Table of Contents
UCC ARTICLE 2: SALE OF GOODS (MOVEABLE THINGS): .......................................................................2
CONTRACTUAL ASSENT AND THE OBJECTIVE TEST...............................................................................3
THE OFFER .........................................................................................................................................4
THE ACCEPTANCE ...............................................................................................................................6
OFFER AND ACCEPTANCE THROUGH ELECTRONIC MEDIA ....................................................................7
UCC ON ACCEPTANCE .........................................................................................................................7
UNILATERAL CONTRACTS ...................................................................................................................8
BATTLE OF THE FORMS.......................................................................................................................9
STANDARD TERMS REVEALED AFTER GOODS OR SERVICES ARE ORDERED ......................................... 11
STATUTE OF FRAUDS ........................................................................................................................ 12
PRELIMINARY, INCOMPLETE, AND INDEFINITE AGREEMENTS ............................................................ 14
CONSIDERATION .............................................................................................................................. 16
PROMISSORY ESTOPPEL ................................................................................................................... 18
CONTRACTS BIG OUTLINE FALL 2019
“Mutual manifestation of an intention to be bound with sufficiently definite terms.”
“An exchange relationship created by agreement between 2+ parties containing at least one
promise and enforceable by law”
1.
2.
3.
4.
5.
5 questions to ask:
What body or bodies of law apply?
Does an enforceable K exist?
What are the terms of the K?
Has either party unjustifiably failed to perform the terms of the K?
If so, what remedies are available?
1
UCC Article 2: Sale of Goods (moveable things):
-“Sale” = passing of title from the seller to the buyer for a price
-If no applicable UCC provision, turn to common law, general K principles of law and equity
-Can’t get title from a thief, no matter how long chain of possession is
If not a “pure” sale of goods/Mixed Ks (goods vs. services):
Predominant purpose test: 4 factors court looks at:
1. Language of the K
2. Nature of the business
3. Reason parties entered K
4. Amounts paid for goods vs. services, respectively
Gravaman test (less common):
 Breaks transaction into separate components and applies A2 to the portion of the K that
involves sale of goods and common law to non-sale portion
Software and intellectual property:
 Goods with embedded software (like digital thermometer) is a good under A2
 Things like computers may be mixed
 A website is not a good; A2 doesn’t apply
 A CD is probably a good if sold that way. An MP3, however, is not, even if the buyer then
downloads it onto a CD (CHECK THIS AGAIN)
 Software purchase:
o Usually a purchase of services if it is analogous to a client seeking traditional
services such as medical advice
o Usually goods if it resembles a traditional one-time purchase of a good
-Merchants:




A person who deals in goods of the kind (both buyer and seller)
OR by his occupation holds himself out as having knowledge or skill peculiar to the
practices or goods involved in the transaction
OR someone who employs an agent or broker with such knowledge or skill
RULES FOR MERCHANTS:
o Merchant entrustment rule (UCC 2-403): if an owner entrusts goods to a
merchant of such goods, the merchant is allowed to transfer the title in the
course of business. Purpose is to protect buyers from acquiring a fraudulent title
2
Contractual Assent and the Objective Test
 Objective standard: legal assent is determined by parties’ overt acts and words—
“objective” manifestation
 If a party’s actions and words could reasonably be understood as assent, they are
understood as such, even if the party did not actually intend to assent
 ASK: Would a reasonable person in the recipients circumstances understand the other
party’s intent based on their manifestations?
 Factors to consider:
 Party’s attributes (i.e. experience, training, commercial sophistication)
 Background info possessed
 Relationship between parties
 Context of the transaction
 Subjective evidence of assent/lack thereof is permissible as long as it is consistent with
and not contradictory to the objective evidence
 Can present evidence that party didn’t have capacity to assent (i.e. mental disability,
intoxication)
 Duty to Read
 It is each parties’ responsibility to ensure that they understand terms of K by the time
they assent
 ASK: would a reasonable person expect to be bound to some type of terms?
 Requires conspicuous notice: drafting party must be sure the signing party has
adequate notice of what the agreement says
 Arbitration provisions and forum selection clauses: ASK: was the provision fairly and
reasonably brought to the notice of the party who signifies apparent assent to it?
 Federal Arbitration Act: upholds the validity of an arbitration agreement unless
there are grounds to invalidate it under principles of K law
 Generally can’t sue on a K while trying to argue that another part of the K wasn’t
agreed to—paradoxical
 i.e. in the McDonald’s case, by participating in the promotion & expecting ∆ to
hold up its end of the K, the π assented to the entire K
 NOTE: it is possible to claim that a certain aspect of a K is invalid, but McDonald’s
was not such a case
 Boxtop Terms: Printed on the exterior of the packaging and discernable before opening
 Shrinkwrap terms: Terms are NOT apparent on the external packaging but are seen only
when the packaging is opened
 FOR BOTH BOXTOP AND SHRINKWRAP: if presented to buyer at the time of
contracting, the buyer’s duty to read is determined under the same principles as
those applicable to other standard terms if not readily available—SEE BATTLE OF
THE FORMS
 Clickwrap: buyer has to indicate assent before placing order
 Browsewrap: terms are available if customer clicks link, but no affirmative assent
required
3

