsolicited products to consumers so that their use (receipt of benefit) or retention or disposal (sue inconsistent with sellers’
ownership) makes their silence constitute acceptance.
If you receive unsolicited mail you can keep it without having to pay the price or be held liable.
Roger’s Backhoe Service, Inc. V. Nichols
An implied-in-fact contract  An offeror does not have power to cause the silence of the offeree to operate as acceptance…the
exceptional cases where silence is acceptance falls into two main classes
(1) Those where the offeree silently takes offered benefits (2) Those where one party relies on the other party’s manifestation of intention that silence
may operate as acceptance
Acceptance by Silence
Restatement (second) § 69
(1) Silence is acceptance in the following cases only:
a. Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they
were offered with the expectation of compensation
The Need to Show Benefit
(1) The services were carried out under such circumstances as to give the recipient reason to understand:
a. They were performed for him and not some other person
b. They were not rendered gratuitously, but with the expectation of compensation from the recipient
(2) The services were beneficial to the recipient
Feldman v. Google
In this case the “clickwrap” agreement explicitly stated that if you click then you agree to the terms thus if you placed an order you had adequate
notice of the terms to which he/she was assenting
Clickwrap should say in bold that clicking agree is acceptance to terms, should be 12pt font, should be relatively short, should
use color contrast, should not clutter big issues
Clickwrap is the clearest way to manifest acceptance on the internet. Businesses should use this form.
Nicosia
“clickwrap” and “browse wrap” reasonable people could disagree on whether there was adequate notice of the terms
Module 7 —Terminating Power of Acceptance
Terminating the Power of Acceptance
Restatement (2d) § 35. The Offeree’s Power of Acceptance
A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the ways listed.
What Terminates Offeree’s Power to Accept?
a) Rejection
b) Counteroffer
c) Lapse of Time
d) Revocation of the offer by the offeror
e) The death or incapacity of either party before formation
Rejection a manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it
under further advisement.
The offeree cannot recant the rejection and then accept the offer
Revocation  Occurs when the offeror takes back the offer. An offeror can revoke an offer up until the moment that the offeree
has accepted it, because one mutual assent happens, the contract is complete.
A manifestation of intention not to accept an offer is a rejection unless the offer manifests an intention to take it under further advisement.
Counteroffer an offer made by an offeree to the offeror relating to the same matter of the original offer and proposing a
substituted bargain differing from that proposed by the orig.
Terminates the original offer & creates a power of acceptance of the counteroffer
The Mirror Image Rule
The mirror image rule  the substantive terms of the purported acceptance must be identical to those of the offer if it is to be
effective as an acceptance
Revocation of an Offer
An offeree’s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to
enter into the proposed contract.
When may an offeror revoke his/her offer? Any time before acceptance
To be effective, revocation of an offer must be communicated to the offeree before he has accepted. It is ONLY effective when the offeree receives it
Dickinson v. Dodds (1876)
Revocation by Communication from Offeror  An offeree’s power of acceptance is terminated when the offeree receives from the
offeror a manifestation of an intention not to enter into the proposed contract
Indirect Communication Revocation  An indirect revocation occurs when the offeree receives reliable information concerning
the offeror’s engaging in conduct inconsistent with the intention expressed in that offer
Normile v. Miller
Rejection  A manifestation of intent not to accept the offer
Chain of Events
1) Offer—N & K submitting signed form
2) Conditional Acceptance— M’s making changes in the down payment & loan term
Conditional Acceptance (operates as a rejection & counteroffer)— a reply to an offer
which purports to accept it but is conditional on the offeror’s assent to terms
additional to or different from those offered it not an acceptance but a counteroffer.
3) N’s conversation of dissatisfaction with the agent is not a rejection (what he said was not communicated to Ms. Miller)
If he was speaking to Miller’s agent and said he declined, then that would have been a rejection
4) When Miller and Segall make a contract, this transaction has NO LEGAL IMPACT on the relationship between Miller and Normille
(Miller still has an offer extended to Normile)—at this point in time she is at risk for dual liability because her counteroffer is still on the
table.
5) When Byer then sees Normille and says “you snooze you lose”
a. It is a revocation
R2 § 42  an offeree’s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention
not to enter into the proposed contract.
b. Byer is not Millers agent and is therefore not the equivalent of Miller revoking to Normile.
Indirect Revocation  an offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an
intention to enter into the proposed contract and the offeree acquires reliable info to that effect
2 Elements—
(1) Sold the house to someone else (definite action inconsistent w selling the house to Normile)
(2) The offeree received the information (from a reliable source)
Revocation of Advertisement  where an offer is made by advertisement in a newspaper or other general notification to the public
the offeree’s power of acceptance is terminated when a notice of termination is given publicity by advertisement or other general
notification equal to that given to the offer and no better means of notification is reasonably available.
The offeror must (1) retract in media of at least equal publicity and (2) no better method of retraction is reasonably available.
Conditional Acceptance  if the seller purports to accept but changes or modifies the terms of the offer, he makes what is
generally referred to as a qualified or conditional acceptance.
the effect of such an acceptance so conditioned is to make a new counterproposal upon which the parties have not yet agreed, but which is open for
acceptance or rejection
Irrevocable Offers
Option Contract—Common Law
Option Contracts (Common Law)  A promise not to revoke an underlying offer until a certain date or time (an option prevents
the offeror from effectively revoking the offer during the option period)
For there to be an option contract:
a) A promise to hold the offer open or not to revoke it
b) Consideration to support the promise not to revoke
*they require mutual assent and consideration*
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 not induce
such action or forbearance is binding as an option contract to the extent necessary to avoid
injustice.
Option Contract Acceptance
The power of acceptance under an option contract is not terminated by
reject, counteroffer, revocation, or by death or incapacity of the offeror.
So even if the offeree rejects during the offer period, he still keeps his power of acceptance
under the option until it is over
An acceptance under an option contract is not operative until received by the offeror
Normille v. Miller
Where one agrees to sell or convey if they accept the offer by a certain date— there is not an option contract because there is not a promise
to hold the offer open for a specified time.
Recital of Consideration  A statement in the written contract that the parties have bargained for the exchange, rather than a give
and take.
Firm Offers—UCC ;
Firm Offers (UCC Art. 2) (only to goods) (real estate is not goods)
An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack
of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three
months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror
Merchant a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill
peculiar to the practices or goods involved in the transaction
Firm offers are limited to those made by merchants because they should know the implications of the commitment being made. This limitation prevents
imposition on consumers.
Module 8— Acceptance by Performance/ The Mailbox Rule
Acceptance by Performance
In a Unilateral Contract, performance is the exclusive method for acceptance.
Unilateral Revocation  can revoke any time before acceptance (any time before the offeree can complete the acts necessary for
acceptance. — cannot revoke mid performance “option contract” arises when performance commences
But the offeree has commenced performance and so has relied on the offer before revocation. The offeror has received part of what he sought to receive.
The Restatement Solution  where an offer makes performance the exclusive mode of acceptance, the offeree’s part performance
renders the offer irrevocable for a reasonable period of time sufficient to permit the offeree to complete performance.
The offeror should not be bound until the performance is complete but, the act required for acceptance takes time to be performed and the offeree’s
commencement of performance represents his assent to the bargain.
Option Contract — The offeror shouldn’t revoke while the offeree is trying to complete performance
Completion  the offeror’s duty of performance under any contract so created is conditional on completion or tender of the
performance. So, the offeror is not obliged to pay the offeree until he performs.
Preparation and Performance he mere preparation for performance is not enough to trigger.
Begins or Tenders Performance  When performance has begun the offer is irrevocable for a reasonable period of time (time
sufficient for the offeree to complete performance)
R2L § 45 — Completion of Performance  the offeror’s duty of performance is conditional on completion or tender of the invited
performance in accordance with the terms of the offer.
The offeror is not obliged to pay until the performance is complete
Cook v. Coldwell Banker Realty Co.
(employee bonus problem)
1) March 1991— an offer that invites acceptance by performance according to circumstances
2) Attempt to change terms Sept 1991— attempted revocation. It is a new offer on different
terms (requiring performance through March 1992).
