If K mixed between goods and services; analyze the purpose of the overall contract - if it is for sale of goods, then UCC
K Formation: “Consideration” and “Mutual Assent” Rest. §17
Necessary elements of all Ks
A. Consideration – Performance/promise, bargained for, and given in exchange for another (Rest. §71) Hammer (Uncle)
1. Mutual Inducement - Was the party induced into K, by the offered Promise/Performance of the other party? Langer (Pension)
2. Insufficient – Kirksey (Grat. Promise); Strong v Sheffield (Illusory); Mills v Wyman (Past Performance); In Re Greene (Nominal Consideration)
Unilateral Cancel Clause does not make obligation illusory if there is some restriction (Notice Time; Extrinsic Event; etc.) Laclede Gas v. Amoco Oil
B. Mutual Assent – Have the parties manifested some intent to be bound? Rest §18 Do not need offer/acceptance on willingness to be bound Rest §22
1. Offer - Manifestation of willingness to enter bargain so that offeree should understand only assent is required to form K Rest. §24; Nordyne (Special Product)
TEST- Would a Reasonable Person, in offeree’s position, believe only assent is necessary? Nordyne
2. Acceptance - Mirror-Image - Acceptance is a manifestation of assent to the terms of the offer in manner invited by offer Rest. §50 Peerless
Unilateral Acceptance; more than preparations Ever-Tite Roofing TEST- Would a Reasonable Person, in offeror’s position, believe offeree assented?
Acceptance isn’t completed until performance complete, but offeree has equitable option K to complete performance after starting Rest. §45
3. Termination of Offers – Break Mirror Image=Counteroffer Rest. §39: Expiration in Stated/Reasonable Time Rest. §41: Revocation by Offeror Dickinsonv.Dodds
Affirmative Defenses
An affirmative defense invalidate otherwise valid K
A. The Statute of Frauds – MYLEGS Rest. §110: Explicitly +1 Year from Formation
+500 Sale of Goods
Interest in Land
B. Infancy – All Ks voidable by infants Halbman; Except, if Ratified/For Necessities Webster Street; Benefit/Depreciation/Dodson Rules Dodson
C. Mental Defect §15 -Cognitive-Unable to Understand Marriage of Davis: Affective-Unable act in Reasonable Manner Farnum; Except, FairK+Knowledge
D. Intoxication-(1)Other party aware of intoxication,(2)Intoxicated party satisfies defect test,&(3)Party promptly disaffirms K after regaining facilities(§16)Hyland
E. Duress (1) Improper Threat (2) No Reasonable Alternative (Rest. §175); Economic Duncan; Physical Austin Instrument
F. Misrepresentation Assertion (1) Not in Accord with Facts (2) Material or Fraudulently Inducing (3) Receiver Justified in Relying Rest. §164 Stambovsky
G. Unconscionability Procedurally (Inequality in Bargaining/Deception/Weaker Party Unable to Protect Interests/No Choice. Frostifresh) &
Substantively Unconscionable (Unfair Risk Allocation/Terms not Related to Legit Commercial Needs/‘Shocking to Conscience’ Zapatha v. Dairy Mart
H. Public Policy –Terms prohibited by legislationintent or interest in enforcement, outweighed by Judicial Norm against terms; Rest. §178; Matter of Baby M.
K Interpretation
Inclusion/Meaning/Enforceability of Terms
A. Standard Form– Terms Generally Enforceable; Unless, Terms Unreasonable, Lack of choice, Lack of Noticegeneral/specific Rest. §211 Healy [Baggage]
B. Battle of the Forms – UCC 2-207 – (See Flow Chart) – Sale of Goods
MUST BE AT LEAST ONE (1) FORM
C. Parol Evidence– (Add Term Discussed Prior/During Formation & Not in the Writing) Is there Merger Clause?
D. Interpretation – (Dispute over Meaning of Present Term) Textualist Giancontieri v. Contextualist In Re Soper
Breach Duty that was due was not adequately performed, breaching the K
A. Failure to Provide Promise/Performance - Failure to satisfy a duty to perform is a breach Rest. 235 Egerer
B. Breach of Duty of Good Faith – (Duty in Every Contract) Don’t be a Dick/Deprive other's Justified Expectations Dalton (SAT) Rest. §205
Conditions
Determining existence of Duty
Conditions - Act/Event that must occur before duty arises (Precedent Rest. §224), or that discharges existing duty (Subsequent Rest. §230)
Intended to shift risk, so if no clearly expressed intent to shift risk between the parties, then the clause is viewed as a promise to perform as opposed to a
condition Printz (Contractor Pay-Paid) Promises are as reciprocal unless explicitly stated: performed at same time Goodisson
Promissory-Party promises act, within their control, that triggers other party’s duty Kingston v. Preston (Secure Debt); if duty triggered is own, illusory
Ordinary- Event out of either parties’ control Irving (Snow): Express-Explicitly Stated Irving: Constructive- Implied & Assigned by Court Kingston (Debt)
Excuse of Non-Performance Enables Rescission of K
Mistake (1) Both parties mistaken as to basic assumption of K (2) Mistake materially affects bargain (3) Adversely affected party must not bear the risk Zimbalist
Impracticability (Seller) (1) Non-occurrence basic assumption of K (2) Occurrence is not fault of asserting party (3) Party doesn’t assume the risk Taylor v. Caldwell
Frustration Purpose (Buyer) – Impracticability + (a) Purpose frustrated is principal purpose of K (b) Frustration substantial Krell
Excusing Conditions
Non-occurrence of condition is excused, duty is due
Substantial Performance - Traditional Rule (Maxton)- No Substantial Performance of Express Conditions
Modern Rule (Sahadi)- If party performs all material aspects of a bargain, then substantial performance
Material Breach - Breaching party may sue for restitution damages: Substantial Performance – Breached party may sue for expectation damages
Prevention – In bad faith, promisor prevents or hinders the fulfillment of a condition & condition would have occurred but-for the prevention, condition is excused Cantrell-Waind
Waiver – Implicit/Explicit promise to perform conditional duty, despite non-occurrence of condition Rest. 84 Clark v. West Unless, waived occurrence is Cent. Purpose/Consideration
Divisibility-(1) Multiple parts of K (2) Performances due from each party are equal (3) Each performance is in exchange for corresponding performance by other party Lowy
Restitution - Modern - Breaching party is entitled to restitution for any benefit conferred in excess of loss caused by breach Rest. 374 Britton v. Turner
Trad. - Party may not recover for part performance, unless there is good cause for failure to complete performance Stark v. Parker
Assignment & Delegation - K rights/duties are generally assignable, See Outline
Promissory Estoppel - Enforce Promise if:(1) Promisee induced into reasonable action or forbearance by promise, (2) resulting in detrimental reliance on
promise, (3) such action may be within contemplation of promisor, & (4) injustice only avoided by enforcement Rest. 90 Ricketts [Implies a contract]
Charitable contribution is binding even without reliance Rest. 90(2)