User must be put on inquiry notice: would a reasonable person realize that there are
terms they should look at?
 Courts are traditionally reluctant to enforce browsewrap against individuals
 Conspicuous hyperlink alone usually not sufficient
 Probably not valid: buried at bottom of page; having to scroll down to different
screen (Specht)
 Probably valid: explicit textual notice that continued use = assent
 FOR BOTH CLICKWRAP AND BROWSEWRAP:
 Duty to read varies based on how reasonably clear and conspicuous the terms
are
 Tricky jokes: a person who claims they were just joking when they allegedly assented
may still be bound to K if their conduct and words would warrant a reasonable person to
believe they intended to assent
 Joke must be reasonably understood as such by the other party
The Offer
“The manifestation of willingness to enter into a bargain, so as to justify another person in
understanding that his assent to that bargain is invited and will conclude it.”
Elements of an offer:
 Communicated to offeree
 Gives offeree power to make decision on whether or not a K is formed
 Offeree must reasonably understand that they have been given the initiative to create
the K by accepting the offer. Otherwise the “offer” is just a proposal
 Offeree reasonably understands that if they accept the proposal, the K is complete
-Potential responses: acceptance, rejection, counteroffer, or lapse
-2 components:
1. Substantive: actual terms of the proposed K
2. Procedural: mode of signifying acceptance
-Buyer USUALLY, but not always, the one making the offer
Advertisements:
 Typically not offers especially if directed at the general public
 MAY BE AN OFFER if:
 sufficiently definite and explicit terms that leave nothing open for interpretation
 some performance was promised in positive terms in return for something requested
 Must be clear, definite, and explicit, leaving nothing open to negotiation, usually with
some kind of limitation (i.e. 1st come 1st served)
 Be wary of limitation thing—Blum finds it dubious as a requirement, but perhaps
useful as evidence
 Language of commitment or… invitation to take action without further communication
4
Solicitation not an offer. Bid not an offer unless specifically states so or is part of the usage of
trade. Price list or price quote generally not an offer unless clearly shown otherwise
Revocation
 Offeror may revoke offer any time before acceptance (unless an option)
 Offer w/o expiration expires after reasonable time
 Must be received by offeree (NO MAILBOX RULE)
 Can come indirectly as long as it’s from a reputable source
 Must also consider what the source is actually saying (i.e. do they simply believe it’s
been revoked or do they know and are reliably communicating the revocation?)
UCC on offers
 Requires realistic assessment of whether an agreement was, in fact, made (UCC 2-204 &
206)
 UCC 2-204: Formation in general
1. K for sale of goods may be made in any manner sufficient to show agreement, including
conduct by both parties which recognizes the existence of such a K
2. An agreement sufficient to constitute a K for sale may be found even though moment of
its making is undetermined
3. K for sale doesn’t fail for indefiniteness if the parties have intended to make a K and
there is a reasonably certain basis for giving an appropriate remedy
5
The Acceptance
“Offeree’s manifestation of assent to the offer made knowingly, voluntarily, and
deliberately”
Absolute and unqualified
 If offeror specifies what qualifies as an acceptance, acceptance is only valid if it complies w/
prescribed method
 If offeror DOES NOT SPECIFY manner of acceptance, reasonable standard is applied to
whether or not an acceptance was made (see second element below)
 ASK: was method of acceptance reasonably appropriate and effective?
 Notice to the agent, within the scope of the agent’s authority, is notice to the principal, and
the agent’s knowledge is binding on the principal
 Elements of an acceptance
1. Communicated to the offeror
a. A person can’t accept an offer unless they know of its existence
b. Silence does not equal acceptance
i. Exceptions:
1. Parties have a relationship under which it is reasonable for the offeree to
notify the offeror if he does not intend to accept
2. Offeree takes advantage of services offered with the reasonable opportunity
to reject them and reason to know that they were offered with the
expectation of compensation
3. In context of transfer of property, offeree could be bound if they act toward
the property in a manner inconsistent with the offeror’s ownership of it
4. Offeror has indicated that the offer may be accepted by inaction and the
offeree does intend to accept the offer by remaining silent
c. Mailbox rule: when an offer allows acceptance by mail, the acceptance takes
effect when it is put into the mailbox, properly stamped and addressed
i. Electronic media and the mailbox rule
1. Is communication “substantially instantaneous’ (usually <1-2 minute delay)?
2. Is communication 2-way (can party know if other is aware of message)?
 IF NO TO BOTH, YES MAILBOX RULE
 But person seeking to apply mailbox rule must be able to present
evidence of when the acceptance was placed in the proverbial
mailbox
o i.e. that case where a fax would have qualified for mailbox
rule, but sender had no evidence of when fax was sent
2. In compliance with any instructions in the offer relating to the manner and method of
acceptance
a. If not clear, mandatory instructions are given, a manner that is reasonable, is
consistent with any prescribed manner, and is no less protective of offeror’s rights
may be an effective acceptance
6
3. Doesn’t vary terms of the K proposed in the offer
a. A response indicating disagreement is a rejection or counteroffer
b. Some variance may still count as acceptance as long as offeree’s intent to contract is