§ 45 principle— Implied Promise)  the main offer (the bonus program offer)
includes a subsidiary promise, necessarily implied, that if part of the requested
performance is given the offeror will not revoke his offer and this if tender is
made it will be accepted. Part performance or tender may thus furnish
consideration for the subsidiary promises (the implied promise not to revoke the
offer)
Promise not to revoke is implied— consideration for that promise is the offeree’s commencement of performance.
The consideration for that promise is the offeree’s commencement of performance.
It is not reasonable to interpret the real estate’s offer as a promise to get a bonus. It is an offer that can be accepted by performance.
Time of Acceptance: The Mailbox Rule
The Mailbox Rule Acceptance
An acceptance has legal effect as soon as it leaves the offeree’s possession and completes mutual assent
without regard to when it is received by the offeror.
Mailbox Rule Revocation
Revocation is effective upon the offeree’s receipt
U.S mail v. FedEx—most courts would say rule still applies if it’s a reasonable medium
U.S. first class v. FedEx— probably not. This is a slower or less reliable way of acceptance.
Selected Medium if the offeror requests a specific manner and medium you must comply.
Properly Addressed dispatch rule is not operative unless it is properly addressed
Acceptance made in a manner and by a reasonable medium invited by the offer
This would ordinarily mean that if the acceptance is done in a quicker method then the dispatch rule would usually apply
If slower or less reliable method then there can be some doubt that the mailbox rule would not apply and the offer could not be effective until it is
received.
Ineffective Methods  less speedy mail, or acceptance by a method not asked by the offeror, or wrongly addressed
An offeror stating you can accept only by email then there is not acceptance by any other method.
Offeror Can Negate Mailbox Rule
By stating that acceptance will not be considered until received
Rationale for the Mailbox Rule
In the US offers are generally revocable at any time before acceptance
This is to protect the offeree
When revocation and acceptance are sent at the same time —
If rejection is received first then there is no contract. If acceptance is sent before rejection, then there is a contract.
Things to Remember
The offeror is still the MASTER of his OWN offer. If he sends an offer by mail and says “please send by mail and the contract will be complete only
when I have your acceptance” he opts out of the mailbox rule.
Lapse of Time
Reasonable Time what is a reasonable time is a question of fact, depending on all of the circumstances existing when the offer
and attempted acceptance are made.
Face to face offers lapse at the end of the conversation unless otherwise stated
Telephone offers do not ordinarily extend beyond end of the convo unless stated
Death of Offeror an offerees power of acceptance is terminated when the offeree or offeror dies or is deprived of legal
The offeree/offerors death terminates the offer even if the other party does not know he/she has died.
Exception: L makes 10-year lease offer and E accepts and signs agreement. Ls estate is liable to honor the lease bc there was a
contract before death
Lapse of Time—Speculative Subjects
The offers relating to speculative subject matter lapse after only a short time
(a) negotiations typically are taking place quickly
(b) market price is fluctuating or is susceptible to wide variations
While the market price goes down the offeree can reject; but if the market goes up the offeree can accept and bind the offeror to
sell at a below market price.
Time When Acceptance Take Effect
Unless the offer provides otherwise,
A) Acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of
mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror
B) An acceptance under option contract is not operative until received by the offeror
Acceptance must be property dispatched
Acceptance sent by mail or from a distance is not operative when dispatched unless it is properly addressed, and such precautions taken as are
ordinarily observed to insure safe transmission of similar messages
UETA § Time and Place of Sending and Receipt
An electronic record is sent when it
1) Is addressed properly or directed properly to an information processing system that the recipient has designated or uses for the purpose of
receiving electronic records sent and from which the recipient is able to retrieve the electronic record;
2) Is in a form capable of being processed by that system
3) Enters an IPS outside the control of the sender
It is received when
1) Enters the processing system that the recipient has designated
2) Is in a form capable of being processed by that system
Nowlin v. Nationstar Mortgage, LLC
 testified they had no record of receiving the documents however it was the mailing of the docs that constituted acceptance, not whether the records
showed that they were received.
Module 9—Mirror Image Rule & Contract Formation Under UCC
Common Law Mirror Image Rule  a response to an offer must conform to the substantive terms of the offer
Requires that the acceptance be an EXACT REFLECTION of the offer
A line of cases allows for “immaterial” or minor differences between the offer and the acceptance.
The offeror is the master of his own offer. The offeror sets out the terms on which he is willing to be legally obligated
Problems with the Mirror Image Rule
Modification “Exception”  a mere request—still requires full assent to the offer even if the request is not granted.
It will still qualify as an acceptance if it proposes additional terms merely as a request. It has to be made clear that the offer is accepted whether such
requests is granted or not, then a contract is formed.
“Freedom from Contract”  We do not want to bound someone to terms that are not identified in the contract.
Immateriality Exception
When the additional terms are immaterial to the carrying out of the contract and do not inhibit the carrying out of the contract.
This is to avoid frustrating the parties’ intentions where they thought they had a contract
A small-time difference is usually immaterial
Strict standard: “immaterial change is one that is minor that do not substantially alter the performance obligation of the parties”
Less Restrictive Standard: “would a reasonable person think of this as
(Has a disadvantage of adding the complication of finding which material is immaterial or material)
Implied Rules Exception
Situations where the court can reasonably discover that the additional terms are normally implied in the situation at hand
Ex: real estate where requested rules are generally implied
Ardente v. Horan
Mirror Image Rule  An acceptance which is equivocal or upon condition or with a limitation is a counteroffer and requires
acceptance by the original offeror before a contractual relationship can exist
Frequently an offeree while making a positive acceptance of the offer, also makes a request or suggestion that some addition or modification be made.
So long as it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer whether such request is granted or not, a
contract is formed.
Last Shot Rule—since the horans requested furniture with the house and then Ardentes performed, the Ardentes are obligated to
deliver furniture with the house
Option Contracts
Power of Acceptance the power of acceptance under an option contract is not terminated by rejection or counteroffer, by
revocation, or by death...
During the offer period, Lucy can counteroffer and reject and still later accept if its during the option period
Princess Cruises, Inc. v. Norfolk Shipbuilding & Drydock Corp.
Last Shot Rule (last communication) performance by both parties makes it clear that there is a contract, but the resulting
contract will be on the terms of the party who sends the last counteroffer, which is then accepted by the other parties performance.
Follows from the mirror image rule—conditional acceptance is rejection and counteroffer but if the parties begin performance despite the fact that the
last communication was not an acceptance, the common law considered their conduct as evidencing the intent to accept the terms in counteroffer
Buyers receipt of the goods plus payment will constitute acceptance (of the counteroffer) since the seller’s form is the offer
UCC Contact Formation and Battle of the Forms
§2-204 (1)  courts should focus on the existence of agreement between parties, whether shown by words or conduct, and if
agreement is apparent the court should not be concerned about technicalities
§ 2-206  rejects technical rules on acceptance — offer should be interpreted as acceptance by any reasonable mode unless made
clear in the offer.
Jannusch v. Naffziger
§ 2-204 (2)  an agreement sufficient to constitute a contract for sale may be found even though the moment of its making is
undetermined
§ 2-204 (3)  even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have
intended to make a contract and there’s a reasonably certain basis for remedy
Rejection of Goods v. Rejection of Offer
Rejection of Goods (breach stage)
If seller delivers defective goods, the buyer has a right to reject goods
Rejection of Offer (formation stage)
A party can reject an offer preventing mutual assent from occurring
VIDEO 2E Battle of the Forms
Battle of the Forms
Mismatch between the terms of the offer and the acceptance
Is there a contract?
Common Law
No contract, Mirror image rule.
The mismatch between offer and acceptance would prevent a contract.
UCC Article 2
The mismatch forms can create a contract
Rejection of mirror image rule
Conduct Rule
Applies when writings don’t establish contract but parties act like there’s a contract
Must be conduct by BOTH parties
If Bianca ships the books and Adam pays for the books there is a contract even though the forms disagree
What terms Govern Battle of the Forms
Contract created by Written Forms
1) Look at the mismatch
Additional Terms
A definite expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states
terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or
different terms
If the seller wants to make sure that its terms govern the contact—“Seller’s acceptance is expressly made conditional on Buyer’s assent to
the Seller’s additional or different terms”.