apparent and variations aren’t material (some jurisdictions—others still strict mirror
image)
i. Material: doesn’t increase parties’ obligation, risk, or burden (one example)
4. Occurs while the offer is still in effect
a. Failure to act before offer lapses = rejection
b. If offer did not specify duration, it remains open for a “reasonable time,” depending
on circumstances of transaction
c. If offeree communicates clear intent to accept, but time has lapsed, late acceptance
can be treated as a new offer by the former offeree
d. Offer lapses if offeror dies or becomes mentally incompetent BEFORE acceptance
i. Applies regardless of offeree’s knowledge of the situation
Offer and Acceptance Through Electronic Media
Uniform Electronic Transactions Act: must be enacted by legislatures (state law)
 Recognizes machine as “electronic agent” of the party
 Parties can form a contract by interaction of electronic agents, including transactions where
only one party uses an electronic agent
 Relevant time for determining manifested intent is when electronic agent is programmed
and placed in use
Electronic Signatures in Global and National Commerce Act (ESIGN): defers to state law as long
as state has enacted UETA or similar (federal law)
UCC On Acceptance
UCC 2-206: unless method of acceptance is clearly exclusive, offeree may accept by any method
consistent w/ terms of offer and is reasonable
UCC 2-206(b): prompt promise to ship or prompt shipment = acceptance
 Can ship conforming or nonconforming goods
 Nonconforming goods = basically an immediate breach of existing K UNLESS
seller notifies the buyer of the shipment of the nonconforming goods, THEN
the shipment of the nonconforming goods is treated like a counteroffer
o Buyer can send back nonconforming goods (reject) or keep the
nonconforming goods and pay (acceptance)
7
Unilateral Contracts
Bilateral: at time of acceptance, K is formed under which both parties have made promises to
be performed at a future date
Unilateral: Offeree’s performance is complete at point of K formation and only the offeror’s
performance remains outstanding when K is created
 Most common example: reward for performing some action
 Unless the offer clearly requires acceptance only by performance, it can be accepted by
either promise or performance
 Terms of offer must be very clear
 Shipment of goods ordered is usually performance as acceptance of the offer made by
the order of the goods
o ASK BLUM: have conflicting note later in notebook that says shipment as
acceptance doesn’t qualify as unilateral K as there may be other promises
involved that still need to be performed (i.e. warranties—goods will be correct
and usable)
 Unless offeror learns of acceptance by performance within a reasonable amount of
time, the offer can be revoked or considered lapsed
o Notification need not be immediate, just within a reasonable time
 For acceptance of an offer by a performance that will take some time, acceptance is
effective when offeree tenders or begins the invited performance or tenders a
beginning of it
o If not likely to receive or otherwise be aware of performance in timely manner,
offeree must alert offeror
o Do we need to know about options?
 Employee handbook: Even if employee did not read they may have inadvertently
manifested assent to the terms by commencing work. BUT b/c of policy concerns, may
not be bound to terms but could take advantage if they want. COME BACK TO THIS
 A check is a promise to pay at the time that the check is cashed/deposited, so payment
in form of check is an acceptance but not a performance
o i.e. offer to clean roof for $1500. To accept, pay by June 6
 Offeree pays in cash: unilateral
 Offeree pays by check: bilateral
8
Battle of the Forms
Common Law
 Mirror image rule: “acceptance” with different terms is a counteroffer
 Last shot doctrine: If parties think they have a K and perform, K is performed on terms of
the last person to respond
UCC 2-207- Additional terms
1) A definite and seasonable expression of acceptance or contract before the writing
shows up operates as an acceptance even though it states terms additional/different
from those offered, unless acceptance is expressly made conditional on assent to the
additional or different terms
OFFER
ACCEPTANCE
NOT ACCEPTANCE
Seasonable and definite
expression of acceptance w/
different/additional terms
COUNTEROFFER OR REJECTION
Not seasonable
Not definite
expression of
acceptance
Expressly
conditional
2) Additional terms are to be construed as proposals for addition to the K.
a. IF BETWEEN MERCHANTS: additional terms become part of K UNLESS:
i. Offer expressly limits acceptance to the terms of the offer
ii. Material alterations
1. i.e. surprising term, unforeseeable, core aspect of the deal,
remedy upon breach
2. Court might look to examples from other courts
3. Would term cause surprise or hardship if incorporated without
express awareness of the other party? (basic test)
a. Surprise: neither customary nor reasonably accepted
b. Hardship: unduly burdensome
iii. Notification of objection to additional terms has already been given or is
given w/in a reasonable amount of time after notice
b. NOT MERCHANTS: offeror must explicitly accept different or additional terms
9
3) If writings don’t establish a K, conduct by both parties which recognizes the existence of
a K is sufficient to establish a K for sale
a. In such cases, the terms of the K consist of those terms on which the writings of
the parties agree together with any supplementary terms incorporated under
any other provisions of the Act
OFFER
COUNTEROFFER
No acceptance by performance
NO CONTRACT
Clear manifestation of
acceptance by offeror
No acceptance, but
performance
Contract on
offeree’s terms
Contract under 2-207(3)
Misc. notes on UCC 2-207




If a response to an offer is so different in its terms from the offer, courts typically
will say that’s a counteroffer.
If the clash is in boiler plate terms, probably stay in 2-207(2)
If clash is in terms specific to this transaction, probably a counteroffer, so stay in 2207(1)
If parties make it clear standard term is material (i.e. “time is of the essence”) court
will generally treat it as material
10
Standard Terms Revealed After Goods or Services are
Ordered
“Cash now, terms later,” shrinkwrap, and rolling Ks
Deferred Communication of Terms (Offer and acceptance at point of purchase)
 If standard terms are reasonable and reasonably expected, they may be part of the K
despite late communication
o i.e. transactions commonly subject to standard terms such that nondrafting
party had reason to know this and should have ascertained what they were—
then there’s a duty to read as long as buyer was on inquiry notice
Rolling K: formed over a period of time following initial manifestation of agreement
 K formed after consumer has reasonable opportunity to reject full terms after receipt
 Circumstances must indicate parties didn’t intend offer and acceptance to be complete
at time of their initial transaction
 Buyer must be able to return item if they do not agree to the terms
 No final K is made at point of purchases
o Offer: delivery of standard terms
o Acceptance: Buyer doesn’t reject it within a reasonable time by declining the
benefit of the K
 TEST: would a reasonable person have known that returning the product serves as
rejection of terms?