When Both Parties are Merchants
General Rule—the new term is a proposal and is into the contract unless
1) Conditional Offer—when original offer forbids new terms (“only”)
2) Material Alteration—when new term materially alters the offer (unreasonable)
3) Objection—when a party objects an additional term
Merchant or Not?
Merchant
People or orgs in a business of dealing in goods of that kind, such as a painting company that buys paint from a hardware store.
If One or Both Parties Are Not Merchants
If one party to a battle of the forms contest is not a merchant, an additional term in the acceptance is a mere proposal
Forum Selection Clause
When two forms say different things on an issue
The UCC does not directly address this situation and disagree on how to form this gap
Contract Created by Conduct
Both parties acting like they had a contract
Knockout Rule
Knock out all terms that don’t match
Leave terms parties did agree on
Implied terms or business practices
Egan Machinery Co. v. Mobil Chemical Company
 order contained a provision stating “Important—this order expressly limits acceptance to terms stated herein, and any additional or different terms
proposed by seller are rejected unless expressly agreed to in writing “
 sent out acknowledgement stating “this offer is accepted on the condition that our Standard Conditions of Sale, which are attached hereto and
made a part hereof, are accepted by you”
Conditional Acceptance
The conditional acceptance clause will convert an acceptance into a counteroffer only where the offeree clearly reveals its unwillingness to process
with the transaction unless it is assured of the offeror’s assent to additional or different terms.
Analysis
’s clause does not create a conditional acceptance because it fails to declare in clear terms the ’s unwillingness to go forward unless additional
different terms are assented to by 
 failure to declare its unwillingness to proceed unless its conditions were accepted compels the conclusion that a contract was formed
The indemnity provision is an additional term because there is no conflicting term and  has acknowledged it.
Holding
’s offer expressly limits acceptance to the terms of the offer and as a result the indemnity provision proposed by  did not become a part of the
contract
 motion should be granted
Langdell (9/25/20)
Module 10— Battle of the Forms
UCC
§2-207
§2-207 (1)  a definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time
operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless
acceptance is expressly made conditional on assent to the additional or different terms
1) Definite expression of assent
2) Seasonable (timely)
3) Response cannot expressly make consent conditional on assent to the additional or different terms
§2-207 (2)  additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become
a part of the contract unless
a) the offer expressly limits acceptance to the terms of the offer
b) they materially alter it
c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received
§2-207 (3)  if the conduct of the parties recognizes existence of a contract then that is sufficient to establish a contract for sale
although the writing s do not establish a contract. Terms are what the party has agreed on and supplementary terms of this act
Specific Transaction Terms  without these met, there probably isn’t assent
If there is variation in these terms, the party has not reached an agreement and there is not a contract
Ex: price, quantity, delivery terms
Sell between merchants—both parties are chargeable with the knowledge or skill of a merchant
Non-Merchants if NOT between merchants then the additional term in the acceptance do not automatically become a part of the
agreement. Instead, it is a “proposal” and we have to find affirmative expression of assent to the new term for it to become a part
of the contract.
Then you have to find some expression of assent for the term to be added to the contract
Merchants  the additional terms do become part of the contract unless one of the three exceptions apply
Comment 4
Examples of typical clauses which would normally “materially alter” the contract and so result in surprise or hardship if incorporated without express
awareness by the other party are: a clause negating such standard warranties as that of merchantability or fitness for a particular purpose in
circumstances in which either warranty normally attaches; a clause requiring a guaranty of 90% or 100% deliveries in a case such as a contract by
cannery where the usage of the trade allows greater quantity lee ways…”
Comment 5—No Element of Surprise  examples of clauses which involve no element of surprise and should be incorporated in
the contract unless notice of objection a clause about the seller’s exemption due to supervening causes beyond his control, a clause
providing interest for overdue invoices, fixing the sellers standard credit terms where they are within the range of trade practice
and do not limit any credit bargained for; a clause limiting the right of reject for defects.
a) Limiting remedy in a reasonable manner (question of fact)
if the limitation of remedy “materially alters” the offer, it falls out; and the contract is formed on the buyers terms
If the limitation does not materially alter then it automatically becomes apart of the contract
Terms do not become a part of the merchant contract when:
a) “offer expressly limits acceptance to the terms of the offer
b) the buyer notified the seller of his object to the sellers new term
it is possible that an agreement will NOT arise by the exchange of documents under § 2-207(1)
Conduct
Agreement might still arise when the above are present if the conduct of the parties are acting as if there is a contract
Ex: seller shipping goods and buyer paying for the goods
Definite and Seasonable Expression of Acceptance
There has to be a timely and definite expression of acceptance of the offer for there to be a contract to begin with
Limitation of Warranty
Probably a significant change
Delivery and Credit Terms if delivery is of the essence then its important, usually credit is too.
Arbitration— article 2 gap-fillers do not provide for arbitration
(a) on one hand they materially alter because arbitration is an important right (2) on the other it is very common in some industries & should not be a
surprise.
Mirror Image Rule IS thrown out if there is still assent to the offer
§2-207 doesn’t want the parties to be bound to an offer where they didn’t agree so the acceptance has to show the seller agrees even though they have
proposed different terms. But if the terms are so different into stuff that really matters then that is a strong indication that there is not an agreement
unless there is contract formation under conduct.
Where the acceptance includes terms different to the offer:
1. Do we have an offer? (governed by common law terms)
2. Do we have an acceptance where the acceptance contains terms different from those in the offer? (2-207 (1)) if yes
3. What are the terms of the contract 2-207 (2)
4. if no to 2
5. then do we have contract under 2-207 (3) by the conduct of the parties
6. if yes then 2-207 (3) to determine the terms of that agreement
Different vs. Additional Terms
Bolded in (1) and (2) of 2-207
Additional Terms are Proposals when: (merchants)
a) A response is not “a definite and seasonable expression” of assent and so not be an
offer
b) Acceptance is made “expressly conditional” on assent to the additional or different
terms, and the offeror has not assented
c)
The terms materially alter the contract
The “Knock Out Rule” Approach  If the offer and acceptance have different terms, then they knock each other out
Then the terms are that which the parties agree + any terms that would be applied as a matter of law from article 2.
Module 11—Consideration: The Basics
Consideration  a promise is not legally enforceable unless it is in
some sense “paid for”
Quid Pro Quo (this for that)  Promise could not be furnished by
anything that was either a detriment to the promise or a benefit to the
promisor
Detriment  The promisee suffers a detriment if he is left poorer or
some way (money, property, some legal right)
Benefit  The receipt of such money, property, or rights from the
promisee is a benefit
Similar performance—is consideration if it differs from the original duty (fishing
example) (sculpture example)
Bargain Theory
The Bargain Theory (Restatement 2D § 71)
1) To constitute consideration a performance or a return promise must be bargained for
2) 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 promise in
exchange for that promise
3) The performance may consist of
a) an act
b) a forbearance to act
c) the creation, modification, or a destruction of a legal right
“Bargained For” must be (1) sought by the promisor in return for this promise, and (2) given by the promisee in exchange for
that promise
Promise must induce conduct of the promisee and the conduct of the promisee must induce the making of the promise by the
promisor
Hamer v. Sidway
Rule
In general, a waiver of any legal right at the request of another party is sufficient consideration
for a promise (detriment counts as consideration)
Any damage or suspension or forbearance of a right will be sufficient to sustain a promise
Benefit Detriment Theory
The promisee suffers a detriment and the promisor receives a benefit
Benefit — Uncle received a psychological benefit that his nephew wouldn’t do drugs or drink,
Detriment — nephew’s detriment was refraining from a legal right
Bargain — Uncle sought to induce nephew’s forbearance and nephew refrained in return for
payment.
Gratuitous Promise
Gifts  there is no exchange so there is no consideration
Conditional Gift  “if you go around the corner ill buy you a jacket” the promise was not made to induce the walking around the
corner, it is merely a condition
Kirksey v. Kirksey
“If you come down and see me, I will let you have a place to raise your family”
Module 12—Consideration the Basics Cont.
Carisle v. T & R Excavating, Inc.
Restatement (2d) § 79. Adequacy of Consideration; Mutuality of Obligation
If the requirement of consideration is met, there is no additional requirement of
a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promise
b) equivalence in the values exchanged
c) mutuality of obligation
Pennsy Supply, Inc. v. American Ash Recycling, Corp.