SHRINKWRAP
ROLLING K
Offer made when terms
presented; nondrafting
party accepts terms either
expressly or by failure to
reject them
K formed at time of initial interaction
Offeree had duty
to read and should
have known of
terms
Terms are added in accordance w/
the offeror’s contractual right to
make unilateral post-contractual
amendments (i.e. credit card)
11
Terms NOT part of K—postcontractual delivery was a
proposal to modify
Sale of goods: UCC 2-207(2):
offeree must affirmatively
assent for terms to enter K
Statute of Frauds
Certain Ks must be in writing to be enforceable
3 basic req’ts (UCC AND Common Law):
1) a written record


If electronic, must be accessible
Doesn’t need to be the K itself as long as it includes req’d components (i.e. a memo)
2) a signature
3) sufficient content to evidence the K
The signature
 Must be signed by the party against whom the K is to be enforced
o Can also be signed by an agent, but most statutes require agent be authorized in
a record
 Can include symbol made/adopted w/ an intention to authenticate the writing as that of
the signer
 Need not appear on every document of large record as long as document where it
appears can be tied to the others
The content
 Enough to show K was made, subject matter identified, sets out material unperformed
terms
 Common law: incorrect term invalidates writing
UCC
 UCC 2-201: omission or incorrect statement of a term doesn’t negate the K, but not
enforceable beyond what is actually stated in writing UNLESS it’s the quantity term—if
quantity can’t be ascertained then K is no good
NO
K need not be in record to be enforceable
Is there a signed record in a form
sufficient to satisfy the statute?
NO
Is there an exception (RARE and highly
specific) to the statute of frauds that will
allow enforcement of the K even though it
is subject to the statute and there’s no
record sufficient to comply with it?
YES
YES
Is the K subject to statute of frauds?
YES
NO
K not enforceable : (
K is enforceable!
12
6 types of K covered by the Statute of Frauds
1) To answer for the debt or obligation of another (suretyship)
2) K of executor or administrator to answer for the duty of their decedent
3) Made upon consideration of marriage
 i.e. prenups, motivated by marriage, in which some property settlement or other
financial arrangement is made relating to the marriage--- NOT actual marriage K)
THE IMPORTANT ONES:
4) Sale of land or transfer of an interest in land
 Also applies to any K in which land or an interest in it is disposed of (i.e. grant of
mortgage or easement)
 Part performance doctrine: recognizes that part performance of an oral K may
provide enough proof of the K’s existence to justify enforcing it despite
noncompliance w/ statute of frauds (limited circumstances)
o Commonly recognized requirements and restrictions on doctrine:
1. Many confine to suits for specific performance
a. Others allow in suits for damages but only in favor of buyer
2. Generally confined to sale and transfer of land
3. Only explanation of the performance must be existence of the oral K
4. Party seeking enforcement must show equities in favor of enforcement (i.e.
justifiable reliance on the oral K and prejudice resulting from that reliance)
5. Terms must be proved w/ some certainty and be fully settled and definite
5) K that cannot be performed w/in a year of execution
 Completion within the year would breach K
 If K is for >1 year BUT includes provision allowing a party to cut the relationship short,
NOT subject to statute of frauds
 Courts reluctant to use death as contingency since everyone is subject to it
 K of indefinite duration doesn’t count
 Measure duration by what was understood at the time of contracting
6) Sale of goods for the price of $500 +
 Total price for all the goods bought under the K
 UCC 2-201
(1) Applies to any buyer/seller:
a. Writing must be sufficient to indicate existence of K for sale
b. Signed by charged party
-may omit or incorrectly state a term as long as its not the quantity term
-K enforceable only for quantity listed in K
(2) MERCHANT RULE EXCEPTION TO (1): between merchants, if a writing in
confirmation of the K is received within a reasonable time and is sufficient against
the sender AND the receiving party has reason to know its contents, it satisfies
13
the req’ts of (1) against such party unless written notice of objection to its
contents is given w/in 10 days after receipt
a. Confirmation should still be signed by the sender
(3) K that doesn’t satisfy UCC 2-201(1) but is otherwise valid is enforceable if:
a. Goods are specially manufactured for buyer; AND
b. are not suitable for sale to others in the ordinary course of the seller’s
business; AND
c. seller made either:
i.
Substantial beginning of manufacture; OR
ii.
Commitments for their procurement; OR
iii.
Payment already made and accepted or goods already received and accepted
d. Admissions in pleading/testimony
e. Payment has been made and accepted or goods have been sent and received
Preliminary, Incomplete, and Indefinite Agreements
I. Preliminary Agreements
 Don’t deal comprehensively w/ all the issues that will/might arise as transaction moves
forward
 3 possible intended legal effects:
1. Parties do intend preliminary agreement to be binding—still not a K if clear parties
don’t intend to be bound or still too much missing
2. Binding commitment to work together in good faith toward K
3. Purely preliminary and nonbinding; merely an expression of desire to eventually
enter K; no legal obligations
 ASK: Did the parties intend for preliminary agreement to have any binding force?
1. How would manifestations of intent be understood by a reasonable person in the
position of the parties?
2. Language is principal focus
3. Context highly relevant too
A. Type I: Meeting of the minds on all issues needing negotiation. Binds parties to ultimate
contractual objective. “Preliminary” in name only
 4 factors:
i. Whether there’s an expressed reservation of a right not to be bound in
the absence of a writing
 Absence of expressed reservation not dispositive; language can be so
noncommittal that this absence is of little significance
ii. Whether there’s been actual performance of the K
iii. Whether all of the terms of the alleged K have been agreed upon
iv. Whether the agreement at issue is the type of K usually committed to
writing
14
 Typical remedy: expectation damages
B. Type II: Commits parties to the obligation to negotiate open issues in good faith in an
attempt to reach the objective w/in the agreed framework.
 Not binding on terms
 Permit parties to make plans w/o expending $/time/effort negotiating every detail
before knowing whether and on what terms they have an agreement
 Courts are reluctant to enforce these. Usually want something more, esp. partial
performance, reliance, etc.
 Remedy may be reliance costs
 5 factors:
i. Intent to be bound revealed by the language?
ii. Context of negotiations
iii. Existence of open terms
iv. Partial performance
v. Necessity of putting the agreement in final form
C. Type III: nonbinding indication of a desire to enter a K in the future
 NOT enforceable
 Examples:
i. letter of intent: language says there will be a future K, no intent to be
bound until final formal doc is executed
ii. Vague agreements to agree
iii. No definite price terms or way to get payment (Baer v. Chase)
II. Indefinite or Vague Agreements
 A K is unenforceable for vagueness if its essential terms are too indefinite for the court
to determine w/ reasonable certainty what each party promised to do (i.e. Baer v.
Chase)
 Price term is essential, but even lacking a definite price term a K can be enforceable if
the parties specify a practicable method by which they can determine the amount
 Duration of K also essential (at least in NJ)—elsewhere it is important but not
necessarily essential—look at nature of K and why duration would/wouldn’t be essential
III. Tort of Interference w/ K Relations: Liability for Enticing a Party to Breach a K
or a Preliminary Agreement