Consideration must exist for there to be an enforceable contract
Consideration
Consists of a benefit to the promisor or a detriment to the promise
Gratuitous Promises  nothing is sought in return and nothing is given in return therefore, gift promises are not supported by consideration and are
not enforceable (there is no exchange)
Three Purposes of Considerations
Channeling Function it sorts out the promises the law will enforce from the promises it will not
Cautionary Function it brings home to the promisor that he or she is about to engage in conduct having legally significant consequences
Evidentiary Function It provides some evidence after the fact that the promise was in fact made
Hypotheticals
1) painting the house and paying the painter (yes consideration bc the purpose of the promise is to induce some action)
2) ill give you 2k if you send me your address (no consideration) (a gift with a condition)
3) “tramp hypo”—if you go around the corner to the store ill buy you a coat (no consideration—the promise was not made to induce him
walking around the corner, it’s a gift that requires him to walk around the corner)
Bargain Theory the promisor’s purpose is to induce something
Kirksey v. Kirksey
“if you come down and see me, I will let you have a place to raise your family”
The promise was a “mere gratuity” unsupported by consideration. Her moving is a prerequisite to get the gift
Carlisle v. T&R Excavating, Inc.
Motivation is NOT consideration
Past Consideration For a right to be consideration, it must be sought by the promisor in exchange for the promise, and that
cannot occur where the promisor is already entitled to that right
The action/condition/performance cannot have already existed before the promise was made
Unsolicited Action Problem to have consideration the promisor’s purpose in making the promise must be to induce the exchange.
Consideration v. Condition
A promise may be conditioned on some event, even though the promise is clearly a gift
The right question to ask: ‘Did the promisor decide to make the promise in the first instance in order to get the supposed consideration in return?’
Does the promisor get any benefit from the exchange? If no, no consideration. If yes, did the promisor make the promise to get that benefit? (ex:
getting reimbursed for material costs)
Module 13—Consideration
Pennsy Supply, Inc. v. American Ash Recycling Corp.
Bargained Theory requires mutual inducement into promising or acting by another party’s promises or actions. Does not
actually require that the parties bargain over the terms of the agreement
American’s promise to provide free aggrite induced pennsy’s promise to haul it away. They offered the aggrite so they would not have to dispose it
Schnell v. Nell
Schnell did not promise to pay $600 in exchange for 1 cent
It is NOT because lack of equivalence in value per se
Adequacy or Equivalence NOT required if the requirement of consideration is met then there is no need for equivalence of value in the
exchange
Courts do not inquire into the adequacy of the consideration. They enforce voluntary exchanges and do not second-guess the values assigned to the
parties
These are not sufficient consideration:
Sham Consideration the agreement may falsely recite that the promisee gave consideration when in fact it is not true (“for valuable consideration,
the receipt and adequacy of which are hereby acknowledged…”)
Nominal Consideration the agreement may provide for the promisee to give or suffer some nominal detriment in exchange for the promise
(something that isn’t a contract but makes it look like a contract)
Settlement of Claims
(1) forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless
a. the claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or
b. the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid
Channeling this is an intra-family dispute, but it is about property and money, so it resembles a commercial dispute.
Cautionary & Evidentiary  agreement is in writing signed and sealed
Pre-Existing Duty Rule performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is
not consideration, but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more
than a pretense of a bargain.
Ex: police officer having a legal duty to do an investigation that a private citizen is asking a reward for
Module 14—Consideration, Pre-Existing Duty Rule, Illusory Promises, Mutuality
Pre-Existing Duty Rule
Pre-Existing Duty Rule performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is
not consideration, but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more
than a pretense of a bargain.
Ex: police officer having a legal duty to do an investigation that a private citizen is asking a reward for
Restatement 2d § 73 “Performance of a legal duty owed to a promisor which Is neither doubtful nor the subject of honest dispute is not consideration,
but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of a bargain”
C.H. Betterton v. First Interstate Bank of Arizona, N.A.
Trial court decided that banks promise was not legally enforceable because there’s no consideration. Betterton agreed to have the truck repaired but
this promise was a pre-existing duty in contractual agreement with the bank that he had already agreed to.
Pre-Existing Duty Rule performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest
dispute is not consideration.
He already agreed to keep his truck repaired
Evading Pre-existing Duty Rule similar performance is consideration if it differs from what was required by the duty in a way
which reflects more than a pretense of a bargain
Provide some new, additional performance
Illusory Promises
Illusory Promise Blacks Law— “A promise that appears on its face to be so insubstantial as to impose no obligation on the promisor; and
expression cloaked in promissory terms but actually containing no commitment by the promisor”
Restatement 2d § 77—“A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of
alternative performances, unless (a) each of the alternatives would have been consideration if it alone had been bargained for…”
Blyden A Davis v. Joseph J. Magnolia, Inc.
“sole discretion”—when a party states it has the ‘sole discretion’ to change the terms of the contract then they didn’t really promise to do anything.
Although the party promised to arbitrate, it did not really because it reserved the discretion to change the terms.
To fix this Magnolia would need to show that it too is committing to arbitrate. The unilateral right to change policy is illusory.
Wood v. Lucy, Lady Duff-Gordon
(1) a contract may be enforced when there is no evidence of a promise, exchanged as consideration, in the explicit terms of the contract (2) a promise
to use reasonable efforts may be implied from the entire circumstances of a contract
Mutuality of Obligation—Consideration
Mutuality of Obligation—if the requirement of consideration is met, there is no additional requirement of (1) mutuality of
obligation…
The consideration by each party must be identical or alike or equivalent. The promises of the parties do not need to have the same spatial or temporal
scope or boundaries. .
Doughty v. Idaho Frozen Foods Corp.
Declaratory Judgement sets out the rights of the parties, it does not produce monetary judgment
Illusory Promise looks like a promise but does not obligate the promisor to do anything if it so chooses.
IFF made a conditional promise but was obligated to purchase the potatoes if the condition was filled. This did not give IFF a choice as to whether to
buy the potatoes or not— NOT ILLUSORY
Module 15—Consideration and Contract Modification
Common Law Approach
Alaska Packers’ Ass’n v. Domenico
Nets ineffective so demand an increase in contract salary to $100—court held modification not enforceable
Pre-Existing Duty Rule performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest
dispute is not consideration, but a similar performance is consideration if it differs from what was required by the duty in a way
which reflects more than a pretense of a bargain.
This rule is made because it does not want one party taking advantage of the other’s dependence on his performance
Limitation** if the promisee adds something to its performance in exchange for increased pay
Hypothetical 1—fisherman then demanded $100 instead of $50 per person and also promised they would clean the boat
Yes—in exchange for the extra $50, they promised to clean the vessel.—similar performance is consideration if it differs form what was
required by the duty in a way which reflects for than a pretense of a bargain.
Exception it would not matter if washing the boat amounted to much less than $50, economic equivalence is not normally
required in an exchange.
Hypotherical 2—two companies sit down and burn and release each other from the first contract and draw up a new one for $50.
Mutual Release exception to the pre-existing duty rule. There is three contracts (1) the original (2) the release and (3) the final.
(2) eliminates the pre-existing duty, so (3) is enforceable.
Angel v. Murray
Trash collector wanted more $ than contracted stated because the city acquired 400 new residents unexpectedly.
Unanticipated Circumstances Exception
A contract modification is enforceable if the parties voluntarily agree and if
(1) the promise modifying the original contract was made before the contract was fully performed on either side
(2) the underlying circumstances which prompted the modification were unanticipated by the parties, and
(3) the modification is fair and equitable.
Waiver
3637 Green Road Co. v. Specialized Component Sales Co. Inc.
Court held that the landlords conduct in accepting the payments waived the anti-waiver provision.
Altered Performance Exception  a similar performance is consideration if it makes even a modest addition or alteration of
performance from the original duty
Anti-Waiver Provision no waiver of any condition or legal right or remedy shall be implied by the failure of lessor to declare a
forfeiture or for any other reason, and not waiver of any condition or covenant shall be valid unless it be in writing signed by the
lessor
No implied waivers—no conduct of the lessor shall be used to infer that it has waved any rights under the contract
No oral express waivers—an express waiver will not be effective unless it is in writing and signed.