Arises when a valid K exists and a 3rd party, knowing of the existence of the K,
intentionally and improperly procures or induces a breach of the K
15
Consideration

A bargained for exchange in which a promised benefit induces a legal detriment,
and the legal detriment induces the promised benefit
If no legal benefit to promisor, and no legal detriment to promisee, then NO
CONSIDERATION
CRUCIAL QUESTION: did each party suffer a detriment in exchange for the
detriment suffered by the other?
Doesn’t have to be economic








A hope or expectation is not equivalent to legal detriment or reliance
Bottom line: courts won’t enforce gifts
Can’t take back a gift
Courts sometimes stretch to find consideration where discretionary promises make
commercial sense
o Modern trend: if promise seems seriously and reasonably made, and promise
appears to have genuinely bargained for the promise, court may enforce
Mutuality: Both parties must give something of legal significance—promisor and
promise must suffer detriment to benefit each other; each party must be bound or
neither party is bound
o Don’t have to have an outstanding obligation on both sides to have a valid K (i.e.
unilateral K)
Detriment vs. Condition to a Gift:

Conditions attached to a gift are not consideration b/c recipient had no legal right to use
gift counter to those conditions prior to receiving it
 If I give you $ for a specific purpose, and you do use it for that purpose, that’s not
consideration b/c you spending my $ is not a legal detriment to you
 Charitable donations don’t usually involve consideration b/c charity isn’t incurring a
detriment—they didn’t have a right to your $ in the first place, so undertaking to use it
isn’t a detriment
o Charitable orgs. Should know donations aren’t enforceable, so shouldn’t be
acting in reliance upon them
o BUT, if you give $ for synagogue to begin a new program, e.g., that might be
consideration b/c they are undertaking a task they weren’t originally planning on
but are doing at your behest
 ASK ABOUT TRAMP & COAT EXAMPLE
Detriment and Preexisting Duty