Waiver a voluntary relinquishment of a known right— a forfeiture of a right that a party could have enforced under the terms of
the agreement
Express Waiver—creditor tells D you may make your October payment at any time before the 15th. D pays on the 10th.
D’s payment is timely because C waived its right to require payment on the first.
Implied Waiver—D makes June, July, august and September payments after the 1st. C accepts. D does not make the October payment on the 1st and
C declares a default.
From C’s acceptance of 4 prior late payments without objection it is inferable that C has given up its right to demand payment on the 1st.
No oral-modification provision parties agree that the contract can be modified only by a written, signed document specifying the
modification.
UCC Contract Modification
Hypothetical—Co. agrees to sell 24k gallons of paint to retailer at $5/gallon delivered at 1k gallons/month for 24 months. After 14 months, shortage
in resin resulted in higher prices so Co. was losing $.25/gallon instead of making $.25/gallon. Co. requests increase from $5 to $5.50 and retailer
agrees and its entered into a written contact modification
Article 2—an agreement modifying a contract within this article needs no consideration to be binding.
(3)
Every contract or duty within the UCC imposes an obligation of good faith in its performance and enforcement
Duty of Good Faith honesty in fact and the observance of reasonable commercial standards of fair dealing
Subjective—factual honesty. Objective—fair, as measured by reasonable commercial standards.
Claims Settlement
At common law, to effectuate a binding settlement agreement, an “accord and satisfaction”, a creditor’s agreement to accept less than the full amount
owed would discharge the remaining obligations only if the debt was unliquidated or disputed.
Unliquidated  not reduced to a dollar amount
Disputed  subject to a good faith agreement
UCC § 1-306  a claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by
agreement of the aggrieved party in an authenticated record.
Consideration is unnecessary for the enforcement of a release or waiver of claims arising out of a claimed breach of commercial contract where the
release is memorialized in a record authenticated by the creditor.
Module 16—Promissory Estoppel
Harvey v. Dow
The parents promise at some point to give her land (court says not a promise bc too indefinite) then allow her and actively supported her building a
house on that property
§ 90—Promissory Estoppel a promise which the promisor should reasonably expect to induce action or forbearance on the part
of the promise or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by
enforcement of that promise. The remedy granted for breach may be limited as justice requires.
(1) a promise (2) that the promisor should reasonably expect to induce action or forbearance (3) which does in fact induce that action or forbearance
(4) enforcing the promise is necessary to prevent injustice
Holding the court said that the father’s actions were enough to confirm his general first promise of at some point giving her the land. She relied on
their promise to build a $200,000 house. It’s necessary to enforce this promise to avoid injustice of her $200k expense
Restatement 90(1) the remedy granted for breach may be limited as justice requires
Hayes v. Plantations Steel Co.
The problem is element (3) whether Hayes actually did something in reliance on the promise
His retirement—the company continuing to pay him did no induce his retiring
Not seeking other employment—the promise did not induce him to forbearing looking for another job because he never planned to get another job
after he retired.
Avoidance of Injustice Reasonableness of the reliance and that the reliance is of a definite and substantial character
The promisor is affected only by reliance which he does or should foresee, and enforcement must be necessary to avoid injustice.
Katz v. Danny Dare, Inc.
The Doctrine of Promissory Estoppel (1) a promise (2) a detrimental reliance on the promise (3) injustice can be avoided only by
enforcement on the promise
Katz action of taking retirement was taken in reliance on the promise to get paid
Charitable Subscriptions
Hypothetical
Conrad promises to pay fields for her books if the she enrolls in law school. She quit her job and then enrolled in law school. She therefore relied on
Field’s promise.
Hypothetical
Suppose field argues that law school is not detrimental because she receives a valuable law degree
Promise must only induce action or forbearance but there is no mention of the reliance needing to be detrimental.
But even if it must be—she incurred debt and gave up her job and therefor surrendered her salary
Restatement § 90(2)—a charitable subscription or marriage settlement is binding under subsection (1) without proof that the
promise induced action or forbearance.
This is not the law anywhere.
Consideration Lacking
Module 17—Promissory Estoppel- Special Applications
Construction Contracts—A Special Problem
The problem—the general contractor is awarded the contract but before it has a chance to
notify the subcontractor whose bid has been used, the subcontractor attempts to revoke its
bid because of a better opportunity, rise in costs, or mistake in figuring.
Baird and Drennan
(Traditional) Baird  a subcontractor that discovers a mistake in its bid
before the bid had been accepted by the general contractor could revoke its
bid in spite of the general contractor’s reliance by using the subcontractor’s
bid to compute its own bid on the main project.
Rejects estoppel based on reliance, saying it was inappropriate in the commercial context
where the offer sought acceptance by promise.
(Modern) Drennan  even though the subcontractor had made no express
promise to keep its offer open, it reasons that such a subsidiary promise should be implied “to preclude the injustice that would
result if the offer could be revoked after the offeree had acted in detrimental reliance thereon.”
Rejects the argument that a bilateral contract arises when the general contractor uses the subcontractor’s bid on the ground
Bid v. Offer
Both Baird and Drennan agree that a bid is an offer.
Bid manifestation of willingness to enter into a bargain at a certain price, and the recipient should be justified in believing that
his acceptance of the bid would result in a final agreement.
Offer v. Promise
Baird  offer is not a promise because no promise until consideration has been received.
Drennan  the offer is a promise
Restatement holds an offer is a promise for an act
Acceptance
A bid is not acceptance— it does not complete the contract. Also acceptance must be communicated to the offeror and the general contractor’s use of
the bid is not communicated
Promise a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in
understanding that a commitment has been made.
Offer manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent
to that bargain is invited and will conclude it.
The offer itself is a promise, revocable until accepted. An offer is a promise, but a promise is not necessarily an offer.
Representation a statement of fact that refers to the present. A representation does not involve a claim about the future, nor does
it necessarily involve a claim about an intention.
§45 v. §87(2)
§45 Unilateral Contracts —Provides that a reasonable reliance on the offer of a unilateral contract (by part performance) renders the offer
irrevocable. Applies only to Unilateral contracts where the offeree begins performance in reliance on the offer
(Drennan) §87—provides that a reasonable reliance on an offer of a bilateral contract (by using the offer that is the subs bid to
compute its own bid) also renders the offer irrevocable.
“an offer which the offeree should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before
acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
The bidder could negate the effect of § 87 by expressly reserving the right to revoke the bid at any time
Bid Shopping—a general contractor is not free to delay acceptance after he has awarded general contract in the hope of getting a
better price
Bid Chopping—the general contractor cannot reopen the bargaining with the subcontractor and at the same time claim a
continuing right to accept the original offer
Precontractual Reliance
Traditional Approach
Traditionally parties are free to negotiate without the risk of precontractual liability.
Modern Trend
Courts have begun to find liability based on specific promises made to interest the other party in the negotiations and that the other party has relied
on.—Franchise cases: a prospective franchisee, relying on the franchisor’s promise of a franchise, makes substantial expenditures for advertising
Hoffman v. Red Owl Stores
Level of Promissory Commitment
Red Owl made a repeated promise to grant operation of a store in exchange for $18,000 investment and advised Hoffman to take specific measures to
develop the training and financing necessary for the exchange.
The manifestation, specific amount, non-tentative language, and series of instructions indicate there was a commitment
Extent of Reliance
Hoffman made major purposes and sales in reliance. He sold his bakery, bought a grocery store, moved to another city, etc.
This is substantial reliance
Reasonableness of Reliance
Red Owl instructed Hoffman to take specific actions—he acted upon Red Owl’s specific urging
Prenger v. Baumhoer
Tentative Promise  invitation to negotiate in the future — no promissory estoppel
Level of Promissory Commitment  a promise does not need to, “be so comprehensive in scope as to satisfy contract requirements,
but it does need to be more definite than simply an invitation to negotiate in the future.
Commitment was tentative
Extent of Reliance
Prenger claims to have incurred expenses obtaining environment impact studies, appraisals, bank financing, etc. But the letter was signed March 6,
and he was notified he sold to another on the 29th before he got the bank loan.
This is less substantial reliance.
Reasonableness of Reliance
Prenger’s actions are not reasonable. He relied on the language of a “tentative agreement”
Module 18—Restitution & Material Benefit
Unjust Enrichment and Promissory Restitution
Restitution (unjust enrichment) (quasi-contract)  a right to recover restitution arises when a claimant has conferred a benefit on
the recipient under circumstances making it unjust for the recipient too retain the benefit without paying for it.
a person who has been unjustly enriched at the expense of another is required to make a restitution
Non-contractual right of recovering in favor of one who confers a benefit upon another without the other’s solicitation where that enrichment would
be unjust.
In unjust enrichment cases there is NO BARGAIN. So, recovery is measured by the value of the benefit conferred
When is recovery appropriate?
“one who without intent to act graciously, confers a measurable benefit upon another, is entitles to restitution, if he affords the other an opportunity to
decline the benefit or else has a reasonable excuse for failing to do so. If the other refuses to receive the benefit, he is not required to make restitution,
unless the actor justifiably performs for the other a duty imposed upon him by law”
(1) P has conferred a benefit on D (2) D had knowledge of the benefit (3) D has accepted or retained the benefit and (4) the circumstances
are such that it would be unjust for D to retain the benefit without paying fair value for it
Measure of Recover
(1) Reasonable value of the services— what would someone charge for these services?
(2) increase in value of property — by what amount has the value of the s property increased due to benefit
Limitations
Where enrichment is not unjust:
Gratuitously— if the benefit is given making it appear to be a gift, restitution is not permitted. The party conferring the benefit is denies recovery on
the ground that he is a “volunteer”
EX: when one renders aid to save another’s life or property
EX: when one is offering services in her professional capacity gratuitously is OVERCOME
Officiously— one cannot obtain restitution for a benefit the recipient did not solicit and does not desire. A party who confers an unsolicited and
unwanted benefit is denied recovery as an “officious intermeddler”
EX: when a doctor is told the patient doesn’t want the surgery and then the patient goes unconscious and the doc performs the surgery
EX: any continued treatment without effort to obtain the patients consent is officious and not entitled to recovery in unjust enrichment
Volunteer— a person acting from humanitarian motives is not entitles to restitution (presumption that people will render aid without expectation of
compensation)
Harrington v. Taylor
Case where one acts gratuitously to save one’s life but here the good Samaritan sustained personal injuries
Past Consideration Harrington provided a service to Taylor and she intervened to save his life, but that exchange was not
bargained for. Taylor did not induce the rendering of the services when he promised to pay damages
Moral Obligation
Moral Obligation  a promise to pay a contractual or quasi-contractual duty barred by the statute of limitations
“A promise to pay all or a part of an antecedent contractual or quasi-contractual indebtedness owed by the promisor is binding if the indebtedness is
still enforceable or would be except for the effect of the statute of limitations”
(a) promises to pay debts voidable by the promisor
(b) promises to pay debts discharged in bankruptcy
(c) a promise to pay a contractual or quasi-contractual duty barred by the statute of limitiations
These are enforceable without consideration
Webb v. McGowin
Webb saved McGowin by an act of heroism that left him crippled for like. McGowin promised to pay Webb $15 for the rest of his life.
Enforcing promises without consideration
Restatement § 86  designed to recognize some prior moral obligations as substitute for consideration
(1) A promise made is recognition of a benefit previously received by the promisor is binding to the extent necessary to prevent
injustice
(2) A promise is not binding under subsection (1)
a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or
b) to the extent that its value is disproportionate to the benefit
Webb v. McGowin — did not think of compensation when he saved McGowin but he did not mean to make a gift either. He did not render ordinary
aid. The gratuitous presumption should be overcome so that Webb can recover in restitution or under § 86.
Harrington v. Taylor — Harrington had no intent to charge but the presumption of altruism ought to be overcome by her having suffered personal
injuries.
Benefit to Promisor
Mills v. Wyman
Mills gave emergency care to Wyman’s adult son and Wyman promised to reimburse Mills for his
expenses.
Court Ruled — § 86 would not apply because the father received no benefit from Mills’ services.
Also no consideration so not within the “moral obligations exception.
Common Law Slogan the consideration need not flow to the promisor
The performance or return promise may be given to the promisor or to some other person. It may be
given by the promisee or some other person
Consideration Lacking
Module 19—Statute of Frauds: Common Law
Defenses to Contract Formation
Form of Agreement statute of frauds
Identity of the parties minority and mental capacity
Defects in the Bargaining Process misrepresentation, duress and undue influence, mistake
Substance or Content of the Agreement illegality and public policy
Blended—Overreaching, Identity, and Substance unconscionability
Statute(s) of Frauds
Contracts whose subject matter falls within the statute of frauds is not enforceable unless it is in writing
We want greater proof that the contract is made in writing to show there was not fraud
Purpose—to prevent assertion of fraudulent claims. It makes contract unenforceable unless a satisfactory writing exists,
Most Common Types:
M Marriage—contract in consideration of marriage
Ex: prenup— after the marriage falls apart the court is worried one party will come to court and lie
YYear—contract that cannot take place in one year
we want long-term contracts in writing.
Ex: lifetime employment not in the scope bc someone could die before the year is up.
Ex: contract for a concert that will happen in 2 years—even though performance itself is short the contract is longer than 12 months
Ex: tasks are never statute of fraud problems— even if it can take someone more than a year, it has to be in the terms of the contract that it will take
more than one year (the dates).
L Land—land sale contracts, interest in land of a term for more than one year
Ex: sale of house, transfer of lease, etc. for a term of more than one year
Ex: a contract to build a house (if there’s no date over a year specified then it’s a task)
E Executor— executor minister who pays the estate’s debts
We want this in writing because usually it’s the estate who pays the debt so if the executor is willing get it in writing
G Goods— sale of goods at $500 or more
You must have some writing sufficient and quantity term filled in
Ex: sale of a Cadillac— not statute of frauds but still a sale of goods
S Surety— a guarantor of the debt of another person
We want the promise of someone to pay your debt to be in writing
Texas Bus. & Com. Code § 26.01
(a) A promise or agreement described in subsection (b) of this section is not enforceable unless the promise or agreement or a
memorandum of it, is
(1) in writing; and
(2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him
(b) subsection (a) of this section applies to:
(1) a promise by an executor or administrator to answer out of his own estate for any debt or damage due from his
testator or intestate
(2) a promise by one person to answer for the debt, default, or miscarriage of another person
(3) an agreement made on consideration of marriage or on consideration of nonmarital conjugal cohabitation
(4) a contract for the sale of real estate
(5) a lease of real estate for a term longer than one year
(6) an agreement which is not to be performed within one year from the date of making the agreement
(7) a promise or agreement to pay a commission for the sale or purchase of: (a) an oil or gas mining lease (b) an oil or gas
royalty (c) minerals or (d) a mineral interest
(8) an agreement, promise, contract, or warranty of cure relating to medical care or results therof made by a physician or
health care provider (does not apply to pharmacists
Mechanics of the Statute(s)
(1) is the agreement within the statute of frauds? (MYLEGS)
Is the agreement one of those that must be in writing to be enforced?
(2) is there a sufficient writing? If yes, is there a sufficient memorandum to satisfy the writing requirement?
(a) writing (b) signed by party to be charged (c) essential terms
(3) is there an applicable exception? If (1) is yes and (2) is no then is the contract nevertheless enforceable because it falls within some exception to
the statute
Exceptions— satisfy statute of frauds
(1) specially manufactured goods exception—Goods that are made to order
Ex: Bubba enters an oral contract in exchange for $500 to make size 19 cowboys’ boots. Bubba will lose a statute of frauds defense once the goods
are started
(2) written merchant confirmatory—memorandum (both parties are merchants and failure to respond in 10 days)
Ex: seller and buyer enter into oral contract of 100 clocks for $500. Then buyer sends memorandum and the seller never responds. Even though a
seller never signed anything, if this was a fraud the seller would have answered the letter right away
(3) Admitting— if you admit to having a contract under oath then that satisfies the contract and there is no statute of frauds defense
(4) Performance— if you have fully performed then you do not need writing to show a deal was made
(5) Promissory Estoppel— you have detrimentally relied on a promise being made
Ex: oral 3-year employment and the employer never writes the contract, but you relied on the fact that the employer would have wrote that down
Texas does not recognize the statute of frauds as an excuse to SoF
Writing Requirement
Writing Requirement
a) A signed writing— reasonably identifies the subject matter
b) signed BY THE PERSON TO BE CHARGED (defendant) (person being sued)
because this is the person, we are trying to protect.