RULE: the performance of, or promise to perform, a preexisting duty is not
consideration
16



o One does not suffer a detriment by doing or promising to do something one is
already obliged to do
o Includes duties required by law
Agreement to modify an existing K is itself a new K which requires its own consideration
Economic equivalence of modification to new detriment not required
o If party modifying adds in any way to performance or obligation as incentive for
other party to perform, the new increase in detriment is sufficient for
consideration as long as it doesn’t “shock the conscience”
NOT APPLICABLE TO UCC
o 2-209(1): An agreement modifying a sale of goods needs no consideration to be
binding, just has to be made in good faith
Agreements to Settle a Disputed Claim or Defense



Retracting pursuit of a valid claim is good consideration
Forbearance from a patently invalid claim is NOT good consideration, even if bargained
Forbearance to assert or surrender of a claim/defense which proves to be INVALID is
NOT consideration UNLESS:
a) Objective standard: The claim or defense is, in fact, doubtful b/c of uncertainty as to
the facts or the law
b) Subjective Standard: the forbearing or surrendering party believes that the claim or
defense may be fairly determined to be valid
 Evaluate both and say that some courts use one and some use the other and
some use both
17
Promissory Estoppel
Promissor can be held accountable for a promise when the promisee justifiably
relied on it
Alternate CoA when K is not valid/formed (i.e. no consideration)
Elements of a Promissory Estoppel Claim:
1) A clear and definite promise was made
2) Promissor intended to or reasonably expects to induce reliance by the promisee, and
the promisee DID in fact act in reliance on the promise
3) As a result of reliance, promisee suffered an actual detriment
4) Only way to prevent injustice is to enforce the promise
a. Highly discretionary—balanced against court’s reluctance to enforce gratuitous
promises
b. Involves considerations such as the reasonableness of a promisee’s reliance
5) Remedy limited as justice requires
-Restatement 90 (2): a charitable subscription or a marriage settlement is binding under (1)
w/o proof that the promise induced action or forbearance (courts haven’t really gone for this)
(even if courts were using 2, it only gets rid of req’t of reliance)
Basis of promissory
estoppel?


Contract
Substitute for consideration
Quasi K
Tort
Independent Theory


Negligence
Violation of general duty of
care
Ramifications of question of basis:
 Jury trial: legal or equitable suit? No jury in courts of equity
 SOL
 Remedy: expectation damages (K) or reliance (tort or something else)
o Restatement 90 says remedy is up to court, suggesting PE arises under an independent
theory
 Sovereign immunity: can sue gov’t in K law; gov’t may be immune under tort law
18
Promissory Estoppel in Commercial Negotiations
 May be available where the ∆ has led the π down a certain path and the π has suffered
thereby
 Full enforcement of the K may not be in order, but perhaps some reimbursement of
expenses
Damages
 Usually reliance costs—only for costs actually suffered, incl. business opp’ties passed up
Remedies
1. Remedy at law
 Damages
 Expectation damages: try to put π back in position they would have been in had
the breach not occurred
 Must be able to show cause and effect relationship between breach and
resulting losses (i.e. delay in completion of building construction was caused
by the ∆ (former contractor who bailed), not the new contractor)
 Direct damages: π awarded what was promised in the K (i.e. price difference
between what was promised in K by original contractor and what was
actually paid)
 Consequential damages: losses that occur as a consequence of the breach
(i.e. rent lost due to apartment not being habitable during delayed
construction)
 Punitive: only appropriate where conduct merits punishment; meant to
discourage others from similar behavior
 Usually where π has acted maliciously or w/ wanton recklessness; very
rare in K cases
 Only granted if π can prove damages with reasonable certainty
 Mitigation: π must make some effort to counteract losses where possible.
Damages can be reduced if π fails to do this
 No damages for emotional distress in K law
 Difficult to enforce
 Declaratory judgment: judgment declaring the rights and obligations of the parties
2. Equity
 Only available where π can show no adequate relief from remedy at law
 Entitled to specific performance when seeking real property
 Specific performance
 ∆ must fulfill promise made in the K
 Courts are reluctant to enforce specific performance, especially for a personal
service K (too similar to indentured servitude)
 π must show no adequate remedy at law exists
19


 TWIST: if π is seeking real property they are entitled to specific performance
 Easier to enforce than damages
Equities between the parties
 Trying to do justice between the parties
 Involves balancing—what is the prejudice suffered by π w/o SP? Prejudice
suffered by ∆ w/ SP? Does one seriously outweigh the other?
Injunction: court order compelling (“mandatory”) or forbidding (“prohibitory”) a
specified action
20