Can be any symbol executed or adopted with present intention to adopt or accept a writing. Can be any kind of mark.
c) with the material terms
identity of the parties, subject matter of the contract, terms and conditions, consideration, signature of 
a formal writing not required—
(1) can be created after the fact (writing can happen after oral argument)
(2) need not be addressed to or sent to the other party
(3) need not be intended to evidence an agreement (may satisfy even if agreement wasn’t intended)

Land Contract Provision
(1) a promise to transfer to any person any interest in land is within the statute of frauds
(2) a promise to buy any interest of land is within the statute of frauds, irrespective of the person to whom the transfer is to be
made
(4) a contract to the sale of real estate
Depugh v. Mead Corporation
Writing was not signed by the defendant. Nor either party. The letter also didn’t state essential terms.
R2d § 127  an interest in land within the meaning of the statute is any right, privilege, power, or immunity or combination
thereof which is an interest in land under the law of property and is not ‘goods’ within the UCC
UCC § 2-107  a contract for the sale of minerals or the like (oil and gas) or a structure or its materials to be removed from reality
is a contract for the sale of goods within this article if they are to be severed by the seller
If the clay has been dug up and moveable, then it is UCC sale of goods. If the claim remains, then it is a part of the real property.
The One-Year Provision
Purpose— it is concerned with the risk of fraud, mistake, or perjury because the memories of witnesses might not be accurate for a contract that
could not be performed within a year.
(1) where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises are within the statute of
frauds until one party to the contract completes his performance.
(b) subsection (a) of this section applies to: (6) an agreement which is not to be performed within one year from the date of making the agreement.
The statute of frauds is designed to guard against fraud and uncertain memory and the loss of evidence owing to the passage of time
Ex: if parties made their contract on April 1, 2019 to run one year commencing on May 1, 2019— May 1, 2020 is outside a year form April 1, 2019.
— one year from the time the contract was made
Performance vs. Excuse
There is a distinction between death ending the period of performance versus death excusing non-performance
Performance—If an employee is employed for her lifetime, when she dies, she has fully performed. She worked for the duration of her life, and that
just was the term of her employment.
Excuse—If an employee is employed for a term of years, when she dies before the end of that term she wont have fully performed and her death will
have excused performance.
Ex: lifetime employment not in the scope bc someone could die before the year is up.
Irrationality of the Statute of Frauds
This is an example of how courts have narrowly construed the statute(s) of frauds.
Ex: tasks are never statute of fraud problems— even if it can take someone more than a year, it has to be in the terms of the contract that it will take
more than one year (the dates).
If at the time of tis making a contract could theoretically have been performed within a year
Browning v. Poirier
Lower courts conclude that the agreement to split lottery winnings is within the statute because (a) the couple were in a romantic relationship (b) they
intended for the romantic relationship to last for more than a year (c) they also intended the lottery winnings to be split.
If the contracts full performance is possible within one year from the inception of the contract, then it falls outside the statute of
frauds
Williston
The oral contract made unenforceable
Restatement 2D § 131 the oral contract made was unenforceable by the statute because they are not to be performed within a
year include only those which cannot be performed within that period. A promise which is not likely to be performed within a year,
and which in fact is not performed within a year, is not within the statute if at the time the contract was made there’s a possibility
of performance before the expiration of the year.
Durham v. Harbin
Letter had his name typewritten at the bottom and was not sufficient because no evidence could show that he adopted those symbol. There was also a
blank signature line under his typewritten name
Alaska Democratic Party v. Rice
Two year oral performance agreement accepted in the statute of frauds because it cannot be performed within one year of its making.
Promissory Estoppel Exception  No written evidence but the court enforced it because it found the reliance exception to the SoF
applied.
Gibson v. Arnold
The settlement agreement involved (i) transfer of an interest in land, (ii) lease of land for more than one year and (iii) payments of money that
couldn’t be performed within one year
Admitting  if you admit to there being a contract then the SoF cannot apply.
Misrepresentation
Elements of Misrepresentation
(1) a misrepresentation and (2) that is either fraudulent or material (3) reliance by the recipient
and (4) reliance has to be justified.
Misrepresentation
A misrepresentation is an assertion that is not in accord with existing facts.
if a statement is half-truth but fails to include info necessary to prevent it being misleading it is
still a misrepresentation
Restatement 2d § 164 if a party’s manifestation is induced by either a
fraudulent or a material misrepresentation by the other party upon which the
recipient is justified in relying the contract is voidable by the recipient
Thus, if the other elements are satisfied, a misrepresentation by one party allows the other party
to rescind the agreement either if:
Scienter Requirement the three factors of fraud to the right
Materiality A misrepresentation becomes material when it becomes likely to
affect the conduct of a reasonable man with reference to a transaction with
another person.
if a misrepresentation is not fraudulently made then it must be material.
R2k § 162(2) “a misrepresentation is material if it would be likely to induce a
reasonable person to manifest his assent, or if the maker knows that it would be
likely to induce the recipient to do so.
What is a misrepresentation?
(a) a statement of opinion if he doesn’t genuinely hold the opinion
(b) if it’s a true opinion, courts usually hold that the buyer should investigate himself
Vokes v. Arthur
(dance instructors told her she was a good dancer & getting better when she was not)
Misrepresentation—do we have an assertion that is not in accord with the facts
Courts Approach opinions given by experts to non-experts will be treated as representations of fact
Worley’s Opinion when they told her she was “good” and “getting better” they were expressing an
opinion, but those opinions were not honest, so they are misrepresentations
Fraudulent R2d § 162 a misrepresentation is fraudulent if the make intends his
assertion to induce a party to manifest his assent and the maker (in this case we will go
with a) knows or believes that the assertion is not in accord with these facts
The s were instructors and therefore probably knew that their misrepresentations about the s
dancing were not in accord with the facts
Material R2d § 162 a misrepresentation is material if it would be likely
to induce a reasonable person to manifest his assent, or if the maker
knows that it would be likely to induce the recipient to do so.
The s surely knew that their lies about the s dan
Concealment v. Nondisclosure
Obde v. Schlemeyer
there was action taken to conceal surface level termite damage which necessarily involves non-disclosure
Concealment  seller has engaged in affirmative conduct descend to prevent buyer from learning the truth. Action intended or known to be likely to
prevent another form learning a
Did the seller “intend” to conceal the termite condition? — concealment has to be done with an intention to cover the truth or its known that the
actions are likely to cover up the truth
Restatement § 160  action intended or known to be likely to conceal a fact is the legal equivalent of a misrepresentation.
Non-Disclosure  where one person simply fails to inform another of a fact relating to the transaction
When does a party have to disclose?
Modern View  a person’s non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the
following cases only:
(a) where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a
misrepresentation or from being fraudulent
(b) where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on
which that party is making the contract and if nondisclosure of the fact amounts to a failure to act in good faith and in
accordance with reasonable standards of fair dealing
A, seeking to induce B to make a contract to buy A’s house, knows…
(c)
(d)
L & N Grove, Inc. v. Chapman
Bought land and after the deal closed the land was more than chapman thought it was.
Module 24—Duress & Undue Influence
Duress
Duress by Physical Compulsion  if conduct that appears to be a manifestation of assent by a party who does not intend to engage
in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent
Duress by Improper Threat  if a party’s manifestation of assent is induced by an improper threat by the other party that leaves
the victim no reasonable alternative the contract is voidable by the victim
Elements (1) an improper threat (2)
§ 176— Improper Threats a threat of: (a) a crime or a tort or the threat itself would be a crime or a tort if it resulted in
obtaining property (b) threat of criminal prosecution (c) the use of civil process and threat is made in bad faith or (d) a breach of
the duty of good faith and fair dealing under a contract with the recipient.
(2) “A threat is improper if the resulting exchange is not on fair terms, and (a) the threatened act would harm the recipient and
would not significantly benefit the party making the threat, (b) the effectiveness of the threat in inducing the manifestation of
assent is significantly increased by prior unfair dealing by the party making the threat, or (c) what is threatened is otherwise a use
of power for illegitimate ends”
Difference between the two Duress
Physical Duress  renders a contract VOID
Neither contract can enforce this
Ex: Gabby was forced to sign a prenup contract by physical abuse.
Improper Threat  improper or wrongful threat which leaves no reasonable alternative but to agree VOIDABLE by the aggrieved
party
A bad guy and a vulnerable guy who has no choice but to agree. Land with a voidable contract can be sold.
Void vs. Voidable
Void  not enforceable
Voidable  avoidable contract is enforceable as long as a party does not “avoid” it, and it may be rendered “unavoidable” if the
parties take certain actions.
Policy
Physical Compulsion — she is not manifesting an intention
Improper Threat — may have intended to do the act but the duress undermines the voluntariness of what they have done
Everbank v. Marini
Husband brandishes the scissors and the next day she signed the loan and mortgage agreement — physical duress
A threat, even if improper does not amount to duress if the victim has a reasonable alternative and fails to take advantage of it.
Where a physical threat is not imminent one might argue the victim has an alternative
No Reasonable Alternative
The victim has to experience fear of loss of life, loss of limb, or imprisonment. Otherewise, one was supposed to use the legal process to combat the
threat.
Economic Duress
Alaska Packers Ass’n
If the breaching party would prefer to breach and pay damages rather than perform, the law usually thinks this is fine.
BUT this case is about the defendants threatening more money as a hold up because the plaintiffs do not have any alternatives. They could have sued
but the fisherman almost certainly would have not been able to pay the huge damages.
Improper Threat  (d) a threat of a breach of duty of good faith and fair dealing under a contract with the recipient
Cabot Corporation v. AVX Corporation
Economic Duress— (1) one side involuntarily accepts the terms of another (2) under circumstances that allow no other option (3)
due to coercion by the other party
The global shortage of tantalum forced AVX to enter in the new agreement, not Cabot.
To show relief one must show they had no reasonable alternative but to assent to the threat.
Common Law — just looks for an improper threat
The letters of intent were not binding contracts
Undue Influence
Designed to protect victims of unfair transactions that are induced by improper persuasion.
Duress— involves fear induced by threat
Undue Influence  aimed at protecting those affected with some weakness by use of improper persuasion
a) over persuasion— use of “excessive pressure” and
b) undue susceptibility— the victims special vulnerability
Restatement 2d §177  undue influence is unfair persuasion of a party who is under the domination of the person exercising the
persuasion or who by virtue of the relation between them is justified in assuming that that person…
Russo v. Miller
Undue Influence  unfair persuasion of a party who is under the domination of the
person exercising the persuasion or who by virtue of the relation between them is justified in
assuming that the person will not act in a manner inconsistent with his welfare
(2) if a party’s manifestation of assent is induced by undue influence by the other part, the contract
is VOIDABLE by the victim
(1) either (a) a relationship of dominance or (b) a relationship of trust and confidence; and
(2) unfair persuasion by the dominant or trusted person
Undue Influence v. Fraud
Fraud is when one party misrepresents facts to another to induce them — undue influence involves using one’s relationship with the other to induce
them
Fraud — false representation of fact V Undue Influence — opportunistic misuse of power
Module 25— Public Policy
Autonomy  people desire to shape their own lives and to arrange their
own affairs, so if they want to enter into an agreement, the law should let
them.
Economic Efficiency  transactions are socially efficient if they make
both parties better off than they were prior to the transaction— contract
law promotes efficiency by encouraging, promoting, and facilitating such
transactions.
Paternalism  people generally are the better judges of their own
interests, but there are times when they may be ill-situated to make
those judgements— the law may intervene and not enforce an agreement
in order to protect a party from his own poor judgment.
Negative Externalities  a contract that directly benefits both parties
directly involved in the agreement may create negative externalities (i.e.,
harm to third parties) either some specific, identifiable individuals or
society as a whole).
Freedom of Contract  enforcement of freely-made contract in order to facilitate private exchange, which is good for the parties
Illegality v. Public Policy
Illegal  if it contravenes a statute or a rule of common law
Some contracts are deemed illegal where performance of the contract involved committing a crime or tort but not all illegal contracts are criminal
Public Policy  some contracts may not be illegal but nevertheless offend some “public policy”
Courts have discretion and usually require strong showing of harm to the public interest before avoiding a contract on public policy grounds
Illegality and In Pari Delicto
Licensing Statute
Public Welfare  if it appears that the licensing requirement is designed to protect
the public health, safety, or welfare, then a contract contravening the requirement
will be illegal and unenforceable.
Revenue Raising  if the licensing requirement is merely a revenue-raising
device, then a court may find that refusing to enforce the agreement does not
advance any important public policy.
Exculpatory Clauses
Exculpatory Clause  absolves a contracting party from liability
to the other party for any number of possible acts or omissions—or
from any liability at all
A ski resort may seek to disclaim liability for injuries suffered by skiers. A landlord
may seek to disclaim liability for injuries suffered on the premises.
Courts strike down terms that attempt to absolve a party from liability for
intentional or reckless conduce.
Courts have enforce contracts under which one exempts himself from tort liability
caused by negligence — courts have also held that such exculpatory agreements
are unenforceable where the agreement affects the public interest and the other
party is a member of the protected class
employer cannot exempt itself from negligence liability to employees
common carrier or public utility cannot exempt itself from negligence
liability to a customer
some courts now refuse to enforce exculpatory clauses in residential
leases
Berlangieri v. Running Elk Corporation
 was injured while horseback riding at the lodge owned by . Sued  for
negligence.
Court — “to exercise due care to avoid risks of physical injury to consumers” 
favors refusing to enforce personal injury waivers
Dissent — freedom to contract  argues that you can relinquish rights in
exchange for goods and services  releases are enforceable.
Why we have Exculpatory Clauses
landlords will increase rents to cover their additional liability or may
decide to go out of business reducing the supply of housing
manufacturers may stop making products, like small aircraft or vaccines, that could lead to potentially large liability claims
recreational activity operators may decide to stop offering some activities
Module 26— Unconscionability
Asks are there contracts that are so unfair in substance that courts should not enforce them?
Warranties
Unconscionability
UCC § 2-302  (1) if the court as a matter of law finds the contract or any clause of the contract finds the contract or any clause of
the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the
remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause to
avoid any unconscionable result.
(2) when it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be
afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the
determination
Restatement 2D § 208 if a contract or term thereof is unconscionable at the time the contract is made a court may refuse to
enforce the contract or may enforce the remainder of the contract without the unconscionable term, or may so limit the application
of any unconscionable term as to avoid any unconscionable result.
Williams v. Walker-Thomas Furniture
Mother of 7 children who relied on public assistance signed an agreement when she purchased a stereo and she defaulted and claimed the agreement
was not enforceable because it was unconscionable  not unconscionable because she had a meaningful choice not to buy the stereo
Elements of Unconscionability
Unconscionability an absence of meaningful choice on the part of one of the parties together with contract terms which are
unreasonably favorable to the other party
(1) absence of meaningful choice
Procedural Unconscionability  unfair bargaining tactics or taking unfair advantage of the other
a. a complete lack of bargaining power on the part of the victim. This undermines the “voluntariness” of the assent OR
b. unfair surprise suffered by a party who could not reasonably be expected to have understood the terms of the agreement
oppression  when there is no negotiation or meaningful choice for the oppressed party
surprise  when one party buries provisions in hard-to-read text so that the other party doesn’t learn of them until after signing
(2) unreasonable favorable terms
Substantive Unconscionability  an unfair contract or term
a. unreasonably favorable to the seller or commercially unreasonable (some courts require this term to “shock the conscience”)
Restatement § 208  overall imbalance— gross disparity in the values exchanged may be an important factor.
Margaret Mitchell v. HCL America, Inc.
 sued  for employment discrimination.
Restatement § 208 (c)  theoretically it is possible for a contract to be oppressive taken as a whole, even though there is no
weakness in the bargaining process and no single term which is in itself unconscionable
Contract was oppressive  it stated to sign the contract or look for another job.
Arbitration Clause
Court finds the clause is oppressive because the selection in this agreement would require the  to litigate in California thousands of miles from her
location of employment in North Carolina (where the  normally does business) so it is unconscionable.